Steve Germain maps out a long-term future for Germain Automotive Group

 

Steve Germain can’t wait to have the opportunity to call his kids, when he’s in his 80s and 90s, and ask them if they sold any cars today.

“I’m going to call them every day, I can tell you that,” he says. “They don’t even like calls. I mean, they’re like, ‘Dad, just text me.’ But I’m going to call them until the very end.”

Germain joined his brothers in the family business after college. His grandfather, Warren Germain — Henry Ford’s personal accountant who wanted to fulfill Ford’s desire to make automobile purchases more accessible outside of Detroit — started a car dealership in Bexley in 1947. His father, Bob Sr., expanded to Florida in the late 1970s.

In the ’60s and ’70s, Germain says his father’s generation of car dealers wasn’t aggressive about getting their kids involved.

“It was all just about trying to make payroll. It was a different environment; a different business. It was a different day, and their focus, our fathers’ focus, was not the next generation; it was the next month,” he says.

The transition from third to fourth generation will differ because Germain learned from his experience to cultivate a long-term outlook. While Germain, who became president and CEO in 1995, took the initiative and asked if he could join the business, he made it clear with his children that the business is in their blood and he’d welcome them.

“The best long-term exit strategy is to have a generation that’s moving in, the next generation, as opposed to working all your life and selling the business,” Germain says. “It’s just a very lonely exit strategy.”

So, Germain is happy his children — Jessica, director of operations, Germain Luxury Brands of Easton; Zach, general manager, Germain Lexus of Naples; and Austin, general manager, Jaguar Land Rover of Easton — are all involved with the business, which comprises 21 dealerships throughout Ohio, Florida and Michigan.

“They’ve grown up in this environment and they are very much in tune with today’s buyers,” he says. “Although the average buyer is a little bit older than the kids, they’re a lot closer (in age) to today’s buyers than I am. So, they can relate, and we can adapt to changing habits. Having the next generation of owners and managers very involved in any business, that is a great asset and one that is hard to duplicate.”

Structuring for the future

Like any family business, Germain Automotive Group has had its challenges. In 2011, Bob Sr. died, and the business had just made it through a very difficult period, the recession. Germain and his brothers knew few companies make it to the third generation, let alone the fourth.

“Each of the brothers needed to groom their children in the manner that they wanted to and the only way to do that would be to realign the business and each of us — for lack of a better word — would go our own direction,” Germain says. “So we split and realigned the company.

“We’re all still in the business and very involved and work together, but the ownership structure is different than it was in 2010. And that gives us the ability to manage and move forward to the next generation as we see fit. That’s best for our family, as opposed to trying to dictate to other families how they should move forward.”

It might seem confusing at first, but Germain believes it actually strengthens the overall brand because a majority owner, in any company, will have a stronger commitment to the customers, growth and employees.

“Because each of us have a stake in it that’s 100 percent, each of us maintain and are absolutely committed to the customer experience,” he says.

Seven years later, none of them have looked back. Plus, over time, Germain has noticed his decisions, goals and perspective have changed. For example, his company is moving away from the name Germain Motor Co., which he owns, toward Germain Automotive Group, which is the corporate name for the next generation of shareholders.

“I make decisions every day that I believe will have an impact in the years to come (so that) when I’m no longer around, my kids are going to look back and they’re going to say, ‘Boy, Dad knew what he was doing,’ or ‘Dad really took care of us or was smarter than I thought he was,’” he says. “That’s the legacy I want to leave.”

But they may not realize it until after he’s gone, because Germain says he didn’t always see it until after his father died.

It’s also important to have a career path for each family member that can be tailored to their experience and interests. He says it shouldn’t be a cut and dried model, but something that’s unique to that individual. It can be challenging to balance and manage that, especially with factors like the other parent who doesn’t work in the business, but loves the children and wants to make sure they’re all treated equally.

“It doesn’t get any easier, but you have a purpose and it makes the days go by very quickly,” Germain says.

Leaving room for growth

In order to leave a strong company for his children — in an industry where transparency and online research play a bigger role, and there’s always challenges with recruiting and retaining customers and employees — Germain knows growth is important.

One way to encourage growth is to retain as many of its 1,100 employees as it can. Germain Automotive Group has an average tenure of 4.7 years. While that doesn’t seem like much and there’s certainly room for improvement, he says the national average is only 2.4 years.

In any company, your culture plays a part in why employees stay.

“Every business has a culture, whether you like it or not,” Germain says. “It could be a good culture. It could be a bad culture. But cultures are part of the business DNA.”

A few years ago, Germain Automotive Group developed core values and a mission statement to help clarify that culture. It also spends time educating its employees about them.

“The culture determines the behaviors which determine the results,” Germain says. “We focus on behaviors and not on the results. The results will come.”

In addition, once you hire the right people, you have to provide them with an environment where they feel respected and comfortable, Germain says. You have to give them opportunities to grow with the business and find ways to promote the people who have been identified as the next leaders.

Germain finds that the best way he can help with this — and one of his greatest strengths as a leader — is to expresses his gratitude to those employees, while staying out of their way.

“A third of all employees, a third of everybody in the world, has something going on in their lives that makes it difficult for them to do the job that they’re asked to do,” he says. “They’ve got personal issues. They’ve got financial issues. They’ve got legal issues. One in three has something going on in their lives that is not a positive, but yet they show up every morning and they provide exceptional service. It doesn’t get any better than that.”

It helps that Germain understands he was given an opportunity he might not have gotten otherwise through his family business. He wants to pass it on to the next generation of owners and managers better than he found it.

“The expression of gratitude is a value, but something that not everybody does. They can be grateful, but they don’t always necessarily express it,” Germain says.

However, this only works if your gratitude is genuine and appropriate, he says.

Creating a supportive environment is also easier when you have a long-term outlook and motivations that go beyond looking to make more money.

It takes time

The company has not only grown its same-store sales, it has acquired dealerships in Ohio and Michigan. The economies of scale decrease costs as Germain Automotive Group finds opportunities through small groups or single point dealers that don’t have succession plans or aren’t comfortable with the future of the business.

The biggest lesson Germain has learned from these acquisitions is that it takes time.

“What I realized over the last six to seven years is that it doesn’t happen overnight. It’s a two- or three-year process, from the time of closing to the time that you achieve what you thought you could achieve and the reasons that you bought those stores,” he says.

You can’t affect the outcomes overnight, as hard as you try or as lucky as you are. It won’t work, Germain says. A healthier and more realistic strategy for the changes or improvements that you want to implement is to move your timeline from months to years.

But even with a longer timeline, he’s going to continue to look for opportunities to acquire more locations, both in the company’s markets and outside those markets, because the industry is consolidating.

“I like the idea of being a consolidator,” Germain says. “That fits right in line with our family business and (the) next generation.”

 

Takeaways:

  • Adapt your business succession to the situation and individual.
  • Give the next generation of leaders room to grow.
  • Express your gratitude to get the best from your employees.

 

Drive Germain offers an innovative ownership alternative — car subscriptions

Subscription services have been around for a while for everything from clothing and razors to movies and home-cooked meals. In December 2017, Drive Germain, a subscription automotive fleet, was launched after Germain Automotive Group was approached by the people who created the technology behind the app.

“We liked the idea because it really centers around the customer experience, and we thought that we could learn a lot from this model to help us improve our resale and service businesses,” says Austin Germain, general manager of Jaguar Land Rover at Easton, who helped spearhead Drive Germain’s implementation.

Fulfilling a need

Some car manufacturers like BMW and Mercedes were early adopters too, along with some dealerships across the country. But he says they’re the only ones trying it in the Columbus area so far.

With the monthly car subscription, members can flip to a new car as often as they’d like. Germain Automotive Group carries the insurance policy, so you have to qualify to join the program. An app makes it convenient to change cars, but you can still call in if you’d like.

The response to Drive Germain has been better than expected, Germain says. It’s on track to beat the number of subscribers it hoped to have by year end, months in advance.

“We didn’t quite know what to expect. No one had really done it. We knew it was a good idea. We thought the customers would like it, but it was so new and so different, ultimately, we were just hoping that it would succeed — and so far, it has,” Germain says.

Some customers use the program to test drive cars for a few months and then buy or lease whatever they like the most afterwards. In other cases, a snowbird who spends part of the year in Florida can use the subscription service, rather than leaving a car sit dormant for months at a time. For others, the program makes more sense over leasing or buying a car, because of its convenience and ease of use.

Germain said the company is still learning about fleet management, how to have the right cars ready at any given time for a consumer, but the members have been great about giving feedback.

What’s next

In the coming year, as Germain dealerships add brands, new brands will be brought into the subscription fleet as well.

“We’re just going to continue to grow and continue to learn from this program, learn from the analytics behind it, learn from the data it’s giving us — and it will not only make Drive Germain better, but it will make the Germain Motor Co. better as well,” Germain says.

Learn more about Drive Germain.