Brian R. Bates is President and CEO of Holman Consumer Services. He started his career as a service writer intern at Holman Ford and completed an internship as an ASE-certified service technician at ARI’s call center. After graduating from Rutgers University, he joined ARI as a financial analyst and later served in several management positions with ARI and Holman. He eventually was named chief financial officer for all of Holman, and later CEO. He was named president and CEO of Holman Consumer Services in 2016. He spoke to CBT News about his company and the auto dealership business in general.
Holman Enterprises was founded in 1924 by Steward C. Holman who signed a contract with the Ford Motor Co., to become a dealer in Merchantville, NJ. Joined by his financing partner, Charles M. Rice, the dealership was named Rice and Holman Ford and sold Model T, Model A and the first V-8 models.
Today, the company consists of six business segments that support several diverse sectors of the automotive market, including Holman Automotive, which has 38 retail franchises featuring 17 brands stretching from the East Coast to the Pacific Northwest. It also includes an auto retail finance company, a national multi-brand powertrain parts distributor, a truck up-fitting business and the largest privately owned fleet leasing and management company in North America, ARI. In overall revenue, the company posts a reported $3 billion with 6,301 employees in Holman Enterprises; 2,489 in Holman Automotive alone. Last year, it acquired Kuni Automotive of Vancouver, Wash., that created one of the largest privately owned dealer networks in the country.
They just started a new partnership with Cox Automotive, Flexdrive, that offers weekly or monthly car subscriptions.
Meet Holman Automotive Group
Q: Tell us about Holman Automotive Group
A: We are a family-owned business. We were founded by Steward Holman in 1924, so we’re in our 93rd year. So we’re currently transitioning between the second, third, really fourth generations. Steward’s son, [Joseph] Holman, is still involved and comes to the office every day. He’s the chairman emeritus. His daughter, Melinda Holman, is chairman, and his son, Steve, handles community affairs. They are on the board and are very involved.
The family is really wonderful. They are very connected to what we do and involved in every decision. They’re unbelievably supportive. It sounds like it’s not real, but it really is. The foundation they’ve set for the business remains true today — they support people first over everything else. If you make all decisions based on that, you create a foundation for long-term business success.
Q: How is the business organized?
A: I tell people that we are more of an automotive conglomerate. We are six different businesses — half of them deal in the business-to-business world, the other three are business-to-consumer. Our fleet management company ARI, manages roughly 1.5 million vehicles internationally. Along with ARI, Holman Business Services also includes Holman Parts Distribution and Auto Truck Group. As president and CEO of Holman Consumer Services, I am responsible for Holman Automotive, Steward Financial Services and Holman Insurance Services.
Q: Are they siloed businesses?
A: Actually yes, but that’s changing. In the past 20 years or so the commercial and retail sides of the business were very siloed, but about five years ago we started evaluating everything and integrated the fundamental areas of the business to support long-term future development. Now our investments in technology, systems and people are leveraged throughout the organization. It’s more of a hybrid. What I call retail services — HR, financial, risk management, etc. — are all centrally supported.
However, our strategy is for each individual dealership to be run by that dealership’s leadership. We believe the individual dealership has the ability to do what’s right and best for their individual situation, employees and customers.
Q: What are your five-year goals?
A: We have a long-term strategy but it’s more than five years. Because we’re private, we can focus on the next five, 10, 25 years and not our earnings from quarter to quarter. We invest in people and technology so we can support initiatives designed to align with whatever direction we think the industry is headed.
For the next five years, we see that consumers will continue to be increasingly connected to technology and automation, and I think the changes we will see in the automotive sector will be really exciting.
More Acquisitions?
Q: What was the biggest decision the dealership made in its history?
A: The biggest decision we made was diversifying our dealerships. We were one of the — if not the largest— Lincoln Mercury dealers in the 1960’s through the ’80’s. Choosing to diversify our dealerships and develop relationships within the automotive industry helped to create added stability for our organization. That was, foundationally, one of the the biggest strategy decisions we have made. The largest strategy decision recently was the acquisition of Kuni last July. It took us from being the largest regional dealership in our area to a national presence.
Q: What is your acquisition strategy? More on the way?
A: Our strategy on acquisitions is to look for an opportunity where the culture fits. In our culture, our people are the primary focus of our organization. Kuni was just like that as well. We were looking for business alignments across the country and we had had a relationship with them for years. It evolved into a strategic fit.
We look for a business alignment with our other businesses across the country. We are looking — or would be open to — retail opportunities where we don’t have them today. We have no retail presence in Chicago; that’s a possibility.
We’re in an interesting situation. We have opportunities that are literally coming to us every week. Multiple opportunities. It would be a realistic expectation in the future for us to do more acquisitions. Again, a dealership’s financial situation is not the driving factor. The dealership’s profits are not number one. We take a long-term view and the current owner has to understand that. It’s a different approach to the business. We support our people first. That’s not always the case [elsewhere].
The Business Challenges
Q: What’s your biggest challenge?
A: Our biggest challenge is staying connected to all of our people. We make it a priority to invest to connect with all of our leadership, especially now since we have grown to 33 rooftops after the Kuni purchase. That’s a challenge. I have something on my calendar seven days a week.
Q: Are you considering one-price, no negotiation stance?
A: That’s a touchy subject for the industry as a whole. The world’s changing and the ability to access information has become easier. Customers have the ability to approach a purchase with more knowledge and much more information than ever before. A lot of car dealer groups are stuck in the past, but the old model of negotiating is not sustainable and we know that. We have a couple of variations of one price. We represent our vehicles at market price.
Q: What is Flexdrive?
A: It’s a new opportunity that we’ve just started with Cox Automotive, with whom we share the patent. It provides customers with a short-term rental as opposed to the daily rental you would get at a place like Hertz. It’s shorter term than a lease payment and a longer-term investment in a car. It’s aimed at those in transition, maybe between vehicles, maybe temporarily in a location, or maybe don’t have the ability to purchase a vehicle at this time.
It’s an online app. Users put in their credit card information and insurance, select a car and a payment plan, and schedule their pickup time. It’s pretty cool. It is brand new – we just launched it last week and we’ll be adding cars to the portfolio and getting the word out on social media.
This idea came from our long-term strategic group. We have an amazing person who is responsible for identifying products and services for the long term.
That’s the cool thing about being a private company. We can do these things. We have the intention to roll it out where we have a physical presence and then connect it with other dealers. Other franchises can participate and the technology supports it all.
What about Tesla and Stair Step?
Q: What is your opinion of the Tesla model?
A: I think the business model is built on a strong foundation, but it presents a number of complications for long-term sustainability. The dealership business model is changing and that new foundation is based on the substantial amount of information that is available to the consumer.
All of the OEMs are adapting to that foundation with their own strategies, but I don’t see any specific OEMs looking to get more into the retail end to mimic Tesla. What I see happening with those partnerships is that they are seeking to have increased access to the customer. There are some OEMs that are actively engaging with the customers. Our long-term strategy is to support every manufacturer in every way we can.
Q: What is your opinion of stair step?
A: I actually can see both sides of the issue. As long as you have a strategic relationship with the manufacturer, together you can be successful. That’s a politically correct answer, but I really understand what they’re trying to accomplish. The downside is — not us — but there are other dealers who have really bad feelings or relationships with the factory. That’s not a healthy way to achieve the goals of the manufacturer or the dealer.
Q: What your opinion of President Trump and the administration?
A: It changes every week. I honestly don’t know. We have a very strong group internally that analyzes the impact of financial and regulatory structures on our business. We’ve been in a volatile environment since the recession. It’s been a slow recovery. As a nation and in the industry, we’ve talked about tax reform for a long time.
When it comes to regulations related to automobiles, I feel that, as an industry, we can adapt very well to whatever comes our way. The tax on imports is interesting — depending on how it’s rolled out. The industry will adapt.
Q: Will the business eventually become run by mega dealerships?
A: It’s going to be a challenge for small dealers to continue to invest in the levels that they will need to invest — in things like technology. I do think the local presence is vital to the industry and I think dealer groups are learning that it’s important to their business model. It’s always been a part of Holman’s mission to support the community and I think that’s very important.
Getting Technicians and Millennials
Q: Is it difficult getting technicians?
A: Yes. We look for them in every possible place we can – trade schools, manufacturing support programs and again, connecting with our other business. At ARI, our fleet management business, we have 400 ASE-certified technicians that work in our commercial vehicle call centers. We have a lot of depth in our organization. We just need to connect with people and bring them into the business.
Q: Do you think Millennials will buy cars?
A: If you go back 92 years you’ll always see transitions in customers. I don’t see them not buying cars. So many of our customers are Millennials. They’re coming to us saying they need mobility. They want to add a vehicle to their portfolio of options. That will always continue.
Q: What is the Holman story?
A: We are a consumer-first business supported by our amazing people. Our biggest acquisition is going very well. We’ve learned from past experiences and applied it to the Kuni acquisition. We’re more than happy with how it’s going.
We have a strong foundation and a leadership team and, sometimes we are a bit slow to make decisions but it’s because we make them for the long, long term. And, we get them right.
