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Pushing a Third-Generation Dealership Forward

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Dec 2017 Feature 1

In 2008, Eve Knudtsen was like many dealers across the country: burnt out. She had spent nearly her entire life working at her family’s dealership, Knudtsen Chevrolet, in Post Falls, Idaho, and the past 13 years acting as dealer principal before seeing it all come crashing down during the recession.

The store became a constant frustration. She wasn’t engaged with the industry anymore. She readily discouraged her daughter from following in her footsteps and becoming the fourth-generation owner. She even decided the car business wasn’t right for her anymore and went back to school to get her master’s degree in organizational leadership. But in school, Knudtsen says something unexpected happened: The dealership became the focus of everything about which she wrote. 

“That was where my experience was coming from. I was really focusing on what it takes to transform an organization. I thought about what the opportunities for success from an outsider might be if they bought my dealership,” she says. “I looked at myself in the mirror and thought, ‘Why don’t you just do what you know a new owner would do? Transform your organization yourself.’”

It was an ah-ha moment that convinced Knudtsen to go back to the dealership and create a sustainable organization for her 100 employees in sales, service, body and parts. 

And she’s done just that: In 2016 alone, her overall dealership sales rose 30 percent with an overall gross profit increase of 19 percent; service retention rates were 77 percent, body shop labor sales increased and gross profit increased 30.8 percent. Her daughter, Lauren, now even works closely with Knudtsen and plans to take over the family business when Knudtsen retires.

It’s a remarkable turnaround for the organization, and a vital example of a how an established, third-generation business has positioned itself for continued success in the industry. 

“I fell back in love with this industry,” Knudtsen says. “We have worked hard to define our vision, mission and values over the past few years.” 

 

The Importance of Diversity

It’s no secret, Knudtsen says, that the automotive industry has a talent shortage. In fact, her dealership has historically fallen victim to that problem, too. It’s part of the reason she’s so committed to helping transform the industry. And the biggest way she’s tried to do that is at a dealership level, so that the business can become a better reflection of her customer base.

“My way of trying to get that message out to everyone that our industry has cleaned up its act is through diversity and inclusion,” she says. “I believe that when people see people like themselves employed in different businesses, their perception of the ethical behavior of that business goes up. Particularly in the case of women, women want to do business in dealerships where they see other women. I want to provide opportunities at all levels for women and millennials.”

Hiring millennials has become easier, she believes, as more and more graduate from school looking for jobs. 

“How I try to capture millennials is to capitalize on their desire to have a career path and move up in an organization,” she says. “What I try to promise every millennial—and anyone who works here—is that I will get you ready for whatever comes next.

“I recognize I only have a limited number of places that are next in my organization. So I get that I may be training you for someone else’s organization. That’s OK. I want you to be ready for whatever comes next. That being said, I’m trying to find opportunities to expand our organization, buy more dealerships, expand my body shop and the number of franchises, so I can create those opportunities.”

But while she’s identified a solid career path that resonates with millennials, hiring women remains a challenge, she says.

“The No. 1 resistance that I get from women is they don’t feel comfortable with the product. They think it’s too technical,” Knudtsen says. “I try to help them understand that the same things that they feel are important in their next vehicles are the things that’s important to the rest of the customers. What’s important to you is what’s important to the vast majority of our customers.”

To get that message across, she leverages a variety of sources to reach women who could become potential employees. She’s a member of the General Motors Women’s Retail Network and an active member of the community. Recently, she spoke with a local political party that was celebrating American Business Women’s Day. 

“That always gives me the perfect opportunity to talk about my industry and the tremendous potential that exists in the retail automotive sector for women,” Knudtsen says. “I start with Mary Barra at GM being No. 8 on the Forbes list. I roll on through that to how many women dealers GM has and how they’re the only manufacturer that has a program that’s dedicated to finding women dealer candidates and helping them get established in their own dealership opportunities. I always have a chance to put that message out there. 

“Forty-five percent of all new vehicles purchased in 2015 were purchased by women but only 9 percent of our salesforce is represented by women. If we know that women would prefer to do business with women, hey, jump in, the water’s fine. You should be doing this. This is your opportunity.”

To that end, Knudtsen’s dealership reflects her women: She has women as sales consultants, service advisors, estimators and technicians, as well as in human resources and the business development center. At her body shop, women estimators outnumber men. Her daughter, Lauren, currently works in human resources while she works on her master’s degree in organizational leadership and learns the rest of the business.

 

A Focus on the Body Shop

Knudtsen Chevrolet has always had a body shop since it’s been in business but it wasn’t always a department that necessarily drove profit at the dealership. That is, until Knudtsen decided to become more readily engaged with with it. She did so in 2014 when ABRA reached out with a franchise opportunity. After careful consideration, Knudtsen decided to transition the body shop to an ABRA facility and added a second franchise in a neighboring community in the summer of 2017. The partnership has been mutually beneficial, she says, and has helped drive business in a number of ways:

  • ABRA was able to bring processes that have been tested and implemented in stores across the country, allowing the organization to become leaner, drive repair costs down and cut cycle time. 
  • Knudtsen Chevrolet has been able to take advantage of national contracts that ABRA has negotiated on a national level without having to invest heavily in creating those agreements themselves.
  • Similarly, they’ve added numerous DRPs and strengthened insurer relations, for which ABRA has done the majority of the legwork.
  • Partnering with a national franchise has allowed Knudtsen to have standards and benchmarks against which to compare performance.

“Not all dealers have body shops. When I go to a dealer 20 Group, only half the dealers have body shops,” she says. “We spend no time on body shop. Everybody has a parts department and a service department but when only half have body shops, there’s just not time to talk about it. So to be part of a national franchise, I can get those standards. I can see what success needs to look like.”

 

Empowering Managers

Head to Knudtsen Chevrolet at any given Wednesday at 6:30 a.m. and you’ll find all the department heads gathered for an hour-long meeting, pouring over financials, discussing industry trends, brainstorming ways to solve problems or create interdepartmental solutions, and discussing their latest book of choice (past picks have included Good to Great and Leaders Eat Last). Those meetings are intense, yes (every department head is required to come with forecasted sales for the week and month), but they’ve been crucial to creating engaged, motivated managers that help drive their departments to perform.

“This is where I get to share new information with all of them. We talk about what’s happening in the industry, in the economy. We try to stay one step ahead,” she says. “We want to have that internal locus of control. We have to be aware of what’s happening outside and what’s happening in the competitive space. But we are the master of our destiny. We want to be proactive rather than reactive.” 

Knudtsen describes her leadership style as transformative, and she says cultivating that leadership style is what she spends the majority of her day doing.

“I love to see the change people experience when they feel they are a part of a much bigger plan. I love their enthusiasm and engagement when they are invested in the vision and mission,” she says. “My biggest source of personal satisfaction is watching employees emerge as new leaders resulting from their engagement in our organization.”

Creating that positive, values-driven culture starts from the top down. The way Knudtsen sees it, those at the top of an organization have access to the most universal information. So, to properly empower managers and expand their roles, she needs to push as much decision making their way as possible by providing them with the necessary information.

“In order to do that, they need a lot of working one on one to begin to take in the outside influences,” she says. “I’m trying to push all of that information and teach all of my senior leaders how to incorporate that universal information into their daily plans and activities so we always stay one step ahead.”
Early on, Knudtsen trained all of her managers to forecast their own operations. It’s something she still requires of all of her staff.

“They’re all empowered and it’s been delegated to them to provide me with, ‘What are you going to do on a day-to-day, week-to-week, month-to-month basis? How is your department going to run and how are you going to deliver results?’ Everybody has access to the financial data. I don’t hide anything,” she says.

Every morning, Knudtsen uses a software program called Reverse Risk to receive reports on how many vehicles have been sold, how many used cars are on the lot ready to sell, how many are in reconditioning, how long they’ve been in reconditioning, etc. It’s her barometer for where dollars are tied up, but it’s up to individual managers to tell her what kind of profit they’re going to retain as an overall average, their staffing needs, their path to profitability and net profit, their expenses and their sales.

“I want everyone here to not just be a manger, I want them to be a leader. That’s not just at the senior level of the organization—that’s throughout the organization,” Knudtsen says. “We’re trying to drive personal empowerment and encourage people to be a leader right where they’re at.”

It’s about being transparent, and more than just providing staff members with information, it’s about showing them what to do with the information.

Knudtsen says that’s the real key to creating empowered managers: They need to understand why you’re asking certain things of them, how to provide the results you’re looking for, and how their department affects the dealership as a whole.

Here’s an example: In 2015, Knudtsen Chevrolet decided the path to profitability was in raising used car volume—something that touches every department in the dealership and could lead to a major increase in profitability. 

“We focused on supporting the used car effort because everyone knew already how that was going to impact their department,” she says.

The project was no small undertaking: It required doing market research to see what the demand was; matching inventory to that demand (in their case, trucks); purchasing vehicles via auctions, online and from individual sellers; reconditioning those vehicles and marketing heavily.

But that commitment to transparency and working together proved true: The dealership exceeded its goal and proved “the secret sauce” to growing the dealership.

 

Hiring is Imperative to Growth

Sure, the economy of 2017 looks remarkably different than the one of 2008: More consumers are looking to purchase vehicles and that’s created opportunities for growth at Knudtsen Chevrolet. However, Knudtsen says that with that growth comes another challenge—staffing accordingly.

“But now, I have such incredible service volume that it’s, ‘How do we handle the increase in volume in fixed ops?’ That’s been our challenge this year,” she says. “The obstacle is in attracting technicians. For ever, parents and high school counselors told kids, ‘You don’t want to go in the trades.’ We saw this problem coming. We knew this years ago that we would have a lot of techs retiring and we didn’t have a pipeline. That has become critical.” 

While it’s a challenge to reverse that mindset, Knudtsen says it’s not only a necessity, but it’s also the best time to undertake this challenge.

“I grew up in an industry where your career opportunities could be a technician, service writer, you could be a salesperson or you could work in the office. There weren’t a lot of different jobs,” she says. “We have so many different positions to enter. You can enter through business development, human resources, service business development, body shop, customer service representatives that field the phone calls, that work with insurers and customers. The whole industry has just changed.” 

Knudtsen works closely with both the high school and the community college in her community to build that pipeline. In 2008, she was one of the individuals that purchased the land for Kootenai Technical Education Campus (KTEC), a career technical high school serving three school districts. In 2016, the community college opened a brand-new technical facility adjacent to the professional technical high school. The two schools are separated by a parking lot and work closely together to develop their programs. For a dealer looking for talent, it’s a dream scenario, and it’s one Knudtsen doesn’t take for granted. She serves on the advisory boards for both to help develop curriculum, she offers numerous scholarships (including a $2,500 one just for women) to help with the cost of tuition, and she also offers tuition reimbursement and student loan reimbursement programs at her dealership. 

“We’re looking at what we have to do as an organization to attract the talent that’s out there,” she says. “We want to be the workplace of choice.”

In 2017, she began working with the Idaho Department of Labor to create an apprenticeship program funded by state grant money. The program kicked off in earnest in November, but includes a competitive pre-apprentice program to assess the talent and make final determinations on who is accepted into the program. From there, apprentices will work up through the ranks, all while going to school and receiving ASE certification. 

“It becomes very transparent because young people know what the process is, what the progression is, what they can expect to earn as they progress,” she says.

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