No one knows how cars are going to be sold in the future: Joe Zanchin
Even after more than 40 years, Joe Zanchin remains as hands-on as ever.
Boasting one of the great immigrant entrepreneur stories in the industry – he came to Canada from Italy in 1962 with $20 in his pocket – Zanchin has amassed an auto retail empire. The ensuing decades has seen him grow from a single Honda store in Vaughan, Ont., to a portfolio with “more than 30, less than 40” stores and four auto malls.
The shrewd businessman has had an uncanny knack for finding success and a legendary humility about his personal accomplishments. This year has seen the group open Milton Volkswagen and announce it would break ground on a new Lexus store sometime next spring.
Canadian AutoWorld recently caught up with Joe and his daughters, Laura and Andria, both principals and executive vice-presidents with the company, for a discussion on image programs, digital retailing and the evolution of automotive retail.
Canadian Auto World: What is your assessment of new cars sales in 2017?
Joe Zanchin: I’ve been amazed at the strength of business in Ontario this year.
Of course we have many different brands that are going through lifecycle management on many models, but overall, 2017 will be the best year ever for Zanchin Auto and I expect the momentum to continue into 2018.
Give me a snapshot of current operations. How many stores, brands and staff?
JZ: I would like to be a little vague and say we have more than 30 stores but less than 40 stores. We have two new additions coming that we can’t speak about right now.
We have over 1,400 staff now – a far cry from the three we started with back in 1974.
Virtually all of your dealerships are in the Greater Toronto Area with the exception of BMW Kingston. We see groups with platforms across the country now. Will we see Zanchin venture outside the GTA?
JZ: I would say the GTA is where we belong, but if the right opportunity appeared, who knows?
We are very careful when we talk about growth as we like to stay within or as close to the GTA as possible. But if the right opportunity comes up and the brand fits our portfolio, we would consider it.
Laura Zanchin: You have remember, we go to our stores. We don’t rule from a centralized office and delegate. We go to the stores almost on a daily basis to talk to people, check out how things are going. That’s another reason we have done so well.
We stay connected to the dealerships.
I read once that you can visit up to 15 stores a day. Is that true?
LZ: Absolutely.
JZ: But you can only do that if the stores are close to each other.
The group just opened Milton Volkswagen have confirmed you won the bid for a Lexus store in Maple. Any other additions you can talk about?
JZ: We will be breaking ground on Lexus of Vaughan in the spring of 2018. We are waiting on two more. Give me a call in a two weeks and I’ll tell you!
The vast majority of the network is Asian with the exception of VW, BMW, MB and FCA. Why not more high volume domestics like GM, Ford?
JZ: Lately we have discussed these brands and clearly they have all made significant improvements with model design and quality. So we consider these brands on our radar.
What about more luxury brands – Porsche, Audi, Jaguar Land Rover?
JZ: If I tell you that I’m not interested, than I am lying. We feel that Zanchin Auto has the right dynamics and culture to excel with more luxury brands like these. We believe in customer service and are always looking to exceed high expectations and deliver a brand promise.
Where does the group perform best? New car sales, used cars, F&I, service?
JZ: We’re well rounded. From the beginning, you have to sell the car. But that is not enough. You have to create credibility so they come back for service and after that, come back to buy another car. We have to keep them in the cycle.
We are doing very well in pre-owned now, more so than 10 years ago. We understand the importance of that department, and 10- to 15-years ago, I didn’t give pre-owned enough attention and that was wrong.
Andria Zanchin: I think if we also keep the focus on creating the best customer experience, then your guests will keep coming back.
They’ll enjoy buying and servicing with you and they don’t have a reason to leave, unless there is something they want that you can’t offer. We try to be balanced in all our departments.
We don’t want one star division and have two or three other ones that suffer. It doesn’t generate that 360-degree view that a customer needs to be happy.
In the last few years your group has built stand alone stores for Infiniti, Lexus and Acura; you have four Nissan stores that now have to meet the new NREDI 2 standards; you have had to meet VW’s White Frame Modular concept at four stores; you have two Hyundai dealerships that need to adhere to the Global Dealership Space Identity and three Honda dealerships that have to deal with HDFP-I. In other words, you have spent and will be spending a lot of money to make OEMs happy with programs that haven’t really been conclusively proven to increase sales. What are your thoughts on corporate image programs and are they changing too quickly?
JZ: After hearing that, I need two Tylenol!
Automakers must understand that these programs can only be completed at the right time and only be done when there is ability to do it. I think a single-point dealer would be terrified at having to spend this kind of money because the factory wants him to.
And some of the renovations, compared to the previous ones, aren’t even that different. And these aren’t facelifts, either. They are going deeper and asking you to spend money where the consumer will never be able to appreciate it.
Changes to an exterior fascia, for example, will make a big difference, but a lot of times, we are adding things that will bring no benefit for the consumer at all.
Your website lets shoppers search and sort by vehicle and offers to send them an email with a best price. Will we see another step towards digital retailing?
JZ: Absolutely. It would be silly for me not to be present for whatever the consumer or the market demands.
I’m always thinking about where we are going, not where we’ve been. I only think about the past to avoid making the same mistakes twice.
LZ: I think one of our greatest strengths as a group is that we are flexible with our thinking, our brands and our people. That’s one of the reasons we grew so big. Our father is always thinking and is two steps ahead of everyone else.
As a traditional automotive retailer with over 40 years in the business, does it worry you to see where the industry seems to be headed in terms of online retailing?
JZ: The last four dealerships I have been granted, if the factory had seen a different way of selling, they would have told me. They still want 30, 40, 50,000 square feet. Eventually, things will change, but it will take time. It will give us enough time for everybody to adapt. There will always be a dealer, in what capacity that appears remains to be seen. There will always be a need for a good ambassador between the factory and the consumer.
No one knows how cars are going to be sold in the future. It could be with a 50,000–square foot building or in a boutique.
Right now, we’re taking a look exactly how the automobile will be sold. We know there might be a change in service capacity requirements in the future. There will always be a need for the automobile but how it will get from the factory to the consumer is something I have been paying a lot of attention to. I don’t have the answer, yet.
You have seen and been a part of the proliferation of dealership groups in Canada in the last 20 years. Are groups better than individual owner operators?
JZ: I don’t think the growth of dealership groups will slow down. I am proud that we are privately owned and operated.
Being a group provides advantages of shared expenses, HR, software, administration, procurement and marketing to name a few. You also have the ability to develop and train staff and move people around to areas where they can excel. There are more opportunities for employees, which is attractive.
AZ: You can also share reporting as a group and identify trends that are happening. This also allows you to jump on KPI’s much quicker as opposed to having one dealership.
Explain your management structure.
JZ: We have general managers in each store and we get them and department heads together every few months to review performance.
Plus, we have operational people who visit the stores to review performances on a regular basis. In some cases, when we have identified key people we do bring them into the group with equity positions.
AZ: We have a decentralized model that empowers the managers to run the store with a Zanchin structure overlaid on top of that that calls for certain policies and procedures. It works for us as it gives them the autonomy to run the stores in a way that makes sense for that community and that brand.
