Detroit-based Feldman Automotive Group was formed in 2008 by owner, chairman, and CEO Jay Feldman. In 2013, he rebranded his various stores as “Feldman” dealerships to create a consistent, recognizable brand. In 2018, Feldman Automotive achieved record sales, selling 26,000 vehicles for $918 million in revenue. In 2019, the group set another new sales record of almost 28,000 vehicles sold, bringing in $1 billion and 50 million in revenue.
Jay started selling cars at age 15 at his dad’s Chevrolet store in Milford, Michigan, and by age 25, he owned his first dealership. Starting with one small store in 1992, he grew the business on his own through a combination of strategic acquisitions and partnerships.
Feldman Automotive today employs more than 1,000 employees. The fast-growing group includes multiple rooftops: six Chevrolet stores, along with separate stores for Chrysler-Jeep-Dodge-Ram, Hyundai, Kia, and Genesis. Most notably, Feldman Automotive recently partnered with movie star and businessman Mark Wahlberg to launch Mark Wahlberg Chevrolet in Columbus, Ohio, at the former Bobby Layman Chevrolet location.
Dealer Magazine: Thanks for agreeing to talk with us this morning, Jay. I wanted to start with your background. You started in the car business very early, selling cars at age 15. What initially attracted you to selling cars as a teenager, and why did you stick with it over the years?
Jay: My dad was in the car business, and I was always fascinated by it. I started selling cars at a little Chevrolet store my dad owned in Milford, Michigan, when I was 15. It was a very small store that sold about 25, maybe 30 cars a month.
When I graduated high school, I went to Northwood University and studied automotive marketing and management. Once I was out of college, I started managing that little dealership in Milford and worked as the finance manager when I was 19. As I said, it was a small store. As soon as I got actively involved in running the dealership and took over management, we started to get profitable. Then I partnered with my dad on building a new Chevrolet store, and I’ve added on to it four times. We just won Dealer of the Year with Chevrolet for that store. It’s a great store that continues to grow year after year. I’ve grown through successful partnerships and have never had a bad one.
Dealer Magazine: What was the best advice your father gave you about selling cars?
Jay: I’m not sure you can repeat it exactly verbatim, but one of his favorite sayings was about making apple butter out of horse manure. For example, I ended up buying a Chevy store in Livonia, Michigan, that had gone through the GM wind-down process but wasn’t prepared to do what it would take to grow the business. We partnered with them and built a new facility, steadily growing the business since 2012 and going from 50% RSI to 200% RSI. Today, that store remains incredibly profitable.
The point is that I always look at the glass as half full, not half empty. I try to find something interesting about a deal or a person, a potential employee or a bad situation. That kind of thing.
Dealer Magazine: What appeals, excites or surprises you most about retail automotive?
Jay: It’s always changing. I do think it’s fascinating how the minute somebody comes up with some new concept, everybody just dives right in, whether it’s the subscription concept or electrification or self-driving. People see it as the next big thing, without asking questions. Then, over time, reality sets in. They start thinking maybe it’s more expensive than we first thought or not as practical as it sounded or looked on paper?
Yes, to some degree some of those changes are coming and will influence our future. But I also think people tend to jump into things and go overboard. That’s why I prefer to sit back and really look at something and ask if it’s realistic or when will it happen before reacting to it. We’re in a unique business. It’s not as if we’re selling toothpaste on Amazon.
Many things affect our business, legal and political things. I believe a large part of the population still want to visit a store and see a $50k car in-person versus buying it over the internet. People still need to be sold something.
Dealer Magazine: What is your digital marketing strategy?
Jay: If you’re a car dealer, you really have to be very disciplined and study what’s going on around your dealership digitally. No question about that. For instance, if you go to Las Vegas and sit down to play blackjack even though you’ve never studied the game or understand its dynamics, you’re probably going to lose. You’re doubling down or splitting or whatever without knowing why or what you’re doing. You’ve got to understand a game before you can play it, especially if you want to win. That’s where your market metrics come in to play and why it’s so important to understand those metrics.
Dealer Magazine: What about more traditional marketing channels?
Jay: Although we’re big believers in the power of digital marketing, we’re also focused on traditional broadcast media.
Five years ago, we thought it was time to hire an ad agency instead of doing our own advertising. We were about 80 percent in newspapers at the time. I remember interviewing ad agencies, and they told us we were one of the biggest car dealers in Michigan, but nobody knew who we were. Hearing that was like having cold water thrown in my face because we had been doing a lot of advertising.
The problem was we were promoting five or six different names, stores we had acquired, each with their own names. So, we made a very expensive, bold move after getting the permission of the manufacturers we do business with, to change all of the store names to Feldman. We rebranded. We still focus heavily on TV and radio, to support our digital marketing. People can’t turn a TV on without seeing us, which is one of the reasons we continue to grow market share.
We give our general managers some leeway in the kind of advertising they choose for their area. Our executive team meets with our ad agency daily, weekly, and monthly. We may pursue the same strategy across the board but make changes due to different programs coming or events happening. Every day, we’re ready to tweak our advertising as needed for better results.
Dealer Magazine: How important is social media?
Jay: It’s very important to be active on social media, for sure, especially for reputation management. All of our employees are on Facebook, and we have eleven hundred team members, which gives us a ton of exposure. They help share our corporate messaging, as well as a lot of the content we create. We’re using vBoost to make it easier for our customers to share their experience on social media sites.
In Columbus, we have 65,000 Instagram followers, so that’s pretty amazing. That store opened as Mark Wahlberg Chevy just over a year ago, and I don’t think we have 65,000 followers because of me. Mark’s been to the dealership twice since we owned it. He’s been highly supportive and has done a lot of national press for the store. We’ve been on The Ellen Show three times, on Stephen Colbert, Good Morning America. The dealership has been featured on the A&E Wahlburgers show many times. And we have a major network show coming out next year that will feature the dealership.
Dealer Magazine: Let’s talk more about your relationship with Mark Wahlberg and the Columbus store for a moment. How’d it all come together?
Jay: It was one of those things. Mark was filming “Transformers” in Michigan for about six months. Mark and I had a mutual friend, and I met Mark through that individual. This was about five years ago, and I only met him briefly. Watching the show “Wahlburgers” one day on A&E, I called my friend up and said we should talk to Mark about a Wahlburgers fast-casual restaurant franchise in Michigan. About a week later, my friend and I flew to Boston and visited with Mark and his family. We ended up partnering on a Wahlburgers in downtown Cleveland, Ohio.
Through that, Mark and I established a friendship. I was hanging out on a movie set with him in Boston one day, and we started talking about the car business. He told me when he was 16, he was flipping used cars. He wanted to know how I got into the car business. We talked more and more and decided to buy a car dealership together. Something like eight months later we bought the dealership in Columbus, Ohio. We opened it in July 2018 and received massive publicity. Mark comes from very humble beginnings and to think that one day he’d own a dealership was a big thing to him.
Jay: We’ve had a great track record together. In another investment opportunity, Mark had formed Mark Wahlberg Investment Group (MWIG), through which a group of us took on a substantial ownership and invested in an international fitness company called F45, which has nearly 2,000 locations and is based out of Sydney, Australia.
Mark crosses just about all segments demographically. Everybody knows who he is, and everybody likes him. No matter where you go with him, the way he interacts with people is amazing. He never gets irritated when a fan comes up to him for a photo or autograph. We’re working on other acquisition targets. It’s been a lot of fun. Today, Mark and I are partners in 10 Wahlburgers locations and growing, plus F45.
Dealer Magazine: I’d like to shift to the topic of tools. If you could only use one piece of digital technology, what tool or service would it be?
Jay: If you want to get the most bang for your buck, and maybe you’re a single-point dealer with not a lot of money to spend, I think you’re forced to invest in pay-per-click. A single-point dealer really can’t make a big effort and get on TV, at least not in any metro market. Maybe in a small town you could do that, but you’re basically wasting your money in a big-ad market. You’d be competing with other purchasers of media, whether it be furniture groups or national advertisers, political campaigns, whatever.
Dealer Magazine: What is your management style?
Jay: I’m mostly a delegator. I think if you’re going to grow long-term, you have to have a chain of command. That’s why we have a COO, CFO, and VP over fixed operations.
Plus, each store in our group has its own general manager, someone who manages all aspects of the dealership daily. Our general managers enjoy great leeway to make decisions, such as managing their inventory.
However, we expect them to monitor our assets on a daily basis. We look at every single metric for digital performance causing ratios, profitability, obviously expense control.
We hold expense meetings every month to talk about what’s going on. We want to know, for instance, why did a certain category get out of whack? But we do let our general managers run the deal every day.
Dealer Magazine: What traits or skills do you look for when hiring?
Jay: First of all, we try to hire people who haven’t been to 14 different dealerships in their career. Job instability is never a good sign. We like experienced people coming to us from inside our industry, as long as they’ve left a position or they’re leaving a position for the right reasons. You certainly don’t want to throw a bad apple in your organization.
Also, we look for new hires who display the right attitude for success. We get lots of traffic in our stores. So, there’s definitely an opportunity for them to succeed, especially since we have very solid pay plans. We create a pay plan that we can live with long term and run with it. When people feel like they’re safe and know what to expect, they’re more motivated and more likely to stay longer. You benefit from their experience while limiting your turnover.
Dealer Magazine: How do you define leadership?
Jay: When somebody is a good leader, they’re somebody who people trust. You feel as if you can learn from that person. A leader has the right attitude, is consistent, and communicates what’s expected every day. Good leaders also know how to do the job themselves. A leader walks the talk.
Everybody’s got a different leadership personality. Within my organization, for example, there are different ways people manage. Everybody has their own style. But the basic traits of leadership must be there: hard work, consistency, excitement, positive attitude.
Dealer Magazine: What makes a Feldman Automotive dealership stand out from the competition?
Jay: I think we’ve done an amazing job branding Feldman Automotive. We have a nice concentration of stores in the local geography for our brand. This means when you see our advertising, it resonates. Where five years ago, we might not have had great name recognition, today we’re very well-known in our market, and customers know what to expect from us.
We’re known for our wide product choices. We also offer a 3-day Buy Back Guarantee for our pre-owned vehicles that’s very popular with customers. It gives them peace of mind to know they can love it or bring it back.
Dealer Magazine: Dealerships are getting pinched by lower new vehicle sales gross profits. What is Feldman Automotive doing to compensate for the lower numbers?
No question about it, margins are shrinking in both new and used sales. That’s the reality. What we’ve focused on is just doing our very best to maintain sales while, at the same time, growing our business. Even under the conditions you describe, we’ve been in a serious growth mode. We’ve increased our annual sales year over year and have really focused on our F&I dollars. We’ve also focused on reducing expenses.
There’s a tremendous opportunity in the service department that I don’t think all dealers have figured out how to maximize yet. Putting a greater focus on your used car inventory can also yield profits.
We realized profits are going to come from different places, which is why you have to be at the very top of your game, whether it’s F&I products, reinsurance or whatever. And we’re constantly looking at opportunities from a Fixed Ops perspective.
Some dealerships are focused on their shrinking margins but haven’t focused on growing their service business or used cars. You can get someone who complains about that one aspect of their business, but they haven’t really done the proper things in their organization to take advantage of it. Some single-point dealers are more profitable than somebody with five or ten stores because they run their store the right way.
Dealer Magazine: What steps do you take to ensure customer satisfaction?
Jay: We do a lot of things. CSI is a huge focus of ours, and we look at it every single day by store. We’re constantly looking at reputation management, with a team dedicated to tracking and maintaining our reputation. We have very strict compliance and guidelines on how we sell our products and don’t just let people do whatever they want. We have a lot of processes in place, such as texting customers to keep them informed of service being performed on their vehicle.
We always look at ways to improve our satisfaction rates. Take, for example, waiting in our customer lounge for car service. What does it look like to a customer at our dealership? Do we offer them fresh fruit and fresh coffee and fresh popcorn, or are we careless and provide stale coffee and a dirty popcorn machine?
Dealer Magazine: What do you see as the biggest opportunities and the biggest challenges on the horizon for dealers?
Jay: You can’t just set up your dealership and forget it. You have to constantly monitor your business. Whether it’s your digital presence or everyday expenses, you really have to do a deep dive into your business every day.
There hasn’t been a year in the last 25 years where the business has been the same. It’s constantly changing. You know, we have manufacturers trying out different ideas all the time. We have shortages of technicians, shortages of people who want to get in the car business. It can seem like an onslaught, and you just have to be on your game. Unfortunately, many dealers have let the business pass them by. Or maybe they’ve lost interest, no longer have the fire or the hunger. Perhaps they’ve bought in to press stories about the end of dealerships.
Again, I’m a glass-half-full believer and think if you embrace change and passionately look for little nuggets of opportunity within your own business, if you do that, I think you’ll be successful over the long term.
Dealer Magazine: More specifically, what’s ahead for Feldman Automotive in the next five years?
Jay: We’re going to continue to acquire stores. We’ve grown a lot through some great partnerships. We’ve had some dealers that we’re not quite ready to get out of the business at the moment, so a partnership made a lot of sense for them. We’re looking for more of those opportunities, and we’ve identified a few things on the horizon this year. But we don’t have a set number in mind, such as needing to acquire x-number of stores by such and such date. Partnerships and acquisitions have to make sense. We’re not growing just to grow.
Dealer Magazine: What one word or expression best defines you?
Jay: Driven.