Asbury Automotive: Empowering Its General Managers

| About: Asbury Automotive (ABG)

Asbury’s (NYSE:ABG) CEO Ken Gilman directly addressed the idea of leaving the customer interface side alone (but still improving the processes). He said: “for the customer facing activities, we want to take advantage of the entrepreneurial heritage of the industry.” He went on to explain that the reason for this is that the business is expressed in unique ways in specific markets. But the infrastructure, that is those areas where the customer does not get involved in, Mr. Gilman feels the company can leverage its scale.

He tended to define "customer facing activities" as those activities that involved the people at the store. So the human resources, ability to hire, fire, and set the compensation plans, are all set at the local level. But on the infrastructure side of the equation, I thought it might be helpful just to lay out the tools and processes that they are working toward standardizing to lower their cost structure (and improve productivity).

Uniform technologies: like a common dealer management software [DMS] system, desking tools, customer relationship management [CRM] software, used car management software, and website technology.

Processes: single chart of accounts, F&I national contracts, store design, training requirements, used certification program, compliance and other public company governance activities, and internet processes.

So here was the best part (I thought) of Mr. Gilman’s presentation. He said their goal is to attract and retain strong General Managers (GMs). And so even with their investments into some common infrastructure stuff, you get the feeling that Asbury’s General Managers feel like they are being empowered (in other words that they are not losing their entrepreneurial spirit). Why do I think that? Because Mr. Gilman said that they have reduced their GM turnover from 35% in 2003 to 21% in 2005.

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