Episode 30: Larry Zinn, Executive General Manager at Warren Henry Auto Group

Tune in now for Episode 30: Jason Stein interviews Warren Henry Auto Group’s Executive General Manager and third-generation leader, Larry Zinn, about the challenges of the current retail market, as well as Warren Henry’s desire to innovate and invest in technology.

0:00 Intro 
5:31 Interest Rates and Dealership Operations
10:02 Dealing with the CDK Outage 
14:40 Warren Henry’s Current Approach to M&A
17:30 What Larry is Anticipating for the End of the Year

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Full Throttle, a Presidio Group podcast, is where you'll find meaningful conversations with thought leaders who make news.

Transcript

Welcome to Episode 30 of Full Throttle, The Presidio Group's automotive industry podcast. I'm your host, Jason Stein, Director of Multimedia and Events at Presidio. On a regular basis, Full Throttle serves as the industry's meeting point for great conversations with leaders across the automotive world.

As you see new car inventories start to normalize, or, in some case, get past what we consider to be an optimal day supply, those interest rates really start to hurt as those vehicles sit if they're not moving. And then, you know, some OEMs that we work with, there's still new 23s, 24s and 25s on the ground, and the new 23s haven't been final paid yet. And I think some of that has to do with, we expected, or at least were hopeful, that there would have been a little bit more production discipline coming out of the pandemic, that we wouldn't get back to the old habits that would ultimately force incentives. But here we are.

To grow and expand in the auto retail world, you need a vision, something larger than yourself, and a target to reach towards. You also need the perseverance of a leadership team, a benchmark of success and a foundation on which to build. In many ways, the Warren Henry Automotive Group has been charting a change for a long time, finding a pathway to a larger scope of operations, whether it's in the acquisition of more Florida stores, such as its purchases in the Florida Keys, or homegrown adding to a base of technology and in house innovation that has separated the group from many others, or maybe it's been the year after year recognition of being a great place to work. With 23 different automotive brands in various South Florida locations. The group consists of volume as well as some of the largest exotics in the country. Today, we talked to one of its team leaders, Larry Zinn, Executive General Manager of Warren Henry Automotive Group. Larry has been a driving force behind Warren Henry's impressive growth and its reputation for excellence. Under his leadership, the company has become a beacon of luxury and performance, consistently setting new standards in customer satisfaction and business acumen, his vision and unwavering commitment to quality have made Warren Henry a standout name in the industry. Larry joined the family business in 2008 representing the third generation of the Warren Henry Auto Group. He's been around the business his whole life, and in an early age, began working at the family dealership in various roles, from Porter and Car Wash Attendant to Apprentice Technician. In 2016 Larry launched the Lamborghini Brower location, propelling it to the highest volume Lamborghini dealership in Florida in under two years, and ranked fifth in the United States. It's one example of the growth strategy, and in today's episode, we'll dive into Larry's philosophy, uncover his secrets to navigating a highly competitive market, and explore his approach to fostering a customer centric culture. We also talk about the impact of this summer's CDK issue, which at the time of our interview, was still a hot concern. Today, he gives us his view on several issues as our 30th guest on Full Throttle.

Hi, I'm Larry Zinn, and this is Presidios podcast, Full Throttle.

It's a pleasure to welcome you to the show, Larry, thank you so much for joining.

Thank you for the opportunity. I really appreciate you inviting me. Very excited about this. 

Ah well, we're excited to have you. And you know, before we go much further, I mean, some people might not know you have a rapidly expanding family, and you're now up to three children, Larry.

I am up to three. Yes. 

So, so you have enough people now to help you out in the sales division in a number of years. So you can, you can, well, stock the dealership.

Absolutely. You know, I got to get one trained for each department, and then I'll really be in good shape. 

Great. Tell me a little bit about the state of the industry for you right now. How is Warren Henry, obviously navigating what's occurring in real time with CDK. And how has your year been to start?

So the year is down a little bit. We are seeing volumes rise, but certainly margins are compressing. You know, there's always a positive of course, of the volumes rising because we're going to see the tail of that service business start to come along as we get into the next year, year and a half. And that's something that we missed throughout the pandemic, as the volumes of cars started to diminish, so we are, you know, certainly excited about the prospect of having those vehicles come back and and certainly have more customers hopefully entering into the leasing market. So down the line, we have more lease returns as well. But we've seen, you know, we're in the exotic business. We have everything from, you know, a small Toyota store in Key West all the way up to Lamborghini, Bugatti, Koenigsegg and our ultra luxury hypercars. Those vehicles are still very hot. On the Land Rover business, for example, Range Rover is still extremely hot. Our least expensive cars are moving very well. It's the stuff in the middle that has become a little bit more challenging. And I think a lot of that certainly has to do with, you know, in many cases, we still need incentives. The interest rates are higher and the leasing is nowhere near as attractive. So if you know, for example, you had somebody who was paying $400 a month for a lease on a sedan, and now they come back in that same exact vehicle as $200 $250 more month that customer is gone, unless you have a vehicle somewhere else in the lineup at that price point for them to replace it.

Is it? Was it your expectation, like everybody else, that obviously there would have been a number of cuts in the federal funds rate. Some had said at least three times during 2024 and that story has changed is, is it really our interest rates and the effect of that impacting your other sides of the operations too, not not only the consumer, but but other other pieces of the dealership operation? 

Oh, certainly, as you see new car inventory start to normalize, or, in some case, get past what we consider to be an optimal day supply, those interest rates really start to hurt as those vehicles sit if they're not moving. And then, you know, some OEMs that we work with, there's still new 23s, 24s and 25s on the ground and the new 23s haven't been final paid yet. And I think some of that has to do with we expected, or at least were hopeful, that there would have been a little bit more production discipline coming out of the pandemic, that we wouldn't get back to the old habits that would ultimately force incentives. But here we are.

Yeah, how about on the you mentioned both ends of the spectrum, I want to talk about both your, your relatively new acquisition in Key West, but also the, also the hypercar side. Let's, let's, let's go to the ultra luxury hyper car. How's that market changed now, a number of years after covid?

Honestly, it's still extremely strong. You know, with the introduction of, for example, the new Bugatti, most recently, you know, we we have orders that, you know, we may not be able to fulfill. There's a backlog of orders for that car, which is a great position to be in. Our really highest end stuff is still moving very quickly. It's very, very strong. You know, the Lamborghini business is still very, very strong. There's all sorts of interest in new vehicles coming along. It doesn't seem like that business has changed dramatically. We have seen some customers drop off, of course, as the economy certainly has cooled a little bit, but there's still long waiting lines for a lot of those vehicles. I'd say most all of them.

And a Koenigsegg customer. I mean, hey, what are what are they like?

Well, honestly, it's a really wide spectrum of people, mostly some of the most interesting people I've ever met. 

Right? 

But you know, these are people who come in. They everything for those cars is totally bespoke. So they're picking everything down from the threads, the stitching on the seats, all the way to the color of the carbon fiber or the gold inlays that they're going to have into the sides of the vehicle as part of their design. And they're customers who are prepared to wait three, four years to get a new vehicle, but when that vehicle comes, it's exactly as they ordered, true to their personalized specification, and something that certainly nobody else will have. 

Yeah, which is exactly the goal. Wow. So let's go to the other end of the spectrum and as I mentioned earlier, your relatively new acquisition, that's in Key West. You have a Toyota store now. So how has that been?

So that's that's been good. You know, Key West is an interesting market for us. We actually had another acquisition down there as well. So we originally purchased Toyota Ford, Chrysler, Dodge Jeep and Ram, and then we added now Chevy, Cadillac, GMC and Nissan

That's right.

So having those stores, it is certainly a different type of business than what we do in our Miami Market stores. It's a little bit lower volume. It's a lot of brands in one location, so certainly there's a lot of management that needs to go on between all of the brand standards and the different programs for each of the different OEMs. But it's, it's a good, interesting market. It's a captive service market, because ultimately, the next closest service centers for other dealers are three and a half hours away on the mainland. So that's that's been a really solid thing for us. The honestly, the biggest challenge down there is the cost of living is so extremely expensive, more so than Miami, more so than anywhere else, and that creates additional challenges that we've never experienced before when it comes to hiring and maintaining employees.

Let's talk about the news of the day and cyber security in general. You are all in on CDK as of this hour, and back to pencil and paper. Is that? Is that how you're operating?

In some cases. I mean, on the on the service side, it's a little bit of pencil and paper. Same thing for parts, you know, we're using spreadsheets, which is something that we really, you know, we're hopeful that we would be moved away from forever. On the new car side, we've been lucky that we had Roadster set up, and that allowed us to desk new deals, even as this all started to come, I hate to say, fall apart, but that's ultimately what was going on. So we were desking deals on Roadster. We were contracting digitally through Dealertrack. We found as many workarounds as we could to continue operating, and we're doing everything we can to not let the consumers feel our pain. But this is certainly a extremely challenging situation, and as we head into the end of the month, it's going to be extremely interesting to see. You know, how we go back to manual processes to close a month, because in my experience in the business, and you know, I started full time in 2008 we were not closing months on paper back then. You know, it's so I know you and I were talking a little bit earlier, and I mentioned too that some of the OEMs are extending the financial statement deadlines, which we're grateful for. But you know, there are a lot of challenges that are going to come from this and calculating employee commissions, and ultimately, whatever it takes for us to do the right thing by our employees, we're going to do and then we'll have to figure it out after.

You've been a group that's always on the forefront of technological changes and and always thinking of of what's next. Does this get you thinking a little bit differently about risks or best practices or backup plans related to cybersecurity?

Certainly. I mean, you know, we're I am very fortunate that my team is very dialed into cybersecurity, cyber insurance, and has been for a long time, so we were prepared to disconnect as quickly as we could, as soon as this went down. But yeah, you know, we have to figure out how to maybe not keep all of our eggs in one basket going forward, because this totally paralyzed us. 

Do you think the industry is going to follow suit and do the same? Think about eggs and baskets? 

I think we're going to have to, you know, if you have all of your solutions, or the majority of your solutions from one provider, it may not be a viable solution going forward, and that's something that we're going to have to look long and hard into. It's, you know, it's nice of some of these other companies that are going around and offering free solutions on their DMSs while this is happening, and a certainly good business practice too, for them to make these pitches right now. But you know, we're going to have to look at everything. We're going to have to look at CRMs. We'll have to look at our DMS. We'll have to look at all these different solutions that we use and see how we can segregate better.

When you think about technology and how it's changing your business and the way that you go to business, what are some things that you're exploring and thinking about that you can implement now?

Well, now is tough while we're down off of CDK. But, you know, we've been talking about going into a more of a fully digitized solution, with some of our locations where perhaps the sales associate is, you know, completely working off the tablet and negotiating basically off of the tablet. So the tablet, you know, using roadster basically not as a customer solution from somebody who's online trying to desk their own deal, but possibly somebody within the dealership to desk their own deal within the dealership and make the process as seamless and haggle free as possible. You know, in many cases, it's difficult, especially in major metro markets, because you really have to be all in on something like that, otherwise you risk getting undercut by your competitors. But you know, in some of our locations, it seems like it might make sense, due to where those individual franchises stand.

What's when you consider what you've done in terms of the Buy Market recently, what's your appetite and feeling of where the market is now on M&A, are you an active participant?

I would say we're an active participant. I mean, we're certainly not looking for anything where we're going to have to be the smartest guy in the world to make $1 but you know, we're looking for the right franchises and the right market. Multiples are certainly very high right now, but I don't know that that's going anywhere. I think this is a very unique business, and there are only so many points available, especially if you're looking for the right stuff, so we'd like to stay active in it. We're actively looking for opportunities, but it has to be the right opportunity.

Right? Yeah, for sure. The Chinese a lot of talk of the of Chinese entrants into the market, speaking of disruption. Are the Chinese vehicle makers a threat for disruption, or are they an opportunity?

You know, I think you can play on both sides of the coin there. You know, there's certainly an opportunity, as they if they do come to the United States, which I think we all anticipate they will, as a, you know, a starter, competitive brand to come out of the gate with low prices, and ultimately, you know, on the electric car side in general, if we do see greater adoption on the electric car side for inexpensive electric vehicles, I'm not sure where that's going to play in regards to the politics surrounding it, and if that's ever going to be a possibility or not, but if they were to come to market, we would certainly be interested in looking at opportunities to be a dealer.

And even some of the new entrants, you know, INEOS, VinFast, are those appealing to you?

I actually did take on VinFast in Gainesville. We've been a dealer for about three months now. 

Okay

And, you know, it's, it's interesting, because the way we were looking at it was, you know, maybe it's going to be something like Hyundai or Kia, was 20 years ago, where it was, you know, relatively unknown, coming to coming to market, not necessarily with the greatest acceptance, but, you know, an opportunity in the long term to have something that ultimately turned out to be really special. So so far, we are selling the vehicles, not, you know, it's a very small market that we're in, so it's certainly, it's starting to gain traction now, but we really once, I think they get some tier one awareness and advertising that will certainly help boost that market. 

Yeah, marketing, yeah, exactly. What else, as you consider the rest of the year. And I know this is difficult conversation that we're having right now because of what you're in right now for the last week or so, but as you think about the long term and where you want to take Warren Henry, what is it that most that you, that you most anticipate or are most excited about? 

Well, you know, it's, it's interesting, because we're on the day of the presidential debates, and I think we're all a little bit leery of, you know, what things are going to look like going forward. You know, I am seeing more production from some of the OEMs, where we've been a little bit starved for inventory with vehicles that are very hot. And I'm really excited to see those volumes grow, see things kind of like they used to be back in 2019 where, you know, some of our locations that could do mega volume had been a little bit hampered, and I miss that side of the business. I miss the big volume and you know, the fun that comes along with it. You know, the last few years were certainly great for all of us. But, you know, things are shifting a little bit, and I think, you know, we'll see some great growth through the volumes that we should be able to accomplish now that these vehicles are easing up because we've been so constrained, really, for four years now.

We coined it in the Presidio quarterly report as the Great Normalization. You feel that we're in the Great Normalization, that this is the movement to a more normal world, whatever that means, Larry

I do. I do. I think, you know, we're going to see the business look like it used to. And as as reluctant as many of the OEMs have been to put out incentives and to move vehicles the way that they used to, things are moving back in that direction, or at least they're going to have to, if they haven't already. So yes, I certainly think that we're underway in the great normalization. 

Wonderful. Well, the best test drives in the business take place in Miami, where Warren Henry has a whole fleet of interesting brands. We really appreciate you taking the time and for joining me on the program. Thank you, Larry. 

Thank you so much for having me. Really appreciate the opportunity, and I can't wait to hear it. 

Excellent. Thank you. 

Thanks again to my guest, Larry Zinn of The Warren Henry Group, and thanks for listening to Full Throttle. Come back to us later in the month for our next interview on this platform. Email me with suggestions jstein@thepresidiogroup.com or go to the website, thepresidiogroup.com you can follow us on LinkedIn as well. Thanks for listening to the program. We'll see you next time you.