Welcome to another edition of the Car Dealership Guy Podcast Recap newsletter—the key lessons from top operators, founders, and execs shaping the future of auto retail.
Today’s guest is Jim Keffer, CEO of Keffer Auto Group.
We break down his radical 10-year buyout model, why he hunts “unicorn” operators instead of centralizing, and how underperforming rooftops become high-ROI assets.
The model began in 1974 when someone introduced Keffer’s father to the business.
Jim's father was offered a deal to buy his dealership over 10 years using year-end bonuses. Jim now offers that same opportunity to his GMs.
"My dad got put in business in 1974 by a guy who put him on a 10-year buyout. So you buy one-tenth each year out of the bonus that comes from a year-end."
After 10 years, operators purchase the real estate at its appraised value, and the deal is complete. For context, 33 transactions have been completed since 1979.
Most deals start with zero money down to let GMs "try before you buy."
GMs can invest up to 25% upfront if they want, but most choose not to risk their savings on an unproven turnaround.
"Most of the deals are no money down. Everybody gets a car dealership... they've saved all their money, most of their life to have this opportunity. Now we're going to go into this, you know, potentially broken store. You know, do I want to stick all of my money right in?"
Equity purchases begin after the first December statement to keep accounting clean and avoid mid-year complications.
Growing dealerships eat cash, so the first three years see minimal distributions.
Selling more cars means more money tied up in contracts waiting to fund, receivables, parts, and facility repairs, all before profits can be taken out.
"Usually the first three years we're not taking much in the way of distributions, not because I don't want to, because I would like to take the money out, and then rinse and repeat and do it again. However, you know, you have to maintain your working capital standard."
Keffer maintains strict financial covenants as teaching tools to prevent operators from growing revenue while running out of cash.
True unicorns are one in 7,000, not one in 10.
Finding GMs who can operate at double or triple the industry average is extraordinarily rare, which is why Keffer treats recruiting as a daily priority.
"The unicorns aren't one in 10, they're one in 700 to 7,000. That comes from a guy named Elliott Jaques who wrote a book called Span of Control…and it's so true."
When you find a potential unicorn, you take that meeting every single time, because these operators don't outperform by 10-30%. They outperform by two or three times.
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Used car expertise is the primary filter when hiring for turnarounds.
Broken stores can't wait for new car customers to return, so GMs need to generate immediate volume by acquiring and selling used inventory from day one.
"The bias would be used cars, because that's the controllable, especially if you're going to go into a market that was a broken or underperforming store and you're going to try to turn that up."
Keffer specifically looks for operators who personally handled acquisitions rather than those who worked at stores where someone else managed that function.
The right acquisition price is 2x what the store can make in three years.
Keffer targets stores priced low enough that a high-performing GM can buy back their ownership stake through annual bonuses without financial strain.
"I think the right amount to pay is whatever you think it can make within three years."
This math only works with underperforming stores where incremental gross profit drops straight to the bottom line once overhead is covered.
GMs don't pay more as they improve the store's value.
Buyout pricing is based on book value, not a new appraisal, so operators aren't penalized for the performance gains they create.
"The actual goodwill that you're paying on is going down by 65 grand or so a year."
Book value only increases when more cash is needed to run a larger operation, not because the GM made the dealership worth more.
Successful operators need diverse in-store teams, not duplicates of themselves.
The best leadership teams balance someone who pushes hard, someone who maintains processes, and someone who keeps morale intact after tough conversations.
"You have to have the person who's the driver, and that person sometimes ruffles feathers. You have to have the person who keeps the wheels on...and then you have to have...the fluffer upper...because that's the person who glues people back together after the administrative person told them they couldn't do something a certain way or the driver pushed them a little harder than maybe they should have."
Three or four exact duplicates rarely create the best results, because different strengths working together is where the magic happens.
High-value franchises can't work in a 10-year buyout model.
A Toyota store that seemed overpriced at $2 million decades ago is now worth over $100 million, making a 10-year buyout mathematically impossible.
"I still remember when my dad passed on the Toyota store in Charlotte many years ago because he thought $2 million was way too much goodwill."
This reality pushes Keffer toward Stellantis, Mazda, and value brands where lower prices and bigger upside make the ownership path achievable.
Recruiting should happen on every day that ends in Y.
Finding both underperforming stores and unicorn operators is equally difficult, so Keffer treats talent conversations as a constant priority, even on Sundays.
"I think you should only recruit on days that end in Y...if you have the right kind of person that you have an opportunity to talk to, you take that meeting 100 times out of 100."
Elite operators are rare enough that any opportunity to meet one is worth interrupting your schedule.
