Welcome to another edition of the Car Dealership Guy Podcast Recap—a rundown of key lessons from top operators, founders, and execs shaping the future of auto retail.
Today’s guest is Michael Maroone, Chairman and CEO of Maroone USA.
Maroone breaks down why new cars are becoming commodities, where profit has actually migrated, and why culture, curiosity, and operational freedom matter more than pay plans.
The new car business has been commoditized and margins aren't coming back anytime soon.
Pricing transparency has essentially eliminated frontend gross as a reliable profit center.
"I can't think of another consumer product that you can find out to the dollar what the seller paid for that vehicle. And the new vehicle margins are way, way off."
Maroone says the money is now in F&I, parts and service, trades, and dealer fees, not the new car itself.
A lost generation of OEM capex means very little exciting new product is in the pipeline.
For years, nearly all OEM investment was funneled into EVs driven by government mandates rather than consumer demand.
"When you look back for five or six years, the OEMs were putting $8-$12 billion dollars a year in a product and it was almost 100% EV driven by top-down government demand."
Until product investment flows back toward what customers actually want, the commoditization problem isn't going away.
Getting obsessed with pre-owned is how dealers get through the valley.
With new car profitability squeezed, Maroone's group has made used vehicle acquisition and retailing a daily priority across every store.
"Obsessed with acquiring and retailing pre-owned. Obsessed. We talk about it every day. We measure it every day."
Some of his stores are approaching a 3:1 used-to-new ratio, a number that now represents a real competitive edge rather than an outlier.
Looking at total deal economics, not just frontend gross, changes how you do business.
Maroone's team tracks what they call "super PVR," a fully loaded view of every deal that stacks frontend, F&I, floor plan credits, manufacturer programs, and trade contribution together.
"When you sell a car, here's what you made in the front end. Here's what you made in F&I. Here's what you got as a marketing credit. Here's what you got as a floor plan credit. Here's what you got as a CSI program and a manufacturer. Here's what you got as a trade on a trade."
Maroone’s take: Dealers who focus on a single number will walk away from deals they should be closing.
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Culture can't be built through compensation plans alone.
Tying every desired behavior to a pay plan creates a team that's purely coin-operated, and misses what actually drives long-term performance.
"I learned a while ago not to use compensation to run your business... what's really important is getting a return on investment, taking care of your guests, getting your retention metrics up, being successful long term."
His freedom frame sets the rules of the road, but leaves each operating partner room to build something people actually want to work at.
Giving operators real equity, with no personal guarantees, is what makes the partnership model work.
After a year, Maroone offers operating partners the chance to buy into their store, repaid through their share of profits with no strings attached.
"There's somebody that gets up in the morning and has responsibility for that specific asset."
The model works well at reasonable valuations, but becomes very difficult to pencil when goodwill multiples push into the 8-10x range.
Curiosity and listening are underrated competitive advantages.
Maroone has built a reputation for asking more questions than he answers—in stores, in negotiations, and across his organization.
"When you become very successful, sometimes you don't listen. You think you know too much. I think there's a lot I can learn."
It's a habit that still drives how he leads, and one he credits as central to his success across both public and private dealership groups.
Chinese automakers are coming to the U.S., the only question is how.
Rather than viewing new global competitors as a threat, Maroone sees them as the latest in a long line of challengers the industry has successfully adapted to.
"My opinion is yes... Will they be a joint venture with an existing OEM? Will they build factories here? I think they will."
Dealers who are nimble and well-capitalized have navigated every disruption before this one, and will navigate this too.
Framework agreements with OEMs are one-sided and dealers shouldn't sign them.
Having signed plenty during the AutoNation years, Maroone's view is straightforward: they restrict dealer growth without offering anything meaningful in return.
"There's nothing two-way about a framework agreement... all of a sudden you can't [buy] and you got this great deal in front of you, this franchise you've been trying to buy for 10 years."
State law takes precedent over framework agreements, and that alone changes the calculus for any dealer considering one.
Getting into ownership today means finding a deep-pocketed, experienced partner who will let you in.
Valuations have made the solo path to ownership nearly impossible for the next generation of operators.
"You need a deep-pocketed partner that's got a lot of experience that will let you in... I have a skill. I have the drive. I have the personal integrity. And I want to win."
The freedom frame model is repeatable, but only with the right deals at the right multiples, and the right person across the table.
