Growth in mind, exec goes from #1 group to #99

With new CEO Lance Iserman at the helm and the backing of deep-pocketed investors, Minnesota retailer Morrie's Automotive Group is poised for growth, potentially to other states and with new brands.

Iserman, former COO and longtime executive for AutoNation Inc., the nation's largest new-vehicle retailer, starts this week as CEO of Morrie's. The Minnetonka, Minn., group is majority-owned by Fremont Group's Fremont Private Holdings, the investment arm of the family behind construction and engineering firm Bechtel Corp.

Fremont's long-term view and willingness to invest in auto retail and expand its presence in other regions and states aided Iserman's decision to join Morrie's. His first task is boosting any struggling stores and improving performance in the current dealerships, said Iserman, 54. He also wants to align best practices within the group. Morrie's then will look to fill in brands it lacks, he said.

"There hasn't been a discussion on 'this is how much capital you have.' It will be more of a what fits, what acquisitions fit?" Iserman told Automotive News. "Timing will be down the road a little bit."

Iserman said he will have an ownership stake in the company but did not disclose specifics other than that Fremont has the majority stake.

Iserman replaces interim CEO Ken Czubay, a former Ford Motor Co. executive, who remains a board adviser to Morrie's. Czubay, 70, took over for former Morrie's CEO Karl Schmidt in February, Morrie's confirmed.

A Morrie's spokesman would not comment on the prior management change, whether Schmidt still has an ownership stake in the company or whether he remains involved with Morrie's. Schmidt, a three-decade veteran of Morrie's who became COO in 2009 and CEO in 2013, declined to comment.

In March, the Minneapolis/St. Paul Business Journal reported that Schmidt still had ownership in the company and was part of its board of directors. Czubay told the publication that the "other owners decided it would be better to take things to the next level. At this point, he's still an owner and we have a cordial relationship."

Iserman takes over a dealership group with stores in Minnesota and Wisconsin that already has grown under Fremont's ownership. In 2016, Fremont bought the majority stake in the then 11-store group from longtime dealer Morrie Wagener.

In August 2017, Morrie's announced plans to open five dealerships and add six brands in the two states by the end of 2018. The expansion included buying Volkswagen and Audi stores in La Crosse, Wis., and Mercedes-Benz of St. Paul in Maplewood, Minn., plus opening West End Lincoln in St. Louis Park, Minn.

Two new builds announced then are taking longer. Morrie's said it now plans for West Bend Honda in Wisconsin to open in November and for Jaguar-Land Rover Richfield in Minnesota to open early next year.

Adding those open points will bring Morrie's count to 17 brands at 16 dealerships.

Fremont Group CEO Alan Dachs said a nationwide search was conducted over the last few months for a new Morrie's leader.

"We are thrilled to have found Lance. He is a highly experienced and respected operator who for more than 30 years has assumed progressively more senior management roles in the auto dealership industry," Dachs said in a statement. "We look forward to working with him to build an industry-leading automotive group in the years ahead."

A no-haggle, one-price commitment for new- and used-vehicle sales is part of the Morrie's brand promise, Iserman said. At AutoNation, Iserman oversaw the rollout of the company's one-price initiative for used vehicles in the western region and launched the strategy nationwide as COO.

"I believe firmly that that's how customers want to transact as we go forward," Iserman said. "It really resonates with the clients."

Iserman left AutoNation in January, among a handful of executive departures announced by the retail giant amid a $50 million restructuring as the company searched for its next CEO. Iserman had been appointed COO at AutoNation in May 2017. He joined AutoNation in 2001. He previously worked for Midway Auto Team and Van Tuyl Group.

With the new role, Iserman shifts his operations guidance from a 244-store giant to a much smaller but growing dealership group. Morrie's ranks No. 99 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 9,741 new vehicles in 2018 and revenue of about $820 million.

At AutoNation, "The times I felt I was most productive and happy is when I had interaction with the retailers, the people on the ground, the people in the field that are actually doing the job," Iserman said. "So for me, it's sort of natural. It's doing something that I've done already in the past. In some ways, it's a step to what I used to do, but in other ways, I have an expanding role in controlling really the direction of the company."

Hannah Lutz contributed to this report.