Hey there, and welcome to the June Newsletter!
When you work with family, you mix the unconditional nature of family with the conditional reality of the marketplace.
VW just reminded family companies to focus on growing and changing in that conditional marketplace. If you missed it, here is what happened:
Changing the traditional dealership model
In the United States, customers buy 96% of automobiles from independent dealers who get their stock from the automaker. Tesla and Rivian are among the 4% of sales who have skirted this traditional arrangement.
Quick history
For decades, then, if a family could run a successful VW dealership (to keep with the story), they could carve out a stable, predictable, and profitable business.
This arrangement could feel committed and safe. Beyond just sending cars to a lot, VW uses agreements that require dealers to use distinct building styles, dedicated service bays, and a standalone showroom. This can feel like a commitment between the manufacturer and the (many times) family-owned dealer.
The (sort of) new disruption
However, Volkswagen recently announced a new electric brand called Scout Motors, and a plan to bypass the traditional dealer network entirely, selling these vehicles directly to customers.
By early 2028, VW plans to launch 100 company-owned showrooms and service centers across the U.S. and Canada.
If a family only owns a single Volkswagen dealership and relies entirely on that one manufacturer, VW is not only keeping a future revenue stream for itself, but it could also feel like they are sending a warning shot about their other vehicles. I talked to one family-owned dealership that saw the Scout plan as part of a bigger threat. “VW did not surprise me. These manufacturers have been trying to get around us forever.”
A mindset of grown and adaptation
What is the lesson for us, regardless of whether our company sells cars?
Early in working in my family’s company, my father taught me a nearly universal truth:
“Adam, companies either grow or shrink.”
There is no holding still because the relentless conditional marketplace always moves forward. If you aren’t actively pushing yourself, you become vulnerable to the market’s shifting tides.
Do family companies need to grow and change?
This rule applies as much to family companies as it does to non-family owned ones.
Perhaps you can think of family companies that stay the same size. Maybe they have a single VW dealership. Their family company appears to be sitting still and doing just fine.
You can find examples like this, but before you ease into cruise control, inspect the examples you admire most; they are likely acting as if disruption is coming, even if it is less apparent. Let me share a few examples:
Profit growth
I worked with a family company that appeared stagnant from the outside, but the family was quietly adding ancillary revenue streams. These new business lines did not require additional labor (noticeable growth), but padded the enterprise’s net income to protect the family from tariff changes and commodity pressures in the primary company.
They did not grow their employee base, but their overall cash on hand climbed upward. They were growing.
Growing someone else’s headcount
Another company reported a stagnant headcount, but they instead expanded their business with contract labor and outsourced partners; growing without appearing to grow.
Continuously improving
I worked with a 100-year-old company that was well insulated from national competition. Over the prior decade, they grew about 8% per year until reaching market saturation. While revenue growth slowed, they also sensed national competition approaching.
They set out to improve operational efficiency and tighten their organizational structure around a more defined strategy. That was a forward-thinking response to the market, even though sales were not growing as quickly.
What about our auto dealers?
I spoke with two family auto dealerships about the VW story. One said it highlighted the need to think outside their local market. “If we did not support our trade association, this Scout situation would have happened a long time ago,” one said.
The other noted, “Tesla and Rivian show some customers want a more direct buying experience. I think there is a way for dealers to rethink the model and adapt to this demand.”
Neither of those is about increasing sales immediately, but they show dealerships that think about scale and new ideas.
In all four situations above, the family companies worked with a growth mindset.
What can you do?
Here is an exercise for your next family meeting, especially as you move into Q3:
A SWOT analysis is a straightforward strategic analysis of the company from your perspective.
What are the company’s current internal strengths and weaknesses?
You may have great AI tools integrated into your workflows (strength) or A/R that has crept past an acceptable level (weakness).
What are the company’s current external opportunities and threats?
Growing customer demand for direct-to-consumer vehicles presents an opportunity, while ongoing lobbying efforts threaten to undercut your business model.
Depending on your family members’ engagement in / knowledge of the company, they may need additional information to take part. You can ask trust executives or outside advisors to provide additional information.
Your family can increase communication and alignment just by completing a SWOT analysis together, and you may find suggestions for the company’s consideration. I like this exercise because it helps families assess business realities and think about growth and progress…which will prepare them for their own version of the Scout Motors blindside.
Wrapping Up
Family ACTion Meetings are where you build Alignment, Communication, and Trust - these are the meetings where your family can collaborate around a SWOT exercise and work out suggestions.
Twenty One Clear supports families in structuring and facilitating these meetings. If you would like to check-in on your meetings, or get started, click below to schedule a conversation.
Till next month
As my grandfather would have said, thank you so very, very much for reading.
Adam, for 21 Clear
