Are You Ready for 14 Year Old Cars? | SDR #301

Welcome to the big show, everybody. Today we're going to talk about how to take advantage of a customer.

Niche that you probably aren't thinking about, you know, is there, but you're not thinking about. We, we have a guest that comes in and helps us a little bit with that. We talk about Christian's newfound love for reggaeton.

I guess, and much, much more. Coming up on this edition of Service Tribe Revolution.

Interesting development in the Chris Collins stratosphere.

What's that?

You've been doing a lot of Zumba because your girl fiance. Is there a date? Oh, there's not a date yet. Your fiance bought a Zumba studio.

She did buy a Zumba studio.

So how much Zumba have you done?

More than I would like to admit.

What is Zumba? Could you explain to everyone Zumba's like, it's a.

Well, first off, it's a ton of cardio, like props to the those that do Zumba on a regular basis. But you dance, you just give props to yourself? Not really me. It's more like the people that are actually good at it. I'm more like, I try to just keep up with everybody. But Zumba in itself is. It's dancing in a method that's like, essentially you have an instructor that teaches a class and there are pre choreographed songs that are done and each class is typically an hour long, so in an hour you might have 20 songs and you go through dance moves and then the whole group, if there's 15 people in the room, we're all doing the same exact dance and you follow the instructor. Very similar to line dancing, as a matter of fact. The same kind of repetition that exists in line dancing exists in Zumba. So. And after a while you just kind of start to catch on and everything like that. But you learn.

What's your favorite song to Zumba?

To. Oh, gosh.

Let'S see. It probably would be the song Pepas by Faruk. Faruko is actually Faruko. It's.

I have no idea what that is.

Have you heard of reggaeton music?

Yeah.

Okay, so it's a reggaeton song. Okay, that's my favorite.

But yeah, so. So she bought an existing studio, she takes over in a couple of months. And it's fun to watch her doing all the preparation. And I'm backside trying to figure out how to make it profitable.

Yeah, you're. You're teaching her the financial and the pricing strategy.

It's so much more than she thought it was, to be honest with you. Like, I'm kind of Doing the thing where, I don't know, I think this is probably normal. Like when someone gets into a business that they've not really owned a business before, they don't understand the pure expense that's associated with it. Right. But like we can attest that it's not cheap to run a business. And then there's always like there's the text man and there's the insurance, there's the security, there's so many other expenses that kind of go into the business. Whereas I think that she might have simplified that in her head. But she's also really receptive to when I tell her those things that like, no, you have to understand like there's a, there's what I would call a break even amount. Just like with service. Right. So you, you know with how many hours you sell where your break even is and where you start to become profitable for that business. It's the amount of people that are class attendees. So you can break it down and you know exactly how many people you need to have in a class X days out of a month to be profitable in a month. So we're kind of breaking it down. Like we'll have a, almost like a financial statement that I'll do every month on QuickBooks and we'll look at what, what works and what doesn't.

That's fun. What's in the.

There are a couple of things in the news. One kind of leads into our topic that we're going to talk about today. But this is just kind of a funny thing.

Not funny haha funny, but just interesting funny. But so there's a lot of, a lot of chatter in the news about electrical, electric vehicles and all the spontaneous combustion and starting on fire and stuff like that. And most recently South Korea is like, they've had a couple of problems so they've, they're holding emergency meetings to discuss how all this stuff happens. But there was a, an electric vehicle that recently just caught fire and basically burned down a parking garage with 140 other cars in it that ruined everything. So I thought that was interesting. Now I would have guessed.

The what I what type of car this was that burned down a whole bunch of other cars is, is not what it actually was. So South Korea, what kind of electric car do you think it was?

Kia.

Yeah. So electric cars check catch on fire. There's a lot of research going into and I think some of it's almost done but like solid state batteries versus the lithium ion batteries which is supposed to reduce the fire risk. But there's something with the lithium ion that, that it can, it can kind of keep heating itself after it's. After it's kind of gotten to a certain point. And if the battery is even remotely poorly made, it runs a risk of a fire hazard. But I see stuff show up on my feeds all the time about cars on fire.

Me too.

So I think that that's super interesting. But I'd say they should get a, get a handle on that. Like, let's not burn people and cars down on a regular basis. It's like the Pinto. Remember the Pinto?

I had a Pinto.

Yeah. Did it blow up?

That's an interesting story. No, it did not.

Sounds like a very interesting story that.

My, my grandfather went to a government auction and at the time my car that I had wasn't running and he bought me a Pinto for 500 bucks. It was an old mail, government issue. Oh, that's great. No, when he told me, he goes, I got you something. And then I get over the house, he's like, here. And I go, grandpa, with all due respect, thank you, but no, I'm not driving a Pinto.

The funny thing is about those, those government auctions back then, which I don't know what they're like anymore, but I remember because we're not too far apart in age. And I always kind of had it in my head that like you would go there and for 500 bucks you would get a Corvette or like a really, really nice car. But for 500 bucks you get a Pinto. Yeah. And. And that's prob. Worst car that you could have got. For 100 bucks you get a car that doesn't have any wheels. But. But yeah, so I, I tried to get a couple of cars from those auctions, but I always got the ones I wanted. I just had that thing in my head that like, they would be cheap, but I was very, very wrong.

Yeah, it was all stripped too. Like the inside was stripped out for sure.

Yeah. Because they did it have the driving on the right side.

No.

Okay. Because a lot of those male drivers.

Just didn't have back seat or whatever.

Yeah. Cuz it just. You put your containers back there and then do your, do your mail stuff. That's fun. I got you something. He was mad that you weren't happy. He was mad. Or.

Just.

You know, functionality of our image, I guess.

Yeah, yeah, yeah. My first car was 700 bucks. It was a.

79 Mercury Zephyr, which was not unlike. It's about as cool as a Pinto, but it was 700 bucks. But I got that from delivering newspapers back in the day. All right. The second piece of news is that Stellantis is laying off up to 2,450 workers in a Michigan truck plant that they're basically closing down because they're not going to do the Ram 1500 classic anymore, which is their work truck, if you remember that, like that kind of stripped out model that you'd use as a fleet truck or whatever. So they're not doing that anymore. And I think that that is.

I think that is probably one industry, one part of the industry that is really going to be affected by our topic. But I don't think people are buying new ones as often as they were before.

Yeah, but definitely not.

If.

So if you were going to buy a truck today, what would you buy?

Maybe a Tundra.

Oh, really?

Yeah, they've. They used to be really, really underpowered. And I think that they've addressed their, their engine issues.

It certainly looks, you know, aggressive.

Yeah, I think it looks better than it used to. The front end's really nice on that. So Tundra's probably really high on the list. I've always thought that rams are. They look great. And I had one. And other than almost killing you, I never had any problems with it. But, but, but, yeah, I think those are, those are cool. I like the Sierra, but Tunder's probably my, my top. How about you?

Are you.

You strike me as you could be a truck guy.

I don't think so.

Never.

I wouldn't say never, but I don't know. It's a lot of empty space.

Yeah. Yeah.

I would probably do the cyber truck, maybe. I like the way it looks.

Yeah, it's super unique. They this, I didn't print this story, but they also, they stopped taking orders on the cheap cyber trucks. So you can only order the expensive ones now, which makes sense. Yeah, I see them all over the place around here.

Oh yeah, it's crazy.

How many.

Are you ready for? 14 year old cars. So people are keeping their cars longer. And I think that we're not thinking of it as an opportunity. We're kind of thinking of it as a trend.

But it's an opportunity. It's not a trend.

It's an amazing opportunity.

And so let's talk about the things that you need to capture this opportunity. So at the top of my list, I have that you need to be available. So what that means is you got to have the text, you got to have the availability to do an oil change. You got to understand that the model is if they maintain their car with you, they're going to repair their car with you. If they're going somewhere else for maintenance, there's a good chance you're not going to get them.

Yeah. Why would they bring it to the dealer if they're already going somewhere else?

So what's the average service department booked out?

Three weeks.

Yeah. And so you got to be like a couple days because the average independent shop is booked out too. Like you, you know, you're gonna. When people need something and they're calling around, the person that helps them will get them more than anything else.

Right.

So having the tax, having the availability. The other thing that I see that, that a lot of especially dealerships don't do is they're not doing any online marketing of consequence. So like.

On Amazon and order tires and they will suggest a shop for those tires to be installed. I don't know any dealers doing that whatsoever. I don't know any dealers doing fixed stops marketing in a way that is anything different than buy three tires, get one free. Like they're not really doing branding or any sort of community.

Marketing that makes people feel like, oh, they're a part of the community.

Yeah. Because they only think about marketing in relation to RO accounts. Yeah, that's a, that's a huge failure. So then they don't market because Everybody's booked out three weeks. So it's not like they need more ROs. So they don't do anything. But I would suggest that that community thing is a huge deal.

And this is probably the, this is a great time to get good at that.

So they're not doing Facebook, they're not doing Instagram, they're not doing Google. They don't have any sort of like, they'll pay for SEO to outside companies, but they really have no understanding of what that is or what they're paying for. And so a lot of times if we go in and we type in like, you know, tires on a Toyota in a certain market, the dealerships don't come up.

Oh, didn't we do one a couple of years ago and they were like 11th on the list? You remember when we did that?

I've done some recently and it was even worse. It was even worse. Like they're just not in it. They're not, they're not doing it all. So they're not thinking about marketing that way. And then also alternative financing. And we, we asked Doug from Sunbit to come on and kind of talk to us about the trends he's seeing. So what, what we did, everybody is we went out and we got our buddy Doug from Sunbit. If you're not familiar with Sunbit, there's somebody we've talked about before. A lot of our clients rave about them in the sense that they allow you to offer financing in the service drive. They have some, some processes that, that are pretty good. I'm.

Really kind of thinking about the fact that in the market the average car his jump to 14 years of age, which is beyond the.

Life projected life of a car.

Right.

For most of them. Right. So that's crazy.

The I think there, there's something like 200 million cars on the road or something to that number. It's huge. And so people are, are not buying new or not upgrading in their keeping what they have. So I'm kind of wondering Doug, what's going on in, with the trends that you guys are seeing in, in that specific area?

Well, the consumer, regardless of Sunday, the consumers are being pinched. You can see it with a basket of goods. And this isn't a political statement. Things are more expensive than they were a few years ago. That's just a fact. And we're feeling that on the drive. In a way it goes back to when you say the average ticket. There's a lot more to be captured. But in a way the fact that we're still maintaining a very high average customer pay ro at sunbay at least is nice because we're capturing more of that, of that spendable dollar than the dealership would otherwise. Folks are having to make decisions, frankly. It's one of the reasons why we're focused on non discretionary things like dental. You may or may not know we're also in the dental channel, veterinary automotive things that you really can't be declined. Right. Your dog gets sick, you have a toothache, you can't get to work because your car broke down. It's hard to get declined. Right. So we're really out there focused on non discretionary. Where you're seeing the big drop is discretionary spending. And so fortunately for automobile dealers, while folks are keeping their cars longer, you can't avoid that. You can't avoid the basic maintenance and the, and the repairs that keep it on the road. And that's typically going to go higher up on the list than others. Yeah.

Do you think that one of our areas of opportunity then is really the story that we're telling on the service drive, that the things that we're presenting to the customer or are non discretionary? It's sometimes I think that what happens is that we make it sound to the customer like it's optional to do it. But I like that you use the term non discretionary, which to me that means you have to do it right. Like you, you're going to do your dental work, you're going to do all that other stuff. But do you think that that's is you've kind of. Because you travel around like we do and you go into the stores and you kind of see and you're listening to their presentations and everything like that. Do you see that as kind of a trend that maybe we're not doing as good a job of explaining or connecting that it's non discretionary?

Yeah, absolutely. I think that it buy a lot of times, and I say this all the time to service directors that I meet with. A lot of advisors think that when they deliver a $2,000 RO that that money is coming out of their pocket. You've seen it, it pains them. And they're delivering this RO to a mom or a dad who's going to say yes to the tires like they've got two young kids in the car seats. They're going to say as they realize that this is non discretionary. But too many advisors think that when they're presenting this stuff, it's a luxury. When it's not, it's an absolute necessity to get this vehicle back on the road and safely on the road, whether they're an Uber driver, have to get to a factory or have to go out and make sales calls like I do every day.

What have you guys seen as far as terms go with your, your lending? Have you extended the terms or are they staying about the same?

We extended our, our longest term for our larger loans from 12 months to 18 months about a year and a half ago or so. We did that like I said earlier as a reaction to the big groups and the OEMs were asking us for folks like you mentioned, folks are keeping their vehicles longer. They need, they needed better terms, more affordable terms to keep their vehicle on the road.

Yeah, that's smart. You feel like that's a. If you go from 12 to 18, it's a 50% increase in the term, which helps out with that monthly payment. Right. That's probably really smart. I wonder if they'll extend that. Well, I mean, you guys got stuff going on, but I almost think that in the coming years, I bet that goes up.

What we don't want to do is we don't want to get to the point where our terms are so long, if you remember the old. And look, credit cards are a fine solution if that's the, the, the direction that somebody wants to go in. The problem is that credit cards by design have a longer term and they do that because they, they have longer same as cash and they want people to bite. And then they. What we're trying to do is to keep the average term as low as possible for retention reasons. We want to turn this, this loan over. There's nothing worse than somebody that comes in, in a vehicle that maybe like you said, is over the average life of a vehicle and they get a three year term on the vehicle to get it fixed and then they trade that vehicle in and they're still paying for that repair.

Oh, the loan outlives the car.

The loan outlives the car, which is something that we just don't want to be in that space because from a, from a dealership standpoint, they want to be able to flip that car and still have the customer get the work done on the vehicle. So it's a real, it's a real fine line there. But yeah, we will look at it. And if it, and if, and if our partners come to us and say, look, things are even tougher, we need to extend the term a little bit more for the, for the larger type loans. That's something that our risk team will look at, I'm sure.

That's awesome. Well, well, thanks, Doug. We, you know, we'll say we're not, there's no sponsorship involved here. We just appreciate how you take care of our clients and what you guys do. So thank you for that and thanks for coming on and talking to us.

Absolutely. Thanks so much for having me.

Now, if you, if you give us Doug Link you want us to put, we'll put it in the description for YouTube too.

Absolutely. Will do.

Okay.

Thank you so much for coming on. We appreciate it.

That's great. So alternative financing, I think is, is really, really smart. I just think that there's probably more opportunity than we even know of that's on those cars at the end of the day. But just thinking about expanding the business. What is it? What does it look like in the, in the service department? If the average age is 14 years, like, what would, how much stuff would you do differently?

I probably would focus on value. Like, I, I do think that, you know, for the longest time we were trying to convince dealerships that their prices were too low. Now I do believe that there's a market out there for somebody not quite as aggressive. So I would really pay attention to my, to my pricing and to the volume and to. There's just a balance to be achieved between having the availability, the doing the maintenance and retaining customers and what you're charging.

And that goes back to marketing. Right. So pricing is a big part of how to market and a pricing strategy. Yeah. Which I, I don't think is existent in most stores.

No.

And there, you know, there's a lot of ways to get at that. Like free oil changes or you know, different things that make customers feel like they're part of a club. But that sort of stuff works, right?

Yeah.

Then the other one is having some sort of follow up process that pays attention to your database and who you're losing and calling them and asking them why and trying to get them back, but not just leaving it to chance. Like really following up.

Yeah. I think that the phone call in itself might be enough to get somebody to try you again because I think the perception is that the dealership doesn't care.

Yeah.

That's really smart to make those calls.

And what is the, the biggest upside to having this thing figured out?

They'll buy more cars when it is time.

Yeah. Like they really are more likely to buy another vehicle from you. And at some point it just. There's no, there's no other way to do it. It just will break down too much. It'll just be too much for them and they're going to have to. They're going to have to do something.

Yeah.

I call that the do not resuscitate moment. Right. Where it's like she's dead. Pedals. Stop.

I think one of the biggest downfalls of our, of our industry. And it's funny because I was talking to somebody about this yesterday where they were like, if you would design a dealership from scratch, like completely throw out the model we have now.

I would design it for the customer.

Oh, yeah.

So I wouldn't design different departments. I would design an experience for the customer. And they would never.

Really think about the idea that there's different departments. They would have one relationship.

Yeah. And they would come into one spot and then there would be some sort of a concierge. I think I see what you're talking about there. That's great.

That might be a good episode. I don't know.

Yeah. For.

For us to break down how we would do it. It would be completely different than what everybody's doing now in the sense that we're used to what we're doing now. But it is probably the least efficient way of doing things, especially with the overhead that it creates. Having more departments creates more overhead.

I agree with that. It's interesting. I also think that there's a huge. Well, we don't have to have the op the episode now, but I would just think that there's such an opportunity because some dealerships are super cool. Like, they're underutilizing the space that they've got. So thinking about, like, what could customers come in for other than just coming in for service and to buy a new car? Like, there's. Yeah, yeah, man. It'd be fun to hit that reset button.

So hopefully your takeaway today is that there's more opportunity than you ever imagined. Because there is. And think about customers in different ways. Like, higher mileage versus new. Like, are we capturing all of it or are we just taking what comes in? Are we just leaving it to chance that whoever calls is who's coming in? Because you do have the ability to create new markets and new streams of income if you, you know, and you embrace it.

Thanks for hanging out with us. We'll see you next time on Service Drive Revolution. Thanks so much for watching this episode of Service Job Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333, Ask SDR and we'll answer your question on the show. That's 8333 at Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins, and I'll see you in the next video.