Can Parts & Service Collaborate? Ideas to End the Department Rivalry | SDR #269

Welcome to the big show. Today we are going to talk about parts in service and can we be friends. And we have some interesting ideas on that. We talk about how I'm psychic and I have predicted all of this already and much, much more. So you don't want to miss this episode of Service Drive Revolution.

We have a trip coming up we're doing. We're actually going to Vegas twice.

Yeah. Because once won't do it.

The first one we won't talk about. But the second one, we're taking the team to see the Spear. I don't. If you don't know what that is. It's like this state of the art.

Round.

Building light show on steroids.

But this sound. And then the video goes all the way around you. You too is playing a concert there. But they. So when you two isn't playing there, they have a movie that was created for it specifically. We're gonna go see the movie.

But you want to know the funniest part of this?

I can't wait.

Is this morning, before you came in the room, you weren't in here yet. Or were you in here? You left. I don't know why you weren't here.

But.

But Patricia and I were here and.

Which is not normal.

We were. How to get to Vegas.

You take the 15.

And I said, why don't you ride with Christian? And she looked at me like I had called her kids a name or something.

It was the biggest insult that you.

Could have given Daggers. And I was like, what?

I'm pretty harmless on a straightaway.

Non. According to a. What did you do to poor Patricia?

I don't know. It's funny. Is that she's actually been a champion, that she thinks that the bad driving's overstayed it. So I'm a little surprised. I'm. It's great.

I'm excited for us to all go kind of experience this. It'll inspire us. We're trying to.

Pick up our game here with our state of the art visual and audio.

Yeah. That's what I'm gonna say is I think what we'll learn is that this library, we want it to have a serious effect on people. And the visual is such a big part of it. Like, even the way the books are organized, it's super intense.

Remember when I wanted everybody to go to Chicago to see that art exhibition?

Yeah.

And.

I think you thought I was crazy.

Nick Cave.

Yeah.

Yeah.

I wasn't crazy.

No, it was great. We did some like.

You could never explain it.

Right.

I'm hoping this is like that.

I think it will be. How's your coffee?

It's great. Christian is saying that because he made the coffee. So we had an incident at Top Dog.

Before. Let me tell some stories today. Let's get a cigar going. Before.

Before Top Dog, I was really concerned about the coffee or Top Dog, and I wanted everybody to experience really good coffee. But when you have that many people coming to your.

Yeah, you guys. Bulk quality issue. Right.

So this chef that we use suggested these pots that are like commercial.

Coffee makers that hold like 100 cups of.

Coffee that had to have been. And there was two of them.

Yeah. And so they were cycling those.

Because they were brand new. And so you want to run some water through them.

Yeah, you're gonna take a couple practice rounds.

And so Christian comes in with a cup of coffee from one of those and says, this coffee isn't bad. And I was like, oh, okay. I go out to the thing and I get a cup and I put some coffee in it and I take a sip. And it tasted like a paper.

I was gonna say dishwater, but paper.

It tasted like paper.

Okay, great.

And then I said, christian, this coffee's terrible. And you're like, what do you mean? And then I went and asked him, I go, what's the deal with this coffee? And they said, oh, we ran like basically folgers, like cheap coffee through it to. They ran three cycles through it to kind of condition get the metal taste out of it or whatever. But you thought that, that. So since then, Christian is committed himself to being a coffee connoisseur. So he's been making pour over coffee for us.

Yeah.

And you're really good at it. I don't know that you taste what.

I taste all in.

I go, by the way, you know that. That latte you had in Seattle, the Vivace?

Yeah.

So there's a place in Seattle called Vivace, and it's the best latte in the world.

It was like. It was good.

Like, you can.

Same thing.

You can't explain it, but.

When I grew up in Seattle, before Starbucks bought everybody and closed them, there were so many great coffee places. Vivace is one of the last standing. It's on Capitol Hill. We were up there jet skiing and I took. We did a little side tour to downtown Seattle. We went to Capitol Hill.

Well, for you to be the tour guide was really cool in that too, because there was a little bit of a. We hung out here, we played here. So the first person tour of Seattle, that part of it was yeah, you could charge for that.

So you had that. Missy has been recreating that pretty successfully with our espresso machine. And next time you come over, you gotta. You gotta experience that. It's really good. It's as close as you can get. So it's their coffee. So she orders it from them.

Yeah.

And then so makes it.

So I can tell at the time that I was having that coffee was special. It just tasted like, I think, this stuff. What is this? Canyon coffee.

Canyon.

But this just tastes a little different than other stuff.

It's better than anybody else's cup of coffee, but it's not the best coffee in the world.

Yeah. But I've got it down to where I believe that our machine. There's a certain amount of water, the beans, the grind time, and then also the way that you disperse the grounds within the filter. The way.

And just your attitude that you bring to it, your energy can have an effect on the coffee. Coffee has feelings, obviously.

But it's so funny. You know, speaking of stories, one of the things.

That, I don't know, we probably don't talk about it enough, but it was like one of the most poignant things with me when I met you was that you were kind of raised in Mexico. Right. And sometimes we'll kind of come across this in conversation and. And you still kind of have that thing in the back of your head where you. Your comprehension of Spanish is probably better than your speech of Spanish. Am I correct in that?

It's not as good as it used to be.

Yeah. But there was a time last week where you and I both answered someone at the same time that was talking in Spanish, but not to us. But they were speaking. Yeah, it was hilarious.

Actually, yours is pretty good.

Okay, so let's try. I just want to give you a layup. I'm trying to gauge.

Where you're at.

So this is a service drive revolution. And now we're doing a Spanish.

Yes. So. En espanol. Closed caption for the hearing impaired. But are you ready for this? Your quiz. Como se Nice. Un zapato en ingles.

One shoe.

Salud.

He got me.

A second.

You're tactically supposed to say ashu, but one shoe is also correct. But, yeah, you did good. You passed.

Not so funny. The. I'm sure a lot of you out there are thinking about your plans for fixed offs for 2024. Just want to kind of play it in your mind if you're not in a coaching group, if you don't have a mentor and you could be doing much better, especially going into what our industry is going to experience the next couple years with used cars and new car interest rates and the equity issues. The big stops is going to be more and more important. So we have limited space so I would hurry if you're.

Thinking that you want to do better in 2024. We only have so many spots for coaching clients.

So yeah, we've had a run lately.

On the new clients chris collins inc.com and we'll get somebody to kind of talk you through that. But you know, the opportunity in 2024 is, is unbelievable.

There's so, you know, there's so many things that we can help you with and do for you.

It will be the biggest Spotlight yet on FixOps.

That also nice little note here from Tom Mack. He wrote a little email. This is given to me in our Monday meeting.

Oh it's funny he replied to the email. That is a mimu.

Oh, he wouldn't know any better.

Yeah, so he very sweet of Tom here. He said hello Chris, just wanted to follow up with you regarding last Tuesday's performance. Again, you nailed it. So he's talking about the Irreplaceable Service Manager Live lecture series that we've been doing every other Tuesday. If you're not in on that, go to Chris Collins inc.com and sign up immediately. You're missing out. You'll get all the back ones too. But I am just wondering how many people caught the Blink reference. It's been about a year now since I read 6 minute X ray which is Chase Hughes phenomenal book. Yeah, and it's been about six minutes since I finished Blink. These two books worked well together in the order listed. Thank you for the reference and for one would be interested in what else lies within your library. I know you're not a big nada fan, but we do have a Book of the Month club in our 20 group and blink will make our November nomination. Thanks again for what you do and keeping it real.

Tom.

Mac man. Tom, I couldn't even start to tell you all the books that are in here or the different categories. I think the thing that surprises most people is the different catalog, the breadth of the library.

Yeah, I also think Tom should come out and check it out.

But we are, we are doing another thing for the general business market and it's called the Syndicate X Library. So that's why we built this library. It now just now has a YouTube channel. The first weekend it had over 5,000 views with just two videos. We're up to like 75 subscribers or something. And that thing will be a. I mean, I have the goal of it being over a million subscribers. It's going to be big. The content that we're putting up there is incredible. And it's a great place for you, Tom, to get ideas for books, because I'm profiling books that I just get. So we're doing a segment on that channel called Just New Additions to the Library. And I'm profiling books that you know, are meaningful or have a lesson. Everything kind of has a business lesson one way or another. I'm trying to convince Christian to go on there and do some reaction videos with me. I feel like I need your sense of humor in there, but we don't want to be too controversial right out of the gate. But check that out. The Syndicate X Library. Please subscribe. Comment like it will help us out. And I think everybody who enjoys this will enjoy that channel also.

Yeah, I think that's going to be a community of people that just have a really good appreciation for books learning. And what you'll find is it'll be your people.

Yeah, we. We learned that with Business Outlaws, right?

Yep.

Because Business Outlaws, of all the things you've done, had millions of downloads. Like.

Yeah, I think that the. I think those channels on those videos, like, they're. They're unlike anything else you can find. And there's a lot of crap on the Internet, like, there's nothing that comes close to what this is.

Oh, you're serious. I thought that was dead serious. You were segueing into a joke. It's like, you know, I was like, in the war.

I can see where you would think that I've got more jokes to come. That wasn't a time that was it. That was a serious. Like, I. I'm a huge fan of what we're doing, which is. I don't know in itself that's really, really fun. But a lot of it translates over into what we do in the car thing.

So Syndicate x library on YouTube, you'll see my mug.

My cool logo. Comment on the videos. Like, oh, he's so handsome, that beard. So wise.

There are already are some comments about your beard. Oh, really? Yeah.

We got to get somebody to manage that because I don't want to read all the comments. No, I don't want to look at it. Christian, what's in the news today?

So we're going to talk about one piece of news. I'm going to go a little bit more in depth on this than we normally Would. But this is out of a publication called the Street From Wall street. And the author is named Colin Salao. S A L A O. And the title, Colin. We're gonna call him Colin for sure. The C. Okay, C. So fine Irish translation of the. Of this. Of this name. So it says, billionaire makes several bold claims about Elon Musk's Tesla. And there was a lot of really, really good.

Who's this billionaire?

His name is Ron Baron. Have you ever heard of Ron Baron?

Oh, but it sounds like a very serious name.

Yeah, he has no choice but to do with Baron. He has no choice but to be a billionaire. But I'll read a little bit of it. Billionaire Tesla investor Ron Baron continues to be bullish on Tesla, and he's got a few reasons why. Baron, who's the CEO and chairman of Baron Capital, not huge on creativity, apparently, when it comes to company names, has been investing in Tesla since 2014, which I wish. I also started investing in Tesla in 2014. Gave his thought about Tesla on NBC's Squawk Box on Friday. He said that what sets Tesla apart, and this is really important, what sets Tesla apart from the rest of the growing pack of automobile companies looking to tap into the electric vehicle market is that Tesla's data and technology allows it to be efficient with its costs. It can probably be. It probably can't be matched by anyone else. They have data, technology, and they make cars cheaper than the rest. When Ford makes one of these cars, every car they make, they lose $36,000 on it.

So every electric car that they make, they lose $36,000.

Our company, Tesla, now makes about 8 or $9,000 in profit per car. Baron also added that Tesla gets about 100 million miles a day. This is another thing that kind of blew me away, which essentially the car collects all this data of 100 million miles a day, and then they use that to improve technology. And the rest of competition is a little more reactionary. So when asked about the slowdown in demand of the total electrical vehicle space, Barron cited that he still expects all cars to become electric down the line. However, the pace has slowed for a few reason. Reasons. Quality, price and dealers, which I thought was really interesting that the dealer thing was put on there.

Yeah.

The reason there's not more demand is that cars are out there. That cars out there are not very attractive and they're expensive. In addition, the dealers who sell them don't want to sell them because there's nothing to service. The dealers make all their money on servicing.

We had somebody in here last week. That is an expert on the front end of car dealerships. Right. And they were explaining to us how bad the negative equity and high interest.

Rates are in the one story was almost appalling to me, the Jeep story that was crazy.

Remind me of that.

So they had, they had somebody come into one of the stores they were.

Working with and yeah, the, they're upside down there.

The customer was upside down to the tune of $800 a month, basically.

Yeah.

Imagine being that far upside down. 8,800 times 60 is $48,000 upside down. Yeah, that's a lot of money.

But we knew when we were doing that that there was going to be a, there was going to be a price to pay at some point. You can't, it's like our national debt. You can't just keep doing it forever and not hit a wall eventually.

Yeah, I mean in, in general financing, thinking about it, right, the first, the first 24 to 30 months of your finance loan, you're barely paying off any, any principal. Like you don't start to get into the meat of it until the last two years of a five year loan. And people, the average trade cycle is like 38 months or something like that. So in general, they owe a little bit. They owe a little bit less than what they paid for a car and they're just upside down. And then the replacement car is $20,000. Yeah.

I'd like to point out that there's lots of evidence out there on this channel of me saying this exact same.

Thing from a long time ago.

Yeah, a long time ago when nada. Tom, one of the reasons I'm not a fan of NAD is because they told me I couldn't talk about Tesla. And I asked him why and they said because it's not a popular subject, not because it isn't reality. And nada has done nothing to make the dealer body stronger, to position them in any way where they're competitive. Nothing has changed in the approach. Dealers just keep losing leverage. They have way less leverage now than they had 20 years ago.

Yeah, with the customer and with the.

Manager, but everybody goes to that convention like it's ridiculous. The thing that I think most.

Most don't get about this is that I've also sat in meetings with manufacturers and they see the dealers as the problem.

So they see that margin that the dealers are getting as an issue. They see how slow dealers move, how they have to force them to do things right. And just the overall mindset, like how many dealers that we work for thought the manufacturers on having charging stations for electric cars?

Several.

Several, yes. Now really, if the dealers were thinking about the customers, especially dealers in metro markets. I'm not talking about somebody in South Dakota. I'm talking about somebody in Los Angeles or Chicago or New York or Miami. Right. Dallas. If they were really like. So the manufacturer comes to them and says, hey, we want you to spend $250,000 on these two charging.

Stations or whatever each manufacturer does a little bit, a little bit different. Right.

Most of the time they should be putting in six, not two.

Whatever they're told you. Two. Yeah.

Times three, probably. Then the second thing is, how much do you think it costs to put a little coffee shop in?

Not my shop. Think of the coffee you could serve.

And just think about the consulting you could do for. For these coffee.

I should be a coffee consultant.

Like, here's how you grind. Here's the energy you got to bring to the coff.

I put at least two cups of love into every pot that I make.

Yeah, you can't. People don't know they can't just do that without somebody actually mentoring them on how to put love into coffee. That's right. So.

To make a very long story short is we're. We're thinking about the wrong stuff.

Yeah. I think it's also very important. It's not too late, but we're running.

Out of time now. Meanwhile, right here next to me where I live in the beautiful communist country of California.

There'S a Tesla charging thing with a diner with waitresses on roller skates. It's in a drive in movie. Like they. And they got fast chargers like you can charge in like 20 minutes. But they just think about how many people are staying for an hour and a half.

They don't even notice. It's not an accident that a lot of charging stations are by malls, but.

We'Re not thinking that way. We're not thinking that way.

Good stuff.

Let's talk about parts and service. Can we be friends?

Yeah. It's a great topic. If only there was a way to glue them together.

They're diametrically opposed.

Well, I'll tell you this. When they are diametrically opposed, you sure can tell. That's one of the easiest things to spot when we go into a store is whether or not parts and service play nice together.

Yeah.

Can you think about.

In some of the stores that you've gone in where you've walked in and just been like, okay, the, the parts manager, service manager, they get it that it's a team. It's a team sport. Yeah. Yeah. What. So what are some things that stand out to you from those. Those particular stores? What are they doing that other. Other ones aren't?

Well, so, okay, so let's say I'm. I'm coming into a store to fix it, right?

Yep.

The very first thing that you notice about a good parts manager is they will be excited to see you, and then they will want to know what you know. So what are you seeing out there? What are people doing?

They're.

They're curious. They want. They want to hear different ideas. They want to hear how other people are doing pay plans, how other people are, you know, doing their. Their personnel count, how many runners versus counter, how they're doing the inventory, perpetual inventory, that sort of thing. And then you can tell right away, the parts managers that are good.

They avoid you, don't they?

They avoid you. But also when you're going through and you're like, when's the last time we did an inventory? Oh, it's been three years. Like, the. You can just tell by the way that the place looks, how disorganized it is. Stacks of stuff.

And then when you interview the text, the techs kind of know, like.

Yeah, parts will be their number one concern.

Yeah. And it's. Yeah, it's always the speed of the leader, the speed of the team. So the parts manager usually attracts people like themselves that wants to avoid.

You know, people. And so then you just have a bunch of people avoiding people.

Yeah. That's great. I love it. So when you think about the mix of the parts manager and the service manager, what do you think are some keys to, like, the healthy relationship between the two?

I think it goes both ways. Right. Like a good parts manager is in the morning shift meeting. A good service manager is worried about the parts manager's special parts or special order parts, the SOPs. Right.

A good service manager is helping protect the margin in parts.

Yeah. Not. Not eroding it, not attacking it, and not using it as an excuse.

A lot of times, you know, we encourage parts managers to come to our master class when you sign up for coaching, but they often don't. But service managers will go back and help increase the margin in the parts department from what they learn. Because all ships rise. Right. Parts can be very healthy and service can be healthy. I think one of the misconceptions out there is that it's only one or the other. It's not both. Both should be healthy. And all ships rise.

I usually call that out. When I do a strategy session and I'll see one's lopsided, it makes me want to ask a ton of questions. Like I just had one not too long ago where service was doing really well but parts was losing money. And I'm like, that doesn't make sense.

No, that's.

It's just a failure on a. On a high level. It doesn't mean they both can't be doing really, really well. But it definitely means one's doing at the expense of the other way.

More creative pricing things you can do in parts to get margin than in service.

Yeah, nobody's really asking about the can you do any better on the part? And if you do, it's a. It's a terrible thing that. The other thing that I was thinking of is that from a parts manager and a service manager perspective, I like the meeting idea, but also there's like a. There's a day in the life. I think that one of the classes that we had, the funnest. It was fun to record, was where we kind of taught parts managers about service and how that was run and taught service managers. Yeah. But I've had a lot of people give me feedback that they didn't understand how the parts department was run until they kind of went through some of those, like those little. It was a really 100 level overview of how it was done, but it was enough to give people the perspective. But I think that it's important to be able to walk a mile in someone else's shoes. That way if. If they don't like you, you'll be a mile away and have their shoes.

Never thought of that.

You like how I snuck that in there?

Yeah.

So also the shop a good parts managers.

Collaborating with the shop, not dictating what the shop gets. Yeah.

Yeah.

There's a lot of dictator parts managers. You guys ever talk about that on parts?

Hold about dictator parts. No, but it's not a bad idea. I was that we do talk about creative. We talk probably more about the positive than the negative on that podcast. Whereas we're trying to inject creativity, which is not a natural thing for a parts department. But there's so much opportunity out there. I was even thinking about that as we were talking about electric cars earlier. Is that, you know, the truth of the matter is do they have as much fluid, do they have as much need for preventative maintenance? No, but there's a ton of opportunity for us and excuses for us to personalize. Right. So everyone wants a personalized car. So if I. If I was running a dealership that's, you know, sold a ton of electric cars, I would make sure that they'd be wrapped, they'd be tinted, I'd be putting special wheels on the cars, bumpers, the whole thing. But nobody wants to get into that because we're just thinking about, well, if we can't change the fluids, then it's. It's a lost cause because it doesn't even change.

Well, I, I do think though, that haven't we seen with the things we've been doing in parts that there's a lot of really good parts managers out there and just including them.

Makes them better in the sense that when they feel like they're included, then they will speak up and then they usually have pretty good ideas.

That's right.

But when they're not included, you're not inclined to push your way into something.

Yeah. I pitched this idea last week on our. We have an internal call with all of our coaches, and I thought for 2024, we should really push into our S pop. So we have in our software when we do numbers, or we call them dashboards, but it has all the important numbers that you would need to know how your, you know, how your department is doing, all the important measurables. There's a number on there called spot, which is service and parts profit. So it's a version of fixed absorption. But it's, it's how we look at it and it's pulled from the information that, that we have. And I think we should start giving out awards every month for the dealers that have the highest s pop.

Like a top of the pop.

Yeah. I think too, if you think about it in your head, the ones that have the highest net to gross usually have the highest.

Size.