Does Service Benefit From Dealer Markups? | SDR #192

Welcome, everybody, to the big show today. Christian is going to mess with me and have me guess what these outrageous markups are on new cars. And we're going to talk about how it affects the industry. Also the news and some fun announcements about what's coming up in our world. That involves parts our coaching meeting and lots of other stuff. So that and much, much more coming up next on Service Drive Revol.

So we're hearing a lot that our accounts are starting to drop.

They seem to be diving a little bit.

And partially that's because war. We're not selling a lot of new cars into the market. Right. And so warranty's down, which would bring traffic down. But I think over the next couple years, the battle is going to be ro count. There is no doubt traffic is going to be down. It's only natural that we would see. You know, when I was a little kid.

I grew up in what country?

Mexico.

Mexico. By the way, everybody, Christian's becoming very bilingual. Dating a Latina has made him. Even some of his jokes, like about Pedro and all that.

Yeah.

Are Latin in flavor. It's having an influence on you. But there used to be this saying in Mexico growing up that they would say about the American economy is that when America catches a cold, Mexico catches the flu, that it has a rippling effect, a butterfly effect. The butterfly effect being that a butterfly flaps their wings in Taiwan and it creates a tornado in Kansas. Yeah, Right. And so it's going to have that effect on us when the volume of new cars is down. Then a year, two years, three years later, we're going to see that in the service drive in that sense. So we need to be aware of that. We need to be thinking about that. But you got to maximize what you have. You got to really focus on retaining your customers.

You gotta really be intentional with the relationship.

Be on it. We also an exciting thing. This isn't the news, but this is the news. Oh, like it's not the news, but like pre news. Pre. Well, different news. How about that different news? Our coaching meeting coming up in Texas. So we're having one of our first. Besides it is dog.

Besides top dog. This is the first time we've met together with our. With our clients.

We've been doing them virtual. Now we're going to a hybrid. Some of the coaching meetings are on zoom, and then this one's going to be in person. So we're doing a regular coaching meeting, and then we're doing the elite group. So our elite managers are the best of the Best. They're the ones that have the best CSI in the country, the highest profitability, and they have won our intern, our competition, that's internal, basically. But we have an incredible speaker and I don't even want to say the name because people wouldn't understand why we have him as a speaker.

Well, if they researched him, it would make sense, but no, because it would.

Come up that he's into data or something, cyber data. But I'm really excited about that. It's somebody I have seen speak and also interacted with. And when you talk about the psychology of the customer and kind of the customer experience also, I think leadership and retaining and hiring techs, all of that is going to apply to this and it's going to be really fun. So I'm really excited about that meeting coming up. Also, the elite group, I can't. We'll talk about what they're going to do on another episode, but they have a little adventure. So the elite group, because they don't want to sit around and talk about how to hire techs or effective labor, because it kind of.

They did that.

They did that. They got that figured out. We usually give them some sort of an experience where we go into a business and we get them to open up their book. So we've done, you know, restaurants, all kinds of different things. And this time in Dallas, it's a pretty interesting business that, that Patricia here in our office has got them to agree to open up their books, which.

They are going to love that experience. A little jealous. I don't get to go be fun.

Then what? One more thing in the news, not news is we're. We're finally doing it. We're adding parts to our software. So we're going to start benchmarking parts departments along with service departments and in some of our coaching groups for a couple dealer groups that we have. We're going to start including parts managers in the meetings now. But I think kind of going forward, we're. We're going to start pulling the parts managers into what we're doing and into the conversation just because they're so vital to it. And we need that, you know, we need their, their opinions, their ideas.

And also it's just parts, you know, is a little lonely sometimes.

So I think, yeah, the collaboration is what we're looking for for sure.

Yeah. So that's exciting. I have suggested and so tell us what you guys think. If you're listening to this, you're not going to be able to put it in comments, but if you're watching this on YouTube, you know, in the comments, tell us what you think. But I have suggested to Christian and one of our coaches. Well, I didn't suggest it to him. I suggested it to you that we start a podcast for parts called Parts. And like, the logo could be like an end hand holding an engine. Like, it's not. It. It's not necessarily like, hey, parts. Hold. It's like, hold on, let's talk about parts. Like parts. Hold on, let's talk about parts.

So it's like a double entendre.

Even if you just started doing one a month and you had parts managers on and we started a conversation about parts, it would definitely be something I would listen to. It would be fun.

We have a topic list going. Yeah, it's about ready. You know, it's been a weird day, by the way. I don't know. I don't know why I didn't mention this to you earlier.

Segue to a joke. And by the way, Christian has a joke you can't tell on here.

It's so I vetoed it, but it was funny. We all laughed, but I wish we had like a.

Hey, go to Chris Collins inc.com cutting room, floor. Something like that.

So good.

But it's a dirty joke. Kind of. Kind of dirty.

No, there's no dirty words.

It's not professional, right? Definitely not professional. So what. What were you saying?

So I'm walking to work and I'm like, okay, this is the best day ever. I look on the ground, there's a can of money. I'm like, this is great.

Can of money. Like a can of soup.

Can of money. It's like a soup can with money in it. So I grab it, I start walking. All of a sudden, some guy with a guitar starts chasing me. I can't figure it out.

Everybody give Christian a round of applause.

Thank you all. Thank you very much.

Be quiet. Can't hear him clapping one person. Before we get to our topic of today, why don't we jump to the news?

So there are a couple of things that I wanted to talk about. Normally on the news, people lead with doom and gloom. I'm not going to do that this time. We will have doom and gloom. But what I wanted to talk about first, kind of exciting.

This is an article that's talking about the new Ferrari suv.

Ferrari suv.

There is now a Ferrari suv.

Ferrari would never make an suv.

That's what they thought, too. So I've seen the Lamborghini suv, but now Ferrari is. Is coming out with Their.

What are your. What are your thoughts on the. On the Lamborghini suv?

I don't know if it's related or not, but it looks a lot like the Porsche Cayenne.

Is that the one you wanted? The girly one?

I want the girly ones. The macan. Oh, let me just kind of read a little bit of this. We can never imagine a day when a Ferrari SUV would become a reality according to Ferrari CEO Benedetto Vigna, which, like, literally, what else could Benedetto have done for a living other than be the CEO of Ferrari with that kind of name? Like, that's the most Italian name I think I've ever heard. But the Italian sports car company is preparing to unveil its first ever luxury suv, the Purosangue, which means thoroughbred in Italian. So they're hopping into that thing, but.

Yeah, it's going to compete against the Lamborghini Urus, Aston Martin DBX, and the Porsche Cayenne. But I have a feeling they're going to put a really nice flavor on the old suv. I think that would be a lot.

Of fun, but I have a feeling they're not.

Why do you say that?

I just don't think you can do it. I don't think a Ferrari needs to be an suv. It's a money grab. That's it. Which is okay. Like, you, as a business, you have. You have every right to do that. It's fine. But it's not.

Well, I. I don't wake up in the morning and go, hey, I wish Ferrari made an suv.

So are you offended by the Bentley SUV now?

You know what I was thinking about is, like, one of the lessons I learned at running a BMW store is like, BMW is all about performance. And then kind of what you find out is the people that buy the M series. And so if you're not familiar with BMW, M would be like their race models, right? The highest performing models. Like, some of them are almost undrivable. Like, if you get a 6 Series M that has this SMG transmission, they're like, they're built for the track. They're undrivable. Like, you, you're just like, jerking. Like, you know it's meant for the track, but people will buy those. And I think the stat was something like 5% of them ever make it on the track. It's probably less than that, but they're buying them for status, 100%. And so when you buy a Ferrari SUV, you're not buying it for the performance. It's not even the Craftsmanship. Because I don't know if you've been in a Ferrari lately. No, my buddy has. Has. He gets a new one every couple years. They're not the craftsmanship. I mean, in a Rolls Royce, you kind of, like, understand, like, there's a.

Hand craftsmanship to it.

You don't really get that vibe in a Ferrari.

Also, because just everything's meant to be light, too. So you're. You're.

You're kind of building it to be lighter and. And more of a performance car. But I don't know, it just seems like even with the Lambo suv, there's no it's all status. It's where we live. It's all just rappers driving around, but they never go to the track. You can't keep going more than 35 miles an hour here. There's so much traffic.

Not on your commute to work.

You look important, I guess. Right? That's why I love my big boat. Like that thing, air suspension.

I will tell you, that's the thing that surprised me most about your vehicle, is that it has the. It rides so much better than I ever thought.

It is like driving a home theater couch.

Yes. And really nice seats the whole night.

It's a lot of fun. It's great. Okay, so Ferrari is making an suv.

Yeah. So apparently that's not news.

You just did the David Letterman throw it at the camera thing.

I really did. Didn't.

Cool.

All right, so next. This is my favorite news article of the day, is we have a list of vehicles that are in the most fatal accidents in the United States.

Oh, that's morbid. Yes.

Let's talk about that.

Let's talk about death.

Yeah.

So I just said we weren't going negative.

No, this is factual. This isn't fake news. This is.

I didn't say it wasn't factual. I said it's negative.

Oh, well, it depends.

So these are the cars that. That are in the most accidents that cause fatalities.

Yes.

Now, would we.

Would we.

Would we consider in this measurement that the type of driver that would buy this car would. I was having a conversation with. With our friend Chase this morning, and he was saying that he was. He was just at the Masters, and they gave him a Tesla to drive, and he turned on the. The auto drive. Autopilot. Right? Is it called autopilot?

I think so.

Autopilot. And he said that the thing almost killed him, that the autopilot was trying to, like, swerve into the semi and, like, that it. When he. He had to overcorrect to get out of it. And he said that it, it was.

Very, felt very unsafe to him. And I said, well, Chase, the science tells you that the driverless software is safer than humans. But you got to consider everybody in that equation, like people like you that shouldn't be driving, your license should have been taken away years ago, are in that equation against the Tesla. So the Tesla just has to be better than your average clown driving, like drinking.

Right.

So you got drunk drivers in that equation. You got people that have had no sleep in that equation. Right. That are falling asleep at the wheel. You got 90 year old.

You know, old ladies that have no, they can't.

See over the steering wheel.

Yeah.

Yep.

So it just has to be better. The marker is just better than your average American clown in this equation. Would we take into consideration that, like if the top car on there is like, let's say a Camaro, would we take into consideration the drive, the type of personality that buys that car might be contributing to the fact that that car is in more fatal accidents.

So I would have expected that that was the case that if I looked at the top five, that they would all be hot rods. Not the case at all, really. Yeah.

The top car is a Honda Accord. Like you would say, a Honda Accord has a conservative kind of smart, safe driver.

Honda Accord, number three on the list. No way.

Promise for the most fatalities.

Yes.

Okay, go through the list.

Number one, the Chevy Silverado. Number two surprises me, I think just as surprising. F150. So if you want to die, drive a truck.

Trucks are flipping over.

That's right. Number three is the Honda Accord, followed closely by the Toyota Camry, another what I would call very conservative vehicle.

So this, they, this must be on volume too, right?

Yeah, so it's, it's graded by volume. So I think that that's the other thing you have to understand about Accord and Camry. There's so many of them on. Well, I mean, F150.

You would, you'd kind of want to dice this list by taking volume into consideration because like, you know, maybe one out of ten Ferraris crashes and kills somebody, but there's only so many of them on the road compared to a Silverado. Right.

Right. Now this is interesting. The. In the state of California, the car that causes the most fatal or has, is involved in the most fatalities. Honda Civic.

Only in California. Every other part of the country, like the trucks dominate. I think that that's fascinating. The low ones.

California's not a truck market. Well, not, not Southern California.

No, the. The low stuff on this list. Hyundai Elantra, minimal amount of dead people. Nissan Sentra, Honda crv, and Ford Mustang.

So on a rainy day in California.

Who'S the person tailgating you Right up on your butt?

It's always a guy in a truck.

Yeah. With the big light bar above the top and it's lifted.

So it is kind of tied to personality. Yeah, a little bit.

And then the balls in the back.

That's always funny.

Yeah. So that makes sense. It's gotta have something to do with driving habits, not just volume.

That's a good list. That was fun. Okay, now let's get to the crazy markups that are happening on new cars, and let's talk about what they are, and then let's talk about what impact it's gonna have on the service drive.

So thinking about that.

Well, you recently.

Just bought a car. I bought a car at the end of the year, and when I was going to buy the car most of the dealerships were charging over. I found one that wasn't. And I, you know, maybe knew somebody.

Yeah.

But if you're a regular consumer and you don't know anybody in a lot of markets, you're gonna. You're gonna pay over. Also, what's interesting is a lot of the cars aren't online anymore. Like, the dealerships aren't paying to put them up on autotrader and cars.com and all that, because I think they have more customers than they have cars. So they don't need to market. They don't want to pay for that. And also they don't want to put it up because they don't want consumers to see how much they're charging over.

That's right. So I did all of my searches through the manufacturer website and vehicle inventory locators. So I knew what I wanted. And then I. I had the color picked out, all that other good stuff. So I. I got it down to where the vehicle inventory was listed, and almost all of them said call for price kind of thing. Like, they weren't really listing the prices. So I found a couple of places. I tried it without using my I know people in the business card. And just call.

Went right to that.

Yeah. And just pull that card out. Yeah. I might have been doing a little bit of research just to see how it was, and. And I reach out to a dealer that had the one that I wanted, and they're like, well, we're happy to sell that to you for five grand over list. And I'm like, I'm happy to not pay five grand over list. That's great news. And I even said.

I'm like, who said that?

Well, do you want me to name the place?

Well, it's not the place you bought it from.

No.

So the first place you went wasn't our client.

Correct. Because they had the car. Oh.

So did our client dealer trade for it?

No. So I took a car that they had in their inventory, which I. It was like my second or third choice anyways.

Was it a different color or what was it?

It was. The only thing was what color did you want? I wanted a blue color because.

And you got one color, like a really cool looking. He got a. It's a 4. It's a BMW 4 Series convertible is what Christian got, if anybody's wondering. And so you wanted the blue, but you got gray.

Like a gray color. Yeah. Which I thought was a really cool color. It actually looks like Clyde's wrap. It's very similar to that color.

Clyde for everybody is.

Everybody doesn't know that the Tesla's name Clyde.

We name our car. So my Tesla is Clyde because it matches a gun that we have that's called Bonnie.

There's always logic to your name.

Yeah. And then my Range Rover is named Winston Churchill, but we call him Winston and that's just because he's English and he looks like. He looks like a general. The thing does.

He does so. But they were. I was negotiating with them. The dealer that I didn't buy from, I was negotiating with them and they're like. They literally let me walk for 2,500 over list.

Yeah. Because they got more customers than they have cars.

It did not matter to them.

So we got to think about this from an industry's perspective is all these customers are paying over the value of the car.

Yeah.

Now what's going to happen a year or two from now we already are seeing. So I was with a big manufacturer last week. They said the average car on the road is 13,000 miles. Now in their 13 years. 13 years.

Yeah.

Yeah, 13 years. And I think that might push up. I mean we might go 14, 15 because people are going to keep their cars longer. So you have a list. I get. They have not shared this with me. They think it's funny. So they've been laughing about this for two days.

Yes.

A list of cars. You're going to have me guess. What are you going to tell me?

So I'm going to tell you the type of car and you tell me how much over sticker they are.

You're going to tell me what MSRP is?

Sure, I can do that for you.

Okay. And so how we're gonna go through, like, I think you had 15, but I said we should only do seven. Right. I think 15 is too much.

So I've got. We're gonna do exactly seven. So the first one on here is a 2021 Mustang GT Premium. Not even the Shelby or anything like that. The list price on this beast is. Is 41,000.

That's a fun car. Okay, so I'm gonna guess they're charging.

Five over, so that would be reasonable. But we found this vehicle listed for $145,000.

What?

Marked up $100,000.

How. What state?

I don't have the state listed, but I did actually click on it. It was on. I.

By the way, there's real links to this. And yes, I don't know how long the cars will still be on the market because somebody might go pay 100 over and buy this thing maybe. But we will on YouTube, we'll put them in the description. Just so you guys can see. That's one thing we were talking about this morning is people aren't going to believe.

Yeah. So we, we verified this list before.

We talk about it.

For regular. It's. Yeah. So it's a regular Mustang. It's not. It's not the fancy Mustang. I thought that was fascinating. Okay, now, next one. This one I expected.

This is a Chevy Corvette 2022.

Okay.

MSRP90805.

I'm gonna say it's marked up 20 because I've seen them for 110.

Yeah. This one's going for $130,805. A markup of 40,000.

Yeah, I, I guess you could make the case that that car is worth 140.

But yeah, I think that we'll get into.

That's a different kind of buyer. Like, I think the guy, the person buying a Mustang.

Is.

More, you know, more susceptible.