#185 - Overcome Todays Challenges w Joe Lescota

Welcome to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson. A podcast by dealers for dealers. Here we go.

Hello and welcome to the Independent Dealer Podcast. Today we are coming to you live from NIADA 2021 Convention in the dealer lounge. Incredible guest guys. If you're watching this on the video, you see the face Mr. Joe Lascoda here. We cornered him, we tied him down. Luke's been hanging onto his ankles all week trying to, you know, and he's tall and fast.

Very wiry, very wiry.

Shakes you right off. And then he's gone.

And so luckily after the Chris Collins thing this morning, and that was, that was interesting, I thought, very interesting. We were able to corner Joe. And first off, Joe, where you been?

I actually have done a lot of consulting work and educational work and designing programs, educational programs with a couple of major franchise manufacturers. I've spent a lot of time up in Canada as they are revamping their education process and looking to help dealers with used cars.

Great, so they sell used cars in Canada.

I gotta tell you, they're killing it. Just like we are in the us.

They all have snowshoes on them.

Oh, okay.

Yeah. I gotta tell you, I don't miss that clue.

I'm surprised you got out. I thought once you're in Canada, you're stuck in Canada, right?

Well, that's. I got out just in time.

Okay.

I would have been stuck in Canada. Good, good. That border shut down and I do miss. I made a lot of friends up there. The dealers are really, really awesome. They're almost like independent dealers. Really awesome. Really down to earth.

Aren't you from, Are you from there?

From Canada? No, I'm from Jersey. Almost like it. Okay, well, I'm just more rough.

But you've always worked up there a lot, right?

Oh, yeah, up there for almost 15 years.

Just more rouge. They'll cut you in New Jersey, but they'll offer you a Molson in Canada, right?

Why don't you shut up.

Talking trash. Joe has filled us with so much education this week. A couple of great breakout sessions. You hosted some good stuff. I mean, obviously you've been busy, you're in touch with the community. It's not like you've been gone, you've been fine tuning and working on up.

With what's going on.

Yeah.

As you look at what is stagnant, what is not. And this business, of course, has always changed, but it's been more challenging over the last couple of years. Over the last three years, Covid has had certainly its Impact. The economy has its impact. The president has its impact, and so on and so forth. So it's been a little crazy. So my biggest challenge as an educator is to keep up with what's going on, the good, the bad, and the others. And from the franchise standpoint as well as the independent standpoint, because, quite frankly, the franchise really directs what happens in the used car market. You don't get used cars unless you.

Sell new, and we've really seen that lately.

Oh, no kidding.

Oh, my. So that's an interesting point you bring up, Joe, because, you know, we're dealers, so us interviewing people, we can kind of stay on top of what's actually going on. You not being a dealer, how do you maintain that? What's going on? I mean, are you calling other dealers? Are you in their stores? How do you. How does that work?

I'm in stores certainly for the last year and a half. I've been zooming. Okay, all right. I choose not to go into dealerships, trying to keep myself healthy, but I have to keep up with dealers. And actually, I got to keep up with the. I guess it's the OEMs, the manufacturers, because that's really what is prompting a lot of the educational questions. They want to know what's going on. And if you really want to find out what's going on, you really want to look at customers and what are they thinking? What are their changes in their. And their habits? And certainly no one predicted that we would have the kind of banner two years that we had. No one thought of that. They thought Covid would shut things down, and everyone hunkered down. No one anticipated all the free money. Right. Number one. Yeah. No one anticipated the government be so generous giving all these down payments. The second thing was no one anticipated that, you know, those that didn't drive couldn't take it anymore amongst their own families. They want to get out.

Yeah.

But they got rid of the cars. Ubered. Uber was really the big thing. And then they realized, I don't want to sit in the car with a stranger, so I don't want to Uber anymore. I want my own car. Yeah. It's very interesting. All the things that happened, we didn't think would happen.

And as quickly as it happened.

Right.

Oh, I mean, it wasn't. I mean, it's instantaneous.

It feels like a blink, right?

Oh, it was a blink. Yeah.

So, you know, I. I think I've said this on podcast before, but I heard another guy on podcast say that technology advanced five years in the matter of like several months. I mean, have you seen that also in the car business?

Well, technology, the way we do business that has been.

We've implemented technology.

We've implemented technology. The fact of the matter is I have tried to get dealers for years to start looking at that, learning about how we should be addressing. And those dealers who got a jump start five years ago, actually listen to me, they did much better. They fared much better. And ironically you still have dealers who are banking on Ford traffic, they're still banking on their local market. They're not looking at the entire country and quite frankly, other countries.

You know, that's interesting because I remember sitting in 20 group with you five, six years ago and you did make us look ahead.

Really?

Why are we thinking about this right now? Well, we didn't realize the things we took from that, you know, getting back to leads quicker, thinking about delivering cars at home, thinking about the appointment being different than the ups because the ups were going away back then. But you really got us to look forward. And that's, I mean, that's one of the great reasons you're such a great educator.

Well, that was the reason actually. When I was asked to conduct a session here, I asked, what do you think the topic should be? I always ask my clients, what do you think the topic should be? What are those asking for? And I kind of stumbled a little bit now. I guess it was a typical answer. And I thought, you know what I really want to talk to dealers about preparing for what is going to happen, not what might happen, what's going to happen. Financially, the market always corrects it, Always, always, always corrects. Those guys who made a ton of Money on the AMC Theater.

Yeah, GameStop, they're going to get it back somewhere.

Yeah, well, a lot of these guys forgot get paid taxes. Yeah, all these young people who were brilliant and jumped in, made a lot of money, but they forgot those are short term gains and they're taxed a much higher rate, long term gain. And some people didn't know you had to pay taxes. So I thought what I wanted to do was share with dealers and remind them that this is really good money right now. And they're selling cars like crazy. But you gotta remember tax structures are changing and most importantly, this ride will end and you better be ready for it financially.

So how do we, how does that look? What can a dealer do best to prepare for the downturn that's coming because we, we. That's coming. Right. So how can we best position ourselves financially to weather those type storms we.

Had in 08 become better business people and less of car dealers, in my opinion.

True.

You know, car dealers are trying to get in the business of, I like cars. Yeah.

But I could sell them.

Yeah. And I thought it could be. And you heard that a lot of those guys are now doing something else. They went broke. So I beg dealers to step back from the fun part of the business. That's why you hire people. And chances are you're still doing things that you shouldn't be doing anymore because you're paying someone already to do it and you're doing someone else's job.

Yeah.

That's for sure. Paying big bucks for it because it's fun and no one's looking at the books. One of my sessions, I brought up the fact that there's probably dealers out there who. Who haven't seen their own financial statement in three months. You know, whoever does the books still has them. Yeah. You're going, what the heck? You know. Why are you not demanding your financials? Well, you don't demand it because you're making money.

That's right.

And as long as you're DB and do business.

Yeah.

Selling cars.

Pretty sure it's in the black, so I'm good.

It's in the black. Hey, the bank's not asking me, and that's.

And I think so many of us get to that. And one thing I did, you know, one of the main things I Learned from your 20 group was that.

It.

Was about the financials. And you and Dave Keller and people like that have made me to look at the balance sheet and do what it's supposed to do. When we did cmd, I remember, you're like, you know, we gotta look at the balance sheet. That's where it's at. And so the more you can reconcile, which we were talking about this morning and know where you are, and you were talking about back then. You know this. You don't look at the end of the month. You gotta look as things are happening. Is that the way we still have to do it? I mean, because it's coming at us fast.

It is a business. And I know dealers who put $5,000 into the stock market today, and they're on their phone looking at that stock they bought for five grand every day.

Every day.

A couple hours a day. And you ask them, how much inventory are you carrying?

Well, I don't know.

I only laugh about that because how.

Much is not ready.

Yeah, he's the same. You buy a little bit of, like, cryptocurrency. You're checking it by the hour, but you're right.

Yeah. How much inventory are you getting? Ah, I don't know.

I don't know.

How many.

What's your average cost of car?

I don't know. What are your payables like? Yeah, I don't know.

Well, that's. I mean, that's something everybody does is we. We stumble over to dollar bills to pick up the pennies or.

That's not you. You look at any business that stumbles. It's the people who got into. I want to run a restaurant. Why? Because I love to cook. Yeah, well, you can love to cook.

Just do that at home.

Right? Help me with that, Joe.

If you.

If you are a car dealer and.

You love to cook, you love cars.

You'Re not good at financials. Do we need to be good at financials?

Is that just like a prerequisite? No, not necessarily. Then hire somebody who is good at financials.

Get to the point where you can hire someone to give it the attention it needs. You're not just talking about, hey, my buddy does the accounting for me, and he sends me a financials once a month or once a quarter.

Love many, trust few.

Okay, you're saying about.

But to that point, a partner should be different than you. If both people agree, one of you is not needed. Right. So you want to have someone who will help you to disagree with yourself. My daughter just opened up a wine bar in Elizabeth City, North Carolina. It's called Two Souls Wine Bar. And the fact of it is, my daughter is excellent at customer service. She was born for customer service. That's her forte. When it comes to the business side, I was concerned, but she has a partner, and the partner is not nearly as good on the serving side in terms of ordering the food, knowing the menus, wines, and so forth. Just not good at it. As a matter of fact, the first night they were open, her partner was asked to serve tables. They just didn't have enough table. It was crazy. And when the night was over, she said, you know what? I can't do this part of the business. I'm lousy at it. But she is good at the organizing and marketing part. So they're purchasing. Perfect. If you met my wife, we're totally different. Yeah, I mean, I would have left me a long time ago. Even I annoyed her. Yeah, right. We're so different. And she keeps me balanced. You know, one of the mistakes that business people ask of their teams, for example, hey, guys, I got this idea. What do you think yeah. Well, what you just told them was, I got this idea, I'm going to implement it anyway.

Yeah, yeah, yeah.

And I just want you to tell me that it's good. That it's good.

Yes. That you're on board.

Never ask your people, what do you think of this? Ask your people, Give them the problem. Say, here's the issue.

Yeah.

Now, what I need in this room is some ideas on solutions. If you own the business, what would you do? But never, ever, ever ask, what do you think of this solution?

That's interesting. That's so interesting. Because as entrepreneurs, we're fixers, right? That's what we're. That's what we think we are. And really, we can get to the point we're trying to fix too much and not listen to other people. So, I mean, do you think this is something we should do once a week with our staff or just whenever we see a problem that comes up?

I think you have to get me used to participating. How many times do we ask anyone how many questions and hear cricket? See, I'm afraid if I say the wrong thing, I'll get punished in public. You'll laugh at me. That's a stupid question. Or my colleagues will laugh at me. So you have to be used to the idea of asking questions. So during your weekly. You really should have weekly sessions. Here's where you are. Here's a rate of travel. These are situations. And I know salespeople. We like to be positive. And there's never a problem. You know, it's always opportunities. But guess what? That's a freaking problem. Yeah. You know, quit sugar coating and Pollyanna. This is our challenge and we need to find a way to fix it before the market fixes us. So I'm going to toss it out there and I need your suggestion. What do you think?

That's really great knowledge there and something that I think all of us should be doing in our dealership. I think I will implement that soon because we got issues. Right.

Everyone does. Ask the wash guy. If you have a problem with reconditioning, quit talking to the manager. He'll only yell about service.

He'll blame them. He'll blame the other guy.

No one's asked the wash guy who's working with a vacuum that doesn't suck. Yeah, he's working with one light overhead, so he's getting shadows. And the fact of the matter is he doesn't have the supplies he really needs. And there's water sitting at his feet. So as soon as he drives that Car out. It makes the car dirty. It splashes water up. But no one asked me his opinion.

That's right.

We had that problem a few weeks ago. And I was like, why are these seats not coming clean? And I had to go find out why. So I went and, well, the extractor we'd had for years, Guess what went broke three or four months ago. And nobody gotten all the way to me yet.

They won't tell you. It's amazing. They won't tell you. They're afraid to tell you because the last time they told you, you blame them for breaking it.

Joe. Joe might be right.

It's a brand new machine.

The first thing you said was, that machine's not why you break it. That machine's not that old.

Take care of your stuff.

You forgot you bought it in year 2000.

Yeah, you're right. Oh, man.

I mean, I got things in the house I look at and I tell my wife, I cannot believe it's broke down. Says, Joseph, it's 17 years old.

Yeah.

I said, don't make a mike that.

You said, really?

Yeah.

You don't? Yeah. That's 17 years old. In my mind. I just bought it.

Yeah, sure. What is in the past year and a half, I guess, is that how long we've been in Covid? Because I've kind of lost track. What is the biggest impact on dealers in this last year? I mean, we've had a lot of things. What do you think was the biggest?

I think the panic mode of not knowing. Knowing how to sell. And that is how do I capture business that I was so used to walking through the door. Where do I go now? What do I do? Yeah. And many salespeople are not conditioned prospect. We made them lot lizards. We conditioned them to sit at the desk and wake her up. So we got exactly what we deserved. We got salespeople who weren't used to fishing. They were used to fish jumping a boat. Yeah. You got dealers who were used to customers walking in. We enjoyed that business. It was a comfortable pace and we weren't prepared for being uncomfortable. So I think a lot of it was. We didn't manage processes, which, by the way, we already had. We just. Just threw them away.

Yeah.

We went into bunker mode, combat mode. It's every man for himself. Let's look at this thing. Process went out the window because our sales people got panicked. They're thinking, how am I going to feed my family? Yes. Managers got panicked. I was thinking, how might I make a percentage of gross? It's not Coming through the door, you panic because banks are saying, you know, we want money, Floor planners are screaming for their money, and so on and so forth and a lot. Guy just quit because he's making more money on unemployment than he was what you were paying him. So it wasn't being prepared. You thought you were. And you had these written processes, but because you weren't doing these processes for so long, we figured you didn't have any processes.

You know, like. Like I say, if you. You have a process, you just may not know what it is.

You may not know what it is you forgot. And then because no one questioned it. I don't know why you're yelling at me. Because you're violating company policy. I do. C, boss, I didn't know that was a company policy. Where is that written? Yeah, you just made that up.

What I find is interesting is even those. The ones where we have the policy or we know we need to make a policy. Policy or make a change, it's the speed of getting it in. We're still coming to convention a year and a half later after the pandemic, and people are talking about remote retailing and digital retailing.

I thought that was mind blowing.

And you're like, you haven't. It's been 18 months and you haven't figured that out yet.

Yeah, that was mind blowing to me.

If you have it, it's too late.

Because, you know. Yeah, we chatted about this 12 months ago and 18 months ago about doing these things and taking these steps. Why is it, as dealers, we don't do it or we don't implement it, or are we scared? Do we not have the courage? Is it too much work? Is it like changing the ship? We're like old dog, new tricks.

Say it's lazy. We're afraid of people quitting.

Yeah.

You know, oh, man, Bobby sells a lot of cars.

I tell him to start using this tank. No.

He's a pain in the butt. And I'll be honest with you, I wish I could fire him. He's my number one guy. So the other guys are demotivated by Bobby, who's a jerk.

They're flunking out.

Right. Everything he does is wrong. You're making me do it. Right. Yeah, but you said. But that's Bobby's way. So now he's the exception to the rules.

Right.

He gets away with.

Everybody's the exception.

Why not? Yeah, why not? I sold as many as he did last month. By the grace of God, I sold as many. Yeah. So I want to be excused too.

Yeah.

Bobby comes in when he wants to. Me too. No, you can't. Why, of course you're not Bobby. You say you know you're not Bobby.

Is that the old adage of being held hostage? Excellent. Being held hostage by mediocrity or something. Whatever. That's right.

You're being held hostage by your employees. It's too good. The employees steal it. I can't fire him, right? Well, I don't want to. He's a good guy and he doesn't steal that much.

And he's happy.

He doesn't steal that much, but he's.

Got a good attitude when he does it.

Let me tell you something. He's never asked for a raise since he's been. Not better yet, you know, because he's been stealing. Yeah, but he's my number one guy, so.

So, looking forward, Joe, we know what we been through. Where do you see us going? If you could look into your crystal ball and make a prediction for dealers, where do you see us needing to be?

I think you see looking at efficiencies, how can you do it faster? How can you do it faster with less people?

That is what I want to hear.

Thank you. Right now I don't need. If I'm going to sell 100, I don't need to figure. I need 10 salespeople selling 10. That math never was good. It someone made that up at some conference or sales seminar and said you should have 10 salesmen and you're going to lose some so and so forth. The fact of the matter is, you know, your salesman should be selling faster. So I don't need as many. It should not take four hours to close a deal.

Right.

So if I can shorten the selling process by doing more of it online. Yes. So that it's more of a transactional issue. When I come in, it doesn't take me four hours. It takes. Takes me an hour and that salesman can sell, close the deal, wrap it up and go on to another up. Otherwise he's watching UPS while he's still stuck with him in F and I, which. That's the other slog. Selling process could be fast, but I've seen customers sitting F and I for hours.

Yeah.

Haven't just held me up.

So if our process and customers hate, hate that.

No, no, no.

They just.

Oh my God. Who does department is this FI department. Yeah, we make it pure hell.

So you're saying if we. If we have better processes, obviously we revamp them because we're working on our Business. We're making those processes better, but then we're using technology to become more efficient. You know, you talk about that with underwriting. Why are they sitting underwriting after they.

Picked out a car?

You know, we flip it around. We've got the status already.

We've been doing it for 75 years. That's a habit.

Yeah. So we challenge that status quo of like, okay, how can I do this faster with less people? And how can I bring technology in? And now that I have these two or three technology resources, do I not need that person? Or can I reassign them to a better place?

Or the role's been changing.

I don't have to rehire them when they leave.

So we talk about that. And since I've talked with you, we've really had a. I guess scalability is not a word, but a huge increase in online retailing companies. Carvana, vroom. What do you think about those companies?

Where.

I mean, are they going to take us all down? Where do we fit in that cog? As an independent dealer, I have been.

Looking at Carvana for many years. I looked at it closely because I heard dealers laugh that Carvana will die. They can't keep that model up. I've heard they haven't made a profit since they open.

They're losing money on every sale.

They're losing money on every sale.

We've had this discussion.

They're going to disappear. The fact of the matter is it's not for everybody. Customers do like it. Not every customer does, but there's a certain market that likes it. I don't like Uber. I like a taxi. I mean, it's just the way I am. It's how I do. I won't order a pizza and have an automated truck to my house. Don't like that. If I go leave my house to go to a truck and I order pizza because it's raining or cold. Yeah. So this makes no sense to me.

So a robot comes.

Yeah. That makes. Yeah, until it comes to my door. It makes absolutely no sense to me. So as you take a look at Carvana, well, they figured out we can sell cars, sell it at a loss, and we make money. F and I. But franchise dealers have been doing this for years. They have been selling cars at a loss. Ford, Chevy, Chrysler, we're all losing money in new car sales. They're making money on service, on parts. And f and I called fixed coverage, and that's the word we built beat to death with a franchise dealer. We beat to death fixed coverage. That you should be able to sell a car at zero. At zero and have service business to cover all your expenses. So when you sell one car, you're profitable.

I think you told me. And I don't know if this number still holds true, but for every car you sell, what was the additional revenue that a new car sold?

$33,000.

And that customer is worth like 250,000 over their lifetime.

Yeah, right, over their lifetime in revenue. By the way, that's one of the challenges of electrification. Electric cars don't need that service.

So I'm glad you brought that up because I wrote down Tesla because I want to talk to you about that. They changed the business model on the franchise dealer is what it looks like to me. You know, we're shipping new cars to people's houses. We're making money on the car. And they're probably making money. They probably own a finance company. This, that and other. What is this going to do to what we know as a franchise store now? Do you think Tesla's going to change it or do you think they're going to evolve on their own?

Well, Tesla's already changing now. Tesla's, you know, with companies that make batteries for other cars, but they're Tesla batteries.

Yeah.

Okay. Tesla is looking at sharing the electrification socket right now. It's like having Android versus an Apple darn plug zone. Right, right. So you're looking at, well, if you go to a Tesla station, which could be available, can you put a generic charger?

Yep.

That's their answer now in charge. So that is an income stream for them as well. So Tesla hasn't made the money on the cars like we think it has. There's other investments that they're making their money on. All right, take a look at that. Look like dealers. I know a lot of dealers who are broke in the car business, but they made their money in real estate, Right?

Yeah.

That's how they get to helicopters and boats. It's not cars that's the ego part of the business. Their money is in real estate and something else that that they're doing. So you kind of have to get an open mind where it's coming from. Electric cars, you're better off. Another service financing, certainly one of those. Looking at accessory sales. That's certainly another one of those. I was questioned independence. How well do you do selling accessories?

And most of us say not very well.

Not very well. I still see the same nasty floor mats that the car that we're traded with. Right. That you steam clean to death with. That extractor with that extractor that doesn't work.

Right, right.

That you wouldn't put your bare feet on. Exactly. Why didn't you offer, you know, floor mats? Why aren't you offering weather tech type of floor mats? There's money in that and people will pay it.

Yeah.

You know what accessories can you offer that that you don't. That's. There's good money in it. Once I make the big decision to buy a car, I'll buy the other stuff.

The rest is easy.

The rest is. That's chump change. And I'll say once you got me done a big yes, I'll.

Yes everything else 100% of the product, 100% of the time, right?

Oh, absolutely, absolutely. Yeah.

Especially if a lot of it can be flipped at F and I and just.

$3 a month, who cares, right?

You think the airlines are not. Are they going to go back to not charging you for your bags? Not charging you for the little more legroom? Of course not. They learned. This is sweet. I came to a hotel here at the convention. They told me right up front, we're not cleaning your room.

Yeah, yeah. When that's ever coming back.

You think that's coming back? No.

I'd be willing to bet you Marriott is. Is saving millions of dollars a day by not having to do that, right?

Oh, absolutely. I called. I called operator last night. Look, I'm calling for tomorrow. Would you pick up my trash? I felt like I was home. My trash can was filled.

You have someone at home you can call to pick up your trash in your room?

Just hit the curb.

She's not gonna be listening to this.

Should I regain consciousness? Hey, sweetheart. I was only kidding, you know, the fact that I had to call somebody, you think they're actually gonna go back to day by day service?

No chance.

No chance. No.

God.

We don't change our towels every day at home. We don't change our sheets every day. You go, we got this figured out.

And we're saving the world because we're not using all that.

That's what they're getting us on is saving the world.

Saving the world.

Yeah. They're getting.

Well, Joe, it's been great. And we gotta do this again sometimes.

This is fun. Yeah.

People that want to get a hold of you and learn more about you and what you do and how your way of thinking, how do they get.

A hold of you? I guess there's two ways. One is just text me. Just tell me who you are when you text me. Otherwise, I think you're trying to get. Give me that warranty.

Yeah, yeah. You're selling the extended warranty.

Yeah. And as you get older, they try to sell you different things.

Yeah.

So Text me at 989-859-0960. Or if it's something but longer, send me an email. And that's Joe. J O E joelaskova J O E L E S C O T A M E T M E T. Right. Joe at Joe. Let's go to m et.com and tell me. Here's what I'm looking for. If you give me as much information up front and I can do kind of some research, then call you back and not waste each other's time, otherwise I gotta call you back and you're gonna go through a story. I'm getting bored. Yeah, yeah, yeah.

And look up. I know there's stuff you got. Some of your keynotes are online. They're on YouTube. I've seen them. Like, yeah, definitely research all that stuff from Joe, because Joe's thought pattern, his way of thinking is just.

It's. It's forward.

It's next level.

Anyone who knows me knows you really don't want to call me if you have really thin skin.

No, don't bring him to your store if you have thin skin.

I actually met a dealer here, and he was just. We were just so happy to see each other. I said, you don't call me. He says, that's because last time you kicked my butt. And I'm trying to heal.

And that's the truth.

I mean, I just. I'm not here to make you feel good. You want to feel good? Buy Hallmark.

Yeah, yeah.

Call your mom. You know, get a puppy. Call your mom. You know, I'm here to give reality.

This is it, and we need it.

Everyone does. And I know those guys. Well, you gotta kind of walk around this nice sense of. Then don't call me. Well, I tell you, sometimes the kid's ugly and your baby's ugly.

Well, Joe, thank you for helping us dealers all the time. And we look forward to seeing you around Niada some more.

I got a session. Yeah.

Awesome. See you.

Thank you.

So glad you joined us. Please take a minute to leave us a review and share this podcast with a friend, the independent dealer. Podcast Dealers, helping dealers.