#2 - Meet Luke

Hello and welcome to the Independent Dealer Podcast, episode number two with our good.

Buddy here, Luke Godwin from Godwin Motors in Columbia, South Carolina.

Awesome. And I'm Jeff Watson. Today we are actually going to be talking to our good friend Luke. Woo hoo. Is it a good one? You feel like you have some good information in this?

Yes, sir, it's awesome.

This is going to be a great podcast. We're going to talk a little bit about Luke's origins, a little bit about of the challenges that he sees going on in the industry today, and some practical tips you can put into practice right now. So stay tuned for episode number two. Okay, so here we are with Mr. Luke Godwin of Godwin Motors, right?

Yes, sir.

Awesome. Awesome. And where are you? Where are you guys based out of?

Columbia, South Carolina.

Columbia, South Carolina. So tell me this, Luke. We're gonna be doing these podcasts back and forth quite a bit. We want all of our listeners and viewers to get to know who is Luke, what makes him Luke.

How about you, Jeff? We gotta know what you are too, buddy.

Yeah, we'll get to that one. That'll come later. But no, tell me just real quick, how did you get into the car business and what keeps you here?

It goes way back, man. My grandfather was a dealer. He got into the car business in about 1950. He was an agricultural teacher in South Carolina. And he just started a family and needed something else. He was a retired at that point. Not retired, but he was a veteran. Came back from World War II, finished up at Clemson, got an agricultural business. His father was a farmer. And the next thing you know, he's doing that and wasn't making enough money doing it. And so he started selling cars at a Ford dealership in a town just next door to the town he was in at the time. So I guess he kind of worked his way up, became general manager, then part owner of a Ford dealership in Sumter, South Carolina, which is about 60 miles east of here. And he worked there for several years. Just a really dynamic guy, great sales guy. Probably not much of what we would call a store manager at this point, but more of a just sales manager, but so good at sales. He was a. Became general manager, part owner. Well, Ford at that point was essentially giving out spots and franchises. Yeah, right. And they, they promised him one. And so he got, I think in 1974, got the point in Winnsborough, South Carolina, which is about 20 miles north of where we are now. And he loved it. But unfortunately, the prior owner to that dealership Was not very good. He was, you know, just a bad operator. Didn't take care of his customers, backdoor deals, you know, just what you would find your typical. The way most people would think of a car deal.

Yeah.

So it was a hard road. He didn't have a lot of capital. And we all know this is a capital intense business. He just struggled and struggled. And then the recession of the late 70s, gas shortage and all came. And finally in 81, my grandfather had to shut down. And then he went to work for someone else selling cars. He did fine. But when he shut down, my dad. So my dad grew up going to all the Ford son school, the dealer sun school. So he, he really had a good base on management and sales. And he opened our store in October of 1985.

And that was an independent store or that was a Ford franchise independent store. Okay.

And it was right in the middle of all the new car stores in South Carolina where we're located today. There used to be 10 new car stores within a half a mile. Fortunately there's zero now. But you know, in 85, it was where you needed to be. And he was selling cars, I mean really cheap cars. He, you know, 900, 1200, $1500 car that paying 2, $300 for. And you know, whenever it seems like whenever somebody gets into the car business, the next thing you know you do is you want to sell a little higher priced car. You know, I want to sell them newer cars. So he started doing that.

And.

The local credit, not credit unions, but the local stores around here, not stores, but the local finance companies around here. He just found it. It was getting harder and harder to get these people financed. And so just a couple years after he started, he started financing his own paper. We were probably at the time one of a handful of people that did it in Columbia, South Carolina. And now we're the oldest buy here, pay here store in Columbia, South Carolina, if not in the whole state. We've been around doing it longer than anybody, but we were in the same location from 85 until 2011. We bought the property we're at now in 2011. It was an old Nissan store. We upfitted it, built a couple buildings and so we've been here since then.

So your dad started it, got into the buy here pay here in the late 80s. And you came in. I mean, is this something you grew up at the lot? Were you detailing? Were you lot porting? I mean, has this been Luke's trajectory his whole life or was this kind of a roundabout? I Went to college, I graduated, I went and worked for Bain Capital and came back here.

So a little of both. So in 85, I was 6 or 7 years old. So every weekend, I was, most every weekend I was down here washing cars. And then I started working the summers, probably after sixth grade or so. So I was 10 years old or so I was working on cars, I was sanding cars, selling cars probably when I was 13 or 14. So I grew up in it all throughout high school. And then I did go to college. I went to South Carolina, which is only about an 8 minute drive from here. So I would go to school in the morning, work in the afternoon, work Saturdays, you know, whatever we needed to do, that's what I did. We were at that time only it was my dad, it was my uncle who was a technician at the time. He, he quit about 019 or 01. And then we had maybe a detail guy, that's all we had. So really small at the time. And I was, you know, just, I'd plan to be a doctor. So I went to college. A biology degree and no business, never took a business class of course.

Uh huh.

So got out of college and I said, you know, I'm gonna take a year off before I go to med school. And during that year I started working back in the dealership a little bit. And next thing I know I'm stuck and not, I mean, not stuck. It's been great.

Yeah, yeah, yeah. That car bug bit ya. Now tell me this, Luke, is it you? Come in, you're running a buy here pay hair store right now. Do you look at it or. I'm curious. Are you hooked on it because of the love of cars or are you hooked on it because of the love of the bank or the financing side? I think there's very, two very distinct sides in a dealership, especially buy here, pay here. Some people look at it as a good business model, some people look at it as good business. They just like cars.

Cars are a necessary evil. We're a finance company, we're a service. We're a service company and we're a finance company is what we are. And we are somewhat of a car dealership, but we're not the normal car dealership. So I love cars, I love classic cars, I love cars that I can't afford, but your regular old car I can care less about.

Yeah, right, yeah. Just kind of a ticking time bomb I like to call it.

Oh my gosh. Yeah. And the manufacturers make me so angry.

So that leads me into My next question for you, Luke, tell us this. As an independent dealer, you grew up in the space, you're definitely heavy in it. What do you see is the biggest challenge today? Or what would you like to see, you know, change or what do you see as the biggest hurdle for the independent dealers?

You know, the buy here, pay here space. The biggest challenge is capital because you can outgrow your money so fast. And I, you know, I see that it's capital and it's people capital as well. The biggest, you know, we got, we as buy here, pay here stores or even used car dealers in general. Sometimes you have this stigma and it's hard to get, you know, it's not hard, but it's harder than it should be to get really great people working for you. We're lucky that I've been able to find those people.

But.

It'S the money capital in the pay here space that's hard. And it's making sure you get the right people in the right place is the hardest thing.

Okay, Getting the right folks in the right seats. How do you feel like as a new dealer coming into it or an independent dealer stepping into it? Do you feel like those are going to be the two obstacles they feel like they need to have their hands on the most? As well? So say you're brand new and you're thinking, hey, I see these guys making great interest loan and doing loans on vehicles. I want to get into it, you.

Know, in the buy here, pay here space, I don't see how you could do it. I don't see how you could start this business from scratch without having worked in one or having a banking background that allows you access to the money. Because let's face it, you know, to start this business today, you're gonna need a minimum of $2 million and that's to do it on the small end. So I just, I don't see how. And I think that's thing that goes with when you see drive time in it heavy. And you see US auto sales around here, American Car center, these big stores, these big money back stores through private capital or hedge funds or venture capital, whatever, it's making it hard for all of us to operate and it's going to make it almost impossible for a new person to start a bike or pay your store, in my opinion.

Okay, so give us some advice as far as something that I know. Some of the people that are going to be listening or watching this are going to be new to the industry or small, and maybe they've dabbled with carrying some of their own notes. Maybe they're not carrying their own notes and they're just selling cars retail, Give us maybe. Do you have a couple of maybe suggestions or tips that these guys should implement as soon as possible?

The number one thing is buying the right car. And so you have to have some education in the purchasing of vehicles and in operation of vehicles. I was lucky that, you know, I worked on race cars, I worked on go karts, I worked on cars, you know, since I was 8, 9 years old. So I really have a good understanding of what makes a good car a good car. Find the right car. Don't find the car that you like. Find the car that will hold the note. And if that means starting out with, with 10 notes on cars that, that were more expensive but better cars, and that's what you do. You don't, you know, if it means buying, you know, five, $3,000 cars instead of, you know, 100, not 100, but you know, instead of buying $15,000 cars. And that's what you needed because the car makes the loan. And if you can't figure that out, your repos are gonna outrun your sales.

Okay. And then from a cash standpoint, I think a lot of new dealers would look at that and say, oh man, that's scary. You know, I can buy here, pay here. I'm fine carrying the note on a car that I'm into at a grand, and that's okay, that's comfortable for me because I'm gonna get a grand down and I'm gonna have no money on the street. Now does that model still hold where people are getting out of the car? You know, dealers are getting out of the car cash wise from day one. Do you see that happening still in areas?

I don't see how, I don't see how it can work. A few things, and my 20 group always gets on me about this, but I don't see how you can get a thousand dollars down a thousand dollar car number one, because you can come to me and put a thousand dollars down, get a car that, that's gonna, you know, it's a $10,000 car retail wise, and it's one that I probably have for. I have $6,000 in. So it's, you know, there's a, you can go somewhere else and get a better car, but there are probably pockets in the country where that model still works, small towns that, that people aren't having to, you know, Southeast, I would say is probably the, the car capital of the US Prices are higher than anywhere else. So it would be tough here. I mean, a thousand dollar car, man, I don't see how it makes three months, you know, much less.

Two factors I think playing against those people is a, there's not $1,000 car out there that's worth anything. You know, those don't exist anymore. And B, yeah, you don't. You've got dealers that will take $1,000 down and carry you on a $10,000 car. Because of competition, because of the way it is right now. Yeah. With the exclusion of those that are in the smaller markets where they don't have the competition. And it is what it is. You know, I think that's one thing. And back to your first point about dealers that want to get into buy here, pay here need to be careful that they are looking for cars that fit the program, not cars that they like. You know, I think as car guys, you can fall in love with a certain vehicle, a certain make and model or a certain, you know, and you're trying to push onto the customer what you like as opposed to paying attention to what they like and what's actually going to make for a successful buyer. Pay here loan.

And I never go with what they like. What happens though, it seems like, is you find a car that your customer really likes and that's a good car. And when you find that, that, you know, it's like lightning in the bottle. When you find that car that works that your customer likes and is a really good car, man, that's exciting. You know, we had a run of Honda Accords from 1987 to 1997. That arguably is one of the best cars ever put on the road. And that car, for a long time you could buy it, right? You could sell it. The customer liked it and it stayed out for 24 months, 30 months, with no problems with 150,000 miles on it. So that was lightning in a bottle back then. And that doesn't always happen, but when it does, you need to hook onto it.

Yeah, yeah, understandable. So now would you say transitioning from that, talking about the old cars that worked and how it was back in the day? Where do you see the future of independent dealers? Whether they're buy here, pay here, whether they're cash, traditional outside subprime loans or where do you see that going for guys like you and me, when we're going against the, you know, the Carvanas and the Amazons and the Teslas, you know, direct to consumer type sales or large, large franchise dealers, you know, the Consolidation of the small dealer.

Man, I'll tell you, it's the last five years have been the toughest years to be an independent dealer. I mean the toughest that I've seen, you know, in 20 years. And it, don't get me wrong, it's been easy before the last five years, not easy. The Internet has changed. It's changed everything. And luckily I was an early adopter, you know, you know, 10 years ago or 12 years ago when we listed our first car on ebay. Customers like to shop behind the computer. And so if you're not, if you haven't accepted that yet, you're probably not gonna be in business much longer. So the thing you and I need to look at is what is that? Next thing that's changing the face of our business is that, you know, a fleet of cars that we're able to service ourself and they go pick up a customer at their house and take them where they go. Is it a shared ownership? What is it? I don't know. I think it's a, I think automated cars are gonna make a difference now. It's probably 10 years out. Not that I think they're gonna make a difference. They are gonna make a difference. You know, is it something as a buy here, pay here dealer. Do I own a fleet of, let's say I've got, I've got a thousand accounts. Do I own 500 cars to service those thousand customers? I think the model is going to go to something like that and I don't think it's right around the corner, but I think it's something we need to have in the back of our mind. And when we see a shift from Uber doing it or Lyft doing it, or Google doing it, or Apple doing it, whoever's going to do it, we've got to be prepared for that. And for that matter, that might be what Ford and GM are doing by going away from the sedans. You know, they may see that the trucks and SUVs are what's making them money and people are gonna still want those, those models, but they may see that. Well, you know that nobody really wants to buy this sedan, but if the sedan was a car service, maybe they would. We all need to be aware of this and we need to think about it. We don't need to be just stuck doing what we do because if we do, we're gonna get past.

Yeah, it's the, it's the age old adage, you gotta put yourself out of business before someone else does. I Think you gotta be continually reinvent. You look at, you know, I mean, in the beginning there was the mom and pop bookstores, and then Barnes and Noble came in and put them out of business, and then Amazon came in and put them out of business. And someone's going to put Amazon out of business someday, you know. And so I think just like as progressive, let's say you use that word, buy here, pay here, dealer, you came in and you ran a model better, and you've probably taken market share and possibly put a fellow dealer out of business down the street who was running a dealership one way and may have had great success in his day doing it the way he did it, but he didn't adapt, he didn't change. And here you come into town and you do it better and you're, you know, on the cutting edge and there's less friction for your customer and all of a sudden you become the preferred place to shop. You know, same thing could happen to us when someone comes into our market and says, hey, we, you know, this company does it a little bit better or a lot better and all of a sudden puts us out of business.

You know, I was so scared when drive time came to town and they've made me better. You know, I hate to admit that, but when you look at, when I looked at the cars they were buying or I looked at the, the warranty they were offering, and this was at the very beginning of drive time, I think they'd kind of gone away from that model now. But it made me really think about what I was doing and what I was offering and hopefully that every time I see a new competitor come into the market, I try to analyze what they're doing and take some of the really good things they're doing and incorporate into my business and see the bad things they're doing and make sure I stay away from it.

Yeah, yeah, that's great. It's a good thing to say. And it's not that they can come in here and just squash you, you know, and put you out of business next month, but what it's going to do is it's going to make you change the things you do and also focus on your competitive advantage, which is, hey, you know, we do everything these guys do. We do a little bit better and we have an owner in store on location that's going to help you out.

And, you know, yeah, that's a great point. And I think that's. So many people miss that, that if you can come into a store and you have a problem and, you know, you can talk to the owner, man, that's a big deal. It's a really big deal. And I think. I think the bigger you get as a buy here, pay here store, and the further you are away, it hurts because you're not. You're not the mom and pop store anymore.

But we got to remember to keep that focus. And, And I talk to my people all the time about this, is they've got to like us. You know, people buy cars from people they like. You know, not some big name because of this, that, or the other, but as long as you're giving them good service and they like you, they're going to come back, you know, And I think that's the number one thing we've got to focus on, is we have the ability to provide better customer service.

People get all wrapped. Oh, for sure. To piggyback on that, People get so wrapped up. Dealers, I'm gonna say dealers get so wrapped up in the next new way to sell a car. Listening it on ebay, which was big 12, you know, 12 to eight years prior. Autotrader, you know, or cars.com or cars guru and. Right. So people get. People get all crazy about this and. And they don't look at their. The actual numbers, because they do. And if you're doing business the right way, most of your business is referrals and people who have bought from you before. It can be up to 70% of most people's business. And if you forget about that side and you worry about everything else, next thing you know, you lost that 70% and you're paying thousands of dollars a month that you don't need to.

Yep. And that's definitely a topic that I think we can dive into in a whole separate podcast is people that don't realize they've got. They've got the best referral source right under their nose. You don't got to be paying Cars.com or Cars Guru or even Facebook Marketplace to get those people. You've got a Rolodex of them right. Right there in your keyboard. So, Luke, just to wrap this up, give us. Give us maybe, you know, one practical tip that us as independent dealers can take and put into our business today. What can I. What can I do today when I. When I hang up with this podcast, I get done at the gym, I get done with my drive, whatever it is I'm doing that I can put into my dealership today, Meet with your staff.

That is. That is key because you know how you want your store run, and you think your. Your staff is doing that, but the more you dig into it, you may not see that you need to make sure you tell your staff how the customer service operation should work. You want them to know we want to treat that customer like family. We need them to really feel like that we want their business. And if you're not meeting with your staff and explaining those things to your staff, you're not going to. Next thing you know, you may not have a company because you're. You could have one or two angry staff members who were treating customers badly. And if you have that, you're going to earn every bit of goodwill you've already created in your company.

Absolutely. You got to inspect those things and keep a standard. I would say maybe is the word, but. Awesome, Luke. Awesome. Kay. Well, this has been a good, fun time getting to know you today in this episode and hope everybody tunes in for next week. And we will keep you guys updated on what's going on in the independent space here. Luke, anything to say as we head out, man?

Jeff, you know, you put this together. That's an awesome thing you've done, and hopefully we'll help a lot of dealers out.

All right.