#215 - Recon In Todays Market w/ David Brotherton

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hey, and welcome to another episode of the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. And today we have one of those consultants here with us, the infamous famous, the needs no introduction, David Brotherton.

David, give us an introduction.

Well, evidently I'm both famous and infamous. I'm not quite sure I can stop that. Thank you both for having me with you today.

Well, thanks for being here. We, you know, you're going to be about here, pay here, United. We've been talking about buy here, pay here, United for about three months now. And David, just go over a couple of the sessions you're doing. What's, what's going on there. You've been to, you've probably been to a thousand conventions. Why is this one different? And what are dingo's going to take home?

Well, and thank you. Great question. And I'm going to kind of handle those in reverse order. I mean, what makes it different is that the vendor focus, the sales pitch focus that you're so used to seeing from a lot of industry conventions simply isn't going to be there. With no exhibit hall and a focus 100% on education, we're giving dealers what they want, what they need with none of the extras. As far as what I'm doing personally, I'm really excited for the opportunity to do a couple of my sessions. I mean, I'm moderating a panel and we're definitely going to be looking at tech culture and tech retention and hiring. But I've got great service directors and managers from around the industry. Some of my biggest long term clients are going to be there to take questions from the floor and deal with how they handle it. So it's not, I'm moderating that panel. I'm going to let them run with it. Those guys know what they're doing. They're solid. Really looking forward to the insights they can bring to the table because they have done a good job keeping their crews intact and keeping their techs focused and working. Also going to be looking at the customer service angle of service, the service department, it's interactional collections and how you bring the customer service angle to service. Actually going to be looking, working with Chad Pennington from Coast to Coast Motors on that. And then I'm doing two sessions solo. One is going to be about efficiency and parts management. The service department, it's kind of, it's one of those niche topics. But I will tell you what, if you want to really Get a handle on controlling costs and service. You absolutely have to start with how you buy, source, allocate and track parts. Sounds boring, but it's, it's a big money topic. And then I'm also going to be handling, I'm doing a session on working a collection queue. Trying to work in a little more, a little more advanced collection topics into it rather than all being 100% on the basics. We're looking at 100, 200, 300 and 400 level classes. Just like when you were in school. This is one session that we're going to be looking at working at Q Smart. And it's more about results than it is just strictly on the number of call attempts and things like that. So I'm that one, I'm handling solo.

So. Yeah, yeah. And that, that's, that's what makes me think I've signed up to come, of course, but maybe I need to bring my collector down, you know, maybe I need him dropped, be my, bring my key manager down. And just to pitch the convention one more time, the rate to add someone is like 199 bucks.

Right.

So you're coming anyways. You bring another person, it's 199 bucks. The room rate is incredibly competitive. It's the cheapest thing you're going to find for months and months and months. So. And flights might be a little expensive right now. You know, this is hitting a couple of weeks out from, so you're kind of getting some last minute flights to Vegas. But for the investment that you're doing, 100% worth it to bring your key players.

Absolutely worth it. This, this agenda is solid. We put a lot of work into putting a really quality product out for the whole industry. There's no sales pitch on this. There's no ulterior motive, no hidden agenda. The engine, the real agenda is right there in front of everybody. This is about education for the dealer.

That's awesome. So today we're going to try to do a little education too, right, Jeff?

Yeah, yeah, yeah. So let's get into it. Why we have you here, David. We want to talk about reconning cars. You know, you said you're going to do a session on some parts management and tracking your costs and sourcing good parts. So we're all going to get a real deep dive when we come to your session, but give us some ideas and tips. And what are dealers facing right now? Well, we know what we're facing right now. It's frigging ridiculous. So give us some, some insights from a From a professional's perspective on some things we can be doing to make this a bit less painful, faster. You know, all those kind of silver bullets we like to hear about.

So. Oh, you want answers. Oh boy, oh boy. Because you know what? It is a mess. It is tough. And two things that I think that we really need to keep an eye on. One is the market conditions today. We and for a while now we've been having to make what I generously call a value judgment in our buying. Every dealer out there has adjusted their buying parameters over the last 12 months. What choice have we had? We've learned to accept more mileage. We've accepted perhaps an older vehicle. Perhaps we're buying things that might have been on our no buy list previously. Because if it's available and we can make it work, we're trying to find a way to make it work. That's been the reality of inventory for the past year. It's just been a challenge. Well, there's a hidden cost to that as well and something that I've been preparing my, some of my other clients collection teams for. In fact I was just doing training on it yesterday is we made, we've been making value judgments. We've bought an older, in this case, we bought a older, higher mileage car. There's going to be post sale repair issues that come up at a higher rate because we bought an older, higher mileage car. They just haven't come home to roost yet. But it is coming. So that planning needs to be around. Well, what are we going to do about it? We entered into a contract with the customer with good faith knowing that we've got a pricey over mild vehicle. In some cases we've got an obligation to keep that car on the road. So we're looking at expanding some of our service offerings, we're expanding some warranty offerings to try and make it easier for our collection teams to keep those people in the cars. Because I think it's unrealistic to think they're not going to break. From a reconditioning standpoint, we have the same problem. And it's not just money. What a lot of dealers don't think about is they look at a reconciliation, an increase in reconditioning expense. Is it just being money? It isn't just money. If you're doing it with your own shop, it's time as well. More repairs, more repair time means you have less flexibility on utilization of your lifts. You have to be smarter about allocating your work. You've got to really take a sharp pencil to whether it makes more sense to keep that vehicle in house or to sublet the work out.

Hmm.

Because lift utilization really gets into play. The more time it takes, the less jobs you can do with the same number of techs and the same number of lifts. And it isn't just cost that goes up. Labor times going up as well. It's taking more time to do more repairs. Not more than it would have taken originally, but more repairs equals more time. Yeah.

You said something really smart that. I think we need to remember that we're making conscious decisions right now to buy higher mileage cars or stuff that's outside of our typical, you know, kind of framework. But what happens is I think we Forget that in six to 12 months, we forget that, like, oh, yeah, I bought a whole bunch of cars with high miles. So, yes, I am going to have a whole bunch more policy and a whole bunch more mechanical breakdowns that could result in repos. And then we're freaking out that we have all these mechanical breakdowns. It's like, no, Remember, we did this by design. Don't forget that.

Very good point. We did go in with our eyes open as an industry. We made the choice. Well, you know, kind of like when you talk to a collection team. The last two years, we've had epic results in most dealerships. Best ever performance on the portfolio side. I think it's about time we start paying for that. I do believe we're going to probably see an uptick in charge off frequency, for example, in the second half of this year. I think we're going to see it. I think it's reasonable to expect it. The customer didn't change. But what has changed is inflation. What has changed has been the impact of our car buying as we tried to cope with an unprecedented inventory situation. Don't forget these people. We kind of made our bed. We need to be expected to make it once in a while, too. We're going to have to back these customers up with great customer service so that they stay our customers and we can keep things moving forward.

Yeah, the free money is not out there anymore, too. So I've seen my repos go up.

It's unrealistic to believe customers, that our customers can live without great customer service because they don't have the readily available cash that prime buyers do. And so when. When they do have a hiccup, we've got to be there to pick them up, right, David?

No, absolutely. We have to be prepared to service and continue to invest in the portfolio post sale. Most dealers get that most people understand the dollars in sense of when we're looking at epic levels of cash and deal, we have to protect that investment. Otherwise we're going to be looking at significant issues with overpriced inventory that if they come back in unacceptable mechanical condition, we're not going to be able to. What we would like to do with that vehicle. Let's prevent that. Let's get in front of it, let's stay in front of it and stay in front of the customer. Hopefully that we can retain more of this business as we go forward. I am concerned about just general cost of living increases and the impact that's going to have on customers. I hope that our customers change jobs to their, to their betterment in the last 12 months because I think they're going to desperately need it. Cost of everything is getting very expensive and they just are going to find that any extra income they're earning is getting rapidly eaten up with food, fuel and general life expenses for sure.

What one thing that I always wonder about because I feel like I've made so many mistakes. What is the one mess up that you see dealers doing over and over and over again in recon?

Oh, There's a difference between cutting corners and making good judgments. I'm not in favor of cutting corners. And by that I mean we're making silly decisions based on dollars and cents when what we really are doing is stepping over dollars to pick up dimes. We're trying to keep reconditioning expense down, which is great. But the way to keep reconditioning expense down is, is to maximize efficiency on your parts. Maximize efficiency with your technicians, have the right people in the right roles doing the right jobs to minimize downtime. That's how you keep your total costs under control. But to lower cost, auto parts are getting more expensive too. But when I see dealers set recon can't be over X. That means we're not changing tires when we need to change tires. And it used to be you point the finger at the buyers. Well, you can't really point the finger at the buyers. We kind of went in with our eyes open just like we were saying earlier. Investments you make in reconditioning and investments you make in post sale repair generally do pay off exceptionally well for the dealer provided that we are willing to support that account long term. But from a recon standpoint, simply not fixing something because you don't have the stomach for the bill. That's very shortsighted. You are going to Be fixing it. The question is going to be, do you fix it for the customer you sold it to, or are you fixing it in Rico recon the next time around?

Yeah. My question is for guys like Luke, who I would argue maybe over recon. You know, they're painting every panel, every bumper, fixing seats, you know, making sure the seat belts were crazy. Stuff like that.

Making sure the seatbelt works is crazy.

You know what I mean?

What's next? You're going to expect the airbags to go off?

Oh, my gosh.

Airbags. I don't know. Just put some tape over it. No, but. But Luke does over recon. We know that. We've talked about it. Are dealers making those value decisions and saying, you know what? I had to put so much mechanically to make this thing fit, I'm not going to do the bumper? Oh, and guess what? It still sells or no.

Look, honestly, you're both right. It comes down to the culture of your dealership. Some of, you know, somebody like Luke, for example, his culture is he wants that vehicle to shine. He wants it to stand tall. But, Jeff, so do you. You want it to stand tall. You just have a different definition of what standing tall means mechanically versus cosmetic. I get that. I do see a need for having a bit of a sharper pencil when it comes to cosmetic repairs, particularly anything that has to go through a body shop. Backups with body seem to be a real problem right now. It's the one area that I think it's even harder to hire body guys than it is to hire mechanics.

I think I had that discussion with you today, didn't I, Jeff?

Yeah, I've heard that somewhere.

Somewhere.

Luke, are you changing that at all? Are you not so.

Yes.

Not doing as much cosmetic.

You will be. You will be proud of me. We walked outside today on a. On a 15 charger, and I know I could sell that thing tomorrow if it was here. And my internal inventory manager said, hey, come look at this bumper. I think I want to fix it. I know you want to fix it. Let's go look at it. We go outside and look at it, and I go, I want to fix it, but I know I can sell it like that. So we rolled it so it's. It's in detail right now. So you'll be proud of me today.

You. You let me know if there's a big pushback on that bumper.

I'm gonna tell you.

I'm going.

I'm gonna tell you what's gonna happen. It's gonna end up in a We O. I just know how this is gonna work.

Well, because you guys are gonna let it, you know.

Right.

They're gonna let it be on the we O.

You're right.

That's another problem. Right. I mean, it's like my argument is, hey, maybe I leave five things undone and then I only got to put two on the we.

Oh.

Instead of doing four of them and then still having the fifth one on the we.

Oh.

Like, you know, maybe not the right road to go down, but for sure.

Well, I do think there's a fine line that everybody has to walk between over recon and. And, you know, really and truly, it's getting the car right mechanically is what really matters. But when you get up to a certain level of car, I think there gets to be another expectation from the customer because that customer doesn't have to buy from us. Typically, that customer can go to a new car store, not that he's getting a better car, but he can go get almost a brand new car. And so I think that the expectation of my customer might be a little bit more, but it might even be my expectation blended into the customer's expectation too.

So, David, can I ask you this? Are you finding any better? Can you give us any tips on getting parts cheaper, faster, more just at all? Yeah. Are there any things you're hearing about out in the dealer community? I mean, is everyone using, you know.

Pre Pandemic? It was pretty straightforward. It's not that we didn't have to work at it, but it was straightforward. We had 10, 12 vendors available between physical and online. And it came down to we're going to order it from the cheapest guy who guarantees we'll get delivery 10 minutes ago. It was easy. We could be demanding. Not everybody has the parts you're looking for right now. Someone does. But that may mean you're ordering it from Amazon, that may mean you're getting it from Rock Auto, that may mean you're going through Worldpac. You may be going through Autozone on this one, O'Reilly's on that one. They have the parts, they're for the most part available, but they're not available everywhere consistently. So we're actually having to spend more time sourcing it, which honestly I think is a good thing. There is a habit, unfortunately, that we see with service departments keep going to their go to parts supplier because they'll get it to them 10 minutes ago. And they're dependable and reliable. They don't pay as much attention to what they're paying for it.

They're not shopping.

They're not shopping it. And that's something we have definitely seen over the years with service departments I've worked with is you take the time to shop, you have your own people, your own parts people, and it totally, totally pays for themselves to have that. That in house department. It ends up being a no cost to the dealership. Significantly better than having vendor personnel on site doing it for you. That never works out. When you put the pencil to the paper, it just didn't work out.

We had that discussion last week. So I'm glad that you, that you approached that.

Yeah, I mean, there's usefulness to it, but if you want to put, if you. It's like dollars and cents, honestly. It's like if you, if you had a 1% charge off monthly, could you make the case on pencil and paper to put two GPS units in a car? If your charge off is only 1% a month, the answer is no. We could talk about one, but you don't need two. Yeah, that's the same thing. It's like there are advantages to having some of those vendor personnel on site, but it's not going to be cost effective. Look, they don't. They give you those people for a reason. Yeah.

Because they're going to make money.

So maybe is there a dollar amount if some dealer's saying, hey, when do I get to the point where I need a parts manager? Is there like a dollar in parts where you say, look, if you're ordering more than, you know, $50,000 a month from outside vendors, whether it's ebay or Rock Auto or any of those parts vendors, you would be, you would save money by paying a $20 an hour person, you know, three, four grand a month to be sitting there to get the best thing. Because right now your mechanics or whoever's ordering the parts, your service writer, he's just going to the first call every single time. He doesn't have time to shop around. Is there a dollar amount, you think where that is kind of a rule?

You know, I think there is. Where there's a guideline. I have. I struggle to give you a rule. Where this came from was generally larger service departments. Most of them at one point had in house personnel from other vendors involved in their parts process. And we just kind of fumbled our way to it. It was actually a group exercise where we would assign a basket of parts, 30 parts here, order them like you were ordering them from your vendors. And we're going to compare prices. What. Here's the prices you got dealer to dealer to dealer. We'd set them up in a spreadsheet and shared across the room and that we did that every single meeting in our service groups. And that really, really cost down. Well, that brought the cost down for everybody and we figured out backing our way into it that it totally made sense to. For larger dealers, I would say someone that's doing 40 or $50,000 a month, it's a no brainer. I could in some cases it depends on, I mean 20,000amonth in parts. It would make sense depending on how poor job you're doing ordering them right now. I mean I have seen the first time we did that kind of exercise, we had 30 parts. There was a $4,000 swing from worst to first. If you just bought one of each and added them all up, there was a $4,000 swing on 30 parts because somebody wasn't paying attention, they weren't keeping their eye on the ball and they were paying way too much for parts. Like, like consumer shelf prices for the parts. They were getting no discount whatsoever.

But their service rider was getting a new jacket and a toolbox and recorder.

There was so much swag sitting around that shop, you wouldn't believe all the stuff they were getting. You probably would believe it. There was a lot.

Yeah, that's probably, I would, I would probably say it's a 10%. I think that'd be conservative to say. If you had someone just looking over your parts, ordering from the best places, tracking your cores, staying on top of returns. I mean that's got to be conservative, right? 10% cost reduction.

I think that's a very conservative, realistic and attainable estimate for anyone.

That'd be 10 to $20,000 would pay for it. If you had a 10 to $20,000 parts bill per month, you're saving 10%. That's 2 to 3 grand a month. That pays a dollar 20 an hour.

Parts guy.

We're not even talking about returns that don't get handled and cores don't get sit back. I mean, you know that starts off your shelf. It starts adding up really quickly and.

They'Re usually having a second service rider isn't going to hurt you. And this like you said, this process will pay for that person. Yeah. And you don't have to be very big to be spending 10 grand a month in parts or 20 grand a month. I mean that bill gets big really fast. That's not, that is like two traverses.

I mean we spend 50 plus a month in parts. I mean it's just the way it is, David, with all these parts problems we've had, staff problems we've had in the last year and a half.

How.

Much have you seen the time to line increase? Because it's had to affect our ability to get cars ready across the board, on average.

I would. I know. I completely agree. Time to line is suffering. What is a little bit more scary to me is that we've got some dealers that still aren't paying enough attention to what that is and what drives it. But time to line is getting worse. In some cases by 20%. Other cases they're staying more on top of it. It really has a lot to do with where they are. If you're a dealer in a major metro that happens to have a warehouse for Rock Auto or worldpac, you're getting your parts, you've just shifted who you're buying them from and you're getting your parts. But the time element is also a big part of it, too. Time is money. And it is just as evident in your reconditioning process as it is in any other part of the business. The longer it takes to get that vehicle from purchase to frontline. There are costs involved in that and it's something we have to stay on top of. But it wouldn't surprise me at all if I took a hard look across dealers I'm familiar with, 10 to 20% wouldn't surprise me in the least. It may be even higher.

Yeah, I've seen that in our dealership. And every time I talk to dealers in the last two months, it's. I would be selling more cars if I could get more cars ready. And that's. I mean, it seems like we can source the cars if, you know, if we really try hard, but getting them ready to just become just a nightmare. And I've got three cars sitting right now in the ABS control modules and good luck getting them because they're not out there. And the store says, yeah, we don't know when we're getting it. They'll give you a date, but it doesn't show up. So, I mean, there's so many things that we haven't had to deal with before, before that they were having to deal with. And it's. Hopefully it straightens up sooner than later because I can't take much more of this, but, oh, well, I guess.

And the mechanic market is really weighing in. It's tough. It's tough keeping people. It's tough hiring people. We're paying all the money in the world and a lot of people are paying all the money, but they're getting mediocre talent. That's two problems. You can afford expensive technicians and you can afford mediocre technicians. You can't afford expensive mediocre technicians.

No, you can't.

If you're going to have expensive people, they have got to be able to turn the hours and then it's okay. I can deal with it if I'm overpaying for someone who's good and worthy and I'm going to do everything I can to make that work environment a number one for them because they're my money maker. They're turning out hours, they're doing a great job. But the mediocre person who is only, you know, I'm not going to pay them like an A level flat rate technician if all they're going to be able to turn is 40, 42 hours a week. That just, it becomes extremely expensive just to get hours on a ticket. For me, my, you know, my average labor cost just goes up and I can't afford the mediocre person if I have to pay premium rates. Problem is these days you have to.

Pay premium rates just to get people in the shop. And David, to get people and recon, do you normally you advise dealers to pay flat rate or salary? When it comes to these positions, I.

Generally advise flat rate for reconditioning. Put a little asterisk by that though. Hourly will work. Both methods require good management. It requires a different emphasis in management, but both ways will work. I like the flat rate built in incentive and punishment system that comes from a flat rate system. I like that. But I will also tell you something that we have found. The last thing you want to do is to have flat rate technicians doing their own checklists. Yeah, There's a unkind phrase for what they do with the mouse that I'm not going to say on your show. But you don't want flat rate guys doing or gals doing their own inspection. So if you can separate the inspection from the actual reconditioning process, which is kind of the answer that a lot of dealers I work with have come up with over the years is we get a seasoned, experienced, dedicated inspector who's not necessarily having to turn the hours at the same rate, but they've got all the knowledge in the world up here. They know what's right, they know what it should be and they can be consistent and crank out, you know, seven, eight inspections a day. Great. Then I'll assign the work to a flat rate tech Once all the parts are in and their jobs. Don't think, just do hang, hang, hang. You tell me how much money you want to make because we're never going to run out of work and you can make as much money as you can turn hours for. I love that environment. I really do. As, again, as long as we're not letting. We're not letting them make their own lunch.

Yeah. You know, I had this until a couple months or so ago, I had this idea that my best tech shouldn't be the inspector. And I got talked out of that. And it's funny hearing you say that because it has really started to change the way our shop operates and it's going to take a little bit longer to get it fully implemented, but that is really the right way to do it. And part hangers, man. I tell you, they're running at 100% and that's what I like to see. And it's amazing. Just that little switch works. Yeah.

Had you asked me about it, I would have also tried to talk you out of it, too. I like having a seasoned, experienced veteran making those decisions. Acting as a shop foreman for the recon team, that's. That's the ideal role. It worked for me very well in practice personally, and I've worked with many dealers who've adopted the same or some sort of a modified system on that. There is a lot of value to having experience on your inspections.

It makes it consistent and makes it right. And your comebacks will have to be a lot less too, right?

Right. Very much so, yeah.

Luke's the same thing. And the reason I'm sitting here staring off into the abyss is I'm just thinking like, yeah, well, that's a mentality change in your shop, you know, to have your AA tech doing the inspections and then you get the diagnosis right the first time. And that's my biggest issue is my CTECs were like, well, there's a noise in the front end. Replace the wheel bearing. It's like, how do you know? You don't know, you know. So put an experience tech on there that's going to actually be able to diagnose and get to the root of the problem and not just tell you the problem. Because guess what? They're telling you the problem and then your tech's got to go back out there and re. Diagnose the whole thing to figure out what it really is.

So you just.

You're just overlapping so much. But also what David, I mean, in that situation, you're a tech. Can't necessarily. Can't be paid flat rate. Right.

Because typically not. I mean they can. It comes down to what you're going to bill out for an inspection. You also might want to consider having that a inspector install your GPS device. That's what we do. Because they're going to do it right 100% of the time. They know their stuff. And almost every problem that you have with a GPS unit is install related.

100% agree. And so David, let's, let's get into the weeds on this because I think this is super fascinating. What should a normal inspection pay? If we're looking at hours, is it one hour, is it one hour and a half? How long should we give for GPS installation is. Well, let's say we're, we're starter interrupt, let's just say that or whatever. What do you think that should be?

Well, look, I'm going to give you an estimate on the GPS portion. A half an hour on that. But I may do an hour and a half for the inspection. So if I'm doing two hours total, so be it.

Yeah, that's what we're doing.

Look, I don't want my inspector suffering. And if you're going to pay flat rate, I'm going to make it robust that inspection. Because he's doing other things too. He's providing direction for the rest of the recon team who are all B minus and C level technicians. He's doing the thinking, he's doing the guiding. I'm okay paying that person hourly. I'm okay paying them flat rate, whatever's going to work in your environment. But I want them paid well. They're the linchpin of the operation. On the customer service side, I'm far more inclined to pay hourly than I am to pay flat rate because there is downtime, there is waiting for parts, there is diagnostic time involved that goes way beyond what's included in your typical flat rate labor charge. I mean, we've all seen people trying to figure out we can't kick the car, we've got too much tied up in it. We have to figure out what the electrical problem is on this. And I've seen technicians take all day, but they say, my God, figured it out. It just took a little bit. It took a little time. Okay. That's why that guy's paid by the hour. Every once in a while he gets a hard one like that. And I don't want him punished because he did a hard one.

Yeah, and that's, I guess when you do have those comebacks that have been out for two weeks and they come back with a problem you can't figure out. You put that inspector atec back on that car, right?

Yes. And the system we're talking about here, gentlemen, allows you to have fewer diagnostic capable technicians and still get the work done. A C level guy is much easier to find, much easier to hire, much easier to quantify the quality and quantity of work that they, they do. A inspector who's acting as a shop foreman and maybe one person on the customer side who's really strong at diagnostics, maybe the same person, maybe they're two different people. You have no doubt whatsoever the value of the work that they bring to the organization is large. But putting a dollar figure to it can be challenging on occasion. The last thing I want to do those guys to do is to feel they're in. They're not valued in any way because they're the linchpin. Those role make your shop work. They're the reason you have your own shop rather than subletting is that role. That's the efficiencies you gain. I'm a big fan of. I've seen so many operations embrace efficiency as the core of their service operations and it allows them to really, really deal with all the issues we've had to deal with.

So David, we talk about rates, we talk about pay rates on technicians and to follow Luke's and go down this rabbit hole a little bit further. I know it's different by region, Right. We always argue that, well, what you pay in a tech here is not what you're going to pay in a tech in downtown New York or whatever the situation is. But it makes me think like maybe, I mean, we know there's a standard in our region, right. We can get on indeed. And we can look up what our competitors are paying for tax. So we can kind of see that dollar amount. But there's got to be an equation too, to those of us that use outside shops. If I know that my best labor rate at an outside shop or my average labor rate is, you know, 50 to 60 to $80 an hour right now, doesn't that help me back into the math of what I could pay a competent mechanic at my shop, you know, I'm paying eight to go out. So if I bring you in.

Well, it does. But I will tell you that if you're getting good work out of a shop that's charging you $50 an hour right now, what they're doing is cutting their margins to keep you happy because that's tough. That Replace for them to replace that technician, they wouldn't be able to continue to do the work for you at 50 bucks an hour. At the same margin there. Something's got to give. Yeah. A $50 an hour labor rate is typically equates to somewhere in the neighborhood of 20 to $22 an hour flat rate.

Okay.

Which you're. You may very well be able to do that in smaller markets. Yeah. But I can tell you in dfw, in Atlanta, in Chicago, please, what you're paying had better have a three in front of it and it better not have a zero after it, because you're not going to get anyone good. It's expensive.

But in that situation. So say it's $100 labor rate, right. To go out to another shop to outsource it, does that mean you should be paying your internal guys 50 bucks? Because you know it's going to cost you twice as much to go out. So I can pay my guy 50 in house and attract top guys because I know he's getting 50 there.

I would say you wouldn't necessarily have to go 50. Look, in major metro markets, going rate for an A level flat rate guy is anywhere from anywhere from 32 to $40 an hour right now. Which just makes you squirm at how expensive that is. The only thing more expensive. Well, no, but the only thing more expensive is not having people to do the work and not have cars. More expensive. Yes. Not having cars on your lot. Not a. Yeah, that's what's more expensive. Like I say, you can afford expensive techs, you just can't afford expensive, mediocre ones. Right.

So that's what. That's my argument then is it's like, wait, so if I.

You can overpay too, though, Jeff.

You could, but if I can't do it in house, I gotta send it out. Right. I don't have enough texts. I only got one. I got two. Whatever. Because no one's responding to my ad. And I can't hire. No one wants to work for 30 bucks flat rate. Okay. So I'm going to send it out and pay 80. Duh. So just up your ad to 40 or 50. You're going to attract their number one talent who's doing the work anyways. He's going to come over and work in your shop because it's still more than what he was getting paid. You know what I'm saying? Like, I guess that's my argument is I think, you know, even when you say $30 an hour like that's for an A tech.

That's well. And if you'll permit me, the real argument that needs to be made that I think we fail at is when we're trying to hire technicians, we're trying to compare apples to apples, but it's not an apples to apples comparison. Even if they come from a flat rate shop. The big difference is in a buy here, pay here environment, we never run out of work, ever. There is always work, there is always recon, there is always customer pay, there is always warranty and policy work. We always have something to do. They're never going to be standing around wondering what they do next. They're never going to be having unallocated time. No. So when you lay out this is what you get flat rate, you also have to ask how many hours a week they're getting and is it consistent every week? Because it will be with us and it will be every single week and you will make this check. You won't make it once a month or once every couple months. You're going to make it every single week because we never run out of work.

That is so important to stress to these people. And I've techs don't believe me when you tell them that. Say there's no.

They don't.

The only time I can remember in the last two years when we did not have work was like about this time in 2020.

Yep. That one week in Covid mid April.

Oh my gosh. We had recon. Everything we had and we were all just sitting here twiddling my thumbs. So then I was like, well we got some classic cars work on.

So we started working on cars. Yeah.

And it lasted 48 hours. Right. And then I went out and I bought five projects and all of a sudden it's been gangbuster since then. I find that's the hardest thing is the first three to four weeks of hiring a tech from a retail location. A flat rate tech is the scarcity mentality. They come in here and they see us outsourcing and like what are you doing? Why are you sending that car out? Why do we send that to them? We can do that. And they want to squirrel everything. They want to just like hoard them like nuts in the back. Like they want to have two years worth of work sitting there and I'm.

Like guys, have you ever been to a one person shop and look around and they've got cars everywhere, you know, and that's the reason because they're like God, I don't ever want to Run out of work. I'm like, if you take one more car, what are you going to do? You know, you don't have anywhere to park it.

That mentality, that scarcity mentality is so hard to get out of them. When they come over to a buy here payer store when it's like, dude, it's unlimited, literally unlimited work.

And this is like selling anything else. We have to convince our customer, in this case the technician working for another dealership. We have to convince them, what's in it for them to come to work with us.

Yeah.

And if the only thing we're leading with is we're going to pay them more per flat rate hour, that's not going to convince them to leave. You know, people tend to not take new jobs over money. They tend to leave. They leave bad managers. They'll, they'll. Well, let me rephrase that. They don't leave for money. They'll take a job for money, but they won't leave over it. They leave, man. They leave bad management, they leave a poor situation, they leave a bad work environment. They'll take a job for money. But if money's the only thing we're offering, we're not actually, we're not being smart enough about it. Think about the work environment. What, what appeals to attack. I'll tell you what works for techs in the south is if you've got an air conditioned shop, they will be lined up first to come and work with you.

I just air conditioned my shop last week because I, because I was afraid that I was going to start losing people.

And you know, two years ago I would have said, wow, you're, you're fancy. Kind of paranoid now. I would have said, good call.

It's 12,000. $12,000, who cares?

The investment pay for itself.

Yeah, that's like two tech. Two months of not having a tech. Right. Outsourcing jobs.

It didn't matter. Hey, let's wrap this up. David, let's talk about due to performance groups. Because you're so involved you're doing consulting. The kickoff in Sarasota was great and then we followed it up with an awesome meeting in Arizona. What are dealer performance groups? How can we get involved? How you know, what is, what is it all about?

Well, we're Chuck Bonanno and I came to Buckeye Dealership Consulting last July and we have recently kicked off the dealer performance groups for Savent was in Sarasota last fall. We just did Phoenix in. What was that? February, January. February, January. Okay. The calendar is Just kind of bleeding together. For me it has really been a tremendous experience. We're trying to bring a different take and a different viewpoint on the traditional 20 group model. Taking some very much appreciated feedback from the rest of the dealer body to have a traditional approach to the 20 group model. But we're also having one meeting, one of the three meetings a year is going to be a combined mini conference, mini convention type meeting where we bring all of our dealers together and that's where we bring in the heavy hitter national speaker types. That's where we roll out benchmarks for next year. That's where we roll out data trends. Rather than go over individual groups data point performance, we're going to look at trends we see across the groups. That's something that's been really strong in the analytics package that is being built for us as we speak is the ability to really look at trending data and be able to use things on the fly. So you guys will see in your first meetings coming up this or early this summer, you'll see the impact of having access to that data from the beginning of the year for us. We're also slowly working our way towards automating data. In fact, I'm supposed to be looking at something to do automate some of the expense side as well. Actually Amanda Sanchez and I are going to be conversing on that because that's something we hadn't figured out yet. But the operating data, that's coming along quite well. We started with AMS. It makes sense we'd start with AMS. They're working on IDMs right now and I believe, don't hold me to this, but I believe Buy Riders next because we've added a lot of Buy Rider dealers to the DPG fold over the last few months.

Hmm.

Well, that's great. I'll tell you, I really enjoyed our meetings and I'm, I'm in one of your groups now and, and it's going to be, it's. I love a new perspective. I love, I love learning and so how can we get in touch? How can dealers get in touch with you, David?

Well, you can get the ball rolling. You want to get started? We need you to go to dealerpg.com apply that's dealer PG that gets the ball rolling. We get some basic information from you and then either Chuck or I will reach out and contact you to get things set up on getting invited to a meeting.

Awesome. Jeff, anything else today?

No, that's great. And come to Buy Here Pay Here United in April. Yeah, Meet Chuck in person, meet David in person, chit chat with them, get to know them, figure out their personality. If it's going to be a fit.

For your you and your group.

I mean, it's a great way to kind of get a whole scope of what these things are about.

It is.

And we'll be there and we look forward to seeing everybody.

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