#295 - Time To Tune Up Your Turn Time

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

Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting.

Yes. And so today Jeff can't talk, so I get to introduce what we got going on. So Jeff was talking earlier off the air. Y' all didn't get to hear it, but we are buy here, pay your dealers. And we need an expert coming in and talking about retail because we really want to cover some retail aspects because right now the market is, in my opinion, probably cool, a little bit on the retail side. And buy here, pay here is getting stronger. So those retail dealers that listen to us, we brought on a very special guest, our friend Daresol. He's out in Arkansas. And Jeff, he was on a How I built this podcast. What number was that?

Yeah, if you want to go back and get the history on Dare, it's 261 guys. You can go back to 261. But Dare, man, how you doing? How are things going out there?

That's right, man. We're growing, we're rocking and rolling. We haven't slowed down. We've had to change with the market as it's, as it's, you know, it's always changing. And if you're a dealer with inventory, it's always going to change. And so that's, that's something that we're trying to stay on top of daily. But yeah, we're doing good. We just had a record month. We sold 107 cars last month retail as a record month from us. We just hit another record in August at 105. So we're continually to trying to scale up here in central Arkansas. It's been good.

Well, you know, it's funny, I think two weeks ago or three weeks ago, Jeff, we had a dealer owned Donald Sullivan up in Virginia, and he was talking about at some point he, he sold too many cars and, and, and he was not making as much money because of the increase in sales and the increase in floor plan problems and expenses. Dare, where are you? There are. Do you know where your sweet spot is? Do you have the problem when it comes to floor plan? Kind of walk us through that.

So I used to think that there, there was a sweet spot. And, but this volume model, it really, volume does solve a lot of problems. And what it does is it, it gives you the advantage of flushing out some old inventory, being able to send a customer to F and I. We lost like $7,000 on a Yukon the other day. Don't ask me how. We've had to put motor and a transmission in it before it ever got to the front line. Terrible buy. It happens, right? It happens. We sent him to the box and you know, and it was only like a net grand loss. And, and so that's the beauty of the retail car business as you, you have that opportunity to, to take care of a customer, send them to the box and not just completely lose your, you know, lose your rear end on a car. Now having said that, you know, your question was what, what was your question again?

Where's the, where's the sweet spot? Where.

Yeah, so you sell a lot of.

Cars but not make a lot of money.

So, so yeah, I lost my train of thought. But selling, selling 100 cars, it was a very profitable month for us. But you just have to scale it, right? You have to follow the process. And that's what we've done from the very beginning, is continue to follow the process. And in how we're sending the customer to F and I and trying to hit all the boxes there and there.

You, you own your own reinsurance company. So when you send them to the box, especially when you put a motor and transmission in the car, you know that thing's going to last. So I mean, is that, that goes into your train of thought as well, I assume?

Oh yeah, oh yeah, you know, that's, that's, that's everything is reinsurance.

No, I agree.

So, so walk me back from the beginning. So when you say this, this, you know, kind of high turn type model, right? This V Auto philosophy, what's your goal on the front end? Like, I mean, are you making a hundred bucks? 200? 500? 5,000? Like, I don't really comprehend that front end gross goal.

Right? I, I think it's whatever the market dictates. You know, I'm reading, I'm actually reading this book right here, Gross Deception. The guy that wrote V Auto is this, wrote it in 2016. And it's funny how, you know, he's talking about these small gross profits like in the, you know, like the $70 range, the front end net profits on new and used. And so, you know, even back then it was all about this turn and burn, this turn and earn type of profit where they're, you know, they're making all of their money on the back. And it, it really is insurance on volatile inventory markets. If you have a strong F and I manager. You know, we used to do cradle to grave here at the dealership, but if you're selling over 50 cars a month and you don't have an F and I manager in retail, you know, that's something that you really need to look for. And I preach that all the time because that's so important. You know, having another face in front of them that's willing to, you know, that has to eat on the gross profit percentage that he makes in F and I is, is huge if you're running any kind of volume at all.

So, so you're telling me like that, that philosophy of I'm going to buy a 20,000, $25,000 off lease, you know, Nissan Altima, I'm gonna make, you know, after my pack, right, if say I put a five hundred or a thousand dollar pack on it, I'm gonna make 100 bucks, 500 bucks over that, like my overhead and then I'm making 500 on the front end.

Depends on where you bought it. But yeah, I mean if you're that Nissan Altima, you need to price it 95% right out the gate. Especially if it's like an SV. If it's a lower trim model, there's a lot, there's a lot competing right there in those lower trim models. So you're going to price that sucker 94, 95% right out of the gate. You may price it a loser, but it's, you know, then that goes into how good, how good did you buy the car and how good you're, how.

Good your salesperson is. Because your sales may better flip it to someone else, right?

Because we don't think about holding costs, guys. I mean with, especially with interest rates. If we're holding that thing 30, 45 days, that things collecting every single day, it's like a horse. You got to feed it, hey, the more hay you feed it, the more it's going to cost you. And at the end of the day, my dad's a horse trader. He sometimes he sells a horse for a lot of money, but if he's held on for it for two or three years, he didn't make a dime. And that's the same way we got to think of cars. Every day they're out in pasture, they're eating, you know, well, let's, let's, let's.

Let'S go down that rabbit hole. Because you know, this model that you're talking about was prevalent from let's say 20, 15, 16 up into the edge of COVID Covet happens there. And, and all of a sudden every car, truck, you know, SUV you get your hands on, you can price 120 of market and probably sell it the next day. And you live through that for probably two, two and a half years. what point in the last bit did that model of high grosses, Tom flip and go back to the model of these, these lower V auto models?

I think it was earlier this spring as we really saw started to take a shift back in November. A lot of us retailers kind of felt it, they felt it coming on. And so we ripped off the band aid of a lot of older age units. Either we just flushed them out in retail or we took them to the auction and took a loss. And a lot of guys wrote off a lot of stuff in November and December of last year because the books changed so much. And then we saw a little bit of a pickup in the spring, you know, a bump, tax season bump. There seemed like there was this little shortage here there, especially with like the, the new body style trucks and new body style Yukons and Tahoe, some of that higher end stuff and your price range stuff that had good miles still, still a little scarce. But at the first of the summer, I'm talking like June 15, we're, we're already start to see 25% of our inventory go over 60 days. And that's a number that I track on this board behind me every single Monday is what percentage of our inventory is over 60 days. This Monday it was 16. And we track it not only in unit count, but we also track it in dollars over 60 days. And that's something that you. Because anything you know, over 50%, 60 days old spells bankruptcy. I don't care who you are, right? I don't care who you are if you're a retailer. So you want to keep that under 20% if you can really good dealers, I mean have it under 10, you know, and we're not there. I often talk about this as inventory is, is an infinite game. It never ends. You never completely flesh it out. You're always turning and burning, you're always buying and selling. You know the difference between finite and infinite games. I know you guys know that a finite game, like a football game, it has four quarters and it comes to an end. An infinite game. You, the object of the game is just to continue to play. And as a used car retailer, we just have to continue to play, right? And the longer we play, the more money we make and more security that we have for our families. And that's really our goal here is just to continue to look at that inventory. There's two things I say you Never win. One is inventory and one is employees and team members. You're always constantly working on those two things. You know, in the used retail, small business or large business or whatever you are. You know, that's.

I, you're, you're so right there. I never even, I've never been able to put that in words. But the two things that I can use to control my sales are. The one things that control me when it comes to sales are inventory recon. Right, right. Are the amount, are the amount of employees I have. What we have seen in the last, in my opinion, the last 90 to 180 days is inventory has gotten easier to buy and we're actually seeing more employees wanting to take our jobs. On the employee side there, where are you right now? Are you fully stocked or with people or.

No, we're needing some key managers right now. And we've, we've got some, we've got some big job descriptions out there. But as far as like your, you know, your, your outfielders, we're all good there on outfielders. You know, we've got plenty of, of detailers. And everybody needs techs, right? We all need techs. I mean, we could always use more people. But as you scale up, as you're growing in business, when you begin to find those key people in your organization, you build around those guys. And we're needing a couple right now as we continue to move up the ladder. Yeah.

And that. Is that because of growth? I'm sorry, Jeff, sorry to cut you. Is that just because of growth there?

That's right. That's right. And you know, so now I'm, you know, where I was managing 50 cars, now I'm managing almost 200 cars. And you know, I've kind of stepped back from that. I'm, I'm training another girl to be kind of like a used car manager where she's. We change prices daily. And that's another huge thing. We change prices every single day. In V Auto there's a bucket. It's the most important button in V Auto. It's no price change in seven days. And if that, if that thing is not cleaned out and you're a retailer and you haven't changed, you haven't changed your inventory in seven days, then something's wrong. I don't care if you change it a dollar. What it does is allows those algorithms or those third parties to kind of reset re engage those people that have looked at those vehicles and all of a sudden you start getting more leads. I mean, we've changed the vehicle $50 and immediately have started having people come and give us those leads, those valuable leads that we need for BDC and to get people in the door.

You know, all I can think about is there like, is there a point where your turn time is too fast? Like, are you giving away the farm or is that not even a thing? Where it's like, hey, if that car showed up and I sold it in 24 hours, I don't care. I'm winning. I'm rolling to the next one.

Okay, so this is huge right here. Everybody know your strike zone? What is your strike zone? We have 10 cars. We sell. I could probably name Ram 1500s, 2500s, F150 Silverados, Equinoxes, Terrains, Yukon's Tahoes. We have 10 cars in our strike zone and we know when those cars get here, we know what we can sell them for. And so we're probably going to put those 10 cars. We might ignore V Auto for a minute because we just sold one for X amount, but we'll, we'll listen to it. But we might ignore it. In that strike zone. In that strike zone, we can get 100 to 105% and we can't have all of our, you know, 200 cars stocked with those exact models. But we know when we get it, when we get those cars right down the middle, we knock it out of the park with those cars and we'll leave it, you know, we may leave that price and maybe just adjusted a dollar until it gets 30 days and then we'll start stripping, stripping pieces off of it. So that, that's what I, I have encouraged everybody from the day one. Know what you sell, know what you can sell it for.

That's it's the same. I mean, it's same in my business, of course. Like we talk about, I'm buy here, pay here. But I do know the five cars that if I buy today, as soon as they hit the front line, we'll sell it. I know exactly what we'll sell it for. What is the number there?

Is it?

Should, should a dealership focus on five to start with, then expand it or should you really have 10 go tos? I guess depends on how many inventory. How much inventory you got too, right?

Hey everybody, real quick, Buckeye dealership consulting, sponsor of the podcast. And obviously when we talk about slim front end grosses and trying to make a lot of it on the back end, your own reinsurance company is a great way to capture all that, man.

It's I tell you, if you're not doing it that way, you're making all these third party warranty companies a lot of money. And if you can take that money and make it yourself, how much better is that, Jeff, than you're making it? Dealership's making back end profit and you, if you're owning the reinsurance company, you're making that profit. Yeah, it's a, I mean, it's a no brainer, right?

Yeah, yeah, absolutely. It's, it's. You got to capture more upstream and downstream options in markets like these. When you are a V. Auto type philosophy, right. Whether it's your, all your reinsurance products and even your aftermarket products in general that Buckeye can help you set up with, you know, whether it's, you know, some of these other type reinsurable items that you could sell to your customers. So reach out to the guys at Buckeye, see what is right for you in your retail dealership.

Yeah, that's, that's, that's dependent on each and every person. I mean like when we started, there was like three vehicles that we buy. Like in the very beginning it was a Nissan Maxima, like a Chevy Impala and you know, Malibu or something, you know, and I would just go to the auction and look for those three makes and models and they just, they just happen to sell. And what you'll find is like a, like a body change, a body style, even if it's old. Like people like are attracted like the old Cat eye Chevy, you know, like, you know, people are attracted to those and you can't go buy those older rigs, but like 16s and 17s and 18s like, like you'll find that people in your market are really attracted to certain makes and models. And with the technology that we have out there today, there's no reason why you can't source those vehicles and source them at a high level.

Yeah. I think the basic philosophy you're saying though is like you said, know what works well in your market. Right. Obviously based on your, where you position yourself, your area, you know, but also knowing those cars is such an advantage because then you know what to look for. You know, the hurdles to jump over. You know, if this is going to show up, this is the problem. Your techs start getting really familiar with how to fix this common issue. I found for me, like, yeah, my one off, like stupid buys on like a Friday night when I'm bored. And on Manheim, those are always the worst, right? Because they're like, you see some shiny, you Know n like Chevy bolt. You're like, oh, who doesn't want a Chevy bolt? It's all electric.

It gets 50 miles, and he doesn't even drink. D. I mean, what the hell? I drink on Friday nights and do stupid stuff like this.

Yeah, you just. But it really is like those one offs that will just like sit forever. And then when you start collecting too many of those, you know, then it's like all of a sudden you've got a whole bunch of little island of misfit toys. Or if you're trying to chase too many things, man, you start getting into stuff you just don't know. Yeah, you can make a lot of those bad decisions.

That's right. That's right. You know, you got to have a business plan and stick with it there.

You know, interest rates have raised, I mean, 500 basis points in, you know, in just a matter of a, of a blink of an eye. You're, you're dependent on banks, large banks, to finance these cars for people. What is, how are you overcoming the hurdle of 18 months ago, your 800 credit scores were buying at 1.9%, and now we're at, you know, 7 and 8%. How, how have you, how have your F and I guys, how are they battling that? How are you winning this game and letting that sink into your customer's brain?

Well, it's tough. I mean, it's tough when we're penciling them, the first pencil comes in, we're penciling at 12% no matter what the customer is, 800 beacon or whatever, just so we can set a realistic expectation. And we're penciling with a price range between, you know, really $100, depending on what that interest rate comes back with with at the bank once we get them bought. And so it is really tough. But our guys are doing a pretty good job with, with the word tracks as far as like, you know, had you bought two years ago, yes, you would have got a better interest rate, but you would have paid $10,000 more for the vehicle. Right. And so as a consumer, I would rather pay less on principal and a little bit more on interest rate because, you know, the feds are going to lower the rates in two years, got less principal paid off, you can double up on some simple interest payments because every contract we write with all these national banks is simple interest. There's no Rule 72 anymore. And so at the end of the day, you're actually in a better position than you were two years ago, paying a much higher price, you know, for that. For that truck, because, face it, they were paying over MSRP for trucks with 50,000 miles two years ago, and people are still in that situation. And so it's. It's the same. And that's what we try to educate customers are. And it really is the same. It's just a matter of. It's just a matter of can I. Getting over those hurdles. And it's really an ego thing, I think, with people right now. Right. It's like, well, I've never. I've never financed anything for, you know, 10%. Well, you know, you know, you didn't live in 1978 because everybody was financing at 10 and 12% in 1978. So that's just getting. Getting people out of that mindset. And, and we've done a decent job with it. We haven't, you know, knock on wood, experience the banks. We've experienced banks pulling out, but we've also experienced banks, you know, pushing the lever forward where that market is kind of like open. Some of these other banks and credit unions have opened up to us, but some of them have definitely pulled out for sure.

I love that you are using word tracks and your guys using word tracks to. To overcome those objections, and that's what we all should do. Is this something, I'm sure you're having sales meetings every week. Is this something you came up with this word track to. To help your guys? Is this something y' all train on every week to make sure you're staying, staying focused?

Yeah. So as when the Fed was starting to raise rates back in the fall, like, we, we noticed. We noticed used car prices were going down. And so it just made sense to us, you know, and we educate our customers on the fact that we use V Auto. We say, hey, we. We pay a lot of money for this software to make sure that you have the best deal. We're not pricing our stuff 105% of market. You're getting 95% of the market or better. And we're the number one dealer. And you don't drive way out here because the price is too high. And not only are you getting a great deal, but you're saving because two years ago, you know, you'd have paid $10,000 more for the same vehicle. And so I think that, yeah, that's something that we really just developed on our own because we just saw the trend in the market a year ago.

Yeah, it's super interesting how most of the time, like our salesman, you bring someone back a 8 or 9 or, heaven forbid, a 12 callback on a good credit customer. They freak out, and the salesman's just like, yeah, man, interest rates are high right now. You know, because, like, that's our gut reaction as well. It's so stupid. Like, yeah, you gotta. You gotta train these guys to have the right, you know, attitude. It's the same people that come to me that want advice on buying a house. It's like the same thing. Yeah. Guess what? Your interest rate's high on a house, but you're negotiating the price lower than you would have two years ago.

Right.

Historically. And rates aren't historically high, which is another thing we have to get over.

Have.

Have you seen an increase in cash deals compared to, you know, two years ago? No. Okay.

We're 20, 80, 20% cash. It's. It's remained the same. Probably a few more USAA deals, Navy Federal deals. Some of those. Some of that military money is still cheaper than anything that we can find on the market. But that's the only thing that has. Is because we really do, like, okay, you're bringing this cash to us. Are you financing this cash? Let's. Let's help us beat that. Right.

That.

That you're getting. And what we found is the two that we can't really overcome is that military money. It's. It's. It's just really good deals for them sometimes.

What's our payment?

What are you seeing? Typical payments come back at monthly.

$700.

Okay.

30 on a. On a $35,000 rig, you know? Yeah. And most. Most customers have. Are coming in with some equity. We're not doing a whole lot of negative equity. I mean, we do it, but most of them are coming in with some equity.

What's that like? I mean, I guess we always talk about this huge negative equity issue that people are going to have from all these Covid cars that they bought at 120 of MSRP. You're not seeing that right now, or you think those people are holding back, or they just know they can't trade in.

Or it seems like we'll get three in a row. And I'll ask my finance manager or my desk manager. I'm like, hey, is the tide turning? Are we fixing to see, you know, is this all we're going to see? And it kind of scares us for a minute. But then we think back to all of the history that we've had. It's like, dare. You know, we've always seen These people tank 10 grand, 15 grand, and we really have, you know, there's there's somebody that's going to come in and just bought and you know they're just, they're just going to be underwater. But I don't think it's a, I don't think it's an epidemic like we were, we thought it was going to be. I mean by rule of thumb people usually try to do the right thing and they're, they're trying to make an extra payment here or there because they do know that they bought high. It's, it's just that one off here and there. You'll see like, wow, I got 20 grand upside down.

Yeah.

And, and we've all, we've always seen it in the car business. What?

Yeah. Lenders aren't really rolling a lot of that right now. You're not seeing a lot of lenders loaning above going to 110, 120% of loan value.

No. And that, that's been, that's been a bit of a challenge too is they're capping you on the front end of the deal now. You know your major national banks, Ally Capital and you know some of those, they're letting you have all the money on the back because it's charged backable. Right. You know it's, it's, it's a little, it's a little safer investment for them because the dealer's got some skin on the game on that number. But line three is, is, is capped on the front for sure. Yeah.

What if gas prices, I know you sell a bunch of trucks. What have gas prices done to, to slow it down or is it an effect at all?

It hasn't affected us. Went up back when it was $4 two years ago when the new administration took office and they were shutting down pipelines and all that kind of stuff. I think everybody had a knee jerk reaction and pulled back for a month and we saw a dip in truck sales and we saw, we sold a few more Corollas that month but it, it quickly dissipated. It's a non issue right now.

Seems like everybody's gotten used to where we are outside of something catastrophic happening. We're, you know, riding in that three to four dollar range is like you just.

Yeah, I mean I think that's fair. 20, 23. I mean 3 bucks, 350 for a gallon gas. I mean, I mean you can't ask for much better than that. Yeah.

That whole. Yeah. It's just weird that everybody's gotten used to $3 to $4 a gallon. But I guess that's, that's it's the times we're living in.

That's right.

You wholesale a bunch of cars or you wholesale some cars, I should say. What do you see going on on obe and. And in the auctions? Is there anything concerning that that dealers should be looking at?

So this is where I don't know that the strike is even. I don't even think it's a factor right now at all. Because, like, oh, are we going back to Covid times? Whatever. I mean, like, it might get that way, but when I. When I start to see offers on ove, people are starting to get desperate, right? They're starting to, like, franchise dealers are kicking in the market and starting to buy used again. And that's really what drives a lot of this is the franchise dealers buying used. That what. That's what drove the whole frenzy for the last two years. Because they knew they weren't going to be able to get cars and they better fill up their lots on used inventory to keep their salespeople employed. And we haven't seen that yet. There's no, like, during the COVID like the two year, my phone was just going crazy with ove offers and smart auction offers, and that has not happened yet. So that's completely cooled off. We're retailing very few on ove, very few on smart auction. The only thing we're really wholesaling right now is our trade ins with 200,000 miles. And those are bringing really good money at the auctions. But the over and smart auctions have cooled off. But I can tell you when they start to ramp up again, that's when you as a retail dealer need to maybe start raising your prices because that's it could be a turn at the tide.

Hey, Jeff, one more thing. You need cash to do business, and Primal M is the place to go to get that money. Yeah.

You always want to be shopping the rates, right, guys? Those things can eat you alive. Your money, your cost of capital, it ain't cheap right now. Right? We talk about interest rates, it. Let me rephrase that. Not cheap. It's not the same as it was. Right, Right. Not what some of us could be used to. But guess what? If you can make your model work with these interest rates, you're going to be even better off if interest rates chill or if they stay the same for a while. Right. Build your model at a reasonable rate, which is today.

Yeah. And you got to have cash to do business. So don't stress yourself. Go get your little cash, pay a little more. Right? Now the rates are going to come down. Talk to probably, and they'll take care of you.

Yeah, it's interesting to be able to time that right in the V auto model. Those things could change in 30 or 60 days. And all of a sudden you sold out of everything that you had yesterday's prices and you sold them super cheap, and now you're going to replace them again. So it almost seems like when that, when that starts to turn the other direction. Yeah, you're going to leave some money on the table, but. But I guess you're. You're trying to not lose on the downside either. So do you. Have you. Do you know any other dealers? I look at some of these guys in my town, and I'll sometimes get on there. You know, some of the software I have will let me see their days in inventory. And some of these guys that are sitting on a whole slew of big fat trucks that aren't exercising the philosophy you have. Have you seen some of these guys go under? Like, I just, I can't even imagine the losses that some of these folks have taken on some of these trucks the last 12 months.

It's got to be close. And I've been saying this for three years. We have not saw this guy that's down on his luck. Because as. As smart entrepreneurs and everybody that's listening to this podcast should be as smart, educated entrepreneurs, you should thrive in a down market. You just got to be ready, right? And so that's why we just keep your head on a swivel. There is coming a time where these guys are going to be hurting. Number one, it gives you the opportunity to scoop up some inventory. Number two, it might give you the opportunity to buy business, to buy another store, to do whatever. You know, just keep your eyes open, because I don't think we've cried hit. You know, I don't even think we've hit a recession. I was talking to my banker the other day. He says for the first time, we've seen these credit card increases and people living off of credit. That tells me that their money's run out. You know, the student loan payments are starting again and everything's still high. You know, maybe inflation's cool, but it hasn't gone down and wages are not going up anymore. So. So we're kind of in a, like a teeter totter, I think. And we're going to be going to be there at least until the holidays. And I don't know what happens after that. You know what I'm Saying, yeah, Christmas, Christmas debt.

I was speaking with someone last night that works for one of the nationwide credit card issuers, right. They do the branded credit cards with like, you know, Victoria's Secret and things like that. And of course during COVID we all know that everyone was paying their debts, right? Consumer debt was at all time low. Absolutely. She said right now she's like, I feel so bad for my collectors because it is so tough to get people to pay. She said, how do you default rates are strong on consumer credit cards right now.

How do you, Jeff, how do you repo lingerie?

Yeah, yeah, no thank you. Not interested.

Dare. What? Right now what is the number one thing you suggest retail dealers do to prepare for the next 60 days?

This is what I've been talking about. Keep your inventory and your time to line tight, right? As soon as you get the car, let's get it reconditioned, let's get it on the website, let's get it on your third parties. Let's make sure that we have lots of pictures on the website. You need 40 pictures on your website and let's get it out there quick. And let's get this thing priced aggressive because what's going to keep you safe is quick turn times, especially in a volatile market, especially when you don't know what to do. You're going to know if inventory starts getting short again, stuff's going to sell a little bit easier. You're going to have people come make you some wholesale offers. But, but my two recommendations, make sure your service, make sure your time to line is under 10 days, seven days is optimal. And then get that thing online, get a lot of pictures, get it on your third parties as a retailer and make sure you start getting some eyeballs, some VDPs. Make sure you work every lead. If you don't have a BDC, make sure you're getting to these leads fast. Under five minutes. If you not acceptable under 15 minutes anymore. You got to get to these leads under five minutes and set up you a system. If you don't have a CRM, if I'm sure your, your lead providers are emailing you, make sure you're getting to those leads fast.

Man, that's, that's awesome.

Talk to me Dar about give me the, the philosophy to sell an aged unit because I struggle with that right As a buy here, pay here dealer, I'm like, look, there's a but for every seat. Like I'm eventually going to sell that freaking Kia Soul. It's been sitting out there for 200 days. At what point, like at 100 days do I just need to take my loss? And how do you wrap your brain around that philosophy of just saying, hey man, we gotta, we gotta, we gotta blow this thing out and I'm gonna take a big old kick in the pants on this, but I gotta do it.

Well, I don't know about you, but the longer the car sits on the lot, it's not a good car anymore. There's, there's a reason that that car hasn't sold. It's not just because it's a skia soul. Like, I don't know, you don't talk to every exit interview on your customers, but somebody set in that car, somebody's drove it around and they didn't buy it for some reason. So get rid of it. 100 days, get rid of it. Freshen that money, freshen that capital. A lot of times customers are driving something and they're too nice to say that it just like it stinks or that, you know, the steering wheel was worn or the buttons didn't look good or something. Like it's the littlest things that drive customers away. I would say even in buy here, pay here, whether it's, you know, whatever it is. And I would just say freshen the money, tighten your buying processes. And you know, do you ever, do.

You ever think that if you just put the car back on the transporter and sent it down 500 miles and then dragged it back 500 miles and everyone saw it as new inventory and you just repriced it at today's prices and sent it back through the shop, that they think it's a brand new car and be excited to sell it? Because yes, if you're going to go wholesale this thing, like you're going to take that aged unit, wholesale it to Luke, Luke's gonna bring it in like brand new inventory, clean it all up pretty it put it on the front line and sell it in seven days?

That's right. Luke's gonna, Luke's gonna fix, fix the buttons, right? He's gonna fix the buttons that weren't selling. He's gonna be in it better than I was and he's gonna sell in seven days. You're exactly right.

So why not do that to yourself?

You could, you could. And there's a dealer in one of my groups, one of my 20 groups that actually does that. He takes it off the website, he does the whole recon process again, assigns it a different stock number, the different stock number gets it into the front of Cargurus. Because Cargurus is smart. If it uses the same stock number, it still says it's in your inventory for a hundred days. I personally don't do it. If I had another roof, I would definitely try to start. If you got two roof costs, back and forth a little bit, bouncing back and forth. But go through the whole process again, like, send that. Send that thing to the shop. You know, make sure that you didn't miss anything. No smells, you know, anything like that. That was driving a customer away.

I think that's a big issue because you do have to bring it back in at today's wholesale value. Right. Rebook it, and then your shop can't look at the old ticket. I think a lot of times your service writer will be like, well, we've already spent $2,000 on this thing. I can't fix that steering wheel. I can't put another $500 into the steering wheel. And you're like, well, you. They don't have the whole picture, right. They're seeing a little split. Oh, man, I can't put more recon into this. And you're. If you don't, I'm taking a $3,000 wholesale loss, right?

Yeah.

So let's do the $500 steering wheel, and let's. Let's get it retailed. How closely dare do you track your overhead per car? Because it seems to me in this kind of like a speed model, you need to know exactly what it costs you to sell a vehicle, to know if you're even making money. I mean, is this. Is this something you track, like, monthly, every week? Like, you add a new salesman, you add a new service writer, you add a new sales position, all of a sudden, you know, you're adding another $50 to every single car you sold.

That's right.

How close do you track that?

I mean, you should. You should know your. Your. Your PVR expense, what you got to pay to Percella Car and ours is like 3, 300. You know, that's up from the early days where it was like 1500. So as you. As you continue to grow, that's just going to be a number that you have to. That you have to monitor. I don't know that there's a sweet spot, I would say much over 3, 500. You better be really raking it in per car.

Yeah, yeah.

Because you got to know that number. When you look at a slim front gross, and you're like, all right, man, we made 500 on the front. I gotta make 2500. Dollar, you know, on. On the back end, or this is a loss loss. And I take too many of those this month and I'm out of business as well, right?

It is, it is, but the same at time. I always say activity breeds activity. And the more plates that you have on the back of cars running down the road, the more Facebook pictures, social repeats, referrals. If you put a good car with a good customer, that's going to say good things about you. That's the best advertisements you can have. And that's why volume, the right kind of volume, solves a lot of problems because it's, it's the unseen things that go behind the scenes that you don't see when you're doing your processes right. That's why volumes, that's why volume is so successful in the car business.

Super interesting.

Well, yeah, Darren, we really appreciate your time today and I know the retail dealers out there did, so we look forward to having you back soon. And good luck.

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