#339 - Ride The Retail Wave

This is the Independent Dealer Podcast, Education by Dealers for Dealers.

Now here are your hosts, Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast, brought to you by Buckeye Dealership Consulting. Luke, how are you doing, man? How are sales?

You know, it's the doldrums of summer is like, is what I like to talk about here at this time of the year. It is so freaking hot and humid here in South Carolina. We've had about 20 inches of rain in less than 30 days and it's 95 degrees every afternoon. You walk outside and you get hit in the face. School's back in. It's. It sucks.

Jeff, you should be selling boats. You should sell boats.

The arcs. We're building arcs around here and we're putting two by two on there, so we're doing good. But I tell you this, you know, it's, it's that time of year, it comes every time. And what's funny is you kind of prepare yourself for it, but then when you're in the thick of it, you forget how bad it is. Collections are horrible, sales are horrible. And we're just hanging on, buddy. We're just hanging on.

Yeah, absolutely. So introduce, introduce our guests, Luke.

Okay. J.D. tomilson from Gainesville, Florida.

J.D.

And I met through Marshall, uh, at, at Niada. And JD's been a long time listener, big fan apparently, and he's a retail dealer. And Jeff, we need more retail talk on here because I know nothing about it and we got people out there listening to like it, right? Jd, Say hello.

Well, hey guys, happy to be here. And that's a credit to you guys. That's how entertaining the both of you are. I am a retail guy listening to a buy here pay your podcast.

So then all you guys don't type cast us. We're not exclusively buy here pay here, but we do lean. We do lean heavy. And we're sorry.

But you know, I still get stuff out of it, even though only a little bit relates to me. But it's just a nice overall automotive news, insights what everybody else is dealing with. So I love it. I'm happy to be on.

Well, I would appreciate you being here, jd. So give the listeners a little bit more depth or background or context to your experience. What, what you know, your dealership, where are you at? What's the scope? Like your business model employees kind of give us that idea.

So we're a 30 year store in Gainesville, Florida. So heavy. College town, university hospitals, an educated area right in the middle of the state. So we're two hours from everything, which is also two hours from any major thing you want to do. So it's good and it's bad. But We've been here 30 years. We're retail only. Average credit score just over 700. So we deal with prime, we sell late model. So kind of 20, 22s, 23s, 24s, low miles, under warranty, main lenders or credit unions. And besides that, we don't have any fees. I know Luke doesn't agree with that. No fees. And in Florida, that's crazy. I don't know what your guys state caps are, but there's no cap in Florida.

Yes. Wild west. Yeah.

So we have no fees and we have nobody on commission. I love that. Nobody on commission, no fees. And we don't negotiate the price at all. So it's a little bit, I mean.

That'S almost a Carvana, CarMax type model. And y' all predate Carvana. I guess you probably open about the same time as Carmax. And I remember there was a big, during, during that era there was a big push and I think Saturn actually was the first car manufacturer, car, car person to go down that rabbit hole of non negotiated pricing. That's interesting. And we'll, we'll delve into that a little further. But I tell you, the no fees, no doc fee thing is.

I know, I know we're crazy.

So I, I want to get into that. That's not, I mean, I don't want to get into it. H, no, like not my business model, but I want you to get into it. Is that the easiest business model or the hardest business model?

Because it's the easiest. I listen to like your guys's headaches and it's way easier. And I think it's easier to grow, I think it's easier to expand and it just makes your life easier from a, and an owner perspective.

Well, but which car?

Like the cars or the model?

Sorry, what was that?

I'm saying like you're buying a near new vehicle, so if it has a problem, you can just take it to the dealer and say fix this whatever it is. Right, Correct.

So like our comeback and our policy every month is like $300 a month.

Yeah. But you're also competing with every guy out there to be the lowest price within 500 miles. So there's zero gross.

Yeah, we're a high volume, low gross store.

How many cars you sell in a month?

JD Just over a hundred.

Okay, and what's a goal?

Like last month, five front End gross right around two grand.

Okay.

And.

And your back. And your back end gross.

Our back end is terrible. So enough back. So we're, we're 580, sometimes around 600 on the back. Majority of that is just. Well, we work with credit unions, so it's, it's give and take. And I go through this with the 20 group guys. They just hammer me every, every meeting.

Well, what's, what's interesting is you've almost flopped it because what, what a lot of stores are doing is 500 front end and 2,000 back. And so I, I like the model where you're still holding gross, which is, which is rare during this time. And it's, it seems it's been a, you know, three years ago. It's not rare, but, but it. Before that was rare. And I think it's gonna get back to being rare. So to get the back end gross, do you have your own reinsurance company or are you selling other products?

We use, we use Zurich. So we've been with Zurich since the beginning. They're awesome. They're a household name, which helps, especially as an independent, to have a product that people know, they see it on tv. It's, it's one of the largest insurers in the world. So that helps us just from a reputation. People, People know what they're getting.

Yeah, yeah, for sure.

But.

But you're able to, to participate in it because you have your reinsurance company. So your, your back end gross is really a lot larger then down the road.

It's larger. We do gap, we do warranty, we just put a bundle in place, a tire wheel, pdr. So that went into effect two months ago. So we're trying to increase the back, but right now we're sitting around that 600 mark.

And JD if you would say right now, what is the car that you sell the most of? How would you describe that? What, what make, model, mileage that if you could, if you could right now go to the used car store and buy them and put them on your lot, what would it be?

So we're, we're meat of the market. We sell a ton of Toyotas, Hondas, Hyundai's, Nissan. So we sell the most Rav Fours, Tacomas, CRVs, Camrys. I mean, it's just what everybody in America can buy. Late model, 10,000 miles, and they never.

Break and they never.

10,000 miles. Way cheaper than a new one. We're selling a really nice one.

Wow. So how do you keep. How are you keeping a $2,000 gross. Do you have a. What's your secret? Like, how do you do that? When we feel like the whole world has gone to a low gross up front, it's just a race to the bottom. This whole V auto stuff, like when you say you're a high volume store, like you're high volume, but you're also high gross. Like that's respectable.

So I think two part question. The first is I think it's how you buy the car. I think that's front end gross is how good of a buyer you are in general. So we touch every car we buy. We don't buy anything with paintwork. We don't buy anything with bad carfax. And we sit in every car. So we keep our recon as low as possible. So I looked it up before I got on here. Our Average recon is $493, including transport. What? Wow. But.

But he's in party.

You can.

He's buying a lot of stuff from Orlando.

And you know that area Sports say average $140. The rest is internal service. So oil changes, filters, whatever it needs. We check tires. So if it. If we need. If we know it needs a bunch of tires, we can just buy one that doesn't. And it's typically the same price.

Yeah.

So we keep our recon down.

Are most these fleet vehicles? Are these.

We buy model fleet, but a lot aren't. So I'll even have new car dealers sell me brand new cars. So we. I think we have 20 cars under a thousand miles right now.

Wow.

When I sell it.

How does that work? What are those demos or why would it different ways. So you.

That summer demos, some sell me at the end of the month. So if they get retro bonuses to hit numbers, if they need to move five new Hyundai Tucsons, they'll just sell them to me way back to hit their numbers.

Do you get them on an MSO or how do you even. Yeah.

So they're all mso and you can.

You can do that in your state register.

We can do that too.

Oh really?

Yeah.

Interesting that. That sounds. That sounds like.

And those are zero recon.

Yeah, zero recon.

Plastic off.

Yeah. What helps is everything's under warranty for the most part. So if we have an issue when we inspect the car, if it has an oil leak, we just run it to Honda.

Yeah.

They fix it, we bring it back.

Do you have pushback from any of those guys saying, well, this isn't in a customer's name. I know a lot of people have issues with the Kia Hyundai warranties on the engines because it's not registered in someone's name.

No, they understand. We had one person, Hyundai registered it to us, and we had to correct that. But besides that, we've been good.

They understand the game. That seems. That seems like an actual. When you buy those off of MSO or you buy them, are you getting them at a price that makes sense in the used market? Because now technically, you know, you're a used car dealer.

Yeah, I just don't buy them if they don't make sense.

Okay, so.

So it's not like I'm just buying anything they. They shove at me.

Yeah.

So it just has to make sense for both people.

So for the common dealer out there, is that a relationship that you've developed? Like, is that like a, a trade secret? Or is that something that any dealer that wants to be in that category could go in and say, hey, you know, keep me in mind when you want to do these things or, or have you built these relationships over 30 years?

No, I think you just call them, say, hey, if you get to the end of the month and you need to move a few cars, just call me. That makes sense.

And there might be some people out there listening to this that don't understand this. So. So let's explain this to everybody listening. The way Kia stores and Hyundai stores and Toyota stores and Honda stores and Ford stores, and a lot of these, especially CDRJ stores make money is hitting certain levels of volume. They have huge rebates that don't waterfall and don't trigger until they hit a certain number that a manufacturer deems necessary. So selling JD for new cars, essentially for $2,000 loss per car, may trigger 100 or $200,000 rebate. That is the reason it makes sense to the new car stores to do this, correct, JD Correct. So this is something that any new car store out there will do and probably does every month. Correct.

I thought we got rid of all that with COVID No, no, not now. Oh, you're saying the manufacturers are back on the I want to shove inventory to the new cars lots.

Well, you got to think Chrysler, Dodge, Jeep, Ram. They. They have never had an inventory problem. They produce plenty of cars, and now they have a real inventory problem, like they have way too many cars. Yeah, and Hyundai has a problem and Kia has a problem.

All these.

These manufacturers like this have problems, and they got to move cars. There's no, I mean, there's no other way about it, right?

Yeah. Hey, J.D. i want to transition to the customer side of it. You're dealing with this 700 plus credit score selling them near new vehicles. Where are you attracting these people? What, where do you find success in your marketing? Is it, is it all like you know, Cars.com and CarGurus? Do you, you pay the mafia a ton of money to have your good deal next to the name. Like how are you bringing these people in?

Well, it's tough because we, we advertise our actual price. So in the V auto, I refuse to use the auto because it doesn't make sense in Florida. So it's, we, we're on all those sites, we get traffic from them. But a lot of it's just reputation, referral, word of mouth. And I think most people, it's all about the financing, capture the financing indirect. We've leaned into credit unions. So we accept all these drafts. We encourage the draft. So you go to your local credit union, which is huge in Gainesville. Credit unions have taken over this town. So you go get your pre approval. If that person goes anywhere besides us, they flip the draft because they want financing money. It's easier to sell product. We take all those drafts with no penalty. So now all those credit unions, they know this is a safe place. They know the price before they walk in the door. They know we don't have fees. So they just basically it's built in business from a referral standpoint because we lean into it as opposed to trying to bump that finance number and compete, get it to 1500 on the back, we're okay with it being lower because of the volume.

So are you using Cuddle or have you developed the relationships internally with the credit unions around you?

We've just developed them. So we have some really strong credit unions in this area. And once it starts, it happens quick because typically those loan officers are on commission. So if that loan officer can put that warranty in with their draft and send them to us. Yeah, we can't sell that warranty, but we're going to move cars, we're going to take that trade in lighter and just churn inventory.

I bet you get some really nice trade ins on these cars you're selling, don't you?

We do. And that's, that's where our bigger front end grosses come is just we cherry pick the trades. We put everything up on a lift. If we, if it's too much work, if we don't think it's reliable enough, we just, we wholesale it. We keep everything that's nice.

How many, how many cars do you on average trade a month in.

We're at like 35%, so anywhere from 30 to 40amonth.

Wow. And while I think you keep.

We probably retail half those.

Wow.

And the rest of them, you, you wholesale or send to auction. How do you dispose of this?

Yeah, so I mean we'll sell to. We've kind of stopped selling directly to wholesalers. So it's mainly just taking them to the auction. We have a really good local auction. So Central Florida, North Florida, South Georgia. It's a great buy. Here, pay your lease here, pay your auction. That's where they're buying from.

And what. I'm sorry, I don't know the name of that auction. What is it again?

A lot of option. Vemo v Emo.

How about that?

Yeah, Luke wants your trade ins.

I'm freaking right now. And actually can we just. I'll just pay you top dollar for all the traders. JD Just ship them up. I'll have. I got a guy in Tampa, he'd be sitting at your dealership all the time just picking up those cars.

Hey everybody, real quick, make sure you guys have given the guys at Buckeye Dealership Consulting a call. So whether this is for your reinsurance, your CPI products or even consulting. Right. They do on site consulting and education, don't they?

You know, I don't know if they're doing as much of that anymore. I think on cpi, of course, and vsc, they'll come in and help you out, figure out how to sell. And like JD was talking about that, you know, he has a reinsurance on a retail dealer, it's so important to make, they're making 500 on their, their front portion of their back end product. And they're also participating in the back end of the back end product because they really. Because they own it. And that's, that's what reinsurance is all about. So if you don't have it, get it set up, make the 500 to your dealership back end profit, then make the profit from the back end of the back end through Buckeye Dealership Consulting.

All right, back to the episode.

Let's talk about this trade ins. I mean there's a real, I mean you're getting some really nice trade ins. In my opinion. You could have a whole nother lot sitting there of a lower, lower price inventory of those. Or you talk about how you kind of like buy here, pay your space. You know, I like, I'm gonna team up with you and we're gonna open up a store in Gainesville and sell those 30 or 40 buy here, pay here every month.

If you run it, I'm in because I just don't have the time to run it because I, I think in a perfect world, dealership is the. Is a combination of what I do and what you guys do. I would love to have your prime lot. Then you inventory a second lot, different name, different brand and sell all that inventory and then you capture all your customers. So in a perfect world, that's what I see in the future is a lease here, pay here, tied to what we currently do. Just because I think it makes sense.

Because you guys probably have some people you turn away, right?

We, yeah, we can't sell if you're not the lender. You have to turn people away. You and that would just. We get a ton of people. We just can't sell them on cars.

And J.D. you know, you, you talked about all your relationships or credit unions. Are you with Santander or Chase or Cap One or any other of these two?

Yeah, so we're with Capital One and Santander.

Okay. So you do have an option for, for those lower credit.

Yeah, I mean, we do two subprime deals a month maybe.

Wow.

So we, we basically don't get into it at all.

Who does that? Can I ask, when you talk about doing 100 to 125amonth, what's the makeup of your employees? How many, how many employees does it take to handle that kind of volume? When really, I mean, it sounds like the credit union's doing everything and just shooting you a check. But yeah, when you have that. Also talk a little bit about that pay plan you mentioned in the beginning.

So we current today on the. We got four people here and that's going to handle everything.

Typically we have four salesmen for total. For total in your office that we don't. Title clerk. Everything.

Five, including title clerk.

Okay.

Wow. We don't have your traditional F and I guys. It goes back to the model. And that's what I was talking about was the same guy that can do a cash deal, which is what a draft is, can greet the customer so they can do that cradle to grave with zero issue. On the paperwork side. I built the form pack. So you just click a box that says cash deal with trade, cash deal without trade. All the forms populate. And then it's just repetition on where to drop those signatures on the docusign.

That is. That is incredible. When you talk about selling 100. Let's just say, Jeff. Yeah, we, we had a buy here, pay here, store Leads here pay your store that's selling 100, 125amonth. You would have to have 80 employees to do that. I mean, seriously.

Yeah. Pay here guys to do that. They, they probably literally have 30.

But that's not even called counting the service department. So JD Do y' all have a full service department?

Yeah.

Yes. We have three techs. Everything we sell gets put up on a lift. So we inspect, we service, everything we put out. That's about 60%, maybe 50%, depending on the year of our service business. The other outside, it's. We don't make any money. It's just oil changes, tires, brakes for customers we've sold cars to. So it's like a safe place to bring their car back where they know they're going to be taken care of. That's awesome. Yeah.

Talk about having a squeaky clean Google review. I'm sure, man. I mean, talk. Could it be any. You're selling near new cars, you're thoroughly inspecting each and every one. You're not beating them up in the office. Your salesmen aren't based on commission, so they're not trying to rough them up. I mean, if you got a bad review. Have you ever gotten a bad review?

We have, but in my eyes, it wasn't our fault. So it's just a customer miscommunication.

Yeah. That was like in 29, like 1993 or something.

I remember the last bad one we got and it was a, it was like a three or four star, which is bad.

Oh my gosh. Those are good. Those are good.

And it was.

And they're like blaming the car and.

It was on like half charge and the paperwork only took 20 minutes and they thought it would be fully charged by the time it was done.

Oh.

And they were upset it wasn't at full charge and we offered to give them a car and they were, they gave us a four star.

That would probably be my headache. Like, my customers are needy. Your customers are, I don't know, like, maybe you probably have a small fraction that are super needy. It's like, yeah, maybe this isn't obsidian blue. Maybe it's ocean blue. And like you're.

We deal with a pickier customer, but not as needy.

Yeah, you know, you know, I, I remember Marshall and Eric talking about this, but that the, the specifics that they have to go into as to what package certain cars have when you start dealing with these kind of customers, you know, if you describe it as, you know, In Ford speak, a 502A, you know, unit compared to a 504A unit. And all of a sudden people lose their mind because it doesn't have this very specific item that it's supposed to have. And people just freak out. Yeah. Not compared to us. Like somebody was mad because one of their speakers at work.

Yeah.

Yeah. Would you feel like, do you feel like hiring is easier for you? Because, I mean, I don't want to, I don't want to dumb down their responsibilities, but it sounds like they're kind of like order takers. Right. You don't negotiate price what we wanted.

So by doing this you're taking basically how good somebody has to be out of the equation. And we've done that with the model and processes. So their whole job basically is greet a customer, be happy, help them out, have some product knowledge and just help them find a car. So it's more of a customer service job as it is a car job. And the best hire, we don't really, we don't hire anybody inside the car business because they're tainted. They have that baggage of shove product, sell something. And I mean you still want them to sell something at the end of the day, but it's just a different mindset.

And JD what is your, your ratio of sedans to SUVs to trucks?

I think we carry about 200 cars. We typically have about 20 trucks, more SUV, heavy, mid size, small SUVs. There's just not as many sedans out there. So probably 40. 40 out of the 200 are sedans.

And EV wise, how many are you doing? And also I guess, are you one of the EV deals like Jeff did the, the rebate deal?

We're not offering it off the price. So we signed up, we can do the paperwork, we submit it, but we're not giving it off the price of the car.

You're making them get the car or you're just getting rebate?

Yeah.

Okay. Yeah.

And are you selling Teslas or are you selling other type of evs?

We do a lot better with non Teslas. So I, I don't, I'm not a Tesla guy. I steer away. We'll take one in on trade, but I don't buy them. So we do well with Chevy bolts. We do well with Ionics, the Ionic fives, especially Nissan Leafs. Yeah, I think it's just a price point because that for the most part gets you under the 25, 000. So you get the rebate.

Yeah.

So we veer away from Tesla, we go to meet at the market a little bit lower price Point that's interesting.

And I, and I would assume, you know, selling the, the newer Teslas, there's not a lot of margin there, so that kind of probably hurts the, hurts you there. You know, selling 125 cars a month is, is a, is a huge accomplishment and it's hard to do even if you're selling newer cars like you are or, or older cars. Just the sheer logistics and getting everything done and stuff. You're, you know, you're trying to really go crazy and do it again. You told me that you're trying to, or your broke ground on a new store in St. Augustine. Talk us about how you came to, to decide to do that, number one, and then we'll go through some more questions there.

Well, I've thought about it, how I got to that conclusion and I can't even remember. So I've, I've spent a lot of time in St. Augustine and I get a cross sale every month of Alachua county, which is Gainesville. So I see what everybody sells, what they're selling, how many, who the lien holders are. But for some reason I started getting St. John's county, which is St. Augustine, South Jacksonville, and I noticed there were zero independence. So you got a couple of new car stores selling over 600amonth and the largest independent in the county only sells 15amonth.

Wow.

So you basically have half the new car franchises over there and no independence, but they sell the same amount of cars as Gainesville. So that's what that just told me. There's a ton of used cars being sold. They're just being sold by new car guys. And with our model, they can't compete with us from a price perspective or they wouldn't sell their new ones. So if I'm selling a one year old with 10,000 miles for 20 grand less on an F150. They're not going to price their used ones there because they gotta sell their new ones.

Okay, that makes total sense. I mean, very analytical. Some people just decide, I just want to open a second store and they just, they just go do it. And Jeff, I'm not even commenting on you. I think you decided that Cedar City was a, was a really good spot. And I don't disagree with you that Cedar City is a really good spot. But the one thing JD that you don't have in St. Augustine, that you have in Alachua county is, is your name. How do you translate the Tomlinson Motor Company name from, from Gainesville to St. Augustine? What's your plan?

We Changed the name. So we're actually. It's going to be called Sunday Drive, which in our eyes it's. It's not close enough to where it's an hour and a half from Gainesville for people not in Florida. So it's not quite close enough to have that same draw by having the name recognition. So we were able to get the name off the sign, which if anybody has their name on the sign, it's. It's a lot of pressure. So when people come in, they see J.D. tomlinson at Tomlinson Motor Company. It's just. It's a lot.

Yes.

So on the review side, it's nice to get it off. It's. I think that name we could do another four stores with. So I think it looks more like a franchise, like a CarMax, a drive time. And I like the name. So we're actually changing the name and it's kind of starting from scratch.

But you rely so heavily right now on. On the Tomlinson name in Gainesville. You're going to have to advertise more at this store, I assume.

Yeah.

How do you build that name up?

I mean, I think it's going to take time. Although one thing I think will expedite our growth over there is. Is the cars rule. Everybody doesn't like it. We're okay with it because it's our model. We're at an unfair advantage right now having to compete against somebody with $4,000 in fees pricing it for our actual price. And actually in September 1st Florida Attorney General just came out. They're basically putting the cars rule in effect. They're actually. They're going to start enforcing it before. That's not the cars rule. So it's just you can't false advertise in Florida anymore and they're actually going to pursue it.

Well, you couldn't do before.

Yeah, I'm sorry. In South Carolina you can't false advertise either. But they do it all day long. They don't include the doc fee and. But I get what you're saying. I mean, you're doing business the right way and I think that leads to sales. I really do. The footprint of the new store is it. I'm looking at your website now and if anybody has a time. Thomason motorco.com if you just check it out, y'.

All.

Beautiful facility. Are you taking this facility model to. To your new store or not?

So we are currently on two and a quarter acres here. We have nine acres in St. Augustine. Whoa. On the corner of the two busiest intersections in the county.

Wow.

So we are right in the heart of it. The traffic count is through the roof. So if you're looking at a map, it's SR16, which is the only way in and out of St. Augustine and I95. So we're right at that intersection.

Yeah, I know exactly where you are.

From a, from a leadership standpoint, how do you split off a second location? Are you worried about distracting yourself from the main thing or do you, are you going there? Do you have a family member dad who's going to run the new store? And how do you not lose focus?

So I'll still oversee both. I'm going to base out of there. So my wife actually works in Jacksonville, so it's easier for her. So I'll, I'll base out of there and then come back to Gainesville. And this has been a two year process. So over the last two years we put things in place for that to happen. So from a process standpoint, from an accountability standpoint, overseeing, not from here, we've basically been gearing towards this for two years.

And it looks like you have a lot of family in, involved in the dealership. Maybe your sister, your dad, your mom, and I assume they'll stay in the Gainesville store. That makes, that makes the, the step over there a little easier, doesn't it?

Yeah, my sister actually lives over there. So she, she got her MBA from the University of Florida. She worked at Northrop Grumman. And then when we decided to do St. Augustine, she said, I want to handle the whole backside of the business. So money. Yeah, that's right. It couldn't have worked out any better. And that was my biggest concern, was trying to figure all that out. But with her, I have somebody I trust who knows what they're doing, who. I don't think I could go out and hire an MBA from Florida that worked at a publicly traded company to be. To run the backside of the business. So I have somebody super capable that I trust handling all the money, which made it 100 times easier.

We talk about this, Jeff, and we're talking really about retail today. But collecting buy here, pay here accounts is the fundamental process of buy here, pay here. There's no need to sell cars if you're not collecting. And Blitzpay really helps us collect that money. Most people pay with credit cards today, Jeff, and Blitzpay makes it seamless for your customer and for your collectors.

Yeah, it's so funny you made a comment just barely Luth, where you said, you know, kind of like, JD has this, like, no advertising, no high pressure. I'm not making outbound calls to get sales. We just hang an open sign and people come in and buy cars from us. Like, that's. That's crazy. Right? And you said, how much less would you collect if you weren't calling your customers? Would these people still make their. Still make their payments? And it's like, well, of course my delinquencies would go up if I stopped calling them and hounding them for money. But what. What would help is making it such an easy process. Right. And I think that's what JD does with his sales, is just an easy process to come in and get a car from him. And we need to do that on our collection side. It needs to be easy for our customers to make payments to us.

Yeah, I didn't even think about that, put that together. But the ease of transaction is really what makes to Tomlinson and J.D. the. The reason people shop there.

Yeah.

And. And the reason people pay you is easy to pay. And Blitzpay really, really helps that.

Yep. Give them a call. Speaking of money, and you don't have to answer these if you don't want to, but to be able to floor 200 cars at your current location and then build out and floor another, I don't know what, two or 300 cars at your second location, that is, I mean, carrying the dollar amount that you do, that's an insane amount of money. Your flooring line's got to be, I don't know, 5 million, 6 million or something? Like, is this something you have to go, did you go get SBA loans? Is this just money you guys have squirreled away? Like, what advice would you give for dealers that might want to get there?

The advice I would give is not to grow too quick. So 30 years ago, started with five cars, you've got to pay tax on all your money as escort. So even though you're keeping that money in the business, you still have to write a check every year, which takes it back out. And if you grow too quick, then you have to floor too much. And if anything happens, your margin of error is just too small. That's how people go out of business. So you just can't do it faster than you should. And that's the single biggest advice I would give anybody. But right now, we don't floor.

So we have a.

We have a line of credit set up if we ever. If we ever want to tap into it, but we just write checks, and that's what. That's what makes St. Augustine a lot easier is we're going to build out the building and wow, we might floor over there. Depends on how we inventory. We might not.

Well, I mean with nine, with nine acres, how many cars do you plan to have on the ground there?

It can fit 500. But I think the plan, I, I haven't figured any of this out. So the, the thought I have in my head is we keep about 200 in Gainesville, but we have to have a storage lot a block back. So if we scale this to what actually fits. So if we scale it down to 140 and then have about 200 over there, we need an extra 100 to 140 to, to look how we want. So I think we're going to scale back here, do about 200 over there, but we're also going to join the inventories. So even though we're going to have less in Gainesville, we're going to have two times on the inventory page.

Yeah, you're going to have, you're going to have everything on your website, on both websites. Yeah, Yeah.

I think 350 combined would be a sweet spot to start. And just as we grow bulk that.

Up, you know, I think, I think the idea of you expanding at this time is, is kind of an indication on your future outlook for retail, for the retail space. What is your current assessment of, of retail in America and where do you think the next two years leads?

I think they're going to be good. This is the best year we've had year to date so far. And this is the first year in the last handful that the volume has really gone up. So we were 125 pre Covid. You dropped to that 80 to 100 during COVID and now we're back up over that 100 mark. So I think inventory is back. We've seen the price depreciation on the use side back to where they're reasonable. So you're getting those price point cars. Rates are going to be coming down. I don't know if they're going to do it this next meeting, but I think next year you could see up to 5 rate drops, which only helps.

So yeah, I mean, I definitely think we're getting a 50% cut in September for sure.

Yeah.

So I mean between rate cuts, between prices coming down, between volumes going back up, volume going back up for us is best, is the best thing because then the new car dealers have to get back into the new car business and they can't price where we price that one year old car. So when they were in the used car business and they don't advertise how they should, it's just tougher. And I'll show you something. I brought this one. This is what we have posted around the dealership. I don't know if you guys can see this.

There it is.

Yeah.

Oh yeah.

Oh, you got all your competitors.

Every single person in town. We list and we've either secret shopped or gone through the fine print to see exactly what they're adding to the advertised price. And we have that posted everywhere. So I think in Gainesville they average almost four grand.

That's insane. Those are some big numbers.

I know. So it goes back to that experience is you can have the no fees, but if you have people on commission, I don't think, I think you're in limbo. I think you're in that no man's land. So I think you have to go all in either way. You either have to make your money on fees and sell some product or I think you do what we do. Because if people were super pushy when they got here, even though we don't have the fees, it's still not a great experience. So having the hospitality mindset along with no fees, I think that's what we've shot for. And kind of the more we, we've veered away from traditional dealerships, the better we've done.

I love that. I love that model. One last question from me, Jeff. You may have something else, but what is your cost per car sold on the sales side? On, on employees?

So like our average acv?

No, no sales cost for the employees. So like you know, 300 cars sold or 200 car sold or 500 cars. So what do you, what do you.

Have to do some math? Just because we don't pay like that. Right.

But in the, in the backwash, it comes out of what you have. I just like to. Do you have any idea?

No. I know on the composite we have average gross per employee. I remember seeing that. So I think ours was right around 16,000.

That's a big number.

Okay.

Yeah. So I could be wrong.

I thought that's what it was.

I would just wonder like, you know, because I think if, if you look at what a traditional model, if you're averaging two thousand dollar gross, you, you know, you're talking about five hundred a car sold. So if you were paying a 25%, you know, salesman commission on that, I, I love the model of, of no commissions. I think it's, it Helps with the customer service side, which you're really leaned into. I would encourage people to look at that because you create really bad habits when you, when you have sales commissions.

But do you, I guess I want to ask, do you have standards then? I mean if you've got salesmen there that are non commissioned, is it okay if they just sell five in a month? Like how do you keep performance?

So we lean into the team mindset and on the composite, we don't track ups. So we track, we do a survey at the end to figure out how they bought the car, what, what they used to, to get to us. So we know what sites, if it was a referral, if it was a credit, we know where they're coming from, which I think is important. But we don't track the actual ups. So if we have somebody pulling up a Tucson for a customer, but then they grab somebody else at the same time, another person can still take that Tucson customer when they get back and answer questions. Yeah. So it's not one for one we don't have. That's your customer. You have to from start to finish. So it's hard to track, I think.

Do you have standards? Like do you know who has a. Do you track closing ratios or phone calls made like outbound prospecting or. These guys literally just order takers and if someone walks on the lot, they help them and if they don't, we.

Don'T do any cold call. We don't do outbound phone calls. We don't do any of that. So we, we take the leads we get and we maximize those. But it's not like we're going through a CRM and just call. You got to make 20 calls today. We don't do any of that.

Wow, that's wild.

So. And we don't have a CRM. So we have a customer database. But all the leads, from an accountability standpoint, they all flow through. Everybody can see every lead and every response. And that's the accountability as you. I see every, every response. I see the customer's response. So if, if they're not sending a good response, I see it every day. So it's a, I know it's, it's, it's different. It's weird.

It's, it's incredible though. As we always say, Jeff, every time we, we interview somebody, everybody does it differently.

Yeah.

And you know, there's no wrong way to run a dealership. There probably is a wrong way around.

The non profitable way.

Yeah, there's, there's probably is a Wrong way. But there's no 100 right way to do it because everybody does it differently. And you know, there's some really successful people just like JD that do it this way. And there's people that are super unsuccessful that do it this way too. So, man, I got a question, I.

Got a question for you, Jeff. So tracking your ups and tracking your closing percentage, when you track all that, do you know how they're doing it or do you just know the end result?

How they're doing what?

Like how they're interacting with a customer, how, what they're saying? Like, do you know how they're getting to that close or not close? Or do you just know if they sold a car, didn't sell a car?

Well, I know whether they sold or didn't sell. And then I use the percentages to look deeper into saying, okay, where are you falling off of that? You know, if you're getting X amount of leads, you should have X amount of appointments or applications. And if you have X amount of applications, I know you should have X amount of sales. And if those ratios are off anywhere, then it's easier to dig in deeper and say, hey, you're taking a lot of leads, but you're not closing anything because you're just cherry picking all the lay downs and maybe you're wasting a lot of leads. So that, that, that's what I say. Because for us it's efficient, right? Like it cost me $60 to get the phone to ring here in advertising spend. And so if someone's not converting an acceptable ratio of that to sales, then they're just brooming people.

And well, I think, I think JD, JD's cars sell themselves, which happens. And, and it's a good problem to have jd. If you had a salesperson at the new, at the new store in St. Augustine that, that sold five cars, how would you handle that? How are we training those people up or are we getting rid of them?

Well, I don't, he doesn't track it.

He doesn't know.

Yeah, you don't, you don't track exactly what people do. So it's it for me, it's seeing how they interact with a customer and online, I see the responses. So if they're not, if they're not giving a correct response or they're not having that, that correct dialog, that's more important than the closing percentage. Because if I see a lead come through and they answer it perfectly but we don't get a reply or we don't sell a car, because of that, he still did a good job. He just didn't sell the car. And as long as he's putting out that hospitality customer service, if he's doing it the right way, that's all we care about. Because then the cars, the cars will sell if we do it the right way.

I get that. I've had, I've had employees that are, that I've seen that don't do it the gobble motors way. And it's time to go. Do you. What's your employee turn like? Are you getting rid of people or everybody been there forever.

We have no turnover.

There's no reason to leave. I could sell one car or I could, I could just hang out in the break room all day long.

Yeah. But I mean, JD would notice that if, if sales.

Correct. So if you're not doing it, we're here. So you see it and we're lean enough to where you just can't. So these guys do a little bit of everything. They're not just sitting there waiting for somebody to pull up. They. They help put cars online. We got to take photos, we got to put stickers on the back. So everybody's doing a lot more than just selling the car. And that's what the job is. And we, we make sure everybody knows that before they get here.

Super interesting.

I have one last comment.

Yeah.

The other thing is schedule. So typically, how much do your guys work?

My salespeople work. They're required to work 40 hours Monday through Friday and they probably end up at 45 or so.

Okay.

That's not. That's a lot better than anywhere else.

Yeah, for sure. And we design it that way. But we're also not commission based.

Yeah. So we do the same thing. So they work five days a week. They get a three day weekend every month. So it's more of a cush schedule. Just that work life balance that I think long term, that's how you keep people. If, if you have this high hours, high pressure, high commission, I think it's just hard to keep people. And then you're constantly training and then it takes time away from you, which increases your overhead. It's just. I don't like headaches. I want as. As few headaches as I can possibly have.

I agree.

I would love that too. You're up in seven days a week. I saw.

Yeah.

11 to 5 on Sunday.

Wow.

So we have three people up here on Sunday.

And y' all sell a lot of cars Sunday or, or.

No, I think we average 2 1/2 yeah.

So you know that it's so interesting. We could go on forever. Jeff, we're about. We're about there to the end. You got anything else?

No, no. J.D. thank you so much for your time, man. We really appreciate. Looks like Luke said just a second ago, there's a million ways to skin a cat. You know, and I think everyone figures out what fits them. And this, I mean, you guys, geez, I would trade. I would trade seats with you in a second. That sounds like. I mean, look at his head of hair. He's got so much hair because he's not with a business model like I am.

And he's a hell of a golfer. I mean, I love it.

Yeah.

Thanks, J.D.

Thanks for having me on, guys.

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