#344 - Finding Customers In A Slow Market

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 again this week by Buckeye Dealership Consulting. That is one familiar good looking face there in the third box. Luke, can you see that?

I can. He's got, he's got more hair on his face than you have on your entire body.

Not true. If I took my shirt off, I.

Would put that thing.

Good is. I don't have.

Keep it on, please.

I think good is your. If you're watching on YouTube, you can see Marshall's beautiful face. Marshall, good to see you, man. How's it going?

It's great to see you guys. It's good, it's great.

It's early out there, Marshall.

It is early out here and it's an adjustment from, you know, the time hasn't changed yet. So that'll be when things really start to get depressing here.

So everybody, Marshall Zoner with Freeman Motor Company out of Salem and Portland, Oregon are with us today and we're going to talk some retail sales philosophy and just a lot of retail stuff. Buy your pay here dealers. You will get plenty out of this. I'm a buy here, pay here dealer, Jeff, and I've learned probably my most valuable car lessons from Marshall. So everybody can get things like this. Just sit back and listen.

Yeah, it's super interesting right now. I feel like, so my month to date sales, I'm even because I'm, I do both, right? I do buy here, pay here. I also do a handful of retail. So even though my month to date sales are a little behind where I want them to be, I'm 50, 50 buy here, pay here and retail, which, which I think I'm seeing, you know, people with decent credit scores and we're getting them approved at some banks and some credit unions and things like that. That's kind of my temperature of the, of the market right now. It's almost like my buy here, pay your customers are really bad and I don't want to do them. So I'm kind of like being forced to kind of find those people that are maybe more credit union type, middle of the road credit scores. Marshall, what are you guys seeing out there on the west coast? Are you, are you seeing as many credit apps? Are you seeing better credit quality, worse credit quality? What's the deal?

Well, that's, that's really interesting. We are seeing actually an uptick at one of our locations on bad credit. So I think, well, we can attribute that to a lot of different things. And it's hard when you talk to other dealers to try to gain a temperature. Are you doing well in comparison to your market or are you behind? But you really have to look at what's their inventory, what's their business structure and, you know, advertising spend. But quality of inventory is probably the biggest thing that I focus on. You know, sure. In region is a big one too, because I can talk to other dealers who are in my 20 group and I'm like, well, you know, you're in a state that the economic climate has always been better. And here, you know, we have riots if Trump gets elected. So those are. Those are things that matter. Right. In our area, whether, you know, whether you like Trump or you like Kamala, we have to take that into consideration. It. Whoever gets picked there could be an upset. And I'd like to know, can I.

Ask you, Marshall, do you guys have a contingency plan for, you know, whatever November 3rd, 4th, whatever the day is after the election, Are you guys going to put all your cars somewhere else? Are you like, are you in the path of destruction or is it just kind of like, let's wait and see. We're not putting like, cardboard and like boarding up our windows just yet.

That's funny. No. Well, I don't know if you know this, but we've already, since 2020, we've had about 17 of our windows shot out at various times. And so we just put plexiglass on them. We've taken them off thinking everything was okay, and then they get shot out again. So we live with plexiglass on our windows at our Portland location currently.

And that's it. And that's so. I mean, it's so wild. Like, my neighborhood around my dealership is rough, right? I mean, it's kind of hoodish. I mean, it's not mountain, but more hunnish. And it's where Marshall hit. Eric's place is important, is so nice. But randomly they've had so much crime there. And that's. I know, been hard to deal with over the last four years.

It has been. I've sent Luke some wild videos. There's some crazy stuff that definitely does happen, but we, we take that into consideration as far as how tight we want to keep our inventory. And from a. From a movement standpoint, not necessarily from a rioting going to destroy our business in that aspect. More will it slow the business down? Because people don't want to go out and shop if there's A bunch of wild people on the streets. Right. So, so that's, that's one thing. I think people get intimidated at this time of year going, I don't know what's going to happen, so maybe I'll just hold on to my money. So we lose a lot of those people that are smarter, you know, with the higher credit scores, they're like, I'm going to see what the market does. So in that aspect, we've seen that change a little bit.

I mean, would you consider that to be one of the reasons you've seen lower credit? I guess I assume you've seen lower credit at the Salem store or at the Point store.

That is a great assumption. Yes, it's been at our Salem store. But I would attribute that to inventory. So one of the biggest things that we've seen a slowdown is the nice part about having two locations is you can draw comparisons. What is one store doing versus the other store? And Salem was just not keeping up with Portland. I mean, they weren't doing terrible, but they're just not keeping up. And we took a hard look at the inventory structure that we had, and we have one in place. And I'm not sure if you guys do, but it says, hey, we're going to carry this year of car under X amount of miles. And these are the brands that we carry. And, and our sales store was not following him. And they were, they were carrying a lot older cars, more specialized cars, and that really does affect the clientele that comes in. I get customers from all over. If you're carrying a 2008 S63AMG, that's drawing a totally different crowd than just a run of the mill 2017 Mercedes GLE. Right. You know, it's a, it's a regular SUV that kind of everybody wants, but an S63 and M3, some of those specialized cars, you're going to reach everybody everywhere. And if you've got crap credit, you're going to try to get financed on it. And then what that does is it throws off your lead count. So I've talked about this before. I think with you guys in your podcast is you got to know what your lead count is and how many leads are getting in a month. And am I off or am I right on track? But you could be right on track. And 40% of your leads can be on three cars.

That's. That's interesting. I've never thought about digging that deep into the numbers because you're right. If you have, let's just say On a buy here, pay here a lot. Jeff. If I have a, an Escalade, a blacked out Escalade sitting on my lot that I don't typically have the lead count on, that car may be half of my total lead count.

Right.

Especially to buy your pay your store. And I could really, you could say, oh, we got the same leads we had last month when you really did not have the same leads you had last month.

Well, yeah, this is an exact conversation. And the fortunate part about our dealership is I have really smart people that work for me. And I'm talking to my GSM and we're in Portland. And he said, what do you think is going on in Salem? And I said, well, we always point to this. It's either if you have, if you're getting the right number of leads, then it's, it's not an inventory problem, it's a salesperson problem. So I think we have a salesperson problem down there. And he sat there and thought about it for a minute. He goes, yeah, but what if you have a lead problem? I said, we don't, because I'm looking at the number of leads. He's like, yeah, but what if it is? I was like, I don't know what you're saying. And it took him all of three and a half minutes to extrapolate all of our leads from our CRM and make a pie chart in Google and then run it through ChatGPT and go. And came up with, we have 40% of your leads on three cars. Wow. Now he's, he, like, I don't always like to admit this, but he's smarter than me in some areas. So. And this is one of them that I was like, how did you do that? Can you walk me through how you did that so quickly? But it was eye opening to me because I thought we had a lead problem. Yeah, I'm sorry, a salesman problem. When really it is an inventory problem. I, I was getting, I said, I need to get rid of those cars because it's throwing off my inventory count or my lead count. And my lead, my sales guys are getting bogged down with a ton of leads on the same cars that everybody's coming in with troubled credit and they're like, they're getting frustrated because they said, I can sell this car 10 times. If you, if you could just get the Kelly blue book to match the banks to buy it or what?

We're into it. Well, we've got the same problem with somehow we took in a 93F150.

Right.

Like painted looks nice, but it brings in so much riff raff and it is our number one Facebook interaction post and is our number one. So you're right. We've got all these leads on a car or two cars that are really just dead end vehicles for the most part. For the majority of those applicants. How do you fix that? Marshall, talk to me about. I have a 93F150 and I've got an 04 Wrangler that are, they're, they're just, they're bad cars to have here. How should I.

Well, I think first make sure there's not a miscommunication on this because some people are going to say, well, that I, I turn those people onto other cars and that's a real thing. So if that's what it's being used like, I'll have a 2017 C class, that's 15 grand and it brings people in, then we turn them to something else. Right. So that's okay. Yeah, it's a bait car, so you got to make sure that's okay. But some of those other cars. This is again a real life conversation that I had just Yesterday with, with Mr. Eric Freeman who told me he was pissed at me. And I said why? He goes, well, I didn't call you because you sold all those cars on Saturday and you knocked. He goes, you sold them for so cheap. I said, yeah, because I wanted them gone. I wanted them, I did not want them in the inventory. He goes, yeah, but why would you discount a car fifteen hundred dollars when it's a perfectly good car? We're getting all these leads because I do not want it in our inventory. And I've already had this discussion. This was a, this was like a reap. It's Twilight Zone a little bit. I already told him what I was going to do and then I have to explain why I did it. So my advice would be just get rid of them. Make a spot for another car to make money.

Well, the question is this, should you ever buy them? And I'm going to qualify.

That's it. Yeah, you shouldn't have buy them.

So let's go down this for a second. I think a lot of retail dealers and I'll even say buy here, pay here dealers sometimes not sometimes. A lot of times make. The problem with going to the auction and getting caught up in a car that doesn't fit their inventory and when they buy it, it does this and that car, you may sell that car and make good money. But how many Deals did you miss because you were so focused on that car? You just have to stay consistent to. You're buying your, your inventory mix. Is that what we're saying, Marshall?

That's what I'm saying. Yeah. We, we got in a room and we agreed with all of our managers, the people that buy, the people that sell or in charge of selling said, hey, what is our inventory mix? Let's all agree on it so that we're not all running this our own game. And then when a car comes in on trade, because this is a big one too, when you agree on that inventory mix. When a car comes on trade, your desk loves to say, oh, well, retail out of it. Yeah. No, dude, you just got frustrated about a car that's coming in with all these leads because it's a, it's a 20 year old car. I would love to send that to the auction, but you're not giving me the option because you overpaid for it.

Yeah, that's what we end up with is the ones that we feel like we have to take them in on trade. Oh, we got to take this in on trade to make the deal happen. And then we end up with it out there. And I can see the benefit of saying, hey, you. Yeah, we're going to take it in on trade. We're going to hit him back a book. It's not something we'd normally carry, but we're doing it to make the deal. That thing's got to be gone within a week or two weeks. Right. If it becomes a, a showpiece or like it, it just become, it takes up space on your lot way too long, then. Yes, it becomes just like an anchor. It's just hanging over you get it gone and, and that's so hard for us to do because. Oh, I took it in on trade grade.

Oh.

Oh, it's awesome. Oh, it's bringing in all these leads like, well, why hasn't it sold?

Well, I think that would lead into the next part that I would say people need to explore. We're in an age where data is so important and we're inundated with all the different forms of advertising. We spend, we spend a lot on advertising. I don't know how much you guys spend, but it's, it's irritating. You got AutoTrader. That goes up tremendously. CarGurus. Those are the two biggest in our area. You got Cars.com, you got Carfax, then you've got Craigslist and you've got auto or Facebook. Right. And those Are just.

Let's stop right there for a second because I, because I think when we say we spend a lot on advertising. Marshall, how much do you spend per car sold?

Per car sold, man. I just did the composite. I got caught up in something else. I don't remember what the number is, but I could do the math. We spend about $40,000 a month and we sold 152 cars.

So 40,000 divided by 152 is 263. And. And you know what's so funny? That number is really close to Jeff's number. That closes that car. That, that's really close to Luke Godwin's number. So I'm glad to hear that. I want people out there to understand when we talk about we spend a lot, that's the number that really matters. So I'm sorry. Keep going, Marshall.

No, it's good. I think you should also look at it as a percentage to gross too. So if you're, if you're trying to grow your business on doing zero more advertising, then you should try to project, predict how much gross you're going to do and then work a percentage off of that.

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So knowing that data is so important on what advertising avenues are working, but to pull those levers, we also have to know what our inventory is to agree on that. Right? And then we have to know, okay, how should those cars be priced? So inventory structure is important, but a pricing structure is important. So if that car doesn't. If you have a car on your lot and you've had it for 15 days and it's gotten two leads, is it price right?

Probably not.

Probably not. Yeah. I mean, that's what I would say. So you got to look at your pricing structure and say, hey, do we want to be best in the market, second best in the market, third best, where do we want to sit and then how do we want to be ranked? And that's good or great.

Yeah, I mean, that's a philosophy of business.

It's a philosophy of business that you have to. I think we all have a philosophy of business. The problem is not every manager, slash owner is on the same page.

Because if you say I'm gonna be the cheapest in the market doesn't necessarily mean you're going to sell that car the quickest either.

Right. And what does cheapest in the market mean is if you have a, if you have two Toyota Land Cruisers and one's fully loaded and one's not, I mean, you can't be the cheapest if they're not comparable. Right. So that, that's that. And then, and then the other thing is we have to make sure we're marketing them right too. I mean, you have to go on the back end of all of these third party companies and make sure they're booked out properly so they're getting ranked properly. But my point in all that is you get figure out those measurables, then you're able to move the levers. Right. So it gets a little bit slower. Oh, what are we doing this week? Well, let's look. Do we have the right inventory? If not, let's get, let's blow some inventory out and get some new inventory in here. Is our cars priced? Are we sticking to the pricing strategy we created? If not, we need to lower some prices to get in within that and everything just becomes a lever that you can pull and push and we don't have them all figured out. But that is the number one thing we're drilling in with our company right now. And all our managers get all the data, drill in the levers that we can pull and push to make us to create customers. So where that, so that we get busier because if it gets election time and slows down, we're gonna, we're gonna crank on those levers full throttle. Right? You had a, you had a bit.

Of a slow year back in 2023 and, and then you've made some changes probably for the last four or five months. And can you pinpoint which levers you pulled to, to change your business and to, to get it back on the right track in a, in a growth mindset?

Yeah, that's That's a. It's a big. Was it big question. There's a big answer. And I'll try to sum it up as best I can.

We got all day. We got it all day, Marshall.

Okay. We had a terrible year in 2023. A lot was due to poor management, a loss of a lot of key employees, not just on our accord. Some of them quit, not meaningfully just or not spitefully, but because they had better opportunities or wanted to work for family or because they moved out of state. And then we had one of our key employees pass away, and that all affected our business. And then we couldn't figure out what we were doing wrong. And we all had to get into a room and come up with a plan and say, hey, are we gonna. Are we gonna adjust to this down. We're. We're selling 50 cars a month. Is that we're gonna adjust to or we're gonna try to figure out what must be true for us to sell back, get back up to selling 70, 80, 90 cars a month. And we said, no, let's. Let's figure that out, because then we can have. Then we can staff our employees back to where we wanted to. We can provide opportunities for people. That's. So we're gonna create a roadmap. And we did, and we got fundamentals in place, and we came up with, okay, what's got to be true in our inventory, what's got to be true in our sales, what's got to be true in our marketing, and what's got to be true in service? And then within. Within that, there were little buckets, like the internal processing time, and we came up with all these different metrics, and it took us probably three or four months to get all that ironed out. Like, what does that look? What does that really look like? And it was not easy because we had to keep coming back and having weekly meetings and making sure we were on the same page, because we weren't. And you, and you have this tendency as an owner or a manager to want to whipsaw back the other direction and say, this isn't working. And we had to stick to the plan. And that was probably the biggest thing that I can point to for success, is we stuck with the plan and we didn't whip sock because owners have a tendency to whipsaw back and forth. And we stuck with that. And we refined everything that we're doing, and we came up with metrics behind them, and we're just following them.

Interesting. I. I think that the Most important thing in, in all this is we talk about having processes and procedures in place for our employees to do their job. And when we don't put those same processes or procedures or guardrails for owners to do their job properly, we can create all kind of mess ups. Most owners in, in this world buy their own cars, it seems like. And that's kind of where it starts, in my opinion. I can tell you if my inventory gets slow, we're going to have a slow month. If I keep my inventory at a certain level, we're going to probably have very consistent months from, you know, from now on. And it's hard to make sure that you're buying the right cars and getting those cars ready properly. But if we can keep those guardrails on us as, as owners, the ultimate managers, I think that maybe we can, can get everybody else on board.

Well, yeah, owners are the exception to the rule always. Right. They always say, well, you know, Luke did it, so it's fine. And, and that's, that's not something you got to be held accountable just like everybody else. And another metric that we look at is how many cars do we have online? That's a big one for us. And then if we don't, you know, what we can attribute usually the number of inventory that we have is usually how many cars we buy. So you have a slow week, you go, well, I don't really need any cars this week. So then you don't buy any cars. And then all of a sudden you sell cars and you're like, oh, I need to buy a lot of cars. And you do this roller coaster of inventory and then it affects your sales. And you're thinking, why? I don't understand. I can't understand the correlation it has. It's directly related to how many you bring in each week and how many cars you post online. We've even got to the point where if we buy 10 cars in a day, we're not posting all 10 of those cars. We want to post four cars a day trying to sell, we're trying to sell four cars. We're trying to post four cars. And one of the things we're trying to work out right now is we have buyers and our marketing people that work Monday through Friday. Well, what happens on Saturday and Sunday when people are looking online and no fresh cars are hitting the market or no fresh price changes?

Yeah, that's, that's a true concern for everybody because a lot of people are closed Saturday and Sunday, or at least Sunday, and it's you're right. If you don't change that inventory, how's your website gonna, gonna rank that day on Google? I mean, that's, there's all kinds rank it on that.

Or all of a sudden two cars hit on Cargurus. And now you went from being a great deal to being a high priced car. And everybody's skipping over your inventory on Sunday because you didn't make price adjustments on Saturday. And so that's something we're exploring with our buying department. I'm hiring a junior buyer and the schedule is going to be Tuesday through what. How does that work? Wednesday through Sunday.

Wow.

That's. That's what we're going to trial at least. Yeah, yeah.

Get creative. To try to solve the problem, I think, you know, with dealers, we try to explore that here on the podcast is how do we think outside the box? You know, we all kind of have this like, paradigm that we've operated in forever, especially as owners, where you feel like you've built the entire, you know, plane your way. It's like, well, you know, this worked for you in the past and you might think it's the only way to do it, but there are other options. Like, we can't think outside the wall. You could never get a buyer to work on Sunday. You probably could, you know, like, it might work. So it's just so interesting to hear other dealers who are willing to think outside the box. And then you're like, wow, that actually did work for them and they've seen a payoff on it, you know, and you're like, oh, maybe I should try that.

Yeah. I mean, the more. Sorry. The more information and data you get, the more you can. And things are going well, the more you can drill down into it. Right. You have to kind of start high level to get a baseline and then you can go deeper and deeper. Yeah.

Speaking of, Luke talked me into being closed Saturdays. We've tried that for two months and we keep the data and I'm tracking sales collections and we may be going, we may go back to being open on Saturdays, you know, because we, we are seeing things trending in the wrong direction and we're going to try to not whipsaw. You know, I'm not going to try to be like, oh, we're closed. No, we're open. No, we're closed. So I'm going to give it some time and track some more. But we may end up having to just go back because we're not getting it done between Monday and Friday. And I think that's okay to have those experiments. You know, it was a scary thing to do, but it's okay to try that stuff and test it and track it, right?

And I know Marshall, y'.

All.

Y' all used to be open seven days a week. Then you weren't. Are you back to seven days a week?

So at our Portland location, we're seven days a week, and in our Salem location, we're six. And the reason I'm not open seven down there is really what. It's a mentality thing. So we opened on Sundays, and we staffed it very lightly, and it wasn't very successful. But you could see the leads were coming in, people were showing up. And so I had a conversation with my sales manager. I said, hey, we're gonna staff it like we staff every other day to be busy. And it has proven to be a very successful day now that we've shifted that. And it's not just a. Oh, staff it with one manager and two salespeople. We're. We were missing leads that way. We had. You can see how many phone calls are coming in. I think that's a. That's a big thing that we're discovering in our dealership. You track leads. The amount of email leads that come in versus phone calls, they're probably 50, 50 for us. But the results from phone calls are way higher. So if you're going to dedicate training and resources and tracking dedicated to phone calls, super interesting.

Because you would think just the opposite in today's technology age. First of all, you would think, well, nobody wants to talk to anybody. They just want to text. So. And then on top of that, you go, oh, well, we'll. We'll install AI so we don't have to text back to that lead. But people actually want to talk to people. Is that what you tell me, Marshall?

I'm saying if it's a good deal and somebody really wants that car, they're gonna. They're gonna reach out to you real quickly to see if it's available. And the quickest way is usually phone call.

Interesting.

If you want. If you want a product, Luke, I mean, I. I would. You wouldn't go for the fear of missing out. You wouldn't text them because you're like, well, but I'm really interested in that car. The most interested hot people are the ones that call hot for the car. Not hot looking. I mean, could be. It's hard to tell. That's.

That's probably a really good point. You know, I think about it when I'M shopping for something. Say I'm, you know, maybe a rental house or something. Like if it's a good deal. Yes, I am calling the agent, I am calling the owner, I'm calling their uncle. I'm like visiting the house. I'm sure, you know, like you're on it. You're trying to be the first in line to snag that car. Right. Or that house, whatever it is. So, so I could, I can see that for a retail dealership that's adjusting those prices and all of a sudden it hits on a Sunday and that customer happens to get on your lead and see that car and realize that that's the best thing within 500 miles. Yeah, they are definitely calling you and trying to show up to snag that before it's sold on Monday morning. That makes a lot of sense. Talk to me, Marshall. I, I, I still can't wrap my brain being a buy here, pay here dealer. I cannot wrap my brain around wholesaling a perfectly good car. How do you get to that point and, and when should I be like, look, I've tried to retail this F150. I can't get there. I've dropped it all the way down to my cost. I'm making no money trying to just get someone to buy it. When do I actually take a losing deal just to get it out of here and try to turn that cash back car back into cash? Like where do you go with that mentally and how do you get there?

Yeah, well, I think you have to determine do you have a finite amount of parking spaces or can you have unlimited inventory?

Yeah, I mean, I do, I have spaces now. I'm not at capacity. No.

Okay, but do you have, every month, do you say, hey, I want to carry X amount of cars in inventory?

Yes. I have kind of a goal. We never achieve it because my shop can't get cars out. So, so yeah, I mean it's, it's not hurting to have it there other than the other stuff we talked about.

Right, so then, so then it wouldn't matter to you. But somebody who works off of those metrics, like we say, hey, we're going to have 100 cars in inventory and 85% of those need to be advertised. And if I buy a car that's a 2000, I just took a 2004 Jaguar XJ59000 miles. This is a golden car. This car is so nice. But if that car gets hung up in my shop for any little thing and all of a sudden apart for an 04 Jaguar takes two weeks to get. Now that car can't be advertised. And the metrics that everybody's working off of is that they have to have 80 of the 85 of the cars ready and advertised and that car is taking up a spot not being able to do that. So they go, all right, well I don't want to hold on to that car. What, what can I get rid of? They're starting to go, what can. What here isn't working? And I think that's, you have to have those metrics. If you don't have those and you're like, well, we don't really have to have 100 cars, we can have 120. So keep it on lot, it's not hurting anything. Sure. And then again, if you have all those leads coming in then on those cars and you don't, I guess the argument could be, well, those are just producing a lot more extra leads and we're not going to factor those in and we're going to say, hey, we need to get more leads off of our other cars. You could do it that way too. It's just not the way we run our metrics.

Yeah, that's, that would be my argument is the first part of our conversation is it's a car that's so far out of our regular inventory that I can't even switch people. This isn't even a truck. I can switch someone to something else. Right. If it was a slightly nice, you know, like maybe we had a 20, 22 Honda Accord for some reason or some nice car that would bring people in and we could switch them over. This is a one off anomaly.

What percentage can you have? Because we have this. So we, we're allowed to have those and our people are allowed to have them. But what percentage can be that in your inventory?

Well, from my problem is those are the ones that they just naturally become a large percentage because they are the ones that sit longer, they're more unique.

So you, so your lot is.

Yeah, all of a sudden I have, is a lot full of one offs. Right. And that's the problem I run into. I look, I can look out here now and I got, you know, 10 of my 40 that I'm staring at are probably one offs, you know, weird assignments.

We, we have 10 that we can allowed to have one offs and you don't have any metric to measure that whatsoever. So you're just a lot full of one offs and if that's successful for you, then great.

Some people, some people, their model is One offs, right? And that's fine to be there. I think what every. I think everybody listening should do this if they hadn't already. Go out there and count your spaces. Okay, say, all right, I've got 60 spaces. I know I have 61. I know I have 61 spaces where we can park cars. So we all know that we have certain times a year that are more busy than others. So at my busiest point in the year, I probably want to have 61 cars, at least 61 cars ready to go. But let's say in those other times of the year that I'm shooting to sell 40 cars. Well, do we have 40 cars inventory? Do we keep 50 cars in inventory? So I want everybody to go do this. Everybody go count your spaces today and make a determination. We're going to keep 50 this part of the year. We're going to keep 62 to 80 this time of the year.

Break it out.

I want to sell this many Hondas. I want to sell this many Toyotas, this many Jeeps, this many Chrysler 3002, this many trucks, this many SUVs. Go do that. Because what Marshall is really, really important. Your leads will go up if you have the right mix and you keep it consistent. And then you don't have to worry about switching somebody from one car to another because they know when they come in, they're going to buy that Honda Accord you have, and you consistently have that Honda Accords they know to come to you for that Accord. Just, just a way to, to really focus in on, on your buying strategy. Because if you have inventory, most of the time you're going to sell cars. If you have the right inventory, you're definitely going to sell cars.

Hey, one more time. Make sure you guys are getting in contact with Blitzpay for your credit card processing, especially if you're buy here, pay here. But even retail, it works. It's fast, it's easy for your customers. The payment portal is super slick and it just, it just makes getting money so much easier. At your dealership.

It's. It's always about ease of use and, and how well your vendor is helping you. Blitzpay. Super easy to use. And they're always there to answer questions or help you when, when a, when a problem arises. So make sure you give Blitzpay a call and tell them we said you.

But what if. But what if I. What if I have my 60 spots and I've had a slow month or two and now all of a sudden my average aged inventory has gone up? Like how do you account for that, Marshall? Do you have a hard like, hey, at 90 days this thing goes to the auction no matter what, because even though it's taking a spot for whatever reason, we are off the market with this thing. It just hasn't sold. We've done our best. I need fresh inventory because so many dealers just hang on to stuff forever. Right. They're just going to. It's eventually going to sell and all of a sudden they have a whole lot full of aged inventory and they're wondering why their sales have gone down month after month. Right. Is that a philosophy you guys implement?

Well, yeah, it's a tricky one with, with I feel like in particular European cars. If we're selling European car at the auction because of our name, if we're running it, they're thinking, oh, well, if they don't want it, there's something wrong with it.

Yeah.

So that gets really tough. But it doesn't mean we should stop trying. So the problem is you try with your one old age car and you don't sell at the auction, then you say, ah, it doesn't work. But if you do it consistently, it does start to work and running more at a time. The bigger success that we found is just keeping getting real with that car. After 60 days, what's the right money on it? And getting really aggressive with it and then sending the message to your sales management team that I want to move that car.

Just sitting down with the car and having a real come to Jesus with with moment. Right. Just kind of like sitting down with it, realizing that you've got to mark that thing down even below cost at 60 days to get it gone. Because you know if you take it to the auction, you're not going to get anything for it. Right.

Because we sell a lot of cars below cost.

Oh, really?

Yeah. Because your money's made. We know our money's made in the first 28 days. So when we sell a car every, our average turn is about 36 days. But the profitable cars are sold in 28 days. Whoa.

Marshall. We, we sat in a 20 group together with Joe Lascoda and we had this conversation with another one of our members. And, and this was in 2016, I think. And it was brought up getting your car on your website as fast as possible within, you know, and this was 2016, so this was super rare. Even think this way that you should have that car on your website within 48 to 72 hours. And this dealer said, well, how am I going to know what the price of that been through my shop yet? Oh yeah, you remember that doesn't matter how much you spend in the shop's not gonna matter where you price the cars. Especially in retail.

Right, yeah. People say that still to this day. We just had somebody in our 20 groups say that and it doesn't matter. It matters what the market is on it. So you're not, I mean we're retail, not buy here pay here. But we could, we could buy the car completely wrong and be losing money day one and that's happened. But you could also be making a lot of money on day one or I. What you don't, what you shouldn't be doing though is making Money on day 90.

90 to try to make. So how many percentage. I mean that blows my mind. What, how many cars do you lose on?

Like is that I, I don't, I haven't three a month.

10Amonth.

At least 10amonth. Yeah.

We lose money on that blows my mind. And that's a different mentality I think as a retail, you know, coming from a buy here pay here world. It's like eventually I will find a butt for that seat and I'm gonn of this thing and then I'll make money on the interest.

It's crazy. Have you ever lost money on a buy here pay your car retail.

Upfront?

Yeah.

No, no, no, I don't think so. I think I'm always broken even.

I bet I, I bet I lose on 5 to 10 a year because I bought the car wrong or you.

Had to do an engine or something crazy.

I had to engine so, so it happens to me. But have you ever, have you ever lost money on a buy here pay here car because you financing to the wrong person and they, they did something to it?

I've, I've lost money because I've tried to force that car to be a buy here pay here car when it shouldn't have been a buy here pay here car. It should have been a losing retail car six months ago. And I try to buy here pay here and I sit on it forever. And then the type of customer that wants that the desperation of the sales team, all those lot rot all factors into the case that sure, I waited six months and gave it to someone and now it's blown up and in the bottom of a ditch or where I should have just taken my loss, you know, six months ago.

We have a rule here. So every once while we'll have, we'll trade something in and we just have like a little cash section. We probably have five to eight cars that, that are just cash, and they're from $10,000 down.

Right.

Our rule is this. If someone makes an offer on that car, you accept it. You just accept it. And if that, if that means you're, you know, you're losing a thousand or, or 2000, then you do it. Or if you're making 2000, you do it. Because that's not our core business. Our core business is not those cash cars. So they got to get going. And the faster we get an offer, the faster we get the cash back in the bank, that, the faster it goes. And so we all going to lose on cars. Now Marshall's losing, let's see, 7% of the time, maybe. He's probably making some money on the back end when he does that. Yeah, so I get it. And Jeff, we had this conversation the other day. We were talking about whether you were going to stay retail or buy your pay here, and you were. And, and you, you wondered what that number was. How many times am I going to lose or how many times am I gonna take a short deal? I mean, this is, you know, this is a company that's been in business 40 years and they, they're losing 7% of the time.

And I think it's a mentality. It's like when we go to the auction and I run, you know, 10 cars a week, I'm running 10 tomorrow. And if I look at every single car and I have to make money on every single one, I will, I will never do well at the auction. I have to look at it as a whole at the end. And the cars that I think I should make a lot of money on, I don't. And the cars that I'm like, why on earth that bring a lot of money? It makes no sense to me. Same reason why they fail arbitration. They fail for the wrong reasons. But, but if I look at as a whole, then I'm. I can sell everything. I'll make five grand on one car and then lose two grand on another wholesale car. And I could take it individually and take that back to the desk and say, you guys took this car and wrong, I took a two grand loss in this trade. And they, they would accept that and they would try to correct. The problem is they would overcorrect and I wouldn't be making money on the other trade ins and it would slow the business down. And you want to keep your cars moving. So if you're not lowering prices to keep cars moving, then your salespeople get frustrated. Your sales managers get frustrated. Your finance people get frustrated because they're not getting opportunities. It's. It's the whole life cycle of the business.

Let's. One last thing, if not last, but close. And it's something interesting. You talk about trades. There's a philosophy out there that you should, you should be chilling on trades, making all this money. In actuality, you're trading at. You should be probably losing a little bit of money on your trades or at best, breaking even. Is that, that's the right mentality to have, right, Marshall?

Yeah, I've heard that. We've, we've discussed it even with my buyers, that we should be breaking even. I like to make money on our trades. I think it's an opportunity. And we do. We as a whole, we're probably bringing in. It's not a lot, but we're bringing an extra 20 to 30 grand a month in wholesale profit.

Well, what's the, what's the average gross per wholesale unit then?

$800.

Okay, well, that's, that's interesting. You know, I guess the conventional thought there is that you might be missing trades because you're making money.

And we look at that every week, and we do. I mean, because one store will take in eight trades and one store took in zero. And you, you have to think that that's an opportunity. And I think that's an everything that when you're looking at those metrics, those are the things, you know, we talked a lot about what you can do on the owner side, but what can you do with your salespeople and your sales managers, too, to create that business? And it's digging up your trade appraisals that you didn't take in. It's, you know, it's looking at every single write up you did to see if there were missed opportunities, because maybe, you know, they were really tight and said, notice some discounts. And you're looking at a car going, I want to get rid of that car. How can we make that deal work with that customer?

That's an interesting philosophy. I think, unfortunately, a lot of car dealers and especially general managers, they get that kind of pressure on them from the owners. They think they have to hit a home run on every aspect of the deal. They think they gotta do a five pounder up front and sell them every product and then rip the trade. And it's like, if you approach every deal like you're gonna take everything off the table every single time. Customers aren't. They're smart, man. It's not like they're just gonna roll over. You may get it over on one of them, but you're going to miss a lot of business. Yeah, you're losing so many sales because you're overpricing things or you're trying to rip trades on people. And it's just. It is a. It's. It's such an interesting mentality that you have to teach the guys who are actually giving the appraisals, like, hey, you can't rip this trade and kill it on the front end. Also, like, that's just not going to pencil for the customer.

Right. And it does happen. And I think when it happens, they get that taste of it, and they're like, we have to do that every time. Or they say, hey, let's lower this price so that we make money on the back end or trade. And then when you don't, you don't get a trade, and you get a cash buyer that pulls everything out of it. They're arguing over the dock fee. They don't even want to pay for the temp tag. And then you're like, see, it doesn't work.

And you just swing back the other way.

You drop. You. You drop the price because you thought you were ripping the trade. At the last minute, they pull the trade out, and then you're left with the price you already gave them, and you're just. Yeah.

Then us as owners switch directions because that doesn't work. Go back to the other way. And that's the. When you say, luke, what did we do? In the last nine months? It's been don't pivot or don't change course and whipsaw back the other direction just because of our natural tendencies or because something didn't work out quite right.

Absolutely.

Marshall.

Yeah. I think that's a great place to end it.

Great, man. Hey, thanks so much for your time, man. Glad we got you out of bed early. Now you can get into the office and just kill it today.

Yeah. Thanks, guys. I love coming on.

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