#37 - Mark Weida - Lessons From A Lifetime In The Auto Industry

Hello and welcome to this episode of the Independent Dealer Podcast. We have a real treat for you. This is an interview I did with Mark Weida when we were both at Digital Dealer 2019 down in Las Vegas. I was able to pull him aside and ask him some questions about his lifetime in the auto industry. Hope you enjoy. Welcome to the Independent Dealer podcast, the podcast for auto dealers to learn and grow together. Here are your hosts, Luke Godwin and Jeff Watson. Alright guys, here we are sitting down at Digital Dealer 2019. I grabbed Mark, pulled him away for a little conversation. Mark Weida out of Colorado Springs. Mark, tell us a little bit about yourself, your dealership, you know, maybe kind of your sales goals and are you buy here, pay here? Are you a retail dealer? A little bit about your background.

I've been in the car business for about 34 years, self employed for about the last 12. Currently I have all retail, two stores, two different rooftops and I also have a service department.

Awesome, awesome. So you got a lot going on there in Colorado Springs, it sounds like.

Yeah, it's a good used car town. There's a lot of military. So we felt like, I felt like it was a good opportunity when I started out doing wholesale after I left running big retail stores and after four years opened the first retail store. And it's been good because we have a constant transition of new military coming in. So there's a lot of used cars sold in Colorado Springs. Ah.

And now side note, I want to go down this route real quick. Is it hard to get funding? You know, is that an issue? I know that funding military has been kind of touch and go and there's ancillary products you can't sell or can sell. Am I accurate in that?

Yeah, we're still working on, on the ancillary products, especially at the NIADA level, trying to get, to get Congress to look at that and realize that they're doing the military an injustice by not allowing them to buy Gap Insurance, for example. But overall though, it's a very military friendly town. So the credit unions are very open to it and we have an outstanding relationship with the major credit unions in town. The majority of our business, finance wise, is done with credit unions. We have probably about 20% special finance. We do not do any buy here, pay here. It's all retail, I bet.

I mean, I guess I could imagine from a bank standpoint a military member, that's a pretty stable income. You know, they're definitely getting a check barring a government shutdown, but they're probably getting A pretty regular check. So I imagine the credit unions, you know, enjoy that as a customer. More so about you, though, Mark. So tell me this. Your background is new car store, correct?

Correct.

You managed for many, many years. What made you take the leap from being a manager at a probably pretty cushy job? I don't know. I bet you were working hard, right?

Yeah, yeah, definitely working hard. I was making somebody else rich.

Okay, talk to me about that. What made you make that leap?

Actually, it was around 2005. I was fairly miserable because it seemed like no matter what we did, it was not good enough. If you had a good month. Well, what have you done for me lately? What are you gonna do this month? And the hours that I was working, I was missing time with my daughters. I'm married and have two beautiful daughters. They're 16 and 20 now. But they were young at the time and wasn't able to spend time with them as much as I'd like. And I didn't want to miss dance recitals, swimming meets, cheerleading competitions, everything that they were into. So I got. I was really just burned out. And so what I started doing in 2007, I started wholesaling. I had a guy that approached me and said, hey, I have a line of credit we're not using if you want to start wholesaling for a while until you find a job. And at the time I was submitting applications to other companies, I was convinced I was going to stay in big store retail. Started wholesaling in 2007. Made an adequate living my first year doing it, wholesaling under somebody else's license. Did it again for a couple more years under another guy's license, and then finally decided I was going to do my own thing because both those companies ended up cheating me out of money. So I thought, well, if I work for myself, then nobody's going to cheat me. If I'm cheating myself, at least you.

Can trust one person.

Exactly, exactly. So wholesaled for about four years and opened up the first store in 2011.

Okay, okay. 2011. So you've been at a solid nine years or so. Eight, eight. Nine years. As a retail dealer. What would you say has been. What's been the hardest part about being out on your own like that? I mean, anything that sticks out to you is maybe being a hurdle that you feel like maybe you didn't anticipate or maybe jumped out at you, but you've been able to navigate.

Probably in Colorado recently, it's been the expenses we can't control when I, for example, we've had so much hail damage over the last eight years since I started my premiums for inventory, for insurance, for garage liability, the premiums have quadrupled. It used to cost me a little over $20,000 a year and my deductibles were 1250. Now I pay $100,000 a year and my deductables are 2,500 per car. So there's certain expenses we can't control. Kind of like floor plan expense, you pay what they charge you. Insurance premiums, you pay what they charge you. But the ups and downs of the economy have not been that bad. The biggest problem really though has been personnel, just getting in and keeping really good guys.

Yeah, yeah, that's a really great thing to touch on because I know you've been on both sides where you've been the number one at a new car store, you know, the go to guy that was kind of getting the pressure from the dealer principle to perform or deliver whatever the situation was. Now has that been able to translate to your current situation where you've got a GSM or a GM running the store? Now that you're on the flip side of that, do you feel more compassionate towards them? You know, do you feel like you understand where they're at or what have you done to kind of keep from having that kind of turnover or burnout in your managers?

Well, I think I worked for enough, both good and bad owners and general managers over the years that I develop my management strategy based on that. Sometimes bad examples will teach you how not to manage people. So I try to be a little more sympathetic. In fact, I'm in some ways maybe a little bit too much. So I insist that my managers and actually all my employees take time off. If they have a family event, I insist that they take their days off. I insist that they take their vacations. Because I want it to be an atmosphere unlike the big corporate stores where it's 70 hours a week and it's a thankless position. You might make a lot of money doing it, but you have no life. And as I said, I mean, when I walked away and I was able to spend time with my daughters, I was able to have dinner with them most nights, but I was always there to tuck them in and read to them, say prayers with them. And that I was missing that when I was working at a new car store till 9, 10, 11 o' clock at night.

Yeah, and that's a theme that I've had and I struggle with too, is I Have a hard time asking my guys to do something that I'm not willing to do. And I know as the owner that's my quote unquote right to take the holiday off, but ask everyone else to work. But that is something I continually struggle with where, yeah, I don't want to be there till 8 o' clock every night, you know, but you know, I asked that of my people, you know. So tell me this, Mark, what kind of advice would you give to those of us that are maybe starting out new in the industry or maybe struggling? Maybe we're a 10 car type store and we're wanting to grow to your size where we're doing 80 to 100amonth. What really pushed you over that ledge or what really changed for you as you grew from being a wholesaler and doing kind of your own thing to now, you know, having two stores doing close to 100 cars a month. What got you there?

I think the most difficult part of it, but the discipline is what got me there, was being patient. Too often I see that people start their own venture and then they try to grow too fast. And the number one reason I see that independent car dealerships go under is not even about profitability. It's usually about cash flow and people just overstep their bounds. I had a friend in Colorado Springs that did it and he went out and leased this huge facility and he put a bunch of cars out there and had a high powered, high paid manager and high paid service manager and he had all these. His expenses were just overwhelmingly high because he wanted to be an 80 to 100 car guy. And he made it all of about 18 months till he ran out of money and then he went under, so lost his life savings and now he's back working for AutoNation again as a general sales manager. So back right exactly where he started. I knew when I went down this road, I didn't want to go back. I mean, it's, it's gratifying to know in the car business you can always get a job. I mean, I could, if I wanted to, I could go back tomorrow and work for a new car franchise store and take care of my family. But what I did is I made sure that I held back, didn't grow too fast. For example, my property, when I, when I bought it, it needed some renovation. We had no lot lights, only half the lot was concreted. I saved up money, I paid cash for the improvements. I did it little by little instead of going out and borrowing a bunch of money and you know, and doubling the value of the property and mortgaging myself up to the hilt. I made sure that I paid as I went. And like, it took me six years before I considered adding a second store. It took me five and a half years before I considered adding a service department because I paid when I opened the service department, I paid cash for all the tire machines and the lifts and everything else. And I started out, I didn't have a lot of money when I started. I started out with some money that I borrowed from my father. And it's important to me now to be the cash flow is not an issue.

Yeah, yeah, yeah. And I think, you know, you're a car guy. I think that's safe to say, you know, sounds like you come through it. But I think from talking to you, you're also a business, you know, I think you understand that side of it of, you know, you can't just manage off the front line of your lot and what cars you got there and what cars you think you can sell. You got to run your dealership from the balance sheet and the P and L statement and the statement of cash flows to know what you've got and where you're going, you know, and what you can do next month. Like your friend there that just knew he wanted to sell 50 or 80 cars or 100 cars a month, didn't know what it was going to take to get there, though.

Absolutely. I've had several different guys thought, hey, it'd be fun to be a car dealer and what's involved. And I sat down with them and made them work up a business plan or a performa and looked at the cash that would be involved. A lot of things people don't think about. It's like when you take in trade ins, you take in a car, somebody trades in a $20,000 truck and they owe $27,000 on it. You take it in and you send the $27,000 to the bank and you might not get a title for three or four weeks. So that $27,000 is tied up. But you can't do that when you open with 100 grand in the bank. And then I see too many people open under capitalized and then unrealistic expectations too. It's like, well, my expenses are going to be $45,000 a month for fixed expenses and I'm going to sell 50 cars. Well, you're not going to make any money doing that, you know, because you got personnel expenses and other things that are on top of that. And I think A lot of that is what most people don't do, is they don't look at it as a business proposition. They think, boy, it's going to be really fun because I'm a car guy or I'm a motorhead or whatever passion they have for the automobile industry, and they think it's going to be really fun. And I just. I try and advise people as often as I can. When they ask, I don't volunteer the advice. But if they ask me, I'll tell them what they're up against to make sure that they don't make the same mistakes I've seen too many other people make.

Yeah, yeah. Be 50% a car guy and 50% a business guy.

Absolutely.

Know what I'm saying? Make sure you're balancing the two or find someone that balances you. Right. I mean, that could be another solution for these guys. Hey, you love cars. You understand them. You get it. Find a guy that understands the numbers or hire someone or partner with someone that understands that side of it. Any other advice you'd have for us dealers looking to grow, you know, outside of that, and I mean, situations you ran into or things that really move the needle for you and your dealership.

One of the things that seemed to make a big difference for us is when we got heavily involved in the community. I just. Personally, my thoughts are it's a moral responsibility if you do well that you give back to community. As a businessman, I don't know why you wouldn't want to be involved in your community. Just makes you more visible. Anyway, so we got involved with several charities in town, and we do volunteer work and we support certain causes, and that helped us a lot because people share that stuff on social media. And when people start understanding that car guys can be good people too, I think that erases some of that stigma, that we're just all bad people, because sleazy car guys and the majority of us are not that way. Majority of us are good people that are just very appreciative of what we have, and we like giving back to the community, and we want to do what's right. We want to do business the right way. And as I stayed more involved in the community and erase that stigma, I got more and more referrals. More and more people were coming to me and referring customers to me. When that happens, as you know, your advertising expenses stay in check and you can offer better cars at more reasonable prices and still make a living.

Yeah, yeah, yeah, yeah. Being good in your community reminds me of that saying That I see circle the Internet or at least in the forum group about, you know where they say something about buy local because Amazon won't sponsor your kid's softball team.

Absolutely.

It's that saying and I don't think I really put that together of like, you know, you're right. You know, as independent dealers we have that opportunity to be in the community, to be an example, not only to buck the stigma that all used car dealers are crummy and want to cheat you, but we have that unique opportunity to be involved in those things. You know, the local sports and activities and whatever else we can sponsor. Anything else for us. Mark, I really appreciate your time here. It's been great. I mean it's been fun getting to know you here at Digital Dealer. I think we've learned some good stuff here, haven't we?

No, absolutely.

Yeah, I've had some good breakout sessions and met some good vendors.

It's been a good conference I think is my fifth year out here doing this and I recommend it.

Give me your number one takeaway from this convention. I really want to know that. What do you think you're going to take home to your dealership from being here?

Wow, there's so much that's been thrown at us. Probably if you're not looking at a digital retailing platform on your website, you probably need to and I've investigated it thoroughly, I don't know that many dealers will actually sell a whole lot of cars doing that. But what it is is it takes a customer from involvement to actually engagement by keeping them on your site longer and then you'll have a more serious lead. If they'll stay there for 5 minutes, 8 minutes, 10 minutes, filling out the forms that's necessary to buy the car, you definitely know that you have somebody that's very interested, a captive buyer at that point.

That is true. I would definitely say that as far as that environment goes of digital retailing, and by that we mean the customer can select the car, they can submit their applications, they can mess around with their payments, their terms, they can add back end products on their own and essentially, basically close themselves. Right. I mean they're selecting the car, they're the salesman, they're the F and I guy and I've seen some of these products where they can actually all but sign the contracts. It's going to take a little while till that's probably the norm or more thoroughly adopted. But like you said, by being an early guy to the game, you at least give them that option and there may Be some guys that go the full path and some people, you sell the. Go the full way. But if nothing else, you know, if someone's going to play around with the numbers and use your, you know, your little widget that's plugged into your website, they're going down that sales funnel pretty far.

Absolutely. Yeah. Like I said, even if they bail about halfway through the process and you can email them back, you can call them back, and you can get them back in to do it traditionally, if you want. I don't think we've ever reached the point to where the carvanas of the world are going to take over. I think there's a lot of people that still want to be involved with the people. They want to know who they're dealing with. They want to actually look, smell, touch, drive the car before. Before they buy it. It's a little different than new cars. I mean, no two used cars are.

The same, but why not give them the opportunity for both, Right?

Exactly.

Then you're capturing both customers. The ones that want to come in and see you and the ones that don't want to see you, they just want to buy it all online and show up and take delivery.

Yeah, and there's a lot of people, and time is of the essence. I mean, people like the transparency. They like the ease of being able to do it all themselves, feel like they're in control. They selected the car themselves, they want to select the products themselves, they want to just select the delivery. In fact, we were just talking the other day, we've sold two cars this year to people in New Hampshire from Colorado. I mean, they just found the car they liked and they wanted us to buy it and they ship it to them and we just shipped them the car. We sell cars sometimes to neighboring states where people fly in, spend the weekend in Colorado Springs and drive the car back.

And your ease of buying and your reputation online makes that a pretty easy transaction for people. You know what I'm saying? They're going to see that your website or that your interaction is easy. There's not a lot of friction points. They can get it all done and then they see that you've got a reputation to back it up. I mean, that makes for a pretty easy sale as a consumer.

It does. Because, yeah, as most of us know, I mean, the general public doesn't trust car dealers much anyway. So when they can look online and see, for example, in our case on Google reviews, we're 4.8 out of 5 stars, 700 reviews, something like that. I mean, it's just.

It's healthy right now.

And people feel like, okay, well, I can probably trust this guy because that many people are saying that they're okay. Yeah, it makes a little easier. We've had customers tell us that I shipped a Corvette to Florida. And the guy said I didn't have anything to worry about because I read your reviews online. And when I talked to you on the phone, I knew you were dealing. I was dealing with a good guy, so. So he wired me the money, sighted unseen, shipped him the car, as pleased as could be.

Yeah, that's probably a whole other topic, those Google reviews. But if you're running in the 5 to 800 reviews right now, I would say you're probably a pretty strong contender. You guys look like you focused on that quite a bit to get to where you are. From what I've seen, and I'm sure in five years we're gonna be talking and you've gotta have a minimum of 2000 reviews to even be considered a reputable dealer. But you know, as that. As those continue to go down that path. But Mark, appreciate your time, man. It's been fun. This has been great.

I appreciate you having me sit down and talk to you for a little bit.

Thank you so much for listening to this episode of the Independent Dealer podcast. I hope you enjoyed it. And remember, leave us a review. Share this with your friends, pass it on so we can all learn and grow together. Sam.