#380 - Industry Temperature Check with Jeff Martin

This is a great an El Jefe episode, man. I think it's.

Where's that acronym that sounds like that's something I should know that you text me and I don't know what that is.

The El Jefe, like Spanish for the boss.

Oh, El Jefe.

People not call you El Jefe?

Yeah, gotcha.

It's a crazy. I have a big. It's across my whole door right here. El Hef. Yeah. Because I'm the only one that doesn't speak Spanish here, so I have to make sure they know.

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. And we have a special, special episode today. It's a Jeff only episode. Did you know that I put a filter on our Zoom call so that only Jeffs can log in? So we've got Mr. Jeff Watson, myself, and Mr. Jeff Martin from Niada. Jeff, thanks for joining us, man.

Hey, thanks for having me, Jeff. I can only imagine that this is going to be the best podcast episode we've ever had with two Jeffs on there. Yeah.

A couple of good looking bald Jeff guys.

Yeah. What we want to do requirements, you can't have any hair and your name must be Jeff.

Yeah, yeah. That's a very elite crowd. So we're going to talk about some really important stuff because you, you are in it. Everyone knows Jeff Martin. You touch hundreds of dealers every single week. I know everyone in the industry has your cell phone number and they all probably bother you constantly at five o' clock on a Sunday, but you have the temperature of the industry and that's what I wanted to start with today because there's a lot of stuff happening out there with the association with convention coming up. But first off, can you just talk to us and the dealers? What are you hearing? Seeing as you talk to dealers across the country right now, so many variables happening, so much change, inflation, tariffs, all this stuff. What would you say is the vibe you're getting from dealers?

Yeah, you know, Jeff, we've talked a lot about this. There's certainly consistency is what our industry likes the most. And unfortunately we don't have a lot of consistency whether you're talking about what's going on at the, at the federal level. We're very excited about some of the things that are coming out of the current administration. But there are also some concerns that we have because even if, like take the CFPB for example, if we don't see the regulatory and the enforcement aggressiveness that we've seen out of the CFPB before, that's going to be pushed down to the states. And sometimes that makes it more difficult to see and to track what's going on in the various states. And so that kind of creates that kind of inconsistency that our industry certainly doesn't like. You know, we look at Q1 of 2024 and Q1 of 2025, and I would say that, you know, sales are flat to maybe just a little bit sluggish, but there's, there, there's some consistency there. But we really want to see, we want to see growth. And I think to find that growth, we're going to have to find more consistency within our, within our industry. You know, and there's no secret, you know, wholesale prices are up, margins are really shrinking. You know, we've seen over the last five years the, the make ready on vehicles has almost doubled. And so, you know, that just continues to kind of, kind of shrink those margins for our dealers.

Yeah, I would definitely say that. So when we say that, my first temperature knee jerk reaction is like, yeah, things have been okay for me. You know, like my sales are a little bit off, my collections are doing great. Like I've got great collections numbers right now. But I just got my first quarter combined financials done and well, no, I didn't make any money. You know, like that was a surprise. I kind of thought we were doing okay. But when you look at it all in, yeah, my sales have gotten hit and my gross profit has gotten hit and my fixed expenses have gone up a little bit. So I'm kind of getting hit on all areas to where when that trickles down to the bottom, it's like, well, he broke even for the last three months. Congratulations. You know, that, that to me is a little scary because typically first quarter with tax time, that makes my year. So I'm a little nervous for the rest of the year.

Right. And those are the margins that we're talking about, Jeff. I mean, we hear a lot of dealers who are saying, actually sales are up for me a little bit, but if your expenses are outpacing your sales, that's what ends up happening on that bottom line. You know, Are we, are you ultimately making money now? Look, there are some positives out there too, Jeff. You know, and you talk offline earlier we talked a little bit about tariffs and not the last two years, independent automobile dealers sold more used cars than franchise dealers. I don't have any reason to believe that's not going to continue. You know, we're going to see some customers fall into our market space that maybe we haven't had in the past. And so what I've told dealers is make sure that you're prepared to try to capture whoever those customers are. Maybe that customer looks a little different than what you've had in the past. Now I've talked to a lot of dealers who are very concerned about you know, the maybe deportation and kind of buyers confidence dropping a little bit. And so maybe your customer needs to look a little bit different than it has in the past. But I look at that Jeff, as some opportunities for our dealers.

Yeah, I, I would say I'm very confused right now whether I should swim upstream or downstream in the cars and the customers. Right. Being a buy here pay here dealer, that's a hybrid retail. The last couple months I've been more 50, 50 and that hasn't been the case in the past where I'm doing just as many outside financed as I am buy here pay here because my buy here pay here customers are just, they have no down payment, they have no time in the area and they're just not there as strong as they used to be. So I'm, I'm dipping into retail more. Which you know, then you say, well maybe because of the cost of car, this buy here pay here model just doesn't quite work the way it used to because I can't get a three or four thousand dollar ACV and sell it for eight or nine. I'm getting these ten thousand dollar ACVs and, and I can't even stomach selling them for fifteen and putting them on the road. So maybe it's a time where I just pivot. So when you say the market is changing and I know we all know we need to adapt with it, I'll be honest with you, I don't know which way to go. I don't know whether to go upstream with a nicer car and get into retail fully or I just got to hunker down and realize that I'm going to sell a 200,000 mile, you know, Ford Taurus and that people are going to keep it for six months and then wreck it or repo it.

Yeah. And look Jeff, if you're spending an extra, you know, 2,500 to $4,000 on what you now believe is a nicer car, are you spending more but it's actually the same car.

Yeah.

Because also because wholesale prices have increased that much and so I would say this. I think there is a lot of unknowns in our industry. Certainly, you know, with what's going on with the current administration that's creating some of that kind of that lack of buyers confidence. But, but look, this is one of those opportunities where I feel like as an industry we, we get a chance to kind of figure that out.

Do you see anyone from like a vendor or dealer space just calling it quits? You know, we saw that in Covid where a lot of guys were like, hey, this is just too hard for me right now. I'm going to use this opportunity to hit the eject button. Like, do you see that happening from dealers that are like, look, I don't want to go through another transition or even just people that have gotten squeezed too hard. That when you're getting pulled in all directions, that's, that's when you just can't make ends meet and, and you're done either from a vendor or a dealer standpoint.

I don't necessarily know from a vendor standpoint that I'm seeing that as much. You know, I always say that, you know, vendors are great partners of ours and they're usually looking for ways to help us kind of come out of situations like this. But certainly if there was a dealer that was thinking, you know, seven years from now or eight years from now, I'm probably in the buy here, pay here space I'm going to collect out, they're probably making that decision a little bit sooner. And that's not anything scientific, Jeff, but like anecdotally, I could certainly share share with you that a number of dealers are looking at. Is this the opportunity for me to collect out? I'm in the best spot that I could be and I don't know that, you know, they're, they believe that in five years or six years, it's going to be significantly better if they're exclusively in that buy here, pay here space. But you had mentioned earlier kind of that hybrid model. We're seeing a lot of dealers who are pivoting to a much more of a hybrid model.

Hey, real quick to break into our all Jeff episode with a solo Jeff ad for Buckeye Dealership Consulting. As you guys know, they are the sponsor, they've been with the podcast forever and they really, really help me grow my revenue. So when I say I've had a tough first quarter, right. Revenue is not quite been where it should be. Some of that is because I am moving money over into my reinsurance company. So it's a great way to defer or put off some of your tax burden. It's a great way to build long term wealth. You take it out of one pocket, you put it in the other pocket through reinsurance products and you just kind of. I don't want to say forget about it, but I kind of forget about it, you know, act like it's not there. And then all of a sudden I do a reconciliation and I look at my reinsurance company, I say, oh, wow, I've actually got some forced savings over there in that reinsurance company that I can tap into if I want to grow my line of credit, my portfolio, if I want to buy a piece of property, if I want to take that out and lend it back to myself or, or take it back into myself personally. There's a lot of different options. So reach out to the guys at Buckeye. I'm sure they're going to be a convention. You can talk to them there. But make sure you have your reinsurance company set up if you don't already. Yeah, it's interesting. I think you see that even in the vendor side where vendors start saying like, hey, yeah, we need to find more revenue sources, we need to find more ways to say yes to people and get money in the door. And they all start venturing off into other areas. You know, they start making a website or they add a CRM component or a booking component or a. And and so same with dealers where it's like I was a traditional buy here, pay here, but I don't want to send anyone down the road because I need to sell a car even if it's at a smaller gross and I don't get any finance income and whatever else, maybe I get a trade. So I think we start trying to diversify our income sources and hopefully don't get too distracted.

Right.

We talk about that a lot in the industry where like dealers are all of a sudden they're, they're selling sheds and U hauls and they're doing daily rentals and, and, and, and it's like, okay, whoa, whoa, like maybe we went a little too far with that because that could be a big distraction if you're trying to run a, a turo rental business out of your buy here, pay here location.

Yeah, no, I totally agree with you and I think that you're going to see some diversification. You know, whether it's, you know, whether it's selling the boat on the side or whatever it is that feels like it works for you. But also just finding some of those avenues to be able to generate revenue maybe, maybe after the sale of the vehicle. I think that you'll see a number of dealers and we saw this a little bit in 2009 when the economy took a little bit of a dip and dealers started looking for other opportunities, you know, and you know, we've got a very resilient group out there and as you mentioned earlier, the vendors are going to be looking for options to help dealers kind of make it through this, make it through this situation as well. I do want to mention this though, Jeff, that we have some dealers who are certainly reporting through our 20 groups that they're having some of the best years that they've had. Now, we can't pinpoint why that is the case. I do feel like it's probably a little bit more in the rural areas as opposed to the major metropolitan areas. But you know, kind of a silver lining is as we had mentioned earlier, there are a lot of customers that are falling to, to our dealers right now. And if we can find ways and help our dealers find opportunities to take advantage of that, I think that there's some real opportunities.

Yeah. It's funny, it just, it reminds me of like, I mean it's not, it's not the haves and the have nots, but, but it's the same for dealers. You've got dealers that are the haves that it's a mentality thing, right? It is always sunny where they're at. And I don't care what the economy's doing. I am selling 120 cars month or more and those guys just seem to thrive no matter what the market's doing. And maybe it's the mentality or their market share or the reputation in the, in the area they're in. And then you have other guys on the flip side of that that like any little speed bump or you know, they stub their toe and, and the sky's falling and sales aren't happening and, and, and it's the end of the world. So really interesting philosophy, but, but let me transition because during these times of change, Jeff, for me it's the opportunity to kind of hunker down and fine tune the business, right? When you say, okay, well I got to reinvent myself, which way do I go? I don't know, like what do the numbers say? What are my opportunities? What are my strengths? What do I want to do in the future? And so much of that comes with education. And I was really excited to see NIADA rebooting the CMD class right this is kind of a, the new launch because it's been kind of dead for a few years, right?

Yeah, yeah, about three to four years. Nieda kind of struggled to get the kind of new certified master dealer program off the ground. We're excited that we're going to have a retail class and a Buy here Pay Here class. Both are going to be in August. One, the retail class is going to be in Georgia. The Buy here pay Here class is going to be in Texas. It's a pretty intense four day training that kind of walks you through the life cycle of a dealer. We focus on everything from compliance to managing the, the dealership inside. We go all the way from purchasing a vehicle to marketing the vehicle to selling the vehicle to taking care of the customer afterwards. We're very excited about bringing the, bringing the course back and kind of focusing a little bit on that education as you were talking about.

Yeah, I like that. I mean I've never been, I'm not a cmd. I never took the class before. But I'm very, very tempted, if this fits my schedule, to show up to that August Buy here pay Here class. Because I know there's so much stuff I don't know that I don't know. And, and there's so many things that I think when you have that kind of intense training, I mean we go to 20 group and you learn stuff and you share ideas but you're not there necessarily as a student to be. Right. Educated and to hopefully kind of explore areas that you're not typically comfortable with. Right. We all kind of stay in our lanes. So to go in there and say, hey, yeah, I'm going to have, you know, six straight hours of compliance training or six straight hours of accounting education, like that really seems like a valuable trip where I'm going to come home and have like that, that high, the doctorate degree. Right. Like I've got an associates in Buy Here Pay Here. Like I went to a community college.

For Buy Here Pay Here, the school of hard knocks. Right?

Yeah, yeah. But like I would like to attend like the Ivy League education where like you come out of here and you're going to know some stuff and also be educated on the other areas that you. I mean, I don't expect to learn it all in four days, but I'm going to know where my strengths and weaknesses are and what I can focus on. Right, right.

Yeah, absolutely. And I know. So as you know, Brent Carmichael in January came on board with Nieda, the new Director of education. And he and our moderators as well as some outside input that we've been gaining have, have put that, that curriculum together. And 100% you should come away from that class feeling like I completely understand, you know, my place in the industry. And hopefully, Jeff, you know, you're going to come out of that with, with some opportunities for, for growth in different areas and you find out kind of, as you mentioned, kind of where your strengths and your weaknesses are at.

Yeah, that's so good. And, and the other things that we're getting into is we've got convention coming up. So this is the most important part of this podcast, guys. If you've listened this long, hopefully, hopefully you are signed up for convention coming up June 23rd through the 26th. So we're exact out to the date you need to be in Vegas at the Fountain Bl. Good luck trying to right Google the hotel because it's the stupidest name for a hotel because nobody knows how to spell it. And then the big, the big news is though, tomorrow after this episode airs, is the cut off for the hotel rate, right?

Correct. Yes. The 23rd. Got to get registered before the 23rd or on the 23rd. Registration is $545. It goes to 7:45 after, after Friday.

Okay, so you're listening to this. It's the 22nd of May. You need to jump on right now. Go to nida.com, find the website, click on the link, get registered, be in Vegas in a month. Great time to be there. Great. I mean, I make fun of the name, but I've never stayed there. This is a great venue compared to some of the other ones that I've been in that are just kind of, you know, barely hanging on. I'm excited. Hey, everybody. One more time. I know, I know. You're missing Luke's voice. Listening to me for 30 straight minutes is tough, tough, tough. But my final interruption, to make sure you guys know about Blitzpay, they will have some new features that they're going to announce at niada. So pretty exciting stuff coming out of Blitzpay. We've moved everything completely over with the recent payment processing snafus between our old processor and our CRM. Our DMS having arguments. It's been so nice to have a company like Blitzpay processing my credit card so that I know there's no interruption. I know I'm not going to have a problem booking my payments back and forth to my dms. It has really been such a simple, easy system. And to be honest with you, I think I can credit it for why my collection numbers have been so good the last six to eight months. Obviously my collector, give her all the credit too. She's been working it hard. But when it's easy to make your car payment, it's easier to stay on top of that delinquency and recency numbers. So talk to the folks at Blitzpay. Either give them a call today or talk to them a convention and see how they can help you with your credit card processing.

I'll tell you a funny story about that, Jeff. So, you know, we've been at the win the last couple of years, and one of the things that we hear back in our surveys, man, this thing is so spread out. I mean, is there any way that we could make it closer together? And you know, at the end of the day, it's whatever property you're at, you're at, and that's the way properties used to be built, is that they were spread out in those convention centers. So the fountain blue is actually vertical. So we'll be on. On two floors that are on top of each other. So you'll get an opportunity to ride escalators. It's a fantastic property, but. But hopefully we're going to decrease some of the steps that you have to take to attend all the education, the expo, general sessions, things of that nature.

You're saying dealers don't want to hike a mile from. From their room, through the casino, through the restaurants, through the wedding boutique, past the topless pool, down the escalator to the corner convention space.

I always love that when we get that on the survey. Like, how can you improve that? Like, there's not really a whole lot that we can do about that. But maybe, maybe we found the solution. We'll see. Bring your Segway property.

So what else do we, Jeff? We got a new venue. We get the opportunity to ride an escalator. That sounds super exciting. So probably worth the cost of admission right there.

Absolutely.

What else are we going to get while we're there?

So again, we're going to have the five sessions, or the five different breakout sessions. It includes Buy Here, Pay Here, retail marketing, management, compliance. There's one thing that's interesting, Jeff. We had about 80 submissions to speak at the convention this year. Of those 80, about. About 10, actually, it was 12. Had something to do with AI. You know, look, that's the hot buzzword that's out there. So we've got five different AI sessions. And it's not just AI sessions from people who are trying to sell you a product or try to sell you a service. We've got dealers who are actually using AI in their dealership. So obviously we're excited about. That's kind of a new strategy that I think a lot of our dealers are kind of tipping their toe into. And this is going to be an opportunity to learn what some dealers are doing to implement AI in their strategy or in their dealerships. This year we're also going to have dealer rounds, which, Jeff, I know you attended the conventions that we used to have in Texas. We've got 15 different topics. The dealer rounds are 10 to 12 dealers sitting at a table talking about a specific topic, whether it's managing multiple locations, identifying fraud, you know, controlling your reconditioning costs, the things that dealers are facing right now. And it gives dealers an opportunity to sit in there and talk with their peers about some of the challenges that they have, some of the successes they have, and then ultimately share some of those best practices. And that's going to be new for. For niada, certainly, you know, excited about that.

Yeah, that's a great. It's a great format because you get to interact and you get the question and answer. Sometimes you go into a session and you'll get Talked out for 30 minutes, 45 minutes, and you'll have a bunch of questions that you either don't dig into, don't remember, don't ask, don't get resolved, but when those little round tables are so great because again, you're asking the questions, you're getting immediate feedback, and you can go to the specific topic that is your biggest pain point right now. So I love those. I think those are great, right?

Yeah. And I'll tell you that the responses that we get every time we do a deal around like that, and keep in mind, they're only 35 minutes, so they're really quick. But the response that we get, it's kind of forced networking, if you will.

Yes.

But every single year we hear survey or in our survey, people say that was the best part of the convention. So that's going to take place on Wednesday. Very excited about. Very excited about that.

Yeah. And that's, I mean, really what you take away from these conventions is the conversations in the hall, the conversations at lunch, the conversations at dinner with other dealers that are having a similar pain point and have either fixed it or figured it out. So this, the rounds create that, like. Oh, yeah, like you said, the force networking. But it's great because there's a lot of dealers that are just scared to walk up and talk to people, they're scared to go approach, you know, a Tracy Myers and say, hey, how are you doing this? So when you're in those groups, you get to do it just naturally. Obviously we did this episode without Luke because we knew he's got a session and, and if he was able to talk his book, that's all we would have talked about for the last 30 minutes was how great his session will be. So show up to it, don't show up to it, I don't care. Probably a waste of your 30 minutes anyways. You've heard it all if you've listened to this podcast before.

Yeah, I know. Jeff, obviously, I mean, Luke obviously has a lot to offer and we're excited to have him back. But to your point, you know, if you have like for example, a Lawrence Mead or Don Griffin and you don't necessarily feel comfortable going up and talking to that person in the hallway, these newer rounds give you that opportunity. And, and so we, you know, we have, last year we had 209 first time dealers and first time dealers create such an, or not first time dealers, but first time registrants, they create such an energy, particularly in the expo hall. We already have 110 first time registrants. We're tracking about 12% ahead of where we were at at this time last year for registration. So we anticipate we're going to have about 720 dealers, about 200 of those, it'll be their first time to attend. And I just always say the first timers bring a different energy. You know, sometimes in the education, certainly in the dealer rounds, they're just sponges eating up all of the education that they can get. And then in the expo hall, the first timers certainly create that, that, that fervor of excitement and going around and wanting to visit with all the, the different vendors that are there.

Yeah, let's, let's discuss that real quick with a couple minutes we have left with the vendor in the expo hall. Obviously one of the, one of the really great things about the national convention, to be honest with you, because you, you get to see what's new, what's cutting edge. You get to talk to your current vendors and see maybe some of the features that they're now implementing that you didn't hear or know about. And, and you get a, just see what is new and exciting. Right. Talk to us about that is how is the vendor sign up? Are there new names, is there, is there kind of movers and shakers in that area that we'll be surprised by.

Yeah, you know, there certainly are some new faces that are going to be in that exhibit hall, but we also have some vendors who have been around for a long time, and you alluded to this earlier, Jeff, who are looking for opportunities, who are creating new services or new products that I think vendors are going to be very excited about hearing about. We have 170 vendors. I think it's 171 vendors who will actually be in. In the expo, you have eight hours exclusively with nothing else going on at the convention to go in there and spend time with those individuals. So you're going to see some new faces. Some of that does have to do. Has to do with, you know, again, kind of AI. I think that's the buzzword. And so people are looking for opportunities to help our dealers be more efficient. So I wouldn't say just go look for the new vendors. I would certainly encourage you to. To stop by and visit with those vendors who have kind of supported the association for a long time and ask them what do they have that's. That's new out there that. That might help you be more successful.

Yeah, I know two of the vendors I use are planning on announcing new features or products at conventions. So that's. That's kind of fun too, to in line to see those demoed and maybe get signed up with them if it's going to help you, Jeff. Guys, if. If you haven't signed up again tomorrow, May 23rd is the day to sign up before the. They jack the rates on you. So get locked in right now. We look forward to seeing you in Vegas, Jeff. This is a great. An El Jefe episode, man. I think it's.

Where's that acronym that sounds like that's something I should know that you text me and I don't know what that is.

The El Jefe, like Spanish for the boss.

Oh, El Jefe.

People not call you El Jefe.

Gotcha.

It's a crazy. I have a big. It's across my whole door right here. El have. Yeah. Because I'm the only one that doesn't speak Spanish here, so I have to make sure they know.

No, you know how this works, Jeff. I work for the members.

All right, Jeff. I appreciate your time.

Appreciate you having me. Thanks, Jeff. See you at the convention.

Thank you for listening. Please leave us a review. We'll catch you in the next episode.