Bellavia on Scout Lawsuit, Van Ryn on Training, Lange on Fleet | Daily Dealer Live
Car Dealership Guy Podcast
Bellavia on Scout Lawsuit, Van Ryn on Training, Lange on Fleet | Daily Dealer Live
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Concept
direct-to-consumer sales
Direct-to-consumer sales mean the car company sells cars straight to people, without going through car dealerships. This can change how people buy cars.
Term
franchise law
Franchise laws are rules that say car companies usually have to sell their cars through special dealers, not directly to people. These rules help protect the dealers' businesses.
Term
trade ins
A trade-in is when you give your old car to the dealer to help pay for a new car. The dealer then sells your old car to someone else.
Term
F&I
F&I means the part of a car dealership that helps you get a loan and sells extra protections for your car. This part helps the dealer make money beyond just selling the car.
Term
franchise system
The franchise system means car companies let local dealers sell and fix their cars. These dealers do things like selling cars, helping with loans, taking old cars in trade, and fixing cars.
Concept
authorized dealer network
Authorized dealer network means the official car dealers that the car company trusts to sell and fix their cars.
Term
reservation fees
Reservation fees are money you pay to hold a spot to buy a car before it is ready.
Concept
USMCA
USMCA is a trade agreement between the US, Canada, and Mexico that sets rules for buying and selling cars and other goods between these countries.
Car
Volkswagen Did Volkswagen
The Volkswagen ID. Buzz is a new electric van that looks like the old VW bus. It runs on electricity instead of gas and is part of Volkswagen’s plan to make more electric cars.
Concept
wholly owned subsidiary
A wholly owned subsidiary is a company that is completely owned by another company. This means the bigger company controls everything the smaller one does.
Brand
Sony
Sony is a company that makes electronics and is now working with Honda to make electric cars.
Brand
Honda
Honda is a company that makes cars and motorcycles and is working on new electric car projects.
Brand
Tesla
Tesla makes electric cars and sells them directly to customers without using regular car dealers.
Brand
Rivian
Rivian is a new company that makes electric trucks and sells them directly to customers, not through regular dealers.
Brand
Lucid
Lucid is a company that makes fancy electric cars and sells them directly to buyers without using normal car dealers.
Concept
distribution network
A distribution network is the group of car dealers and shops that help sell and fix cars for a company.
Company
Ford Auto Collection
Ford Auto Collection was a plan by Ford in the 1990s to sell cars directly to people by owning the dealerships themselves. It didn't work out and was stopped.
Concept
diesel gate scandal
The diesel gate scandal was when Volkswagen cheated on pollution tests for their diesel cars, which caused a big problem for the company and people who bought those cars.
Term
class action lawsuit
A class action lawsuit is when many people team up to sue a company or person because they all have the same problem with them.
Term
FNI
FNI means the money a car dealer makes from helping you get a loan or selling you extra insurance when you buy a car.
Company
Hagen's Berman
Hagen's Berman is a law firm that helps people sue companies together. They have won big money in car-related cases.
Concept
rally
Rally is a type of car race where drivers race on different kinds of roads, like dirt or snow, not just regular streets, and they have to be really good at driving in tricky places.
Brand
Subaru
Subaru is a car company from Japan that makes cars that can drive well on all kinds of roads, especially in races on rough terrain called rally racing.
Brand
Ford Motor Company
Ford is a big car company from America that makes many types of cars and trucks. They have been around for a long time and are very well known.
Company
Lithia
Lithia is a big company that owns many car dealerships where people buy and sell cars.
Term
curb appeal
Curb appeal means how nice and welcoming a place looks from the outside. For a car dealership, it means making sure the cars and the building look clean and inviting so people want to come in.
Term
reconditioning process
Reconditioning means fixing up a used car so it looks nice and works well before selling it. This can include cleaning and small repairs.
Concept
commercial vehicles
Commercial vehicles are cars or trucks used by businesses to carry stuff or people for work, not just for personal use.
Car
Ford Five Ford
The Ford Five Hundred is a big car made to be comfortable and safe for families. It was made to replace an older popular car and give people a good, reliable ride.
Car
Chevrolet Suburban
The Chevrolet Suburban is a big car that can carry lots of people and stuff. It's popular with families and businesses because it’s very roomy and strong.
LIVE
Hey everybody, welcome back to yet another episode of The Daily Deal Alive.
I'm your host Sam Dark and thanks to you for choosing to be here on this Wednesday the 4th of March.
So today's show might be one of the most important conversations we've ever had on Daily Deal Alive
because in our industry the question isn't whether the auto industry is changing, it is. The question is
this, who in the future will have the relationship with the customer and will be able to connect with
the customer best? Right now there's a massive lawsuit against Volkswagen over its new Scout
brand selling vehicles directly to consumers filed yesterday bypassing the existing dealer
network entirely. We'll leave the news with this story in just a moment. Dealers claim Volkswagen
created Scout as a workaround of franchise law and if they win, if Scout wins, if Volkswagen wins,
it could open the door for every OEM to launch new brands and to sell direct. Think about that.
Ford launches a new EV brand, GM launches a new tech brand, Toyota launches a new software first
brand and suddenly dealers are cut out of the transaction. No sales gross, no F&I, no trade ins,
no service relationship. Well today we're talking to the attorney leading the charge against Volkswagen
and we're talking and we're asking the real question dealers need to understand. Is this the
beginning of the end of the franchise system or is it the moment dealers push back? Then also on
today's episode we'll talk culture leadership and one of the most interesting F&I strategies
increasing PVR right now. And as a reminder to you, our daily dealer listening audience,
we are streaming across all CDG social media platforms. Post your comments in, tell us what
you think about this suit, tell us what you think about the things that we bring up today on today's
show. Your comments will help guide today's show. Welcome to Daily Deal Alive. And first,
today's automotive industry headlines. I mentioned it in our opener, breaking news. We're starting
with a big legal development out of the auto retail world. Two Volkswagen dealers, one out of New
York and one out of Connecticut filed a class action lawsuit yesterday against Scout Motors.
Scout Motors sales LLC, Volkswagen Group of America and Volkswagen AG and Federal Court in
Virginia. At the heart of it, plaintiffs allege that Volkswagen has a contractual obligation
to sell vehicles through its authorized dealer network and that Scouts direct to consumer model,
well, it violates that agreement. For context, Scout has already collected an estimated $15
million in reservation fees from roughly 150,000 customers and they all bypass the dealer network
entirely. If you're a VW dealer out there, this case automatically covers you. So say the attorneys,
with the plaintiffs attorney saying damages could run into the billions. Safe to say other
manufacturers will be watching this one closely. Next up in news today, keeping with the legal
beat, a fraud ring bust out of Miami Dade County is putting a spotlight on a threat that dealers
may be underestimating. Authorities say a former dealership finance manager and a broker, by the
way, we're going to continue our broker conversation next Wednesday with the broker perspective on that
distribution model, back to the story. A broker recruited straw buyers to secure over a million
$5 in fraudulent auto loans across two Florida stores. The scheme is what is known as bust out
fraud, where bad actors build up credit profiles, load up on loans, then, well, they intentionally
default. One elderly buyer alone had nearly $436,000 in loans approved across six vehicles.
Fraud strategists say this type of activity jumped 16% last year, with the average dealer missing
most of it because these buyers often look picture perfect on paper. It's astounding to me as an
aside out of the news, how fraud is prevalent and how the bad folks, the bad actors are becoming
more creative in ways that they're perpetrating the fraud. And finally up or next up today in the
news, shifting now to the supply chain, bankrupt auto parts supplier first brands is closing on
a creditor settlement and Ford and GM are playing a key role in keeping things moving. The company,
which filed for bankruptcy last September with more than $9 billion in liabilities,
has been unable to find a single buyer for its operations, largely due to alleged fraud tied
to its founder. As a result, it's now pursuing separate sales of its four business lines,
with Ford currently sourcing parts from three of them, both Ford and General Motors have actually
prepaid for parts to keep production flowing during the process. But Ford's attorney said
it plainly in court every day these operations aren't more stable hands is a production
risk. And finally up today, some trade policy news out of Canada that's worth keeping an eye on.
Canadian finance minister, Francois Philippe Champagne is moving to tighten the country's
automotive remission framework. Essentially, the system that allows automakers to import a set
number of vehicles, tariff free in exchange for maintaining production and investment in Canada.
The government has already cut annual remission quotas for GM and Stellanus by significant margins
and is now inviting industry feedback on further changes through April 13th. This comes
as USMCA review talks heat up and US Canada trade tensions remain elevated. Still, for dealers,
tighter import rules could mean more volatility and model mix, tighter vehicle availability on
import heavy name plates, and potential pricing pressure on both sides of the border. One to
watch as negotiations develop. And that is a wrap on today's industry headlines.
Again, feel free to type into the comments, join the conversation today as we talk about this
Volkswagen suit. And as we talk about the different distribution models that are out there direct
to consumer franchise model, even broker, which we'll hit again next Wednesday. But let's dive
straight into our conversation today. First up, my guest Leonard Belavia, founding partner of
Belavia Cohen PC Leonard, Len, welcome to the show. Sam, great to be with you. Thanks for having
me on. Thanks for being here. And thanks for coming on the car dealership guy daily dealer
live to break this news of your lawsuit. Let's start bulletly. Did Volkswagen intentionally
try to bypass the dealer network with Scout collecting deposits and and seeking legally
to move forward at selling vehicles direct to consumer in the United States?
Yeah, I think Sam, the best way to put it is that Volkswagen brazenly did an end run around
the franchise laws in every state in the country to one degree or another. I mean,
there are some states that outright prohibit direct to consumer sales. Other states are a little
murky, but we don't even have to go there because the dealer agreement between Volkswagen and its
franchise dealers expressly states that authorized vehicles and we can get into why Scout is an
authorized vehicle will be sold directly to dealers. So, you know, my view, I've been doing this for
39 years representing dealers in disputes with manufacturers, manufacturers bank on the reality
that most dealers do not want to engage their OEM and illegal battle. So typically that's reserved
for termination, defending termination cases or ad points, things like that. So I guess the general
rule in my experience is only when the OEM crosses that red line will a dealer or group of dealers
say enough is enough and bring legal action. And that's what happened here because it's rather
apparent that VW knows that the worldview Scout as a wholly owned subsidiary. I mean, when you look at
I'm sure you read the lawsuit, you'll see all of the indicia of, you know, the financial control,
the operational control that both VW the parent and VW of America has over Scout,
even transferring key executives from VW to Scout. So we call it a thinly veiled shell game. So,
you know, there's enough here where dealers can say, hey, look, I don't want to take on the factory
if I'm not going to hit them between the eyes. But this is a case really where
the VW is going to have a very difficult time defending its actions.
So the two dealers in particular came to you and said, hey, we want to file this suit.
And there's this word putative, which as I understand, it brings all dealers across the
United States. Before we talk about what if Volkswagen wins? What does that mean for the
network? Let's first cover how are you covering all dealers across the US if they want to be
covered? And how are you the right voice to be making this case in courts on behalf of these
two dealers and potentially all Volkswagen dealers across the US? Sure. So one of the
obstacles of, you know, dealership attorneys is not advising them on the illegal rights. You can
tell a dealer, you know, up and down that they have a right to fight against the manufacturer.
99 out of 100 will not do that for a lot of reasons, political reasons, operational reasons,
and litigation costs are very high. The class action litigation model is the answer to that
because there are no legal fees that dealers have to pay if we prevail in the case and the court
will direct the defendant to pay what they consider to be a reasonable attorney's fee
based on all these different factors. So why would a dealer take on the manufacturer in a case
like this when they really feel the threat that their empire potentially could crumble? And,
you know, I've said that this is not really purely a VW case. It's really a case that should be
important to dealers of all brands because if VW gets away with this, you could rest assured.
I mean, we already know that Honda has formed a new venture with Sony. So that's probably a year
or two behind this. But if companies like Volkswagen, you know, the largest automotive
manufacturer in the world or up there anyway, and Honda are thinking of doing this and we've
seen other attempts to do this. I mean, keep in mind, this is not Tesla. It's not Rivian.
It's not Lucid. You know, that's a totally different model because they don't have an existing
network of dealers. Right. Yeah. Yeah. Volkswagen, you're saying initially had a distribution network.
Now they're seeking to go around it. What do you say to the industry folks that say, look,
Ford tried this in the past. In the 90s, Ford tried something called the auto collection.
They bought up dealers and they tried to sell direct. It didn't succeed as my memory serves.
What would you say to the folks that say, hey, let the free market win. If the dealer distribution
network is better, it'll win in the free market. If direct to consumers better, it'll win. Let's
let free market dictate. Well, I guess there's several answers to that. One is 125 years of
doing this doesn't mean it's wrong. If anything, it means it's been refined and protected over the
years. You and I I'm sure have listened to all the reasons why consumers don't like to interact
with dealers in the purchase process. You know, I don't get too upset when I read comments from
consumers because I appreciate what they're saying. I just don't think that they are immersed in the
industry enough to realize that the dealer franchise model is better for them. You know,
sometimes I feel like I'm preaching to the choir when I'm speaking to consumer groups.
We all know the pain point of going in and buying a car. However, that's only one small aspect of
the relationship. You know, your viewers, I'm sure know all the bullet points about why the
franchise system is better. It provides for competition. It creates convenience for service.
You don't have to deal with some central location where it takes 45 minutes to find out the status
of your car while it's in for service. You don't have to be without your car for days at a time.
You can navigate through recalls. Most consumers, 60% of consumers have trade ins. How does direct
to consumer deal with those consumers who have trade in? There really is no magic answer to
that right now. And not every consumer has an 800 credit score. So dealers do a fabulous job at
trying to get consumers bought, so to speak. So I could spend hours in on talking about why the
direct to consumer model is not consumer friendly. But putting that aside, there's a reason that all
50 states have, we're not talking about one unified political party. There's Democratic
states, there's Republican states, and they've all figured out that the franchise model of selling
and leasing cars is best for consumers. Yeah, of course it protects dealers, but it's best for
consumers. So yeah, the free market may sort it out. But I speak to a lot of consumers, speak to
dealers and consumers. I know a lot of friends of mine that have Teslas and they say, yeah, I mean,
the buzz is kind of worn thin and their next vehicle will be from a dealer. So I think we'll
sort itself out, but it kind of has done that already. So we had on the show several weeks
ago, we had Alan Haig. He works in the M&A marketplace. He deals with Bicell. And he made
a great point about Volkswagen and Scout. He said he hopes calmer heads prevail and Volkswagen
pulls back this model. He says, look, in the United States, Volkswagen, and this is my recollection
of what he said, Volkswagen created value in that ban through its dealer network. It asked
dealers to build beautiful facilities, invest in those facilities, those technicians. And they've
built this network and this distribution, selling the brand Volkswagen, which has value because
of that network. And he said, it's not right to have an entity come in like Scout and piggyback on
that existing brand and try to distribute direct piggybacking off of that brand. And I'm using my
own recollection of what he said. How do you, as you think about going after damages with Volkswagen,
if they're successful with this, how do you calculate the value of that network that U.S.
auto dealers have created through the franchise network as you seek to protect that?
Well, to add salt to that wound that was just pointed out is the fact that it wasn't that long
ago that all of the most of the existing VW dealers stuck by VW when they went through the
diesel gate scandal. That was a real painful period of time, not just for VW, but for VW
consumers who had vehicles that they really couldn't market for what they thought they couldn't
sell them at what the fair market value was before the scandal arose. And then you have
dealers who continue to stick with the franchise, continue to do the things that Volkswagen wanted
them to do like modernizing their facilities and all of the other things that provide for the
infrastructure. So isn't it the ultimate stick in the eye that after they recovered that they
decided, you know, it reminds me of the person that stays with the medical student all throughout
medical school and the day of graduation, they dump the person and go with someone else. It's
very analogous. So dealers have a lot to be annoyed about not just based on the business model and
and the legal prohibition, but it's also kind of gut-wrenching that Volkswagen is doing this at
a point in time where dealers really showed their loyalty over the years. So what do you make of
that as you put together the suit and ultimately file that you're pursuing this? What do you make
of Volkswagen taking this action to your point on the tail of diesel gate and some of the other
challenges they've had as an OEM, you would think they'd be the least likely in the least position
from a strength standpoint to pursue something like this. Why do this now if you're Volkswagen?
Well, you know, I'm sure they're looking at dealers as middlemen. Dealers are not middlemen per se,
but to the extent that the margins can be improved by dealing direct and not having to worry about
competition and mandating prices and all the reasons that this is not a good thing for consumers.
You know, there's always been friction between manufacturers and dealers. There's never been
a period where it was a total love fest. There's always give and take and push back and it generally
gets worked out. You know, in this particular case, and I'm sure ATAEs all over the country will tell
you, they have attempted to sit down at a table with the president and CEO of Scout and didn't
even get a return phone call or a responsive letter. So it's almost like Scout has been inviting this
type of a response. I mean, it's a class action lawsuit by all of your dealers is a big deal.
It means your network is very unhappy with you. And granted, no, not every dealer raised their
hand and called me. However, you know, based on the litigation model, they will be part of the case
once the court certifies this as a bona fide class action. And, you know, getting to your point,
Sam, about the damages and how to quantify the damages. It's not just the lost profit on the
initial sale. It's the FNI. It's the value of having a trade in 60% of the transactions involved
trade in. It's warranty, parks and labor. It's customer pay labor. There's empirical data to
support, you know, repeat business, not only from that customer, but from family and friends of
that customer. So the damages model, you know, for 600 dealers across the country goes into
the many billions of dollars. So Volkswagen really needs to take a time out and pause and say, is
this worth the fight? A, we might lose. And B, we're going to severely diminish the quote unquote
going concern or blue sky value of our dealer network. And it hurts dealers because now they
have to worry about, you know, the ability when they want to retire or exit the industry to sell
their dealership for fair market value. So this really has implications across the board from
consumers to local municipalities to state agencies and governments and local churches and
little leagues. And, you know, this is a real disruption, an attempted bad faith disruption.
So that's why I think dealers have said enough is enough. And the other dealers that I speak to
that I represent from other brands are saying, you know, kudos to these two dealers, these two
dealers that have stood up in the New York dealer and the New Jersey dealer really deserve a round
of applause from all of the dealers across the country who said, who spearheaded this initiative.
I think I predict that, you know, Honda dealers will be next and anyone else that seeks to cross
the line, because there's often an awful lot of sacrifice that dealers have made across the
country to get where they are now. So before we talk next steps, let's go to the comments,
several comments online. Paul Salisman says, companies conveniently forget the past
when new leadership is installed. So the inference there being mean, meaning a rotation
in leadership there at Volkswagen law cocktail comes in says, I was a VW Audi dealer through
dieselgate. Every day it felt like they fought us on selling cars night and day difference between
our other OEM brands in the group, then Dancy comes in, I hear all the arguments
here, but it really gets down to how the consumers treated in the buying process. Can Will
direct sales from the manufacturers improve the process is the real question. So what is the steps
now? The suit is filed, you've got two dealers on board with it, you say everyone could be a party
to it nationwide. What are the next steps? What are the deadlines and how soon do you project
this getting resolved? Sure. So the next steps really are to speak to other VW dealers. We expect
other VW dealers will want to be front and center and be named in the caption. We don't need any
more, but I'd like to get maybe three or four more just to cover the geographic. We have East
Coast dealers. I'd like to get a couple of West Coast or Midwestern dealers. The next steps will
be Volkswagen will, like in any lawsuit, make a motion and scout will make a motion to seek to
dismiss the case. They'll argue that, well, reservations are not sales. Well, then why do
you take $100 if it's not a sale? Why not just take a reservation in the true sense of the word,
like when you make a reservation at a restaurant, they don't ask for their $100 deposit. So it's
a disguise. It's part of their defensive preemptive measure to say they're not violating the law by
calling it a reservation. So that was tactical, but when the customer forks over $100, that's a
business transaction, and it falls within the definition of a sale, which is what is prohibited
under most state statutes. So they'll make their motion to dismiss. Presumably it will get denied.
The case will continue through the discovery stage. There'll be depositions. We'll get all the
records. I mean, we have enough data out there because, you know, in these big OEM companies,
they kind of like the left hand doesn't know what the right hand is doing. So, well, the CEO
level, the C-suite level is saying, no, we don't even know who the scout is. The marketing level
is out there saying consumers buy this product. It's not a startup. So I don't think they all
said at the same table when they were putting out these, you know, disparate messages. So that
will certainly help the case. They pretty much established the case of liability on our behalf
by making those wildly inculpatory statements. So then we'll go through discovery. Ultimately,
it could take a couple of years to get to the point where we're getting closer and closer to trial.
There'll be a motion for summary judgment, but both parties will say we don't even need a trial.
Our respective cases, our case and the defense, is clear cut. The judge should either find in our
favor or in Volkswagen's motion, they'll say it should be dismissed altogether. And depending on
the outcome of that, you know, the case will proceed to trial if the plaintiffs prevail.
And then, you know, keep in mind most cases settle. My co-counsel in this case is Hagen's
Berman. Volkswagen knows them very well. Hagen's Berman has the record in this country of getting
the highest class action recovery in the automotive industry ever. It was $15 billion
against who? Well, Volkswagen, the same party. So Volkswagen is going to take this case very
seriously. Ultimately, hopefully they relent and realize they should sit down with dealer counsel
and the attorneys involved and try and get back to square one and recognize the value of the dealer
network. Or if they remain steadfast, then they're going to have to write an awfully big check, in
my opinion, when this case is concluded. So most cases settle, though. So we're hopeful that we
can show them that they're going to lose. And therefore, we don't want, we don't want dealers
to litigate. We don't want our clients to spend, you know, hours and days and months in court.
We want to, we want a resolution that's consistent with the law. I just think that Volkswagen never
had really any anyone aiming at them. They felt this way with impunity. I mean, there's a case,
a smaller case in Florida, but it's not a class action. There's another case in California,
brought by the California Dealer Association, that's not seeking money damages. So this is really the
one that has them in the crosshairs. And I think they'll pay close attention to. So we'll see what
happens. So speaking of those other cases and kind of the general frustration in the dealer
environment, what's the biggest misconception about state franchise law? Why can't state
franchise law in Florida or Colorado or Utah or Michigan, why can't it address this on its own?
There's an agreement between an OEM and a dealer to distribute. Why is state franchise law insufficient
by itself to remedy or address this issue? I think there's about, I'm going to say, roughly 30
states that outright expressly prohibit direct to consumer sales as long as there is a dealer network.
Some even say Tesla and Rivian can't sell direct to consumers. So there's different
levels of prohibition. Some states don't say anything. The problem with that is that the
tapestry of 50 states requires, if you want to take this state by state, is that one dealer in
each state, I should say all dealers in each state bring 50 different lawsuits. It's just too
cumbersome. It's a long process. It produces inconsistent results. It's thankless. And that's
why the class action model is a litigation model whose time has come because it unifies. We're
proceeding on a breach of the general contract that VW has with all its dealers in all 50 states.
So we're not really stepping into this maze of statutory prohibitions. We're saying,
this is what your contract says, your dealer agreement, you violated it. And by the way,
it happens to violate the industry custom and practice, which prohibits these type of direct
to consumer practices. All right. Going back into the comments, a longtime listener, Dan C comes in
and he says, hey, if this goes to trial, will it be a judge or a jury that makes the final decision
on this? Sure. We're requesting a jury trial. That's the plaintiff's rights. The difference is,
you know, the judge will decide what law applies and will instruct the jury. The jury decides on
the facts. The jury will hear the facts and decide, for example, is Scout the alter ego
of Volkswagen. So they'll see all the documents in the corporate minutes and everything that we
think is going to be probative of whether Scout and Volkswagen are one and the same,
and that'll be up to the jury. And if the jury does find that, then the judge will instruct the jury.
So, you know, each party, the judge and the jury has their own distinct legal responsibility.
So that's why jury trials are preferred, because generally speaking, you know,
lead people understand things with a fresh point of view. They're not wanting to deal
so much into the facts as they do reading the law. And I'm just curious, what state
will that jury trial eventually end up in if it were to go that far? We filed a case in Virginia,
because that is where the offices of both the defendant, Scout and Volkswagen coincidence,
they happen to be in the same state, right? But they don't know each other. So the case will be
litigated in the state of Virginia. So last two questions. Your opinion, actually two opinion
questions. You mentioned state franchise law, you mentioned the franchise system in the United
States. It's 100 plus years of case law and history contract law. Is the is the franchise
system stronger today? Or is it more vulnerable today because of attempts like this by Volkswagen
and other OEMs to go direct? I think it's vulnerable because there's consumer sentiment
that's expressed, you know, to legislators that they somehow feel that, you know,
dealers are in the way of a happy, seamless transaction. It takes a lot of work for the
ATAEs and they all do a very, very good job. I take my hats off to them. Explaining to lawmakers
why the franchise system with all its problems is better for consumers and it's better, you know,
for local government, for all the reasons we discussed earlier. So it's a difficult process
and sometimes you feel like, you know, you're not making your points, but by and large state
legislators understand the value of the franchise model. It takes a long time to get there. So I
think though that, you know, everyone wants to come in and fix something. You know, you get, you
get, you know, these newer executives and they want to make their mark. So here, you know, you have
the VW executives, including their president, who thinks that all the other manufacturers
for 125 years have gotten it wrong. You know, I usually make the analogy, there was one,
one airline out there that didn't have reserve seats for their customers. You just went in like
cattle. Yeah, yeah, yeah. I wonder who that is. Yeah, we all know who that is. And finally,
they titulated like last week, I think, recently, he said, you know what, maybe if our system was so
great, maybe one other airline would copycat us. And after years and years and years of realizing,
you know, maybe we didn't build a better mousetrap. So, so I think that's what's happening here with
Volkswagen. And they think they finally arrived at the answer. And now they're realizing, you know,
the jig is up. The dealers aren't buying it. Consumers aren't buying it. Lawmakers aren't
buying it. And, you know, this whole tapestry of trying to make it look like scout is some third
party that just kind of came up from the ashes. And who are they? You know, that's worn thin too.
So, so, you know, Volkswagen is really at an inflection point. And they have to decide whether
the dealers are a friend or foe. And if they make the wrong decision, I think it's a precarious
circumstance for them. Because ultimately, when they're when no one's looking, they will make
the concession that dealers are their biggest asset. Maybe it's a weak moment that they tell
you the truth. But we have it. I mean, we've done a lot of investigation. And we know that
they value the dealers. But if they can get away with something and enhance their bottom line,
they'll try it until they get caught. So my hope is that we're at the point now where they got
they got caught. And now they have some serious decision making to do.
Well, Leonard Bolivia, we would absolutely love to have you back on the show for some updates as
this case progresses through the court system. Wish you the best of luck in defending this
automotive dealer franchise system. Fanning partner, Bolivia, Cohen PC. Leonard Bolivia,
thank you so much for being on the show today for sharing. And we go to the comments, just some
great comments online. Dealer Insight says this is an interesting case. And I'm sure many dealers
are anxious to see the results of the case play out. Also, Paul Salisman comes into the comments
says Rivian is spending heavily on lobbying here in Washington state to allow more direct sales.
And I do think the difference that he pointed out is definitely worth noting, which is
there's a difference between an entity that goes direct to consumer and never had a distribution,
Tesla, Rivian, some of these others, and then a difference between somebody like Volkswagen
that had distribution dealers invested, built up this big network, and they're seeking to go around
it. There's got to be something different there. That's just my lay opinion and lay viewpoint.
But let's talk Great America. Today's episode is brought to you by Great America, Great America
finances, buildouts and remodels, including service equipment, collision and repair,
body and paint, EV charging, car washes, signage and software, upgrade your dealership without
draining cash, learn more at greatamerica.com forward slash dealer build props to Great America
for supporting today's content, including that fascinating conversation we just had about this
suit filed against Volkswagen. Again, breaking news here daily dealer live, you heard it,
the conversation with the attorney that is at the center of the suits brought by two dealers
looking to defend the franchise system in the United States. So thanks again for being on and
thanks to Great America for supporting today's content. You can scan the QR code or if you're
listening to this after the recording, you can go into the show notes and go get more information
there. Let's keep today's momentum. Next, we turn back to my own home. Every now and again,
I get to have our own folks at the Ziggler Auto Group on the show and today is just another one
of those days. Mike Van Rijn, Vice President of Talent Development, Ziggler Auto Group. Mike,
welcome to the show. Well, thank you, Sam. Honored to be here. We're shifting gears, aren't we? Going
from lawsuits and lawyers to culture. That's right. We get to shift and by the way, just
as a little side note, people often ask, and I think there were a couple of questions in the
comments, does Ziggler have a Volkswagen Audi store? We'd absolutely love to have an Audi store,
but we don't currently. So we don't have a dog in that race. However, what I would say is the
outcome of that will end up having a lot to do with the future of the franchise model. So all
right, Mike, let's talk, let's start here. Ziggler Auto Group, 51 years, 41 stores, four states,
2,700 employees. Aaron Ziggler hired you a certain number of years ago to head up talent and
development. And you were at that time a elementary school principal. What does a dealer at one of
the nation's largest privately held automotive groups go to a principal for when he starts to
think about culture and development? Well, Sam, that's a great question. And like a lot of our
listeners out there, they probably never thought they'd find themselves in the automotive industry.
And it's been it's been a fun journey for 20 years. Ziggler Auto Group. And I never thought I was
going to be working in automotive. And it's been an absolute blast. As you know, first hand, because
of our team and because of our people. But, you know, hats off to to our owner to Aaron Ziggler
and our CFO Dan Scheidt for being very, very proactive 20 years ago and thinking about recruiting,
thinking about culture. And I don't think we knew what culture was back then. And then also
training and it still is. Yeah. So you know, those three areas are areas I'm passionate about, Sam.
Okay, so you work with multiple GMs again in this culture training development world. Mike,
in March of 2026, what's the single biggest leadership mistake you see GMs make when they
think about culture and training and developing talent? Well, you know, I think the biggest
mistake is really just looking at production, but not looking at the potential of our people. And
the biggest responsibility of leaders across the group and managers would be thinking about
where getting our people from where they're at right now to where they've never been. And that's
our biggest responsibility. So seeing that potential in our team. Yeah. So there are several things
that Ziggler does different from I think a lot of other groups out there. I'd love to have you
walk us through this. The first up, and we'll actually have our production crew show us a video
from Ziggler just outside of what we call our locker room. And this is the wall that kind of
shows the history of the Ziggler Auto group. So at the point they're ready to show that they
can roll that. But we've got this history wall. And it shows everything about Ziggler's history
from its founding in 1975 all the way through to today. And then you can also see on this opposite
wall, a list of speakers at the Ziggler Auto group that come in and deliver speeches every now and
again. And then you get a tour of our Ziggler studios, which is broadcast central for this show,
as well as many others we do as well, our town hall live stream. Talk to us about the Ziggler
speaker series and why Aaron Ziggler and why you bring people in from outside of automotive to talk
about their perspectives. And who are these people and why bring people outside of work to listen
to them? What are we to learn? Well, Sam, we started this back in 2010. So it's been ongoing. And
we started very small and our listeners, this is something they could implement to enhance
their cultures across their organization. But we brought in speakers and back then we brought in
some local community coaches to motivate and inspire our teams. And now it's really grown.
And we've had some huge names like Grant Cardone, Eric Thomas, Tom Izzo, Kirk Cousins, Jesse Itzler,
Inky Johnson, we had, we had Yossi in last year, right, Sam? Yes. Yeah. So I mean, it's just been
an absolute blast. And our teams are across Ziggler Auto Group are learning about how to be
better at their roles for their team members and their customers. But they're also learning how
to be better when they go home for their families. Yeah. Yeah. Who's your favorite speaker that we
brought in for over the years? So this one right now, we're showing, I forget his name actually,
but he's a professional bodybuilder. Yeah, that's all that he's Mr. Olympia, seven time
Mr. Olympia. So Phil Heath was amazing. You know, I loved last year, we had Rhianna Gelsamino,
and she's a Subaru rally co driver with Travis Pastrana. So our automotive listeners will love
that, right? There's the OCS picture right there on the wall as well. Tom Izzo, you saw a picture
of him earlier. Mike, it is interesting when I first came to be part of the group, I sat in
this room and you would see hundreds of our Ziggler team members who were part of this hour
long speech by a business professional or a sports professional, and they're sharing how
they had success in their given endeavor. You know, we've had the pilot who then went on to
sponsor Folds of Honor, and he's talking about how success in aviation translates into success
and business. And I think it is fascinating when you're allowed to contemplate that connection
you learn from someone else in a different discipline, how they exercised discipline
to execute, and it makes us all better. Why is that Mike, do you think?
Well, you know, a common theme across the group, Sam has been a lot of these speakers have gone
through hard times, they've gone through times when they need to be resilient, right? We've had
that in the automotive industry over the years, right, where we need resiliency, but a lot of
it's about mindset and how they really look at a situation and, you know, look at it at a challenge
as an opportunity. And we've really learned that we've taught that to our, to our teams across
Ziggler, look at the challenges you face, turn them into opportunities to really grow and do
bigger things. All right, so in automotive, when we're in 30 day cycles, you win or lose on a 30
day cycle, a lot of people in automotive may not invest quite like a company like Ziggler and some
of these other large companies invest in their people. You certainly run across people that push
back on training that push back on culture and they're like, you know what, Mike, I think it's
nice that you give us these tools and you ask us to develop and grow ourselves. But it's not for
me. What what do you say to those GMs or those salespeople or those leaders that say, Hey,
I'm not going to spend time on this, I just want to go out and sell a car.
Well, I use the word investment when we think about investment, we think about money, we think
about retirement, our finances, our 401k. And the flip side of that would be, Sam, what you and I
know, right? And we train our teams, but investing in ourselves. And really, we need to invest in
ourselves and continually grow and learn and change every day for ourselves, for our families,
but also for our teams and our customers to get better. So continuous growth is huge. And if you're
not doing a ton of that in your in your stores right now, the listeners can just start small,
right? Start very small, but look at topics that are of interest as well.
All right, so there's another, there's another tradition, I think that happens along the Ziggler
Auto Group. And it's, it's called Diamond Drops. When I first heard about it, I thought, interesting,
right? You've got an example of one there. Tell us a little bit about Diamond Drops, how, where
they came from, and how they help contribute and build culture across the Auto Group.
Yeah, Sam. So that's a great, great example of recognition. And we teach our teams, we continually
teach our teams throughout the years, how to recognize and appreciate their team members.
So everybody across Ziggler has a notepad, and they're called Diamond Drops. And if I see
somebody hitting a goal or somebody hitting an accomplishment, or working with a tough customer
and doing an excellent job, I can write them a handwritten note. And a lot of times,
recognition goes a long way coming from a manager or from their leader, but it's even more powerful
if it comes from a coworker. So that would be a second piece that all our listeners could start
is teaching your teams how to write a note of appreciation and recognition to others. So pure
recognition just goes such a long way in building a world-class culture.
All right, so world-class culture, it resulted in Ziggler Auto Group getting actually top
dealer for, what was the award? It was Glassdoor's work-life balance, right?
Yeah, we got a work-life balance award, and two times in a row, we received Glassdoor,
our best places to work awards. So that was a huge honor for us, Sam, and for our teams.
So we often talk culture development on the show, but we want specific things that help build that.
So Diamond Drops is one, bringing people from inside out to help grow that culture as another.
Mike, one thing that's tough in automotive today is hiring great general managers. In fact,
some people would say it's tougher to hire a good GM than it is a service technician. What's one
leadership habit in your experience that separates elite general managers from average GMs in March
of 2026? So that's a great question, Sam. What I see is that culture piece, they build world-class
cultures, and you can feel that when you walk into a dealership. You can feel the energy or lack of
energy from the teams, and customers feel that. So it'd be building that, and then also really
investing in their people, right, and growing their teams, and challenging them, and seeing the
potential, and helping them get to that potential. All right, so you have a bunch of dealers, general
managers, and others that are watching you right now, Mike. If a dealer group wants to create a
future dealer principle or a general manager internally, what should they start doing today,
March of 2026, to develop and build that talent? Yeah, that's a great question. I think the biggest
thing would be have those conversations, right, with their team, and what are their strengths,
what are their weaknesses, how can we take some of their weaknesses and turn them into strengths,
and really invest in them, and then also show them a career path, right, to help them learn,
help them grow within your dealership, so they stay. You and your head of training and development
role, you work with Aaron, the head of the Ziggler Auto Group, on a group, it's a performance group,
it's the general manager performance group, and there's 10 to 12 folks that are in that that
are aspiring leaders that want to ascend to that GM dealer principle position. Why do that? That
session happens typically once a month, once every other month, and it's an opportunity to get folks
together to learn directly from Aaron about the way he thinks, the way he makes decisions,
the way he executes. Talk to us a little bit about that. What went into the creation of that group,
and how is it successful at creating talent top tier in March of 26?
Yeah, so that was Aaron Ziggler's brainchild. We started this thing like about 15 years ago,
and we got some leaders around the table that had aspirations to become general managers,
but they weren't to that level yet, and we really just poured into them. And Aaron actually, we do
six full day meetings a year, and we go through different departments, so they can learn to
different departments within a dealership. We'll also just teach them overall leadership traits
and skills. And then we also will read books, we'll do homework, we will bring in speakers to talk to
them on the leadership journey. And one of the things I've really found, Sam, and you've experienced
it as well, and you've been a leader in those performance groups, is Aaron will share mistakes
he's made. And he'll share some mistakes he's made and what he's learned from those. So,
you know, the vulnerability is big too. As leaders, we need to be vulnerable and show our
teams that, hey, we're human, and we do things right, and we do things wrong, and it's about
growing and learning. So a lot of great comments in the chat, Mike will bring a couple in dealer
insights says challenges are opportunities in the rough. When you push through, you grow stronger,
very well said Ziggler Auto Group, way to be an auto leader that shows up and teaches others,
how to be better in personal life and in business. And then Toyo Deal says, please check your DM,
so you'll have to check that to see what messages exist for you there. So Mike,
thinking about the next decade, do you think leadership quality or technology adoption will
determine which dealer groups and dealerships win moving into 2026 and in the next decade, Mike?
Well, as we've always talked about, Sam, technology can never replace relationships and
replace people, right? And we all need to be real authentic leaders for our teams and for our
customers to provide them the ultimate automotive experience in our stores. But we also have to
learn and grow with technology and you've actually helped me personally, Sam, and challenge me just
on tech, learning technology and so forth and growing and it's been great. And so we got to
embrace that. We got to use it to our ability, but also remember that it's all about meaningful,
authentic relationships. Yeah, it is interesting to dealers, dealer insights when we have a
challenge, we grow, right? If we if we lean into it, we push, we look to others to kind of help
us through that last question up today. We always talk about challenging leaders across
automotive. They can they can diss, you know, they can demotivate employees, they can ruin
culture. What's the real cost of a bad manager in a leadership? Mike, is it lost employees?
It lost culture? Is it lost customers? What's the real cost in 2026? Yeah, you know, we've all
probably worked with bad leaders over the year somewhere. And you can learn just as much from
a bad leader as you kind of an awesome leader. But yeah, the cost is just culture and the cost
is losing great, great talented people. So we really want to make sure that culture relationship
building is number one, because customers can feel that as well, right? And they can feel that energy
or lack of energy when they come into your store, and they can feel bad leadership, believe it or
not. Yeah, when a customer comes into your showroom or your service area. All right, what's the next
big challenge when you think about culture development training, leadership, hiring and
recruiting and automotive? What's the big thing you're working on this year to solve for Mike?
A big thing we're working on is continually growing Ziggler University for our teams across
the group, and pouring into investing in our future leaders, because we're going to keep
growing at a fast rate, Sam. And we want to have the next general managers and next leaders for
our store in every department. Yeah, absolutely. All right, Mike Van Rijn, you're going to join
us at the very end for the chat. We appreciate you being here. Mike Van Rijn, Head of Leadership
Development, Ziggler Auto Group. Thanks for joining the show, sharing your perspectives.
We'll catch you on the backside at the very end. Yeah, you know what, it's interesting leadership
and development. Talk about two completely separate topics. We go from the Volkswagen suit
and how dealers are going to win and kind of defend the franchise model. And then we go into
culture development and just talking about what it takes to create a great culture in an auto group
so that you can hire and attract the best employees. But then also, you know, the place where you
work is oftentimes the place where you spend the most amount of time. You deserve a great place
to work, an engaging place, place where you get to grow. So we appreciate Mike for sharing his
perspectives. Let's transition next to a newer leader that's working to develop and grow a team,
Terry Lang, Assistant General Manager, actually, I believe now General Manager at Suburban Ford
of Ferndale. Terry, welcome to the show. Hey, thanks for having me. All right, did I get your
title right or wrong, Terry? I'm Assistant General Manager. Okay, all right. So tell us who you are.
Tell us a little bit about yourself and what you do for those that don't know. So I've been with
Suburban Collection now for 10 years. We were acquired five years ago by Lithium Motors. We're
one of the largest public and regular groups in the country. And I've been able to develop under
some fantastic leaders like Mike Kavanaugh, our president, Jim Elder, our store general manager,
and my father. My father was a general manager at our previous store. Him and I took over a store
together three years ago. We were at separate four dealerships, more in competition with each other.
They brought us together and we turned that store into a Lithium partner group, a high-performing
store for the company, and then achieved President's Club Award through Ford Motor Company. It was
something that the store hadn't hit in a long time. So we set those goals out, achieved them at a
high level, and an opportunity came up for me to take the step into Ferndale and take a leadership
role as the Assistant General Manager and just have that presence in the store on a day-to-day
basis. So I've been blessed to take on this opportunity and I'm 30 days in. So a lot of the
stuff that we might chat about might take some time to get a good scale on what we're doing.
And the first thing first for me was just establishing a relationship and building a strong
culture here. So it's a little bit flip note of my story. Before we go into your current role,
let's talk about the... I'm fascinated by the story of you and your dad coming together to work.
So was it with Lithia or was it with Suburban or was it with another auto group that they put you
together to work together, father, son? Yeah, so it was actually under Lithia. So Lithia acquired two
dealerships locally. So they acquired Elder Ford of Romeo and Elder Ford of Troy. And the Suburban
name was so big in Metro Detroit that Lithia had a great idea of branding those stores as Suburban
stores. So instead of having three to four dealerships in the Suburban brand, now we have five.
And part of that rebranding, they'd had some leadership changes at both stores and
they brought in... They brought the idea to us and said, hey, if we brought you and your dad into a
store, made him a general manager and you work under him, what are your thoughts on that? I said,
I'd love to be a dream come true to work with my dad. Because some Sunday dinners were
sometimes uncomfortable when we were in competition with each other and we're two different
Ford dealerships in the same market and we are competition, but we love each other. So
joining forces, we were stronger together than apart. And now being a leader next to him at
Ford Store, I've learned a lot from him and the other leaders that I've worked with. So it's been
a blast. So what would you say to leaders in large organizations? Lithia's large organization,
they chose the right path, obviously. The history has shown it. What would you say to leaders in
large organizations that say you don't put a father and son together or working together? It could
create problems. And in fact, your dad, GM, you working alongside him, that was a winning solution.
Yeah, it comes down to the father-son dynamic. So I would say this, you talk to both of them,
but my father and I had a really unique relationship where one, he's my dad,
but he's also my best friend, but we are also very business minded. So both of our goals were
always aligned. We never really went against the agreement, though we challenge each other's ideas and
what the best decision was for the store. We were really good at taking the hats on and off of
father-son and that business relationship. So we could flick that switch. I mean, we could disagree
on something and agree on a lot of things. And then we'll get at home and break bread together
like we're father-son again. So just having that balance, because you are right. I mean, that's a
really big challenge of having family work together. There was never a time where it was
uncomfortable or we never went to get one of the wrong impression that they made a bad decision
about putting us together. And like I said, our goals were always aligned and we were able to
achieve a lot together. Props to Lithia for seeing that. I think in our own auto group, we believe
the same thing. Family actually is a strength and actually in the right situation with the right setup,
you can actually do a lot more together with family. So, Terry, your store is doing something
fascinating. You put F and I managers on the floor early in the deal. Why did you decide to
break the traditional sales to finance handoff? What are you trying to solve for with that?
You know, my thing is I've always hated the idea of the customer meeting the finance manager
at the end of the sale. That's one of the toughest jobs in the store as it is as a finance manager
and they have a very short window of time to establish that relationship. So, you know, sales
people are getting early turnovers to the sales managers. We can do the same exact thing with
the finance managers and establishing that relationship. So, it's time to come sign or it's
time to do an electronic signature with the customer. If there's a familiar face or someone
that we trust and there's someone that they can, you know, pick up on some of the things that
we talked about early on in the sale and relate them as they're going through their menu presentation.
So, early involvement is just as important for a sales manager as it is for a finance manager.
The store's done it before and a lot of stores do try it. It's something that has to be talked
about on a daily basis, right? Because the science managers, you know, they have a lot of things
going on. The calling and deals, getting deals bought, getting deals funded. You know, you kind
of get locked up in your office, but getting them on the floor and getting more, you know,
fluid with these customers just sets you up for success.
Yeah. So, you were trying to solve more for that relationship element,
not necessarily a profitability standpoint. What happened to PVR after you implemented that strategy?
Month over month, it stayed pretty consistent. These finance managers do perform at a pretty high
level. So, you know, we're averaging over $2,000 a copy, you know, between January and February.
How do we grow? How do we get that to the next level? How do we get to $2,100? How do we get to
$2,200? So, keep these guys involved. You know, one thing is like it does help with customer trust.
It does help with deal flow, right? So, we want to convert as many cash transactions or people
that are borrowing money from their banks into the dealership and try to retain those customers.
Organically, PVR should go up, right? The more they're early involved, we should see PVR increase.
So, this finance team that we have at this store, again, they perform at a high level. So,
how do we take the team and just get them to the next level is the challenge that we have.
Yeah, Cox Auto Inc. is called finance F&I in 2026. One of the biggest profit center opportunities
where dealers can really win. From your perspective, what's the biggest reason customers say no to most
F&I products? It comes down to menu presentation. I think if I think sometimes customers focus on
cost over value. So, the more that we build value in the products that we're offering to the customer,
you know, it just becomes more advantage for the customer to reinvest in their investment that
they're making, especially on the pre-owned side, I think. So, we have front-end margins being
compressed over these last few years. This ain't COVID anymore. That was five years ago, five,
six years ago now. So, now it's more important that we build value in the products that we're
offering and we believe in them and have these customers see the value that come out of them.
So, I think if they see value, they'll invest in their investments. The second biggest purchase
that these people are making in their lives and, you know, most people on their cell phone will
take the insurance plans with Apple or Verizon, whoever their carrier is, and that's a thousand
dollar phone. Your average cost on our used cars right now is $20,000 at the store. So,
showing them the value and protect it is key. All right. I have a couple of culture questions
for you because you talked a lot about that in your intake, but I'm going to save that for the
roundtable with Mike Van Rijn since that's his area of expertise as well at the Zach. But let's
go into the last question here. If you took over a struggling store tomorrow, what are the first
three things in this March of 26 you would change in the first 30 days in a struggling store?
The first thing that, you know, that I did when I came in here is when I met with all the store
managers, right, and met with each employee and established a relationship, right? So,
one thing is I didn't want to be the guy that came in, took an office, and just went to work. I
wanted to build that relationship and establish the culture. But I started with that. But the big
thing that I changed was curb appeal, right? So, we walked in and our front row of cars were
not facing the historic Woodward Avenue that we're located on. So, just flip that around,
make sure that all the trash is picked up. Our front-facing windows in the dealership are on
Woodward Avenue and there's a lot of glass. And this glass hasn't been cleaned in over two years.
It was almost like there was a tint on the window from just the salt and all the stuff that comes
off our Michigan roads. I once had a company come in, clean all the windows, and really just make
the place pop, make it look brand new. And then it took a look at our reconditioning process
with used cars. What's our time to market? How fast are we getting these cars priced and photoed
online? And then how quickly are we getting them through the shop? And do we have a good relationship
between the used car manager and the service department and those technicians that spent a
pain point at this store? It's something that we exceeded really well at my last venture in Troy.
So, just taking a look at some of those internal processes, how can we turn cars quicker so we
can try to get ahead in profitability with these cars? And it's the biggest thing for us. It's just
people process and getting these cars online quick. All right, we have a stat from Lott GPT and then
we're going to quickly go to this round table. The producers are going to bring it into us.
42% of your total stock is commercial vehicles. That's 4% of the market. What are you guys doing
in commercial vehicles? At this location, we don't do much commercial vehicles. Again,
so we have those five Ford dealerships that are local in this tri-county area that we're in.
Our Sterling Heights location does take on a lot of that commercial vehicle. I'm at one of the
smaller store, actually the smallest out of the five. So our front, it'd be tough to establish
commercial vehicle sales, but I tell you what, our Sterling Heights location does exceed a very
high level of that. Okay, very good. All right. They call us that at the moment, right? Terry
Lane, assistant general manager, suburban Ford of Ferndale. Thanks for joining the show. Being
here, we're going to bring Mike van Rijn back in. Then I'm going to bring you guys a comment from
Don Hall, ATAE from the Virginia Auto Dealers Association. Mike van Rijn, welcome back.
Hey, thank you, Sam. Good to be back. All right. So hey, Don Hall comes into the comments and says,
Bravo! The very items you're speaking of is what will help us win the battle against VW Scout.
Your organization is leading from the front. Consumers want an outstanding buy. And so
I think that's to both of you gentlemen in both of your organizations across Lithia,
across Ziggler, focus on people developing people and focusing on that end result. I agree with
Don Hall. Don Hall has been on the show. He's a huge advocate for the franchise model, but he's
also a huge advocate for creating a better product from automotive. And he definitely balances those
two really well. All right, we're going to go into a little bit of a roundtable into the producers.
We may go a hot minute long, but bear with us. And this is for both of you. What's one metric
in automotive? We talk about a lot that dealers obsess about that just doesn't matter that much.
What's one metric that everybody obsesses about, but isn't that important?
Go ahead, Jerry. I'm trying to think. That's a good question. A lot of stuff do matter.
I'll give you a couple examples. Unit sales every month. CSI.
Days to turn, days to front line, retention.
I'll say this. I think one metric that I would say that doesn't matter that much, but it does,
is our total market day supply and inventory. You're looking at forecasting year over year,
month over month. And if you want to grow used car sales, it's going to be based on data that
you've done in the past in terms of what's best for market day supply. But in order to sell more
used cars, you have to have more used cars. So you could throw that metric off from reporting if
you start growing used car inventory, where it's going to say, hey, you're too high in inventory,
but we're in a growth stage, so we're trying to get more inventory. You start comparing
market day supply from my smaller store in Ferndale compared to a bigger store in Romeo or
Sterling Heights. Yeah, I don't know. The inventory market day supply on used cars is in new cars
are probably the number that's talked about. Okay. All right. Next up. Next question up.
Where are dealers leaving the most money on the table right now from your experience?
I think we're leaving a lot of money on the table when it comes to advertising.
Yes. I think these third parties that we pay a ton of money to
is where we're leaving the most money on the table. When we have sales teams that have social
media presence, and that's basically free advertising, I think the more you push your sales
team into getting involved with their social media platforms, drumming up their own business
is key. I mean, it's been more expensive than ever to advertise at this third party. So I think
it's really the most money on the table. Yeah, we've put a lot of focus recently. We did something
with Russ Flipswitch this past week talking about the importance of creating video to connect with
consumers and then also get out on social media. Get the word out about yourself. Let's stop paying
for these digital lead providers that are outrageously expensive per lead. I'm going to add one thing
to that. I think bad data. I'm convinced CDP, data lakes, clean data and marketing to that clean
data helps the better return on investment. What's one belief about the car business that's
completely wrong today? What's one belief about the car business that's completely wrong today?
Mike, I bet you got one. Yeah, I'll take that one, Sam. There's so many stereotypes on the car
business, right? But you wash all those away. Take away the stereotypes and there's great,
great people in the car business, people from every diverse background. And it's amazing what
you can do if you really invest in yourself and you have a great culture and you have a great team
and a great company to work for. Yeah. And by the way, Terry, tribute to you. That's you and your dad
working together. Mike and his son work together in the same rooftop. His son's a sales manager at
Granville Chrysler. It's probably not too far away and generations working together.
It definitely overrides the stereotype and automotive. All right. There you go. There you go.
All right. Final question up on this roundtable. What will separate winning dealer groups from the
struggling dealer groups in the next five years? I'll go back to this one, Sam. And it's what I
talked about. It's the culture piece because our customers can feel it. But obviously, our team members
can feel it. Really developing people and developing cultures and the growth will come and the sales
will come. Yep, Terry. I'd echo the same thing. And for us at Lithia, we just instill our core values.
It's earned customer for life, constantly improved, take personal ownership and have fun while you're
doing it. If we embody those core values on a day-to-day basis, this company can achieve big,
big things. So it's all, like Mike said, culture, culture, culture. That's awesome. Terry,
laying Mike, Van Ryan, thank you both for being on this roundtable to close out today's spectacular
episode. Thank you for you both being there. Thanks, Sam. Thank you. All right. And to our
listening audience, thanks for watching Daily Dealer Live today, where we break down the biggest
moves in the car business as they happen. And oh, by the way, next week on Wednesday, we had a
conversation last week on the Dealer Broker distribution model. Are brokers valuable and
worthwhile in automotive? And is there a place for them in the franchise network? We heard two very
strong opinions from dealers last week. We're going to hear a broker response next Wednesday.
And coming up this Friday, if it's Friday, it's fixed ops Friday. So to everybody who's watching,
thanks for watching. Don't forget, we are here live every Monday, Wednesday, Friday,
1 p.m. Eastern. So if this is your world, hit like, hit subscribe, turn on those notifications so
you never, ever, ever miss a beat. And we'll see you next episode. Thanks for being here, everybody.
About this episode
The episode dives into a landmark lawsuit filed by Volkswagen dealers against Volkswagen's new Scout brand, which sells vehicles directly to consumers, bypassing traditional dealerships. Attorney Leonard Belavia explains how this challenge could reshape the franchise system and dealer relationships nationwide. The discussion also covers rising fraud risks in auto financing, supply chain issues with parts suppliers, and evolving trade policies affecting vehicle imports. The episode highlights the tension between direct-to-consumer sales models and the established dealer network, exploring potential impacts on service, sales, and industry structure.
Original notes
Today's show features:
- Leonard Bellavia, Founding Partner of Bellavia Cohen P.C.
- Mike Van Ryn, Vice President of Talent Development at Zeigler Auto Group
- Terry Lange, Assistant General Manager at Suburban Ford of Ferndale
This episode is brought to you by:
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