Dave Thomas on Q3 Sales Slump, McGovern Auto on Untapped Fixed Ops Revenue | Daily Dealer Live

We're doing better as a result of social media presence. It doesn't do those three things, then it's on the chopping block. It's in return on investment, discussion. Hey everybody, welcome to another edition of the Daily Dealer Live! I'm your host

Sam Darken, back with me. Co-hosting today is the one that only V, Uli, D Martino, what's up, Uli?

I'm saying welcome back. I'm excited to have you back and you know what? Drive for life, Ziggler Auto Group's

Drive for life, 2025 is in the books, huge props to Yosi and many of the team from CDG for coming out to

that charity event. We raised over a million bucks to benefit local Michigan-based, still-annoy-based

charities. Heck of a lot of fun last night, Uli, you got to come next year. We're going to get you

I'm in, it would be fun to celebrate alongside you and an auction is fun. Have you ever tried auctioneering

speaking as fast as an auctioneer speaks? No, but it's always actually been a super fascinating thing for me.

I got to tell you, I love, obviously we do the show, we speak well, we speak good, that's my joke, right?

And you would assume I could be able to auctioneer, I can't talk that fast, I cannot do that.

Yeah, they've got like a very unique skill set. And speaking of skill set, Uli, a reminder to everybody watching,

we're live across all CDG social media platforms, post your comments into today's show, and actually let's

start it out today with tell us where you're watching from. Last show on Wednesday, we had someone from

the American Airlines Terminal in Boston watching. Thank you, wherever you are, you are part of something

unique and special and all of automotive. We talk about this a lot, this in many ways is the voice of

automotive, it's the best place to get your news, it's the best place to stay up to date on issues and

items relative relative to automotive. And speaking of that, what a show we've got today, Dave Thomas with CDK's

coming on, we're going to talk canaries in coal mines, Uli, we're going to talk about what is the future of

automotive look like in new and new sales for the next six months. And maybe we'll even talk some data

ownership as it relates to CDK. And then we've got a fixed ops director in to talk about untapped

fixed ops revenue, the govern coming up. But first, before we go there, let's dive into today's news headlines.

All right, first up today, California's plans to replace the expiring $7,500 federal EV tax credit has

collapsed shocker with governor Gavin Newsom saying budget deficits make state subsidies, quote, no

longer feasible. How is this a news item? Like California should have realized that, by the way,

Lauren Klein, thank you, listening while on vacation in Cancun. So we are being live streamed in Cancun,

Mexico, Lauren, we wish we were there alongside you. That means residents in California that nation's

largest EV market will have to absorb the $7,500 gap themselves once the credit ends September 30th.

Yeah, with everyone else in the entire country. At a recent press conference in San Francisco, Newsom

said, quote, we can't make up for federal vandalism of those tat, you know what? This is ridiculous.

The federal vandalism of those tax credits, the state will support expanding EV infrastructure,

but not the direct subsidies that we cannot make up for. Right, they can't. And the federal

government shouldn't. Newsom also blasted Detroit automakers for undermining California's EV,

mandates sing singling out GM, quote, Mary Barra sold us out, close quote. He said referencing

lobbying against California zero emission goals bottom line without state level subsidies, EV adoption

in California could slow sharply putting pressure on automakers to cut costs, boost affordability,

and double down on infrastructure. You only stop me. I don't want to like give any editorial

comment on the ridiculous news. Take a breath. Take a breath. We just go to the next one. Let's go to the

next. The federal subsidies on EVs was ludicrous insane and made no sense. It caused inflation,

right? It it sped up adoption. It caused automakers to pivot. It's a reason why we have fewer

models coming up in the coming years. We'll get to normal. You know what? Never mind. I promised I

wouldn't don't forget the brownouts, the rolling brownouts from everyone plugging their cars in

at once in a state that can't handle it. Yeah. Yeah. Cole adds to social media says, don't

hate the player. Hate the game. Don't hate the player. Hate the game. Appreciate your comment. Cole,

thanks for posting up. Again, everybody tell us where you're watching from. Next up today,

cdgbicel.com news alert. Go to cdgbicel.com for all your updates on bicell activity. Jeff

Swickert, CEO of Swickert Auto Group, has purchased BMW of Portland from Lithia Motors, Lithia's

divesting, including the dealerships real estate in what he calls a personal and professional investment

in the city's future. The move comes just months after Swicker bought Portland's landmark

Big Pink, US bank corp tower, bringing his total Portland investment to more than $110 million

in the past six months. Well, according to Swickert, quote, BMW of Portland has incredible

potential and we are committed to making it one of the top BMW dealerships in the country reaffirming

his confidence in Portland as at a time when many businesses are pulling back. And don't forget,

you can see this deal announcement and many more throughout the entire year on the cdgbicel tracker

at cdgbicel.com. Our own Michelle reports watching from dtw before taking off.

Michelle Yosey in the entire team, safe travels. Thanks for coming to Kalamazoo to, again,

participate in our event. Next up in news today, BMW is recalling nearly 200,000 vehicles in the US,

including more than 1,000 Toyota Supras due to engine starter relays that can corrode over heat

and potentially cause a fire according to federal regulators. The recall covers multiple BMW models

from 2019 through 2022 with the NHTSA advising owners to park outside and away from structures

until repairs are made. By the way, you got to love some of the side commentary on some of these

recalls. Dealers will replace the part free of charge, of course, once available and owner notifications

will go out beginning November 14th until then, please park it outside. I got to ask a question,

maybe I should know this. Somebody should chat GPT it. Does BMW make Toyota Supras? They don't

have anything to do. They make the engine in the Toyota Supra. Yeah, yeah, sure. It's the Z4,

if I'm not mistaken, the BMW Z4 and the Toyota Supra are twinsies. Very good. All right, to our

GM of the BMW store, he's going to give me a hard time for not knowing that off the top of my head,

Julie. I should have known, but to our audience to find out exactly which nine models are affected by

this recall, head over to the CDG recalls tracker powered by busy car at CDG recalls.com.

What other news source, by the way, can you go to for up to date news, all the bicell tracker,

all the recall stuff, but here again, it does exist. Just this for watching and being part of this.

All right, next up today, a new CCC intelligence solutions report shows the average vehicle repair

bill has climbed above $4,700. That's up nearly 4% year over year with higher labor rates and more

expensive parts fueling the increase. Hence the reason for vehicle service contracts. Price, parts

prices, which had been flat in 22 to 23, jumped more than 4% this spring, while labor rates rose

over 3% adding to pressure on consumers and insurers alike. Diagnostics in calibrations are also

extending cycle times repairs that require multiple calibrations now take more than 17 days on

average compared to 13 days when no calibration is needed. That's an extra four days is a percent

that's big. And more than 70% of vehicles declared total losses in 2024, where seven years or older,

reflecting both an aging fleet and failing use car following use car values as the report puts at

vehicle repair costs like other ownership expenses have fundamentally shifted in structure,

creating unseen financial pressures for consumers, already working hard to make ends meet.

You know what the solution here is for this, Julian, it makes me happy and should make all of

automotive happy vehicle service contract. So there you go, you're at your pen rate on VSC and then

great business for fixed ops. Lauren Klein says no, but they have engine components from BMW.

Lauren, thanks for being for watching and for noticing and for commenting. We appreciate it.

So and that's a wrap on today's news this Friday, September 26th.

All right, Julie, we've talked about this a lot. We'll spend two seconds on this. If you are a

dealer and you have a viewpoint, you'd love to share with us here. Go to our submission form at

cdgguest.com to fill out the intake. You'll meet Michelle. You'll meet Hannah and others on the team.

They'll talk to you, learn about your perspective and we'd love to have you on the show,

which also brings us to another point. It's funny because I've actually had some friends,

Julie, that are like, hey, can you get me into the Cardiola ship guy NADA party? They don't even want

to go, they don't even want to go through the, they don't even want to go through this submission

thing. Dennis, we are going to get you into the party. You are in, but you got to fill out the form.

All right, Cardiola ship guys back with our second annual NADA party happening in Las Vegas on

Thursday, February 5th. It is the single hottest ticket NADA 2026 with special guest top personalities

to be considered for a formal invite. Hit the link in the show notes, request to join and fill out

a questionnaire. Spots are limited and unfortunately we can't invite everybody. So RSVP today

and we hope we'll see you in Vegas. Julie, why don't we have a snazzy website? We have the cdg

bicell tracker. We have the recall website. We need an NADA site so I don't have to reference the

link. Yosey's list thing. So I'm sure he's going to spin it up right now. Yosey, we need a site,

we need a site. Hannah Farmer pipes in here. It's going to be the party of the year and what I love

about anything put on by cdg if you want to be somewhere where you've got forward thinking next

gen like trying to figure out what's automotive going to be the future. What is the future look like

an automotive. This is the spot, especially at NADA. Dennis Gingrich, Pike said he says thank you.

Sorry, Dennis. I didn't have a chance to respond to your text but I'm glad you're on here and he says

I will. So we're excited to have you. All right, let's transition. Let's go to cdk first up today

director of content marketing at cdk global. Dave Thomas, Dave, I promised no Wendy's jokes. Where's

I'm not going to ask it. Sorry, I had to do it. I had to do it. Thanks for having me back.

Welcome to the show. We appreciate you being back and joining us again. So let's ask

how's Bizz in your world. How are you to find that and tell everybody a little bit about yourself, Dave?

Bizz is busy on the on the research and insight side here at cdk. We have a number of studies

just out on the market on f and i and some others and we have ev and service coming up. So my world is

quite busy. And so that's that's great. And personally I've been in the auto biz for about 20 years.

I started off on the editorial side at cars.com as manage head are there for 10 years.

Then went to an agency worked on the OEM side and now I'm I'm working with dealers at cdk.

That's awesome. We're glad you're there. We're glad that you're here on the show joining us.

We want to go to a post first off. We recently put out there into the world on LinkedIn.

Carmacs recently reported its quarterly earnings. They disappointed. It actually led to I think the

largest decline in stock share in the past five years. And you said quote Carmacs may be a canary

in the coal mine when it comes to Q3 sales. Tell us in our audience a little bit about what you

mean by that and what you think the forecast should look like with Carmacs and automotive overall, Dave?

Yeah, I think it's one of it's a really early example of just how significant the pull forward

is in demand that we're seeing based on shoppers on the tariff and EV news.

And so Carmacs being on the the use side obviously isn't directly related to tariffs because

they don't directly hit the MSRP on a use car. But it all filters down.

Use car prices are going to go up as well and they are. So the fact that they're off and it was

a surprise. They were not expecting this. And I think all of Wall Street was surprised by it.

And I think there's a little bit to it. And I'd love to hear your feedback from both of you.

And I didn't really think about it until this morning. But listening to your show and listening

to other dealers I talked to, they are doing everything they can to get used inventory.

They're beating Carmacs a little bit. So I think this rise in the emphasis on used at the

among franchise dealers is probably one of the reasons that Carmacs had a little bit of trouble

in Q3. And we'll talk about EVs in a second. But Q4 is I mean this is really when we shift into

October this Q4 is going to not be pretty until we kind of stabilize and recover from all that pull

forward demand. What do you expect Carmacs to do to have a better next quarter? Do you think they'll

become more competitive in their use car acquisitions? Do you think that's going to be a

little bit of a challenge? I mean for car dealers watching this show September 26, what do you expect

to see from Carmacs in the coming quarter on acquisition and sales used? Yeah, well I'm not a

Carmacs expert. But to your point, I don't think they're going to sit back. So expect that

machine they've built in terms of acquisition that is almost a gold standard you would think

that many franchise dealers kind of want to emulate. They'll spin that back up as hard as they can

and it's going to be on the acquisition side. Every time I come into the office here, I drive by

you know a car dealership row, right? Just like many towns. Yeah, we're on the outside of Chicago

here. So I go through Shamburg. I'm sure you're familiar with it Sam. Oh yeah. There's a state

Shamburg. Yeah, the whole area. Yeah, Gulf Road. Yeah, there's a huge Carmacs dealership. They're

all huge. And over the past few months, it's really been the first time I've seen holes in that

in that lot. Usually it's stacked completely and you go buy it in the past few months and it's not.

So you're seeing so many dealers adopt that strategy too. Like just pulling a Carmacs which like

you said is you know the gold standard and then trying to match or beat that offer with the customer

right there. So I think you're right, you're going to see a compressed margin is better than no margin

right. So it's going to be a bumpy ride. Yeah, I'm curious and maybe maybe none of us are qualified

to do this, but you said it surprised Wall Street their results right. So at the end of the month

you know when we think about all of our stores like nobody should ever be surprised coming into

the end of the month we should know kind of where every store is going to sit like you don't

ever see a huge profit or a huge decline that you don't expect. How can a public company like that

so solidly shock Wall Street and like is it an attempt to hope for better market conditions?

Is it isn't it? What drives that in your opinion? Do you have any background to help with that?

So I've been I've been doing this for about like I said about 20 years.

Wall Street's got a lot of things and there's really smart people that know this industry.

I don't know if if they all know it as well as they think they know it. It is a fluid

fluid industry on the especially on the retail side and there's never I can't recall besides

08 you know with this tariff impact there's never been something that's so pinpointed

again maybe the maybe the great recession and cash for clunkers but besides that nothing

has had the impact of tariffs and I think that's more mental I think that's more of a

a mental thing on the car buyer side but nothing's impacted like that so not how those ways

that impact someone like Carmax probably would be a surprise and they don't listen to you guys where

we hear every every time you talk I would say it's got to be more than half the time you talk to a

dealer they're talking about their user acquisition. Yeah it has been a huge focus these past many

months and how do you get cars? How do you compete against Carmax? We saw for so long high appraisal

values so car dealers franchise retail would allow a used car appraisal to go to Carmax because

they could sell the new car on it and and and maybe maybe the benefit of this is maybe we'll see those

used car values come more in the line with the market and whatnot. A yoga cars comments I

taught Wall Street has satellite images to count cars same as they do for Walmart parking lots so

that could be you know what makes me happy though Dave and Yuley is that automotive is complicated

enough that Wall Street can't guess a hundred percent which that makes me happy because what we do

is a little bit of a it is a little bit of a challenge so do you think well let's talk EVs

anything else you want to talk about with as it relates to Carmax Dave any other insights or

thoughts you have about it take away for auto dealers? Well I think you know when we go into the

sales side of things and and talk about EVs and going into September in this end of this incentive

it's all about that pull forward demand and and I listen to you guys like I said all the time and

when you think about EVs in the market and what we're going to see what gets talked a lot about

is a is a narrative but with EVs we talk about nuance in all of our sales nothing is more nuance

in the EV market and you know I'll go through some of the points and you know you'll bear with me

but the narrative is very strong and I'll point to you Sam you say it sometimes no one wants EVs

that's like kind of the narrative right it's a very strong narrative the nuance is very different

because no one wanted EVs they wouldn't be rushing out and and and getting them now while there's

a value to them right you're still buying a very expensive product 70 to 500 dollars you're still

buying you know the second most important thing you'll ever buy I joke in this housing market it's

the most expensive thing you'll ever buy now so no one's going to take a leap just based on that

incentive right they're they want that EV so if we we jump up to 12% or whatever it's at 14% in

this this rush and the average last year you know the market share was 9% we're going to fall

really steeply in quarter in Q4 how steeply probably going to be like steep it's going to be like

5 6% market share it's going to but it's not going to stay there people like EVs and the nuance on

these numbers is all the traditional automakers EV sales are gaining and who's losing Tesla

so Tesla had such a high market share they keep dropping by large percentages the overall volume

is coming down really significantly so it's it's kind of this battle of the gains the traditional

ones are making against the losses of Tesla and that's hurting as all this other stuff is going

on with the incentive expiring so you're going to see numbers they are nuanced numbers and that's

something to kind of remember as we go out when we come out of Q4 Q4 won't be nuanced Q4 is

going to be bad yeah there will be a there will be a normalized demand for EVs and my frustration with

the EV debate is that the federal government created fake demand and they were trying to create

infrastructure behind it and to your point in doing that they've kind of pulled it ahead it'll end

up somewhere in between I do think don't you think it's not going to fall off the cliff that

everybody thinks there will be some sort of normal I it feels like yeah oh yeah I mean I think

to you yeah I think it's going to go back to 9% I don't think the $7500 things coming out of weird

time the Tesla things going to hurt but there's this other element and I've talked to Yosey about it

before there's still not a lot of EV products on the market you know most most automakers have

maybe two or three in their mix most you know there's some others that are doing more but you know

they've got two or three there's not a lot of affordable ones yet that that do what people need

them to do yeah and those are coming the Nissan leaf the new Nissan leaf being the first one and

Nissan's move that very quickly through at 30,000 price point trying to you know land at this moment

when they need it to and so the $30,000 cars of volume car 40 to $50,000 EV is not so if we bring

more of these volume EVs that's right that market share is going to grow and Kia has an EV 4 that's

similar we don't know the exact price but it'll be in those in that 30 range ish and that'll be out

next year and so you know as we get more of these products that cater to more people you know it

will it will stabilize and I think it will still hit that 9% even with what's happening at Tesla

and even with the incentive going away so you've got this EV shopper study ones it released

as fast as as fast as we can get it we have a terrific research team here and they are firing

all cylinders like I said we just had an FNI study come out we have this workplace that just came

out and so EV is next on the docket we have a great service shopper study also coming out in the

future so I can give you some sneak peeks of what the EV study says give us give us one data point

is there one or two data points that would surprise people yeah the biggest thing point yeah the

biggest data point is going to unfortunately reinforce that narrative that no one wants EVs we

survey in this in this shopper study not just the EV and I'll battle it a little bit we study not

just the people shopping for EVs but also gas and hybrids right we want to see the comparison and

and wear it all away it's because yeah that's the market yep so the cash shopper last year

three out of 10 gas shoppers said they'd buy an EV eventually they'd buy one in the future

okay so someone going to get a big SUV that runs on gas is three out of 10 of those people

said they'd buy an EV in the future that number this year is one out of 10 it is a huge drop

and the hybrids the hybrid shoppers which was about 50% said they'd buy an EV in the future it's

now in the 30% range so that is where that narrative makes an impact right that EVs aren't for you

those gas shoppers seem to be believing it even as each EV that comes out is more capable more

affordable and EVs are honestly they're they're great cars you survey gas shoppers correct that's

what you said all three EV hybrid and gas yes and I'll say because isn't it true that then the

gas shoppers bought EVs so there's less in the market but well we we also do that right so

we have an EV owner study we put it out over the summer 80% of people that own EVs are going

to buy another one so that's the other part of that growth where you're going to see that

market share maintain because they're going to buy a car in three to five years and it's

going to be an EV so in this study the people out shopping for EVs right 50% or over 50% I should

say are by are shopping for a new EV to match with one they already have so they are going all in

on the EV so this is probably the most important part of that nuance of EVs once someone's got one

they love and that is also important you know to differentiate the buyer you know you're talking

about nuance on the use car side of things for a used EV I think the buyer of that car is

completely different than a traditional use car buyer because my opinion it's less about mileage

and more about something like battery health right so it's like you have a super pointed

passion at shopper who thinks and all agree is you know highly informed on the decision

so this is one of those things that I think dealers need to be on the lookout for there's more

to that second market that used car that used EV market yeah and and it's the used EV market it's

really intriguing and so so when I used to you know talk to when I was at cars.com and my job was to

you know give advice to car shoppers and so the thing you would say about the the knock on a used

car is you don't know who owned it before and how they treated that car that was always my thing

is like if you can afford the new car and it's not a big trade off you know you got a warranty no

one's ever you know gunned it you know and gone over potholes at 100 miles an hour you just don't

know what they've done to that car right no matter what the car fact you don't know an EV in the way

that that transmission there is no transmission and the way that motor work it's very hard to be

hard on an EV so even with the higher mileage which by the way EV drivers drive more than gas

driver right so they use mileage on EVs is usually much wait wait is this a is this a fact I didn't

know oh yeah oh yes okay yeah so EV drivers put more miles on the the EVs yeah yeah yeah so

so they're gonna bring that that cost per mile down right right they and that's that's a big

I know a lot of them are rideshare you know drivers and they want to get the most out of that

that that's definitely some of them but oh it's overall and when we do our owner study it

proves out they they have the longest commutes and they and we check the road trips and they're

doing more road trips than they used to at much longer distances wow so before before we transition

into the workplace study we want to hit that just briefly here just two things on EVs number one

as EV credits expire for use car managers dealers that are listening to the show today what would

your advice be based on your survey in acquiring and selling EVs in today's market new end used by

the way and then is there any myths that's still suppressing demand a little bit in that EV

marketplace according to your survey and then we'll switch to the workplace um yeah let's let's

tackle the myth first um is that you're going to run out of range um we can talk about battery

placement which doesn't really exist most most people's use case never experienced

massive placement yeah but the range thing I mean most most modern EVs have 250 miles of range if

not more just think about that you're you're not doing that type of driving in your daily week

um you know maybe you're in sales and you do that much driving fine that's that's an outlier right

so the average commutes 20 you know uh that we saw for for EV owners is about 20 miles a day um

and so you're never and that was more than the gas owner so you're you're not going to

run out of that range it's not going to be this and I when I was a car time we bought the first

Nissan Leaf one of the first Nissan Leafs in the country had 80 miles of range that was white

knuckling all the time you know I had one too so great and so we don't have that any that it just

doesn't exist in a modern EV so you would say range anxiety is overplayed that people have plenty

of mileage they can go before they have an issue on charging that's interesting and then what advice

would you give to dealers looking to sell uh EVs for the rest of this year uh it rebates expire

unsupported by government subsidies which I love that and and now market comes into play

how should I stock and think about selling EVs so the selling point on used EVs no matter what the

incentive is because really you're going to get way more value of that vehicle than you would

buying a used let's say Honda Accord or something like that you're going to be getting a similar price

like a poll start two I mean you're going to get like near luxury they're decked out with technology

for the most part they're newer um and and you know they just have lots of bells and whistles

they're impressive it probably won't feel like you're like settling on a used car let's say right

like you are getting something that that feels very tech forward and so on that use side is

I mean they're they're just cool like and when you think like you shopping like if you're a used

car shop I was like are you really thinking you're going for something cool or you're going to get

something to get you from A to B right I mean obviously you can get used you know luxury and sports

cars but most part um it is a a very unique product yeah yeah all right so just a couple comments

online then we'll go to the survey so PSI Mac says they love them if they don't live in a multi-family

dwelling I think homeowners with garages see a lot of benefits because infrastructure is still a

challenge Morgan bird says check out our F&I shopper study I think you probably know Morgan

at cdkglobal.com forward slash insights Jay lasco says follow up question for the people taking

the survey saying they will buy another EV if the payment is a hundred dollars or more per month

for a similar vehicle would you still buy the EV again and that's a great question

yeah going to the government subsidies support um actually how would you answer that Dave

100 bucks does it make a difference no they they're shopping for that vehicle and and it's not

I don't know on the lease side it's it's a completely different conversation because of the lease

rate so you're going to see talk about a hit the lease hit is going to be remarkable um but no if

you're shopping and you're going to own and for the most part they want to own the car they're

choosing lease because it's just you know a terrific deal but for the most part they want to own it

so they're shopping like anyone else it's a $40,000 car you know six-year term four percent you

know they're just that's what they're shopping it's there's no difference there um now are they

do they tend to be a little higher income and higher education all those things yeah just like

similar to luxury shoppers all right let's let's transition to the workplace study in just the final

couple minutes we have left job satisfaction according to your works at workforce survey jump to 82

percent what changed on the ground inside stores to drive that jump and actually where did it start

I don't I don't have a context number for that um I believe it was 78 you're gonna you're gonna

okay yeah it was in the high 70s yeah so um it was good um I think the national average is in the 80s

so so now it's right on par with the national average in terms of job satisfaction uh and I think

what's changing it I don't think it's actually changed that much probably in terms of what dealers

are doing um you know we saw some changes uh we really we added a new question this year

about stress and that was probably the most interesting thing because again we listen to dealers

all the time we listen to show all the time yeah a dealer will say I can't focus on the broad

economic stories happening I don't control it I can control what's happening in my store control

the control yeah yeah yeah yeah the employees the number one stress they have is economic uncertainty

it is what's going on in the world and that tops uh bad customers so a bad customer stresses

them less than uh than the economy so the real thing at the point I want to ask yeah with this

study is you know dealers doing a great job job satisfaction but just to know what they're where

their workers had their employees heads are at um and the number three after the customers was

the future of the auto industry so they yeah the employees are really focused on what's going on um and

and they're gonna you know when is this survey done hmm when was the survey done I want to say it

was about three or four months ago yeah oh so I mean tariff time you want to talk about economic

uncertainty oh wow well what strikes me about the results of this survey though is what what is the

difference between a dealer being able to kind of tune out the uncertainty I think it most dealers

see economic opportunity in uncertainty yeah employees have a challenge because they can buy off

in it it's poor leadership if if if you can't convey that certainty in times of uncertainty because

in automotive there's opportunity in moments of change and uncertainty that doesn't exist when

things are just straight luck which that's a myth anyway there's no economic time that's just flat

right um but it's interesting to me because you know the future of automotive that's been a concern

since I got into the business in the late 80s early 90s right like we've always been talking about

this Dave so what makes now and those these results so applicable to today and and what is a

takeaway for a dealer reading this workforce survey um for them I think it is to see like the the

core um what people say are the reasons they are satisfied and and so lean into that yeah and

and number one was the people they worked with and that was that top um compensation which was

number two um so for a you know an industry that really focuses on how much money you make

it really was that camaraderie in the dealership which last year didn't shine through as much

and because we hear dealers talk about that quite a bit and so we were like oh no this year it did so

that's really positive um the thing that another kind of thing that we thought was interesting is

um you know working a dealership is very unique um you know long hours you know the kind of

you're dealing with customers all those all those types of things you can't work from home

flexibility is a little less than than other places so that did hurt how many people would

recommend the career to someone else only a quarter a quarter of employees would say they'd

recommend a friends and family a job in in automotive retail so I don't think that's you know saying

something bad about the industry I think it's this reality it's not for everyone but it's it's

nice to see that confirmation well director of content marketing CDK global Dave Thomas

absolutely appreciate you being on the show one last comment posted actually there were multiple

to ask this Ariel Perera said can you post this survey so Ariel just as a reminder you can go to

cdkglobal.com forward slash insights and Dave we'd love to have you back to talk about any of these

data points or others just one takeaway it just it came into my head right dealers see opportunity

and uncertainty employees sometimes have tougher it's on us as leadership to convey that certainty

in that sense of opportunity where it exists and help keep teams focused on the mission and I think

when people are focused on that mission we become better at what we do Dave fair so I think you said

a great yeah Dave Thomas thanks for being on the show sharing your perspectives all right thank you

guys thank you that's a fun conversation a ton of comments online as we go through it let's talk

toma here for a moment most voice a i's frustrate consumers and waste everyone's time only toma

customizes a i agents to your dealership so calls can actually get resolved that's why top dealer

groups trust toma to automate their phones visit toma.com for slash cdg to learn more you can

also scan the QR code there and go straight to that toma thank you for supporting today's content

including these cool insights we got from Dave and the team at cdk today uh toma thanks for your

supporting the show and morgan bird was quick to pop out aerial you can go here to find the survey

Dennis well i love it when Dennis pipes in thanks for listening and watching hopefully both you and

toly are dialed in but ton of comments in the uh link today uh preach sam thank you Dennis we

appreciate it and then aerial post back morgan bird thank you all right let's go to danie and

gala at director of fixed ops at magovern automotive group danie welcome to the show

hello thanks for having me it's a pleasure to be on we appreciate you being on we love it when

fixed ops folks come on and join the show especially on our fixed ops friday we're going to brand

that at some point here i think you're gonna get us a cool new jingle because fixed ops is so key

and crucial to our success currently in automotive and our future success in fact just here at

ziggler we just graduated a group of aspiring technicians today in in the town of new marketplace so

we're excited about that but before we go into that danie let's talk about how is biz in your world

and as part of that we just tell us a little bit about yourself how's biz danie uh business has

been great i think uh we've definitely uh grown year over year in terms of the controllable areas

that we can revenue wise we've seen some really nice growth in our customer pay business

as well as on internal business so that's been all positives as a matter of fact we've

we've jumped about uh 17 spots nationally among the top 150 groups 30 second parts

service and fixed revenue so we're excited about that this has been good so if you had to point

to one thing danie that other dealers could learn from and fixed ops that's caused that increase

what would that one thing be i think uh implemented continuous process and improvement strategies have

definitely contributed to that you know having that competitive advantage um and you know what that

said is enhanced customer satisfaction i think those all will lead to more revenue and uh be

inefficient uh in what you do so you have a lot of rooftops tell us how many rooftops you have

and then i'm going to ask what's one process tell us how many rooftops first

we have 34 rooftops uh and uh to more pending congratulations are the pending ones ones you can

talk about is that public yet thank you we sure can yeah we uh if not sure if you heard about propony

your pony is a hundred year deal group uh in new hamster uh so we'll be acquiring our third

Toyota store and our seventh Hyundai store so it's very cool you're on quite a bit uh over the

last uh a couple of years very very good brands we should have announced that today on the cdg uh

bicell tracker dot com uh yeah we'll make sure to catch on the next show all right so you

mentioned execution and process has helped increase uh helps you see that increase this year

what's one process other dealers could learn from that you feel like you've really executed well on

in the fixtops arena your stores i think this all started you know back uh during covert and then

post-COVID uh you know staying ahead in technology and process innovation you know i think that's

that's deals aparts and by providing a significant pet of edge in that market so utilizing it's been

a tsunami of a technology over the years as you know so we took that time to maximize

the platforms that we have that that are digital which means uh installing you know your video

when you're uh your multimedia enhanced multimedia video photos uh text utilization uh catering

to the customers what they need uh and by getting the buying of employees um we've seen you know

some really good trends in revenue growth like i was saying earlier the controllables uh

maximizing those opportunities over the past several years of now comming fruition and we've

seen some positive uh positive growth in that area so is there anyone that you're using to

deliver that video MPI uh are using one vendor across all your stores you doing it in house or using

disparate vendors so we're you know talk about technology we're big with xtime we big xtime users all

of our stores are in the next time um and we've been xtime users since the beginning of our group

in 2016 uh with that said we've transitioned into uh the AI um AI phone reception so we've installed

Mia who's uh been a big factor to our most recently um we now have 12 of our 34 stores installed

and uh she's definitely or it's definitely going to bring some some positive insight into being

more efficient to our customers and that relationship growth Danny as you considered implementing voice

AI into your processes you're a big group you you obviously have teams that execute really well

what went into that thought process and what concerns did you have about potentially uh

going to voice AI and and and where they elayed as you as you started to kick it off across the

different stores well you know looking at you know utilizing our data and analytics understanding

what what those would be for strategic planning so the amount of turnover you know uh in the in

the BDC workforce and locations we have we're pretty we're higher than what we wanted it to be

so once we embrace the Mia technology we we look at saying why don't we we don't want to be

obsolete in a year uh especially you know with a such such a fast-moving environment uh with the AI

so it was beneficial to us to take on a company that's already been somewhat established with

bigger groups and be able to fill those those positions a lot quicker and a lot more efficiently

so the concerns were you know how what customers are going to react to them um but because this

product feels like you're speaking to someone so naturally and they and they can customize what

you want based on the culture and um what McGovern uh feels is best from a customer perspective

uh we've been very comfortable with it and it's it's really been uh really been a great tool for us

so yoga cars asks a great question uh they say yoga cars says do you use it full time or off hours

only the Mia voice so um right now we're using it full time at the 12 stores it takes the it takes

the first call um and then it's also 24-7 so the after hours uh calls are also answered

and um we've seen an uptick in appointments uh and shown appointments which has led to

more revenue for those after our calls and so you don't have it in all your stores are you looking

to potentially roll it out to the rest of them or are you happy with where they are it is like do

some OEMs align better with that voice technology than others or is your intent to roll it out

across the group uh so right now we have uh several like OEMs that have been pretty consistent

what i've noticed is the the bookable rate is better with some OEMs but the the the technology has

also been with that we um a little bit longer which means that it's learned a lot more

so the goal is to continue to roll them out across the stores uh what you know with one

to make a point that we're not looking to replace any any bdc members of the workforce uh what we're

trying to do is if we do have somebody that turns over we're just not going to replace that person

because we feel that this will be a more efficient process based on what it can do um and there's

no emotional attachment to it you know it's it's it's uh it doesn't take any emotions in the

fact when the customer is yelling at it so yeah all right i have a question about a specific OEM

you have but i got to let our audience have a few questions because there's a ton coming in on this

so yoga kar says or i'm sorry a Lauren Klein says is me me handling inbound only or is she doing

outbound calls as well that's a great question now that's one of the reasons why we uh we wanted

the work with Mia so she's handling all inbound calls and uh she has the capacity to offer outbound

calls uh for example uh we can give her a list after hours or whatever time we dedicated to and

tell it to call these 100 customers with a template and say please call these customers recalls

or please do a CSI follow up for these called uh these customers whatever is that we want to

cater to she will do and she can pretty much handle it within minutes interesting so you have

Ferrari we do just just for are you use voice uh do you use voice AI and uh in fixed ops for

Ferrari or is that more of a customized experience we have one as well and i i wouldn't imagine

you'd do it but no with i just so good good point we uh would definitely haven't rolled out a

Ferrari and i think that's a whole different brand when it comes to us things like this as you

know uh they're the brand that uh doesn't want a text or video for they want to be spoken to

and they want that personal uh level experience so i don't think that you're working out of them

what about vans vans i think we will i think we ducked well we have Mercedes vans in New Jersey i think

that um it might not be the first ring but it could very well be the third or fourth ring um which

will allow that overflow of calls to get that bookable great where we need to be uh brando asks what's

your upsell strategy for book deployments so that's a great question um right now i don't have a

a uh an ROI or uh what that what that is uh but i i believe that the focus on doing the

up on the initiatives is we're going to get that upsell on on this technology platform uh i think

that's something that will probably um will be dialed in where you know Mia could take a look at

previously declined services and what the recommendation is for the services that we offer

and uh i think that's still a working process but that's a great question yeah it's fascinating and

just to just to our audience this is not a paid advertisement for any voice AI technology but i am

fascinated by it we had a group of CEOs on we talked tech and it's interesting there's some early

adopters there's some folks in automotive that are super hesitant to adopt you're a large group

you've gone in on a voice AI and you know i don't know we're so quick to adopt and execute an

automotive it's tough to see that fully replacing a human being and yet when you look at the stats

on how horribly in automotive we pick up the phone and respond and actually resolve the customers

reason for calling especially in service yeah especially in service it makes sense did that

play part into your calculus and saying hey we want to go down this road to increase that

answer rate in in response rate absolutely uh that was definitely a big part of it

not only to the not only because of the turnover that that uh we've had in that position but

the answer rate is huge i mean when you don't we could really track it as well as we do now with

with this with this this technology and uh who knows how many calls were going elsewhere or drop

calls and you know just the human human interaction uh from the BDC with the customers really not

happy about their vehicle so that's a big part of it answering the calls i always believes

and believes to you know managing that customer relationship and also uh translates into profitability

yeah all right so one more question on this then we'll go to the next topic uh

Lauren Klein says how does she handle OB outbound i would assume decline in service calls

sure so the outbound initiatives uh you know there's a template that we'll uh right we'll write

the script for her and then uh we take a template we upload it into the uh the dashboard uh and then

she'll take that and she'll reach out to the customers you know uh for how many whatever calls we

have on there she'll reach out to them and make the appointments yeah so man it's a manual

of male upload very good thank you for sharing that that with us so fixed ops is enormously

important to retaining customers growing your brand all the things you've implemented voice

you've got video uh MPIs you've got some other technology what's next like what are you sort of

thinking about as your next play to continue the increases you've seen in your department uh this

year year to date i think you know from a group perspective when initiatives that we have to

always get better at is uh improving the service reliability and uh i believe that speed leads

to high customer satisfaction especially in a it's crucial in a competitive market you know

satisfied customers and we'll look at a return and they recommend a dealership to others so being

more convenient i think is part of that you know implementing some of these technology things we've

talked about is more efficient makes it quicker for the customers convenient and i believe that you

taking a look at a capacities and allowing more more availability is going to allow us from

retain is going to keep us retaining more customers and not losing to the aftermarket so essentially

you know booking your last appointment half an hour before the the the business days over and

taking control of the capacities within our xtime platform is something that we're really working

on because customers want convenience it's never about price i believe it's about you know

treating them well and giving them convenience that they need and uh making it more efficient for them

on the vein of convenience have you adopted you know valet service remote service

so um some some of our luxury brands have the valet service uh we're investing quite a bit in

mobile service right now mostly with the domestic brands uh we're starting to see that happen

more and more so for example one of our OEM brands and i can i'll test genesis they're um they're big

into pickup and delivery so we'll go out pickup and deliver their vehicles uh have them have them

service bring it back and you know we get reimbursed from manufacturing that so they're a step ahead

now we're going to start to see you know how they do this we're going to start to see other domestic

brands do that so from the manufacturer perspective they're starting to they're starting expected

and uh it's a good investment on our end because the reimbursement rates are good and the customers

like yeah Danny of you've got multiple OEMs that you work with as director of fix stops you have

an interesting view which you have the advantage of seeing OEMs that do really well in supporting

you in the fix stops department and others that are probably frustrating who do you see is maybe your

top two or three that are committed to fix stops that help retain those customers bring them back in

and help you grow that revenue i'm going to be careful here but um you know based on the 24

25 OEMs that we have i will say that Toyota is a very big supporter of yeah relationship

Honda is a very good a very big supporter i'll say Subaru is as well um and then you know you have

BMW who's a you know one of our luxury lines that i've seen some positive interaction with

from a manufacturer perspective you know they all have their strengths but if i was going to

say who you know going into our third Toyota store i'd have to say that Toyota is you know the

biggest supporter and uh relationship wise they do a really nice job is there something specific

that Toyota does in your world that you wish other OEMs would replicate to support you um it's

consistency i think you know the people that they put out in the field um and the relationships

they build with the management team at the dealerships they get things done um they're not concerned

about selling you the next product that's available that you know they feel is going to be great in

your store they're more concerned about making sure that the customers take care of making sure

that the quality is there and not trying to get you in the oil program uh that's you know a lot more

money than what it if you were not an oil program or the next platform for multi-point inspections

and things like that so i think that separates them they have their focus on helping the dealerships

and making sure that uh the team has the support they need to repair the cars properly address

customer concerns and support them uh you know i would i would agree a hundred percent with you i

think something else interesting that Toyota does is they seem to rotate their reps around a lot

and that cross-training i think continually sort of pushes you to think about things in a different

way so you never become so familiar with one person that you kind of reiterate the same script

back and forth with each other you can hear new ideas they bring different sets of experience

they kind of challenge you in that area um Toyota is is interesting you you also have

Ford in your portfolio we've reported here many times number one most recalled brand year-to-date

this year what do you make of that how are you turning uh those lemons and eliminate and helping

to deliver the best to a consumer uh that's in a Ford vehicle that might be recalled multiple times

in a year so yes definitely how does it has its challenges uh we're big Ford owners uh we just

close on a fourth uh four store today so i guess it's managing the expectation right being able to

for example uh you know recalls for four come out every night now so we try to get the the

vehicles delivered before they come out uh managing the expectation stop so yeah so managing

expectation being convenient uh and you know being real with the customers uh fortunately a lot of

our business in the four world is heavy commercial uh and uh the the amount of recalls with heavy

commercial a little bit different than your non-commercial vehicles or your medium duties so

it's managing expectation being able to accommodate the customer providing with a loner making

it convenient for them uh reimbursing them for whether it's a complimentary service or um a complimentary

payment if they're already in the vehicle it's it's not easy but uh we've embraced ways to make sure

that the the the employees are empowered to make sure the customer has a good experience

if it's uh if it's a challenging one especially with the recalls and there's a lot of them um so you

in fixed option a big partner with the use car department i presume you do use car recana what not

you heard the news from Dave Thomas about car max and their challenges this past quarter

also the challenge that is use car acquisition how do you think about as a partner to use cars right

now how are you thinking about use car reconditioning and turn time in a process there anything unique or

interesting you're doing within your auto group to become more competitive in that use car space

yes uh use cars have been a big a big part of our business this year as well uh we know that the

market's changed and that uh we need to be in use car business so what have we done we've uh can

continue to build our relationship with our use car team uh the sales department uh being able to

accommodate them and understand that you know uh the market out there uh and the pricing is a little

bit more aggressive than it was a couple of years ago so providing them better price and being

competitive so they can sell that nest that next use vehicle and put it out on the road and not

have it auction where it ends up another independent or a competitor of ours so being smart about

let's work with use car department you know let's work let's look at the value cars that

you know have need better pricing provide better options in terms of parts uh so they can help

sell the next use car and that that's i think been important for us this year because at the end of

the day um we need to sell use cars and uh stay profitable and keep keep building our business

Danny last questions we as we go here we appreciate you being on the show today

technicians in any service department are one of the toughest positions to hire for

it's a super technical job it's one that requires training a good background technical curiosity

here at the ziggler auto group we just graduated a group of aspiring technicians we do a class

multiple times a year to kind of create homegrown talent where are you finding your best source of

technicians and what's your strategy to retain those technicians i i love that you just brought

that up and when you said it earlier that was great uh so about three years ago we took a

about three years ago we took a 30-year technician who wanted to get out of the business and we made

him our technician recruiter training for the group that's a good idea broadamon board we

over the last couple of years we've hired over a hundred technicians group-wide through him and his team

we've gone out to the traditional the trade schools have brought him in and have had a apprenticeship

program in place and we've created a modern university which not only helps him with the mentorship

but also shows them the basic electrical class the how to log into the dms you know the basic of

alarm and safety and things like that so we've created that a couple of years ago and we're out in

the shops training them we have a team of nine and helping them making sure that they're being

mentored properly in addition to that about three three and a half years ago we installed a

technician center program where last year we paid up over 1.6 million to all of our technicians

with some skin in the game so the average technician got a got a bonus check right around the

holiday season right before Thanksgiving anywhere that from six to eight thousand dollars with some

top earners in the 18 to 20 thousand dollar mark and it's been a great retention but we've also

asked them to perform tenure multimedia performance and certifications those are all part of it

and our turnover rate and fixed has been about 21 percent and I believe that's some of the lowest

you know compared to you know national it's really helped us and the guys love it so it's been a good

advertising tool as well are you able to just very last question we do have to is there a dollar

amount per technician hired that this initiative is costing you I mean obviously the ROI is right

but how do you think about the economics of the program you know the the ROI is definitely right

and look it's not a hundred percent you know nobody hits the top tier so our goal is a big picture

so if we can retain them longer than it makes a lot of sense to us so really have a good that much

process because when I look at the payout versus what they've what they've generating gross it's

very minimal and we have an owner that believes in it so you know on we're an upper Danny we

absolutely appreciate you joining the show today welcome to Fixed Ops Friday everybody we're

branding it we need more Fixed Ops voices on our show sharing the best practices and processes

that you're doing and you've provided a wealth of knowledge to our viewing audience so Danny thanks

for being on the show thank you thanks for having us appreciate it thanks Danny Lauren Klein Yulee

posted love that home made talent I think what a cool program and process that they have and I love

what they're doing and voice AI you know I think it's interesting you know as you think about our

dealers comfortable with that technology and are willing to turn that customer over to it here's a

real example of someone that's that said yes to it so what's your favorite moment Yulee from today

well you know the thought starter for me was we keep hearing the same OEMs are the ones to work with

right and it's I don't have a photographic memory but if you were to overlay new car day supply

and best OEMs to work with even on the Fixed Ops side I think there's a direct correlation to all of

that yeah yeah well congrats to my cover on their new Toyota acquisition that's a heck of a lot of

fun and and his insights and that and Yulee you're right I think there is a correlation there so

to our entire viewing audience we've come to another the end of another show on this Friday we'll

be back Monday thanks for watching daily deal alive we break down the biggest moves in the business

as they happen don't forget we're here live every Monday Wednesday Friday 1 p.m. Eastern so if this is

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have a great weekend we'll see you next episode everybody

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