Fred Emich IV, a partner at Emich Automotive and chairman of the VW National Dealer Council, shares insights on the evolving automotive landscape, particularly regarding electric vehicles (EVs) and the challenges faced by traditional dealerships. He discusses the impact of VW's transition post-Dieselgate, the return of the Scout brand, and the strategies his dealership employs to thrive in a competitive market. Emich highlights the importance of community involvement, dealer relationships, and the need for VW to improve product quality and dealer support amidst changing consumer preferences.
Today I’m joined by Fred Emich IV, Partner at Emich Automotive.
We cover how Emich Automotive became the #1 EV retailer for Kia, the challenges Fred’s faced as Chairman of VW’s National Dealer Council, and the evolving threat Scout poses to VW dealers — plus much more.
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Topics:
00:37 How did racing shape Fred's career?
02:51 Entering the family car business how?
05:40 Biggest triumph and challenge in auto?
09:57 Strategy for dominating the EV market?
17:34 Future vision for Volkswagen leadership?
20:39 Key industry challenge with Volkswagen?
22:26 Direct-to-consumer: threat or opportunity?
24:28 How has Tesla impacted the industry?
35:30 How does community shape future vision?
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"...at the time Volkswagen had some pretty good contingency money in the in world challenge. So we built out a car to chase some money..."
World Challenge is a racing series where different types of cars compete against each other on tracks. It's a way for car makers to show how fast and good their cars are.
World Challenge is a professional auto racing series that features multiple classes of cars competing on road courses. It provides a platform for manufacturers to showcase their performance vehicles and is known for its competitive racing environment.
"...where Volkswagen was at where the the Kia location is currently at..."
Volkswagen is a car company from Germany that makes many popular cars, like the Beetle and Golf. They are known for their quality and engineering.
Volkswagen is a German automaker known for producing a wide range of vehicles, including the iconic Beetle and the Golf. The brand is recognized for its engineering and innovation in the automotive industry.
"...where the the Kia location is currently at..."
Kia is a car company from South Korea that makes a range of vehicles. They are known for being affordable and offering good warranties.
Kia is a South Korean automotive manufacturer that produces a variety of vehicles, known for their affordability and warranty offerings. They have gained popularity for their stylish designs and value for money.
"And at that point we actually had a letter of intent with Kia... So it on paper was gonna work out just great."
A letter of intent is a document that shows two parties are interested in making a deal. It helps to outline what they plan to do before they finalize the agreement.
A letter of intent is a document outlining the preliminary understanding between parties who intend to enter into a contract. It is often used in business transactions to clarify intentions before final agreements are made.
"In September we were the number one ev dealer in the nation..."
An EV dealer is a car dealership that sells electric cars. These cars run on electricity instead of gasoline, which helps reduce pollution.
An EV dealer specializes in selling electric vehicles (EVs), which are cars powered entirely by electric energy rather than traditional gasoline or diesel. The rise of EV dealers reflects the growing demand for environmentally friendly transportation options.
A tax credit is money the government gives back to you when you pay your taxes. For electric cars, it helps lower the price you pay for the car.
A tax credit is a financial incentive provided by the government that reduces the amount of tax owed. In the context of electric vehicles, tax credits can encourage consumers to purchase EVs by lowering their overall cost.
"...where they realize that global warming is a real thing..."
Global warming is when the Earth's temperature gets hotter over time because of things people do, like burning fossil fuels. This can cause problems for the environment and weather patterns.
Global warming refers to the long-term increase in Earth's average surface temperature due to human activities, particularly the emission of greenhouse gases. It is a significant environmental issue that impacts climate patterns and ecosystems.
"I really promote ev driving technology and Whether you're doing it for performance whether you're doing it to save money whether you're doing it for the environment"
EV driving technology is what makes electric cars work. It includes things like batteries and electric motors that help the car move without using gasoline.
EV driving technology refers to the systems and components that enable electric vehicles (EVs) to operate, including electric motors, batteries, and regenerative braking systems. This technology is crucial for improving vehicle performance and efficiency.
"to drive an ev versus a internal combustion vehicle with that"
An internal combustion vehicle is a car that runs on gasoline or diesel. It uses an engine that burns fuel to make the car move, unlike electric cars that use batteries.
An internal combustion vehicle is a type of vehicle that uses an internal combustion engine (ICE) to convert fuel into mechanical energy. This includes most traditional cars that run on gasoline or diesel.
"Really 2015 with Volkswagen going through the tdi scandal"
The TDI scandal was a big problem for Volkswagen because they were caught cheating on tests that measured how much pollution their diesel cars produced. This caused a lot of trouble for the company.
The TDI scandal refers to the controversy surrounding Volkswagen's use of software to cheat on emissions tests for their diesel vehicles. This scandal led to significant legal and financial repercussions for the company and raised awareness about environmental regulations.
"we weren't the first to market, but we were close to first to market beyond, you know, tesla"
Tesla is a car company that makes electric cars. They are known for their high-tech features and have helped make electric cars more popular.
Tesla is an American electric vehicle manufacturer known for its innovative technology and high-performance electric cars. The company has played a significant role in popularizing electric vehicles and advancing EV technology.
"And with that, you know, there's some very early investments into ev infrastructure. So we do have two public Chargers that'll do 125 kilowatts at our vw location"
EV infrastructure means the places where electric cars can charge their batteries. It's important because without enough charging stations, people might hesitate to buy electric cars.
EV infrastructure refers to the network of charging stations and related facilities that support electric vehicles (EVs). This infrastructure is crucial for the widespread adoption of EVs, as it provides the necessary charging capabilities for drivers.
"...two public Chargers that'll do 125 kilowatts at our vw location..."
A kilowatt is a way to measure how much electricity something uses or provides. For chargers, a higher number means they can charge electric cars faster.
A kilowatt (kW) is a unit of power equal to 1,000 watts. In the context of electric vehicle chargers, it indicates how much power the charger can deliver to the vehicle, affecting how quickly the vehicle can be charged.
"...two public Chargers that'll do 125 kilowatts at our vw location..."
Public chargers are places where anyone can plug in their electric car to charge it. You can find them in many public areas like malls or parking lots.
Public chargers are charging stations for electric vehicles that are accessible to the general public. They are typically found in parking lots, shopping centers, and other public areas, allowing EV owners to charge their vehicles away from home.
"How specialized you need to be as a dealer to successfully retail evs at high volume... I think there's a combination of things"
EVs stand for electric vehicles, which are cars that run on electricity instead of gasoline. They are often seen as better for the environment because they produce fewer emissions.
EVs, or electric vehicles, are cars that are powered entirely or partially by electricity instead of gasoline or diesel. They are becoming increasingly popular due to their environmental benefits and lower operating costs compared to traditional vehicles.
"Put the price low enough. You'll be the number one ev retailer in the country. What is it?"
Pricing affordability means how affordable a product is for people to buy. If a car is priced low enough, more people can afford it, which can lead to higher sales.
Pricing affordability refers to the ability of consumers to purchase a product based on its price relative to their income and budget. In the context of EVs, setting a competitive price can significantly influence sales volume.
"...that's continued to support the EV business..."
EV means electric vehicle, which is a car that runs on electricity instead of gas.
EV stands for electric vehicle, which is a type of vehicle that is powered entirely or partially by electricity instead of traditional gasoline or diesel fuel.
Chevrolet, or Chevy, is a popular car brand in the United States that makes many types of vehicles, including electric cars.
Chevrolet, commonly referred to as Chevy, is an American automobile brand known for its wide range of vehicles, including trucks, SUVs, and electric models.
"Sometimes you know haggle negotiation or no haggle pricing. What are you? No, I'd say like we're no hassle..."
No haggle pricing means the price you see is the price you pay, with no room for negotiation. It makes buying a car easier because you don’t have to bargain with the salesperson.
No haggle pricing refers to a sales strategy where the price of a vehicle is fixed and non-negotiable, eliminating the traditional back-and-forth negotiation process. This approach is designed to simplify the buying experience for customers, making it more straightforward and less stressful.
"If they want a couple thousand dollars off the price of the car... show them comps and and and sell the value in the vehicle"
Comps are similar cars that help show how much a car should cost. Salespeople use them to explain why their car is priced a certain way.
In the context of car sales, 'comps' refers to comparable vehicles that are used as benchmarks to justify the pricing of a specific car. Salespeople often show these comps to demonstrate that their pricing is in line with the market value of similar vehicles.
"Part of that has to do with you know, we have seen some repairs some battery repairs same with kia as well"
Battery repairs are when you fix or replace the battery in an electric car. This can be expensive because batteries are complicated and important for the car's performance.
Battery repairs refer to the maintenance or replacement of the battery in electric vehicles (EVs) or hybrid vehicles. These repairs can be costly due to the complexity and technology involved in modern battery systems.
"...we get weather. There's a traction law as well. So if you want to go up to the mountain..."
A traction law means that drivers must use special tires or chains when the weather is bad, like during snowstorms, to help keep their cars safe on the road.
A traction law is a regulation that requires vehicles to have specific equipment, such as snow tires or chains, during certain weather conditions to ensure safe driving. This is particularly important in mountainous or snowy areas.
"...that helps us sell some snow tires and make sure they got enough tread on their tires..."
Snow tires are special tires made to help cars grip the road better when it's cold and snowy. They are different from regular tires and work best in winter weather.
Snow tires, also known as winter tires, are specially designed to provide better traction and handling in cold, snowy, and icy conditions. They have a unique tread pattern and rubber composition that remains flexible in low temperatures.
"...make sure they got enough tread on their tires..."
Tread is the rubber part of a tire that touches the ground. It's important because it helps the car grip the road, especially when it's wet or snowy.
Tread refers to the part of a tire that makes contact with the road. The depth and condition of the tread are crucial for providing traction and handling, especially in adverse weather conditions.
Term
RO
"...when you do arrive your ro is higher..."
RO means 'repair order', which is a paper that shows what work was done on your car when you take it to a dealership for service.
RO stands for 'repair order', which is a document that outlines the services performed on a vehicle during a visit to the dealership. It typically includes details about the work done, parts used, and costs involved.
Over-the-air updates let car companies fix or improve your car's software without you having to go to a shop. They can send updates directly to your car through the internet.
Over-the-air updates refer to the ability to wirelessly update a vehicle's software without needing to visit a dealership. This technology allows manufacturers to fix bugs, improve performance, and add new features remotely.
How did racing shape Fred's career?
Entering the family car business how?
Biggest triumph and challenge in auto?
Strategy for dominating the EV market?
Future vision for Volkswagen leadership?
Key industry challenge with Volkswagen?
Direct-to-consumer: threat or opportunity?
How has Tesla impacted the industry?
How does community shape future vision?
Select text to request an explanation
Dealers early access to our private dealer chat groups is now open join top dealers at cdgcircles.com
That's cdgcircles.com or hit the link in the show notes. I'll see you inside
They were trying to go direct to consumer under the guise of being an EV brand EV only brand and now they have a hybrid
So that changes things so what's stopping any other brand from just starting a new competitive brand and competing with their dealer body
Today, I'm joined by Fred emick the fourth partner at emick automotive and chairman of the VW national dealer council
Fred's been at the center of one of the toughest transitions in modern auto retail
Navigating EV growing pains shifting OEM strategies and the looming impact of scouts return and after years of rebuilding trust post
Dieselgate the stakes have never been higher for Fred his stores and the entire VW network a big
Thank you to our sponsors for making this episode possible lot links CDK global and
CDG circles and now let's get into the show
Fred emick the fourth on the CDG podcast welcome Fred thanks for having me on I
Surprised you with the fourth. You didn't expect that I did not like that. So like you said you did your own work
Yeah, although I'm rusty on my Roman numerals. I'm not gonna lie
So when I saw it up, wait, is this the sixth or the fourth because I remember the IV so but it's been a while
But I did get that
Welcome, it's great. It's great to have you on
Growing dealer in the Denver region
Volkswagen and national dealer council chairman. This will be a it'll be a fun conversation
Yeah, looking forward to it. Let's let's start a bit more lighthearted before we even talk about anything
I heard you are possibly a race car driver
Maybe competitive skier. I think that was what I was sorry ski racing
Tell us a little bit about this. I mean, I'm assuming you live in Denver. So you kind of fall into it
It's inevitable in one way or another but what tell us about the race car driving and skiing
Yeah, so the skiing
Start as a kid and yeah, if you live in Denver, that's why my you know, my parents moved here and
My dad particularly coming from Illinois was really interested in in skiing as much as he could and getting getting us up there and
His sister was a ski instructor and so I got into ski racing at a young age and took that as far as I could
all the way through college and
Almost did a little bit beyond that but injured myself pretty bad
Then to my college tenure and decided that it was it was time to to get a real job
Basically driving kind of came out of out of skiing
there's a lot of similarities in terms of of line and and how you hold speed and and
You can just draw you can take a lot from ski racing and apply it to car racing and I was always interested in drive
Obviously cars driving cars fast
Go-karts racing stuff like that. So
I got a chance in like 2010 2011 time period
where I could get a
free Volkswagen
Chassis and white and turn it into a race car and at the time Volkswagen had some pretty good
contingency money in the in world challenge. So we built out a car to chase some money and
It worked out pretty well
wish I was still doing it, but
Family came along and business and everything like that. And so so now I
Participate in not at the same level
Every now and then I'll jump in a car for an endurance race or something like that
We do attract a twice a year. So I'm all very cool
I'm still interested but would love to be out there all the time
So car business are you first-gen in the business because I saw you are AutoNation early in your career
Let's say roughly 20 years ago. So first-gen second-gen. What's the story here? Good question. So I'm
fourth generation in the business
Not through succession though like like you'd normally see so my father sold out to AutoNation
When I was about 15 years old
And then kind of the way that it worked is at that point, you know, he told me that when I was eight
I told him I didn't want to be a car dealer
So he sold out and didn't have a conversation with me beforehand. Okay, very literally very literally
Yeah, and I have a son who's nine. So I make sure not to take him too literally in terms of what he wants to do in the future
But yeah, so he sold out worked for AutoNation. I was obviously young at the time thought I was gonna be a ski racer anyways
Went through college ended up
You know one summer in New York City thought I was kind of going that direction and finance
Kind of like all of us. Yeah, and I think it was a aha moment
You're looking at you're looking at someone that applied to internet JP Morgan. So like all of us
Aha moment for me was you know
towards the end of the internship and the luster of the city had kind of worn off and
I used to take two subways and a suit to work and in the summer
It's just so hot and humid down there
And I'm just waiting with this crowd of people for the subway to come and basically push this rat-infested air
My way. So like a cooling feeling and I was like, I just need to go back to Colorado
And then I realized that you know when I was trying to figure out what I was gonna do next with my life that I knew so much
about the car business
That I'd kind of be silly not to take and apply that knowledge and then I I talked to my dad about getting back into it
He was really excited
At that point I came back worked for Auto Nation
He had non-compete so
We let that lapse as well as he had to kind of quit and allow it another smaller non-compete
And then we got an opportunity in 2006 with a Chevy and a VW store
Incredible so today. Are you partners with your father? I'm partners with my father
We had another business partner up until July
Who'd worked with my father since 1975 and he just recently retired
I also have
My cousin runs our Kia location and he's also a partner in the Kia store as well as
The Volkswagen store in Boulder
So you're not you're not afraid of confrontation
I saw I mean I read about that Kia acquisition or I would say that the launch of that store and
That wasn't a walk in the park
Right you you open that store about six years ago or maybe a little bit more at this point
But I right away when I was reading about you said, okay
adrenaline-drunky to a certain extent
Not afraid of confrontation so you you know you make things happen how what happened there in 2018?
You sought to open the store and you know you clearly were convicted that you can make it happen
And you did want the court
But how can you just give us a summary of that experience and why you really believe that you were gonna succeed at that?
Yeah, so so it all stemmed out of
We couldn't come to terms with our
Landlord where Volkswagen was at where the the Kia location is currently at
So I was looking for a long term
You know place where I could relocate Volkswagen own the property kind of own my destiny
Found a location went through the whole relocation
process with Volkswagen
Presented to all the Volkswagen dealers got through the protest period
So that was a very long period just to be able to move the Volkswagen store and then in the process
You know Bob who was our business partner. He was interested in hey, you know, we still have some time left here
Maybe we can put another franchise here
A Kia store had closed nearby. Maybe that's an opportunity. So we started conversations with Kia
2000 February 2019 we relocated so move Volkswagen off of this Colorado Boulevard location to Santa Fe to the new location
And at that point we actually had a letter of intent with Kia
So it on paper was gonna work out just great. We're gonna move Volkswagen. We're gonna get Kia
Also kind of realized kind of through this that you know if you if you control the real estate where the manufacturers want to be you have a
Much better opportunity in terms of getting an open point
So got the letter of intent with Kia moving forward last day in the protest period they
Two dealers filed an injunction against Kia
This being 2019
Covid hits in in 20 before they could they moved it from state to federal court
And then it really prolonged the process and it wasn't until
May of 22 that we were operating a Kia location
And that's after Kia won
in federal court
You know blocking the injunction
Well, what's your dad thinking through this entire process like
Is he like what do I need this for or is he like all in like no this this makes sense. We're gonna we're gonna make this happen
Um, I you know, we were committed to Kia at that point and and Kia
You know, they supported us they they funded the the entire
You know federal
Lawsuit, which I'm sure was was not inexpensive
And and at that point, you know, we we had the property we had a pretty good lease on it
And we were just trying to operate it
So we were running a youth car dealership out of there and the youth car dealership was was fairly successful
We were paying the bills. We're making some money
so we were able to kind of just
I guess tread water until we had a final
You know say in terms of what we were going to do
And then at that point we were going to make a decision whether we you know, obviously continued with Kia or if we were going to
Close the the area or just continue selling youth cars there
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I mean you made a pretty good bet. I'm actually looking right now at the the blue sky multiple on kia
And I mean this thing has been on a tear for the past five years
um, so
How's how's the store doing? I also know that you have led the state as if i'm mistaken in ev sales
I'm the viewer have led it for quite a while. I know it's
Likely been rocky over the past month since the tax credit's gone away
Yeah, um, so tell us a little bit about that
Yeah, so so ev sales on the kia Volkswagen side have been really robust
um
Kia stores is is doing well. Um, we actually last
In september we were the number one ev dealer in the nation
Out of colorado, so pretty good on the kia side beating the cal for kia for kia. Yeah
On the Volkswagen side, we're we are the number one and number two
ev dealers in the nation
um
We're supported obviously by a great market here in colorado where people
Are interested in evs. We have a great tax credit
um
And you know people may work in an industry or do an activity where they realize that global warming is a real thing
Um smog as I know when I was a kid here, you know, you could see it visibly with the mountains
And depending on how the wind was blowing everything like that
So I think people realize that that's the future and there's a reason to go ev
um, so
um
And with that, I mean kia continued on with the incentives pretty close to what we had in september in october
We have a chevy franchise, which you know, they had a program that was short lived
That was supposed to be a fourth quarter program, but uh, we ran it through october
But at the end of the day, we had such a rush
I think in that third quarter that we didn't see much sales
We pulled so many people forward who was interested in evs. Of course
Okay, how did you become the number one?
Seller of evs. That's a very intentional regardless of market like you have to be very intentional about that
What did you do and and also you mentioned?
Uh global warming like is this like an ideological?
pursuit for you is this uh
Simply like a financial thing like there's a demand here. I'm going to capture the demand a combination of the two
You mentioned something when you were young. I'm curious to know like how you actually
Decided like, you know, we're going to really tackle this market hard
And what steps you took to accomplish that?
I mean to begin with I per I've driven an ev for probably three four years. I believe in the technology
I love the cars
so from the top down
I really promote ev driving technology and
Whether you're doing it for performance whether you're doing it to save money whether you're doing it for the environment
There's many reasons to to drive an ev versus a internal combustion vehicle with that
I guess it goes all the way back to
Really 2015 with Volkswagen going through the tdi scandal
You know that flipping that brand to going
full-on in ev
Unfortunately, we weren't the first to market, but we were close to first to market beyond, you know, tesla
Um
And with that, you know, there's some very early investments into ev infrastructure. So we do have two public
Chargers that'll do 125 kilowatts at our vw location
Our key location is actually under construction right now and we're going to have I think two
200 kilowatt chargers at that location that are public. So we're supporting both the infrastructure side of things
We obviously when you're doing a high volume of of evs. Anyways, you need some really good charging, but it's also good to
you know support
You know driving and charging and the infrastructure as well
um, so there's that and
You know, we've gotten kind of everyone behind it almost all of our sales people drive them
um
Also because the performance the technology everything else is is really there. So it's kind of a no-brainer
When it comes to retailing them, do you believe that a dealer has to
Go out of their way to create process or I should say, you know, adjust their sales process to
Serve an ev customer in like a better way
Or do you think any dealer could be stellar at retailing evs?
Because you know, there are literally
Dealers out there who only do evs like use car dealers
And then there's new car dealers franchise dealers like yourself who are just, you know, really great at selling
new evs
I'm curious to know how you think about just the retailing side of things and you know
How specialized you need to be as a dealer to successfully retail evs at high volume
Or is it strictly a function of pricing affordability?
Put the price low enough. You'll be the number one ev retailer in the country. What is it?
Um, I think there's a combination of things
I mean for us the customers
We don't treat an ev customer different than a gas customer
Um, I would say though when we were selling a very high volume
Of evs whether it was this past third quarter
Last year whatever the time frame was
Is we did make it very easy for our sales consultants to sell them
So we had kind of templated quotes that were printed out
That you could take any trim level you could send it. It was kind of a
No negotiation deal. It was a great deal for the customer
It was a good deal for us at both sides of the party were happy and we made a lot of deals easy that way
Um, and I guess maybe the same expectation that they would have working with, you know, direct to consumer
You know brand where they're on online or something like that. So we're able to give them, you know
Basically a great quote in a very quick time frame and with no, you know going back and forth
And as someone who has really dominated the segment very well
What's your plan now with the tax credit having gone away?
Which clearly will have an impact on sales. Yeah, are you changing anything?
What's your, you know, like how to what extent is this really impacting your operations and just your go forward plan?
Um, you know right now
We're we're trying to figure it out and we knew that we were gonna have an incredible third quarter and the fourth quarter was
Going to be really tough
You know, some brands have surprised us. So Kia being one of those that's continued to support the EV business
Um, although I don't know how long that's gonna last and at what point that adjusts
um
But with our Chevy and vw business now, I mean we're
We have to would now wait until that market realizes that they're willing to buy an EV for the same or more
Um, then what a nice car costs, which was not the reason that we were extremely successful
I would say the last year and a half. It seems to me like the pulse I've
um
I I've sort of uh picked up on here is that the use side
The used EV business is still doing pretty well. There's been a slight slowdown since, you know, the
The credit's gone away. The new car business seems to be going through a very tough time
Much more than the used car business
At least on the EV side
um
so
Well, let's talk about
You're also the
We haven't talked about vw. You're the chairman of uh, the national dealer council
Why'd you decide to you know, why why did you pursue that that role?
I don't know if I'd say I pursued it. They may have pursued me for that role
um
I've served in many boards
My drop
Uh, you know, I mean at some point, you know, that's a that's a tough position to have and um
You know, not everyone wants wants that position. So
Um, I did have my predecessor
Contact me pretty frequently looking hoping that I would take the uh baton from him and and continue on so
I add a little bit of pressure to to take the position. I'm glad that I did
um, it's certainly
I I mean the leadership has definitely improved with uh, kel gruner
Um, so looking forward to that, but it's going to take some time at vw for them to to really turn around the brand like they need to
Um, so right now we're we're kind of putting, you know, band-aids on
Trying to to sell whatever we can and and know that, you know, it's going to take some
incentive some marketing
Uh to get the uh the demand to to where it needs to be and then they need to fix the product and the quality and and have a
long-term strategy
That that that was going to be my question, you know from what you can share
It seems like there's a product issue and I don't know what it is, but I when I see
You know sales slumping
I think incentives and marketing is is one thing but product to me is the root cause in many cases
What do you think needs to change there your opinion?
Uh, what's wrong with the product?
So I mean one one thing is we don't have a hybrid product
So, you know, we're either ev or ice and now the the ev strategy is is totally changed
So we're pretty much stuck with with ice. Um without a truck or, you know, large suvs
So we're typically hybrids are are succeeding in, you know, the segments that they play in
Um beyond that, you know, there's been some quality and some reliability issues with with the products
Um, there's been some corkiness with some of the software the infotainment
And stuff like that that that frustrates customers. So getting ahead getting that stuff fixed ironed out
Um getting some software production
Um here in the united states versus europe whether that's rivian software that
That they know is is working really well
Um or or something else, but mainly iron out a lot of the software bugs that they've had
Uh as well as just some of the general reliability with the brand that they've struggled with over the years
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And and what would you say is the mood amongst?
The uh, you know the rest of the council and the dealers how how just what's the feeling in there?
I'd say that the mood is pretty low right now. I've been contacted more recently than in other times and
Um, you know, everyone's seen this the nissan letter that's that's floating around
Yeah, so we've certainly had some direct conversations with with
You know
Volkswagen executives whether they'd be here locally or with the brand board
Um, but you know, I think we're kind of reaching those levels because our return on sales is very similar to
to nissan return on sales
And it doesn't necessarily seem like we have this master plan to get us out of this in in the short term
And do you feel like you have the right tools at your disposal to really effectuate change?
How do you what's your feeling being in the position you're in today?
so to
Make change with the brand
Yeah, so I mean, I understand that you know my role. I'm not going to go in there and change how Volkswagen
You know ag does business
Um, you can see that with what they're doing with scout
Um, as they continue to to push forward
And we're pushing back as as hard as we can and and letting them know exactly how we feel
um
But you know, we we hope to have some little wins and to make some little changes and to
You know at least
Let make sure that the the executives understand where where the dealers sit and
Um, you know, my hope also too is the relationship was pretty strained a few years ago
Is is to kind of bring that relationship and try to work together
Um, so that we can make some positive changes
Mm-hmm. You mentioned scout and I think back to for that, you know walked back under direct consumer murmurs over the past couple of years
Do you do you think that something like that could happen with dw as well? I hope so
Um, I I don't know if that's going to happen. They seem to be continuing to to put in a lot of investment into scout
Um, Scott keo seems to be you know on bloomberg and different who's um
You know
Basically talking about the investment how they're moving forward how they're going direct to market
I think the wrinkle now is
I know at least here in the state of colorado is is they were trying to go direct to consumer under the guise of
Being an ev brand ev only brand and now they have a hybrid
So, you know that changes things
So what's stopping any other brand from from just starting a new competitive brand and competing with their dealer body
The whole direct consumer stuff for legacy oems like existing oems really baffles me because I i'm trying to understand
What is the real reason if you say that it's consumer experience?
I would I would argue that
That is not
You know claiming that you can do it better as a you know from private from from home base as a d to c
There's zero
There's zero signal or reason to believe that you can do it better. I don't think looking at tesla is a good
Analogy like you're you're putting them like arguably not arguably the number one entrepreneur in the world
As the CEO of that company they can do certain things that
You otherwise likely cannot that's the first thing and then the second thing is if it's all about the money
You know if they say follow the money and if it's all about capturing more value from the value chain here and you're trying to
Be the dealer
That's an entirely different business model
um
Right which you now have inventory risk at a much greater level. So I I don't know. What am I missing here?
I don't I mean truthfully
I didn't think tesla was going to make it based on the burden that they were going to have to take on
based on
You know when they actually did sell volume of cars trying to service all those cars
You know and from
You know, I think it's tough. I know when we trade for a tesla
Sometimes we're on the phone for at least 45 minutes to try to make a service appointment
And that could be several weeks out
And you see a lot of things that like if that exists in our dealership. There's just too much competition. We would go away
um
And
From a scout perspective. I mean it's it's a vw brand
So if if they produce the same product that they give us
I mean it's going to be really really difficult for them to
To service all those people out of very limited
Um, you know capacity footprint and employees
I honestly don't know how it is. Yeah, I it's I just wonder I wonder what the conversations look like behind closed doors
Like I'd love to be a fly in that wall and just see what assumptions they're working with
and
you know
How they're arriving at these conclusions that this is the smartest thing to do
at this point in their
Uh and in just the life of the brand especially when the brand is having its challenges
The product is not where it needs to be. You know, it's like my I grew up in a household where
Philosophically like what you were what you did was you built a strong foundation and then you went on to the next thing
um, and if the foundation wasn't strong
you
You said away once I can hold on let me fix let me make sure house is in order and then I'll do the next thing
I've actually really applied that today and you know in car dealership guy and what we've done and the launches
We've done and all that but even you know in the dealership, you know
The one time I didn't do that
Was the one time where things really did not go well
when you know, you try to kind of
Bite off too many things at once when things are not in a strong position
And then you end up losing it all and so it makes me, you know
I think on a much bigger scale with Volkswagen
It's you know, you like your dealers need you right now the market needs you
Inventory the product like you said incentives like things need to be done the right way
Why are we why are we channeling our energy in so many different directions when we're not doing the core thing that we set out to do
Well right now
That those are the exact conversations that we're having with Volkswagen right now, you know
attention
you know if
You need to support you they tell us that we are their core business then they need to support us with you know
Like we are their core business and not continue to spend billions of dollars on what what I call their passion projects
Unfortunately, it seems if you if you follow the money that the the money is going into these passion products and not to support their core business
their quote-unquote business which you know, they're
Both both Volkswagen Audi and Porsche dealers and I've heard yeah, I've heard some stuff from Porsche as well
Let's uh, let's zoom in a little bit. We've talked a lot about, you know, macro big picture
But I'm curious and you're in your own dealership as someone who is uh, you know
I'd consider you a forward, you know forward thinking, you know more progressive dealer
And also a cdg circles member. Thank you. You're part of our dealer chat groups and peer group
And if you're listening, you should join as well cdgcircles.com shameless plug
Um, can you tell me a little about what are you doing in your own stores nowadays? Like how is this buying?
Uh car from emick evolved over the last year whether it be ai technology staffing
I'm curious to know what what would uh the vibe in store feels like nowadays and what's different
I don't think we've transitioned all that much in the last year. I mean ever since we started
I came into this business, you know very young as a dealer and a gm
that we were ahead of the game and
You know, we are showing proposals with interest rates and no
Fluff or anything like that. We're straight to the point
We're going to give you a fair deal and and from the start and make it as easy as possible
Sometimes you know haggle negotiation or no haggle pricing. What are you? No, I'd say like we're no hassle
So I mean we price all the used cars exactly where we want to transact them
I worked for auto nation for a while. So I realized that you know, if you go hard
No haggle and you don't negotiate at all
It's you know
If someone wants $200 off the the price of the car to make the deal and and then they feel like they won
Then then we're going to go ahead and take that deal and move on
If they want a couple thousand dollars off the price of the car
We're going to have a discussion in terms of why the car is priced that way
Um show them comps and and and sell the value in the vehicle
I mean other than kind of going through that that heavy EV push
To where we enabled, you know, all of our sales consultants to to have these quotes and
Not go through a sales manager
To to get someone a quote to take a deposit and and move forward with a vehicle
Um that we're just kind of these these canned quotes for these different trim levels and and miles per year on on leases
Um, I wouldn't say that we've we've changed much. We've just kind of stayed true to who we are which is
Taking care of the customer and taking care of our people
And what's your financial model when you were selling EVs prior to the tax credit being removed?
Were you banking on any front end margin? Was it all back end? Like how did you think about the economics of that sale?
Uh, we had to bank on some front end margin because
90 percent were two year leases
Uh, and the f and i opportunity on a two-year EV lease is is not as good as
Another opportunity. So, uh, I would say our teams did very well despite, you know
Dealing with two-year EV leases on on the f and i end
So we were happy with that, but we definitely had to make some front end margin
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And what does what does service look like?
I'll see and how's it impacted your service department
So ev sales on the kia and
You know, I guess we're talking
22 23 kind of time
Period that we really started selling those cards a little sooner at vw and more volume at vw and we have two vw stores
So we see the collection of of service at at vw being pretty good
Part of that has to do with you know, we have seen some repairs some battery repairs same with kia as well
So those are usually some high dollar repairs
But we've actually been happy to see that people are pretty loyal to come back to the dealership
For like an annual service
There's not a lot of competition in the aftermarket for that. So at this point, it seems like
Ev maintenance is standing up and the the repairs are are pretty good as well
Interesting. Okay. So you're seeing customers
You said you did a couple batteries were those under warranty? I assume
No, way more than a couple batteries
Or you've done many batteries, but were they all under warranty any customer pay there? No customer pay yet
Every customer pay
Okay, and what about tires? Have you brought those in-house? Is that like a bigger a bigger thing for you now in the service department?
So tires
We
Generally work with dealer tires. So through the the oem. So so nothing necessarily special there
You know, we do they run a promotion by three get one
Several months a year. We do well with that promotion
You know being in colorado we get weather
There's a traction law as well. So if you want to go up to the mountain
So that helps us sell some snow tires and make sure they got enough tread on their tires, but
Certainly evs go through tires
Blowout tires based on their their weight as well. So
Um
When they come back here, we obviously do our best to sell them tires
So what's the punchline for dealers that are maybe reluctant?
Uh, or maybe share your brand. Is it like lower volume higher ro when you think about evs?
Is that is that the case to be made or is that incorrect?
Or I should say lower frequency like coming to the dealership service once a year
But when you do arrive your ro is higher
What's the ultimate that's all we're seeing? I mean
Typically we'll have a lot of recalls software updates
um
You know the the car's driving fine, but you know on the back end they've they've updated a bunch of stuff
And particularly on the volks wagon side, they've struggled with the over-the-air updates
So we've still had to continue to do those in the dealership now
That's something that probably will change in the future
When we do lose those software updates and some of the recalls that they can do over the air
Interesting there
Fred, what about AI? I know I mentioned briefly technology. Have you deployed any like voice AI any chat AI text anything?
Any like standalone AI systems other than of course, what's baked into your pre-existing dms and all that?
Uh, we use Numa which which has some AI in it
We're also voice. Yeah, we're piloting some some AI in the office right now
Um, so to to post certain things and to do some things and in the dms that um,
You know right now just take manually manual entry being able to read the invoices input them
Um, so we're working with the vendor right now on on piloting something like that anything particularly
Exciting to you nowadays or is this right now wartime like tax credits gone?
We had a large percentage of our business focused on that. We got to readjust quickly
Is that kind of where that's at? It's pretty much wartime at this point, but we've always like it
Uh, we've always been focused on fixed operations
So a parts and service business and making sure that we have a really strong foundation there
And that that can support the ebbs and flows that that we get in the in the variable side of the business
Yeah, what do you typically hover around like absorption levels and fixed ops?
Uh, the vw stores close to 70
Um, you know key is just growing. We open that store in in 22. It's new. Yeah, it's new
Um, and at our Chevy store, it's it's probably in the 60% range
Good stuff. Yeah
What haven't I asked you? I feel like we've talked about a lot
Uh macro we've talked about some in-store
Uh, you're probably right now day by day with the ev stuff
As you're readjusting what else didn't I ask you?
I mean, maybe about our community involvement and what we do there. I'm about it
I do have culture in down here and I have a couple points. So what's your what's your just philosophy on culture and community involvement?
How are you going about that?
Uh, I mean, I take them as two different subjects. So can community involvement which actually I think helps build the culture
The way that we do it
Is we have a board called emick cares
So it's I think it's 10 or 12 employees between the four dealerships
We can have bylaws that is certain, you know positions and departments and dealerships. So can we have fair representation?
But the idea is they meet once a month. They have a budget at about 100 000 a year
Um, and they they spend that as they see fit on philosophical projects
Um, we also do some employee hardship stuff. Um, so if there's you know, they hear that there's some employee that
Had an issue or something like that though
They'll look at that and then make a decision on, you know, supporting what employee in whatever way that they can
So I like how it gets everyone involved. It's not me making the decisions on on
What we're donating to and and who we're supporting and that there's actually some some thought that comes
You know with it and that the employees feel, you know invested in the process
That's nice. So it's basically bottoms up
And the employees actually get to make the decisions here
Um, and is this like a monthly thing quarterly? How often do they do this?
They meet monthly
Oh nice
They rotate between the stores and they meet month monthly
And what what have you supported recently?
Oh all sorts of things. So we just had our golf tournament
um
And then that supported a charity that that gives
Meals to to families that can't afford it, which you know right now what's happening everything like that is
Is probably being felt huge. We support different things that support, you know battered women
Tons of different projects, um, very cool
Almost I think, you know, they they pick and choose too many where maybe we need to focus more money with with one project
But it seems like we we spread it out pretty well
That's good
How do you think about the future of emic and do you
Do you want to leave a legacy? Do you care about that?
Uh, what's your kind of long-term vision?
Yes, so my long-term vision is
To hopefully work with you know my son or my daughters
In in the future and um family in the game. Yeah
Um, I don't want to you know, just pin this up to to sell it
Um, I like what I do. I love the people that that I work with
And I want to continue to do it and I hope that you know someday I can
You know pass this on to you know, whether it's my kids or someone else and uh, you know continue on
Incredible
Well, dude, you have a great story and uh, you're a mover and shaker
You're you got a lot on your plate and you're growing
So it's really cool to see again. Thank you for for for being part of circles
We're excited to have you there and to grow that with you as well. And um
With that, I I hope you I I am going to be very curious
You know, I I almost want to extend an invite to have you come back on daily dealer live
In a month or two because I'm going to be curious to see how you have
Navigated the business through the the EV
blip right now, so
Um, but I'm sure you'll figure it out. You're you're a smart guy and you're convicted and you're not afraid of confrontation
So that's my assessment at least
Fred emick emick automotive Fred emick the fourth emick automotive Fred. Thank you so much for coming on the pod
It's been super super insightful. Thank you. Thank you. Have a good one
All right, hope you enjoyed that episode
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Thanks for tuning in. I'll see you guys next time
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