Derrow on Auction Lane Grades, Holleman on Lenders, Kaulback on Subaru Strategy | Daily Dealer Live

Hey everybody, welcome to another episode of The Daily Dealer Live.

I stumbled over my words there. Welcome everybody. This is the space where all

automotive comes together to join, to learn, to grow, to share ideas with each other. Thank you

for joining us today. We know you've got a choice about how to spend your time on this Wednesday

afternoon, November 5th, whether you're a dealer, a vendor or someone just passionate about where

automotive is headed. You are in the right place. Let's jump into it. First up today,

in the news, Michigan regulators have suspended the dealer license of Lafontaine Chevrolet Buick

GMC of St. Clair accusing the store of selling more than two dozen vehicles used as new. The state

first flagged this practice with the dealership over a year ago. The store has issued a fine

and placed on probation for 18 months. However, during a recent investigation this past September,

state regulators claim that Lafontaine Chevrolet Buick GMC was again in violation of this rule

in a statement. Lafontaine said the situation was due to a clerical error tied to Michigan's outdated

titling laws. The group says the rules conflict with automaker programs that treat loaner or

rental cars as new and eligible for full incentives and warranties, something that's allowed in most

other states. What's the kicker here? Lafontaine Hyundai of Livonia, another Michigan dealership,

was suspended for one day last December and they were fined $25,000 for the same issue at that

point. So I know the Lafontaine group is a personal side note and editorial. Good folks, great

operation. We'd love to have them on the show to provide their counterpoint to this news twice in

a year is odd at best. So next up today, a new report says dealers are leaving serious money on

the table because of mismatched payment quotes, otherwise known as the gap between the monthly

payments initially quoted to customers and the monthly payments that lenders actually approve.

According to Elan solutions, more than 80% of dealers say lender approved payments usually

come back higher than the initial quote. And those mismatches are costing the average store

more than an estimated $500,000 per year. That's a lot. Excuse me, roughly split between lost

vehicle sales and missed FNI revenue. At scale, that's a $4.7 billion hole across franchise

dealers nationwide. Bottom line here in a market where affordability is already the number one

reason buyers pause, every small payment discrepancy can compound over time.

Turning now to a big product update from Stellanus CEO Antonio Felosia during a recent briefing with

Wall Street analysts, Felosia shared that Ram will have a quote much more comprehensive product range

by adding a Michigan made SUV to its lineup and will debut besides the Dakota midsize pickup in

2028. The SUV will include an internal combustion engine ice as well as an extended range electric

vehicle era variant. For dealers, it's likely a small overdue move to keep the brand competitive

by building what customers actually want right now. But only time will tell if it actually

materializes. And finally up to a ally financial is trimming its workforce again by cutting about

2% of its roughly 10,000 employees, mostly at the manager level and above. In an email to staff

obtained by CDG news CEO Michael Rhodes described the move as a restructuring effort to simplify

reporting lines and quote free up resources for growth and innovation. Impacted employees will

continue to receive full paying benefits through early January along with job placement and career

canceling support. Big picture. This is ally second round of cuts this year following a similar

reduction back in January, which suggests the lender is tightening up for a tougher economic stretch

like many others right now. And that is a wrap on today's industry news.

Yuli, welcome back to the show man. It's good to have you back.

It's excellent to be here as always. So I'm fascinated as we hear about ally trimming up a

little bit. Is it AI driven? Is it tech driven the need for a smaller headcount or is it a canary

in the coal mine for things that are coming up in the economic space? I don't know.

Is it bad to say it's one of those wait and sees because I mean, I think any one of those

roads is plausible. Yeah, could be. All right. For everybody joining our live stream, we're live

across as we always are across all CDG social media platforms. Post those comments. We'll bring

them into today's show and what a show we've got for you today. We'd love to hear as you shout out

in the comments too. Where are you listening from? What are you doing right now? And what are you

doing on this fifth day of November? Whether you're at the desk, whether you're desking deals,

training, whatever you're doing, we'd love to hear from our loyal listening audience. But first

up, let's jump into the owner of Finlay, Chrysler Dodge Jeep Ram, Cable Darrell. Welcome to the show.

Hey, Cable. How's it going, guys? Cable, it's good to have you here with us. Thanks for being here.

So, hey, before we dive into the topic you came and joined us with today, tell us a little bit

about yourself and answer the question we ask everybody here. How's biz, Cable?

It's a record month last month. Best month we've had about COVID months, really.

Mainly used car store. Last month we did 203 used, 21 new, so our new cars have struggled for a while.

It's become a focus now, so we're getting there. Yeah. And you're in Ohio, so you're

still in us in Ohio and you're finding ways to use right now. Yeah, so we invited you on because

you posted out into the world an interesting post that gave some insight into condition reports.

Tell us a little bit about what you saw, what you noted, and why does it matter? Talk to us about

your post. My experience, and I'll do this to say that, but just based on our experience

that we've had, we're running into a lot of discrepancy. I've got cars I'm buying that are

5.0s and we're checking them back in. We're getting them home. We're checking them in. They're not

5.0s and we check them back in at the auction and they're 3.5s. We do a little more research into that

and there's favorable sellers and it's just been difficult. It's difficult throughout the

auction industry. It's hard enough to buy the cars. It's hard enough to absorb the fees and then to

get terrible service. It's no fun. They've taken the fall out of it. So let's talk about in Ohio,

why does it matter that the condition report matches its actual condition? You buy something,

you put a dollar amount on it, it comes to you, it's not the right condition. That matters because

it impacts what you're going to pay for it, how quickly you buy it and what you're able to retail

it for, right? Yeah, I mean, we're fairly high volume and I wouldn't buy the 3.5. It's turn,

turn, turn. It makes it very difficult and then you're chasing your money back.

You've got a million dollars in cars that are non-sellable and then you're chasing your money

and it's just frustrating and it gets old. So Cable, we talk often on the show about what's

the best source of used car inventory in today's marketplace. So you sell more, use the new.

What's the number one source for you for that ideal, perfect used car? I would say 75% of

our inventory is out of Canada. We're kind of in that hub, that Midwestern hub. There's a couple

different ports. So Cable, that goes back and forth. Sometimes it's good to import from Canada,

sometimes economically it doesn't make sense. For our viewing audience that may not be aware,

what is it about right now that makes those Canadian vehicles more appealing to you in Ohio?

I don't know if it's appealing as much as it is, it's availability. I mean, where we're at,

there's just not enough vehicles out there. They're just not out there to buy. If I had to

buy all American cars, we'd barely have any cars in stock. I think it's just supply and demand more

than it is. It's what's out there in this area anyways. Is it a tough process to bring a vehicle

cross-border for you? Do you have to go through quite a checklist? That kind of goes to the

a good CR. If you're buying at the auction, if you're buying at the sale, it's bonded,

the titling's done, everything's done. So that part's pretty easy. There's some, I mean, there's,

if you're buying direct, there's some hold times, there's a 30-day hold.

Some other hoops you have to jump through, but it's fairly, they've got everything figured out

for the most part. All right, so walk me through this. You said in your post that it's Detroit

in Flint where you're seeing the discrepancy the most. Do you have a way to appeal the condition

report once you get it and get it corrected? Is it a lengthy process? I mean, you file an arbitration

claim and it takes two weeks for them to get back to you. Okay. And then eventually, do you get a

response or no? You'll get a response that, you know, the condition report is not a buyback program.

You know, I mean, they'll offer you an adjustment possibly sometimes, sometimes it's just pound

sand. Interesting. It's just frustrating. It's super, super frustrating. So why do you think the

number is wrong? Like, what's, what's the benefit of the seller? I mean, obviously, there's a benefit

of the seller to put the wrong number in, but what's the benefit of the process or the system to allow

that incorrect number to go all the way through? Do you think it's just an oversight? Do you think

it's intentional? Do you think it's preference? I think the high volume sellers have been allowed

to write their own ticket. Okay. You know, we have multiple instances of cars that are

anywhere from two points to half a point adjusted. I mean, it's,

there's clearly some favoritism and some control by the sellers. And I'm okay with that. Just tell

me that. But if you get caught with it, take care of it. So have you calculated what the

incorrect number on the inventory you've been purchasing? How many vehicles would you say are

impacted? And then what do you think the financial impact is over an incorrect CR?

I mean, over, I would say there's, it depends on who you're buying the car from.

Yeah. You know, that's, that has the biggest discrepancies.

What's your bread and butter car in your market right now? Like, what's your,

your average transaction price? Two to three year old, two to three year old trucks and SUVs.

Okay. Yeah, I mean, I think my average cost right now is about $40,000 a unit. So

all in, we buy and sell a lot of, you know, 60 to $80,000 vehicles. That's, I would say that's

kind of our sweet spot as far as, you know, our volume stuff is a higher dollar stuff. And,

you know, you buy a 25 escalate for $100,000 and you get it back and it's, it's been, you know,

by a train. And then you, you know, it's just that, that's the difficult one.

So yoga cars asks the question online, are the issues always from the same seller or

there are different sellers that are seeing this impact?

It's, you could say that.

Consistent. Okay. Yeah. Yeah. I mean, it's, there's clearly an issue and,

Yeah. You know, you hate to say it sometimes because you don't want the backlash either,

but it's to the point where I've just basically, we're finding different channels to buy the cars.

Yeah. You know, direct from the sellers, direct from some sellers, you know, skipping the auction

process completely and just building relationships with, with individual sellers.

You know, we found out that's the best way to combat it.

So is it a Canada issue? Is it a, is it a network issue? Is it just a supply-demand issue?

In your opinion? I mean, it's, the better the report, the more money the car brings.

For sure. Yeah. Yeah. I mean, it's pretty.

So it's a fascinating problem in today's world. There are not enough used cars to go around and

many would project that that problem will continue. We've got potential chip shortages.

We've got some production issues from new car manufacturers. Some of the smartest people that

you would talk to today are going to say, Hey, you're going to see used car prices gently escalate

over the next six months, let's say. And so if that's true, finding that great used car is going

to become a huge battle in the coming days. And I think auctions, brick and mortar and online are

scrambling to get as many vehicles as they can inside the auction. What advice would you give

to these auctions, both physical and virtual regarding accurate condition reporting?

I think they have to, accuracy is the thing. It's, I think it's tough. I think it's a tough pill for

them to have to, to swallow, but I can't imagine I'm the only guy that gets a, you know, that

thinks one thing and you get another and you get it back. Yeah. So Dan C, Dan C in the comments

says, Are you glad? Yeah, you're fine. Dan C in the comments says, Are you buying these vehicles

remotely or do you have a buyer on site who could review the actual conviction versus relying on a

CR? I would say 90% of ours are bought virtual. Yeah, I mean, they're semi-cast. Yeah. Yeah,

that's interesting. Yuli, what's been your experience? Do you have some appeal? Can you go

back if you buy a vehicle and it's the incorrect CR, you dispute it? What's my path to appeal that?

What he said is accurate. I mean, if you get something that's misrepresented, you know,

mechanically or has some issues, there's, there's some limited clawback. But I think, I mean,

first of all, you're doing high volume use vehicle sales. I mean, 200 plus use vehicles is,

is awesome. You know, most dealerships would love to be at 200 plus. So when you're in and,

and buying the vehicles at that scale, if you have to slow down, I don't know what your mix is,

but if you have to slow down for 10%, 20%, 30%, I mean, you can fill in the dots there.

That's a tremendous amount of momentum lost and, you know, frozen capital just sitting there.

So it makes sense. I mean, I think that points to a larger issue at the auction level, right? If

you're allowing them to score their own cheese and they're consistently doing that. I mean,

there should be something in the back that could, you know, be at least punitive for the seller

or maybe put someone on someone's eyes. So Yuli, does the auction right the CR or is it the seller?

In this case, based off of the volume, it sounds like they're allowing the seller to

write the CRs. I mean, in my experience, it's always been allowing them to adjust them because

in mine, they would always check them in. If we shipped the car to auction, they would check them

in and they would score the car, irregardless of what I scored the car. Yeah, the same thing.

That's the same way with me, but you know, I understand the high volume where they need the

cars. I mean, you get it. It's just, I feel like it would be nice if, okay, you got caught,

pay me the money back and let's move on. And again, it would be bad enough if it was a couple,

but if you're doing the volume that you're doing, I mean, there should be someone in your corner

fighting for you. For sure. So Yuli, AW Hitton 24 online is disputing a little bit what you're

saying in terms of who writes that CR. He says, look, we're one of the largest sellers of Canadian

vehicles. The auction, in this case, they say Mannheim writes all our CRs. He says, he goes on

to say some sellers write their own, not all. So I guess it's, he first said it's the auction,

and then he said sometimes the seller. And I will, I don't know, I know of, I don't know who

exactly A Witton is, but I know a different Witton that I'm assuming the same group,

you know, and there's relationships you have with them. They've been great. If I call

John, he takes care of it. I mean, it's, you know, there's other ones that it's like fighting tooth

and nail. All right, so give us, give us a solution. You've identified a problem. You've

identified how much money it costs. You've identified the impact to your business,

not to mention just the headache nightmare. What would you want to see from auctions and sellers

to help guarantee that CR or to help you buy with more confidence?

I mean, it's accuracy. It's, you know, you can't, the car is what it is. If I buy the car to 5.0 and

I check it in three days later at a 3.5. Yeah, it was never a 5.0. You need someone on the ground.

Yeah, there's either a gift card in the mailbox with this for the CR writer or there's,

it's a car business. I think we all understand that there's things that happen.

Well, we appreciate you sharing this with us. We appreciate you bringing this to light and

creating a conversation out of it. It's amazing. You know, the comment section is a light with

different comments and feedback because truly in today's economy, buying that great used car is

job number one. Like we have got to be able to buy it. You got to buy it right. And then obviously

time to front line, you know, days to actually selling that matter a ton. But finding a place

where you can have that confidence to buy, you know, it's a huge challenge. So transition a little

bit with us, Cable, because we didn't get to know you a lot. We brought you on because of the post.

Tell us a little bit about what, what's something you're working on right now aside from the CR

issue in your business? What are you, what are you struggling a little bit in the last 12 to 18

months as far as getting our volume back up? We've really increased inventory lately. I mean,

that's been the biggest thing is trying to increase inventory. And it's starting now to,

you know, to we're starting to benefit for some of that. Yeah, we're trying to keep the

turn going, trying to, you know, just create smoother processes to keep what's your turn.

We're probably about nine, nine to 10. You know, we want to get to 12.

For sure. And it's, it's tough though, especially it's nothing ever runs perfectly. And you're

always going to have a car that's cogs the system down a little bit. But I think right now we're

about 7.7 days, timed a lot. So just tweaking, tweaking basically everything we're trying to get

done right now. Yeah, well, Cable Daryl owner of Findlay Chrysler Dodge Jeep Ram. Thanks for joining

the car dealership guy daily dealer live stream today. We appreciate it. Sounds good. Thanks,

guys. Thanks for sharing your perspectives. Interesting challenge, right? Like if you

allow the seller to write their own CR, that's a challenge because then, you know, what, you know,

how do you appeal that? If the auction does, there's got to be some way I it'd be fascinating. And

it would be super fun to hear how other dealers are dealing with those. And again, I'm not sure

it's the auction fault. I'm not sure it's the seller's fault. The challenge is in today's marketplace,

there's a lot of competition and pressure to buy that perfect car. And yeah, we'd have to find out,

you know, who's grading the car. Are they working for the auction or they direct rep for the seller?

You know, it would be interesting, especially with those higher volume guys. Yeah. All right.

All right, we're going to turn and we're going to, and I kid you not, the timing of this is just

coincidental, at least as far as I know, I just get the script, but let's talk CR stream. Hey,

dealers. I mean, this is too good. Hey, dealers, put the power of multiple auctions in your hand.

Use CR stream to sell vehicles on multiple online auctions fast. You only pay a $150 flat fee,

flat selfie to the auction. That's it. Register at CRstream.com today. Click the QR code for

more information there. And you got to be kidding me. We were just talking about condition reports,

CR. I'd be curious how they come up with their, their number. Avoid some headaches.

Yeah. Yeah. And then let's talk. So props to CR stream for supporting today's content,

including the conversation we just had there. And obviously, Yuli, we've talked a lot about

the NADA party for anybody looking to join us in Vegas on February 5th. The car dealership

guy party is the hottest ticket at NADA 2026 with special special guests and top automotive

personalities to be considered for a formal invite. Just hit the link in the show notes,

request to join and fill out a questionnaire. Spots are limited. And unfortunately, we can't

invite everyone wish we could, but to come have the coolest conversations at all of NADA meet

some of the best people RSVP today and we'll hope to see you in Vegas. So, and then a couple of other

comments in the stream here from Robert F. What about a universal CR without human subjectivity?

You know, that's something that AI could solve for. I love that. So

that would be super, super fun. So what's that machine? I can't remember the name right now,

but you drive the car through and it points out all the blemishes. UVI is a product. So GM is

partnered with UVI and they also offer an individual store. So yeah. All right. Next up,

let's go to Will Holman, automotive sales at Equifax. Will, welcome to the show.

Will.

Hey, how is everybody? Thank you for having me on, gentlemen. I appreciate it.

Thanks for being here, Will. So, hey, tell us, how's Biz? What is your Biz? And tell us a little

bit about yourself as part of that, Will. Yeah. So we'll start off with a little bit about myself.

Get that out of the way. I got into the car business because I love my girlfriend in college.

Her family owns a handful of car dealerships here in St. Louis. You know, I didn't grow up

thinking I would be in the auto business, but here we are, 15-year strong. And so the

Davidson-Claire dealership here in the St. Louis area has got a strong brand, a strong recognition.

Her grandfather built these dealerships here in St. Louis. Still very family-run businesses.

My sister-in-law is the GM for the Lincoln stores, cousin-in-law Tommy's running the Ford store,

and I'm still very close to that. So I just decided to take a different path and get into

nine-to-five job. You know, that first Saturday off where I didn't have to go into work was

kind of different, but I've been at Equifax almost 10 years now and run a sales team here where,

you know, shout out to Jennifer, Jason, Jody, and Brian. We work with all kinds of auto lenders

from subprimes to captives to big banks to buy here, pay here, and we sell income and employment

verification data. Oh, interesting. Income and employment verification data. So it's interesting.

How much more of a frequency of employment and income fraud have you seen as payments escalate

and as we've kind of gone into this world of weird economy? Do you have any stats on that?

Right, yeah. There's that natural inhibition to bump up that gross

income on the credit application in this day and age as everything gets more expensive.

One of the studies that we've done shows that, and this is wild, it might not surprise a lot

of people in the auto industry or have been around the industry that income is misrepresented quite

frequently on the apps for credit, but 52% of all income that we see stated income is misrepresented

by 20% or more. That's not just the underrating, but overstating as well. And so, like I said,

who is misrepresenting will in your experience? Is it a tumor misstatement? Is it an employee

misstatement? What is it? You know, I think it's a little bit of both. There'd be a lot of

everyday Americans that, you know, if you press them on, how much do you make every month?

You know, they might not know the answer to that.

Unless they're in the car base.

Right, right. And you know it down to a T and you can do the math and say,

this is how much I make a week times that by 4.3 and, you know, you got your monthly.

You know, and I was in the front of the house. And so we, I think it really depends. We had a

really reputable business. So we didn't see a lot of that. You know, obviously there's,

there's some bad actors that are all over the place. One of the people that come into the

dealership with fake paycheck subs that they made through AI or whether you have, hopefully,

you know, it's just a rogue F and I guy that is, you know, bumping up the monthly income because

he understands the deal structure and understands what it takes to get bought. I think it's a

lot more consumer pushing and fraud as, as incomes are challenged right now. And as payment

affordability is a huge challenge. What tips would you give to a dealer, to a finance manager,

to a GM, things to look for to make sure that it's accurate as they put it on that credit,

as they, as the consumer puts on the credit application, as they send it across to the

lender? What, what should we be watching out for? What are red flags?

Yeah. And so, you know, really the F and I person at the dealership is the first line of

defense. And, you know, with a strong dealer principle with strong GSMs and GMs, you have to

build a culture inside of your dealership, you know, a culture of integrity. And there's all

kinds of tools out there. There's obviously our income and employment verification product

that we sell. But, you know, I say the more data that you bring in to the consumer experience,

it might be counterintuitive to think that that's going to speed things up, but it's actually going

to make things more secure in the long run. So, you know, dealers can be hesitant sometimes to

bring in more data, can be hesitant to spend on that. But, you know, it's, it's becoming ever more

important because of the ramifications on the back end from lenders. You know, if you get that

wrong in the F and I office, you know, there could be a pretty big check coming out of your monthly

the stroke for a buyback or a car gone. So, how does your technology verify that income, Will?

Yeah. So, we have the work number database is an income and employment. It's the largest income

and employment database. It's instant. We have over 4 million employers that report to our database

close to 200 million active employment records. And so we partner with employers. We partner

with payroll providers to get that information. And really, it serves our goal, which is to help

people live their financial best. And so, you know, we're able to share the income and employment

information with lenders, not just in the auto business, but, you know, mortgage business,

personal loans, credit cards to help people who may not have access to credit, you know,

prove themselves as as being worthy to buy. So, you know, we have all kinds of information,

hundreds of millions of income and employment records that we're able to share, not just in

the consumer lending space, like I said, but, you know, it helps people qualify for government

programs. You know, we try to do a lot of good with the information that we have.

So, I got a question in this highly competitive lending environment, like banks want to make a

great decision. They want to make an accurate decision. Auto groups, we want the right decision,

the accurate decision. To your point, if it's not accurate, it's going to come back, right?

Nobody wants that. With all the technology that's out there, why don't most lenders

just implement this technology as part of their underwriting process? In fact, I'm curious,

two things, the income piece, but then also the vehicle valuation piece. Technology would make

that so easy, Will. Yeah, I can address from a lender standpoint the income and employment.

We had an auto roundtable where we take some of our biggest and best clients and, you know,

we get the voice of customer. That's how we do things around here. When we're building product,

when we're looking to develop strategy, we want to hear from them. And we had this about a month

ago, and the biggest word that came to mind when we heard all their feedback was balance.

It's the balance of when to apply that friction, when to verify income and employment.

Hey, how's that balance?

Well, you obviously want to, and this plays a big role with fraud, but you want to make sure

that you're verifying income and employment on the right people. You want to make sure you're

putting that friction in where it needs to be on those right people while not

displacing those people that want to go through that process very seamlessly,

because, you know, nowadays with the ability to apply for credit, buy a car over the phone,

there's a lot less tolerance from the consumer on friction in general.

So how friction- how friction- that's not a word. How friction-based is employment

income verification? Is it a database where that data just resides and it's a

simple poll? Or are you actually calling the employer and doing a voice call as part of the check?

No, actually, it used to be a voice call probably 30 years ago where you would call up

and get a verification from a hotline. These days, we have APIs into all kinds of payroll

providers and employers, so it's instantaneous. How's that friction? Well, we don't- unfortunately,

we can't answer that for everybody. You know, there's a lot of times where, you know,

you're self-employed or there's W2 workers and it's harder to verify income on lots of those folks.

And what we're seeing a lot is that people have second jobs now, second and third jobs.

And so, you know, we may not have answers for all of those jobs on our database.

Well, I'm going to give you my take, right? So, as an auto group, we want to do business with- I mean,

like, it's in everybody's best interest to have that income validate out. It's going to uncover

fraud as fast as you possibly can. And I don't buy the friction argument. I think the sooner you find

that out, the less time you spend chasing your tail on something that's not going to be accurate.

I would be fascinated to see what the comments in the online say about that. Is there really a

good reason for a lender as part of the underwriting process or us as part of our submission to not

uncover it early and quickly? Because to your point, if it's not a voice call, if it's an API

dial-up, that's automated, right? Like, that's not a tough process, Will.

Right, no. And so, what we see from most all of our lenders is that, you know, we have a lot of

lenders that are making a decision that's 100% automated, comes back with a call that calls

conditioned approval. We want to see income and employment. A lot of times, those lenders

go right to our API and hit that so that, you know, an FNI manager sitting in the office doesn't

even see that conditional approval. They just see a check mark because income cleared out with the

work number database. And so, they see good news coming back as opposed to that dreaded

red X or, you know, having to go get paycheck stub or W2 from somebody.

All right, so let's back up on that. Oh, go ahead. Go ahead.

No, we do have lots of lenders that implement our product in that process. And a lot of times,

it's the dealer that doesn't even see that come through. It's most of those times when,

whenever we're unable to provide an answer, that, you know, some of that manual process that

we hate so much that the dealerships comes into play.

So, let me ask you this based on your experience there. How do you see the relationship between

a dealer and a lender evolving over the next several years? Like, how will automation and

some of the AI things help prevent broad theft and speed up the process of approval for everybody?

Yeah, no, that's a good question. And right now, it's, you know, if lenders and dealers were on

Facebook and they were in a relationship, you know, a lot of times it would be, you know,

it's complicated. But I think the advent of all this broad is going to speed up the relationship

together because, you know, really lenders look at dealers and they want a partner.

Dealers look at lenders, they want a partner. And it might not even be over the next two to

three years with how quickly things are moving with fraud. It's going to accelerate the partnership

between dealers and lenders and I believe they'll come together. You know, and in my mind,

easier said than done, but it's bringing data into the transaction. It's bringing technology

into the transaction and making sure the dealers and lenders are on the same page when it comes

to data and technology. Yeah, yeah. So give us one actual takeaway for dealers watching today,

something that they could do today or tomorrow to improve funding speed, minimize risk and expose

fraud in that process. Yeah. And so, you know, I watch the show a lot and this platform has done

a great job of highlighting some of the really awesome work that people are doing in the dealership

space. Exactly what I said is the embracing of technology and the embracing of data,

the progressive mindset, the advancement of technology, you know, inside a space,

a dealership space that, you know, previously, you know, maybe you don't think as a very technology

friendly space. I think dealers really have to embrace technology and embrace data. The lenders

will reward it and the consumers will reward it as well. Yeah, and see, my own take is in this space

in particular, there's so much potential for fraud and we get taken advantage of as dealers

by people wanting to steal our stuff. Anytime we can have a tool that helps slow that down,

minimize it or reduce it, that's awesome. And even more so when it eliminates it and it's

more or less automated. I think the future of automotive is going to be that relationship

between a dealer group and an awesome lender that's willing to go all in together and we as a group

protect the lender and the lender in turn trusts and protects us and automation just helps do that,

right? I don't know if you have any closing thoughts on that piece.

Yeah, I think you're absolutely right. I think you look at the lenders gravitating towards these

big dealership groups where they have a strong relationship with dealer principles. It's an

organization that's full of integrity and good culture. I think lenders gravitate towards that,

that's the kind of partner they want. And like I said, dealers want to feel comfortable that they

can go to those lenders and it's got to be a very symbiotic relationship where both win and

you know, I think you're exactly right on that. So just as we go away, just another thought given

all the data you have access to and expertise, are you seeing average credit scores shifting

up or down? What are you seeing right now in the marketplace? Because to some in finance

offices and dealerships, it feels tougher right now. It feels like credit scores are going down

and if they are, what's driving that in today's economy? Yeah, I think you're right in that

assumption. And one of the cool things about working here at Equifax is we're not just in

the auto business, we're in the mortgage loans, personal loans, we deliver business and commercial

data. We work with a lot of people so we get to see a really big picture on what's going on

in all different kinds of industries. So total consumer debts up almost 3%, outstanding balances

on bank cards are up 4%. We're seeing more personal loans come through and you know,

even the severe delinquency rate on first mortgages is up I think about 15 basis points

from last year. So the American consumer is stretched, it's a little bit scary. From all

these lender and auto industry conferences and meetings we go to, you know, affordability is

the big issue and so yeah, it looks like, you know, there may be a bubble that's about to pop,

right? People are stretched and you know, what do dealers and lenders do about it? We might

find ourselves in a situation, you know, like we did very much in 2020 when things changed

significantly there with vehicle prices and credit where, you know, lenders have to change their

thresholds and we see a new normal. So looking at the news headlines from today, Ally and their

employee cuts, what do you make of that? Is that a canary in the coal mine for what you're more or

less kind of foreshadowing or does it have something to do with something else altogether?

Oh, I wouldn't say that. Yeah, I don't want to comment on my friends over at Ally, but

you know, you know, that could just be a sign of the times, you know, of, you know, the world in

which we live in where, you know, public companies have to make changes and, you know, to improve

profitability and stock price. I don't know that that was, I wouldn't call that a canary in the

coal mine. Just yet, I'd look more towards the DPD rate on 60. That could be a canary in the coal

mine. Tell us about that. So that's up in some spaces that we don't like obviously within the

subprime space, but starting to see that creep up in the prime space as well. And so all the trends

that we're seeing as an industry right now outside of auto, when you look at some of those indicators,

you know, they start to worry me. I'm hoping that with some of the interest rates coming down,

you know, maybe some people are able to dive into some of the equity that they have in their homes.

Hopefully we start to see helox and home loans go up. People might be able to take some of that

equity and pay off some of their personal loans and high marks on their credit cards.

The rates are coming or the Fed rates coming down, but a lot of loan rates aren't necessarily

following just yet. Fed rates are coming down, you know, those used in new car rates. I think

people, when we educate the everyday consumer on what those average interest rates are,

you know, when we have internal meetings here and we talk to some of our teams that aren't

immersed in the business like we are and we tell them that the average interest rate is,

you know, 15% on a used car or near and double digits on a new car. The average car price

is $50,000 for new and, you know, approaching $30,000 for a used car.

You know, it surprises some people and I don't see it going the other way anytime soon.

Well, Will Hallman, Automotive Sales Equifax. We absolutely appreciate being on the show sharing

your perspectives and all the wealth of information you have from Equifax. So thanks for being here

today. Thanks Will. Yeah, pleasure to join you guys. Thank you.

It's an interesting conversation. I just get so fired up over theft, like income, valuation,

the whole thing. Lenders and dealers should be able to better utilize technology to completely

eradicate it. And, you know, I don't buy the friction piece that we don't want to bother

customers because if it's automated, it should be more of an automated process, fair?

Yeah, you know, I took the friction pieces. He was insinuating maybe a little more friction on

the dealer side. Yeah, like dealers don't want it as much, but why? I didn't hear that part.

Yeah. Yeah. I mean, I don't know. I always got frustrated when you're dealing with someone

that doesn't know how much money they're making. They give you your net instead of the gross and

then, you know, you got to go through the whole rigmarole of getting that income verified. So

this could be a great tool. Yeah, but automate it. Yeah, automate it. Exactly. Take away entry.

Like, don't make me as a salesperson the bad guy because I got a number from you, the customer,

and it's wrong. Like, yeah, my own experience back when was like, customers would usually

understate it. I don't know if that's hoping today. Good comments online. Dan C says only a 2%

reduction of staffing at Ally. Sounds like just like getting lean, which I think is probably true.

And it may be some more automated piece, right? They're getting some benefit out of automation.

YogaCar says 10-year treasury yields need to come to get auto loan interest rates down,

and we are seeing that, right? Dan C says, and I like this comment, Dan's a favorite personnel.

Can you say that because you come from an organization with a strong cold?

Thank you, Dan. We appreciate that. 50 years, Ziggler Strong is what we're going to say.

All right, next up on that, Devin Callback. Devin, welcome to the show. Thank you.

Hey, before I ask you our signature question of who are you and what do you do? Or rather,

the signature question is how's biz? Tell us a little bit about who are you, what do you do?

Where's your background? Where's your stronghold right now?

Yeah, so my name is Devin Callback. I'm the GM here at Subaru Niagara. We're part of the

Willowdale Automotive Group. We represent five different brands. We're in St. Catherine's, Ontario,

Canada. Very nice. And how's biz? Biz is good. We've been rocking. We were a newer store 13 years

ago. We're coming up to our 13 year anniversary. And we're no longer the new guy on the block.

We've been doing very well. Quantify that for us. Where'd you come from? Where are you at now?

Well, I mean, when we first opened, we were a brand new open point. Subaru was in the Niagara

region 20 years ago and then they left. And our owners were trying to get it back. And Subaru said

there's no chance in how we're coming back. And they went back and forth, basically took 20 or 30

nos and we got the franchise back in 2012. Went from 280 new vehicle target. We had eight employees

to now retailing close to 1300 cars a year and we have 40 in place.

Wow. That's great. Listen, you recently implemented Drive AI, right? What was the biggest operational

change that this created? So Drive AI is a Canadian company. It's by Unleashed Technologies.

And it, you know, look to book has always been something talked about

for the last 10 years. And I know a lot of people are now looking that more important than look to

book is how many appraisals are you doing per month? And now everyone talks about doing the

service drive and, you know, working the service drive. But if you've actually done it, it's really

hard to do and you can only take so many nos a day. Drive AI technically does 2000 appraisals per

month of my database and knows my service customers coming in and appraises their vehicles on its

own. Wow. And how does that message get relayed to the customer? So they get either a text message

or an email based on their preference. There's two different ways that it can be sent to them.

Either it will be an appraisal value of what their vehicle's worth or it will be an upgrade my ride

and show them what a new payment is on a light vehicle with their trade factor.

That's great. And who do you have pushing the buttons or pulling the levers in the house for

this? Or is it completely automated? So it is automated. It's basically kind of like running

a private sale every month. There is eight different campaigns that go out through SMS and email.

But I also kind of champion it. I oversee it. And, you know, our sales were selling 20 to 30

cars extra per month. Over 70% have trades just from this program. Now, are you able to buy a

lot of vehicles out of the service drive as well? You know, it's not as big of a thing in Canada,

at least within our Niagara region. Normally people that are getting rid of the car buying

something new. But the whole idea with the program is I didn't think it was going to sell cars for

me, but I thought it would start the conversation that people are having at their dinner table

earlier and is like moving up their buying cycle, which we've seen.

Sam, are you using any of this type of technology in-house in the Ziggler Group?

You know, across different rooftops we are, not this particular one. I don't think we use

drive AI inside additional rooftops. I am curious though, Devin, do you guys

wholesale vehicles that make it across the border into the US to our earlier interview?

No, we do not. That's not something that we get involved in whatsoever. Way back in the day,

we had a customer that wanted us to buy a vehicle from, I think it was like New York or something,

and it wasn't in Canada yet. And I attempted to do it, and I said, there's no chance of me getting

this. Yeah, so your store is one of the strongest performing rooftops for Subaru in Canada. You're

one of the best of the best. What gets you there? And you probably do these cross-border meetings,

Canada and the US, among Subaru OEMs. What would you love for US dealers to know about the difference

between Subaru or just auto retail in Canada versus the US? What could dealers learn in the US from

Canada? Good question. So last year I did NADA, and I was in a class with all US dealers.

Definitely the scale in the US is like 10 times the Canadian market. So I mean, you guys do volume,

volume, volume. We do a totally different approach. We don't do spot deliveries, same-day deliveries.

We actually sell a vehicle and get the customer comfortable with buying the vehicle.

Normally, we don't have the new vehicle in stock. It's a lot of incoming pipeline sales.

Interesting. Yeah, and then we actually have the customer come back when the vehicle is close

and hopefully ready to start getting excited of when they're picking up the car, and then that's

when they meet with finance. So you've been selling into an order pipeline for a long time. US

dealers have only been learning about that through COVID. Was there any shift for you

during the COVID period where like did availability become even less as you had to order?

Yeah, we've always been like very rarely, you know, if we retail and deliver 90 new cars a month,

I have right now have 34 cars in stock, 34 new cars. So it's a lot of pipeline stuff that we've

been doing and that's been for the last 13 years. There was one point in 2022, we had just under

400 pipeline sold cars that we were waiting on. Wow. Wow, that's crazy. What's one thing that you

hear from the US as a best practice, maybe on the show or maybe at a 20 group or in the OEM

where you're like, you know what, it just doesn't quite work here in Canada like that. That wouldn't

work here or it doesn't work here. Yeah, the spot like the same day delivery stuff that goes on,

I mean, for a customer to go to a bank, get the bank draft, get funds released,

investments, whatever, and then to get insurance in Canada, then to get licensing,

you're not doing the same day delivery. I'm sure there's some dealers that attempt to do it, but

it would be a process later. And what is it that's stopping that? Is it just culturally,

there's not that same expectation for that speed to delivery or is it just,

what's creating that slower process? Is it Canadian nice? Is that what it is? It's just

a little slower? Yeah, I think there's something there. You know, we don't have any deals cancel

or deals blow up. That's going to be my next question. How many people cancel?

Yeah, nothing like that. I mean, I guess we've done a very good job training the customer of

what to expect and I mean, setting expectations is kind of part of the job right.

So what's a dealer's perspective on tariffs that we hear about so much in politics today?

You know, you're our friends across the border. You know, when you hear about that,

do you kind of roll your eyes? Do you see the purpose behind it? What's your take on it?

Well, it's totally impacted us. I mean, you know, the outback, the scent, our wilderness models all

were made in the US. So we haven't been getting any of those vehicles since April. So it's had a

massive impact on our business about 30%. So it's impacting us just as much as it is everyone else.

And when that happens, you don't know what the impact is going to be right away. And then you

got to obviously pivot very quickly. Yeah. Is the Subaru Love Promise similar to Canada versus the

US? You know, I'm a Subaru. We're a Subaru dealer. We've got a store in Fort Wayne, Indiana.

We've also got a store there in Lafayette, Indiana, just right by where so many of the

Subaru models are built here in the US. And it's a very different way of selling cars. They focus

on the Love Promise. They focus not on payment, but on safety, security, and really providing a

great experience. Is it similar? Is it different? Where do you see the similarities and departures?

So definitely similar. And, you know, recently, one of Subaru America's executives has now joined

Subaru Canada. So his name's Aaron Weisel. So Subaru Canada's slogan, or like mission statement,

is welcome to uncommon. So that's what all their marketing and messaging is across Canada.

That's fascinating that they actually have a different tagline in slogan, even though

all, you know, different North American dealers. What do you think drives that different approach,

even though we're so close? We're only separated by a small, not well-guarded border, right? You

could probably walk across it. I can be like from my house, I can be in the US in like 10 minutes.

But why is it different? I don't know. I mean, there's things that we do and kind of feed off

each other, but more of like a brand identity within the Canadian market to kind of separate

ourselves. Are you a Blue Jays fan? What's your take on the World Series? That was crazy.

Yeah, that was a heartbreak. I was five years old when they won in 93. So being able to kind of be

right there and two outs away from winning it, it was heartbreaking. Did you go to the game?

No, no. Tickets were insane. I tried to get tickets and I was like 260,000 in queue.

260,000. That's insane. Is it StubHub? Taylor Swift might have an issue with that too.

That was right on the Blue Jays portal. Yeah, it was crazy.

That's nuts. Well, hey, a comment from David Thomas. He says 30% volume of units aren't coming

through due to tariffs at all. That's astounding, David Thomas, maybe one of our vendor friends.

True? Yeah, so it, I mean, the Outback, the Outback in the scent,

obviously the Sensor 7A passenger, the Outback has been a staple within the Subaru lineup for years.

And that was, again, if we're selling 90 units a month, that was about 25 to 30 vehicles that

were no longer getting. So we're having to extend leases and kind of pivot customers to

something different. The good news, we weathered the storm for the last seven months or so,

the 2026 Outback for Canada is being made in Japan and it's built three weeks away.

Yeah, and that's a positive, right? The way the tariffs work. That's a huge positive. It's going

to be, yeah, that car can't come soon enough. That's interesting. So for us, we want it built

here. For you, you want it built in Japan. Is that an unintended consequence of the

administration's tariffs? Yeah, I don't know, like what, I mean, obviously they had to do something

because the Outback was like our, you know, almost second best seller within the lineup.

And I know the Forester for the U.S. market is now being built where the Outback was being built

in the U.S. So there's definitely been some pivots. Dancy says, sounds like very little new vehicle

floor plan assistance costs for Devon because you're not stocking as many. Does Subaru offer floor

plan assistance in Canada for dealers? Yeah, it's, yeah, for sure. If you're doing it right,

you're selling into your pipeline. It's a profit center for us. Yeah, yeah. Well, Devon callback,

GM of Subaru Niagara, we appreciate you being on the show. How's your view from your side of

Niagara Falls, by the way? That's a pretty cool place, yeah? Yeah, I mean, most people know that

that would be got the nicer falls there. So you do? Yes, I have heard that many times. So Devon

callback, we appreciate you being on the show. Thanks for joining us and sharing your perspectives

and, you know, Blue Jays next year, next year. But what a, what a playoff game that was for anybody

that was there. Yoga Cars, just to support what you said, view from Canada is better,

view from Canada is better. So thanks for being on the show. Awesome guys. Thanks, Devon. Thank you.

I love getting the perspectives from north of and south of. It'd be cool to hear from some

Mexico dealers of different OEMs because there are such differences. I got that opportunity to

go speak to Lexus dealers in Toronto many months ago. And there are parts of how we do business

that are uncomfortably fast for them, I think, right? The idea for this point of walking in,

buying the car, having a spot delivery or whatever, same day, it just doesn't exist.

And I'm fascinated by that fact, you know, we should ask them another question about

digital retailing and just kind of Amazon, because like, do people in Canada want to be

able to buy it fast, that fast? You know, is there a greater push for digital retailing there or less?

Because it feels more human touch. I don't know if that's true. Do you get that take, Julie?

Yeah, I mean, the first thing that I thought of was how many deals blow up, right? Because that

would happen here left and right. And he said it's non-existent. So I think maybe just culturally,

the customer is accustomed to a different level of speed. But who knows if there's that need?

Yeah, yeah. Yeah, it's fascinating. All right, well, Julie, great show today. It was fun to hear

about all the different things. I'm going to go look into CRs. I got to figure that thing out a

little bit, understand how predictable all that is. But we look forward to seeing everybody Friday

to our loyal listening audience. Thanks for watching The Daily Deal Alive. We break down the

biggest moves in the car business as they happen. Don't forget, we're here live every Monday,

Wednesday, and we'll be back Friday, November 7th. So if this is your world, hit like,

hit subscribe, turn on those notifications so you never ever miss a beat. And we'll see you next

episode, everybody. Thanks for joining the show. Thanks, guys.

Derrow on Auction Lane Grades, Holleman on Lenders, Kaulback on Subaru Strategy | Daily Dealer Live

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