FLASHBACK Fixed Ops Friday FLASHBACK ft John Ellis - 6:25:24, 11.44 PM

Welcome to the Fixed Ops Friday Show, where we bring you high quality guests speaking about how to take your fixed Ops department to the next level. This

Car Guy Coffee production is brought to you by Fixed Ops Digital powered by Trade Pending. Let's prove what's going on car guys and car gals at Sluwimirez the

Car Guy and it's Fred and Art's subprime Hero and we are brewing solutions on the Car Guy Coffee Podcast for another fabulous Fixed Ops Friday with No One the Only Oh when move? What's going on? Brother? What's up? Gentlemen?

How you doing today? I'm super excited to be here. I got

some great news books. We are streaming right now on Instagram. It's the

first time we've done that. They just want some opportunity for so we are

live on Instagram right now. So if you're watching this on the Gram,

welcome to the show. We're excited. We have a great show for you

today. We're pumped up. We have somebody that is not just a great

car guy in this industry, but just a great guy, just a great guy. Like whenever you meet him, you could just sense that he just

got nothing. Good spirits and good once for everyone around them and so excited

to have him on the show talk about this year, talk about twenty twenty four, and to talk about fixed ops Man, and that's a big deal.

What's going on? So Lou, what's up? Bro? I think

that we need to get other people involved. That's Owen. I believe you

agree that we got to get some car guys and car goals out up inside of this. So tag a car guy and tag a cargal and share share,

share, share, share share. We got a great Fixed Ops Friday

ready for you, and we need to get some more people inside of this brew. But Owen, you get the chance to choose the incredible individuals that

we have on this show, and it's always awesome who it is that you pick. Sometimes we're very familiar. This time we definitely are. Sometimes we're

not so much. But why this time on Fixed Ops Friday we bringing in

John Elvis. What is it that John is bringing that we definitely need to

brew about on a Fixed Ops Friday. I've gotten you know John a little

bit this year through some clubhouse rooms and things like that. And what I

really like about John his economic updates. Right every time we get started in

a room John gives everybody that's the table, right, like, what's going on, But we're going to talk about how to affects what's going on in the market. And I thought, being this is the last show of twenty

twenty three, what better guy to bring on than John to tell us a little bit about what's going on with the industry, what's going on with the different parts of it, from used cars, new cars, fixed ops.

Obviously this is more of a fixed ops focused show, but it does affect also used car and vehicle trade ins and things like that. So I just

reached out to Johanna, said, hey man, as the last show of the year, everyone's going to get focused in on the holidays and closing the month strong. Here, let's talk a little bit about what he's seeing from

a data standpoint, and then what he's looking at that data and kind of how what does twenty four look like at least through the first six months of twenty twenty four, right it can be an ever changing environment right now, but I think John's gonna bring a lot of really cool insight to that.

And just also to let John talk a little bit what he's doing. I

know it's a relatively newer company that he's he's found and we were talking a little bit about it prior to the call. Super excited to hear his story,

and anybody that doesn't know John can obviously learn a little more about him today. So let's get him on here too. Let's go ahead and get

this rocking and rolling. So everybody help us to make welcome. If you

don't know him, you're gonna get to know him a little bit more.

But we are excited to be having fun on this Fixedtops Friday with the One the Only. Let's go sho. Hey ah, he's on you too.

Okay, it's all good. Here we go. I love the intro,

I love the music. I was dancing waiting for you guys to bring me

on. Glad to be here. Hey, John, we're super excited.

We got a Facebook user that says John Ellis is like a celebrity news show host. I love that, dude. That's awesome. Hey, you buddy

Worse. I'm excited about Instagram. That's pretty cool, guys that you guys

are on Instagram. Not well done. Yeah, it's cool man, they're

doing that. That's awesome. It's a unique thing like you. It's always

been able to stream on Instagram, but you weren't able to do it from stream yard and stream to multiple sources while doing it to Instagram. So it's

beautiful that we can all do that. So you're going to start probably seeing

not just our show, but so many other great shows out there. They

are going to start streaming there, which is going to be big. And

because Instagram is a pretty hot spot for a different generation of people. Even

I'm all over it right. I love Instagram, and I think that you

all can agree that it's a great source to be able to share some great news like we are today. So excited to have you here. Man,

Thanks buddy, glad to be here. Great stuff ruined, great stuff cooking

right now. John, tell us where it is that you're tuning in from,

and for those that don't really know who it is that you are and what you're doing, go ahead and give them the quick download. Oh yeah,

thanks, I'd be glad too. So I'm from a live in a

small town called Laurel, Mississippi. If you guys watch HGTV or yeah,

we've got a huge national show here called Hometown and it makes us popular.

But this is an old pope Boid country. There's a lot of money here,

big industry here, believe it or not. Small as we are.

We have the world's largest transformer manufacturer of the world's not the Nations in Laurel, Mississippi. So it's a great resource town for good talent tech tech talent

as well, which really leads me into what I'm doing today. I was

with Cox Automotive for seventeen years. I worked for Gulf State's Toyota and ran

their fixed stops division in the Central US for a time as well, and just last September said last we're not there yet. But this September I left

Cox to go out on my own because the groundswell for the need of what we'll talk about today in fixed stops and just in general how to forecast.

The market was growing and growing and dealers were reaching out. And to be

fair to a company I love and treated me well for so many years, I thought it was time for me to move on and do this full time.

So I'm excited to be with you today to talk about the automotive advisor team. On my shirt you can see it. A ground swell of great

advisors and I have a small insulting company underneath that umbrella as well. So

let's get started. Yeah, we're excited that you're out here. Brother,

Thank you for being one that is consistently brewined solutions for the industry, whether with a big company everybody knows or venturing off on your own. You are

an expert in this industry that has helped bring so many solutions so many times, just because you're filled with wisdom, and we're excited that you're on here, and we are honored that we have this opportunity. Car guys cargays,

please make them welcome. If there's questions that you have during the show,

please don't hesitate to drop them into the comments and drop them in even if you're watching this on the replay, we will make sure that we get to them or get them forwarded so that you can have them answer. We want

to make sure that you are feeling part of this brew as well. But

now that we're all doing what it is that we do, we're gonna go ahead and let Owen start putting you inside of the hot seat. And it's

brewing. I can feel it. Let's go. Should I put you on

the hot stage? John, if you want to give us an economic update.

I'd love to do that, give us the economic Oah, that's all we're going to start this thing, why not start it here as well?

I looked unfortunate that I do it on David Long's All Things Fixed. Oops.

I definitely put a fixed ops flair on that. That's our audience.

We do it for the Used Car call on every Friday as well. It's

just critical. We grew up in this business for so long, and we

went through the eighth nine issues with casher clunkers and our recession there. It's

different this time, and so many more KPIs coming to play besides automotive that impact automotive. I hadn't used the acumen. I graduated in economics in ninety

three from LSU after the Marine Corps, and it was I went and got my advanced degree in International Finance, which is an economics division of spinoff, and I didn't use it much, kept reading, kept studying. But boy,

these last few years actually six years have said taught me how important that can be in helping automotive dealers think about their operations. Not the microeconomic landscape,

but what we're going to talk about today, what's happening. Now,

what economic conditions are ahead of us that can help us plan for the next quarter and two quarters. You said, oh, imperfectly, because we don't

want to get over our skis. No one can predict the future. We

don't have crystal balls. But there are great indicators that help operators go.

You know what, I look at cost to market. I look at the

bottom and top line, P and L. But I don't think about that

too much. I'm glad to hear it every week. Johnson at least says

something that makes me think. So let's just start with what we think is

going to happen at the end of this year and first and next year.

We've already seen that the unemployment rate's ticking up a little bit, and that's good. That is good news, believe it or not, because that leaves

the Fed at bay. We want them out of our business. The second

thing is the wage market, right has been very tight, meaning there's more jobs than people looking for jobs. It's softening a little bit, and that's

good news. Right. It makes the Fed pump up and feel proud.

And when they're proud, they go hide in the corner somewhere. And then

we get to do what we do best. So what they're forecasting is we're

going to see a mild recession in the first half of next year. That'll

pump us up to about a four to one four point two unemployment rate, and they're going to open up the floodgates. I say that, I don't

mean big moves, but moves that make people move quarter percentage point moves, probably starting in May or June all the way through the end of the year.

The FED speculated just this week, so it came out of their mouth, not IHS and not the other think houses, which are very relevant.

But the horse's mouth will probably reduce raised by one point five percent next year.

Now, if I'm a new car salesman, I'm deal. I'm going

to sew at first glance, I'd be like, I can buy down the rate today four gms to land as we're getting rach are down in the dumps now when with these incentives but use car rates, we need to get our used car affordability back in the line, and that's what's going to happen.

So we're really excited about that. But guess what if you're paying attention to

what the FED did in the first for the first half of the year.

They give us a little Christmas present too. We've reduced to standard increase the

standard deduction another three to I think it's thirty five hundred, maybe five thousand, dependent on you know where they landed last week, but they even increased it. That's more money in the consumer's pocket, and they brackets down a

little bit, so many filers are going to find themselves in a lower tier bracket when they go to file their income check, and that means they'll get a little more money back. Look, we're not going to have a great

tax season. It'll be good, a great one with what we remember in

the past. We'll come back to that, I promise. Right now,

people have a lot of debt and savings right to a little lower So they're not just going to jump off a cliff because they got a few hundred dollars extra, but it is going to give them enough to think, hey, it's time to trade in this thirteen year old car for a better, new used car. And that's all we want. So we have a really good

positive outlook for the tax season. We think we'll do well. But here's

where a dealer wants to be cautious and car Max has proven it to us.

Right now. They're buying and loading like a frenzy on the website.

If you look there, if you fight in the lanes, you see them and they're getting crazy right now. Why are they doing that? As a

single rooftop dealer or a large group dealer, I would think to myself, they're anticipating rate prices to carias during the tax season, so they want to get cheap inventory now and be able to hold that they can afford to longer, and then blow that out during the tax season, which they think will be pretty robust for them. So how would we act on that? What

we would do is make sure that we're just not understopped. We don't need

to go jump and get overstocked like they do. We don't have that kind

of budget, but just make sure we're steady. And that's what we do

at the Automotive Advisor team. We align sales rate to inventory acquisition strategies and

build a plan to where they stay on pace. It doesn't matter what the

market does. It'll never get over leveraged or under leveraged and lose profit in

substantial ways and they won't gain profit in substantial ways. That's a lucky play.

The pandemic did that. So we're real excited with how our clients are

formulating their Q one and Q two strategy. And I hope that was enough

information. Why didn't make it too money? Oh no, that's awesome.

So one thing I heard this morning, and you mentioned just a little bit here, you said fifteen thousand vehicles added to carmas. Yeah, so if

CarMax holds about fifty thousand vehicles online at any given time, And part of the Automotive Advisor team consulting Umbrella has a gentleman by the name of Frank notch af Lease only twenty years with CarMax. This guy's a veteran in the industry.

So he's on my team as a buyer from our clients, supplemental buyer when they need good inventory. And he's been reviewing their change and behavior and

they've added about fifteen thousand over the last thirty to forty five days to their online presence, right, And those are the things he watches because what happens if you notice the inventory that's moving off the dealer's shelves right now is sub twenty five thousand the big stuff is just moving slower. There's some profit there,

but if you don't move it fast, you're going to hold it for age. And so the rate of inventory loads for carmaxon Is was about twenty

eight to twenty two to twenty eight percent sub twenty thousand. Now it's above

thirty percent, and if you look at drive time, it's above fifty five percent. Now we know that model set makes a little bit of sense,

but that's what's moving. So as a dealer, you have to remember,

I may have done it always like this, but if the affordability is making the market move this way, I want to play in that game too.

I don't want to stay right here and then not be able to enjoy those market share opportunities, holding too long and then aging out of some of this other stuff. And that's what we're seeing. So we're helping dealers watch the

market and then play those both those games, and that's how you win.

You're gonna lose a little bit here and win big here. You're pretty much

gonna break even or win a little bit here. And when you play those

games together, man, you could really win in the market. So we're

having a lot of fun but it's taking a lot of analysis to make sure we stay on track. I love the car business man, this constant evolution,

constant change. But it's that's what people like you and your business are

important. I think dealers really appreciate what you do, and I think that

if anything, they could at least learn from what you're trying to teach, even if they don't use the product. Just learn, learn, learn,

learn, friends, These tips are great when it comes to our inventory.

It is an indicator when you see big companies like that that are buying vehicles in that price range. That's a big market share they know is a getting

ready explode. It's the hottest one man. And to be honest, I

believe that market share has been a big part of a motive for a long time. I was the market I made a crazy amount of money on for

many years. Would help a lot of people do the same thing. But

those types of vehicles are harder and hard to find, and you're having more people competing. Car max is, the drive times and all these things,

but they're out there. So just get those vehicles because those are what's helping

you get customers into your doors because they know that's what they can afford now with Like you said that one point five on an interest rate. I love

that you talked about that at one point one to have points drop for a pre owned customer that's looking for a car, that is the difference between them being able to buy the car they want or settling for a car that they can afford. That's it. When they get they're so much happier, They

have more freedom, they have more trust in you, and you know what, they're more excited about buying more vehicles from you and telling people about yousing me. John said it best, he said, you want to just get

them to upgrade a little bit, right. You can't upgrade a little bit

when you can't afford that next layer. So what's the motivation to parallel buy

where you're just buying the same car but now at a higher interust rate, putting more debt on your books. Everybody wants to upgrade, right, Everybody

wants to get the next thing. It's called human nature. Want to better

yourself. So the rates are important, and that one one to two percent

our points are definitely the drivers and all that. Yeah, Fred, you

said something so important, I don't want to skip it. You made a

living off that price band right in a lot of independence. I live in

Mississippi. I worked the streets with Auto Trader for years. I was in

and out of dealers for so long at that level, helping them find the best inventory and price it right and then find the audience for that inventory because the markets are so small here and franchise did not well. Now they're having

to right. And that's to play right because most of our clients are really

franchise dealers with one or two rooftops. We have a few that are a

little bigger, but those are the ones that are saying, Wow, I'm playing a game I've never played before. How do I play that game?

And that's what we're teaching them, right, how to play that game.

So they're not giving it to the wholesalers and not going direct the wholesale with it, and not trying to find that exit strategy that makes five hundred d one thousand dollars. They need the front in the back and everything that comes

with that transaction, no matter the price point. And you'll see David Long

said, he said, John himself cars eight thousand dollars. Yes, yeah,

I said, you should be and well done. So it's a great

point. You just but whoever thought that. Whoever thought you'd have an eight

thousand dollars on a new car franch in California And to be able to offer that to a client is massive. Even people with perfect credit want less payment,

especially though, So we have to offer those types of incentives, those types of vehicles, and people are not scared to buy cars with miles on them anymore, not with these interest rates and not what the car price is going up. They're actually excited to find one that runs right, like,

oh cool and I can afford it. Affordability over the last handful of years

has become the big thing for the average. Right is it affordable? Cool?

I'll worry about warranty later, right, that type of stuff. We

need something that can drive and get me to and from that I could actually make the payment on. And so that's why these types of cars are hot,

and they've always been hot, but more so now with rates as high as they are. Most that pricing on average cars is over twenty thousand.

That's crazy. So it's like, what do we do? So you have

to have those you have to take those trade ins and recondition them, have them ready for the lot, have a process for that so that you have those vehicles ready to go quicker than they used to right sitting on the back lot waiting the game to get a wholesaler to buy it at like you said, make a five hundred dollars quick profit and turn it around, or you could turn around and put a customer inside of it, build trust inside them, build their credit up. When interest rates drop, gets what they're going

to do, they come back and see you and trade in that vehicle again, and it's going to probably be a good one, right and then you can turn around and sell them something newer. But right now, we have

to play the today game, not the tomorrow game. We have to plan

for tomorrow, but play the today game. And that's the today game.

I love it, Yeah, I love it. Yeah. All we're trying

to do is build our dms. And the other thing that we're working really

hard with dealers because especially our franchise dealers is understanding that frontline ready costs for that vehicle is so much different than it is for a thirty five thousand plus vehicle, and we have to work together as a used car department and a service department to really understand. Okay, there's give and take at even price

band, and so just learn the price band give and takes because those we're getting into as is cars. Lot of cases, right, and so at

what point do we say we can't pack everything, can't certify everything. I've

got highline dealers. They still want to certify everything, and we just build.

So we offer any dealer that sees us that wanted a free inventory analysis.

It doesn't cost anything. We'll get into your v auto or VENDQ or

whatever you use it, and we'll just show you know where you sit in the market, what's your exit strategy to prepare for tax season and go light and get fresh is. And at the same time, a lot of that

will show you wait a minute, I bought this at the right cost to market, but by the time I got price to market, which is front line ready. Oh okay, what's happening is dealers are going into forty thousand

dollars space because the cost to market is like, it's easier, it's just eighty seven eighty four percent. They think, oh, I got to get

all these but the problem is no one's buying them, so they age out the ones that have high cost of market have a reason for that because the dealers are driving the price up in the lane because they want them, and so at the end of the day, there's there's fewer margin there, so you have could just play that game. Yeah, you can get a good

forty five to fifty thousand dollars car in the lane for decent price, but how long is it going to take you to sell it? You have to

make sure you get that thing out of there quickly find the market for it.

Most of our dealers that have been lazy are over index from thirty thousand dollars up and under index from twenty nine thousand down. And that's all we're

showing them. And I'm like, why'd you buy these? Which I look

what I got them for. Yeah, but they've been here in ninety days,

so was it really a good what I got? So? And some

yes, some know it early. All depends and all we have to do

is pay a little bit more attention. We call it a strategic analysis that

builds calculated courage because you can't play in that space with the right strategy.

So yeah, it's a lot of fun. Like you said, we are

our heads are spinning, but we're having fun, excited. It sounds like

you are. I see that's smile on your face. And in what I

really enjoy, John, is the information that you have just ru at the top of the dome. Man, that's pretty amazing. I could tell that

you take what you do serious. And I hope that your dealers out there,

everyone watching the show understands that's what a professional sounds like. When someone

comes to you and ask you a question, you should know the answers to it, especially if it's your lane. And I love that your lane really

well. Right now, brother, speaking of your lane, you're we're talking

about reconditioning these vehicles. We're talking about all the stuff that kind of brings

us into the fixed ops world, right, Like is get a fixed ops department too? It's all in one Like a lot of times like we don't

want to take care of the other these older cars, but you know what, there's money to be made in those hills, so I want to do.

So what do you think about that? What does that do for a

fixed ops department? Yeah? So typically if you take the emotion out of

you get down to math, that's when you win, right And so really you have to be very you have to be very strategic about how you bring those two departments together to show a winning strategy, because typically what will happen is used car managers don't want losers and directors don't want losers. So if

we already are in the same playing field, we both want winners, how can we make every car a winner? And it takes a partnership. So

we did this years ago. Started doing this years to go. Was sitting

in a fixed ops director and a used car manager down virtually or in person, and we would say, all right, what's bage utilization look like?

What's your efficiency rate? Look like? What's your labor out? Give us

let's just lay it on the table, and if you're having any struggles there, how about we take these cars that have been waiting for a while and grow your efficiency Your labor rate's not gonna grow, right, and use that to fill the gaps to get you the percentage you're looking for. It won't

be the same labor rates. It got that because you're gonna give me a

discount on these five thousand dollars cars. So you're gonna make money, but

everybody's gonna be working, everybody's gonna be happy, and by the way, it'll those customers will come back and buy the bigger cars, and then you'll have those, and then they'll come and service with you. Because these older

cars need a lot of service. They're gonna need to know you and they're

gonna service with you. So retention is gonna be huge in this space.

We've found that the average car age from JD Power is twelve point five, thirteen point one for passenger car, eleven point seven for truck, the average miles seventy thousand, So everything's gonna need what we're talking about today, it's like the norm, not the rule, that have an aging inventory with a lot of mechanical needs. That's a win for both sides of the business.

Always do is put it together and show the plan with math and then everybody understands. We've had to do that quite a few times with some groups,

and what has happened is not only has the owner and I'm not suggesting to anyone do this reduce some expectations in the front that are themselves, but the fixed ops person said, wait a minute, if we get twenty more cars in here doing this, I'm actually going to make more departmental money than I may now. So once they see that, it is a win. And

then guess what, they're holding weekly meetings and they're gauging their success instead of just maybe talking once a month. They mentioned that, John, you said

that, so on the freaking money and they're service in their texts. Man.

They get to get more practicing on cars that they don't really get to see all the time because they're older and these newer cars. It's fun.

It teaches them and it keeps them on their game. It shows them how

to get through stuff faster. And like you said, it's a little extra

money, but it does it. It's a great tool for all kinds of

stuff. That's a great place to put somebody who's new along side somebody who's

got a little veteran in them making learn how to do it together. Yeah.

As a layer, there's so many layers to this, folks. And

as an owner, it's huge money for you. There's a great opportunity because

it's all internal and everybody in the house is going to be doing something.

Activity breeds activity, which breeds money. Just saying so keep moving in and

even talked about parts. No, man, there's so much. Well,

hey, one thing, let me throw some things here. So I got

asked by a fixed hous magazine to write an article and for twenty twenty four, and so it just came out and I coined it the year of the teenager. And to John's point, the vehicle is thirteen years old on the

lot right now, So think about that. That's twenty ten, that's the

average vehicle. So where can we win if you look at everything in like

small segments, where can we win? First off, John hit on it

late ownership services. Our company has been preaching about late ownership services since we

started to open our doors five years ago. If you are not putting late

ownership services in front of consumers, they're going to move on onto the places where they can find that information. So laid ownership services is one thing that

I really hit on this article. The other two things I thought about was

like profit centers, right like tires accessories. These are like profit centers that

we don't ever hit and dealerships you walk in, they don't have a have a tired display inside their showroom or inside the dealership, and we definitely don't have it on the website. So these are things that just if you could

think a little bit outside the box and say, hey, where are some ways that we can pick up those extra revenue opportunities because we might have a little softer sales year. Let's get into it now. Those are some things

that I talked about, and John just reinforce some of that with some of the data that he's through out there. Walk into a Firestone or Goodyear and

tell me if they don't have tire displays. We don't get thought of that

way, and we need to because that is an entry point battery breaks, batteries and tires, right. We want to be that provider too. Remember

I think it was two weeks ago I gave the stat on all things tick stops that everybody knows, but just hearing it makes a difference. Seventy five

percent of that after gets that after market bit does get your business to only twenty five percent dealer return, right, So we want to take that business back, and I think we have a future. We have a transformational opportunity

with evs, even though it'll be a long runway. I'm not a mandate

guy, so we can go there if you want. But I'm a fiscal

economist. I'm a conservative. As they get I don't believe in force feeding

anything that the market demand is driven by consumer, not by the government.

But in the end, what a way to bring brand loyalty back to the dealership when it comes to fixed ops, right, I want to see that as a way for us to get that business back. So we'll have a

lot of fun talking about that in the future. Absolutely, I love that.

I love what we're talking about, and I just want to throw a quick few shout outs Pierre, thank you for jumping in. Yes, this

is going to be on replay. You can always go back to any of

one of our profiles and it'll be there for you to watch any time.

I want to say hi to a bunch of people. We got mad in

here. Matt Man. He's been crushing it with these comments. Thank you

so much for all these great comments. He's at the end. He said

here that we're just talking about service advisors have a massive opera community to upsell tires, accessories, wiper blaze and those things add up. Yes, the

biggest reason why we don't sell those things we never asked in order to be displayed. So as long as we're doing those two things, the opportunities there.

It's like the salesperson fails ninety percent times. They never asked for the

sell, so that's why we got to do it. I love that.

It's great stuff here, but we also got it Bill, Jenny, Bill Demery, My man, what's going on? Bill? How are you doing?

Just talking really great stuff, saying really great comments in here, talking about the car business. It's fun. If it wasn't fun, it would

be insanity a man, and I think that's great. It is crazy.

It is crazy fun, right, I love it. It is insane,

but it's the good kind of insane. So I love this stuff. Yeah,

it's fun. I spent twenty eighteen years in telecom before car business.

I got blessed. I got lucky and tripped into this business. I wish

I would have got in sooner. Bob Hollington is a good friend of mine.

I talked to him about the good glory days before I was in and even before I was born, and just eat it up. I love the

people are the best. Absolutely. Look at that, you guys, some

dude. This is Owen dude going Matt, Yes, yes, Matt,

and Matt coming from you. That's some pretty good words. Brother. We

appreciate you so much. Yeah, so yeah, this is this has been

great and I'm loving what we're talking about here, and John, thank you so much for giving us some time with you today to be able to talk about some really great splay. I know where we've talked about what it looks

like. I love your predictions. I love what you're talking about when it

comes to money, it's big. I think I hope that people are taking

notes on that. If there was one thing that you say that twenty twenty

four is going to be a surprise, what would that surprise be. Yeah,

first of all, I want to say one thing about what you said.

If we don't ask. Somebody just said, you can't get fed if

you don't open your mouth. We need to train our service team like we

train our sales team. Yeah, in in the same way we don't do

that. And line item per repair order is where you can see where your

problems are and so start there actual versus a praise on the other side of the business. So you're not making the praiser. The re kind got mad

because you've just completely flubbed the appraisal and it's not anywhere. Actually, you

got to come up and off the left four or five pounds. All of

that is areas of opportunity. But I love if you won't don't open your

mouth, you won't get fed. And that's our problem in the land sometimes

is we just we won't sell. And I don't mean it be overbearing.

I am never that way. Consult and sell services as as your friend and

advise, right, the relations would be that you're an advisor pointing them towards what it takes to optimize the experience they have with this dollar machine that they bought to protect themselves and suit their transportation needs. Inside of that, I

believe that the salesmanship is on dual sides of the coin too, not just that it has to happen in sales and in service, but that it has to happen to those that are already in our bank already our customers. We

do oh wow on being quick to make the recommendations to our fresh up, our new person in the service drive and all that. But with fixed ops

digital, there's so many tools that we can use to keep in contact with the people that we have in our bank already. We already have them,

they're already our customer, and those are the people that were most twisted about when they defect, when they go a different direction. We're the most knotted

up over them going into different direction, but we never really took intentional walks or intentional efforts towards keeping them with us. So John, inside of that

and recognizing and being able to project and to look to the future, how do would you recommend somebody look at their actual fixed ops campaigning towards customers that are in their banks already instead of chucking I love that my new ones, you know if fortunately this is in my wheelhouse because with Gulf Stay's Toyota, we specialize in service retention, right, they're the best at it, No Toyota they are. And of course service retention marketing is really where you start

in minding your own database first, making sure first of all the declined service customers are always touched from you said something that I want to make sure we're there to create an experience for the owners, and that experience also has a safety component to it, and if they're climbing services, it's our responsibility to check mark that and go back and remind them that this could turn into a safety issue down the road. So you're not just trying to sell something you're

really trying to advise that our job is to take care of you and to make you feel comfortable, safe, and excited about our ownership. And so

I think really paying attention to that. When I used to walk into I

started my business walking into the front. Then I walked into the back,

and now back in the front. And what I found when I started walking

in the back of the house was the budget and the amount of money spent in the back of the house as compared to the front was minuscule, and on the things like marketing and advertising, sales training and all those things.

But we expect it back to absorb the front. And it just didn't make

a lot of sense because when we were we were always talking about absorption, but we weren't spending the dollars to do that. Now I think that's changed

some, but we have a long way to go and that and what we forget is it costs three times as much money to get a new customer than it does for the repeat. So you have so we want to save money,

and you don't want to just dump money down there, then go after the most efficient resource and source of revenue that you have, and that's the people that already love you, know you, or maybe they don't love you, but know you, and we have to rebuild our brand making that is, we have to get the confidence back in everybody we have. It's no

different than not following up with your customers after you sell them. On the

sale side is that if you don't, eventually they forget about you, they go somewhere else. You have to stay top of mind all the time,

and that's it does take some things like fixed ops digital with online service marketing and all those types of things. Well, but being fair as an owner

again, I'm going to point to you owners out there, is that are you spending enough with your back are you giving them the opportunities to be able to help absorb But not only that, but they can produce enough to where the front of the house absorbs. So it's a two way street if you

do it the right way. And that's why it's important that we really focus

on this and I'm so glad companies like fix Up Digital out there to help dealers get way more streamlined in it and way better and faster and cleaner and efficient, you know, and when well in front of add to that, obviously, since our being acquired by trade Pending and they just bought snap Cells sixty days ago. I've been knee deep in their service a video tool,

and it's amazing how many trainers are out there training but aren't training with the technology with video. Video creates trust, it creates au authenticity. It's what

people look at when they see it and they go, oh, he's not just telling me that I need this, he's ripping and that makes it more valid. That's something they don't normally pass up on if they actually see it

and they know that it's not somebody like no different than car salespeople, a mechanic or service you know tech. They also think that they make stuff up

or they loosen something up so that they have to get it fixed. But

when you could show hey, this is actually needs to be repaired, we recommend this today, then they're gonna be like, yeah, let's do that.

They'll find a way to make it happen because it's real mad and I love what doing. Snap Cell is a great company. They once again they

got acquired by this trade pending also, which is amazing, and it's great that you've teamed up with all them and now you're able to see even a bigger scope of what's happening back there and the tools that are available. But

snap cell is great, and if you guys don't know snap cells, go check them out. They really do. That's a really cool tool. I

got to see a demo of their stuff, and I was like blown away by how a service rep can sit there and talk to people and show them right there, I hope you're having a good day. We're looking at your

car. They can even show them how perfect it is. Hey, it

looks great in here. You guys have done a great job at all this

stuff. We recommend that in three months that you probably come back for some

breaks. But besides that, the kicking butt, right, that's a great

message to send somebody to trust. That's the way it is. People will

like to communicate. I'd rather see that video than read a text message about

it. Oh yeah, especially when you're trying to get customer paid dollars right,

because this is where we run into problems. People come out of warranty,

they've been maybe a prepaid maintenance, nothing's been charged to them for three years. Let's say field a toileta and no ofsen You come out of that

and now you're like, oh, now I got to try to spend money on service, Like they just don't want to spend money anyways. I don't

want to spend money. I'm a consumer too, I'd agree that, but

I'll spend it if if you prove to me I need it, and then I don't want to overspend and I want to make sure that I'm getting the right I'll actually spend a little more money to make sure I'm getting better service to get ahead of a problem later. If you just know that, you

know what I'm I'm right here right now. But that's the difference between a

company that has a relationship with their actual customers and somebody that's really just doing transactions with them. If they recognize that this is all of the tools that

you have as the big dealership that you are, as the big service department that you are, all of these tools are for me. Whatever the tools

are, we're over here in Drive Centric headquarters right now right because they are an incredible tool in our industry that many people have and yet still do not maximize. Do not utilize the video piece of that element in it. And

that is the thing. If we utilize video to build trust and to reduce

confusion, because folks, there's so much confusion. I'm a car guy,

been a car guy for decades. I am confused when I listened to a

mechanic tell me about what's wrong with stuff, and yes, I need to see it. I need to see it to understand because my red yellow or

green, or my cautions and all the fun colley coordinations that we have to tell a customer where we're at. It's true to many people that are like,

hey, I have to hurry up and get someplace and I planned on spending this, and I don't know the need for that, and I don't really get it right now? Do I have to have that? No?

Okay, great, they don't really see or feel the problem out there right now. They don't get it. They don't. I just went and had

an all change down recently, and when I went in, they pulled out my airfield MPI exactly. They pulled out my air filter right, and then

they showed me a brand new one next to it. Oh, yeah,

this is what yours. Yeah one looks. Do you want us replace it

today or would you rather wag? And I was like, replace it?

That was done. That was done. Door to doric vacuum sales. Yeah,

rod out of Pipple's carpet. They don't want that in there. Whatever

love yours? You love? Yeah? Yeah, you drink that water.

I don't want to I don't want to pass this up because I think it's important. A study just came out. I think it's from Cocks actually,

John. Yeah, we got thirty five cents on every dollar service wise against

the independence this year. A year later, we're down to thirty cents.

So we knocked the doors down. There's more trainers than ever out right now

for fixed operations. It used to just be the sleeping giant in the back.

No one really cared about, which just went around their business. We've

knocked down the doors because of economic factors, right, inventory, COVID, all these things, and yet we're losing market share. That's a problem.

What why do you think that is? And then give me maybe one or

two things and from your opinion of what we need to do to reverse that trend going into twenty four, because it's amazing to me that with all the focus we put on it, we actually lost market share. And that's that's

scary. Actually, yeah, I think it's because the entire p and l

got pandemic drunk. And when you get pandemic drunk like that, you don't

departmentalize and find out where your efficiencies are and need help. And so now

that we are all seeing in erosion of margin, spotlights on everything. So

we're doing studies and Cock showed just I saw that study two weeks ago last week and I thought the same thing. I'm like, wow, that's crazy.

Orrow counts up, Dollars per ro are down, and then typically the meander like that, but a year over year they're up a lot, but we're making less money then and then I dig deeper and it's line items per ro. We've lost our craft and we need to get our craft back.

We've gotten a little lazy. We've got lazy on the front of the house.

I'm not picking on fixed stops, it's overall. But what a used

car director said to me yesterday, and it was so profound because it was stupid simple. He said, John, we've decided we have got to go

back to the basics period and everything that we do, and that means we have to remember all the things that we forgot during the pandemic. A lot

of the folks that I see running areas of our business. These department heads,

a lot of them are promoted during the pandemic, so we just have to help them. We just have to help them to remember a time when

they weren't leading. And these are the KPIs and metrics that you need to

pay attention to because to your point, the customers that are leaving and taking that dollars per down are the ones that are sitting in your DMS. They're

there ready. So what we have to tell two things You said that we

need to confront upfront with our customer. We're not more expensive, right,

the big one right. And then of course we're not going to we're not

going to try to sell you or upsell you, or do we want to take care of you in your car. And I love what Fred said.

And if you're not ready for this today, we'll be upfront nine us that we're here when you're ready tomorrow. You're building that stream of over six local

service right right now. They're gone as soon as that warranty and recall period

is over. They're thinking of a cheaper place to go to save money for

groceries and whatever else. Right, but they'll spend what they'll spend ten dollars

on the Starbucks. Yeah, they'll spend the money with you, but just

to give a compelling reason why. And a lot of that has to do

with confronting the objections that are myths where we're more expensive and we're going to actually we're going to make you spend more if you come see us than they will at Firestone, and we know that's not true. And remember Firestone and

all the other third parties, they are not letting up on their marketing.

That is their whole shebang. That's all something every week in the mail.

Yeah, it's so hard to get past it. And even to build the

curiosity, the customer has to be like, man, maybe you know one time, I don't know, but they're being berated. Why because that is

the main the source of income for those third parties, and because it's not been as prioritized as seeing it as sales, even if the sales department was included in the party of maintaining that customer, if there was a magical way for us to do that in the future where you stay connected to them, your service advisor is helping you win, You're helping the service advisor win.

What a magical world. That would be maybe sometime in the future. I

don't know. A new walk is coming at Mike. We need to prioritize

our service walks. We have to take every transaction on the very side of

the house, welcome back to and meet everybody. That would be key to

their success. I don't care if the car is eight thousand dollars. Yeah,

we need to do our service survey because that's even on the fact, it's almost more important on the eight thousand dollars car. It's more important the

reason why they have that car, and they want to keep it for a lot longer, right, because they're like, hey, I'd rather spend an extra thousand dollars to keep us forever instead of buy a car, make five hundred doars a month, thousand dollars a month, right, So to them, they're willing to invest a little bit. And those cars do matter more

than more now, never more now than ever. So at eight thousand dollars

car to them is gold. It gets them to work, It gets their

kids to tell you too, just telling you you know, so enjoy that and cherish that and let them feel like it's a diamond, right and let them know you think it's a dimond. Okay, I want to help you

want to make this vehicle as perfect as possible. I want it to be

safe and reliable for as long as you own it. When they feel that

and they know it's not just a sales pitch, then it's way better.

You know, you said something earlier about and I, and it's not untrue, and I love it. It's the fact that we changed habits while we

got pandemic, drunk front house, back house, and automotive. In the

world, things change or a fast food restaurants see the difference. So it's

that happened. But I do I think necessarily that it's because we're being more

lazy. Maybe, but I think it's more so that our habits changed so

much that it's hard for people to go back to old habits. Right,

Just like anything else, if you're a smoker, if you don't like to work out, if anything else, the moment you stop, it's hard to get back to doing something, or the moment that you start, it's hard to quit. Oh so true. So it's same thing here. It's just

that and I love what you said that. They're like, let's get back

to the basics. Fundamentals. Fundamentals, fundamentals, Foundation, Foundation, Foundation.

So, folks, that's a great word of advice is if you are struggling in any department, re look at your process and get it back to the fundamentals. Work on the little stuff, customer rapport, building, loving,

trust, being open reach, educating, training, daily working, having fun while you're at work, not getting insane. And that's the thing I

think that we need to as a whole in this industry is that we need to get back to fundamentals that granted, fundamentals may be a little different because there's new tools, there's new things, it's still fundamentals. It's basic stuff.

It's not order taking, it's not just selling them and telling them this is just the only place you can get this part or this is the only place like that doesn't work today anymore. That's done, that is over with.

It's time to get back to what we know best. And that's when

somebody says no, we start putting our salesman shoes on and we start showing them why their no is really not a no, it's just it's actually you just don't have enough information yet. So let me give you more information so

you can see why it should be a yes. That's the key. I

love that you're so true about the habit thing as well, because a lot of our even older operators, it's okay, think about dieting. If you

have dieted and you've been really fit in the Christmas season, you let it go for about two or three months, How hard is it to go back?

It's extremely hard, but you know how to do it, but it's hard to get back. And so everything you said starts with leadership. Put

a plan together, train, coach, develop. We talked about it on

a day it's called this morning is training, and then there's in the moment coaching, and then after the moment coaching. And if you keep reinforcing the

fundamentals with your people, then everything will start changing. But if you expect

them to do it by themselves, and it doesn't start with leadership, and if we expect those that are following to be any different than the leaders, which if the leaders are always so reactionary, we is in the industry and get it, honestly, we are a reactionary industry. We pivot because we

got to pivot. We pivot because of pressure, not because we want to

see how to reconquer this mountain or see if there's a better way to do it. And that is the issue with being able to advance forward because we

have that conversation of let's go back to that's so often where we end up running the conversation is we want to point back to a time where it was what we should have been doing. Whereas when we came into this party as

solutionaries trying to retrain and recreate the experience in the industry, it was post it was pre COVID, It was before everybody got drunk on profits or scared they were never going to sell anything again. Before all of that, there

had to be a change to the language. Otherwise we were just getting more

of the same of us trying to beat the customer at buying or kill our competition who's trying to do the same thing we're trying to do, which is feed our families and service our customers. We don't want to take anything off

of anybody's plate. As a matter of fact, we want to be good

stewards of what's on our plate, which is all the technology in the world there is to service our customer. Yet when we've lost view of it,

a focus on that, and then became let's take care of these transactions, make all the money that we can, because hey, that's what we're here to do today anyway, and then go back to saying, now we got to go back into learning how to sell them or close them or lead them where you know what. In the beginning, what we needed to shift to

is saying, hey, the best thing we can do is really build these relationships that keep them with us. If we take care of our customer,

our customer will take care of us. If we take care of our community,

our community will take care of us. And whoever shows up in our

community to take our market share, right, they're going to have to compete with the relationship that's entwined these clients with these guests, not did I remind them or do I have the best coupon of the week. No, it's

no. Owen's my guy, and I only see Owen because he always takes

care of me and I can trust him and the dealership behind him. That's

the relationship fundamentals that we should have been at before we talked about how to sell anybody that's one hundred percent and it doesn't matter how great your software is how great the tools that you have are if you can't do the basics, because it's all just it's just those are just tools until unless people are using it. So people have to use they have to be using it correctly.

So if you teach your people fundamentals, get them back to the not only want to say basics, but just teach them the fundamentals and make and make them, but have them and show them the way, show them that this is how we build relationships. Encourage them to talk to many people, Encourage

them to make mistakes, encourage them to try. It's the key is that

we have to make We have to have them do things. They can't keep

doing what they're doing now and expect to get better. It's never going to

happen. So don't give them tool they're not ready to use them. Once

they're ready, it's them a tool that now they're hitting targets bullseye every time.

But until they learn how to use that M sixteen, it doesn't matter.

Oh I love that. Thank you for that. So John real quick

brought me home. We're going into twenty twenty four. You obviously have started

a kind of a new thing here in the last ninety days. Pretty much,

people listening right now, give me one or two things that you know that if a dealer reached out to you could help them with right away, and obviously then you'll focus into other areas of your business. But what are

the two things that you're helping the dealerships the most with right now? Yeah,

thank you for giving me a minute to say that. So the number

one thing that we're doing right now is helping dealers match their inventory acquisition strategy.

We're not buying cars for them and not taking over v Auto, We're not taking over van. We go in there and we have a tool that

builds a strategy for sales rate as in market conditions, which is something that's new no one else is doing, and then monitors how they are imagining that sales rate and their sales goal. Every month, you always have the optimal

amount of inventory that matches their goal. And so they're never owned for leveraged,

they're never under leveraged, which means that they're missing out on sales.

Over leverage means they're aging and losing out. But the day then that month

closes, and we know how critical that day is, the next day they're already set up with the right leveraged inventory to go right into next month and start off as strong as they were. And we found this from years of

study that dealers will have great couple of months and bad couple of months, and it's because of inventory management, not that they're not buying the right stuff or they don't know in their gut how much they need for sales rate.

But this is a structured plan and the only reason we put it together was because over the years I saw the stress that the used car managers would feel because they had great months and a bad month or two good months and then the inventory start aging. And I want them to sleep good at night.

I want to say, if you stay on this plan, you can go to bed, wake up, trained, coach, develop clothes direct and consumer all the things that you do well, knowing that everything all this is in line and you can watch it every day. So that's our little inventory acquisition

tool that we love, and it's very inexpensive and it comes with a little coaching and economic update every couple of weeks in our calls. But the other

thing we're pretty excited about and we just signed up Carter Myers Automotive group, or in talks with a few other groups. Is EV retail transformation right we're

doing. We're helping dealers determine what's the best first couple of steps to get

my dealerships ready if an EV conversation happens in store, So we leave We're current up to the battery score. We leave Rocket and Plugstar and others up

to the content. We are operational folks that take all of that information help

salespeople and leaders feel very confident that they can have a conversation with somebody who comes in and says, is an EV right for me? You got three

out front, but I just don't know what is it? And then they

can go into whether they sell an ice engine or another or that EV.

They bring a brand loyal customer, somebody happy that wants to do business with them for a long term because they didn't shove anything down there purchase path.

It wasn't a good fit for their lifestyle. We're loving that side of the

business. D ran Cage is running that for us. It's all good stuff.

But those are the two things we can help you with. Inventory strategy

and I tell you twenty twenty four is gonna be big. You asked me

a question. I don't want to skip it. What might surprise this next

year? I gave you the forecast right, but want to be careful.

JD Power excuse me. SMP showed us that in twenty five and twenty six

and in twenty seven at flatlines, we're still going to have a declining retailable inventory supply period. So we didn't build cars in twenty twenty and twenty twenty

one. I'm sorry. If you look at your experience report last week,

what they call that rollover inventory is about to hit us. So what is

that going to do to use car values? They are not going to drop,

So we can see a huge acceleration in use car values in the middle of next year, coming off the tax season, which is good for aged inventory, but it means you have to be strategic in the market. And

so my point is, we don't know if that's going to happen, but it very well could. That would the way it accelerates could look something like

we haven't seen in two years. So that might be the surprise we need

to pay attention to. We'll do that, We'll look at it every week.

I can see that in a good and bad thing but I love that insight and I love how you came up with that, so it makes all the sense in the world. And I agree. Actually I was something in

my mind's thinking the same thing. So I'm excited about twenty twenty four.

I think there's a lot of great opportunity. I think that there's always a

ying to everything, ying to every yang. So as long as you guys

understand that with something going down means something up is coming. So make sure

that you guys are ready for that and be prepared for that and use data, and if you don't know how to do it, reach out to John.

John, I'll get you all set up. He knows how to do

all that. This guy, he's been dropping so much that on us and

I'm just like blown away. I'm like, this is awesome stuff, and

I'm so glad I can say that John's my friend. I got that guy.

I know somebody that knows the answer to that. Let me get you

there, right. So John, we thank you so much for coming on

the show today. Man, thank you so much to want to say before

we get out of here, no manager the holidays, John, and look forward to catch it up in twenty four. God great thank you guys.

I enjoyed today. We appreciate it, and we appreciate all of you that

have been participating with us today. The comment box has been filled and we

appreciate all of you that have been joining us. If you are watching this

on the replay again, please still just drop those comments in there, ask John any questions that you have, and just let us know that you had a fun Friday enjoying a Fixed Ops Friday brew with this crew. We are

so thankful to be hanging out with you all. This is the last Fixed

Ops Friday of twenty twenty three, and we are so thankful that we get the chance to hang out with each and every one of you. We do

wish you all a happy Holidays, a very merry Christmas, a happy New Year, and get ready because twenty twenty four is going to have some fun challenges and we can't wait to cover all of the solutions that we get to brew with other incredible people like those that were on the show today. We

honor you all. We appreciate you all. Car guys and cargals. I

am Lou Ramirez, the Car Guy, and I'm Frelin Art Subo and we've been Brewing Solutions on Fixed Stops Friday with your other host, the one, the Only, and today your special guest has been the One, the Only John. One copy as John, copy his buddy, Focus and keep throwing,

keep throwing. You will see you all soon. Keep brewing solutions.

Everybody, talk to you soon. Don't bot tree, y'all

FLASHBACK Fixed Ops Friday FLASHBACK ft John Ellis - 6:25:24, 11.44 PM

About this episode

Request an Explanation

Want to learn more?

More from Car Guy Coffee

FLASHBACK Fixed Ops Friday FLASHBACK ft John Ellis - 6:25:24, 11.44 PM

About this episode

Request an Explanation

Want to learn more?

More from Car Guy Coffee

FLASHBACK Fixed Ops Friday FLASHBACK ft John Ellis - 6:25:24, 11.44 PM