Gruwell on Hot AZ Car Market, Flagstaff Chevy on Training Next Gen of Auto Techs | Daily Dealer Live
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Gruwell on Hot AZ Car Market, Flagstaff Chevy on Training Next Gen of Auto Techs | Daily Dealer Live
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We're doing better as a result of social media presence.
It doesn't do those three things, then it's on the chopping block.
It's in return on investment discussion.
Hey, everybody, welcome to another edition of the Daily Dealer Live.
I'm your host, Sam Dark.
And back with us today, co-hosting is the Yuli, D Martino Yuli.
Welcome back to the show.
Hey, this is fun.
It's Friday before Labor Day.
We're about to get our last show of the week on.
This has been quite the week.
You and Yosi started out the week Monday.
I was bummed not to have been able to be here.
I was with a Ziggler executive retreat Wednesday.
I broadcast using Starlink, thanks to Elon Musk.
And today's Friday headed into the holiday weekend, and we're back at you live.
For everybody joining the live stream, as always, we're live across all CDG social media
platforms.
Post your comments.
We'll bring them into today's show.
They do change the trajectory.
And your comments actually add a ton of interesting commentary to the show.
Justin Villas says the Yuli, Nate the truck driver, is out delivering his part, says,
howdy, gents.
What do we have coming up today?
Yuli, worth commenting on.
A follow-up conversation to Wednesday's chat with Infinities Tiago Castro.
A couple of comments out there we'll share.
If you need a better way to edit vehicle photos, Yuli, you're going to share a million-dollar
idea in tech with us here coming up.
Plus, Gruel on hot Arizona car market, he'll bring up a little bit about Carvana's
attempt to go franchise.
And we'll also talk Flagstaff Chevy on training next generation of automotive tech.
So we got a lot of very cool stuff coming up.
But first, Yuli, as always, let's go into today's headlines.
All right.
First up today, the latest TransUnion data shows used car loan-to-value ratios rising steadily
across banks, captives, credit unions, and independent auto finance companies.
Back in Q2.22, just 38% of used cars had LTVs above 120%.
By Q2.25, that surged from 38% to 53%.
That means more than half of buyers now owe at least 20% more than the car's value at
origination on top of that.
LTVs above 140% nearly doubled in three years, jumping from 17% to 31%.
Independent finance companies are most exposed, averaging 139% LTV compared to 128% at credit
unions, and 115% at banks and captives.
What's the problem?
Well, high LTVs can often trap buyers in a cycle of negative equity, complicate refinancing,
and raise delinquency risks, as we all know.
But dealers who work with lenders to balance down payments terms and loan structures
can protect both margins and help safeguard potential repeat customers.
An astounding stat, 38 to 53% with problems with LTVs over 120%.
Next up today, we turn to Ford, our number one recall OEM in the marketplace currently.
Ford's quality control crisis deepened further this week with two major recalls.
First, federal regulators flagged faulty instrument panels in more than 355,000 F-150 and super
duty trucks, raising risks that drivers won't see critical safety warnings.
On top of that, nearly 500,000 Ford Edge and Lincoln MKX vehicles are being recalled for
leaking brake fluid caused by ruptured hoses.
That's not good.
Together, these recalls add to a staggering tally.
Ford has already pulled back close to 7 million vehicles this year, across more than 100
separate actions.
And the mounting quality issues are likely costing the automaker hundreds of millions,
if not billions.
And it definitely is straining relationships with consumers.
And then next up today, on our M&A tracker.
So just a reminder to everybody, you can come to the car dealership guys M&A tracker
to follow all the mergers and acquisitions within automotive.
And as many as get announced here, we'd love to have dealers on to announce those,
like Aaron Ziegler did with Ferrari and others have done with others.
Ken Ganley in this week's news has acquired Metro Lexus in Cleveland and Lexus of Akron
Canton from the Friedkin Group.
For CEO Ken Ganley, who's been a Toyota dealer since 95, adding Lexus has been a lifelong
goal and the close proximity to the group's headquarters made this deal even more attractive.
The buy comes on the heels of Ganley's July acquisition of six Sarchioni family
stores bringing the group's footprint to 60 dealerships across Ohio and beyond.
What's the bottom line here?
Well, the move shows how regional players with patient capital are targeting premium brands
close to home, doubling down on markets they already know best.
And finally up today, Mercedes Benz has sold its entire 3.8% stake in Nissan for
about $325 million, describing the holding is not strategically important.
Nissan stock tumbled more than 6% after the news, its sharpest drop since July, reflecting
investor skepticism over the automakers turnaround prospects amid tariffs, weak U.S. demand,
and falling China sales.
The sale also comes as Nissan struggles with a $535 million quarterly loss and continues
to reshape its partnership with Renault, lowering required shareholding thresholds.
For Mercedes, the Divayet divestment clears out its portfolio for Nissan.
It's another challenge on the road to regaining market confidence.
It's interesting, Uly, because we just had Tiago Castro of Infinity on.
He talked about how at Infinity, they're reducing friction point, they're reducing complexity
and they're really trying to strengthen that Infinity brand with additional models starting
with two they have today and expanding beyond that at one model a year into the future.
You know what, props to Tiago and Vinier before him for coming on to the show and being so
transparent and being so articulate about their plan and their path to success.
It's interesting, we did get called out, so I'm part of the CDG20 group, it's a collection
of dealers that share a text chain and there was a commentary that went on there.
And by the way, I reached out to the person that shared this comment with me.
I said, are you okay with me sharing this on the show?
He said 100% because otherwise everything that's discussed in there is confidential and only
shared within the group.
But if we can pop up on the screen the comment, we were called out.
We were called out for not discussing one topic that this dealer who will remain nameless
felt needed to be discussed and that was stair step.
So actually, let me just get to the, let me see if I can find the comment.
Since it's not popping up on the screen, one moment please.
We were called out for not bringing stair step into the discussion.
And anyway, the commentary was that stair step is probably a bigger issue than even the two
brands.
He says stair step is a race to the bottom and it needs to be addressed in order for
us to be successful in the infinity and in the Nissan world and I'm absolutely butchering
it.
So he says, Sam, nice job on the interview with the guy from infinity.
I was disappointed you guys didn't challenge him on the use of stair step programs.
We all know nothing is more destructive to customer experience dealer profitability and
resell value than stair step programs.
Yet OEMs like infinity, Nissan, Hyundai and CDJR continue to use them aggressively.
And the evidence of their impact is manifesting itself in all of the aforementioned KPIs.
I think it's time for retailers to say enough is enough with respect to stair step
programs.
And we should be putting OEMs on the record about their plans and intentions for using
these stair steps and other objective based programs.
And they should know that they're incredibly destructive to the retail market and dealers
are opposed to them.
I think Honda Toyota Lexus are proving which model works best.
What's your take on stair steps, Yuli?
What would have Nissan's response been to that, Tiago?
Yeah, I mean, in their mind, they're doing the right thing.
They're simplifying the programs by, you know, making a unified goal, right?
But to his point, they're not addressing the elephant in the room.
And you know, don't quote me here, right?
Because if I think about Nissan's distribution, I think their dealer model is set up for
8% market share and they're under 4% market share right now.
So yeah, stair step is going to benefit, you know, the large high volume dealers
immensely.
But the people that are struggling to grab a foothold, it's like, they can't,
they can't reap the same rewards as these high volume stores.
I mean, what do they put in 1200 a copy at the end of the month?
Okay.
If you're a store that's retailing 30, 40 new cars, who cares?
So that ended up being the debate that I've had with other dealers is the higher
volume that focus on volume love stair step because it gives them an advantage
in the marketplace.
The smaller stores that aren't on the volume, they want to focus on the experience
and some of the other key core metrics.
It is a fascinating debate and conversation would have loved to have asked
Tiago about that.
I do know Infinity is less focused on stair step than Nissan, but, you know,
it's still an element of their go to market.
What I'm most excited about when we talk to Tiago Wednesday again,
his transparency, his vulnerability, his willingness to come on the show,
but just their laser like focus on delivering additional models for Infinity
to thrive and grow into the future.
And many doubt their ability to do that, but for them to thrive and grow
into the future, they have got to deliver on those models.
And I'll tell you what, if they can do that, a model year for the next,
how many ever years, if they get a solid five or six models out in the
marketplace, Infinity will crush it, but they've got to get there.
And then the question is, is can, can leaders like Vinay and Tiago
make the decisions in the US over and above their Japanese counterparts
to make it work?
And it'll be interesting to see over the coming months and years,
will they be able to make it happen?
Do they have the command control to do that?
So fascinating, fascinating comments from last Wednesday's show,
which was a heck of a fun show.
Yuli, you have an item hot off the press from Google.
Yossi asked you to share with us.
Give us this billion dollar, billion dollar idea by Google.
So I was talking with Yossi before the show and it's worth mentioning here.
You know, we've had a couple key players.
I mean, since the inception of Daily Dealer Live, but every single time
when we come in and we talk to a high performing elite general manager,
we say, hey, you know, what's the first thing you do when you take over a store?
And everyone says almost the same thing.
Why make sure my vehicles are merchandise properly, which to me is,
you know, boring, but a testament to you got to nail the basics.
Right. Well, Google just released a new A.I.
imaging editor called Nano Banana, which is nano banana.
Nano banana. Why is Google naming things like that?
That's that's a misnomer of itself, but nano banana. Love it.
All right. I'll tell you what, I disagree because you're going to remember it.
I'm going to remember it, right?
Nano banana. It's like it's a weird name.
Anyway, we'll tool where now you can and hopefully the production team
can put the two images up right now as we're talking about them.
So we have an example here.
This is the original dealership picture from the website and Yossi
was able to go on and put the image in and just request
Hey, show me another angle of the vehicle.
So this within a few seconds was the Google generated picture from nano banana.
So if you think about this to nail merchandising, here's the million dollar hack.
If your picture is not right right now, instead of waiting for your
photo crew to come back or your guide to picture it, you can fix it immediately.
No more postponing tomorrow, next week, whatever.
Yeah, just go in there and get it hooked up.
That's pretty cool.
So that there's a dollar savings to that, right?
Of course.
And I think even on the flip side of that,
there's hopefully a customer earnings to that, right?
Yeah. Where do I find nano banana?
Do we know this?
This would be Google.
It's Google. It's integrated with Gemini.
Yeah. Yeah.
You know, I had to make I had to I had to create
an AI generated image of a facility recently.
And I'll tell you the tools that are available.
You just you can go through chat GPT five.
You can go through Google Veo three.
Any one of these tools, it is astounding how good tech is right now
at creating images and creating videos and creating even audio voiceovers
that you want one day.
Who knows, maybe this entire show will be audio AI generated.
Actually, that's not true, because we would lose.
You can't you can't be produced.
You can't you can't reproduce us.
Come on, come on.
So anyway, all right, we'll check out that tool.
Thanks for the tip on that.
Hey, and then you Lee and our entire daily dealer live audience this Friday.
We get a ton of requests by dealers and others to join the show.
We're taking those requests into one place, dealers.
So if you want to join the show, which, by the way,
you're joining the show makes this show.
It creates the dealer 20 group conversation that we always talk about.
And we praise that is this show.
We hear ideas like this video editing or photo editing or image editing.
And you can bring those back into the business and it makes your business
better every single day by you coming on the show and sharing your views
and opinions, go to cdgguest.com and fill out our intake form to be considered
for a future guest spot.
So we're excited to have as many of you listening as can possibly come on.
If you've got a great opinion about a topic in automotive speaking
about opinions in automotive, we transition to our first guest, Scott
Gruel, CEO of courtesy automotive, Arizona based courtesy automotive.
Scott, welcome to the show.
Thank you very much for having me.
Scott, welcome.
Scott, we're pumped to have you on today's show.
And we're going to start out with our banner question.
And then as you answer that, just tell us a little bit about yourself
and your auto group, where you are, what you sell.
So, Scott, how's biz?
Business is pretty good.
It depends on which OEM that we're talking about.
I'm here in Phoenix, Arizona, I've been doing this.
We're celebrating our 70th year.
I've been at it for over 30 years and we primarily focus on the region.
We have six stores here in the valley and then one store over in the San Diego area,
so regional.
And business has been pretty good.
You know, there's always the challenges that we have with the front end
margin compression on new and used, but that really varies a little bit
more with which type of OEM we're speaking of.
But our fixed ops, our service and parts and body shops have been pretty strong
and, you know, plugging away.
It's not definitely not the COVID era, but who could expect that, right?
All right.
So I'm going to put you on the spot a little bit.
You mentioned the OEM piece.
What OEM are you crushing it with and which one are you most frustrated with and why?
Well, I don't really want to get into specifics.
You spoke about a couple of them earlier in the show here, but I do have a lot
of faith that things are going to get better with that particular OEM.
But we're having a lot of a lot of success.
The General Motors and Chevrolet, I think they're they're going to market
in the right way.
They're they're product of the right way.
They're inventory levels in the right way.
So we're having a lot of success with the Chevrolet brands.
Yeah, very good.
So Chevy Chevrolet is at the top.
So which is good, right?
So I love it.
And then you can make your own assumption about where you sit with the others.
And actually, one of the others we want to come back to in just a moment
because you have some interesting competition in the Arizona market
with one of your OEMs.
But before we go into that, you've scaled courtesy from two
rooftops to six and over a billion in sales.
Give us a lesson or two that was most significant to you
as you went along that journey in scaling.
Well, you know, we're fortunate to be or blessed to be here
in Phoenix, Arizona and, you know, their larger stores, larger rooftops.
I feel that we've had a lot of opportunities to get other,
you know, be a collector of franchises that's not in our regional area.
And I feel that the strength that we've had and the ability to engage
and grow our rooftops in the valley here, the Phoenix Valley,
has really, really enhanced what we're able to do.
You know, there has been a lot of opportunities for us to take
on other operations that aren't within a 30 minute, 45 minute drive
of where our HQ is in the central of Phoenix.
So, you know, I've been patient, you know, and really, really strategic
in the acquisitions we've done.
And I feel that that's sort of been our strength
versus being spread too thin and trying to be all over the place.
We're very centrally focused in our organization
and we're able to engage with our GMs and really put forth,
you know, every family owned auto group has their own way of doing it.
We call it the courtesy way, but it's our touch of how we engage
with our employees and our customers and what we do.
And that's that's been really beneficial.
And, you know, we're also in a very good growing market.
We've had some very strong brands.
We still do a couple of are not doing as well as they ought to be.
But I think that's the case across.
Yeah, you'll you'll get them there.
So it's interesting you mentioned Phoenix
and part of your strength is being geographically clustered into one place
and you're able to grow and learn together and create that culture.
San Diego is is not far from Phoenix, but it's definitely outside the footprint.
What prompted the growth into that market
and and what drew you into that California acquisition?
That's a good question. Good question.
It was a legacy store that was acquired through the organization back in 81.
OK, it's been a while.
It's a great location where it's at and the marketplace is strong there.
Great fixed ops there.
And we continue to support it and they're doing pretty darn good.
Yeah, a comment or online, by the way, said courtesy
and Scott are legends in this AZ market.
And Robbie Ben Bencoya says congrats on on that.
So let's turn to your Chrysler store in Casa Grande.
So Carva or I'm sorry, your Chrysler store.
So Carva is buying a CDGR store in Casa Grande.
How has that changed the competitive landscape for a family
owned group like yourself?
Well, our store is in East Mesa, which is the east side of town.
And we've had a tremendous amount of success
having it and operating it throughout the last four or five years.
And and most recently, the transaction has closed.
The Carva took over an operation in Casa Grande,
which is almost like a rural kind of area between Tucson and Phoenix.
Not a lot of rough tops.
They obviously probably a market share
that probably went in and got it at a reasonable rate, I would assume.
I don't know all the specifics. I don't I don't intend to.
But, you know, Carvana is headquartered here in Phoenix, Arizona.
And obviously, we know that they do a very good job
judging from the numbers of online retailing
and marketing and their ability to finance the vehicles themselves,
which is a Spanish and most recently,
Carvana took over a rooftop down there in Casa Grande.
And, you know, I do have an opinion on that.
I feel that if OEMs go down that road,
I don't think that's a very good partnership between the dealers
who've been investing in decades, the facilities,
you know, customer experience, the parts, the service and all that.
So that is an investment and a true partnership.
And I feel that the latest situation with that particular OEM
isn't doing right by the long, loyal partnerships
of dealers that we've been out there investing millions of billions of dollars
with that OEM to pedal the product properly.
I just feel I feel like that's almost a slap in the face.
But I don't think it's building bridges. How about that?
Yeah. So what would your message be to OEMs
that are considering entering into transactions?
So that was the first, but there could be more.
What would your message be to OEMs looking to enter into those transactions?
And like I said, I don't want to get I don't know all the details
regarding if it's the first and there's many more coming in this and that.
But, you know, I think I've been doing this for 30 years
and it truly is a partnership between the dealer, the distributor
and the OEM, and it's been working very strongly.
And I feel that sometimes when people make decisions like that
with a strong retailer, I'm going to give them credit.
They've done a good job in these cars
and they might even do a good job in new cars.
But they're looking at the short term game and not the long term game.
You know, who's been with you through thick and thin that dealers have.
So when you make decisions on a short basis,
maybe you might get a lift in a little bit of volume.
And indeed they have, judging from the last six days.
Yeah, they're thinking about short term product sales and this and that.
They're not thinking about relationships have been established.
And, you know, all the all the good stuff
that's been out there with the factory dealer relations.
So my advice to all the OEMs is don't look at a short term.
Look at a long term.
And if there's a way to slow that out,
I think that's that's something you need to look at
because we're truly in this thing as a partnership.
And I feel that doing that is really short sided by the OEM.
Yeah, so you're in there in your backyard, you're competing with them.
Are there any any lessons learned in that in ways
that that competition creates or changes the competitive landscape?
You know, they've got access to an auction.
They've got access to an interesting finance operation.
There are elements of their operation, the delivery and whatnot.
You know, what lessons could you share with other dealers in 2025 here
that could be contemplating competing against them in the OEM world
in the franchise world?
Well, I think that it's competition, right?
We all got to get better on our D.R.P.s.
We all could get better at our deliveries.
We all could do this as an independent franchise.
And and I'd be first to say they do a darn good job of competing on that.
Their marketing spend is substantially higher on a national basis.
It's a public company.
You know, I understand that they have that advantage as well.
One of the unique advantages that they have versus, you know,
normal franchise dealers is for the most part.
And I know some public groups are doing this,
but they have the ability to actually carry the paper and finance
a lot of that back and so they could squeeze the price
or even continue to be aggressive on the pricing,
which affects all as dealers, as we all know,
and compress that margin down to nothing or even below.
But yet they pick it back up on the on the finance part.
And I feel that that's a challenge, right?
For all those dealers out here who don't carry their own paper
or they, you know, they they don't have the sophistication
to, you know, to credit and repo and collect
and all that other complicated issues as deal with when you sell finance a vehicle.
So that is it.
That's a challenge, right?
And, you know, as as we move forward, we've got to make certain
that we're always looking for increase in revenues in different ways.
And and that's that's who's going to win in the long term.
Yeah. Yeah, it's a fascinating lesson.
I mean, you know, I can't imagine they've had so much success
in that Chrysler marketplace in there in Phoenix,
taking that that location from worst to, you know, a top
a top performer in that marketplace.
Certainly, I would anticipate that they take that model
and seek to try to expand it with those advantages that they have.
So your lesson, your lessons learned and shared with other dealers
are very relevant, I think in I think in today's today's marketplace.
You know, they've got tech and scale.
You've got culture and community, culture and communities
and longevity have got to give you a leg up and an advantage.
Maybe talk about some things you're doing in the culture and community
area that that give you that advantage.
It's good. So obviously,
the carbon we're talking about might not necessarily have that culture
and community angle and historic.
And, you know, we do a substantial amount as do a lot of regional players
and family family run operations.
We're we're embedded in the community with doing a lot of give backs,
charities, you know, I can name dozens of things we do.
And we we try to we try to explain to our customers that we are family
and that we are different.
We're a privately held organization and we get back to the community
because that's the ones who let us grow so much.
And and we're doing that.
And is that a competitive advantage?
It is. It definitely is.
But, you know, there's a lot of consumers out there
that just just want that, you know, that G.
Brangler at low cost because, you know, that that's what they're doing out there.
So it's challenging.
You know, of course, we're going to keep fighting the fight
and winning out there on everything we can do.
But I just think it's appropriate to bring it up
not only to that particular OEM, but to all the OEMs.
Don't lose sight. Right.
You don't see some of the stronger OEMs out there
even considering something like this.
So yeah, yeah, you took the words out of my mouth there.
The strongest OEMs would not even consider a partnership like this, right?
Because they are the ones that care the most about that relationship.
You know, it's between a wholesaler and retailer.
It has to make sense.
Right. Yeah, I I'm fascinated by the by the conversation and the debate.
You know, we've done the whole direct to direct to consumer model.
We talked about that here.
We talked about the Tesla model and it is interesting.
Like everybody wants like and I don't completely know what the right answer is.
Like I think there's a path to winning in every single model.
If if I'm an OEM and a big group like Carvana comes
and they want to create a relationship, my biggest challenge is going to be,
you know, you know, how long are you going to be around?
How are you going to create the best customer experience?
How are you going to service our customers?
How are you going to make sure registration?
Everything leans get perfected well across the board.
Those are going to be the challenges.
I, you know, I'm not sure out of hand, I would reject it.
I'd just be super curious.
Lauren Klein says, keep your customers close with Carvana moving in.
And Eager says, what about idle inventory?
How long cars stay in parking lot and depreciate?
Keep your customers close with them moving in.
I think is is is good advice, right?
Your relationship that you have helps you own those customers
for for a very long time and give you a leg up,
even as these national players, I mean, let me put it this way.
I mean, Scott, how different is Carvana from a Carmax coming in, right?
Well, that's a good question.
I think Carmax did try it.
I'm not exactly on the specifics in the Midwest somewhere.
And they decided to get back out of that business.
And so obviously there was reasons for them to get out of that.
That's our business.
But, you know, I think there's there they do a good job with the DRP.
We all know that and they're able to carry their paper.
Which is an advantage over, you know, normal, normal independent.
Yeah, yeah, let's transition away from the Carvana conversation for a moment.
You you at courtesy was the first family
on Dealer Group in Arizona to launch an EV exclusive showroom with Polestar.
You took that leap early.
Tell us a little bit about that and why.
So we had the opportunity to to pick up Polestar
and this is back three or four years ago.
And we we saw all the positive stuff
that Tesla was doing with volume and such.
And I felt as an exec team here felt as an opportunity to,
you know, we wouldn't want to pass that by when, you know,
and it could be the next Tesla, right?
So we felt that the dollars invested in it
and the exposure we had in it was worthy, worthy gamble.
And and we still have it to this day.
Polestar is doing fine.
You know, there's always little things that happen along the way.
But, you know, we didn't structure that entity with anticipation.
We were going to do a scale up rollability of overhead
and structure and fixed expenses.
So, you know, we had the ability to run it at really lean, lean, lean overhead.
And it's actually doing pretty good, even though the volume is light.
But it's doing all right, right?
So so. So we got a lot of money out of it, too.
As as we get to the point, Scott, where where those EV rebates go away,
what what what's your view of EVs in your Arizona marketplace go forward?
And then what are some of the learnings?
You say you've learned a lot along the way.
What are some of those learnings, Scott?
Polestar did a good job of sort of doing a direct dealer.
But we're actually the dealer.
They branded it through Polestar.
We're not allowed to use our corporate name and there's a lot of different
marketing, but they really did a focus on digital retailing.
And so we picked up a lot of little tidbits of things that we brought
on to our whole organization about digital retailing,
because we all know that that's important, correct?
Yeah. So that was a big learning in itself.
Back to your first question regarding EVs and the future of EVs.
And my perspective of these, I have no no problem with EVs.
I have no problem with people wanting to do it.
And I think a lot of the IMs are doing a fine job with producing the EVs.
I've always felt that people wanted to have a need to have a choice
and not being pushed.
And so, you know, this latest administration going that direction,
I always I think it will settle in at 10 to 12 percent.
I think maybe I'm a little bit overly optimistic,
but I've always believed, you know, 10 percent.
It makes a lot of sense for people.
It makes a lot of sense for the third car.
People will want to plug in.
They have the accessibility, but for a lot of the other folks out there
who live in apartment complexes or multifamily housing or whatever
that might be might not make the best sense.
So give the option and a lot of the OEMs are learning that.
And so that's a very good thing in my eyes.
So post rebates, demand curve will normalize.
And in Arizona, that demand curve will exist.
It will happen. So I do feel that way.
I mean, if you really look at the engineering
and the structure of these EVs, they're they're built.
They're very good cars.
And that's why there's a lot of technological advances
of having an EV over a nice vehicle.
But it doesn't make sense for everybody.
But I do believe it will settle in between eight to 10.
Some particular OEMs may be a little higher.
All right. So I'm fascinated by what you said on digital retailing.
So digital retailing is the one thing, you know, many years ago,
it was it was a buzzword at NADA through COVID.
Everybody knew it needed to happen.
And we thought it would be a great way
to deliver our best to customers remotely.
I still feel like at least in the Midwest, where we are,
customers still wanted to come in and interact with us.
Didn't, you know, they kind of pushed off of digital retailing.
Amazon is coming in like Carvana's had its success
and its turnaround story.
So throw out to us in August of 2025.
What are a couple of the digital retail learnings
you've learned from Polestar that you've implemented
across the rest of your group?
Companies that you use technology or processes.
So, you know, there's really two types of I mean, there's many more.
And by no means, I don't want to say I'm an expert.
My team is an expert, so I just wanted to placate that.
But I do feel that the consumer, you're exactly right.
Customers do want to touch and feel the vehicle.
So we allow, we we we try to have that
experience positive with the consumer, touching the vehicle.
They see the vehicle and we do a lot of the videos.
We do all the pictures.
We do the introductions, all the electronic, all that all that stuff.
But we do a lot where they, you know, what they see the vehicle.
We bring the vehicle out to the to them all the time.
And they they say, yes, OK, great.
And then at that point, we do the digital retail
and where these will deal jackets and then they sign and all that
and take pictures of their driver's licenses and titles and all that such.
Do you know what technology you're using to deliver that?
Are you? I don't know.
I could get my team on that, but no, no, no, that's OK.
There's there's some really interesting tech.
In fact, there's a company called Mavsign.
We're doing a dealer best practice on one of the other shows.
And they actually will send someone like it's interesting in today's world
how we want to do everything digitally, want to deliver this remote experience.
And yet so much risk still exists out there on the delivery
price piece for fraud for, you know, all sorts of, you know,
we can have vehicles stolen, identity theft, all the stuff.
And so there are companies out there that have actually sort of taken
that very tech driven process and made it more manual.
They actually have a person on the other end.
You can pay as a dealer to have that person go in and do the notary
process to help make sure it works and then and then kind of make sure
that that F and I process gets observed and retained.
Because I think that's one of the challenges.
You know, you talk about Carvani, you talk about Amazon.
What is F and I attachment and adherence look like?
Are we able to still be as successful at advocating for VSC in gap
and all the other F and I products remote as we are in person?
And I'd be curious, what's your experience been with that?
Are you able to are your average PVR rates as good remote as they are direct in person?
You know, I was obviously concerned on that because we've had a lot of success
in the F and I departments over the years.
And so I was I was concerned about that originally.
But if you have a good layout and a good pitch and we we have a F and I folks
give them a call, talk about it, you know, to walk them through that
on a video call and also on this normal phone call.
Our penetrations is a little bit lower than physical delivery.
But it's been it's been adequate.
And, you know, it's all about the customer experience.
And that direction they want to go, we allow the customer to go that direction.
If they want to come in in person and do all the paperwork in person, we allow that.
So we're very fluid.
We want we were customer first and we want to make sure
that we deliver what they expect.
Yeah. Well, Scott Grewell, CEO, courtesy automotive.
We absolutely appreciate you being coming on the show,
sharing your perspectives about all things, including competing with Carvana
there in the Phoenix Marketplace.
We wish you all the success now and into the future.
And thanks for thanks for being on the show, sharing your perspectives.
Thank you very much.
And I appreciate you having me on your show.
Thanks.
That's a fun conversation.
And, you know, big players can't compete when it comes to relationship
and culture and giving back in the community, as well as some of the super
big players. And so for for groups like Scott, like leaning in on that,
you know, creating a great employee experience, creating a great customer
experience and really staying connected in that local marketplace.
You know, you feel like I predict that's one great way to continue to win
in the marketplace.
There's a lot of layers to this onion to peel back,
but that's a conversation for another day.
I think it's very fascinating.
No, we're having it.
That's the conversation today.
I love it.
So, all right, Hague Partners, let's talk about it.
Hague Partners, public retailer site at National Media trusts that dealers
rely on it.
The Hague Report sets the standard for dealership M&A data and trends
in auto retail, Rita at HaguePartners.com, Hague Report and huge
props to the entire team at Hague for supporting today's content.
You can scan the QR code there for more information on the Hague Report.
If you haven't read it, we read it within our auto group and use this data
to make acquisition M&A decisions on a regular basis.
The entire team there, Alan and everybody are absolute professionals.
They're the best in the business.
So, thank you, Hague Partners for bringing today's content.
All right, next up today, let's transition over to Mark Harris,
owner-operator at Flagstaff Chevrolet, and this little Ford.
Mark, welcome to the show.
It's an Arizona day today, Mark.
Yeah, go figure.
I don't know how it worked out.
Scott and I are old friends.
This has been great.
Wait, so how do you know Scott?
Tell us that story.
Well, I used to work for General Motors Corporation,
and I called on his store back in the day as their service rep.
So, got to know Scott, his father, Mark.
We just got to know each other through business.
So how many years were you a GM service rep?
And how did you make that leap from service rep
into a dealer owner operator?
Yeah, I mean, the short answer was I got my degree in education
and taught at the high school I graduated from.
GM hired me to start teaching dealer technicians
out of the local community college.
Then they transferred me up to San Francisco,
became a field service engineer, visiting dealers.
They brought me back down to Phoenix
as the Chevy service rep,
and that's how I got to meet Scott.
After a little bit of time,
they'd moved me from the service side
over to the sales side,
and I was a district sales manager
and called on the store up here in Flagstaff,
the Chevy store in Flagstaff.
Well, I hit it off really well with Terry Markson.
After about three years,
he offered me a position as a GSM
that allowed me to buy in as a minority partner.
And then after he was ready to retire,
he allowed me to buy him out completely
and that was almost 10 years ago.
Very cool, very cool.
So your experience starting out basically
in fixed ops and education is interesting
because the traditional role is starting in variable
and sales and then going into GM and dealer and whatnot.
So your perspectives are great because right now
so much focus is put on UIO units and operation,
fixed ops, retention and keeping those customers close
as a way of winning against some of the bigger players.
So we're excited to have this conversation
but before we go into that,
let's ask with our banner,
let's start with our banner question.
How's biz, Mark?
You know, it's been okay, it's been sporadic,
nowhere near what we would normally expect
for this time of year.
But we're making payroll, we're selling cars,
you know, we're getting cars out of the service drive.
So it's been a bit of a challenge
but I have really no complaints
considering everything that's been going on
in the marketplace.
Yeah, yeah, okay.
So it's interesting, one of the toughest jobs
to hire for within a dealership is technicians
and fixed ops folks, right?
Service riders and whatnot.
A, why is it so hard to hire for those positions?
And you've come up with an idea
of an automotive technology training program.
So start with, why is it so hard to hire for?
And then tell us a little bit
about this program that you're starting.
Yeah, that's a tough question, quite frankly.
I've got my opinions.
I don't think the industry's done a really good job
and I'm talking about the OEMs right now.
I've done a really good job in trying to promote
this as a career.
Back in the day, back when I was really young,
you know, you'd have people going to high schools
and promoting the different tech schools.
You had ASAP and ASAP and all these programs
that were available.
And it seems like the OEMs, and I shouldn't say abandoned,
that's the wrong word,
but it doesn't seem to have been as much of a priority
as it might have been.
Now I see that pendulum shifting.
I see it changing.
I see things like micro getting involved with,
you know, that level or that type of training.
And we're seeing traction in that.
And so I think you're seeing that pendulum
come back over to where it should be.
It's interesting to your point about micro
and his celebration of dirty jobs
and the technical industries.
There's something in the American culture
that's just gone away from that, right?
The nitty gritty, roll your sleeves up, do the tough thing.
And maybe that's kind of driving some of the challenge.
So like, what advice would you give to OEMs
and other dealers that haven't had that as a focus?
And what's the word track that you give to kids
that says, hey, this is a fulfilling career.
This is a place where you can really make a difference.
You can earn a great income.
You can have a career that's successful.
Well, I think specifically to the kids
who might be considering, you know,
you've got some people who have to make
some really important decisions at a fairly early age
on where they want their path to go going forward.
Picking a career is not easy.
And so I think you really need to lay out
what the benefits are.
And as far as automotive technology,
the benefits are the challenge that are involved,
certainly the amount of money
that you're capable of making is a good deal.
But also the freedom.
I mean, the freedom of being able to live anywhere you want
to go to work for almost any OEM that you want,
open your own business if you want.
There's very few businesses or careers
that allow that level of freedom.
So not only are you gonna make a ton of money,
you can do it almost anywhere you want.
Yeah, and not only that,
the elephant in the room right now, right,
is everyone saying like, oh, AI is taking over jobs.
Well, I can assure you what jobs it's not going to take over.
And it's all of these trade school jobs,
all of these dirty jobs.
And to your point, I don't think a lot of people realize
just how much money can be made in this industry there.
And we just haven't done a good job
of promoting that within that right audience.
And that's the key.
We may be talking amongst ourselves, amongst the dealers,
but when's the last time we've seen an OEM representative
visit their local high school?
And spend 15 minutes discussing
what career opportunities there are.
We just don't see that anymore.
And that used to be normal.
Yeah.
So talk to us about this training school you've created.
How did it come about?
What is it and what are your expectations
for graduates and career path?
The situation is that up here in Northern Arizona,
like everywhere, it's very tough to find
qualified trained technicians.
Our local community college,
Coconino Community College specifically,
has really done a good job of trying
to get that program going.
The problem they had is lack of a facility,
but they just don't have the right facilities
where they can do a good job.
Our local Honda store offered up their shop
at things like two or three evenings a week
where they could teach a class out of their facility.
It was just a great start.
So Finley did a really nice job
and a nice thing about allowing them to come in.
The problem is you're teaching one course a week
for a couple of hours.
That's not enough to train technicians
to the level that you need
to be able to hire them in a service department.
It's just not.
I've been working with the president of CCC
for many years now,
trying to figure out a way to build a facility.
We have a lot next to the dealer
and even went and had the plans designed
and we submitted to the city.
The problem was the city came back
and was gonna require us to change
the entire dealerships layout
for parking, landscaping, sidewalks.
It basically doubled the cost of the project
and I couldn't justify that, unfortunately.
So unfortunately the city got in a way
and that would have been five, six, seven years ago.
So at this point,
we're just kind of in a holding pattern.
We're trying to keep the conversations going.
I mean, involved with their different meetings
and consulting, whatever.
Ultimately, I have a body shop
that hasn't been performing
and it's not, wasn't any real fault of their own.
It's just without getting into a whole new discussion.
The insurance company submitted almost impossible
to make a profit back there.
And so I made the sad decision
to close the body shop as of December 31st last year.
At that point in time,
I called Dr. Heizer over at Copenhagen Community College
and let him know that this was happening.
I'm gonna be retasking that facility,
but before I do, is there any interest
on your guys in possibly leasing it?
I'll make you a smoking deal on the lease.
I'll cut the cost in half just to get you in.
I'll support whatever you need as far as equipment.
I even got our local commercial construction company
loving contractors to come in and donate time
to help update the facility, the offices, the bathrooms.
So it's been a nice community project
to get everybody involved.
And so they started teaching their first class
this past Monday.
Nice.
Cooking along.
They're teaching classes like air conditioning
and transmissions and electronics and engines,
all the basics that you would need.
But now they can do it if they wanted to 24-7, right?
They can teach as much as they want,
get as many classes as they need
to handle the enrollment.
So that's a couple, go ahead.
What's your expectation as far as the number
of students graduating and going into the workforce?
The problem is you're gonna have a lot of people
who wanna work on their own cars
and they're just gonna sign up and take a specific class.
So you really kind of, for me anyway,
it's got to call them out of that number, right?
So I'm looking specifically at those people
who are graduating out of high school
or maybe out of a two-year degree
wanna get something that's a little bit more usable
in the marketplace and be able to get them
into the dealer role or even an independent shop, it's fine.
So to answer your question, I don't know.
I really don't know if I can get 12 a year
who come out of it with a skill set,
I can't hire 12, right?
But the other dealers in town, well.
For sure.
So put on your hat as the former GM.
So you've got this extensive history and education.
You were a GM rep in the service department
teaching and training.
Talk to us today about the differences in fixed ops.
So I think about like remote delivery, remote service.
There are EVs, there are a whole bunch of different areas
today that a technician needs to be trained on
and considering on what are some of the biggest challenges
in training in those areas?
Well, and those are great questions.
And I don't know if the answers
are back presented themselves.
When it comes to EVs, at least in our area,
EVs is really kind of a non-starter
simply because we're so far away from everything.
They're a great vehicle, my wife drives one.
We love the vehicles, but I can't sell them.
No one wants to buy them.
So those who do have them have a hard time
getting service, even though we have a tech
that's properly trained and can do that warranty,
we just don't see a bunch coming in the door.
So I don't see a big need in the future
for technicians properly trained,
although I think it'll be there, right?
It's kind of on the fringe as far as our shop is concerned.
But electronics in general, it's huge.
The ability to properly diagnose electrical issues is huge.
Diagnostics, that technique for properly diagnosing
anything is a big issue.
And that's something that I'm hoping
that the folks coming out of the shop
or the training program for you to be will have.
I mean, that's big.
Do you have remote service?
Do you have service?
Do you provide offsite service?
Our Ford store provides it consistently and a lot.
We provide more of a pickup service.
A big part of our business
comes from the local Navajo and Hopi reservation.
And sometimes we have to coordinate with them
to try to get service.
And they may bring the vehicle to us
and we have to deliver it to them,
or however that works out.
We don't have a dedicated truck for remote service.
Now, having said that, Chevrolet, as you probably know,
is starting to push that a little bit.
I personally think it's a great idea.
If I can make it pencil,
if I can make it make sense financially, I'm all in.
Yeah.
It is interesting going back to the EV conversation.
So, Lauren Klein says,
crazy to think EVs are so niche in some areas.
EV adoption and EV, you know, you go Phoenix.
So Phoenix is just two and a half hours away.
You've got EVs and you have EVs,
you can get a RoboTaxi, right?
Jaguar, I think that is what they're running.
And you can have a driverless EV vehicle experience.
And yet you go up into the mountains of Flagstaff,
just what, you are an hour and a half away or so.
Two hours.
And two hours, and it's a completely different story.
In the Midwest, where we are,
you know, not as aggressive adoption,
but you go to the coast and maybe a little bit more.
So it'll be interesting.
You know, I don't know if you have anything,
any commentary on how different it is
depending on the geography.
Well, for us, we're at 7,000 feet elevation
where Phoenix is down at 1,000 feet.
So you take a typical EV and you get it fully charged up here.
You can get to Phoenix, no problem.
I mean, you've got plenty of charge left over.
Turn that around though,
you get a full charge to Phoenix to try to get up there.
You're stopping at least once and probably twice
for a charge just to get back in the EV.
And certainly there are some EVs with a capacity
that would get you up to Hill.
But those mountains really drain in the heat and the cold
because we're a four-season community up here.
It does provide some real challenges
that quite frankly, a lot of people
just don't want to have to deal with.
Yeah.
Well, Mark Harris, we appreciate you coming on the show
to share your perspectives on all things fixed ops
and creating this technician initiative.
Very cool to see that you're getting this up and running
and it'll be exciting to check back in with you
and see what the results are,
how many technicians you're able to graduate
and then, you know, as these kids make careers
in areas, maybe they haven't previously.
You know, the other thing, I guess,
when I think about techs,
many of us fell into a sales job, right?
I remember in the early 90s, I was a high school student.
I went and washed cars for a year
and then kind of fell into sales.
And honestly, Mark, it took two or three years
before I was like, you know what?
This is good money.
I enjoy it.
And then it probably was a decade where I'm like,
you know what, this is a career, right?
And you can't just, you can't by accident jump,
you know, fall into a technician job.
You've got to be a little more deliberate, right, Mark?
Yeah.
That's a very good point.
You have to go after it.
You have to consider it your career
because you're devoting so much time and effort
and quite frankly, capital just for tools.
Yeah. Yeah.
Which is a big, big, big investment.
Mark Harris owner, operator,
Flagstaff Chevrolet and Winslow Ford.
Thanks for being on the show with us today
and sharing your perspectives.
It's been a pleasure.
Thank you so much.
So some interesting comments off that.
Justin Villas says, mobile van is crushing it for us.
He also says, get in the game.
And it is interesting to me, you know,
as I think about Mark's challenge up in the mountains,
you know, low EV adoption,
but there are a few of them out there.
You know, could you do a mobile van like Alex does
with EV Auto in Utah and crush it there?
And Lauren Klein says,
are you offering accredited certifications
they can use elsewhere?
Is there a cost?
So we should ask that.
We'll get that.
We'll get you an answer on that, Lauren.
We'll post it in the comments.
Or if Mark is still listening,
if you can put that into the commentary.
But gosh, one of the biggest takeaways from today,
interesting to me to hear a dealer competing with Carvan
in that marketplace,
is I would bet you 100 bucks,
they copy-paste that into other marketplaces.
And I don't think it's that big of a threat.
I just think, as with all things in automotive,
traditional, franchised auto dealers
just have to become even better at delivering
the best customer experience in whatever that way is.
I've got many friends that say
they never want to set foot in a dealership.
They want to do it all online.
We've got to become great at that.
Or for those that come into the dealership,
we've got to own that experience
and create something that no one else can do.
And if we do that, nobody can compete
with my auto group, the Ziggler Auto Group
or anywhere out there.
Yeah, well, I'd have to say,
I think it's a bigger threat than you think
because I think our model really only shines
when there's a problem.
And if these new DTCs or Carvana,
if they really get exceptionally good
at delivering a seamless experience without issues,
that consumer who's interested in going hands-free
is never going to see the value
in having a local dealer support you.
So I think that ends up being the existential threat
to the model because they won't even touch our showroom.
You have your people that have issues with Carvana
that are going to be like, man, I'm never doing this again.
I wish I would have bought from a dealership.
But what's the percentage of people
that are having a really bad experience?
I'm with you, I got to touch the car.
I'm not ordering a car.
But Julie and Phoenix and their franchise dealership,
there is no difference between a franchise dealer
and Carvana because they're operating
a brick-and-mortar franchise deal.
They're just applying their methodology to that store, right?
It's the same.
Yeah, but I think there's got to be a bigger play there.
I don't think it's going to stay in that small of a footprint.
I think they're trying to do something different.
No, no, no, I agree with that, yeah.
But the takeaway is just better experience
and become better at what we do and then we win.
Well, great show this week, great shows.
Thanks to you and Yossi for taking it Monday
and cool convo with Tiago on Wednesday.
Go back and listen to that if you
want to hear more about Infinity and what's coming up.
And thanks to everybody that joined today.
We're back at it not Monday because it's Labor Day.
We'll be back with you on Wednesday.
Thanks everybody for watching the Daily Dealer Live
where you break down the biggest moves in the car business
as they happen.
And don't forget, we're here live every Monday,
Wednesday, Friday, except Monday, Labor Day.
So if this is your world, hit like, subscribe,
turn on those notifications so you never, ever miss a beat.
And we'll see you next episode.
Thanks, everybody, for joining.
Thanks, guys.
About this episode
The episode features discussions on the hot Arizona car market with insights from Scott Gruel, CEO of Courtesy Automotive, and Mark Harris, owner of Flagstaff Chevrolet. Gruel shares his experiences with OEM relationships and the challenges of competing with Carvana, emphasizing the importance of long-term partnerships. Harris introduces a new automotive technology training program aimed at addressing the technician shortage, highlighting the need for better promotion of automotive careers. The conversation also touches on the evolving landscape of digital retailing and the impact of EVs in different markets.
Original notes
Today's show features:
Scott Gruwell, CEO of Courtesy Automotive Group
Mark Harris, Owner Operator at Flagstaff Chevrolet and Winslow Ford
This episode is brought to you by:
Haig Partners – Public retailers cite it. National media trusts it. Dealers rely on it. The Haig Report® sets the standard for dealership M&A data and trends in auto retail. Read it at https://haigpartners.com/Haig-Report/.
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