Open Road on Third-Party Overreach, Five Star Chevrolet on Chevy EV Strategy | Daily Dealer Live

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Hey, everybody, welcome to another edition of the Daily Dealer Live.

Back with us today, co-hosting is the Yuli, D Martino Yuli, welcome back to the show.

What's up, guys?

Thanks so much.

What's up?

And for everyone, all of you are a loyal listening audience joining our live stream.

Remember, we're live across all CDG social media platforms you can share, you can post.

We want your comments, all of them.

Bring them in.

They'll help enrich today's show.

And speaking of the show, we've got a bunch of cool topics coming up today.

For example, what do we have?

We've got third-party lead sources and some potential overreach.

We'll have that first up in today's show.

We've got a bunch of really cool stuff.

Actually, this thing reverted back.

I have no idea why it reverted back.

We've got a bunch of great topics, so anyway, all of that and more, so make sure you

get on to the comments and we'll look forward to having a great show.

Let's dive into today's headlines, Yuli, shall we?

We've got some breaking stuff, absolutely.

All right.

So, hey, first up today, Fed Chair Jerome Powell moved markets up today with a simple

comment at a speech in Jackson Hole, Wyoming, hinting that current economic conditions,

quote, may warrant interest rate cuts as the Fed proceeds carefully.

Well, that's news all automotive has been waiting for for a long time and the

stock market seems to agree pricing the increased possibility of a rate decrease as

early as September.

In fact, I think you may see the Dow jumping in the thousand-point

increased territory and above.

So a heck of a lot of fun today as automotive waits for that long-awaited decision.

First up today, Jeep is reviving, get this, the Cherokee after nearly three years now

as a larger hybrid SUV positioned against Toyota's Rav4 and Honda's CR-V.

The 2026 Cherokee debuts Stellantis' first North America hybrid system offering 210 horsepower,

37 miles per gallon, and over 500 miles of range.

What's pricing look like on this Cherokee?

36,995.

That's slightly above a Rav4 hybrid, but well below a Highlander signaling a middle ground play.

Additionally, the Cherokee will be built in Mexico with engines from Michigan,

meaning it could face U.S. tariffs on non-domestic content.

What's the bottom line here?

Well, the Cherokee's return is critical for new CEO Antonio Filosa's turnaround plan

as Jeep has suffered six straight years of declining U.S. SUV sales,

with market share falling from 13% in 2015 to just 5.9% in 2024.

What do you think of this strategy, Julie?

Will this work alongside the rooftop wind turbines that Jeep's bringing out?

I think it's another bullet in the gun.

I don't know about the wind turbine ones, but my first car was a 93 Jeep Cherokee with that 4.0

high output, so pretty iconic.

It's a good-looking ride.

It does look a little bit like the old one, but it's a good-looking ride.

Next up today in news, most assume autonomous vehicles or self-driving cars will shrink

the auto insurance business by cutting down on accidents.

But Bank of America analysts argue insurers could actually benefit.

Today, drivers obviously take the blame when crashes happen.

But in a driverless world, that responsibility moves to who?

Automakers and tech firms, the people who design the cars and software.

Historically, liability coverage has been a money loser for insurance companies,

and offloading that risk to OEMs with deep pockets and tech companies

could remove a drag on profitability.

You see, even if autonomous vehicles reduce crash frequency,

the ones that do happen are costly, loaded with sensors, cameras, and advanced materials.

So insurers still have plenty of premium justification.

The takeaway here?

Well, if Bank of America is right, self-driving cars may not crush insurers.

They could turn them into steady fee collectors while the real financial exposure

shifts to automakers and tech players.

Fascinating insight from Bank of America.

As you think about it, I've always wondered in a driverless situation or in an autonomous

situation who takes out liability because the computer, the sensor, it makes a decision,

and in a no-win solution, it could be loss of life.

It could be physical impairment and somebody has to pay for that.

And those OEMs and tech companies have deep pockets.

Fascinating.

We'll check that out.

So next up, Hertz just teamed up with Amazon Autos to sell its retired rental fleet online,

starting in Dallas, Houston, LA, and Seattle with plans to expand to all 45 Hertz car sales locations.

For Amazon, it's the second big swing into auto retail after launching new car sales with Hyundai,

signaling a much deeper push into the car buying marketplace.

Shoppers can now browse, finance, and buy Hertz cars on Amazon the same way they'd

order electronics or furniture, then pick up at a local Hertz store.

Each vehicle comes with 115-point inspection, a 12-month, 12,000-mile warranty, and a 7-day,

250-mile return option.

And as far as dealers are concerned, Amazon may be able to match convenience at scale,

but personalized service and creative financing remain the edge traditional rooftops can use

to compete.

It's about the experience, it's not the transaction.

So interesting, yeah?

I agree.

This is very scary, though.

I mean, a new landscape is coming for sure.

Yeah, you know, it's interesting.

I was reading some of the social commentary out on a Cliff Banks who puts out the Banks report.

He's like, look, I don't know that it's completely new.

Like, Hertz uses multiple different distribution sources to get their inventory out in the

marketplace.

I think what is new is Amazon is actively looking for you, for dealers to add their

used inventory to their platform.

They could become a behemoth distribution platform.

But again, it's not an experience, it's not a value add, it's a transaction.

And as long as franchise dealers focus on the transaction and delivering above and beyond,

I think that's where the secret sauce lie, and also learning and understanding the

strength of Amazon.

So this is going to be a fun topic in the coming months.

We'd love to have somebody from Amazon Auto come on and talk about that.

We had them on the industry spotlight several months ago talking about their

beginning into Hyundai.

We'd love to catch up with them on the use side.

Call to Amazon Auto, come on the show.

Finally up today, August is shaping up as one of the hottest sales months of 25,

with new vehicle sales projected at 1.48 million units.

That's up more than 8% year over year, according to JD Power and Global Data.

Consumers are set to spend a record $54.6 billion on new cars, with average monthly

premium climbing to an all-time high of $743, and incentives remain somewhat light

at just over $3,100 per unit, or 6.2% of MSRP.

Meanwhile, lease returns are still scarce after the 22 production pullback,

leaving dealers without the usual flow of customers rolling into showrooms with trades.

And as for electric vehicle sales, sales are pacing to reach record market share,

as shoppers rush in before the federal $7,500 lease credit expires on September 30th.

That's coming up.

Looking ahead, August may be the last sugar high month of 2025.

The looming expiration of EV credits plus the timing of Labor Day weekend

inside August's reporting window are inflating the numbers.

Come Q4, the market will surely look very different.

And I'm not sure, just talking to other dealers about where everybody is this

month in August of 2025.

I'm not sure I would describe this month as a sugar high, but that could be.

That's a wrap on today's news this Friday, August 22nd.

A sugar high in a very niche market, obviously.

You know what? You're absolutely right.

Your experience may vary as some of the disclaimers out there are.

So, hey, just a quick word before we get to our first guest.

We get a lot of requests to join the show.

We want all the requests to come into one place.

Dealers, if you want to join the show, please visit cdgguest.com.

Fill out our intake form to be considered for a future spot.

We want everyone and anyone with a great opinion, with an insight,

and with a news item to come join us on the show and share it with all of Automotive.

This platform is what is awesome about Automotive in the United States of America,

because while we compete, we talked about this last episode with Ryan Rohrman,

we also collaborate and work well together unlike I think any other industry on the face of

planet Earth.

Steel, sharp and steel.

Is proof of it. Absolutely.

Hey, we even got the ring there. Very good.

And we got Nate. I'm loving Nate, our loyal viewer here.

Yeah, that's right. Bring it.

Yeah, so Nate says, Nate, the truck driver says,

we'll put a prayer in for Jeep.

Maybe the new Cherokee will help.

He also says Hertz better knows what they're doing.

They recently came out of bankruptcy a few years ago.

And then my Honda guy says, come see me if you're looking to get a new certified

pre-owned used leases.

Cool, cool advertisement going on there.

All right, first guest up today, President of Open Road Auto Group, Michael Moray.

Welcome to the show, Michael.

Oh, thank you, everybody.

Sam, Julie, thank you.

I'm a big fan of the show.

Thank you for having me today.

Thanks for being on.

Thanks for sharing your perspectives with us.

So before we get to the topic and the reason why you're here today,

we want to go with our signature question, which is,

how's business part of that?

Tell us a little bit about yourself and your auto group.

Well, yeah, look, I wouldn't say it's as robust as the report just echoed.

However, I agree.

You know, it is better.

You're seeing a little bit of urgency on what we have for electric cars right now.

You're seeing those last consumer rush.

I guess if you could say there's some seasonality or some forced sales.

People know that the $7,500 federal credit's going away and they're coming in.

We're seeing great movement there.

You know, as far as used cars,

we're definitely having one of our better months of the year.

It's been, I'm in the Northeast predominantly.

So open road auto group is 20 dealerships in the Northeast.

Mostly import brands, BMW, Mercedes, Audi, New York City, Volkswagen, Honda, Acura, Mazda,

as well as a couple of domestic.

We have Chevy and we have Cadillac, General Motors, 1,100 employees.

And again, we're really tri-state, mostly predominantly New Jersey and New York City.

Awesome.

Well, thanks for that insight.

Your geography is fine.

Well, great, great franchises too.

So you're on to talk about something interesting that happened to you recently.

Tell us a little bit about this situation that has developed with a lead provider.

Well, yeah, I love your platform because it gives dealers a chance to come in and

give a little dealer beware.

And I was so frustrated on Friday night.

And I really, I thank Michelle in your office for listening to me.

He's awesome.

She gave me an hour of therapy after I was done venting my frustration to her.

You know, I immediately called her after after my attorney and he said, sure,

go right ahead and let it let it rip because I've been fighting this battle for a decade from,

you know, when when Carfax would come in on holidays with their representatives and

decorate our trees and our showroom with Carfox stuffed animals.

And, you know, I would say, please kindly stop decorating, stop hanging Carfox post,

you know, posters all over our our showrooms.

You know, we give you $3,000 a month for the dignity of, you know,

having exposure and having vehicle history reports and being on your listings,

which is a great tool, by the way.

Yeah, you know, I'm not, you know, here to bash anybody's actual software or their tool.

They're viable.

They do ring sales.

Unfortunately, also compete for our intergranate search.

So that causes a bit of flux because when you really think about it,

all the dealers are ending up, you know, giving them the money to basically buy paid

search for pre-owned, which, you know, kicks us down the funnel quite a bit on the page for

the vehicles we're listing.

But, you know, the frustrating thing that happened last week was CarGurus,

who we've had a partnership with on and off for over 10 years.

In 2023, I exited almost every third party vendor contract.

We were cascading off the profits of the, you know, supernatural COVID, you know,

we could do no wrong.

I had a PhD in profitability.

It was fantastic.

And we were doing such a great job.

And then all of a sudden we were done again and we were starting to fall.

We looked at some of our contracts and, you know, our structures on the President of

Open Road Auto Group, we have five vice presidents that run four stores each.

And, you know, our VP's and I meet weekly.

And, you know, I keep a division for myself to run as well as a vice president

because I want to understand boots to the ground.

And it was a really interesting conversation.

And back then, what triggered our departure and reevaluation of our third party contracts was,

you know, a young lady came in from Carfax and basically said,

you know, you're the only store I haven't been able to sign up in your group.

I said, really?

Tell me more.

And told me all about, you know, this particular service that Carfax offered,

you know, Carfax for Life, which was basically to notify customers about recalls.

And I kind of looked at our product.

Yeah, it's a service notification product.

I'm worried.

I said, well, you know, with that said, it's solid product.

I said, but why would I pay you for that when really my OEMs do that?

And, you know, we do that.

And I just stared.

And I just realized that every other service manager in my company basically said,

yes, and nodded to a $1,100 upcharge on 20 stores.

It's $300,000 a year.

So I started to reevaluate all of our contracts.

And again, for decades, I've been saying there's got to be a

there's got to be a bottleneck when it comes to who makes that decision for signing.

And, you know, this is my caution to my fellow dealers is, look,

make sure that you control and micromanage your third party vendors,

because what you think you signed for three years ago for $2,100 per month

is now probably $3,800 a month.

And you're probably asking yourself, what the heck happened?

And that was pretty much us in December of 2023.

We re-signed up with everybody slowly.

Car brewers came right back to the table with a sort of a price adjustment for us.

And, you know, grateful.

It went really well and confirmed that any and all changes in price,

changes in services, updates to services would have to come through my office

and my office exclusively.

So fast forward to last week.

And why I'm probably here today is we found out last week in an email

that my five, five of our stores that weren't in my division,

ironically, there were in all the other divisions and had been chosen to do a pilot,

a beta test, if you will, for a new service, an enhanced pricing tool for car gurus.

And they said, well, that's interesting.

I said, and yeah, it's been running for 98.

Lucky them.

But how much does it cost?

Lucky them.

But how much does it cost?

Right?

Yeah.

Know what?

For the privilege.

They never got that far.

Oh, okay.

I was already saying, wait a minute.

You used so our BDC managers were involved.

We found out that all of our BDC managers were being, they'd been trained,

they'd been involved in it.

And I said, so you took my, you took my employees and you used them for your benefit

on a beta test for a product you're bringing to market.

Now you're walking it back to me to say, by the way,

we'd like you to sign up for it because we're going to make a deal for you.

They never got that far.

I basically proposed to them.

I said, look, you violated our, you know,

actually our sales in those five stores went down.

You violated our agreement, which I had emails back and forth that were acknowledged

by the, by the local reps.

And, you know, this changed our strategy going forward,

which I'll go through in a minute.

What we're doing to do the change this process for all third party vendors.

But for us, you know, we looked at this and said, you know,

this price strategy tool detracted from our typical business model.

And, you know, when you're looking, and sometimes when you're looking at

the market as a whole, especially for pre-owned,

it can create a downward funnel of price.

You know, if I'm looking at, if I'm looking at Yulie's,

if I'm a pre-owned manager and I'm over in Bridgewater, New Jersey,

and Yulie's over in, let's say, Edison, New Jersey,

and he's got, and he's got a Jeep Wrangler at a certain price,

and I look at his and say, well, I got to be $500 lower.

And you get that behavior with pre-owned managers, right?

But we all learned that, hey, look, no two pre-owned vehicles are the same.

There's different levels of condition, ownership,

multi-ownership versus just one owner.

There are different factors that create that car.

The truth is what we train our management team in our stores is, look,

the car stands on its own.

You own it, correct?

We watch MMR.

That's truly the only thing we look at for pricing is,

what will this car, we keep our inventory for 60 days.

At 60 days, we used to keep it after COVID strictly internal.

If it was a retail piece,

but even if this car needed a transmission,

we would do the work, but we'd always keep the retail piece.

It was too hard to source for a while.

And then Leasing came back and then we had a brief reintroduction of off-lease.

The off-lease for northeast anyways, robust up until the second and third quarter of 2025.

Obviously, we've seen that shrinkage from the whiplash effect of COVID come in,

and now we haven't had that off-lease sourcing.

So we've been very protective of what we've had.

But it's been hard to ignore with interest rates still being high.

Actually, pre-owned sales through the dealership have dropped quite a bit,

but the auction sale has been incredible.

We've been averaging over $1,600, $1,700 of the auction,

and we've taken a larger percentage.

We're on 180 to 200 cars every other week,

and we're averaging about $1,600 per car.

It has been incredibly robust.

We use that MMR report to say, well, what's our worst case scenario?

Well, you keep the car for 60 days and you have to get rid of it.

That's what we use when we're pricing a pre-owned vehicle

and when we're trading in it, when we're owning it.

And then so when we're pricing it to the street,

I'm really not worried about what the other dealers are doing.

Anyway, this pricing tool, I think, might have detracted our team

from our internal processes, which disturbed me.

And then to get back to where, again, they used our stores to test their products

and benefit themselves.

So my response to CarGurus was simply, look, for the 90 days that you tested us,

I want our money back for the group for our subscription.

And what was the response?

Well, although I wasn't, in the being a car dealership world

and understanding, hey, we're deal makers,

I also wanted the rest of the year absolutely for free.

They politely declined my offer and told me to basically,

and they understand it's September one, should they say, no,

this distrust relationship is now permanently ended.

I've terminated the relationship.

We're probably not going to seek legal action at this point

due to the nature of the complaint being, look,

I'm going to not spend all this money to chase.

It's not about money.

It's about principle.

It's about, you have a business, you have a dealership,

you have partnerships, and you also have, you enter into agreements with vendors,

but it's not a license for them to come in and camp out in your dealership

and turn their business into, turn your showroom into their business playground.

And it can't be that way.

My question was going to be just that, right?

You have this decree that everything's going to funnel through your office.

You're the decision maker for signing all contracts.

How then did this company come in and kind of nestle up and say,

hey, we're going to do this?

How are these decisions made without the oversight of the VPs there?

So their answer was, it's absolutely free.

So we're not violating any agreement because we didn't charge you.

No, but you benefit from this.

And that's where the violation comes in.

And again, am I seeking legal remedies?

No, at this point, you know what?

This was probably about a $600,000 account that's completely gone.

And yes, the best deals in life, you have to be willing to walk away from.

And we're gone.

And they can call other vendors that we've dealt with.

When we're gone, we're gone for good.

So it's interesting.

This really isn't just a, this isn't really commentary on that particular vendor.

That's it.

This is commentary on in automotive, we're surrounded by vendor partners,

people that have permission by us to walk into stores

and help us achieve and accomplish our goal.

And it's a fascinating masterclass on what is the line between help and hurt.

And there are a couple of things I noticed in what you said.

So I'd love for you to give our audience,

our auto dealer audience that's listening to this,

your takeaways after this experience because it's painful, right?

Like they provided a service for you.

They violated what you felt like was that obligation.

And now you've got to take action that may create additional challenges, right?

So it's interesting, where is that line?

Like I think you said at some point,

you said somebody came in and said,

well, hey, I've signed up all the other stores.

You're the only other one.

How do we get you signed up?

That's a little bit of a sales job.

Tell us about that.

And that's kind of how you uncovered it, right?

And how you started to dig in.

And that was a different vendor.

That wasn't, this wasn't cargo.

This was a different vendor.

And this was end of December of 2023.

And I just looked at this young lady and I said, I'm sorry.

What do you mean?

And now we have standard operating procedure guidebook in our company

that everybody from every management level has been instructed and signed off on

that says all third party, any services, any changes to services,

any, anything, you are not allowed to sign up for anything.

Everything comes through the office of the president of the company.

And, you know, this is, you know, how we do business.

We do micromanage that because if you left it wide open,

before you know it, you're going to be bogged down with incredible expenses.

So, and we communicate.

Listen, I'm a hands-on operator.

You know, I'm in the office every day, five days a week.

Our vice presidents and I work out of our corporate center in Bridgewater

every Thursday.

We're all together for these vendors.

Yeah, they can have a conversation with you and have that conversation,

right?

So what was the nature of the pilot that CarGurus did that created this result,

in your opinion?

They explained that the nature of this was a pricing tool.

They were there developing.

And apparently it's fully developed and they were just,

you know, test driving it so that they were going to use my own employees

to come to me and advocate for this tool.

That's a very foolish way to take on this approach.

For sure.

And in your opinion, what gave them the kind of the

impression that they could do that, that they could change your business operation that way?

Their justification is, well, this is absolutely for free.

But this is like, you know, those parents out there that have a young child,

this is kind of like when my daughter would come to me and say,

listen, dad, mom said I can have two friends sleep over tonight if it's okay with you.

And I said, well, okay.

And then my wife would say, did you just tell our daughter that you can have two

kids sleep over tonight on a school night?

And I said, no, well, she told me that you told me that she could do it.

And, you know, and that's sort of what this sort of scheme is almost about,

is like, well, they come in and they give it to your people for free.

And then they get your people to come to you and say, we must have this.

And it was just, you know, I'm like, no, we have to monitor our expenses.

We also have to look at what our sales are.

What's our available turn?

Have we been monitoring the turn in your stores?

Oh, by the way, we did look at the last 90 days in that store.

And you sold, on the average, five less units per store for those 90 days.

What's the answer to that?

Oh, well, that was because the market's been slowing.

We've been sending more cars to the auction.

And I said, what, that's preposterous.

So at the end of the day, what we did is we're entering into a new,

we're actually drawing up a new vendor agreement for all third party vendors.

It's going to be strict and it has to be signed,

not by the local area rep, but it's going to have to be signed by the regional manager

or the CEO to say, look, if you want to do business with our organization,

if you want to do business with our dealership,

you're going to have to sign an understanding letter that says,

any services, upgrades of any kind, even for free,

cannot be, any changes to our services have to be discussed

with the dealer principle with no exception to the rule

or the services are cancelable immediately.

So in a large dealer group, you've uncovered this

and you're taking actions to stop it.

What steps or advice would you give to other dealers

watching this show right now with multiple rooftops

that have multiple vendors?

Like, hey, how do you find this?

How do you uncover this?

And then I would presume part of your advice

would be part of this agreement.

But what's your advice to dealers today to limit this,

to prevent this from happening?

First thing, go back and look at every contract and say,

what did I sign up for?

How much was my rate?

And how much am I paying today?

Go back to your, if you have a payables clerk,

if you have a single point store,

sit with your office manager, your controller.

If you're in a group, get with your CFO,

review all these contracts, look at the scope of services.

Anybody tells you, well, it's got to be more money

because your Honda store does 5,000 cars a year

versus your Volkswagen store that does 800 cars a year

is usually, it's nonsense, the software is paid for.

Work your best deal and every deal that you do work.

Please understand you have to also manage the change factor.

They're going to come in and change this.

It's not a matter of what we've learned from COVID was,

we were doing so well at COVID that we got complacent.

We took our eye off the call for about 24 months

because the profits were supernatural.

And who could complain about those months between 2022 and 21, 22, 23.

And then as we started to see it, the tide pulled back out a little.

We noticed, hey, look, there's definitely some issues here.

Like I said, I wasn't even looking.

I just happened to be a heavy dealership on a Tuesday.

And Rep walks in and she said, oh my God, Mike Murrays,

I've been looking for you.

You're the only division in your company

that hasn't signed up for this particular service.

I said, that's interesting because nobody's allowed

to sign up for any service in our company

without my direct authority.

And so it's a program.

It's a look, everybody, even our vice presidents,

were like, I didn't sign up for this.

Who signed up for it?

We don't think that anybody was even offered it in certain.

And I can't accuse anybody.

I can only tell, look, to all the dealers out there,

go through your contracts, look at what you're paying today,

check and see if you've had a price increase since COVID

because I guarantee most have and haven't even gotten to it yet.

And then honestly, after COVID, right around December of 2023,

as we were starting to normalize,

we started to review and walk away.

Because believe me, in December of 2023,

the last thing you were going to get was sympathy or empathy

from a third-party vendor and why you need a price increase.

So the only thing that worked for us was actually walking away.

So and I agree with that.

It's interesting.

In our world, we see that.

We see the pricing creep on vendor services

and you've got to be just vigilant in watching it

and then pushing back and challenging it.

But let me also challenge what you're talking about

just a little bit.

So if you allow platform managers, VPs and GMs

to have accountability for processes in their store

and you want them to have P&L responsibility bottom line,

do you risk by locking it all up

and not allowing any kind of innovation?

Do you risk taking away the ability to find new

and interesting ways to deliver products

and services to the ground?

Could there be a freezing effect to locking it up too tightly

and not allowing vendor partners to come in?

I mean, they need to do it the right way.

That would be the big call here, I guess.

But what's your thought on that?

Because there is a balance.

Isn't there a little bit?

Yeah, Sam, you're right.

Listen, I'm not opposed to do innovations.

I'm all for it.

I just met with an incredible software company yesterday

that handles backstop calling.

And Andrew Paul and I, our vice president

for all of our BMW stores and I, we met at BMW of Marstown

with this young lady out of DC.

And her tool was fantastic.

It's basically transcribes voicemail messages,

puts it on a dashboard for our manager

so he could say, look, this has actually,

and they pick up word tracks that says,

like, this is fire.

This is a hot system.

Get on it and allows for that sort of,

so yeah, no, we're still looking at all new software

that helps us be better dealers

and deliver better customer service.

I am super open-minded to that.

But you got to walk through the front door.

Yeah, you've got to do it the right way.

You can't sneak it in.

And my gosh, changing a business system

of a large organization, the financial impact downside,

if it doesn't go well,

I don't want to be the person responsible

for that or liable for it.

So I love it.

DriveStar Auto says online 30-party vendors

must be looked after as they change

the prices for services.

Very often, Lauren Klein says,

a great dealer partner doesn't create problems.

They solve them.

And I think to your point, Mike,

they do it up front so that everybody can see it.

And then Daniel Gonzalez says,

hire managers who have the lights on

and don't just say yes to everything offered.

It is an interesting point.

Some people in the store take a shotgun approach,

I think, in automotive,

where it's like they'll buy every little shiny thing

and just see what sticks.

And what you're talking about

in terms of vendor management helps prevent that, right?

Because you have to say no a lot,

don't you, Mike, in your role?

Well, in our business,

we have to take it in with a wheelbarrow,

give it out with an eyedropper.

We also try to say to our people,

look, our model pays our management team on gross.

Okay, we want them to go out and raise

the earnings as high as they can.

And again, but if you give them every tool

to go do that and you give them

complete autonomy to sign on for every service

and they're not paid on net profit,

well, you're doing the business of disservice

because you're probably not entering

into the best deals.

What allows me to do something

that my other managers,

including our vice presidents, can't do

is I can leverage, I'm coming in with a 20 store buy.

A vice president's coming in with a four store purchase,

but I'm coming in with a 20 store purchase.

So I'm going to have the leverage

to make the best deal.

So what I've said to my team is,

look, I get paid the way you all do off net profit.

Let me help you help all of us

by giving me, if someone comes in

with a great idea and you're passionate about it,

I'll make time.

I'll come to the store, I'll come to the meeting.

Like I said, I'm not,

I'm as boots on the ground as you could probably ask for.

So I'll be there and I'll be there tomorrow.

Let's meet with them if they're still in town.

Have them come into our corporate office.

We meet every Thursday.

Let's innovate.

Let's get better.

We want to be better.

We chase volume.

We want to be the best at what we do

and we want the best tools for our people.

So no question.

But when it comes to locking in the price,

let me negotiate.

Yeah, yeah, I agree.

Does the OEM relationship fall into this a little bit?

Because the OEMs notoriously come in and do similar, right?

But they have a, they have a,

they have a, I guess they've got a dog in the race, right?

I'm going to tell you the best story.

I just got this yesterday about Volvo.

So, you know, my vice president,

Joe Bellotti calls me up and says,

Hey, you know, Volvo,

we're already signed on with my karma.

Full suite.

But Volvo's got a special service reception

service innovation package.

Yeah.

For all the dealers in the country, right?

All the dealers in the country.

And they're my karma price is $150 more than I negotiated

for our 20 store group.

How's that possible?

You know, and I just laughed like,

this is impossible that we have a,

we got a better deal than they did.

And I'm like, you know, so.

Or is there something a little extra in that

for them though is the question.

That might be the case.

I'm sure all we have partners,

you know, focused on just making,

you know, make their profit on selling cars

and service, you know,

and let us like,

let us make our best deals with these vendors

instead of they make their best deal with the vendors,

which by the way,

BMW has been notorious for this for years.

You know, so, you know,

how many times I've had to deal

with so many third party vendors

that have come in and like mastermind

and whatever and said,

well, I can give you that rate

for all your other stores,

but the BMW stores have to be up here.

But it applies to your co-op.

I'm like, yeah, what?

So we've had this move many times.

Which co-op could be a completely

separate conversation today,

which we, which unfortunately,

we don't have time for,

but Mike Marais,

president of open road auto group,

thank you for this masterclass

in vendor negotiation

in making sure that pricing is accurate

and that no new programs

are put in place without,

obviously our understanding,

I sincerely hope you get this issue resolved

and really thank you for helping all of us

that dealers see something

that potentially could be a big problem

and something that we see in our world

and I'm sure many others see.

So thanks for being on the show today, Mike.

Sam Uly, thank you so much.

And again, continued success on the show.

Thank you. We appreciate everything.

Thank you.

Thank you. Thanks, Mike.

Thanks for being here.

Thank you both.

Yeah, you know, I would love to say

I've never seen that before,

but man, I have seen that before.

Like, you know,

there is premium creep in vendor services

and it feels like you just constantly

have to be pushing it back down.

But, you know, the game at the field level of,

and you don't even have to point your finger

at one vendor or another in this case.

The game of, hey, everybody else signed up

when you need you to sign up.

Like, look, we're all good at selling

and most great vendors have ex-car people

that are in selling

and so they kind of learn the quickest path

to the close.

When if I'm working with open road

as an example, I'm going straight to Michael

and I'm going to have that tough conversation

and I'm going to sell him

or I'm not going to take my toys

and try to play around with his business.

When I play around with his business,

that brings liability on me,

my company, my product

and heaven help anybody

that tries to do that in our group

or anybody else's group.

So transition.

Oh, go ahead, Julie.

Go ahead.

No, I was going to say that's just

and that's just entering the right way.

This is another example of you just have

to keep your eye on the prize at all times

because even the vendors that do things

the right way,

we're all constantly iterating

and evolving the products, right?

But you need to make sure you're constantly testing it.

So along with price creep,

there could also be some products

that end up getting rolled out

by these third party vendors

that don't benefit your business.

So it's really important to not just,

you know, sign a contract

and assume that things are going to go great.

You got to be policing it every step of the way.

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and the content we have on today's show,

including that awesome masterclass

and vendor management negotiations

from open roads.

So next up today,

we go to General Manager of SAMPAC's

five-star Chevrolet, Allen Brown.

Allen, welcome to the show.

Hello, hello.

How is everybody today?

Doing good.

How are your vendor contracts today?

Are you reading this whole thing?

You need to go back and look at them?

I took a few notes from Michael here.

He's got it buttoned up pretty tight.

And I loved your comment about,

hey, great process,

but also be careful

that you're not boxing your people in from that point.

But hey, it sounds like they're meeting weekly.

And if they're doing that,

then they've got good forward progress with it.

It is a balance

because you want the GMs to be able to make decisions

that help increase and better the operation.

And I would have hoped in his case

that that rep is working with the GM

to create a better process

or test something or try something.

But you've got to understand the impact

and everybody's got to be aligned that it's okay

because it's not their business.

It's not the vendor's business.

But we have so many hands in our business pot

between OEMs and vendors

and all the other people trying to help us

for a fee, right?

To his point, everybody's feeling margin compression, right?

And his pay playing is geared towards gross

and I'm sure he's got great longevity on his teams.

And so you also have to be very cognizant

of the dollar spent.

Sometimes can't be a dollar in place.

Yeah, for sure.

Well, hey, let's go to the first question

that we always ask everyone, Allen.

How's biz?

And as you answer that,

tell everybody a little bit about yourself

and the auto group you work with.

Yeah, so I'm Allen Brown, obviously,

Sandpack Auto Group.

We have six stores here in Dallas,

four of the largest Ford stores in the country.

One of the largest Subaru stores in the country.

And then the Chevy store that operate here.

You know, I'm in the same market

with the number one Chevy store in the world classic

right down the street from us.

So obviously Chevy perspective,

there's a lot of competition.

And so, you know, over the last,

I would say 30 days or so,

because it's been hyper competitive

from a pricing strategy standpoint.

We've actually taken a step back

because a lot of our team is very long term

and paid from a gross perspective.

And we've kind of pulled back on being hyper competitive

on those negative growth fields.

And you know, we're holding the line okay

in a lot of ways.

We're very big in fleet,

very big in parts and service,

but from a new car perspective,

you know, we're focusing on experience

and gross right now.

And actually it's penciling up.

And you know, with my topics on EV,

that ought to be a fun conversation

where we mirror,

where we match gross

and in an EV conversation.

Well, let's go there.

Let's talk EV conversation.

Tell us about it.

Well, you know, I see the EV business,

obviously it's growing momentum.

We see it in every market.

In fact, I think Chevrolet was very pleased

to see that the North Texas market

has been performing at the pace

that we've performed at.

I think we have absolutely exceeded

their factory forecast from that regard.

You know, I think our only concern

from, you know, from my chair,

looking at things,

especially from a GM financial standpoint,

you know, what these cars look like

in 24 months when they come back.

And you know,

everybody's chasing a cell phone payment

on an EV Equinox

and they're obtaining it

in a competitive market,

you know, a 220 or 240 per month payment.

And so what does it look like

when those cars come back

and with that residual value

that's probably overinflated, right?

And then what does it look like

as a retailer for us

when we try to put Mr. Smith back

in an EV Equinox in 24 to 36 months?

Are we going to have a massive Delta

between the current payment

and the new payment?

And is that going to put the customer

in an adverse situation?

Is it going to put us in an adverse situation?

Yeah, how are you preparing for that?

As a GM dealer in August 25,

is there anything you can do

to prepare for that potential outcome?

Or do you just roll?

Well, you know, I mean,

obviously you don't want to take away

from the moment that we're having

with the customer,

especially someone that,

you know, Mr. Smith has never owned an EV before

and has his entire life.

You know, if you think about

what the dealer network

has really adapted

and overcame in the last 18 to 24 months

with charging system and infrastructure

and how to use the app.

And when you travel out of town,

you know, this is the app

is going to guide you and direct you

based on utilization of the car.

You know, there has been a lot

that's gone into this.

So I don't think anyone,

nor should we worry too much

with the client face to face

about what 24 or 36 months

into the future looks like.

But it is a concern with the colleagues

in and out of market

that I talked to the app stores.

You know, how are we really setting up

the EV market for the future?

So with you selling,

how many EVs do you sell a month currently?

Let's say on average, it's eight.

Eight, okay.

And then the rebate goes away

in September, end of September.

How are you prepared?

You know, do you expect

that demand to fall off?

Do you expect it to go away?

Do you think it'll right size?

Well, the leadership business side

of Val and Brown is we're selling

to the wall between now

in September 30th, right?

And I think a lot of our dealers

out there are the same mindset.

And then we've got to then see

where does not just Chevrolet

but all the manufacturers,

what do we do going forward?

October one forward.

You know, we all know that the manufacturers

are doing massive subsidy, right?

And in a lot of cases,

I think we would all agree

that they've taken away incentives

from ICE cars to prop up the EV market.

So when that leg drops,

you know, is there really that type

of resources to also tap into,

hold the line where we're at

and add to it?

I think that's our concern going forward.

Yeah, interesting.

So how are you doing with the used cars?

Sorry, with used cars, EVs,

we talk about it all the time.

You know, it's one of the backbones

of the car dealership, you know,

used cars and so many people

are averse to doing the EV thing.

And we see especially a lot of our Texas guys

are crushing it on the EV used car scene.

Are you leaning into that as well?

We've done very well.

You know, it's about the price point

and them qualifying for the used vehicle incentive,

$25,000 and below, if I remember that correctly.

So, you know, that's a very, very important driver.

But, you know, when you look at those cars

and you think about the client that first bought it,

imagine the haircut.

We know that we're doing well with that.

But, you know, Elon's figured out

how to sell everyone,

regardless of who they are.

They're selling everybody at Sticker, right?

And so, you know, we know where they bought that car

and 24, 36 months later,

we know what we, you know, acquired the car for.

And there's somebody that's taken a pretty big haircut.

For sure.

Yeah. So, hey, let's transition for a moment from EVs.

It is going to be what it is.

It's fast.

It's fascinating to understand,

I think for you and I to see,

you know, how are different dealers

kind of closing out this moment in time.

Like, there's a certain number of days

before this moment in time ends.

And I think part of what you're describing

is there's excitement around it

because there's an opportunity,

that cell phone payment.

I love that, by the way.

I'm stealing that.

We're going to start talking

about cell phone payments and EVs

until we can't anymore.

And that's what we do in automotive.

We capitalize on the moment.

But I want to talk about,

you recently were honored by Jint GM

for receiving the Financial Presidents Club Award.

And you have something that's called

a signature pep rally strategy.

And it's defined as an energized,

transparent monthly gathering

that celebrates team achievements.

What the heck is this?

And how does this help you sell

a heck of a lot of cars

month after month,

whether it's EVs, gas, whatever?

Well, you know, when you really

peel back the layers of any of us

that's been on the retail side

for a long time.

And you know, I started when I was 18 years old.

And now I'm 35 years in the business.

And you know, I looked back on that

and it was because I had really good mentors.

And you know, mentorship is about transparency.

And so when we go into the pep rally question

of the show, we're very big

on having a monthly pep rally.

We have the factory show up,

the financial arms show up,

you know, the accessory side of

general motors and everyone on our team.

So from Porter to general sales manager,

service manager, we're all in a big circle

if you can imagine.

And you know, if you want to read deeper on this,

we had an automotive news article

that actually came out and did

in a pep rally experience.

And at this point, yeah, and you know,

what was fun about this particular experience

was not planned.

But we had on the books,

the high school marching band

in our market, they were there.

So when you walked into the shop,

felt like you're walking into a high school football game.

The little hair on the back of your neck stands up.

And we literally go through birthdays,

anniversaries, top performers of the month.

We go through how we did as a team

against forecasts.

And I'm fully transparent with every number.

And then we talk about the new month

that we're walking into together

and we talk about what that forecast is.

So within this 20 minute window of time,

everybody walks away with love and appreciation, right?

They also walk away with an understanding

of we pushed you pretty hard last month

and how did that unfold for all of us?

And then what are we going to go after in the new month?

And if you look online or you read the article,

there's a huge blackjack wheel.

And this blackjack wheel, obviously,

if you hit blackjack and blackjack has four points on it,

you win $500 cash.

The other numbers pay anywhere from $100 and $250.

And we have about well different categories

of employees of the month.

So if I personally, for a moment,

as we talk through this, reflect back,

what kept me in the business?

It was great mentors that recognized my performance

at key moments of time that kept me hooked up in the deal, right?

I'm excited about growing my own way

of approaching the auto industry

and developing in that piece of it.

And so the history of the store,

the first five years of ownership, it failed.

It had a lot of trials and tribulations.

In the last five years, we've been voted

top 100 best places to work

and have the lowest turnover in our automotive group

and our automotive group has very low turnover.

So it was a very, very tough bar to achieve.

But we've done that through hiring good people,

putting the right people on the bus,

and then equipping and encouraging and training

and being alongside of them with good solid communication.

And that's what our pep rally does for us.

So Alan, you've given us a lot of different things.

So I want to pull on a bunch of threads,

almost kind of rapid fire style.

So first of all, you said one of the results of this

is lowest turnover in the group.

What's the turnover?

How do you measure that just kind of briefly?

I believe last year it was 7%.

So yeah, that's all aspects of the store.

And what day of the month are you typically doing

this pep rally?

Is it the beginning of the month?

First of all, the early of the new month.

Okay. And how long is it?

How long do you do it?

20 minutes.

How do you get a marching band in in 20 minutes, Alan?

They're marching.

Yeah, they got here about 30 minutes before.

You know, it's pretty easy to toss up between the Mariachi band

or the high school marching band, right?

You don't hear them comment as they're crossing

through the dealership.

And what's your way of recognizing?

Like, when you talk about your recognizing people

and you're like, what is the method

during that meeting to doing that?

So let me walk you through it.

We'll start with birthdays and anniversaries.

And the milestones of a birthday.

And then we go into the milestones of 10 year.

And when you're celebrating someone that was with us

even before the buy sale that took place,

you know, almost 12 years ago, 11 years ago.

So we get a chance to really recognize that

and see that and celebrate that.

And then the milestones of the obvious,

salesman of the month, tech of the month,

parts person of the month, support person of the month.

Business office person of the month.

But here it is, I want to give you some insight

because this thing, if you allow the voice

of the employee to come up through it,

you will uncover some amazing moments.

So we had our techs challenge us about

two and a half years ago and said, hey,

the one or two techs in the shop out of 14,

15 techs are winning it every single month.

And a lot of our shops have that

for one reason or another, right?

And so they said, we'd like to create a category

where we vote on ourselves and have a tech

attitude, production, tech of the month, right?

I love that, I love that.

That's awesome.

Yeah, and so here it is real quick.

The techs, our human resources created

an online survey that was a blind survey

nobody could see.

And they got to survey each other.

And they got to write comments blindly.

And I will tell you when you read them out,

it'll almost bring tears to your eyes when you get to say,

hey, tech A is being honored.

But before I tell you tech A's name,

here's everything every other technician said about you.

Clean, strong, great attitude, always on time,

willingness to help, right?

And you go over those 10 or 12 beautiful comments

and you announce their name.

And what's cool about this,

we might have people on our team

that have never been recognized publicly

among 70 or 80 people in their entire life.

And I've had people bring their wives

knowing they were getting recognized

because they were salesmen of the month.

I had just this last pepper off.

I had a mother flying from Florida

because her son was salesman of the month.

So can I tell you something, Allen?

Recognition like that isn't just a nice to have.

It's a need to have an automotive today.

And it's the difference what you're doing

in your auto group.

And we do a similar.

I'm going to learn from you.

We may implement a part of it.

It connects the individual's efforts,

however visible or invisible, invisible,

with the purpose of the organization.

And it drives purpose into their life and their work.

And I think a basic human right in automotive

and in any industry in today

is to know that as we invest our time,

we're doing it towards something bigger

and greater than ourselves.

And you're doing that by highlighting something

in a way that it brings in family

and it brings in other people for that recognition.

Technicians, parts people, they don't usually get that.

So I just think it's awesome

that you guys are doing that.

And Allen Brown, thank you for being on today.

General Manager, Sam Pack, 5-Star Chevrolet

for sharing this awesome process with us, Pepp Raleigh,

and a little bit on your EV strategy, Allen.

Thanks for being on the show.

Thanks, Allen.

The producers are, you know, I got to tell you,

we do something similar at Ziggler Auto Group.

So we have something called a diamond drop.

And when some people first come into the group,

they're like, wait, what is this?

And it's basically just a recognition.

It's a thank you from one employee to the next.

And at the beginning of our version of a Pepp Raleigh,

we read through these.

And I've seen people tear up at the thought of it

because they're getting recognized in a time and place

when they're usually not.

So all right, let's transition over to Anna Delvolar,

our head of editorial content.

Now, Anna, welcome to the show.

And you know what's crazy?

You know what's crazy is we end up on such a time crunch

because we have so much content packed in this a little time.

Anna, you've been watching the buy-sell market like a hawk

with Q2 data now officially out.

There's some key trends emerging, Anna.

Tell us about those trends.

Yeah, absolutely.

It's going to be back guys.

And this week, I got to have kind of an early sneak peek

at the car dealership guy podcast episode with Allen Haig,

Mergers and Acquisitions expert.

It was so good.

Yes.

And what he had to say was super eye-opening,

kind of mind-blowing.

And I just want to dive in.

And he mentioned that public dealership groups are pulling back,

brands are fluctuating in value,

and there's a cohort of dealers

who made big bets during the pandemic

that are now kind of biding back.

I shared some of those signals that Allen gave me

with some acquisitive dealers.

And they kind of agreed that the buy-sell market

is kind of nearing a turning point.

First, public companies acquired just 13 rooftops

through the first half of 2025.

That's compared to 22 stores during the same time last year.

It's a 41% decline.

Meanwhile, private buyers picked up 179 stores

and actually increased their activity.

And that's because many sellers are still anchored to 2022-2023 valuations

and when the bid-ask spread gets too wide,

as it has this year, public companies walk

and opt for buy-backs and other things.

But private dealers are much more flexible,

much more tolerant of risk,

and they don't need to justify acquisition premiums

to shareholders.

Private dealers still have conviction and urgency,

especially when the right store opens up.

But this isn't just about who's buying,

it's also about what they're buying.

Take Audi, for example.

The brand just saw the steepest valuation cut

Hague Partners has ever recorded.

The chief reason being that Audi doesn't produce any vehicles in the U.S.,

which makes them one of the most exposed brands in today's trade environment.

Allen told me a story about a buyer who was locked into a deal

with two premium stores and an Audi rooftop,

and when tariffs came up, the buyer nearly backed out of the whole deal.

But brands like Toyota, Hyundai, and Kia all saw valuation bumps

primarily based on their strong product lineups.

But here's the kicker.

I've spoken with multiple dealers who are buying distress stores

for millions less than what the sellers paid for them just two or three years ago.

One dealer buyer told me he's acquiring a store

for around $13 million less than the seller bought it for in 2022.

And another store acquired previously for over $15 million,

lost $4 million in the seven months that the owner had it.

So they decided to throw in the towel.

We don't really have any hard data to back up this trend or anything,

but I've had several anecdotes from dealers

and it just doesn't seem to be isolated incidents.

And if this cohort of motivated sellers rather grows larger,

the number of dealerships available to buy will tick up

and likely pave the way for further consolidation.

Ultimately time will tell how all of this plays out,

but these are the trends we are keeping a super close eye on.

Anna, thanks for the feedback.

And by the way, it reminds me an automotive, the golden rule.

Buy low, sell high.

Don't buy high, sell low.

And it seems like you're starting to see the converse trend of that.

Anna, thanks for sharing the perspective of the story.

We're going to be excited to have you back next episode for the next story.

We love what your team and you and your team bring to the show when you're on.

So thanks, Anna, for being on.

Thanks, Anna.

Thanks, guys.

Lots of great comments today.

So Jason Pittick says,

Alan is a natural culture builder,

one of the most humble and genuine GMs out there.

Recognition is a dying art these days.

I love that.

It's fascinating because I think in automotive,

some people are afraid to recognize because they think,

hey, if I recognize too much, people will get ego and then they'll be uncourageable.

What he knows and a lot of us forget is there are so many roles,

so many faces inside automotive that don't get that recognition.

This is core.

You've got to do it.

And Jason also says no one wants to leave and everyone wants to join places like that.

Nate, the truck driver says,

fun fact, I served in my high school marching band.

We've got a 20-minute gig for you if you want.

Perfect.

And then Dan C, props to the producers of the show here.

The producer of CDG must not be an easy job.

Action, packed agendas.

Wait, what about us?

I want some.

I get all these little notes scrolling across the screen.

We get the applause.

That's fantastic.

I love it.

So launch live now.

We love what they bring to us every single week here.

So Julie, great show.

We're looking forward to Monday.

Excellent.

Right back at it.

So to our audience, our listening audience out there,

thanks for watching The Daily Dealer Live today,

where we break down the biggest moves in the car business as they happen.

Don't forget, we're here live every Monday, Wednesday, Friday,

which means we'll be back live Monday.

So if this is your world, hit like, subscribe,

turn on those notifications so you never, ever miss a beat.

And everybody, we'll see you next episode.

See you guys.

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