Perdikis on Gov. Shutdown, Wood on Recent Buy Sell, Huff on Used Philosophy | Daily Dealer Live

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

I'm your host C.M. Dark and welcome to this the space where Automotive comes together to learn,

to share, to grow. Thanks for choosing to be here on this Wednesday, November 12th. Let's jump

straight into today's auto industry headlines. First up today we turn to the CDG Bicell Tracker

Lithium Motors is back in the headlines after acquiring Porsche, Beverly Hills and Audi Santa

adding an estimated $450 million in annual revenue to its portfolio. Lithia says the two

stores are positioned to become among the highest volume dealerships in the world for their respective

brands. That brings Lithia's total acquired annualized revenue for the year to an estimated $2.1

billion larger than some of the largest private groups. Meanwhile on the east coast, Timbrook

Automotive has picked up right-way Hyundai in Jamesboro, Virginia from Mark Wright. The newly

renamed Williamsboro Hyundai continues Fred Timbrook Jr.'s steady expansion along the eastern

seaboard. Timbrook has now grown to 20 dealerships adding several Hyundai, Mazda and Chevy stores

in the past year alone. Lithia keeps scaling at the national level while operators like Timbrook

are carving out regional dominance. Both are betting on growth through consolidation as retail

competition tightens heading into this next year in the 2026.

Next up today, the used car market's traditional role as a pressure release valve for affordability

is being tested. It's being challenged, leaving buyers and dealers alike in a delicate dance

searching for value of mid-rising costs. According to Edmunds, the average transaction price for

three-year-old vehicles hit $31,067 in Q3. That's up 5% year over year, meaning late model used cars

are now brushing up against certain new car model prices, forcing buyers and dealers into tough

for trade-offs. But EVs were the exception ahead of the federal tax credit cutoff. They sold faster

than any other segment averaging just 34 days on lot. The conversation at the dealership level

is turning from simple supply and demand to the nuanced calculus of who can afford to buy and

what they're willing to sell for. And next up today, turning to the finance market,

auto credit loosened slightly in October, even as approval rates dipped according to a new Cox

automotive report. The company's all loans index inched up to 98.3, marking a small month-over-month

gain and a 4% jump year over year that continues a gradual trend of easier credit that started

late last summer. Approval rates actually fell to 72.6%, but Cox says lenders offset that by

writing more subprime loans, stretching loan terms past 72 months and allowing smaller down payments,

all of which made it easier for buyers to get financed. And when lenders loosen credit access,

the dealers often benefit from increased sales volume and higher gross profits in the short

term, especially among subprime and near-prime customers. However, the true operational impact

surfaces during the next purchase cycle when many of these customers return to the dealership in a

more precarious financial position, a.k.a. upside down on that 72 or Heaven Help Us 84-month loan.

Finally, up today, Subaru is tapping the brakes on its EV plans. The automaker says it's retooling

its $10 billion electric fasion strategy to better match what customers actually want right now,

which is more hybrids and fuel-efficient gas models. Subaru president Atsushi Asaki told

reporters the company will delay full-scale EV investments, calling it a growth investment

instead of an all-in-EV push. For dealers, this could bring some near-term relief,

a product lineup that moves faster, aligns better with current buyer demand,

and doesn't require heavy new infrastructure. But at the end of the day, Subaru isn't

abandoning electrification, it's just slowing the pace to protect profitability and align with

market reality. Something Subaru has done all the way through COVID and certainly very well over

the last five to 10 years. And that's a wrap on today's industry news. Yuli, welcome back.

Happy to be here. Joining back in the co-host chair, we got a lot of cool stuff coming up,

not only today. We do. We've got a dealer here to talk a little bit. Government shut down. We've

got great conversation and used cars coming up among other things. But tomorrow on Friday,

Brian Benstock's joining the show for a special roundtable to announce an industry first.

He's teased it in the past on the show last week. 900 service drive vehicle sales. So if you want to

know a little bit more about that, be sure to check in tomorrow, 1 p.m. Eastern, or I'm sorry,

Friday, 1 p.m. Eastern. What would that be? The 14th of November, 1 p.m. And Yuli,

CDG circles. We've talked a little bit about that. The CDG circles are a cool tool. It's a great

conversation as dealers chat peer to peer with other like dealers, similar roles, responsibilities.

Signups close at the end of November. So whoever doesn't register now will be placed,

won't be placed in a group till at least April of 2026, which, I mean, come on, in a world

race to execution, it's kind of a waste of time. So if you want in on that, make sure you join up.

And what a cool conversation we had yesterday or went on Monday with a bunch of dealers,

including with, let's see, we had, oh my goodness, why am I, my mind is probably went blank.

We had, well, so Monday, we had a great conversation. Anyway, there were some,

there were there, there was some information dropped. We're going to actually get a response

to it coming up on Monday. There was some information dropped on Cox's Viato.

Oh, Brian's, Brian Cramer, Brian Cramer. Yeah. Yeah. So Brian Cramer made some comments about

accessibility. Their tool has cars.com to to Carvana and Carmax data. And we're going to give

Cox a chance to respond with their Viato products. So Monday, we'll have a response on that. So

be sure to join us for that if you want more information on that. Other than that,

anything else you leave before we dive into today's show? I think we just got to crush this one.

All right, let's do it. All right. First up today, let's turn to CEO Coons motor,

a not a stranger to the show, Alex Perdicas. Alex, welcome to the show.

Hey gentlemen, how's it going today? It's fantastic. Thanks for being back. We always

enjoy having you on the show. Alex, how's biz? Thank you. Hey, we're ready for this government

to reopen. We're here in the DC market. Business is actually fixed ops is killing it for obvious

reasons. And sales has been not, October was a little softer, a little pullback from the September

and August numbers that we were trending. Traffic was still up, believe it or not,

in September over, I'm sorry, in October, over the prior year. And sales were up a little bit.

So that's a positive. And I think right now, November is actually is trending in the right,

in a better direction. We're actually ahead of October. I think a lot of our, not to say

constituents, but clients that are, you know, government workers here in the area,

because we have several hundred thousand, you know, government employees here,

I think they're feeling the end's coming. So that being said, people are starting to make a,

you know, they're gaining confidence to make a purchase decision. And, you know, we're also running

with a government shutdown program that we launched on October 1, when the government shut down.

So before we go into that, Alex, because I want you to share the program with us.

It's interesting. Anyone who's ever tried to get on an airplane in the past week, 10 days,

has felt the impact of this shutdown through TSA and airport delays, which actually is kind of a

smart strategy. If you think about it from the government standpoint, trying to get

max pressure applied, obviously snap benefits and some of the other programs that government

has out there have been a pain point for those in need of that. How have you in your dealership,

in your dealerships, given your geography, what, how has the shutdown manifest back to you?

Is it a topic talking point with customers? Is it something that they're less interested in

making purchases over? Where are you seeing the pain point, Alex? So the pain, though, I think

it's not every customer that's in the area, but you've got a government shutdown that also

that impacts also federal contract, you know, defense contractors or different government

contractors that are in the area. So it's not just the government employee, you know, that

one person in and of itself. So it kind of spreads, right? It's kind of like a web of,

you know, there's some involvement with the government somewhere, you know, with most,

with a lot of organizations and a lot of people in the area. So it's more of just, I think it's

just more of a concern and it's a confidence issue, right, in terms of wanting to make a decision.

And so I think for us, it's doing what we can as a leader in the community to offer them some

sort of a peace of mind to say, you know what, you know, you've helped us become who we are

in this market. You know, we're, you know, not even seven, eight miles north of the city,

even though we're in Maryland, you know, where our main stores are in Silver Spring, Maryland,

and Bethesda, Maryland, Bethesda, Maryland's not even, you know, it borders on to Washington DC,

Northwest Washington DC. So we're right there. And so we get a lot of, you know, we have a

lot of people that are clients that are obviously been government employees lifetime or even just

current government employees that have been, you know, they might be attorneys, they might, you

can go on and on, all the different facets of employment within the government. So it's just,

it's an impact and somebody may not be a government employee, but they might have a child or a relative

or a niece, nephew, whatever it may be, aunt, uncle, parent that works. And so it kind of has a

trickle down effect on everybody in the area. It's all really people talk about. Now, so with

that said, you know, it's our, I feel like it's our responsibility because these, these clients are

foundation of who our organization has become. And I feel like it's, it's our responsibility to kind

of take that leadership role and offer something back. So it's interesting, you bring that up. So

Grant Cardone was on the show and he once talked about how an automotive, we get really good at

like creating opportunity in chaos, right? Opportunity in adversity. So you've got your

message, which is you want to give back to the customers that put you in the position where you

are. What specific programs did you put in place to help attract those customers? And what was the

net impact of that? So, so two specific items that are out there. Number one, anybody that

owns a Ford Lincoln or Mazda, and it does not have to be purchased from any, any of the Coons

Motors dealerships. Okay. So anybody in the DMV that owns a Ford Lincoln or Mazda, that it was

either, either furloughed or laid off, you know, through this, through this, this, you know, government

shutdown, we will provide you with the free in-home mobile service that includes a whole change and a

tire rotation. So, you know, you never have to, you don't have to come into the dealership, nothing.

I mean, you know, you know, these people obviously aren't at work. So, you know, coming into their

home is probably perfect for most of them. So we will actually come to your home, take advantage of

our mobile service vans that we have with Ford and Lincoln, because we can work on any vehicle.

And it doesn't have to be, you could have bought a used car from us too. It doesn't have to, you

know, you know, we will handle those clients as well. That's a non-brand, right? So with that

being said, you know, anyone, anyone that, that, that takes advantage of it, the van is going to

come to your driveway, we will pull up and it's great, it's great for the client and it's great

for us. We get to show off our vans and all these fantastic neighborhoods around the DMV.

The customer gets a free all change, free tire rotation. Again, they do not have to have bought

a car from us. So that's been, you know, that's one of the big things, right?

So this is only, only during the shutdown, Alex, right? Or once it, okay. And how many

takers have you had on this? So we're over 50, right? We've done 50 so far as of this morning.

We've probably got about another dozen or two dozen, about a little over a dozen

scheduled already for the next week. Because, you know, we're just trying to, you know,

working into the schedule. And we've told everybody too, when the government reopens,

it's going to hopefully, you know, get voted on by the house tonight at 7pm. Once that reopens,

even if you've got it scheduled, as long as it's done scheduled by the time it reopens,

we're still going to honor it. And so Alex, what's your cost in doing those? And then,

and then how would you measure ROI on that? So look, I mean, the, the, the ROI,

no, I'll start with that, is just all the, all the goodwill, right? You can't really measure,

I can't really put a number on it. I've gotten count, I mean, a dozen plus emails, text messages

from, from different clients that have gone either to me or the service writer or the,

or the start service managers, where they just can't believe we're doing this, right?

And so they're the good wills and not to be, not to be negative on other organizations, but

Carmack's ain't doing this. Carvana ain't doing it. Asbury ain't doing it. AutoNation

ain't doing it. I can go on and on, right? Not to, you know, I've challenged them to do it.

I think it'd be great if they did and they, and they can make decisions, but we're the ones that

are also, you know, sponsoring your local youth club. We're the ones, you know, we're going to

hand out 2,000 pies Friday night at this Thanksgiving dinner. Like we do these types

of things. And I'm not saying us Coons as an organization. Oh, the local dealers. And so what

I think is important is that people remember your local privately, family-owned, operated

organization when it comes to times like this, right? Because these other organizations, while

they love to, their bureaucracy would never let them get it done. And what's genius about this,

Alex, is it has a predetermined start, right? And then, you know, it can't drag on forever.

And you're showing support for a group that has been severely impacted by something and letting

the general public know, hey, we support them. Like, you almost want to do two free oil changes

for the TSA guys who will show up and help you gals, who will help you get through the deal.

What does it cost you? Did Ford give any money to help with this? Or what does it cost you for

that oil change in the customer drive? We have, with mobile service, we have some incentives,

just normal standard incentives that Ford has put out there that, you know, just the

usage and the mobile incentives that we have internally with the fixed operations side with

Ford. But there's no extra money or anything like that coming in on this. Again, it's just,

and then, again, the goodwill, getting our name out there, reminding people what we do for the

community. I really don't care if we get card deals out of it or not, whatever. But I mean,

you know, a lot of the press has picked it up. And I mean, you know, obviously, the free advertising

is great. But at the end of the day, I just want those people to remember, especially the ones

that didn't buy from us, that bought maybe from, you know, another store. You're thinking about

that. You're doing something nice, right? I'm going to go to the Coons Ford store in Silver

Spring this time to buy my 1550 because this other store, you know, when I called them up,

they told me to pound Sam. So, you know, like, you know, I think, I think people will always remember

that. And then on the flip side, too, if you want to buy a car, and you've been affected by the

shutdown, we are making your monthly payments until the government reopens. So when did you

start that, Alex? Okay, so and that was on it, we've done a handful of deals, we haven't that

that's been, you know, that and and that were just like with the with the in-home services,

we're charging all this stuff, you know, to our to our goodwill internally, right? So Alex, how

did you ideate this? So it's the beginning of a crisis, you're starting to sense it's significant,

you're hearing everybody in your marketplace talking about it. How did you get to the point

where you're like, Hey, this is the idea, and we can make this work for us. And so I think that the

key is keeping it simple. And so and we were going to elaborate on some other, you know,

inspection items and things like that. My fixed ops director, who's fantastic, you know, we both

just said, you know what, let's just make it about all changes, right? Keep it simple. It's

like the Ford, you know, employee pricing program back in the summer, keep it simple. When we're

saying free and home old change, right? That's straightforward. And obviously comes with tire

rotation and so forth as well. But we just said, let's just hammer this, you know, free and home

old change. And so I think keeping the message simple resonates well with the customers, with

our clients. There's other industries in our area have done something like, you know, like a couple

of the local burger joints, for example, they're giving away, you know, free cheese burger to

government employees, like things like that. You just keep it simple. And I think the messaging

resonates really, really well. And I think that's why the service part of it is, you know, is obviously,

you know, gotten so much attention. The sales side of it, it's a little different. It's a little

more, you know, I think as a, as a, someone that just got laid off or not sure what's happening

with their, with their pay, with their pay, hard to make a $50,000 decision, you know, during this

time. So we get that. But we, you know, the handful of deals that we've done were kind of

distressed situations where, you know, at least a couple of them that I was involved with where,

you know, they got their car in for service, and they're staring at a $6,000 transmission bill.

And, you know, they got to make a decision. And so, look, hey, we're here for you folks,

you know, let's get you in a new vehicle, we'll take care of the payments until the government

reopens. And, and we know it's going to last, you know, maybe it does last a few months. But

the reality of it is it's never gone more than what I think 35 days now it's gone over 40.

So it's only going to go for so long. So Alex, just a ton of great comments off

social media, I want to go to a few of them. So Strada Works AI says it's nice to be nice, right?

Which by the way, everybody who's a MASH fan would remember Frank saying it's nice to be

nice to the nice, but MASH fan dates me. So Paul, Paul Salisman says the local dealer is important

to any community because it has more agility to make local impact. Hyper local action is so

important. And yet it's fascinating, Alex, not a lot of people take, I don't want to say take

advantage of it, but a lot of people hear negative news in the news. They wring their hands, run

around circles. The teams kind of get frustrated because it's like, Hey, this is impacting our

sales, this is impacting ourselves, our ability to be excellent. You've often talked about clarity

and consistency as being the backbone of your leadership strategy. This relates to that because

you identified the problem, you went clear to a message that was clear and consistent. And then

you as a team executed on it. Strada Works AI says, do you think your staff feel like they

have a positive purpose too along those lines? What impact to your team? Definitely, absolutely.

I mean, they love the messaging. And I mean, when you're dealing with a client that you've never

dealt with before, that might be 40 miles away and you're launching a mobile service

van into their neighborhood. And they're like in disbelief. They're like, we've never even done

business with you before and you're coming to my home to do this. So I think the service writers

and the service managers that get the feedback, it's a good feeling, right? And I look at our

industry as we're so blessed to be in this business. I feel so lucky to do this every day. I really

do. I have to pinch myself sometimes. I'm like, I can't believe I get to do this as a career.

And you can make such a big impact on people so quickly with just the smallest things. And so we

don't have to overthink it. And, you know, sometimes I think, and I've been, I've been guilty of

trying to come up with these ideas and programs and you start to overcomplicate things and then

you don't really understand why they work, right? So Alex, that would be my next question. So one of

the risks of a program like this is appearing to be tone deaf or trying to capitalize on pain

by tragedy. How do you get to that clear message with confidence that both serves your team because

you've got to win hearts and minds among your employees, but then also connects with the public

in a way that doesn't come across as like predatory or, you know, ambulance chasing, right?

I think the key is don't tie it into any sort of a payment, right, in a sense of so forget the

sales side of it for a second. Think about the fixed ops, you know, the in-home mobile service.

We're not qualifying it with anything. We're not, you know, because we had those ideas too,

like, you know, give them a, you know, give everyone a $500 credit, but then that means

you got to spend something like, you know, I think as long as you don't qualify it with,

you got to do this to get that, right? You actually keep it simple and you got to be

willing to do it, right? Exactly. You got to be willing to do it, right? That's the,

that's the next part, right? So fortunately, knock on wood, you know, we have a really great

organization. We've got great leaders. Our teams perform at an extremely high level,

and we can, we can afford to do it. I mean, if this went on for a year, we could continue to do it.

You know, I'm not, I've no, no hesitation, no doubt. I'm already thinking about the next time,

you know, the next shut down happens, right? It's your government shutdown program go.

I just, I think about it from a customer perspective, and even from an employee

perspective, doing good creates more good. When I just think about that, your, your

mobile service Ford van pulls into the driveway to do a free oil change. And I'm pissed off because

I'm a TSA agent and I've had nothing but grief for the past three or four weeks. Like, you're

going to own me as a customer for a long time. I mean, you're going to have my loyalty and I,

I hope so. Props to you and the entire team for doing that, right? That, that is, that, that,

that is a bold statement in the marketplace and it landed really well. So transitioning a little

bit from that before we have to go, you have really grown into a powerhouse in the mid-Atlantic.

What's, what's driving your current expansion mindset and what's your goal relative to the

expansion? I would tell you, well, first off, it's been like kind of, and we know when it rains

of course, right? So other than what we're already working on, because we're, we're working on

expanding our current operations just from a footprint standpoint, right? So, you know, we've

got, you know, as an example, we've got 40, 46 service bays. I got 47 technicians. Like, you

know, we need, you know, we're looking, we're looking to ramp up our fixed ops. And I can say

that with confidence because of one thing and it's our people. Okay. And I, and, and with, with the

right people, you know, anything's possible, right? You can't do it on yourself. You know,

as much as we try, I get up very early every day. I'm up at four o'clock studying my traffic

reports, studying my grosses, studying all our leads. I mean, that's, I'm obsessed with that,

but I can't do it myself, right? I have to be kind of the person to get people going in my mind.

Like I've got to, you know, I got to, I got to start that day early and get, and get people

tuned up, but I can't do it myself. And I think over, over, you know, I'm going to be going on

30 years in this industry soon. Like you start to realize, you know, after, after, you know,

after a while, how important your people are. So we've had a lot of, I mean, it's been, it's

almost mind boggling the amount of opportunities that have been presented to us in the last,

I'd say 90 days and had a long meeting with a broker yesterday and it was a great meeting. And

I can go into these meetings with confidence because I've got great leaders and without the

great leaders, it's kind of hard to really, you know, sit down and say, okay, we want to do this.

This is what we want to expand in. These are the franchise, you know, and start to really look at

deals in a confident manner. If you don't know who's going to run it at the end of the day.

And truly, I agree 100% with you. The ability to grow and expand is directly proportionate to the

quality of leaders you have. So from your perspective, getting GMs and sales managers and

finance people and sales people to care about the business as much as you do,

execute at a high level, what are one or two key takeaways for other dealers listening

to creating the culture that elicits that care and concern about your business as much as

I would say it starts with the general manager, right? That's the head coach of the team. I look

at, I played football through college and my head coach was everything to me, right?

And your position coach is important. I was a linebacker, defensive coordinator is critical.

Like, you know, you got these important, you know, and I look at those kind of like in the

dealership, like the head coach, the GM, you got the offensive coordinators like the GSM,

you know, the defensive coordinators, your fixed ops director, like, you know, I've already played

this scenario so many times. And you got to have great, you got to have a great head coach.

And so that general manager, okay, not only compensated well, but they have an opportunity

to have some skin in the game, right? Or ownership options, right?

Give them ownership a little bit. You got to give them, you got to give them that opportunity,

right? So and that, and that's where, you know, I, my, my, my mentor, Jim Coons over the years,

you know, obviously, you know, he's retired now, but how he grew his, you know, his empire,

really, he had great general managers that people, you know, gave them opportunity to,

to put skin in the game. And so once you've got that, not just, you know, ownership from a mental

perspective, but from a financial perspective, and you've got the right people in place,

the rest kind of takes care of itself. As long as you're on the same page with, you know,

ethics and business policy and business practices and certain, you know, certain, you know,

certain processes that you want to see in place, you got to let those, you got to let

those general managers run. So Alex, what's the right percent buy-in? And the producers

are going to kill me because they're giving me notes. We got to move on. But Alex, having a

conversation with you is absolutely fascinating. So I'm going to hear, I should have two more

questions. So what's the max buy-in that you'll allow the GMs to have? And then another quick

question. Well, I think you start at five. Okay. And then it goes there. And you have, and the

buy-ins aren't, aren't a given, right? There, you have to have certain preset criteria that you

all agree on. And you'll say, Hey, Jim, look, you know, if we hit this in 2026, let's agree

that these are the three criteria. Here's a sales option. Here's a new car market share

number. Here's a profitability number. Here's a, you know, fixed option, whatever they might be,

right? The different criteria, obviously prerequisite is always going to be great CSI.

That's never an option to not have great CSI. As long as we hit these things, okay,

here's your initial 5%. And this is the value of, at that 5%, right? And then it's kind of,

you build it up over time. And I think you give that option, if things are going well,

you give that option every year. Will you allow them to buy it out? Or is there a max buy-in?

I'm not, for me personally, no, I mean, not in my, no, I mean, I'm looking to grow. I'm looking

to acquire and, and, but, but look, a general manager making a general manager commission,

plus 30% or 40% of a net, your build is a pretty, it's a great income. Good life.

Yeah, it's a great life. Well, Alex Perdica, CEO of Coons Motors. I have so many other questions.

We'll have to do it another time. No problem. But we appreciate you being on and sharing your

strategies during the shutdown. Hopefully to your point tonight, it's all over. So Alex, thanks for

being on. Let's go. Let's push it through. Let's do it. All right, guys. Thanks, Alex. Thank you.

Thanks for being on. Absolutely. So Yuli, that's always a lot of fun. And, and I do think, you

know, that is the challenge of our day is how do you get leaders, general managers, sales managers,

even different roles to care as much as you care. And, and to his point from a sport, I was going

to ask him who he played for. We got to ask that. I want to know, he said he played football through

college. I don't know who he played for, but maybe if he breeds positivity, man. Yep. Igor K says

he personally knows the Coons organization. So if anyone knows where Alex played, put that into

the comments. I'd love that. But let's talk stream companies real quick. Be first to market with

retail ready from stream companies, the proprietary platform that gets custom designed, compliant

specials live on your site within four hours. Learn how at streamcompanies.com. Again, streamcompanies.com.

We appreciate stream for supporting the great content we have today, including that phenomenal

conversation just now with Alex. And maybe stream can help us figure out where Alex played because

I thought his talk, his conversation about how it relates back to sports and leadership and

coaching is just spot on. So special thanks to stream companies for supporting the content today.

I don't see any notes on that yet in the comment field. Somebody has got to know. So I want to

know it just as a quick stream has four hours. Yeah, yeah. As we segue into our next guest,

just a couple of reminders, you can sign up for the fixed ops newsletter, which started last

Wednesday fixed ops Friday has been a huge feature. We actually have a brand new graphic. So on our

next fixed ops Friday, we're going to show a cool graphic. And we hope everybody fixed ops related

is here to enjoy the conversation. And then of course, as a reminder, you can sign up for the

annual NADA party in Las Vegas Thursday, February 5. It's a hot ticket for NADA 2026. We can't have

everybody, but we want to be able to have as many as we possibly can. So just dropped in the comments

here, Richmond. Oh, Richmond. Okay, very good. Very good. Did he did he put it in or through

put it right in the show notes? Yeah. All right, very good. I love the analogy of business back

to sports and the comparison back to it and just spot on about that ownership and how important

that great GM role is. One day we need to do one day, I would love to get a dealer panel. Maybe

this is for Hannah where we have a bunch of dealers on talking about the key things they look for in

a general manager. And then maybe even debating, do you give ownership or do you just pay really

well? Like what's the best way to get them to care? Because I think there's two sides to that

ownership argument that would be fascinating to have a conversation through. Use car director

at Fred Martin Superstore. Let's turn to Nick Huff. Nick, welcome to the show. Let me ask you

our signature question. While you're telling us how busy is, tell us who you are and what you're

doing. Yeah, Nick Huff, Fred Martin Motor Company in Norton, Ohio. We're just a little bit south

of Cleveland. Currently, I manage our use car operations here. And the famous question, how's

this? This is okay. I'll also be the one that says it always could be better. We're a big use

car store and we're also a volume Stalantis dealer. So we are put into that play of the

stair step program with Stalantis. And we're living the dream of that right now. And we're

just some context there. You say you're a big use car store and a volume Stalantis dealer.

What are the numbers looking like? We got some big dogs listening right now.

Yeah, well, maybe not as big as some, but we average about 230 retail use cars from this

location. We also have several independent use car stores in our market. From a new car standpoint,

Stalantis anyhow, we're averaging probably about 150, 155 new cars the last few months. So that

number that stair step program they put out there for us is really important. We're chasing that

number hard. We're seeing gross profits suffer a little bit because of it. For everybody who's

not familiar with the stair step program, in particular Stalantis, tell us what it is. What

is the program and what are you chasing right now? We're chasing volume. That's all it is. I mean,

from a Stalantis perspective, we're assigning objective and you need to chase that number to

hit that objective. And if you do, you're rewarded with a good lump sum incentive payment. If you

don't, you're left holding the bag. So there's different schools of thought here when chasing

volume, especially when tying in use cars. I'd love to know your take, given that you're selling

so many use cars, when chasing volumes, what are you doing with the use car ACVs? Are we trading

the use cars for what they're worth anyway? Or are you going back and adjusting anything to make

sure we're showing a profit? How are you treating this? Well, we're aggressive. At the end of the

day, do I want to be playing this game of chasing this volume? No. But that's the word we're in

right now. So we're going to, if we don't, there's just a whole many repercussions that we're just

not suited to absorb. And we need to get that volume. We need to take those trade-ins. We

do appraise cars for what we think they're worth. Are there times where we step up and pay too much

to make one of those new car deals? There are. But based on the volume, we can do that from time

to time, still move that car, put that on a used car a lot, and turn it in a quick amount of time

to make it make sense. Now, are you seeing any of those moves affecting your turn?

No. There's some trades that aren't ideal for our inventory from a retail perspective. I wouldn't

say it's affecting our turn, but there are trades that we take in that, not something I really want

to use car a lot, that we're going to wholesale relatively quickly just to get rid of that.

But now I think it's affecting our turn. Good. Well, you had said something in the green room

that's near and dear to my heart. Use cars. We all love them. And subprime credit. I mean,

I love subprime. I think Sam does as well. But not every dealership out there is really going full

bore into the subprime. You guys seem pretty comfortable with it. Let us in on some of your

strategies. How are you tackling the subprime? Well, we're in a market that supports subprime.

So we've got that going for us. There's a good amount of the business here. I will say, pre-COVID

happened. We had a few competitors. COVID happened. It made a lot of our at least new car

competitors get in the used car game, which now some of them are dipping their toe in the

subprime market. So I will say there's more competition, at least in our local market in

subprime than there ever has been. But we have a reputation. We've been doing this for a long time.

Some of our, a couple of our independent locations that we have do subprime leasing for the

lowest of subprime, let's say, or the lowest credit tiers to kind of get them driving a car,

get them something reliable. And then we have a path that allows them to graduate up into,

you know, more conventional car loans. And many customers we've seen over decades of doing this

started with a, you know, 3,000-hour buy here, pay here car. And today you're driving, you know,

brand new jeeps. Now, is that something you guys are doing in-house with a customer like that,

or do you tap someone outside? We do do it in-house. We recently strengthened our relationship

with credit acceptance, and they're absorbing some of that as well. But we do a huge amount of it

in-house for 25 years. So both get the answer. So you're leasing used cars then in-house,

and then once the customer has the wherewithal to finance the vehicle on their own, you're

allowing them the opportunity to do that. Yeah, or they just turn it into us and they go a more

conventional loan route, either on a used car or a new car. It's a great program to see people

graduate up through and, you know, you help people when they're down and out and are going through

something difficult in life, and they become super loyal customers over a long term.

I couldn't agree with you more. Listen, I've been beating the drum with my teams for

decades that we don't sell cars, we sell dreams, right? So that vehicle that you're putting in

someone's driveway is going to give them the opportunity to get to work, to go on a date,

meet their future partner, get married, like this is a big deal, you know, and those subprime

customers you keep for life. Let's get into, you know, a little bit of the how. You know,

how are you sourcing so many used car vehicles to support the operation?

Well, the good news of the SteerStep program is we're sourcing a lot from our trade-ins,

our new car department, which is our favorite way, you know, of sourcing a used car, of course.

We're also very aggressive from what we call a street purchase, you know, acquisition front.

That's people in our community and even outside of our community that have a car they want to sell.

We have dedicated processes in place to purchase those quickly,

write checks immediately, and then pay our staff, our sales staff, to do those transactions.

What's that look like for your sales staff? Because, I mean, a lot of people want to get

into this market, you know, buying cars from the street, and you just mentioned the compensation

piece. Walk us through what that looks like for your team.

Well, in summary, it's just a flat commission we pay per car they buy.

And we recently changed it. Now we're doing it based on the price of the car that they acquire,

putting emphasis on what we need to turn quick in our market, which for our area is, you know,

10,000 to 20,000 dollar cars. And for those cars, just to throw a number out there,

you know, we're paying almost $500 for one of our salespeople to acquire that car.

I look at it kind of like an auction buy fee. But I don't have to transfer the car,

it's going to show up on my lot for free. And I have the opportunity to ride,

drive, and do an OVD scan on that car before I buy it. So I'd much rather pay one of our salespeople

to administer that transaction and let me get a good read on the car,

opposed to go buy in the car somewhere else. And ultimately, we're just trying to drive down those

auction rental car acquisition numbers. And paying our salespeople a good amount of money to

acquire them is a big part of how we're doing that. I agree. As a used car director, obviously,

you have your hands on a lot of places. How do you make sure that you have this unified process?

Because I mean, I assume you're not numbering every car, you give some autonomy by rooftop.

Yeah, there's, well, there's a lot of great people involved, because it'd be impossible for

anyone person to put numbers, acquire or analyze appraisals in real time to acquire the amount

of cars that we do. There's a lot of good people, there's dedicated buyers that we have that have

been with us forever, that are not only veterans of the trade, but, you know, we have a lot of

trust in and they know what to do. They know how to appraise the cars. We have many used car

managers, same thing, most of which have, you know, our 10 year of used car managers, our average 10

years, probably 12, 13 years. So we have just people that have been with us for a long time,

with a high amount of trust that do great things, and really just comes down to having

those people around for a long time. They know what to do, they know how to do it.

And then we do go back and we look at some of the results and just make sure everybody's,

you know, doing what they're supposed to. But it's easy to manage when you have a good team.

For sure. And we talked about a little bit on Monday with Tully. We talked about the

relationship between the used car department and the service department. So what are you doing,

you know, under your rooftops to ensure that that's, that there's synergy between these two

departments so you can get those retail cars, even your auction cars. I'm sure you still check

them before you ship them out. What are you doing to maintain synergy between these departments?

Well, we have a good person in place that manages our reconditioning for the majority of

our pre-owned cars. And again, he's just like our other managers I was talking about, been with

us for a long time. He knows what to do. He's compensated on speed, a heavy way on speed and

efficiency. And he does great at getting those cars into the shop and dispersing that work

amongst our technicians, obviously, who were there to perform the work and get paid on it.

But it really just comes down to good people. We do have a great process that's refined from time

to time, small refinements from time to time. But really, again, it's just having a good person

that manages it and using a good tool, plug rapid recon, very basic, but good tool to help give us

that data and insight to make sure things are moving through the process that we need them to.

So you are using rapid recon. Now, when you say speed, what's that look like for you? How many

days to front line? Today, thanks to the executive summary by Rapid Recon, it's about 4.93, which is

a little on the high side of where we want to be. But when you look at the diverse

make and models that we service, overall, I'm happy with it. I just think we could see a small

amount of improvement there as well. So a lot of good comments coming in from social media. Maybe

we'll entertain a few of these before we jump. So any dealers giving lower ACV values or costing

new car department sales, according to Igor, agree or disagree with that, that lower ACV values

are costing new car department sales? I would generally agree with that. If you're trying to

sell new cars and the used car department has a trade that comes across the desk,

you can't be hitting it later. You're not going to get the car.

Just pay what it's worth and make a strong offer.

So as a Stellanus dealer in this rush for the volume on new cars,

from a used car director perspective, is that dangerous? Is that tougher? Do you like that?

Because you're seeing higher volume and new cars can make a sacrifice to the benefit of

used cars. What advice would you give Stellanus? Would, hey, continue this stair step program

that we chase or do away with it and let's have a more even and consistent approach over time?

I generally, you know, I can't say that I have a great solution replacement. I say I generally

don't like the idea of the stair step program. I don't think it's great for dealers. I don't

think it's good for the manufacturer long term. I don't think it's good for consumers. I mean,

we see, unfortunately, I'll just talk to these brands that are dear our heart. You know, if you

look at somebody that bought a wagon year, for example, two years ago and what they could buy it,

you know, now, a new one now for, I mean, it's really killing those resale values. So I don't,

it's not good for the brand long term. I'm hoping this is a temporary engagement that they have us

playing, but we'll see. I like having the opportunity of the trade. Yeah. Yeah. It is interesting

because in the news, we reported how used cars aren't quite the release valve. They were affordability.

They used to be the gap between new car and used car pricing is narrowed. And I think probably more

so in some of those OEMs that do stair step. So Stellanus, Hyundai, Nissan, some of those,

you're seeing a narrow or margin between what potentially you're seeing in some of those

used cars. Eager case as statistically data shows that dealers who hold back on trades to make value

values lose new car deals because of low trade offers, wholesale profit is not worth it over

retail profits. Agreed. You potentially miss. And that was actually a part of the whole conversation

with Brian Kramer. Last show was that there's value in actually over bidding on private sales,

trade ins, service trade ins in an attempt to get it and be competitive with some of these

national retailers who are just throwing bids out there all over the place. How do you deal with

CarMax and Carvana offers that walk into your store? Do you compete? Do you tell them, hey, go

trade the car in there and then come buy the new from us? What do you do there?

We absolutely compete. I will say it's a case by case basis. There are sometimes where we see

a CarMax or Carvana offer where they seem like they're on another planet and we'll let

out of those bids. CarMax specifically, my personal experience, just looking at their values

that they're putting on cars over the last two months, CarMax has not been Uber aggressive

right now. So it's been a little easier there. They're putting fairly light offers on cars

from what I've seen. So they haven't been a competitor. They normally are.

Okay. All right. Jason Pittock says hard to focus on the content with Uli's nice stash. So,

there we go. There's your stash there. So, Nick Huff, thank you so much for joining us,

talking about all things used cars, used car director at Fred Martin's super stores.

And you are also a member of CDG circles. Long time or just recent, Nick?

Just recent, just recent. I'm eagerly waiting the next steps.

Okay. All right. So you'll be joining in and you'll be participating in those conversations.

And we wish you all the luck as you continue to compete in this world of Stalantis and

stair step and all the things, new car, used car acquisitions. So thanks for being on the

show, sharing your perspectives today. Well, I appreciate you guys doing this a few times a

week and it's a pleasure to be here. Thank you. Thanks, Nick. All right. So we are going to make

another try at this and actually Michael Wood, GM Jaguar Land Rover, Chantilly coming live from

the lot on the dealership. Michael, there. Here. There he is. There he is. Nothing but blue sky behind

you. All right. So you were telling us, you recently made a shift. You're at a new dealership

with all the new things going on. As you work to make an impact on this store, what are the top

one or two things that you're doing this month to make high impact at your new store?

I'd say the first thing that I'm doing is really just, you know, making the charitable assumption.

You know, this dealership has been underperforming for a long time and I have to think after meeting

the vast majority of the staff that it's not predicated on bad apples. It's a lack of processes

and standards. So initially, I'm going to make the charitable assumption that they just haven't been

brought up the right way. And then hopefully we can teach them the way that needs to happen

before any attrition occurs. I don't like being a part of a buy sell where people go in and just

start chopping off stuff because their initial assessment is X. I don't judge a book by a cover.

I like to read a couple of chapters first to make sure it's something that's going to fit for me. And

if it's not, hey, I'm not opposed to getting a new book, but ultimately, I think the number one thing

is just making the charitable assumption with my staff, seeing if there's anything I can do to

help them better, make them better. And I need to be able to check the box that I've done that before

I can move on with trying to move on with anybody. I love that concept. Where did you get that concept

of charitable assumption and giving them the benefit of the doubt? It's another way of saying it,

but I like it. Will Gidera from Unreasonable Hospitality. Yeah. I think it's in chapter

seven of his book. He talks about that aspect about making a charitable assumption. Yeah. All

right. So you walk into an acquisition. This is an acquisition. Everything is in flux for a while.

What's one or two things that has surprised you that's been difficult in the beginning of the

acquisition in this particular one? Fortunately, this is my second buy sale that I've gone through.

And I think what was surprising about this one was the lack of information from the company that

was initially selling. So that's definitely kind of like slowed us down when it came to really

getting off the ground and everything like that. But really, it was how excited the staff was. I

mean, the organization I'm with now, Euro Motor Cars, has a phenomenal reputation in the marketplace.

And really the thing that got me to go to the company was I paid a visit to their Bethesda

Mercedes store. And in that store, they have a wall that has all of their technician pictures on

it. And on that wall, there were three father-son combinations. And I couldn't think of a better

testament to the culture of an organization that, listen, I don't have kids, but if I did,

I'm surely not telling them to get into the car business. Hopefully I can turn one of them to

like a lawyer or a doctor or something. But you know, more than likely or not, I probably wasn't

going to bring them into my organization. So the fact that there was three like that, I mean,

that said, that spoke volumes to me about the organization, how they treat about treat their

customers and their employees, I should say. So it's interesting, Yuli. I've done a bunch of

acquisitions as part of the Zigguratta group. So when I first came aboard, they were just in the

middle. If you can imagine this, they put they began a buy sell and bought what then was our

biggest acquisition. It was Mercedes Benz. It was Infinity. It was JLR, Jag Land Rover,

which makes me think of him in his situation. And then the COVID shutdown happened. And it was like,

Oh, no, like you have all these brand new team members, you have all this uncertainty and challenge

of, you know, economics and whatever, it ended up being one of the best acquisitions, I think Aaron

would say that that he'd made up to that point, because it was at a time of change and everybody

kind of rallied together, put new systems and processes in place. And now I think Hoffman

estates Mercedes Benz. Well, it's certainly within our group is one of the best run, best executed

stores in the group. So I love what he's doing. There's a lot of flux in this moment as he's

trying to implement these new practices and procedures. And it's just fun. I almost think

it'd be a cool business to like be a turnaround artist where you go into just poorly run stores.

In fact, we should do that as a show here one time, you go into a poorly run store,

and you see how quickly over and over and over you could turn it around. Because my theory is

culture is everything and systems and processes are everything and then attracting and hiring

and recruiting from Alex's point is everything and you combine those three things in a poorly

run store. And you can you can turn it pretty doggone quick. We should do that. We need to do that.

What's the cooking show Hell's Kitchen, right? Isn't that the one where they go to restaurants

and they turn it around in whatever and they, yeah, to your point, listen, adversity brings

our breeds strength or at least gives the opportunity to become stronger. So J420ACK says

there is a movie about that. And we need to find out what the movie is remake it yoga car says

fixer upper dealer. So we'll see fixer see all that eager case as Euro motors Mercedes in Bethesda,

Maryland is an awesome store. They compete with ASC Mercedes of Arlington, Virginia.

And then J420ACK says incredible. I have a staff from 1989. So that's long standing. And then back

to the car, CarMax Carvana Convo eager case as I match CarMax and Carvana offers 100% also use

tax credits as additional savings to the customer. So customers get higher trade value based on

tax savings. Then eager K finishes up with his most recent comment as we group made the best new

acquisition. They bought out herb chambers over 40 stores in New England. And all the stores

are highly profitable. They've got a great culture. They're well run. So yeah, that's fun. Well,

you know what? We're not going to have him back today. I don't think Michael Wood and his sunny

background there. But I do believe we'll bring him back on and we'll hear the rest of his story.

But for everybody, Brian Benstock, again, coming up Friday, we're excited to have him on the show

to make an announcement and show us this path to a ton of service lane business. Oh, 420ACK

says the goods. The goods. That's that's the one by the way with a with a cameo from Will Ferrell.

It's a it's a classic classic film and unknown says hey, that's what credit acceptance likes

to help with. We love helping dealers grow their business, give them tips on how to improve their

dealerships and what's trending in the mark. So props to CAC, again, a subprime lender and

provider. So, well, Yui, let's wrap it up to our entire Daily Dealer Live audience. Thanks for

watching Daily Dealer Live, where we break down the biggest moves in the car business as they

happen. Don't forget we're live here every Monday, Wednesday and Friday. 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, everybody. Thanks for being here. Thanks guys.

Perdikis on Gov. Shutdown, Wood on Recent Buy Sell, Huff on Used Philosophy | Daily Dealer Live

About this episode

Lithia Motors

Porsche

Audi

Hyundai

Mazda

Chevrolet

average transaction price

federal tax credit

subprime loans

upside down on a loan

Subaru

EV

hybrids

Lincoln

Ford

tire rotation

transmission

Stellantis

stair step program

subprime customers

trade-ins

street purchase

flat commission

$10,000 to $20,000 cars

synergy between departments

reconditioning

Nissan

CarMax

Carvana

Infiniti

Jaguar Land Rover

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