"Stop Breaking Even!" – The Playbook to Make Money on Wholesale And What Dealers Miss | Kirk Rogers, Head of Wholesale at McCarthy Auto Group
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"Stop Breaking Even!" – The Playbook to Make Money on Wholesale And What Dealers Miss | Kirk Rogers, Head of Wholesale at McCarthy Auto Group
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Term
high line car
A high line car is a fancy or luxury car that costs a lot more than regular cars. They usually have better features and performance.
Brand
Hyundai
Hyundai is a car company that makes many different types of vehicles. When they mention a 'Hyundai lot', they are talking about a place where they sell Hyundai cars.
Term
MMR
MMR is a report that shows how much used cars are selling for at auctions. It helps people know what a fair price is when buying or selling a car.
Term
salvage title
A salvage title means the car was in a bad accident or had serious damage, and the insurance company decided it wasn't worth fixing. This can make it harder to sell or insure the car.
Term
frame damage
Frame damage means the main structure of the car is bent or broken, usually from an accident. This can make the car unsafe and harder to fix, which lowers its value.
Car
Chevrolet Silverados
The Chevrolet Silverado is a big truck that's popular for carrying heavy loads and is often used by people who need a reliable vehicle for work or family.
Car
RAM pickup
RAM pickups are tough trucks that can carry heavy things and are often used for work or outdoor activities.
Car
Dodge Ram
The Dodge Ram is a big truck that people often use for work or to carry heavy things. It's popular because it's strong, can pull trailers, and is comfortable to drive, making it a good choice for many drivers.
Car
Toyota Camrys
The Toyota Camry is a car that many people like because it's dependable and good on gas, making it great for everyday driving.
Car
Toyota Highlander
The Toyota Highlander is a larger vehicle that can carry more people and stuff, which is good for families or trips.
Company
Auto Haulers Exchange
Auto Haulers Exchange is a company that helps people move cars from one place to another. They make it easier to get cars delivered on time.
Term
Smart Auction
Smart Auction is an online platform where people can bid on cars to buy them. It's like an auction where you can place bids to try to get the best price.
Car
Chevrolet Corvette
The Chevrolet Corvette is a fast sports car that many people love for its speed and design. It's been around for a long time and is very popular in car culture.
Term
aftermarket parts
Aftermarket parts are car parts made by other companies, not the original maker of the car. They can be cheaper and used to fix or improve your vehicle.
Term
OEM
OEM means Original Equipment Manufacturer, which is the company that made the original parts for your car. These parts usually fit perfectly but can cost more.
Concept
Carvana
Carvana is a company where you can buy or sell cars online. They make it easy by letting you shop for cars on their website and even deliver them to your home.
Concept
CarMax
CarMax is a store where you can buy used cars without having to negotiate prices. They have a wide selection and let you return the car within a week if you change your mind.
Term
blind bid
A blind bid is when someone makes an offer without knowing all the details about what they're bidding on. For cars, it means they haven't looked at the car to see if there are any problems.
Term
fender
A fender is the part of a car that covers the wheel. If it's damaged, it can affect how the car looks and functions.
Term
windshield
The windshield is the front glass of a car that helps you see out. If it's cracked, it can make it hard to see and might need fixing.
Brand
Chevy
Chevy is a popular car brand in America. They make many types of cars, like trucks and sports cars.
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I mean, what's the point of going to work
if you're not gonna make profit?
There are times when you take a loss,
because you can't avoid it.
You've missed something on the appraisal.
But again, overall, if you wholesale, say,
10%, 15% of your inventory when you come out
green at the end of the month, you did a good job.
Today, I'm joined by Kirk Rogers,
head of Wholesale at McCarthy Auto Group.
Most dealers treat Wholesale as a last resort break-even.
Kirk doesn't.
He's built a system where Wholesale
actually drives efficiency, protects margin,
and turns a real profit, and he tells us all about it.
A big thank you to our sponsors
for making this episode possible.
Cox Automotive, Automotive Mastermind,
and Auto Hauler Exchange.
And now, let's get into the show.
Kirk Rogers on the CDG podcast,
not to be confused with Kirk Cousins or Aaron Rogers.
Right.
That was such a bad, such a bad joke,
but you know, gotta keep it interesting.
All good.
I've heard them all, I've heard them all.
I bet you have.
Yeah.
It's good to have you on.
I, we were actually just bonding for the audience.
We were just bonding over Manheim, Pennsylvania,
the largest auction in the world right before this.
And you can.
It's a spectacle.
Yes.
Where it all started.
It's where it all started.
Used to go there every Friday.
What a place.
Shout out to Bob Holland said, if he's listening.
Yes.
I used to love seeing the Apple Cores.
He lines up the Apple Cores.
It's epic.
You kind of see how well the lane is going
by the amount of Apple Cores and lane.
Kirk, Wholesale is going through a moment.
I would say in general in our industry,
we know that used is continuing to be
an incredibly important profit center for dealers
in light of margin compression on the new side
and just the instability of the new car.
You know, OEM strategies, incentives.
Right.
Used has been just the hottest thing.
It's gone through some cycles, but you know, it's used.
It's always important as a dealership, obviously.
And you are the head of Wholesale.
I'm McCarthy overseeing nine rooftops
in the Wholesale strategy.
So, you know, I haven't done one of these episodes
in a while and I'm excited to just chat with you
about what Wholesale means today to you,
how you're navigating through that nine stores,
volume, auctions, no auctions.
So, we could really start,
we could start them in many places,
but I would like to start,
if you could just tell us a little bit about today,
your role as, you know, head of Wholesale
throughout McCarthy, what are you doing?
Like, what are you in charge of today?
What are you focused on?
I basically Wholesale cars for all nine locations.
We do try to keep everything on the retail side
as much as possible.
Obviously, we can't keep everything for,
you know, we don't have enough recon set up.
Car doesn't fit our mold.
Maybe it's a high line car.
Maybe it's 150,000 dollars saved.
We don't want to put on a Hyundai lot
so we might wholesale that car.
But my job is basically to make a profit, obviously.
And everything we do in the car business
make a profit.
And that's my goal over time.
I go to the auctions to send the cars
to the auction, I think we'll make the most profit
for that vehicle.
And I put a lot of thought and time into it
and research and show up and we do really well.
Kirk, do you believe,
do you believe that Wholesale should be a profit center
or is the goal to break even?
Like, should we realize all that profit
on, you know, the initial retail sale?
Like, how do you think about Wholesale?
I think the goal in Wholesale is to break even.
But my goal in anything is to make a profit
no matter what I do.
Wholesale car, buy a car.
I mean, what's the point of going to work
if you're not gonna make profit?
There are times when you just take a loss
because you can't avoid it.
You've missed something on the appraisal.
But again, overall, if you Wholesale, say,
10, 15% of your inventory and you come out
in the green at the end of the month,
you did a good job.
And if you don't, you need to readjust
and figure out what you're doing wrong
in the appraisal process and thought process.
And as your team go to work
and try to get back into the green.
But the goal is just to break even
and never go in the red.
Okay, Kirk, you started in the business
over two decades ago.
You've obviously grown throughout that time.
You weren't always running Wholesale.
Right.
But before we dive into the speed details,
how has just your role changed?
And the Wholesale landscape,
for you, how have things changed over that time?
We went through a couple of things.
You know, when I first got into the business,
a lot of stores were Wholesale and a lot more cars.
They were keeping, they were probably Wholesale cars.
Maybe they had over 75 to 100,000 miles
just automatically some of the auction get out of them.
Didn't want them on their lots.
Then everybody's kind of changed
to keep them more inventory on their lot.
Maybe keeping those higher mileage cars
for a different price point
for different types of customers
which we've had a lot of success with.
COVID changed the game a little bit.
A lot of people were wholesome on a lot of cars
making a really good profit.
You know, the digital part of it
or the online auctions have changed the business
a little bit with more visibility.
I still believe that the true Wholesales,
the six to 11 year old cars,
you know, they do really well at physical auctions
with physical buyers.
They want to see the car, smell the car, drive the car
and make the best decision they can make.
They don't have as much assets as we do say.
They don't have a fixed office apartment
a lot of times to cover them on
if they make a mistake to precoup their money.
So, you know, you have your late models,
which is your three year old index.
A lot of those cars you can put online,
sell and they'll have a warranty.
They pretty much bring what they bring.
Everybody can buy those online
and they all usually have a good CR.
Those are kind of more what I would buy online,
but to buy anything a little older than that,
you probably need to go to the auctions,
put the time in, drive them
and do your research, check your car effects,
auto check and make it.
So you're still physically driving,
touching these cars for that you're purchasing?
Absolutely.
What percentage of total purchases?
I mean, for the store I work out of,
I probably buy 30 to 50 cars a month,
somewhere on that range.
And that's from the acquisition side?
That's the acquisition side.
Online, I probably buy between five and 10.
I don't buy a lot online.
I, we have a used car managers
that typically buy their own inventory.
That way they're a little more invested
and they have a little more
what they need at the time now
if they want to step in and help them.
But mostly I buy a lot off the street
for just that reason.
So you're mostly focused on disposition,
less so acquisition?
Yes.
When you think about,
how are you determining today
what you are wholesaling out?
What's your framework for that?
Versus what you're keeping?
Well, typically we try to keep everything.
You know, it doesn't fit our,
like I said, our strategy
as far as how much a recon we set up,
which is set on every car.
Say we didn't do a good enough job
during the recon or the appraisal process.
Maybe we set up $3,000 in recon
and missed something
and now we got a $5,000 bill.
We'd send the auction
and recoup our money that way.
Typically we come out in the green
or we trade for a car that just doesn't fit our mold.
So like I said, we trade for a,
like I said before, 180,000 mile Mercedes.
We're probably gonna put that on our Hyundai lot.
We're gonna probably send us the auction,
get out of it,
make a little bit of money move on.
Maybe call another dealer that's a Highline dealer
and sell it to them directly,
which we've done before.
We have a lot of success with that
and we return the favor
if they need a car that they don't want,
we'll buy from them.
It seems like you still operate a very high touch process.
Absolutely.
Is that correct?
Yes.
I parked my own cars from my own mobile cell.
That way I have the email that,
what the driver,
I put myself in the buyer's shoe.
Like, what are they hearing?
What are they listening for?
What do they feel?
And then I base the car,
basically I'm trying to get all the money for it.
But if it doesn't bring the money,
I understand why it won't
and I try to get the most out of it
based off what I know is wrong with it.
I wanna go through a certain order
where I think they'll bring the most money.
I like to keep the buyers engaged.
So I don't want all my nice stuff in the front of the run
and then all my bad stuff at the end of the run
because you end up losing a lot of buyers.
So maybe they don't wanna hang out for 75 cars.
You gotta keep a carrot.
Gotta keep a carrot.
So you keep every buyer engaged
by changing how you set them in the lane.
A lot of times you go to GM Finance
or something like that, for instance,
they'll put all their 5.0s
which is the best condition record at the front
and the worst cars at the back.
Well, there's a lot of waiting
if you're looking for those cars
that are the 3.0s or 3.0s that you're okay picking up
with a little bit of scuff here and there
and a little ding.
So I like to keep everybody engaged.
So I have the most buyers in lane at one time
and the most buyers engaged online.
So when you can look up at the auction
and see that you got 80 buyers online
and you look down and see you got 50 buyers in lane,
you wanna keep them engaged.
You wanna keep them buying cars.
Tell me more about your appraisal
or reconditioning strategy
because you mentioned certain vehicles
don't fit your store strategy that you'll wholesale.
It could be maybe too much recon.
What is your strategy?
How much recon are you optimizing for?
At what point do you say this is a wholesale vehicle today?
Obviously, again, like I said,
if you praised the car correctly
and you intend on keeping the car,
based off it has the right amount of mileage.
It's not a 300,000 mile pickup truck, for instance.
You're going out and actually putting your hands on it,
test driving it, scanning it with a scan tool,
doing the car facts out of check,
using every tool you have to make the best decision
and say you put it instead of $2,000 a recon,
you set up $4,000 a recon, you're able to keep that car now.
If it comes out of surprise, you go in the shop
and you got a $7,000 hard bill,
sometimes it's better to take the auction,
make four or 500 bucks and move on
and not deal with it.
Not tie your money up and have money tied up
in insurance and interest and all the things.
Just move the car as quick as possible.
That's the goal and everything anyways.
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Well, let's talk about that.
When you just think about the success
of your wholesaling department, what are you tracking?
I'm sure turn and we could start with that,
but in addition to that, I'd love to understand
like what are the most important metrics to you
that dictate success?
What dictates success for me is that
do I sell the cars at MMR or above,
which I typically sell them above MMR?
For the year, I'm well over 110%.
I have a lot of sales where I'm in the 115% of MMR range.
So I hold myself accountable to that,
try to get the most money I can out of a car.
Obviously I have some cars I can't
because of issues with you could have salvage tile,
could have frame damage, something like that.
I gauge myself basically off that number
and my sell rates.
So the average, I guess you'd call a sell rate,
like to say Mannheim right now is like about 55% I believe.
So you could expect to sell half your cars.
My goal is to sell 80, 90%, 100% if I can,
but 90% are better.
And being a good seller like that,
you'll attract more buyers.
So if you're somebody who goes to sell a lot
and you don't sell a lot of cars,
people don't wanna go waste their time in your lane
and you're not selling anything.
That doesn't mean you gotta give them away,
but if you know what that car is worth
and you truly do the research on it
and so forth it's worth,
you're gonna end up getting more buyers
because they know you're a good seller.
And then moving to the dealership,
like what type of turn are you targeting?
I agree.
We turned a little over probably about 1.1,
I think it was last month
with the store I work out of did.
So if we have 150 used cars in inventory,
we expect to sell 150 cars, that's our goal.
So we did a really good job in the auto group
of our term time in managing how many used cars
we have in inventory to obtain that.
Like we wanna sell 250 cars at a store,
we know how many used cars we need to have
in inventory all the time to obtain that, right?
Yeah, I think it's interesting that you said that
as a store you're optimizing for breakeven on wholesale,
but on a just personal departmental level
you're still optimizing for profit.
Absolutely.
What type of investment are you putting
into these cars prior to wholesale, right?
What's like the average level of investment,
not dollar wise, but what are you really doing
to your average wholesale vehicle
in order to generate that incremental 15% return
when you sell that vehicle?
I think the main thing is to make sure
you send them to the auction detailed.
You know, obviously it gives the best chance
to have that first impression.
Any car that you send to the auction,
not detailed lack of effort,
you're probably gonna get that return.
So if I see a store that's putting out
a little less than what I like as far as detail,
it was obviously my background when I started that
with a detailer.
I'll have a conversation with him,
hey, when you step up a game a little bit
on the detail department,
and you know, just detail a car
could get you $300, $500 more car.
Simply just doing a good job on the detail part of it.
And it might save the smaller buyer,
the guy who owns a little small lot,
sorry, it might save him a detail,
he doesn't have to pay for it
when he buys the car from you.
So it's something they look at too.
Yeah.
What about not sending to auction?
I mean, are you doing, you know,
the Mannheim Express, the dealer clubs,
ACVs in general, are you selling from lot?
I see you kind of, you know, your facial expression,
maybe signals that you're not into that.
I'm curious, I'm curious, you know,
what's your thought process on what should go there
versus auction, physical versus digital?
We like to keep everything in a house if we can.
I'll be honest with you,
we'd like to trade within our own group.
We have a 75 day write down.
So typically a lot of stores,
if they don't move a car within that 60, 70 days,
they start looking to move it to a different location,
keep the recon, keep all the money inside the outer group,
set a sentence to the auction,
losing all that recon money to go buy another car
to replace it, you know, where you can keep it in house
and have a trade with maybe that same store
that works out for everybody,
reset the clock, so to speak.
And we keep that front end gross
and try to get a trade, feed the machine,
keep, you know, your fixed off department moving.
So we try to avoid sending in anything
that we've put through our retail recon process on auction.
And it's just not a good extra strategy for us.
Unless we have to.
But when you do, you send the physical,
you stay away from digital?
I do send physical sometimes.
We do some smart auction.
We don't really use smart.
Yeah, we use a lot of smart auction.
We buy a lot from smart auction as well.
When you're selling, what are you looking for
between the digital and the physical auctions?
Like what's important to you
when you're determining if you should sell
through a digital or physical auction?
For me, it's how many views you get,
how many people you have on a car.
So if, like I said before,
if you're in lane and I see that I have 80 buyers online
and 50 standing in front of me and I've got, you know,
$1400 over in my mind, it's starting to die out.
And I throw a couple of spice in there
that throw a little information about, you know,
it's got a sunroof, it's got navigation,
whatever that is, and it dies out.
You can be confident you sold a car
for all the money based off the amount of people
that you have looking at that car at that one time.
Now online, it's a little different
because it's delayed sometimes.
It might be online for four days.
So a lot of people don't,
they might not wanna put in the time
to sit there and monitor that vehicle
for that amount of time.
They wanna be able to buy the car then and move on.
You know, some people are a little leery
about putting proxy bids in
because maybe they're getting ran for that proxy
and there's nobody really been
to get some but themselves.
So there's a lot of factors in there.
And like I said, we don't really sell a lot online
so I can't really venture into that a whole lot.
I mean, a lot of people do, it's kind of the future,
but I still feel like the physical options
I have success at,
that's where I typically sell 95% of my vehicles
based off that we do so well with them.
Interesting.
Yeah.
Talk to me about, I wanna talk about your in-store process
and then we'll talk a little bit about the back end.
I know you also obviously recon logistics.
There's a lot of costs there that you can shave.
Let's start with your in-store process.
So you mentioned swapping between stores.
Tell us a little bit about that.
What's your process for swapping across the group?
How do you go about that?
Well, typically that's gonna be between the general manager
or the platform directors that will reach out to each other
and say, hey, I've got,
like say, the CGR store might reach out and say,
hey, I've got a couple of Silverados to the Chevy store,
one of our Chevy stores and they might give them
an old-age RAM pickup in exchange,
something they might do a little better with.
Same with our Toyota store,
we might send them our Toyota Camrys
or something, not to those typically aged,
but say we did have a vehicle like a Highlander
or a 400 that we'd kept for a little long
and we wanted to, we'd sell it to them,
have them better opportunities.
Same with the Subaru store.
We try to give them that brand as much as possible.
So a lot of it's just being fair with each other,
working together to make sure we keep cars
inside the group and make the most profit
for the auditor.
But most of the same,
by the general manager or the used car manager.
And from your vantage point,
you're sort of this independent party within dealership.
Like, how have you found,
what's been the most successful way for you to work
across the departmentally with the GMS,
the platform managers, right?
When it comes to making sure
that you wholesale the right cars,
you get the right numbers,
I'm curious just what is your style
of working with these departmental leaders?
What's been the most successful for you?
Well, typically,
it's intentionally, I'm asking this,
it's sort of open-ended intentionally
because I'm just curious,
what has been successful for you
just working across the group?
Again, nine different stores.
What goes to the auction?
How you maximize that,
maintaining trust with your leaders?
It's a very more kind of,
I'm kind of talking about the emotional intelligence here,
but how have you found
what's the most productive way to work with them
to achieve success for the group?
Well, typically they decide where goes to the auction.
They send me a list of what's available.
I determine where it goes based off where I think
the car is gonna bring the most money
based off what I do.
And they put the interest in me to do that.
And I do a good job at that.
As far as communicating,
we reach out, send reports,
they get a monthly wholesale report from our corporate office
where they can see what they've done.
I go to the stores, have conversations in the store,
it might be struggling a little bit,
show them where they could have probably made
a better decision on that car.
Maybe a little more research based off
all the data we have through Viato,
looking at MMR where it shows you
where the car is gonna be working next 30 days,
something like that.
Showing that this car is supposed to lose $1,400,
but you stepped up to your grant in it.
And then you let it age on yourself.
That's how you can lose two or three grand sometimes.
So a lot of us just pay attention to the small details.
I'm a very structured individual.
So for me, I look at everything.
I slow down and just make sure every little thing's covered.
Now they don't miss something, you know?
Car facts tells you a lot.
History, you look at comparables,
how long somebody's had a car on their lot.
Check on and see how much they've dropped the car
in that amount of time.
And if everybody's dropping their prices a ton
and they're still not selling,
two, three grand in a song,
I mean, that's kind of giving indication
what your market is, right?
Within that time, that saves to our mile radius.
Okay, so it's talking about just like operational excellence
and the back office or the back end.
Let's start with recon.
So I know you oversee recon and logistics.
What are you doing across these departments differently?
You know, how are you cutting costs?
What's just tell me a little bit about that.
Well, to start with the cost aspect of it,
when we obtain a car or buy a car from Auction,
I set up all the transportation for the auto group.
And one of the things I do is to make sure
I get the cars here as fast as I can
and obviously try to spend as less money as I can.
And over the years, I've done all that myself
and recently I've been using a company called
Auto Haulers Exchange, who's been a great asset.
I still put in the cost, I still, you know,
post the car myself, which I've done before,
which I love doing.
So I still control the price, so to speak.
But they do a great job of getting the cars to me
within the timeframe I need.
You know, especially with Smart Auction,
you have a certain amount of time to arbitrate a vehicle.
Same with Mannheim.
They understand my importance on getting a car here.
Quick, safe, no damage.
They vet for me.
I just have to do all that.
They've kind of taken that away from me
when I have to call and check on Debbie Nimes,
check on insurance and all that.
Auto Haulers, Auto Haulers Exchange does.
Yes, they did it all for me.
I basically have a concierge, you know,
that I talk to her at email.
And if I have an issue and they get on the ball
and help me get something moved
or get something handled from, you know,
sold, you know, I gotta get this car to,
for instance, I got a Corvette right now.
We still, we're trying to get to Arkansas.
And they know that I need the car there tomorrow,
you know, tomorrow, basically,
and they're doing their best to make that happen for me.
Instead of me being on the phone.
Super cool.
Instead of me being on the phone
with 25 different drivers
dealing with all the cancellations,
you know, when I'm on the block trying to sell cars
and you got drivers calling you,
it makes it a little difficult.
And that's what I did over the past,
probably 10 or 11 years of my own.
But so Auto Haulers has definitely helped me
a little bit with that, you know.
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I'm curious.
So Auto Haulers is a partner of the podcast.
So shout out Auto Haulers.
But how did you hear about them initially, Miss Curious?
I've heard about them over the years.
They reached out to me before.
And like I said, I'm kind of a hands-on guy.
I did a lot of it on my own.
But over the last two to four years,
the transportation's changed a little bit.
You've had a lot of different type of drivers
kind of enter the trucking industry, so to speak.
It's got a little harder to vet people.
There's a language barrier sometimes.
There's an issue with security sometimes.
I mean, unfortunately there's been an issue
with hackers getting into Mannheim even,
central dispatch, hacking trucking companies,
taking gate passes, things like that.
I take it personal when a car doesn't show up on time.
And unfortunately I've had a car not show up at all
the first time in 12 years.
And that was a huge detriment to me.
I lost two, three days of sleep over that deal.
I don't know how online you are,
like us chronically online losers over here.
But there's this meme of Michael Jordan
where he's from his documentary The Last Dance on Netflix.
It's a meme, you see Michael Jordan and it's like,
and I took it personally.
If you Google it, you'll see it right now, right?
Michael Jordan, I took it personally.
You know what I'm talking about?
So that's the first thing I thought about
when he said, yeah, I'm like, and I took it personally.
I took it personal, you know?
I love that.
But everything I do, I take personal.
You know, I take ownership of everything I do.
From, I still run detail how clean a car comes
out of detail, if a car doesn't get done
the way I want it to be done, I take that personal.
Cars don't get on a lot within our seven to eight years.
You don't learn that in school.
You don't learn that in school, my friend.
No, no you don't.
And I think part of that's why maybe I'm good at what I do.
I love that confidence, that's what we need.
Before we talk about recon,
just one last question about auto hauler,
because I'm a fan.
Yeah.
What are they, what's the value proposition
that they're most like, are they helping you
save money, you save time, both?
Like what's the number one thing
that they've actually brought to the table for you?
Time, freeing me up to where I can do other things
as far as acquiring cars,
actually being more involved in my detail department.
Helping out with recon, trying to get cars to the shop.
Nice.
You know, getting with the internal advisor.
You know, hey, what's going on with this car?
Why haven't I gotten a shop?
It's been two days.
Things like that.
Helping out of themselves.
You know, anywhere I can help, help,
I praise cars, even if I'm not buying them.
If they, hey, can take a look at this, trade them,
sure, no problem.
I drive around the block, scan it,
do what I do, give them my fair educated value on the car.
We go from there.
We used to get a lot of cars.
We do really well.
We work together as a team really well.
And so now let's talk about recon.
What are you doing on the recon side?
Anything creative on recon to cut costs,
you know, are short in time to line?
What's your strategy there?
You know, I think sometimes for us,
and I'm just a part of that, I'm not in charge of it,
but for us, one thing we have done is we try to
maybe use some aftermark parts
instead of OEM sometimes to save on costs.
You know, we do everything we can
as far as working with the technician.
Sometimes it may be, hey, we really got to make this car
work and we, you know, shave a little time off here
to make it work.
Knowing that they're getting more time than they would
if you wholesale the vehicle.
You know, you can get the inspection time,
which is 1.5 hours or you can get eight hours
instead of 10 that you want it to work together
and maybe get that car to the shop.
Having that relationship with them,
being in the shop with them for, you know, 20, 30 years,
we've burned that, we've earned that trust
where I can ask for favors if I need to
and then only if they're going to make it back up
in the term with the trade-in
and they're going to have more work coming.
The goal is to feed the machine, keep them busy
and keep our store moving really smooth
when we get cars from the back to the front
pictured and on the lot,
hopefully within three to five days max
so we can optimize our front-end growth
and help with our trim time.
It seems like wholesale has been evolving a ton
over the past, you know, a couple of years especially.
Yeah.
It seems like there's still a lot of opportunity.
You know, you think about condition reports
and just had a dealer DM me the other day
about condition reports again.
It's like, this is a common thing I hear about.
Across, this is not exclusive to one, you know,
auction house or anything.
And just in general, you know, people,
there's always been some friction there
but what is, is there anything right now
that's exciting to you in this specific, you know,
segment of our industry,
whether it be like the opportunity
or the growing opportunity of buying cars off the street,
whatever it is or the way wholesale is changing,
the way the lines between retail and wholesale are blurring,
right, pretty much every large-scaled retailer
nowadays has an auction.
Yeah.
You know, I don't know if you buy from like
Carvana auctions, Carmax, but I'm just curious,
what is, as someone who's in the game daily
and has been doing this for a long time,
is there anything exciting to you particularly
about where this part of our industry is headed?
I think for us, the most exciting part for us
is just how we acquire cars off the street.
I think that's our huge opportunity
along with using auctions, physical auctions,
online auctions, but for us,
I think our best opportunity is to buy off the street.
We've really focused on that over the last year or so
and some of our stores are really well,
some of our stores are really, really well,
service of sales, buying out their own service departments.
I have two stores that do 40, 50 cars a month,
which is amazing.
So a lot of stores try to focus on those little
majors that they can dial in, maybe get a little better.
But what really excites me, I think, is just more of the,
there's just so much opportunity to buy cars
from everybody now.
I mean, you can buy cars from Facebook.
You can buy cars from Kelly Blue Book.
I don't typically buy, obviously, from Carvana
or Carmax, they're one of my competitors.
I try to stay away from that side of the business,
but we want to compete with them also with
buying cars off the street, so we have more
of a brand on our own where people know
that they can come to McCarthy and sell their car to us.
Instead of just thinking, well, I'll just take it
to Carmax, I'll get the most money for it.
So if I can be competitive with them
and acquire a car that way, even if I do take it
to the auction and I'll sell it and make a buck,
I'm gonna do that all day.
How can you compete with the Carvanas and Carmaxes?
What's your strategy?
I mean, these behemoths, they have,
arguably, superior economics because of their scale.
So they can pay more, frankly, for that car, most likely.
They also have, as they say, like a better end user.
This is a term from the Accutrade guys,
Brian Kramer and Holland's head, but meaning,
they have more eyeballs on every single fin,
so in theory, they can maximize value.
So how can you possibly compete with that
in your market?
What's your strategy?
Well, they obviously try to make a profit also,
so do I, but there's times when I can outbid them
and I'm confident about that.
I've had times where I've bid a car and said,
hey, Carmax offered me this and I said,
well, have they seen your car yet?
Because that's a blind bid.
Have they seen the damage on the fender?
Have they seen the tires?
Have they seen the crack windshield?
I'm here because based off those factors,
Carmax is down the road from my location 15 minutes.
I'm like, go ahead and take Carmax and see how it comes
and sometimes they come back and sell me the car.
And that's not saying I'm trying to buy the car
just to prove a point.
I'm obviously still trying to make a profit.
I just know that that car isn't worked
what their offer was.
Now there's times when they do blow you out of the water
and I've seen it laying.
I mean, I've bid on cars in lane while I'm at the auction
to buy from my Chevy store
and they'll just pay the moon for a car.
Still knows don't make sense for us
as far as trying to make a profit.
We're set up a little different.
Is there anything I didn't ask you that I should have?
One thing I'd say to a lot of dealers
if they're gonna buy from an auction,
use their transportation services,
they're paying too much, a hundred percent.
If you use, that's a hot take.
Let's do that one more career.
So if you were to buy a car from an auction
and you were gonna use the platform's transportation service
say, Mannheim or Open Lane for instance,
I know what they charge
because you can see it right there.
I'm paying less than that to get a car shipped
through our haulers for instance, or do it yourself.
So for me, it's like, if you're willing to get about
three, four, 500 bucks a car
because you can click it and that's easy for you to do,
you're leaving a lot of money on the table.
And a lot of times that's just right out
of your front of your house obviously.
Slowing down, doing your research, putting the mileage,
actually looking at what the cars have been going for
historically pricing it based off that,
giving it a little buffer and you can save,
I mean literally hundreds of dollars a car,
sometimes even four or 500 bucks a car.
It's a lot of money when you're shipping
1,000, 2,000 cars a year.
So pretty simple math there.
That's where the big problem, I'm not a problem.
I think that's where a lot of people are a lot of profit
by using these auctions to ship their cars for.
I like it.
Kirk Rogers, McCarthy Auto Group, Kergs
has been very insightful.
So I appreciate you coming on
and sharing your insights with us.
And thanks again for joining.
Thanks for having me.
All right, hope you enjoyed that episode.
Please give the podcast a rating,
consider subscribing to the show
and check the show notes for links
to what we talked about.
Thanks for tuning in.
I'll see you guys next time.
About this episode
Kirk Rogers, head of Wholesale at McCarthy Auto Group, shares his insights on transforming wholesale from a break-even strategy into a profit center. He emphasizes the importance of careful appraisals, maintaining high engagement at auctions, and optimizing the reconditioning process. Kirk discusses the evolving landscape of wholesale, including the shift towards acquiring cars off the street and competing with giants like Carvana and Carmax. His hands-on approach and focus on detail highlight effective strategies for maximizing profits in the wholesale market.
Original notes
Today I’m joined by Kirk Rogers, Wholesale Manager at McCarthy Auto Group.
We dig into why wholesale should be a strategic lever—not a last-resort escape hatch, how efficient transport unlocks massive savings, and the process McCarthy uses to eliminate the automotive retails biggest logistics bottleneck.
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Topics:
00:46 Current state of the wholesale market?
01:35 Key responsibilities at McCarthy Auto Group?
02:29 Biggest wholesale strategy challenge?
03:22 How has wholesale landscape changed?
04:39 Best acquisition and disposition tactics?
09:44 Key metrics for wholesale success?
18:51 Managing recon and logistics effectively?
23:36 Strategies to cut recon costs?
27:08 How to compete with industry giants?
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