"The Million Dollar Swing!" How One GM Drove $1M in Profit Growth in a Year & The Numbers Behind It | Frank Esparza, General Manager at Tracy Honda
Car Dealership Guy Podcast
"The Million Dollar Swing!" How One GM Drove $1M in Profit Growth in a Year & The Numbers Behind It | Frank Esparza, General Manager at Tracy HondaCar Dealership Guy Podcast · Jul 28, 2026
A pay plan is how a car salesperson gets paid. It can be based on how many cars they sell and how much profit those deals make. If you change it, you can change what the sales team focuses on.
Minimum standards are the basic rules for performance that employees have to meet. Here, it sounds like they’re sales targets that must be hit consistently to keep the job.
A production-based business model means the organization is judged primarily on output—here, the number of cars sold. The host is contrasting that with a more relationship-focused culture, emphasizing that sales volume is still the core requirement.
This is the newer monthly sales target the dealership expects. The GM says they increased it from the earlier number to keep performance standards high.
An internet manager is the person at a car dealership who handles online leads. They help respond to people who contact the dealership through the website and guide them toward buying.
A general sales manager runs the dealership’s sales operation. They’re responsible for how the sales team performs and usually help manage sales managers and targets.
The finance department is where the dealership finalizes how you’ll pay for the car. They also handle financing paperwork and may offer extra protection products.
“Training from within” means teaching people the dealership’s way of doing things by promoting and developing current employees. The idea is they’ll follow your process better than someone new.
Podium is a company that provides AI tools for car dealerships. The pitch is that it helps with real dealership tasks (like sales and service), not just generic replies.
Customizable AI agents are AI programs you can set up to do specific jobs. Here, the claim is that they help with real dealership tasks like sales follow-ups and service workflows.
Voice AI is a computer program that can understand what someone says out loud. In a car dealership, it can answer calls, ask questions, and send the customer to the right place so leads don’t get missed.
Term
upper funnel
The upper funnel is the early part of the buying process. It’s when people are learning about the dealership and becoming leads, before they’re ready to purchase.
Ken Harvey is mentioned as the COO (chief operating officer) who suggested trying Prophecy at Frank’s dealership. His role matters because he’s the internal decision-maker driving the A/B testing approach.
An A/B test is a simple way to compare two options. You try option A with one group and option B with another, then you look at which one gets better results.
VLA’s is an acronym for a specific kind of lead or tracking metric. Frank is saying the vendor they tried didn’t measure or deliver results in the format that their team wanted.
Term
G4 analytics
G4 analytics sounds like a dashboard or reporting tool the dealership uses to track marketing results. The goal is to see which efforts actually lead to real customers, not just clicks.
UTM tags are like labels you attach to a website link. They help a dealership figure out which ad or campaign a customer clicked, so they can track what actually leads to sales.
“F&I” is the part of the dealership where the paperwork and extra protection products are handled. It’s where you might hear about warranties or other add-ons after the main car sale.
“Desking” means the dealership sets up the deal and prepares the paperwork at the sales desk. Instead of waiting for finance to start, sales handles more of it up front.
A “traditional F&I box” is the usual setup where the finance team takes over later in the process. The host is saying their store does more of the deal work at the sales desk instead.
VIN Solutions is a computer system dealerships use to handle car deal paperwork tied to a specific VIN number. Here, it’s the tool they use to process deals at the desk instead of passing everything to finance first.
“Back end products” are the extras sold during the finance step, after the car price is set. Think warranties and other protection plans that add cost but can add coverage.
Gap coverage helps if your car is totaled and the insurance payout is less than what you still owe on the loan. It covers the “gap” so you’re not stuck paying the difference.
“Low Jack” is an anti-theft recovery system. If a car is stolen, it’s designed to help authorities find it and recover it faster.
Term
paint and fab
“Paint and fab” is a dealership add-on for protecting the car’s look—things like paint or interior fabric protection. It’s meant to reduce wear and help the car stay nicer longer.
In a car dealership, FNI usually means the finance-and-insurance team. They help customers get approved for financing and they also handle extra protection products that can be added to the deal.
Upstart is a company that helps car dealerships arrange financing for customers. Instead of only using the usual banks, the dealer can send deals through Upstart’s system to get approvals and paperwork moving faster.
Term
A paper
In car financing talk, “A paper” usually means the best-quality loans—generally for customers with stronger credit. It’s part of a ranking system dealers use to describe how risky or favorable a loan is.
Term
B paper
“B paper” is a shorthand dealers use to group loans by risk. It usually means the loan is not the very best tier, but it’s also not the worst tier.
Term
C paper
“C paper” is a dealership finance label for loans that are riskier than the top tiers. That usually affects whether lenders approve the deal and what terms the customer gets.
Term
D paper
“D paper” is a shorthand for the riskiest financing tier in that A-to-D system. Deals in this bucket are more likely to be harder to approve and may come with tougher terms.
A “desking tool” is a computer system dealerships use to set up financing deals. It helps figure out lender options and payment structures so the paperwork can be submitted correctly.
Term
lending institution
Here, “lending institution” just means the usual places that provide car loans, like banks or credit unions. The speaker is contrasting them with Upstart’s process.
Cross shopping means the customer is looking at more than one deal before they buy. For car loans, that usually means comparing interest rates and monthly payments from different places.
A captive lender is the financing company connected to a car brand. If you lease through that brand’s program, the deal is usually financed by the captive lender.
Lease penetration means what percentage of car deals are leases. If more customers lease, the dealership is more likely to use its lease financing partner.
This part is a sponsor message for Digital Dealer. It’s about tools and strategies to help dealerships turn more leads into sales and reduce wasted effort.
Term
minimum tank cars per month
This sounds like a monthly sales/inventory target the dealership set for a certain kind of car. The idea is to make sure they have enough vehicles moving through the store each month.
Motive is software dealerships use to run their website and help customers shop online. The idea is to make the experience smoother and easier to manage for the dealership.
A backend tool is the internal control panel the dealership uses to change how its website works. Instead of submitting requests and waiting, the dealer can make changes directly.
The AI component is software that learns from how people use the website. In this case, it can remember where you left off so you can continue shopping later.
A marketing funnel is just the path from “someone first hears about you” to “someone buys.” If you reach people earlier—before they’ve already looked everywhere else—you have a better chance to guide what they learn and who they contact.
SEO means making your website easier for Google to understand and more likely to show up when people search for cars or services. If it’s done well, more shoppers find you without you paying for every click.
Organic search is the free traffic you get when your site shows up in Google results without you paying for ads. If it’s up, more shoppers are finding you that way.
An LLM is a smart text engine trained on lots of writing. It can understand questions and generate helpful answers, which can make customer interactions feel more natural than basic automation.
AI here means computer software that can learn patterns and respond in smarter ways than a simple script. The point is using it to engage customers more effectively, not just running a basic automated chat.
A “hybrid line” is the lineup of cars that use two power sources—gas and electricity. The idea is to get better efficiency than a gas-only car while still being easier to live with than a fully electric car.
“EV market” just means how many people in that area are buying electric cars. If the EV market is strong, the dealership has to stock and advertise more EVs to match what customers want.
Car
Honda e-cars
“Honda e-cars” means Honda’s electric car lineup. The GM liked what they saw at a show, but they think hybrids will be the bigger near-term move for their customers.
The Honda Passport is an SUV that many people buy for commuting and family use. The GM is saying it’s doing really well and that hybridizing it (or offering hybrid versions) is part of why it’s working.
A hybrid version uses two kinds of power: a gas engine and an electric motor. That usually helps it use less gas and can feel nicer to drive, especially in stop-and-go traffic.
The Honda Pilot is Honda’s bigger family SUV with three rows of seats. They’re saying Honda is updating it soon, which usually means a nicer interior and newer features, and sometimes changes under the hood too.
The Honda Accord is one of Honda’s most popular everyday cars. Here they’re saying Honda is updating it with a redesign, which usually means changes to the look and features, and sometimes the engine and driving feel too.
The Honda Prelude is a Honda sports-coupe name that has been around for decades. Here they’re talking about the new Prelude’s styling and how some people think it’s not powerful or smooth enough, even though owners who actually bought one seem to like it.
The Honda NSX is a sports car designed for fast, exciting driving. It’s built to feel responsive and perform well, not just to get you from place to place. People mention it because it’s recognizable and has a reputation for advanced performance.
A test drive is when you take a car out for a short drive before deciding to buy it. The speaker is saying some critics judge the car from a brief drive, not from living with it.
LIVE
I try. I gotta be good at it. Otherwise, you know, we're not gonna make it. Yeah. I was
listening to you when nobody knew who you were. Really? What was the first podcast you
listen to?
No, I'm not even gonna. I can't. I'm gonna, I'm gonna bad them a guess because I listened
to so many initially, you know, and I was like, the big thing was like, who are you?
Who is this guy that knows so much about dealers? And yet nobody knows who he is because you
were anonymous, but everything you said in all of the podcasts that you did, you, you
were relevant and everything you said, it wasn't like you were an outsider that didn't
know what he was talking about. So everything you hit that you spoke about was relevant.
That's what made it interesting.
Well, I appreciate the compliment and for us for sticking around with us.
Oh, yeah.
Tell us about yourself, though, like less about me. You've been operating a very high performing
Honda store in California now for what is it over 18 years?
I have not been the complete control for 18 years. I was one of the, you know, centricle
managers, I guess you could say as a GSM and sales manager for 18 years at this particular
store. We're in Tracy, which is, you know, the entry to the Central Valley or the bread
basket of the United States. I don't know about any more, but for traditionally, it's
in farmland. A lot of farmland here in the Central Valley and a lot of fruits and vegetables
grown in this particular area came over from our sister store, where I did a decade as
a salesman. I also got promoted over there and then got demoted back to sales manager,
but that's another story stuck with the business for quite some time. And I'm here now and
I took the helm as general manager about 18 months ago, January 1 of 2025 was, was when
I took the helmets, the GM and being able to make all the decisions, which have, I think
have gotten us to the place where we're at today.
Frank, we discussed before this and you have driven over a million dollars in net profit
growth in just the last year. So let's, can you break that down for us? How did you do
that?
One of the three P's obviously is people process and pay plans. Those are the things that drive
the sales people and that what goes on in between the walls of the store.
Did you change pay plans?
We did. We did change plans.
Like what was not working before that?
We had minimum standards, but we were not enforcing minimum standards and making sure
that you, you know, it's, it's mandatory, not optional and that you enforce the pay
plan and that you enforce minimum standards. You know, you got to sell 10 cars. If you
don't sell 10, you can't stick around. We like everybody. We want to, you know, promote
the family atmosphere because we spend more time here in the dealership walls and we do
with our own families. So you want to promote that type of camaraderie and relationship with
your employees. But the reality is, is that we're, we're a production based business and
you have to produce. Otherwise, unfortunately, we, we got to part friends, you know, so that
is definitely what we see.
Do you think 10 cars is, do you think it's too low?
I think the market is ever changing and I think 10 cars per month when you average 10
a month over 90 days, which is a, you know, a better scope. I think 30 cars in that timeframe
is a reasonable amount. Once you get everybody to buy into 10, then you move it to 11, you
move it to 12, you move it to, so your minimum standards have to increase. We're currently
at 12. So the minimum standards is 12 cars a month in order to keep your job. So we've
increased it by two in the last, you know, 18 months.
What is your, what does your top producer do per month?
20 plus 22, 24, 26. Yeah.
And what's your total store volume?
We're averaging about 100 new and 50 years per month. We're tracking right around that
total for the year.
Yeah. You know, I do, I, I, I listen to that quote by, I forget who mentioned this. It
was, it may have been Steve Greenfield, but it was that we have, as an industry, have
spent so much more technology and everything, you know, like the last 50 years, you had
the average vehicle sold by a salesperson in 1970 is still the same number it is today.
And it makes you wonder, right? Like, you know, it goes back to that adage of like,
you know, you build a bigger highway, like traffic will not ease. You'll just put more
cars or, you know, you set an hour meeting versus a 30 minute meeting, you're going to
end up spending the same amount of time. What is it like Parkinson's law? It's like, you're
going to waste the same amount of time. So it does make you wonder, like, where is the
investment going? Like, how are we still, like, why isn't the average salesperson at
this point selling 50 cars per month?
Talent level. It's way easier said than done. Being a retail automotive sales professional
is not easy. It's not for the faint of heart. I tell people all the time, you know, they're
like, oh, you sell Hondas. That must be so easy. And I said, well, if it was that easy,
everybody'd be doing it. You know what I mean? The reality is, is it's not an easy job
that we get, you know, 40 nos before we get a yes. And being able to get by those nos and
not taking it personally is really easier said than done. And being able to focus on
the next step, even though you've been told no 10 times, but you rephrase the question,
you reask it and you get a yes. And then you move to the next step and then you move to
the next step and the next step. And before you know it, you're handing them the car keys
and saying, Hey, thank you for the business. I appreciate it. And now you have a friend
in the automobile industry and I'm your guy. So it's way easier said than done. It's not
easy to sell 10 cars. It's really not easy to sell 20 and selling 50 is a pretty astronomical
number. I mean, average guy is going to work 23 days a month. So that's more than two a
day. You really have to be honed in on your skills. And more than that, your follow up.
And we provide, you know, a CRM, just like everybody else to our sales professionals.
The reality is, is that CRMs are only as good as what you put in them. If you take copious
notes and and you use that as your personal secretary, then you're going to get the results
that you want. Are you sending out the birthday cards, the one year follow up the your your
lease is ending in six months. You have to tell the machine that you want to do that.
We can say it. But if you want it personalized, are you sending, you know, that message to
the customer personally, or are you allowing the machine to do it? And personalization
makes a difference in our industry, I believe you mentioned talent level. Do you think we
are attracting just not the best talent? Or do you think we're just not training? Like
where where is the industry accountable here? Or it could be all of it. But yeah, we just
not training the right way. Yeah, I would say both so much so that my owner saw fit
to go out and hire a professional trainer for his dealer group. He was a gentleman previously
known as the trade doctor, Sean Evans, and he hired him specifically to be our corporate
trainer for all nine of his rooftops. So training is a big component. I've always trained from
the desk. I don't I think that when you're penciling a deal, and you can load your sales or
since lip and guide them as to the way things are going to unfold, because you've done it
so many times. I think that's invaluable training at point of sale, because, you know, iron
sharpens iron. And when you're in the moment, and you're you're facing the customer and
they're telling you know, and you got to get them to say yes, you have to be skilled enough
to go out there present it in a fashion that's going to be acceptable to consumer and get
them into the next step. And so I've always been a proponent of training in the moment.
And unfortunately, in my current position, I can't do that now. But I, you know, the sales
manager that I have, I hired as a salesperson, and I promoted him. The general sales manager
that I have, I hired him as an internet manager. I promoted him to sales manager, promoted him
to general sales manager. The finance department, two of the four finance guys that I have, I
trained, I brought them up through the ranks and promoted them. So I'm a real proponent of
training from within and growing from within, we'd rather hire and train internally than train,
bring somebody from the outside and train them on our process and make sense. You say you
started working with a marketing company and that had it correct in your business. Okay,
you tell us about that. Yeah, so the marketing company that we decided to go with actually got
from one of the other dealers in our 20 group. It's called Prophecy Digital. And they spell
the name PROF instead of the pH. And when I talked to the vice president of sales, he said we
spelled it that way specifically, because we believe that you deserve profit on every car
you sell. And I was like, and then you're preaching to the choir, you know what I mean? So I was
super excited about it. We've had great luck with them. Last year in November, we started with
them. And we were in such a good spot last year in November, I was actually able to enjoy
Thanksgiving instead of being on pins and needles and worried about, you know, how we were going
to perform over the weekend, because we were already up year over year. And we've continued that
cycle. Throughout this last 18 months, they performed exceptionally well for us. And I would
say that's one of the key components to our success level and the amount of growth that we've been
able to produce. This episode is brought to you by podium. If you're like most dealers, you've
probably tried some version of AI by now. The real question is it actually doing the work or just
answering with generic messages. In our CDG circles groups, I keep seeing podium come up when
dealers are talking about vendors, and it's not hype. It's because they're meeting the needs of
dealers right now. One in three dealerships is already using podium, and thousands of their
customizable AI agents are actively running sales and service workflows every day. What makes them
different is they're not just another AI add on, they consolidate sales service messaging, and
especially voice into one customizable platform. So you're not stacking a bunch of disconnected
systems and let's be real. The phone is still where a lot of money is won or lost podiums voice AI
books appointments routes calls correctly and escalates when it should based on your dealerships
playbooks. If your AI isn't driving real outcomes, it might be worth a look. Check out podium.com
slash CDG or click the link in the show notes below. But but Frank, how are you triangulating
value towards the agency? Because agencies in our industry get a very bad ret, right? It's
every day. I mean, I see it another dealer complaining about some agency who's not delivering.
There's a lots of churn. You go to a different one. You try a new one. You just don't hear you
don't often hear people speak highly of agency. So like what what has been different for you? And
how are you able to really? How are you able to really assign the value created to the leads or
the upper funnel that they've generated for you? What I would tell you is this, we've tried multiple
companies. Just like you've said, we've gone to one, they they didn't work. We've tried another
didn't work. We're moving around, always looking for a better mousetrap, right? And so
when we came to this company, our COO, Ken Harvey himself actually said, Hey,
one of my other dealerships wants to use another company and you want to use these guys. And so
I said, Well, why don't we do an AB test? You let him do the one he wants to do. I'll do
prophecy and we'll see how we perform. Well, it was very apparent very quickly that my company was
doing far better than the other company, which I'm not going to name. And in turn, he left that
company and then came to mind and quickly changed that and went back to the original company we
were at because they didn't operate in the same fashion that he wanted. He's very G4 analytical,
wants the VLA's want and that's unfortunately not how they operate.
Prophecy, their mousetrap is built a little different. What we found out very quickly is
we send it, we're spending a certain amount of budget on marketing that we really can't attribute
to a sale. And we found that out by looking at our G4 analytics and our UTM tags and everything
with our digital guru from the NADA. And he's just pointed out month after month, hey, you're
spending this money and you have no correlation to a sale. There's no key events. There's no,
you're not getting anything from it. So we go back to the marketing agent and we're like, hey,
we're being told that we're spending this money and we can't attribute a sale to it.
So we changed from what we were doing, which has been working and I can totally attribute to our
increase in gross year over year. And we went from higher funnel and moved that budget to a
lower funnel and got more centric on car shoppers that were in the market showing buying signs as
opposed to the higher funnel customer. And we got what we were looking for. We got customers that
were definitely looking to buy a car, but they had also been brain damaged by five other dealerships
and already got quotes and pricing and already shopped their trade. And they're already figuring
out what they were going to do with their trade outside of the sale of the vehicle. And in turn,
we got a bunch of customers lower funnel that were buyers, but for way less profit and no
trade ins. So you were spending more to get a higher quality customer and that had a big
impact on your business. Correct. Correct. So we quickly reversed that trend and called the
marketing company and said, hey, we want to go back to what we were doing before that was working
because yes, we're selling more cars, but now we're selling more cars or the same amount of cars
for much less return on our investment. So we're selling the cars without any profit really to
speak of front end or back end. So we quickly switched back and we did that at the end of June
and then we've saw an uptick in our business and we're back to normal at the end of
June and the beginning of July and July is coming on to be a similar month to what we had
April and May and in May we had a record month of business here as far as gross profit. So
we corrected had a corrective action. And then when I was talking to our rep and the vice president
because I got them both on the phone, I'm like, hey, something's wrong. We need to fix it.
Basically what they do in the higher funnel is it's I've coined it chumming the waters.
They're they're sprinkling that budget there throughout the different layers of social media
and video that you can utilize and they're bringing the customers in and in turn by
chumming those waters, we're getting customers that weren't necessarily in the market to buy a car.
It peaks their interest and then they start moving down the funnel and we're catching a higher quality
customer higher in the funnel that hasn't been to five other dealerships. That's that's very interesting.
It seems like that makes sense. It does. You've done a good job on the marketing side. Yeah. Tell me
more about I don't have any other questions that I think I was pretty it was pretty clear. Tell me
but tell me about in the store, right? So what have you changed? Like we talked about
outside the store or like online, but when it comes to actual in store, whether it be your
FNI process, your sales, we said training, you've done training. What else have you done in store
that has had a big impact? In store, we're having a lot more early management intervention. So we're
bringing the sales manager out earlier in the process, introducing himself,
talking to the customer, letting the customer know that, hey, we're here to help in any way,
shape or form. If for any reason, you know, the salesperson can't answer a question, we're going
to get the answer for you. And just that soft introduction to the sales manager. So that's
not just the guy behind the glass. I think that that's a key component. And then we are not afraid
to take off the seatbelt. My sales managers are up, they're engaged, they're taking off the seatbelt,
they're talking to the customer, they're going out and closing deals. Do you have a traditional
FNI box or how do you desk deals? How does your store? Yeah, we have a traditional FNI box.
Our process is desking deals is done through VIN solutions. We process deals just like
everything's done at the desk. We get them bought at the desk. So we're not, when you say traditional,
traditional would be that we give the deal to finance and finance gets it bought. Our deals
are bought at the desk, put into finance already bought, already set in standard. We have about a
60 to 70% sale rate of back end products in the front of the store. So we pitch warranty gap,
low jack or paint and fab up front. And we have a pretty good success rate at throughput on those
items before they get into finance. Well over 60%, we track it monthly. Our FNI guys are also very
good. So if for some reason we're unable to secure that in the front, then they get another opportunity
and they're all very skilled individuals. One of the guys been here 20, one of the guys been here
24 years. Another guy, we have another two hires. The 20 year guy is average and
3800 copy at a Honda store, which is pretty astronomical this month. Overall,
my FNI department averages well over 2400 a copy right around 23, 2400 a copy.
On the topic of FNI, I saw you had one note here of your upstart deals. What do you really mean by
that? Well, I will tell you that our partnership with upstart has been really, really beneficial
for us. And the reason is, is there are full spectrum lender just like everybody wants to
be a full spectrum lender, but you have your, in reality, every bank says that, but they're not.
You have your A paper, your B paper, your C paper, your D paper that run the gamut from,
you know, the big guys chasing cap one all the way down to the West Lakes and, you know, Santander.
What upstart does differently, and I'll be honest, I was not a fan up front when I did the,
you know, phone call or zoom meeting with them. The guy was like, look,
we want you to use our system. We want you to use our desk system. We want 100% of the looks,
100% of the time. We want you to utilize everything that we put out there. And I would
be in a car. I was a little put off. I said, I'm going to have you come in my store
and tell me how to run my business. Right. So I was put off by it. And then when I mentioned
that we had a second guy come out, his name was Dave and he's our rep currently. And he was like,
look, I've sat in your, in a dealership. I know this is a different deal. You don't need to take it
word for word and verbatim the way he said it. If you don't want to use our desking tool, you
sort of soft shoot us into it. Now we use their desking tool on almost everything,
but initially that I was concerned about that. I know my job and my guys know their job. I'm not
going to have you tell us where to send paper. In turn, over time, what we've learned is that
by sending everything to them, we're getting things done that we wouldn't normally think we
could get done at a traditional lending institution. I'll give you for instance, gentlemen comes in
here. He's got four months on the job at Amazon making $4,400 a month. He's got one credit card,
$500 high. He's on a $42,000 with all the accessory, a cord sport L. He's got three grand
down. He doesn't have depth. a long enough job. He doesn't have three lines of credit.
So it doesn't meet their algorithm, right? But we sent him to upstart and he gets done at a single
digit rate for a full call. That's not something that would get done at the traditional lending
institutions. Do you set every deal just to upstart it to other lenders that obviously don't have
booked to look? How does that, how do you structure your? Yeah, so initially, we were sending deals
to them sparingly. We were choosing what deals to send to them and then we quickly realized
that the more we send them, the more obtuse yeses that we're going to get. Stuff outside of the
realm that we would normally think, hey, this is a deal here. This is a deal there. From normal
structure, from the lending institutions, based on desks, 100 deals, 200 deals a month, you sort
of get an idea of what they're going to say yes to and what they're going to say no to and where
to send the paper. And we quickly learned with upstart that you really can't tell what they're
going to say yes to and not, and the biggest deal is because they don't have a buyer. It's an AI
understanding. And so what they're looking for is totally different than what the traditional
lending institutions are looking for. And they're not bogged down by the buyer who got burned on
the last guy that worked at Amazon and they said yes to and ended up being on their portfolio as a
bad loan. So they don't remember. They don't have a memory. You're not dealing with a person. So
they're saying yes to things that normal lending institutions won't say yes to and it's been a
windfall for us because they're saying yes at a much lower interest rate than traditional
lending institutions are saying yes to. When the customers reach us, they've already been exposed
to maybe one or two other dealerships who are utilizing that other lending institution and
have been exposed to a much higher interest rate. And in turn, when we give them the lower
interest rate and we have it packaged with back end product, they're saying yes to a much lower
payment even with the back end product. So it's been a windfall for us. I get it. Yeah, I mean
it's a no brainer for them at that point because you're seeing your customers cross shopping.
Correct. So. Correct. And they're not utilizing the same lending institutions that we are i.e.
Upstart. And in turn, we're giving the customer a better call. The customer's happy because they got
a payment that was astronomically lower than what they've been shown previously at another lender
or their friends because a lot of our clientele shopping groups and they've got a friend that
bought a car at a higher interest rate. So when you show them a single or low teen interest rate
comparatively speaking and show them what the difference is, it's pretty astronomical the
difference in monthly investment. How meaningful has the impact of this been on your business
growth? Like do you know or what percentage of your monthly deals you're doing this way now?
Other than our captive, they're our number one lender. There are a number one lender other than
our captives and a lot of the captive is getting because it's a subvented interest rate or lease.
We obviously want to be at 40% lease. We run between 25 and 30% lease penetration.
So leases automatically are going to go to our captive lender. But other than our captive,
they are our number one source for banking and it's been a great partnership for us.
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or click the link in the show notes below. Good for you. So it sounds like you came in,
you tweaked comp plans, you set some more goals you mentioned like minimum tank cars per month.
That was the decision you made and various other things. You changed marketing company,
you partnered with Upstart which has been has paid dividends for you. That's a
seems like a very important part of my process today. You trained of course. What did we miss?
I mean that in and of itself, now I can understand how you've driven growth.
The picture behind your head, I mean a little aesthetics in the dealership,
we got the little Marlboro race car for anyone that doesn't see that. What am I missing here?
The other component that we moved, we changed websites. We changed websites. I went to NADA,
we were in looking at the different websites prior and when I took over obviously on the
new guy and my COO had some guardrails on me. He was closely watching my movement.
I was running pretty much everything by him as I wanted to make changes. Hey, I want to go to
this marketing company. Hey, I want to do this. Hey, so I was running a lot of the stuff by him
being that I was the rookie. Luckily for myself, the marketing company has paid dividends and
our partnership with the banking company, Upstart has paid dividends. I would say the
other component beyond training and management in the building is our website and we went to
Motive as our website and Motive is a little different because they're not so big yet that
they're where the point where, hey, okay, I'm going to get experience. Correct.
Many of the other sites, you go to them and they're giving you the, okay, let me open a ticket and
I'm going to elevate this to a specialist too and then you're like, okay, well, how long? Well,
usually a week or two, we're going to upgrade it and then it's up to you to follow up and call
them back and go, hey, are you getting this handled? With Motive, I can call my rep and go, hey,
I want to do this and more importantly, we have access to the backend tool where we can adjust.
It has an AI component that's constantly learning. If you're shopping on our website,
it'll take you back to where you left off if you want. If you don't, you can shop traditionally,
but the biggest thing is their support has been the key component of our relationship.
I call the guy and if he doesn't answer, he calls me back within five or ten minutes,
so they really value the partnership and you are, that's a great terminology. We're really
getting a boutique experience from all the players that we're utilizing right now,
our marketing, our website, and of course, for you on the overhaul.
If you had to now drill down to the one or two most impactful things from everything we just
discussed, what do you think is the most? Any dealer listening right now who's going through
this process, obviously doesn't have to be a Honda dealer, but whether it be a turnaround,
just wants to grow, what has been the most impactful for you, would you say, the one or two
top things from everything you just mentioned? Obviously, you got to hold your people accountable.
That's the first thing is, you have to inspect what you expect,
right? My owner's big on that. Then in order of importance, I think that if you have good
people process and you're set up internally and I believe that we do, the biggest component would
be our marketing component and moving to prophecy from our old marketing company,
I really think that that's given us an opportunity to catch people higher in the funnel and given
us a better opportunity to create growth. Then going down the funnel, obviously changing the
website and making the user experience better. Our time on site when we tracked it last month,
I was in a meeting, it was over five minutes. It's like astronomical for industry standards.
So you have to give some credit where credit is due and that's due to the website. So that's helping
bringing customers. I think a lot of that is that we're catching customers higher in the funnel and
in turn, they want to learn more. They haven't already been to the traditional third party sites,
so they're coming to our site and we're trying to teach them how to do it.
And I almost missed one component. We also went with a new SEO and SEM company that has paid
massive dividends. Our organic search is up over 130%. It's a company called Zing Metrics.
That's another key component that we added. So we've done a major overhaul of our marketing,
our search engine optimization, our website. And Zing is really good at engaging AI and
LLM, which is huge in our market space right now. I was listening to one of your podcasts earlier
about the difference between the guy who pointed it out, which I thought was pretty good. He said,
before we were slicing the lemon, then we're squeezing the lemon, now we're making lemonade.
That's how AI is moving, right? From a base to where now the next step is learning where you're
actually have an employee that's an AI, not a bot that's an AI. So having that component
with our SEO and SEM company, where they're engaging the large-scale LLMs to
value our web's information is huge for us. And they paid huge dividends. I'm glad that you went
back and said, hey, what are the things that you would accredit to your success? Because
I really believe that they've helped us immensely.
So before we wrap up, I'm curious, you're in a very EV heavy market, obviously,
California. And how do you feel about the future of the brand you represent, Honda,
in your market, the product, the current lineup you have? How do you feel about it? What's the
conversation behind closed doors with ownership? What are you talking about?
I think Honda has their finger on the pulse of what's really going. If you look at one of our
competitors, they never really jumped head over heels, and they really expanded their hybrid line
and their paying dividends. Honda's said to us that they're going to expand the hybrid line.
We currently have four models. They're talking that we should have an additional 15 worldwide
by 2030. So over the next 36 months, they're planning to come out with multiple hybrid variants
of our vehicles. And I really think for us, specifically my market where I'm at in the Central
Valley, we do a lot of commuting. A lot of our customers live here, and they commute 45 minutes
to an hour into the Bay Area in order to work. And so for us specifically, the EV market is there,
but it's more around us. If we were over the hill to where our sister stores are,
I think it'd be a larger component. I was really excited about Honda's e-cars, and they were
coming out. I went to the show in Chicago, and they had them there. And I was very excited about
the product. I thought it was going to be great for us. But I think that there's some definite
wisdom in them moving to what they're doing in hybridizing a lot of our vehicles, such as the
pilot, the passport, the Odyssey. I mean, the passport is, for all intents and purposes,
as a home run. They've knocked it out of the park. We sold more passports
in the last year and a half than we did in the previous three.
What's driving that, by the way? It feels like not here nor there. Why is that moving?
It's actually a beautiful truck. I mean, the first thing is...
I love that. You just double take that. You're like, huh?
Don't disrespect my passport, Yosie. Don't disrespect it. I'm not disrespecting it.
No, it's a beautiful truck. And I think just like anything else, when you go to a fancy restaurant,
you eat with your eyes. If it doesn't look good at first, if it tastes good, but the experience
isn't there. So when the car's driving down the freeway and passes you by, you got to look over
and go, hey, what is that? You've got to look at it and go, what is that? And the passport
takes that out of you. The passport, when you look at it, you go, man, what is that?
And you go, wow, that's a Honda. Now, in your brain, it says that's reliability.
So not only am I looking at a beautiful piece of machinery, but Honda has that reliability
built in. And so it's really been a home run for us. And for us to get that in a hybrid variant
would be, you know, crazy. Yeah, I can't wait. And then they're going to redo the
Accord. It's going to pop off, baby. Yeah, they're going to redo the Accord. We're going to get a
redone pilot in the near future. The new Honda Prelude is a great look in car. I was just looking
at it yesterday. I go, you know, this looks like an NSX from behind. And I know it's got its naysayers
and it's not enough power and the shifting. But if you look at the people and you listen to the
people that have bought them, they love them. The people that are driving them and that have
actually bought them, they have nothing but good things to say about the product. The people that
are the talking heads that are the pundits, they don't own one. They're not driving it. So they don't
know really about the experience. They're just speaking about the car, the way it looks, and
maybe the way they took a test drive. I love the passion, Frank. Yeah, I bleed blue. I am a Honda
guy. I've been with Honda for 28 years. I bleed blue. I am Honda through and through. Amazing.
Yeah. Well said. Well, Frank Esparza from Tracy Honda in Tracy, California. Frank, thanks so much
for coming on the show and just telling us about your journey of the million-dollar swing
and what you've done to get there. It's very impressive, man. I'm sure you're going to keep
crushing it. Yeah, I appreciate it. Yeah. I didn't do it by myself. I've got a very, very good team.
Of course. I got great ownership. Like I said, initially my owner, the CEO, had some guard rails
on me, but he paid me a great compliment. I went to him. I said, hey, I want to do this. He goes,
right now you're batting 1,000, so go ahead and do as you see fit. He's allowing me to
take the training wheels off and make some decisions. Thankfully, the decisions that I've
made have paid off. Well done. Well said. Frank Esparza, thanks for coming on the show.
Thank you, Yoshi. I really appreciate the opportunity.
Thanks for tuning in and I'll see you guys next time.
About this episode
Frank Esparza, GM at Tracy Honda, breaks down how he took the helm on January 1, 2025 and drove measurable improvements over the next 18 months. He credits changes to “people process and pay plans,” enforcing minimum unit standards, and tightening sales execution—like early management intervention and higher back-end attach rates. On the finance side, he explains how Upstart’s AI underwriting and desking tool helped approvals at lower interest rates, while marketing and CRM discipline supported the growth.
Today I'm joined by Frank Esparza, General Manager at Tracy Honda.
Frank walks through how his Honda store in Tracy, California, turned a stagnant pay plan into more than a million dollars in net profit growth in twelve months.
He breaks down enforcing minimum sales standards, why he moved his advertising budget from broad reach to buyers already in the market, and how a lending partner is approving finance deals that traditional banks reject outright.
Topics:
03:00 Raising Standards Drove $1M Growth.
09:20 The Marketing Company That Worked.
13:00 Lower Funnel Marketing Was A Disaster.
28:00 Fix Your Funnel, Fix Your Gross.
32:00 The Passport Home Run.
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