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How to Build a Used Car Dealership Empire | Car Dealership Guy Podcast

发布时间 2024-05-23 17:00:03    来源


Welcome to the Car Dealership Guy Podcast. In this episode, I'm speaking with Michael Kelley, General Manager of Bourne's ...



Have you ever considered going franchise? I would say absolutely not until listening to some of your podcasts. This general manager has grown with the same dealership for over 20 years, but after building a wildly successful used car store, the question begs, what's next? Today I'm speaking with Michael Kelly, general manager of Borne's Auto Center, a progressive independent dealer group based out of Boston with over $125 million in annual sales. Don't forget to click subscribe so you never miss an episode.
你考虑过加盟连锁吗?在听过你的一些播客之前,我绝对不会考虑这个问题。这位总经理在同一家经销商工作了20多年,但在建立了一家非常成功的二手车店之后,不禁让人想问,接下来该怎么办?今天我和迈克尔·凯利(Michael Kelly)谈话,他是波恩斯汽车中心(Borne's Auto Center)的总经理,这家总部位于波士顿的前卫独立经销商集团每年销售额超过1.25亿美元。别忘了点击订阅,这样您就不会错过任何一集了。

Well, before we get into the show, this episode is brought to you by Uber. Courtesy transportation is no longer a nice to have, it's a need to have. That's why 80% of dealership respondents agree that providing on-demand courtesy rides with Uber has helped retain customers based on Uber's survey of 79 organizations in 2023. With Central, you can request a ride on behalf of your customers even if they don't have the Uber app. Car dealerships are loving Uber for business because it's a headache-free solution for offering white glove service and seamlessly handling tasks like pickup and delivery of auto parts and replacing shuttles and loaner cars. Dealers can request one way or round trip rides, add multiple riders and locations and even monitor trips in real time. Plus, you'll get monthly reports to keep track of everything. If you're ready to reduce the costs associated with maintaining shuttles and limit the liability of loaner vehicles, it's time to partner with Uber. Visit t.uber.com slash CDG Auto today to learn more or visit the link in the show notes below.
在我们开始节目之前,本集由Uber赞助。礼貌接送不再是一种奢侈,而是一种必需品。这就是为什么80%的经销商表示,根据Uber在2023年对79家机构的调查,提供随时可用的Uber礼貌接送有助于留住客户。通过Central,即使客户没有Uber应用程序,您也可以代表他们请求搭车。汽车经销商喜欢Uber for Business,因为这是一个无忧的解决方案,可以提供贴心的服务,并且可以无缝处理类似汽车零部件的接送和交付以及更换班车和租车。经销商可以请求单程或往返乘车,添加多个乘客和地点,甚至实时监控行程。此外,您将获得每月报告以跟踪一切。如果您想降低维护班车的成本,并限制提供租车车辆的责任,现在是与Uber合作的时候了。今天请访问t.uber.com/CDG Auto了解更多信息,或查看下面节目说明中的链接。

This episode is also brought to you by Cars Commerce. The platform is simplified everything about buying and selling cars, including the quote unquote follow-up. Let me explain. Dealers, fast and effective follow-up is crucial for converting leads in customers. But here's the problem. 40% of shoppers report that they are not getting timely or helpful responses from dealerships. This is a huge problem because your own team could be leading four out of every 10 sales opportunities on the table.
这一集也是由Cars Commerce提供支持。这个平台简化了关于买卖汽车的一切,包括所谓的跟进工作。让我解释一下。经销商,快速有效的跟进对于将潜在客户转化为实际客户至关重要。但问题在于,40%的购物者报告称他们没有从经销商那里得到及时或有用的回复。这是一个巨大的问题,因为你的团队可能会让四分之一的销售机会白白流失。

Cars Commerce makes it simple to measure and improve your follow-up performance. A Cars.com Experience Report tracks the percentage of leads your teams are responding to and how customers rate those responses. While dealer inspires retailing technology enables your team to quickly text follow-ups with personalized financing options to make the most out of every opportunity. To learn more about how you can measure and improve your team's follow-up performance, go to cars.com or dot inks slash experience or click the link in the show notes below. Michael Kelly on the CDG podcast, Michael, welcome. Oh, great. Thanks for having me, Yossi. It's great to be here. Great to have you on. So I was looking through our old emails. You had initially reached out to me September 2023. And you sent me something very cool. You sent me this like the report that you do for your team, which my honest opinion was I was pretty impressed because, you know, I just, it was a pretty sophisticated report that, you know, call me by, I said, wow, okay, like this is a top notch use car dealership. Like good stuff, like the way you manage your team, at least it seems like an outside. Anyways, then, NADA, that was that whole thing.
汽车商业简化了衡量和改善您的后续跟进表现。Cars.com体验报告跟踪您的团队回应的销售线索的比例以及客户对这些回应的评价。而经销商激励零售技术使您的团队能够快速通过个性化的融资选项发送跟进短信,以充分利用每一个机会。要了解如何衡量和改善您的团队的后续跟进表现,请访问cars.com或dot inks斜杠experience,或点击下方节目注释中的链接。在CDG播客上的迈克尔·凯利,迈克尔,欢迎您的到来。哦,太好了。感谢你邀请我,约瑟。很高兴来到这里。很高兴有你在这里。我翻看了我们的旧邮件。您最初于2023年9月联系过我。您给了我一个非常酷的东西。您给了我这个您为您的团队制作的报告,我的诚实看法是我印象深刻,因为,你知道,这是一个相当复杂的报告,打电话给我,我说,哇,好吧,这是一个一流的二手车经销店,管理团队的方式很好,至少从外部看是这样。总之,然后,NADA,那是个大事。

But then you sent me an email after NADA. And it was really great because I told you, hey, like we should, you know, connect about doing a potential podcast. You had really included like your entire story. And I love how you, you did it in like bullet point format. So that was, it was great. It was like punchy, concise. What I liked about your email, which is cool, was that you had to highlight in your rental car business and you're like Epic fail. And I was like, sweet, like, okay, cool. So we're going to have like a good, transparent conversation, you know? Sure. I'll put it all out there for you.

So Michael, I want to start with the obvious, which is 20 years out of one dealership. You're defying almost every dealership turnover metric. What's going on over here? Yeah, so I mean, going all the way back to how it kind of got my start in the business. So I was one year out of college, I was working at an insurance company, adjusting claims. And Jason Bourne, the owner here, he had kind of reached out to me. And I had known him because when I worked in high school in college, I worked for his buddy, Landscaping, in the summer. And he knew I was like a hard worker. And we had met a few times. And his sister, who's also an owner here and works here as well, was a couple of years ahead of me in high school.

And he had a small used car lot here in town. And he basically, they were moving locations in a couple of months. And he really wanted to grow the business. And he needed kind of somebody to come in and just kind of take over the sales team. And our sales take over sales, no team. There was no team. He was the team. And so I did that. And one of the reasons why I decided to kind of go in the auto business, which my college buddy is like, you're crazy. You're going to work on Saturdays. Like, what? That's nuts. One of the things that I learned at the insurance company was like, we had these claims that we had to adjust. And if you did all your work and you key, you were organized and you could call it all your people back, they would make you then go in and work on the other people who were really far behind. And I was like, 21, 22 years old. And I'm like, this is crazy. If I'm going to do that, I want to get incentivized for it. So I'm like, I really need to find a place where the harder I work, the more I'm going to get compensated.

And it was a perfect fit. So I just kind of took the ball and ran with it. So we kind of grew it. And I took it from when I started at the company. I mean, I really treated it like it was, I still do. Like it's my own business. So that just having that mentality right out of the gate has worked really well for us. So talk to us. So you started not much of a team. Today, give us like a little by the numbers, just a table set, right? Like what are your annual revenues units? So give us a little high level.

Sure. So last year, we did just shy of 3,000 retail units, about just over 4,000 total units in a wholesale. That's all out of our Easton location. So we do have, so backing up a little bit, we do have our Easton location, which is our flagship dealership. We sell about 300 to 315 cars a month right now. We're on pace to actually do 330 this month, retail only. And we also have a reconditioning center, an offsite, where we do all the offsite, mechanicals, photo, clean. And then we store a bunch of cars there. It's about a half mile away from here.

And then on top of that, we have a location called CarBids, which is, it used to be $10,000 in undercars, trade-ins that we took here. We're trying to get the lift over at MMR. We're trying to get a $15,000 to $2,000 lift over MMR, but might have a scratch, might have a dent. We do check them out, but it's more of cash and carry type of thing. Now that's more of a $15,000 underlies. Sometimes they'll even a little higher than that, but there's a huge market for those cars as well. So those are the three current locations that we have right now. Annual revenue, we're doing about $125 million in revenue. Total, everything. And how many stores is that? So that's pretty much one store here, doing everything right out of the East and like.

So just to recap this, you have one main retail location. That's your Easton location. And then you have a reconditioning center. And then you have a value lot, where you put these like $20,000 in undercars. Correct. Got it. I'm getting giddy because I have a laundry list of questions. So this is going to be something fun. Also at the Easton location, we have retail service. And we have retail body shop as well. Ah, OK. So Michael, I think my hot take, first of all, is not even not hot take, sorry. Like my initial reaction is that you are the type of use car dealership that many use car dealers aspire to build. Based on your size and scale, and from what I could tell, thus far again from our prior conversation of how you manage your business, you've sort of taken this to the corporate level. All right. So we'll dig into that. Start us off if you may, just your sales model. I know when you started, you had mentioned to me that you were cradle to the grave. And of course, you've evolved your team a ton instead. But just talk just a little bit about how do you actually sell cars today at your dealership? What is your structure?

So one of the biggest things that we did in 2003, we went to the fixed price, no haggle pricing model, all market-based. We priced very competitive to market, lower front end gross. And obviously, we rely a lot on the back end. And then we have a pretty substantial documentation fee as well. But we went to that fixed price model. When I started in 2003, we visited two or three car max locations before we went to it. And Jason was like, you got to see what these guys are doing down here. And we watched that, and we figured out, OK, we're going to do this. And we literally will not negotiate a dollar, even if it's my best friend from high school or anything. That's 2003. I mean, you're talking about pre-website adoption. That's very early. What gave you the conviction to go fix price so, so early? Why? Why do that?

Well, obviously, seeing what car max was doing, and they were on a huge growth trajectory at the time, also just the experience and being able to do that kind of volume, it needs to be fast. Everything needs to be quicker. And we knew that the negotiation part was the part that takes a long time in the car buying process. So especially back in that time, it was common for a person to spend two or three hours in a dealership. So everything that we've always done has been volume, volume, volume, and speed. We've tried to get somebody in and out of here in 45 minutes as soon as they say they want to buy the car. So now, fast-forwarding again, what are your margins today? You mentioned low and the front, bigger back, a substantial dock fee. Can you take us through your margins on the front and back end, everything?

Sure. I mean, obviously, the front end varies. Average and average. Yeah. Yeah. So averaging right now, F. So this is where you can get into the weeds on this. And you know this with your use car background, right? I love the weeds. I love it. Yeah. So all, you know, we're about 800 bucks on the front end. And last month, our back end was a little bit off. But we strive for about 1,500 on the back. And then we have a documentation fee that we ended up raising, I think it was towards the middle or end of last year to 584. So all in, you're looking at somewhere around, so about 2,800 bucks per unit. And the other thing is getting into the weeds is the reconditioning, right? So we're spending on average. Which was going to be my next question. Yes. Go ahead. Right. So we're spending about $900 to $1,000 per car in reconditioning, right? There are 115 point inspection. If the breaks are less than 50%, we replace them, tires less than 5, 30 seconds. We'll replace those. But there is a markup in that as well. So that's where. And that's when you want to compare yourself to other dealers or some of these other public companies and say, what they're doing per copy or per, well, are you tagging your transport to that car? What are you putting into that? Or what are you stripping out? It's maybe the better question. So that there is some money baked into that as well.
没问题。我是说,显然,前端是不一样的。平均和平均。是的。是的。所以现在平均是 F。这就是你可以深入探讨的地方。你在二手车行业有经验,对吧?我喜欢深入研究。我喜欢。是的。所以,总的来说,我们的前端收入大约是 800 美元。上个月,我们的后端收入有点偏低。但我们力求后端每辆车大约能达到 1,500 美元。此外,我们还有一项文件费,去年中间或年底时,我们将其提高到了 584 美元。总结一下,大约是每辆车 2,800 美元。另外一个细节是车辆重新整备,对吧?我们平均花费。这将是我接下来要问的问题。是的。说吧。对。所以我们每辆车的重新整备费用大约是 900 到 1,000 美元。我们会进行 115 点检查。如果刹车片低于 50%,我们会更换,轮胎不足 5/30 寸,也会更换。但其中也有一些利润。所以这就是你要拿来与其他经销商或一些其他上市公司进行比较的地方,看看他们每份成本或每个。哦,你会将运输费用标记到那辆车上吗?你会投入多少?或者你会削减什么?也许更好的问题是什么。所以其中也有一些成本。

So let's break down reconditioning, right? I think a lot of people just don't really know what happens behind the scenes at this level of detail. So you're saying roughly $1,000 into every car on average. We know that some are 500, some are 2,000. But tell me, like, what goes into that $1,000 on average? And then also, I'm surprised to hear you say that there's profit baked into that. I'm curious to know also how much of that is profit. Because I have only ran reconditioning centers as cost centers. There was never any markup. It was strictly a cost center. I'm not saying that's right or wrong. Just it's a different model. So I'm curious to know how you do it.

Sure. I've kind of argued to do it at a cost model as well. But when we first got started and we have accountants, no, this is the way dealerships do it. You got to make money. And one of the things that was the absolute fuel to our fire was when we separated our customer pay service department from internal. As soon as we separated that, we just took off. Because we were having a hard time. What do you mean by that? Explain that to us. Explain that.

So for a long period of time, before we opened the offsite reconditioning center, our service department here was dealing with customer pay stuff, service contract stuff, use car policy stuff, person buys a car. They've got an issue the next day. You've got to get that car right in. So oftentimes our lock cars would get pushed to the back burner because obviously there's no one really complaining about that. So we've learned that having the offsite reconditioning center, time to market is much, much faster. They don't touch any customer cars. And it's just a production. It's a used car factory in terms of getting the cars to the front line. So tell me, so before I move on, I want to talk to you about setting this up, which I think is also very relevant for lots of dealers, especially as you're amping up your use car business. And you want to be competitive. You see what a lot of people don't think through is that if you're a franchise dealer, clearly, you're running your use car reconditioning through service, unless you have some adjusted rates, you're not competitive. And you just can't do that in this market. And you'd be surprised. I mean, I still talk to some groups or dealers that just operate that way, where their use cars run through service at normal rates. So what happens is they end up actually setting lots of cars to auction. Or the system doesn't work. You know what I mean? And so before I ask you about setting something like this up, tell me about, I just want to close the loop on that question of the cost they get baked into that $1,000. All of that, how much does labor, how much does body work, everything? However much you can drill down and break that down for us. Sure. So I mean, we do now give ourselves a little bit of a discounted rate in the internal shop. So our retail labor rate is $149. They're doing it at $95 an hour. And then you can figure out what service technicians get paid from there. So I'd say the breakdown on the profit side of it is we probably have a 40% margin on the parts that we buy, the aftermarket parts that we put on. And then you're looking at probably the 100% margin on the labor part of that. So it comes out to the profit that's probably baked into a $1,000 RO is probably about $400, I would say. Talk to me about sourcing parts. How are you doing that? All aftermarket, I would have to assume. Yeah, mostly aftermarket, more and more stuff has to come from the dealers. A large part of those reconditioning cost of tires. Tires drive the recondi-, I mean, tires prices are just gone through the roof. And so a lot of that is driven by tires. We try to lay off the major body work stuff. So there's not a lot of body work in there. I think right now with we have about 100 cars that need that are in the process right now. Only about 40 of those have some sort of minor body work. So only about 30% to 40% of the cars actually go through the body shop.

This episode is brought to you by my very own car dealership guy, Industry Jobboard. CDGjobs.com, my industry job board connecting the best talent and automotive with the best companies, will remain absolutely free for CDG listeners to post and fill available roles at their companies. This free job board is for anyone in automotive, vendors, dealers, lenders, manufacturers, auto tech, everyone. Already over 100 companies have posted open positions, including Lithia Motors, Recurrent, Credit Acceptance, Vero's Credit, Cars Commerce, Shift Digital, Plug, Full Path, Westlake, Trade Pending, you got the point. The best part is that when these companies hire through CDGjobs.com, they are hiring the most informed candidates in the marketplace. So don't hesitate, you can add your open roles today by visiting CDGjobs.com or clicking the link in the show notes below. That's CDGjobs.com.
这一集由我自己的汽车经销商合作伙伴Industry Jobboard带来。CDGjobs.com是我的行业招聘网站,连接汽车行业最好的人才和最好的公司,对于CDG的听众来说,发布和填补公司可用职位的服务将始终是完全免费的。这个免费的求职板面向所有汽车行业人士,包括供应商、经销商、贷款人、制造商、汽车技术人员等等。已经有超过100家公司发布了空缺职位,包括Lithia Motors、Recurrent、Credit Acceptance、Vero's Credit、Cars Commerce、Shift Digital、Plug、Full Path、Westlake、Trade Pending等等,你明白了吧。最棒的部分是,当这些公司通过CDGjobs.com招聘时,他们正在雇佣市场上最了解的候选人。所以不要犹豫,您可以通过访问CDGjobs.com或点击下面节目说明中的链接添加您的空缺职位。就是CDGjobs.com。

And then how are you managing this reconditioning center? So in 2015, I got approval from Jason to go out and build our own reconditioning software to manage the process. God, OK, so tell us more about that. What was that process like? Why do that? Why not use a third party software? Like give us the full scoop. So back in 2014, 2015, there wasn't 50 to 100 different recond people at NADA at the time. We're hardly any. And so when I first started thinking about it, I thought that there would be a huge value to build something the way that we thought it should be done. And that was catered to us. I mean, there's so many software solutions, CRMs, DMSs that are built, but they're not built for your organization. They're built for everyone's organization. And there's so many pieces of it that you don't use or don't need. So it's been a very, very powerful tool. And we had a lot of input from the team here that actually helped build it. So they're bought into it big time. We've got our body shop, Forman Tim. I mean, he still has a flip phone, but he loves that. But he was involved in helping design how it was going to work for him. But to get back to how we went about doing that, I posted a gig on Craigslist and found a guy. That's my good. I love it. I love it. It's so scrappy. But so is this like, how much does this cost you to software? Is it cost on recon software? How much does that cost you? I still pay them a small amount a month to kind of maintain it. And if we need any small updates, it's been very, very minimal. I would say the initial investment that we put into it, all in was probably somewhere around $100,000. So if you extrapolate that over the amount of months, far less than we'd be paying for any software solution now. We also kind of, I would say, maybe four years ago, we added to the software to manage moving vehicles. So because our lot here, where Massachusetts's real estate is extraordinarily expensive, and there's not much of it. So essentially, if we don't have all of our cars here on the lot, so if a customer comes down and they want to look at two or three Jeep Wranglers, Jeep Grand Cherokee's, we use the software to manage, OK, we need the sales person. We'll request the car. It'll send the lot attendant a text message. This car needs to be moved as soon as he gets the car over at our recon center to bring it over to this lot. It sends the salesperson alert back, tells them, hey, Mario, car's on the way. And he can tell the customer, hey, the car's on its way over. So that's been a big part of it, too. We used to manage that via just texting back and forth, and that just wasn't going to work. And I know the pain, and I know the feeling. So it doesn't surprise me.
然后你是如何管理这个整修中心的? 所以在2015年,我得到了Jason的批准,可以去建立我们自己的整修软件来管理这个过程。天啊,好的,告诉我们更多关于这个。那个过程是怎样的?为什么这样做?为什么不使用第三方软件?给我们详细介绍一下。所以在2014年,2015年的时候,NADA当时没有50到100个不同的整修人员。几乎没有。所以当我第一次开始思考这个问题时,我认为建立一个符合我们想法的东西会有巨大的价值。而且是专门为我们定制的。我的意思是,有这么多软件解决方案,客户关系管理软件,经销商管理软件,但它们并不是为你的组织而建立的。它们是为每个人的组织而建立的。其中有很多部分是你不适用或者不需要的。所以它是一个非常强大的工具。我们团队在建立过程中提供了很多意见,因此他们完全赞同它。我们有我们的车间主任Tim。我的意思是,他仍然使用翻盖手机,但他喜欢它。他参与了设计如何让它为他工作的过程。但再回到我们是如何做到这一点的,我在Craigslist上发布了一个广告,找到了一个人。这很喜欢我。我喜欢这样。这么简单。但是这个软件的成本是多少呢?整修软件的成本是多少?这花费了你多少?我仍然每个月支付一笔很小的费用来维护它。如果我们需要做一些小更新,费用非常非常少。我会说我们最初投入的成本,总共大约是10万美元。如果你将其分摊到几个月,远远少于我们现在要支付的任何软件解决方案。我可以说,大概四年前,我们添加了一个管理车辆移动的软件。因为我们这里的停车场,马萨诸塞州的房地产价格非常昂贵,而且没有太多空间。所以如果我们没有我们所有的汽车停放在这里,如果顾客过来想看两三辆吉普牧马人,吉普大切诺基,我们使用软件来管理,好的,我们需要销售代表。我们会请求这辆车。它会向停车场管理员发送一条短信,告诉他这辆车需要尽快移到整修中心,然后再送到这个停车场。销售代表会收到提醒,告诉他们,嘿,Mario,车子已经在路上了。他可以告诉顾客,车快到了。这也是我们的软件的重要组成部分。我们以前只是通过短信来管理,但那根本行不通。我知道那种痛苦和感觉。所以我一点也不惊讶。

Paragraph 1: All right, so it's great insight into recon. I want to transition first to the value lot. This is, again, another concept that lots of people in the industry dabble with, which is we take all these cheaper, kind of sketchy cars to the auction that we probably don't want to retail and put our brand behind. Well, should we set up a value lot? And it's associated with us, but it's a different name, and there's different vehicle warranties and blah, blah, blah. So you're not taking that reputational risk, plus you're offering a different type of insurance after the fact. So what has been your thinking with this value lot, number one? And then if you could also share the economics of the value lot, because I'd have to imagine margins are very different than your primary lot.

Paragraph 2: Yeah, so the value lot, we will retail as many trade-ins here at our bonds lot that we can. But we also know that there's a huge affordability market, even before the use car prices went up. There are people, I mean, how many times do you have a friend, hey, I need a car for my daughter, I need this, I need that. But we really, we quickly learned, and I know that there's been some dealerships that have tried to put different types of cars on the same lot and say, this is this car, this is a value car. But our salespeople, they just couldn't differentiate between the two. So we separated church and state, we sent it over there. We do, like I said, we do still check them out. We still do want to sell a good car. We still do stand behind the car if there's any issues. But it is very controlled. There's two people that work over there. They know what to say to the customers and how to set the table and let them know exactly what they're buying and what the scenario is. The margins are very, very, they're much, much higher. I believe last month, there is virtually no back end because it's mostly cash and carrier outside finance or personal loans and stuff like that. So we don't really do much of that. Yeah, so it's really, like I said, a cash and carry. And I think last month, they were average and somewhere around $2,500 a car. Not surprised on the front end. And then we don't do it off the field. Yeah, cheap cars. We let the customer go to the registry on their own. It's no frills.

Paragraph 3: Oh, wow. Yeah, so what are the core differences, right? So you let the customer do the docs on themselves. Why do you decide to do that? Well, because Massachusetts is a little difficult with registering and titling. I don't know if you've experienced that at all. But so we have the registry right here at the dealership in Easton. And there's all sorts of things that kind of go along with that in terms of auditing. So we just didn't want to get involved in any of that. So it's more or less, if we don't charge a doc for you, we don't do anything, then we'll just give the customer all the correct paperwork and say, here, take it to your insurance agent, then take it to the registry. But all of those expectations are set up front. And that's what's most important. Yeah, you brought back memories because you're right. I do remember us delivering cars. Delivering, obviously not selling physically, but delivering to Massachusetts. And there was always some challenges with that. So it does bring back some memories. And if anyone from those times that worked with me during those days is listening right now, I have to imagine some people are. They're probably smiling right now because they remember this as well. So good times. I love how you've just taken cars that would have otherwise gone to wholesale and how you would have left money on the table. And you're actually making something out of it, retailing it, and expanding your margins. Very smart. I mean, their turn is like 100%. Their selling cars so quickly, it's actually amazing. It's pretty amazing. I mean, if you could actually go out and source those cars and have 100 of them, I mean, talk about what you could do. But obviously sourcing those cars at auctions and things like that is very, very difficult.

Paragraph 1: Got it. And then what about your appraisal process? How do you do that? We're using FirstLook right now. We have dabbled a little bit with V Auto. And FirstLook just, it's actually Max now, Max, Max Digital, which is owned by ECV. And they've actually implemented their clear car into their software, which has been very, very helpful for us to have a more sort of transparent and online appraisal for our customers. We used so many different online ones. The customer would come in with three different numbers, one from KBB, one from, you know, we were using the car offer at one point, I mean, so now with Max, we're in a pretty good spot with, you know, if somebody submitted their online trading value, we know it. Whereas before, we'd give them a number in the store and then they'd pull out a piece of paper and say, you're a website told us that. And we're like, oh, shoot. You know, so then you've got to got a backtrack. So we want to be as transparent as possible. And that the transparency too, I mean, going back to the no hassle pricing, I mean, that's one of the things that's, you know, really, really helped us just the transparency with the pricing transparency. We give the customers the internal reconditioning, tell them exactly what we did to the car, really a value build on that. Yeah, tell me more about that. What do you actually show the customer? I've long had this like idea of taking a reconditioning transparency to the next level. I just think that it talked, you talk about building trust with a customer at like a next level. We're already showing them the hotspots on the car of like the scratches and all that. Why not actually, and by the way, like I don't mean just like telling them like, oh, we replaced your whatever breaks, but like if you can show part of that, I just think there's something, you know, unique to that experience. And look, service centers all across the country, right? At this point, if you put your car in for service, you know, a franchise dealership, typically, you know, you will be able to get videos and pictures and stuff like that, which I think is a great way to engage the customer. But I'm curious to know how you actually share reconditioning with customers and how you use that to your advantage in the sales process.
知道了。那您的评估流程怎么样?您是如何进行评估的?我们现在正在使用FirstLook。我们之前尝试过V Auto。现在使用的是Max,Max Digital,由ECV拥有。他们实际上将清晰的车辆信息集成到他们的软件中,这对我们来说非常有帮助,让我们可以为客户提供更透明、在线的评估。我们曾经使用过很多不同的在线工具。客户可能会拿出来三个不同的数字,一个来自KBB,一个来自……我们曾经使用过Car Offer,所以现在使用Max后,我们能够更清楚地了解客户在线交易价值。以前我们可能在店里给客户一个数字,然后他们拿出一张纸条说,你们网站告诉我们的是另一个数字。然后我们就得回过头去核实。我们希望尽可能透明。透明也跟无压力定价有关。这是让我们非常受益的一点,有了价格透明度。我们会告诉客户内部的整修情况,告诉他们我们对车辆做了什么,真正为此增加价值。嗯,请再告诉我更多。您实际上向客户展示了什么?我很久以来一直有一个关于将整修透明度提升到更高水平的想法。我认为,如果能在谈到与客户建立信任的下一个级别时,就会有所不同。我们已经向他们展示了车身的明显痕迹,像划痕之类的。为什么不实际展示出来呢?顺便说一句,我不是说只是告诉他们,我们更换了某个零件之类的,而是如果能展示其中的一部分,我认为这样会有独特的体验。看,全国各地的服务中心,对吧?到了这个时候,如果您把车送去服务,通常,您会能够得到视频和图片之类的东西,我认为这是一种很好的方式来吸引客户。但我很好奇知道您如何实际与客户分享整修情况,以及您如何利用这一点来优化销售流程。

Paragraph 2: So that's actually changed recently. So we used to, so while the customer was on a drive, we would actually print up everything that they would want for the vehicle, you know, the Carfax report, you know, we would give them our internal repair order and we would start the value build in the presentation rate when they got back from the drive. So for us, it was all about a value build because we're not gonna be able to negotiate on the price. So we got to build value in the car and we got to build value and buying a vehicle from us and what makes us different than other dealerships. So the reconditioning is obviously a huge part because you don't wanna compare our car to a car at another dealership that maybe they didn't, doesn't have new tires or it doesn't have brakes or you don't even know what they did to the vehicle. So we used to actually print that out and give it to them when they would come back from the test drive. We actually switched at any DA. I went with a company called iPacket and iPacket is now right on our website. So now the customers are actually able to drill in and see the service RO right on the website. So we're actually be able to build value before the customer even gets in store.

Paragraph 1: Mm hmm, got it. Tell me more about your sales process while we're on this topic, right? Like, can you like break it down to, you know, five to 10 steps? What is your sales process? I think you just made a good point that you have, like you sort of have this forcing function where you can't negotiate price. So you have to build value, which I think is a beautiful thing because it gets your team trained into good habits, right? You have to build value. We all know the easier thing to do in any case is to always to lower the price, right? That's the easy thing to do. And so it's a cool, like, it's a cool environment to be where you like have no choice, but to build value if you want to make a sale happen. But what is your sales process? And is it something that like you came up with, like who inspired your sales process? Does it get a twofold question?

Paragraph 2: So yeah, I mean, I would say I came up with it. We've been very, very fortunate. So the first person I ever hired in my hiring career back in 2003, David Pear, he still works for us today. He was the first person I ever hired. I was 22 years old and I hired somebody and I hired Dave and he still works here to this day. Now I made a lot of mistakes in between Dave and today, but Dave's still here. So our sales staff is very, very seasoned. I think our lowest, you know, least 10 year sales person has been here for three years. So, but we built the process kind of together myself. We have a great GSM Carlos. He's been with us for over 10 years. One of our finance managers, Sean, has been here 17 years. So this process has kind of evolved, but it's speed when the customer, we don't go on the drive with them.
所以,是的,我是说,我会说这是我的创意。我们非常非常幸运。所以在我2003年的聘用职业生涯中,我第一次雇佣的人,David Pear,他至今仍在我们这里工作。他是我雇佣的第一人。那时我22岁,雇佣了一个人,就是雇佣了Dave,他至今仍在这里工作。在雇佣Dave和今天之间,我犯了很多错误,但Dave依然留在这里。所以我们的销售人员非常有经验。我认为我们最经验不足的销售人员也在这里工作了三年。所以,我们一起构建了这个过程,我自己、我们有一个很棒的GSM Carlos,他已经和我们在一起超过10年了。我们的一个财务经理Sean,在这里工作了17年。所以这个过程逐渐演变,但我们在客户来时需要迅速行动,我们不随他们一块儿行动。

Paragraph 3: We have five sales people, five sales people still in 315 cars right now. Two delivery coordinators. So they assist the sales team within anything that needs to be done with the vehicle, making sure the registration, everything's good. Every, you know, just whatever they need, the liaison between them and getting the customer, getting the car delivered. We have four finance managers and a sales manager. And yes, I do still go up and sell cars myself. I think I have eight or nine out this month myself. I don't pass them off. And the delivery coordinator is David will step up. Dave, I mean, the book of business that he has, he grew up here in town as well is pretty strong.

Paragraph 4: So he's got a big, big repeat referral business. So the process is, you know, the customer will come in, you know, about 50% right now of our customers set an appointment before they come in, which is pretty interesting. Pre-COVID, it was like 30% and 70% of the people would just show up. Then during COVID, it flipped to 70% would make an appointment and 30% would show up. And now it's kind of gone down to 50, 50. So if we have the appointment set, of course, we're going to have the car pulled, you know, pulled over to the side. We know the appointments are coming. Any car they want to look at, if they want to look at three cars, we'll have them all here for them and ready to go.

Paragraph 5: If they didn't set the appointment, you know, we'll get them going. We get them checked in at the front desk. We get them entered into the CRM. Right at the front desk, we have a check-in area. They go through this, can't them in. So the sales team doesn't have to do that. We'll round robin them. And then while the customer, they'll get the customer on the drive, while the customer's out in the drive, they're doing up the whole breakdown of what it's going to cost to the car. If they have a trade-in, we're getting all that information up front. We will have the trade appraised by the time they get back from the drive, all in the salesperson will already have it and have all the numbers. And then he'll get the commitment. He or she will get the commitment. And then we'll get the application going. We'll get them into finance. And we'll get them in and out as quick as we can.

Paragraph 1: What's interesting about Massachusetts on the use car side, and I don't know if it was this way for you when you sort of had a brick and mortar store. But a lot of, very, I would say like 20% of the customers take the car all in one shot. Massachusetts customers are accustomed to buying the car or paying for the car and then coming back and picking up at a later date. And I think that that has a lot to do with the registry challenges. And that's just the way it's always been, even though it's gotten better. And we can actually, what we call a spot in the car and we incentivize the sales team to do that. But only about 20% of the people actually take it on the spot.

Paragraph 2: So you're telling me that people buy a car at your store, four out of five people buy a car at your store and they leave without the car and then they come back to pick it up after the deal is funded? Whenever they want, we don't require it to be funding unless it's a real supplement. So what do they wait for? Why don't they take the deal right away? Yeah, it's just the kind of the mentality, oh, you know, I'll come back and pick it up on Tuesday. All right, we'll see it Tuesday and we'll get it, you know, one final clean, but we can do all that right on the spot.

Paragraph 3: It's just the way that it is. It's just different because we did have a store in Florida and we can get into that. But that is not the way that people were. People were to take it right then. And I think a big part of it is there's no temporary tags in Massachusetts. So that's the way car buying has been in Massachusetts for a long time. I mean, I'm like dumbfounded. This is like, it's like my brain is just like a short circuiting right now. It's like people, it's an emotional purchase. People want the car now. And you're telling me now four out of five people buy a car at a use car store in Massachusetts and they don't. So when do they pick it up? How many days after? One, two, sometimes four or five. And after the one, two, three, four, five days, has anything changed whatsoever? Forget the fact that you may be vacuumed the car next to time. Has anything changed? Nothing. Oh my goodness.

Paragraph 4: Now you taught me something new because this is like, if you told me this, like, hey, you think this could work? Like, would this business model work? I would have left you out the door. By the way, I don't want to fix it. I want them to take it right then, you know? And we don't have a lot of back out. We don't have a lot of back outs because that would be the fear, right? Oh, they got to take it today. They might back out. They might think about it more, you know? It's not that way. It's pretty interesting. Yeah, not even backing out, just like the fact that it's like you buy a car, you kind of need it. But hey, so I think that, I want to transition that to the next question, which I think I have an answer for based on what you just told me. But who are your customers? Like talk to me about like income levels, like credit, like who are your customers? So yeah, we have a lot of good credit. It's not a subprime business. And we do it, don't get me wrong. And, but I would say, I don't have the demographics on the customer, but you know, I would say most of it is middle class, you know? We're in a, I mean, we're in a very populated area where 25 miles south of Boston, income levels are high. So it's, they're strong customer. And customers, you know, a lot of people around here buy used cars. You know, that's kind of the way I grew up. I did not going all the way back to my history.

Paragraph 1: I did not grow up in the car business. I didn't really like cars, but my parents always bought used cars, low mileage used cars. So, and I think that that's been that way here for a while. And they buy them and they will buy them from independence. And they don't buy, they don't, you franchise dealers don't sell as many used cars in Massachusetts as they do like in fly. Why do you think that is here? I don't know. I've wondered about that. Maybe for a long time, the franchise dealers, they weren't really focused on it. I think they, you know, I'm going way, way back. But there's in our area, there have been, you know, some reputable use car operators. So, I think that that might have something to do with it. It's all, you know, reputation, you know. Yeah, of course.

Paragraph 2: We're big on the reviews. We were dealerator, which is now a cars commerce company, was founded in Massachusetts. We were an early adopter to that. I think we got over 5,000 reviews with them. Wow. Now, and we pushed the Google reviews as well. And that's been something that reviews have been great for, you know, independence because it gives you, you know, it lets people know that you care and that, you know, that you're not just going to tell them to go pound it if they have an issue. And if they do have an issue that you're going to address it, right? So that's important too. I respond to all the reviews personally. So, good, bad or indifferent, I respond to them. Not necessarily to get them to change it, but just to let people know, hey, we're reading these. So if you have an issue, we are going to try to fix, of course.

Paragraph 3: Why do you think people come to your store? Like, what is the value proposition that you're marketing out there? Right? You mentioned reviews. I have to imagine your experience is a big part of it. But again, you're clearly not the cheapest price in town. You don't even negotiate. So that's a, you know, let's scratch that off the list. Why do people shop at your store? How are you driving traffic? We are market-based. Our prices are competitive. We are watching it every day. Competitive, not the cheapest. And I mean that in a positive way. You're not like, you're not under, you're not undercutting the market, you know, selling cars, you know, a thousand below front end. Like, yeah. Right, right. Yeah, no, we are market-based and we have been for a while.

Paragraph 4: So they know they're getting a good value. I mean, our repeat and referral business is about 50% of our business, month in and month out. So, you know, you're talking, you know, 30% to 40% of our customers have bought from us before. Or, and then the rest, you know, 20%, somebody sent them down to buy from us. I think there's something to the longevity of the staff being that when you come in and you're like, wow, Dave's still here. Dave's been here for 20 years, man. I mean, that's, you know, that tells you that the place is good, you know. And so I think that that just kind of builds on itself over time. And, you know, we do pay attention. Very close attention to Carby Roo's is really big up in this area as a third party lead source. There are number one, probably third bill they are our number one. That is also a Massachusetts based company. So we really pay attention to their deal ratings and and how our vehicles are marketed on those websites. And I think that that and drives a lot of business as well.
因此,他们知道他们得到了物超所值。我的意思是,我们的复购和推荐业务占我们业务的大约50%,每个月都是这样。所以,你知道,你说,有30%到40%的顾客之前已经从我们这里购买过。或者,剩下的20%,有人推荐他们来我们这里购买。我认为员工的长期性很重要,因为当你进来的时候,你会想,哇,戴夫还在这里。戴夫已经在这里工作20年了,这说明这个地方很好。所以我认为这种信任会随着时间的推移不断增强。而且,我们非常关注Carby Roo在这个地区很受欢迎,是第三方潜在客户来源。他们可能是我们的头号客户。这家公司也是马萨诸塞州的。因此,我们非常关注他们的评价和我们车辆在这些网站上的推广。我认为这也推动了很多业务。

Paragraph 1: Tell me about, I was going to, it's funny. I was going to ask you about how you're handling employee retention. I would actually skip that question and go to the go to the one that's connected to it, which is you said you have five salespeople selling over 300 cars a month. How much are your salespeople making? So Mario is our top salesperson. He will probably sell about 80 cars this month. He started here as a runner, as a lot attendant, as we call them. Amazing. Yeah. So he started as a lot of tended. We have another salesperson that started in the reconditioning, like cleaning the cars. He's in the sales department as well. We typically don't take salespeople that have prior automotive experience because it just, it really just doesn't work. That had it. Yeah. So and they know too much, right? So we don't pay off the gross and we pay a low base and then we pay a flat per car.

Paragraph 2: And then we pay spiffs. You know, if they take the customer takes the car that day, we'll pay them a spiff. If they finance it, pay them a spiff. If they buy a warranty because we want them to kind of set the table for that at the, at the sales desk, not talk too, too much about it, but set the table for it. And then if they get to certain volume levels, then, then they start to make even more, you know, not retro back, but, you know, once they get over a certain number of cars, 30 plus cars, 35 plus cars, then they'll, they'll make more, more per car. The other thing that we do that I don't know if it's unique in the industry or not because as an independent, as you know, we don't have 20 groups. There's not a lot of people I can kind of wrap with about the business. That isn't my direct competition. You know, so you just said that and it's funny because like whoever's listening to this, if you're an independent that wants to be part of an independent 20 group, shoot me an email. Right. Let's do it.

Paragraph 3: Michael, let's let this thing up. I've thought about it. Actually, I think you may have seen, like I tweeted about this like six months ago, but I just think like we just got to make this happen. You're like, independence don't have these like great 20 groups that are, you know, super known and ubiquitous. I think it's a great idea. So if you're an independent, listen to this and you'd be one, you want to get better. You want to be part of this. Hannah motor. We can get him. We can get Hannah motors on. Yeah. Yeah. Let's do it. Why not? Let's let's have some fun. Let's. Yeah. Let's go. I'm calling them out. Yeah. I've gone to be. I've I've visited. If there's a large use card dealer, I've visited it. I've been to H Greg. I used to stop it off. Lisa only every time I flew in and out of Orlando. I've been to Texas direct. I've been to car max. I've been to almost all your student of the business, man. Your your sponge. I love it. You just you just love learning. It's great.
迈克尔,让我们把这件事搞定吧。我想过了。其实,我觉得你可能已经看到了,就像我六个月前发推特说过这个,但我觉得我们必须让这件事发生。你知道,独立经营者没有这样伟大和广泛认识的20个团体。我认为这是一个很好的主意。所以如果你是一个独立经营者,听到这个消息,你想变得更好,你想成为其中一员。汉娜汽车。我们可以找到他们。我们可以把汉娜汽车也请进来。是的。是的。让我们做吧。为什么不呢?让我们来玩点吧。是的。让我们去吧。我在呼唤他们。是的。我会去的。如果有大型二手车经销商,我会去的。我去过H Greg。每次我飞进和飞出奥兰多的时候都会去丽莎。我去过德克萨斯直销。我去过CarMax。我几乎去过你所有的学生业务,伙计。你是一个海绵。我喜欢。你热爱学习。太棒了。

Paragraph 4: We talked about how you wholesale vehicles talk to me about acquisition. But what are your core acquisition channels? Were you bringing your used cars from? Yeah. So anything we can trade, like I said, those of those, that's the bread and butter. We can buy off the street. We'll buy off the street. We don't do a great job of that. I mean, we do it. You know, it is something that we do. We've tried doing a bunch of different things with it. Right now we're doing a little bit with with gurus on sell my car and trying to be the backstop there on on what the number they're putting in and buying some cars through them. So anything we can acquire outside of the traditional auction, we're trying to do that. Right. Because you save on transportation, you save on the auction by fees. There's just a lot of savings with that. So that would be number one. I mean, we do buy a lot from, you know, man, we're big man, high buyer. We buy there is an independent auction, another shutout, a southern auto auction note in Connecticut. It's a great auction. We buy. We're probably we're always kind of in the top 10 buyers at that auction. Out there in in Connecticut. And then we do a lot on OVE, smart auction. We do a lot on there, a little bit of ACV, but that that that's where we're acquiring from anywhere and everywhere that we can. We do also buy. We do buy from dealers to direct. So there are some dealers up here that will do some sort of sealed bid auctions or or bank the cars. It's kind of going away now with kind of the ACVs and the back lots and stuff like that, but there's there are still some and then, you know, off brand stuff. And so we do do some of that as well.

Paragraph 1: And closing the loop on the salesperson question. So if I'm selling like 35, 40 cars at your lot, am I making one 50 a year, a hundred a year? What am I making in between those two numbers? Yeah. So I think again, and I think the combination of the way you run your store again, as a as a bystander here, right, the way you run your store and the income that your salespeople are making, I think that is a it's a it's clearly a winning formula. I mean, you have crazy retention, which is like unfathomable in this industry.

Paragraph 2: It's very rare to retain, you know, quality employees for that long, but, you know, they're making great income. It's really good to hear. We're looking to add probably to we've got the volume back to like a more consistent level. So, you know, but what's amazing is like on a Saturday, we will see between 40 and 50 customers come through the door. And with the five salespeople, the two delivery coordinators, you know, Carlos chipping in, we get those customers in and out and the fact that they're all so experienced is the fact that they can manage that.

Paragraph 3: I mean, you are expected to manage three or four customers at one time. So how are they doing that effectively? Yeah, they just the way, you know, getting one customer out on the test drive, you know, communicating with them, letting them know. We always say, you know, some people will be like, wow, man, you probably losing some customers there. And we might be. However, would you rather go eat at a restaurant that's empty? Or would you rather go eat at a restaurant that's slamming busy? So the busyness.

Paragraph 4: Okay. Wow. All these people are here. There's something to this place that, you know, and we'll hear the customers talking, you know, around the showroom and saying, oh, this is my third car. This is my fourth car. And I'm just like, oh, just like smile ear to ear. I'm like, there's selling it for us. Yeah. I mean, I get it. I think that, you know, the store would still be busy if you had another salesperson. So I do, I do get the point on me. I know you helped them on the floor. And I have so how many desk managers do you have or like finance managers? How many have you have for finance managers?

Paragraph 5: I can see how this can work where, you know, one customer moves on to the finance manager, one customer is on a test drive. Okay. Okay. We might want to add, you know, one or two salespeople still. Well, it kind of. We had some, we had a couple leave and we just didn't, we're very picky, like about who we bring on. So we're actually training a runner. A lot of tended right now. To see if maybe he's going to work out and we love doing that. I mean, down here in our accounting office here, two of them started as receptionists, you know, in our registration office, same started as receptionists. So we really like that.

Paragraph 6: Our service manager started as a lot attendant. So it's, we, we, we really liked to, to try to grow our own. Talk to me about this. Inventory carrying costs floor plan. How are you doing that? How are you sustaining it? Turn time, like give us the whole layer of the land. Yeah. So we've gotten. Who didn't tracking how many cars we can sell in the first 30 days. That's everything, right? Even wholesale trade ends everything. We want to everything we can sell within 30 days, you know, so if we can do, which we're, we're, our goal is to try to get 50% of our cars to sell it. Within 30 days, you know, we're running right, we're at 42% right now. So that's number one. You sell the car quickly. If it's on floor plan, you're not going to have to pay as many carrying costs on that.

Paragraph 1: So we, that's one way to do it. We're also, I actually looked it up, our February of 2023 was our high water mark for floor plan expense. It was like six or six months later. We were like, you know, we're going to have to pay for that. We were going to have to pay for that. We were going to have to pay for that. So we were going to have to pay for that. So we were going to have to pay for that. And then we didn't have to pay for that. So we were going to have to pay for our high water mark for floor plan expense. It was like 67,000 for the month. You know, you're talking like February 2023. 2023. Yeah. Are fun. Do you do, do you know how many cars that was, like what your rate was? Uh, I don't know those, like those specific counts, but I know that the dollar amount on was probably around 10 million something like that. So right now what we've also done is that we're just trying to pay cash for as many cars as we can. So we've gotten that number down to, you know, I think the low watermark was December of 2023. We had it down to like 25,000 a month. And last month we were somewhere right around 38,000. So we're owning about probably about half of our inventory right now. Oh, right. So you need to sell it fast. Oh, yeah, I cannot. For both reasons, when you own a cash, you need to sell it fast. When you finance it, you do so fast. Now what do you say we're owning?

Paragraph 1: So that's cash from the balance sheet. What's the ownership? Like are you an owner of the business? Are you managing partner? Are you GM? Like how does that work? I'm a GM. I've never really understood again. No 20. I don't really understand what managing partner means. Nobody's ever really kind of said to me, okay, this is a structure of a managing partner. I don't really know what that means. So I am the general manager. I do not own a part of the business. You want to talk about Florida a little bit? What happened down there? Talked about Florida. What happened to Florida? And set the table here because you mentioned like you got a store there, you close the store there, give us some context. What happened to Florida?
第一段: 所以这是资产负债表上的现金。你是业务的所有者吗?你是管理合伙人吗?你是总经理吗?这是怎么回事?我是总经理。我从来没有真正理解过。第20。我真的不明白什么是管理合伙人意味着。没有人真的对我说过,好的,这是一个管理合伙人的结构。我不太明白这是什么意思。所以我是总经理。我没有拥有业务的一部分。你想稍微谈谈佛罗里达吗?那边发生了什么事?谈谈佛罗里达。佛罗里达发生了什么事?并在这里做些铺垫,因为你提到你那里有一家商店,你关闭了那家商店,给我们一些背景。佛罗里达发生了什么事?

Paragraph 2: All right. So we've always long thought and still do think that former dealerships, the facilities are great for independence, right? So I would just search on LoopNet all the time up and down the East Coast for I just do keyword dealership and I just looked to see what was out there. So I found a Mercedes dealership in Daytona Beach, Florida on LoopNet form and the place looking beautiful location look great. It was, you know, it was east of 95. It was in between where all the dealerships were. So I sent it. I sent the email to Jason not thinking anything, you know, nothing's going to happen of it. So about three or four hours later he called me or came into my office. I can't remember. And he goes, we're going to Daytona. I go when he goes tomorrow. I'm like, really? Okay.

Paragraph 3: So we met the brokers down there and we ended up putting a deal together and buying it. So it was the former Mercedes Benz of Daytona. They moved out to the autumn mall. A couple of little, a couple of quick little nuggets will give some more shout outs. So Daytona is the land of Terry Taylor. His first dealership was in Daytona. He owns all the deals and most of the dealerships in Daytona. And the Mercedes Benz store had some crazy history. It was owned by Sonic at one time where they had their corporate offices there. It was owned by the Higginbotham's at one time. So it's, it had a lot of history. It was, it's beautiful store.

Paragraph 4: So anyway, so we, we were like, you know, the cost of that store, what we paid for the real estate. And if that store was up here, it would have been five or six times what we paid for it. So we were looking at the numbers. We were like, if we can just sell a hundred cars here, I mean, which we could do easily. I mean, this is a no brainer. And it was. And, and it was great. And I went down there for five months in 2016, opened the store. My kids were little. It was great. The time it worked out great. It was January to May. So I mean, with was nothing better than that. So we went down and we, we got the store flying and it was great. It was exciting. It started off as a rock ship. It was flying.

Paragraph 5: But you know, we ran into some, some challenges in the market. Credit being one. What your was this? Specifically, this was the store opened in 2016. So you, what did you have a lot of subprime credit that you were used to? Or we weren't. Yeah, we just weren't able to get it. A lot of it. We weren't able to get approved. Yeah. So you don't have the right lenders. Yeah. Yeah. Or any lenders. There was some of it was, you know, the, the, a lot of, I read an article at one time. And it was about one of the public's that had tried to do standalone, use dealerships.

Paragraph 1: And they said that in Florida, what they noticed was is that the customers with good credit buy used cars from the franchise dealers, not from independence. And I thought that was interesting. And we definitely experienced some of that. The other thing that was interesting about Florida, right? So we're 50% repeat referral up here. We had nothing. We started from zero. We have no brand loyalty. We have nothing down there. So and all you rely on is your people. The problem is that like 70% of the people that work for us down there, nobody's from there. Like they'll move there. So it's like nobody grew up, you know, I think we had one employee who went to like Daytona, you know, mainland high school, like, I mean, so they had to like damn, they didn't have any friend like didn't have anybody to bring us a business.

Paragraph 2: Yeah. No network. And we rely heavily on that here. I think you've touched on a couple of key points here for the use car business, which is number one, from what I've seen, like some of the best ways to expand typically are in the adjacent markets, because you still have that halo effect. You know, if you're 20 miles south of Boston, you expand to, you know, 20 miles north of Boston. I don't know. But you get that idea like I've seen that that is, I don't want to call it best practice, but I've just seen I've heard a lot of success stories. And it makes sense, right? Because you're marketing and your, your name sort of bleeds over.

Paragraph 3: Also you're, you're, you're likely not getting into a completely different culture of people that could also, you know, have a different type of just, you know, buying patterns, thinking when it comes to use cars. The other thing that you're bringing up, which is a really key point that I always stress is simply like the lend lenders in our industry, the lending relationships is still very much biased towards the franchise model. Right, wrong or indifferent. It's the sort of the reality. And it, it, that's what kills lots of use car dealers, because you are sort of at the mercy of the right lending relationships, unless you are by your payer. And most use car dealers are not. And so that is a huge issue, right? Where, where I think again, as a use car dealer, you know, if you're looking to expand, I mean, the first thing that comes to my mind is my lending relationships.

Paragraph 4: After that, I'm thinking about location, people inventory, da, da, da, da, but lending, lending, lending, I mean, no lenders. We were fortunate to leverage our relationships up here with, you know, with, you know, ally bank, cap one, America, you know, we were able to leverage some of those relationships that, you know, if somebody else just went in there, they had never started the business, they would have never been able. I mean, they wouldn't, they wouldn't, the last at all. So we were able to leverage some of that. But it was challenging. The other, you know, there are some other, some other interesting things too. But, but I will say, like, I do, I do commend the effort. I mean, you took a swing, didn't work out. All good. You learned from it, you know, it didn't work.
然后,我开始考虑地点、人员库存等等,但是放款问题,放款,放款,我的意思是,没有贷款人。我们很幸运地能够利用我们这里与Ally Bank、Capital One、美国等合作伙伴的关系,我们能够利用一些关系,如果是别人进去的话,他们从未创办过业务,他们就无法做到。我意思是,他们根本做不到。所以我们能够利用一些这样的关系。但挑战很大。还有其他一些有趣的事情。但是我要说的是,我真的很赞赏你的努力。你试过了,结果不尽人意。没关系,你从中学到了东西,你知道,事情不顺利。

Paragraph 5: It did work a long way. Oh, oh, yeah. Okay. Well, hit. Oh, okay. Okay. There's a cliff hanger. All right. Yeah. So dude, you're, you're just getting me, you're just getting me with all these cliff hangers. We got the reinsurance. It did work out. Oh, go ahead. Hit me. Go. So just going back to just a couple of differences between Florida and Massachusetts and doing business, right? So typically us use card dealers dealers in general don't like much regulation, right? Well, regulation sometimes can help you Massachusetts. There is a ton of regulation. It is very, very, very difficult to get a dealer's license in any town in Massachusetts. We had a dealership under agreement for a former dealership, by the way, another vacant one, north of Boston for a year and a half. We could not get it licensed. It was a dealership at one point.

Paragraph 1: The licensing inspired. We could not get it approved. We buy the store in November of 2015. I had a dealer's license from the state of Florida in 30 days. I was selling cars the second week in January, right? So that's kind of bad because there are a thousand, I mean, I don't even know how many dealers are on Florida, but they come and they go very, very quickly. So I think the consumers might be a little bit leery of that like, oh, you know, are they going to be around? Are they going to be here to service me? Are they going to try to, you know, take advantage of me, those sort of things. Also in Massachusetts, we have inspections stickers. You need to get one every year. When they jack the car up, make sure the ball joints are tight. You know, they go through the car all the lights. So that if they, if they fail inspection, check engine lights won't pass airbag lights won't pass. If they fail inspection, that puts some customers in the market for a car or at least maybe in your service lane. Florida doesn't have anything like that. Right. So that actually doesn't, you know, put customers into the market. I mean, I tell the story. I had a guy come to the Florida store with a 91 Astro van and he wanted like 1500 bucks for it. And I'm like, it's 400 all this junk. And I'm like, you're going to drive that thing out of here. Like he's like, yep. I'm like, wow. It's like, so that's just, you don't see 91 Astro vans in Massachusetts. They don't exist because they can't pass from market. Very, very different. And lastly, there's a lot of games down there. I know you know this. A lot of pricing games online, you know, advertising a car, you know, cash down, trade down, not including the reconditioning. A lot of games being played down there. And Massachusetts doesn't, you know, if those games are getting played, you can get in trouble with the attorney general. You don't want that. So there are a lot of games being played. So it's really tough to compare our use cars to their use cars as well.
我们受到了许可的启发。我们无法获得批准。我们在2015年11月购买了这家店。我在30天内获得了来自佛罗里达州的经销商执照。我在一月的第二周开始销售汽车,对吧?所以这有点糟糕,因为在佛罗里达州有成千上万家经销商,但是它们来来去去很快。所以我认为消费者可能有点担心,比如说,哦,他们会继续存在吗?他们会为我提供服务吗?他们会试图利用我吗,那些东西。在马萨诸塞州,我们有车辆年检。每年都需要进行一次。他们把车升起来,确保球接头紧固。他们检查车灯等。如果他们未能通过检查,机器故障灯和气囊故障灯就通不过。如果未能通过检查,可能会有顾客要买车,或者至少可能会找到你的维修车道。佛罗里达州没有这样的规定。所以这实际上并不会把顾客引入市场。 我讲个故事。我有一个人带着一辆91年的Astro小货车来到佛罗里达店,他想卖1500美元。我说,这个400美元都不值。他说,我就是开这个出来的。我说,哇。这就是,你看不到91年的Astro货车在马萨诸塞州。因为它们不符合市场规定。非常非常不同。另外,那里有很多游戏。我知道你知道这一点。很多价格游戏在线上,比如,宣传一辆车,现金首付,置换,不包括整修。在那里有很多游戏正在进行。而在马萨诸塞州,如果有这些游戏,你可能会招惹上检察长。你不想那样。所以有很多游戏在进行。所以很难将我们的二手车与他们的二手车进行比较。

Paragraph 2: Fast forwarding. So you know this that end of 2022, beginning of 2023 was ugly, right? I don't know if it was very, very ugly. Use car prices were falling fast. I mean, we went, we went negative on that. You know, we had a machine up here in Massachusetts that was just, you could kind of set your watch to a set, you know, it was going to do what it was going to do. And when you know, we could kind of concentrate on the Florida thing. Well, when you couldn't really set your watch to it, the gross is we're falling, cars were getting old, you know, flow plane costs were going through the roof. We were really, really focused on this store and not as focused on that store down there. We made it much, much more difficult to really kind of, to kind of manage that from afar as things got challenging here. So we got approached off market for a company that wanted to buy the real estate. So I said, okay, so entertained the idea of doing that. It was equipment rental company. They came in with a number. It was a good number just to buy the real estate. So we agreed to it. We tell the team down there, we do everything right by them. Nice wind down. Keep everybody on for 30 days. We kept the two of the guys on until we closed.

Paragraph 1: You know, we tried to do everything the absolute right day. We have our final, final supper down there. It was like April of last year, right around this time of last year, we had the final, you know, take everybody out and thank you. And then we actually take, we had like five highline cars. We would drive them down to the West Palm Beach Highline sale. And as we're on the way down there, we get, I get a call from the broker and says, you know, they're going to back out. There's a zoning issue. They can't get the other parcel.

Paragraph 2: So I'm like in the car, Jason's in the car in front of me. I haven't told him yet. I'm like, you know, we're going to tell them, you know, when we get down there, I'm like, ah, you know, this is going to be bad. And then I started as the car rider is going on. I'm like, actually, you know what, I think this might be a good thing. We never went to the market. I think we can get more maybe. So I started hyping myself up. So I'm like, hey, man, I got some bad news. And then the first thing out of his mouth, he's like, I think that's great news. I'm like, oh thank God.

Paragraph 3: And within like a week, we had four offers for, you know, seven, seven figures more than we had agreed to. So oh my God, dude. Yeah. This is like ridiculous. I'm loving it. Shout out to Carl, the real estate broker. You did a great job. Yeah. And so you also shout out to inflation, right? yeah. I mean, the Florida market, you know, you could buy a piece of brick. So it would go up in value. Like the county actually bought it to basically put their ambulances there. That's who and they basically were like, we'll be the hybrid by whatever it needs to be. It's crazy. I love it.

Paragraph 4: Wow. So it ended up working out in the end and ended up working out in the end. And now we're back up here. And I think there's something to what you said in terms of the growth in this area, you know, before we wrap up, Michael, this has been a ton of fun. I'm curious to know your thoughts on, have you ever considered going franchise? I would say absolutely not until listening to some of your podcasts. Oh, look at that. We're making an impact, baby. It's got you thinking. It's got the brains, you know, before the NADH show, we went in the day early and we went to the buy sell meeting that they put on there and I don't know. You never know. You never know.

Paragraph 1: Yeah. And I ask, I just ask because again, you're on a size and scale. We're typically you just hear of used car dealers, you know, start, you know, sniffing into the franchise business. Yeah, we always were, you know, our philosophy was like, we don't want them telling us what we can do, what to do, you know, looking at it, you know, sending statements like we just want to do our own thing. But, you know, the franchise dealer does have some advantages over us.

Paragraph 2: Fixed ops, you know, is a big one. You know, we don't get any of that warranty work, any of that recall work, you know, that that's a big driver, any of that parts stuff that they sell to us. I mean, that when you talk about fixed ops absorption, I mean, in the independent space, I mean, it's not much. You know, our front and back in Doc V, it should be 75% of our total gross for the month. You know, the 25% of it is the service department. But some of that number, half of that number is baked in and what we're servicing on our own cars.
固定运营是一个重要的部分。我们得不到任何质保工作,也没有任何召回工作,这是一个主要的推动力量,以及他们卖给我们的零部件。我是说,当谈到固定运营吸收率时,在独立市场中,它并不多。我们的前台和后台在Doc V中应该占我们当月总收入的75%。服务部门占了25%。但其中一部分数字,其中一半的数字是我们自己车辆的维修费用。

Paragraph 3: So it's so, you know, to have that fixed ops absorption deal would be amazing. But you know, independents typically don't get that. I have a feeling like I have a feeling that by the next time we chat, you'll be a franchise dealer as well. So let's just throw that out there. We'll see. Incredible. Michael, this has been a ton of fun. Learned a lot. And I appreciate you being so transparent. Really, really awesome. We'll throw up your link in the show notes. Also, what's your contact info? If I know once again, talk to you.

Paragraph 1: Yeah, it's easy. Just email me, Mike at borns.com. B-O-U-R-N-E-S.com. Cool. I love it. And if we get enough interest from the independent world, maybe we'll set up this independent 20 group as well. It would be awesome. It really would. And I know all the big ones. So we could start a hit list and, you know, it would be really good. I want to let you know that, you know, I know you were anonymous for a while, but I spent a lot of time trying to figure out who you were. And I did find out before N-A-D-A.

Paragraph 2: Oh, no. How did you find out? How did you do it? I can't reveal my sources. Oh, okay. So it was a leak. A leak. That's all good. When it was someone, you know how someone actually had found out? This was, I was shocked because I thought it was pretty good at this, right? But someone, what they did was they saw the lawyer I used to trademark the card dealership guy, logo. And then they looked at other trademarks by that lawyer and they saw my prior company. And so they put two and two together. Like I was like, wow. I was like, that is creative. So anyways, that was a funny one.

Paragraph 3: Well, I appreciate you being so supportive and, you know, really engaging with the brands. Really awesome. Honestly, it's, you know, what you're doing is great for us because there's not a lot of good source, you know, to get good information. I can't tell you how many times in our management meeting, I've, you know, showed something or a stat that you brought up and I actually thought it was funny the other day. I know you did a pod about stolen vehicles or something. And in my email box, like the next day is one of the industry publications and the headline is stolen. I'm like, they're just, they just ripped that off. Pretty much, you know, so it's a Senate today. I want to see that. You probably should have thought it out there. So I will.

Paragraph 4: Yeah, I will. I will. I will train for the, for the, you know, the topics in the industry and really. And yeah, there's definitely a lot of, you know, definitely sets in discourse. So something that's interesting. I will give a plug to, I know you're talking about Melissa from LoJack, but something interesting that I learned the other day and I'll give a shout out to Eastern Motors for this. But they told me that they basically put the LoJack device on every vehicle because super interesting. It's considered a back end product that cannot be charged back to the dealer. And so it's almost like treated like front end.

Paragraph 5: So again, for anyone listening to that doesn't get this concept right back end, if you sell like a vehicle service contract, gap insurance to a customer, if they cancel that product, right, that gets charged back to you as a dealer, right? It's like funny money almost because you don't actually make all that money until the customer pays it all off. And more likely than not, you're going to pay off, you know, you're going to pay back a certain percentage of that product once the customer cancels it. That's just how it works.

Paragraph 6: But it's interesting that, you know, there's a class of products and this, you know, this specific LoJack product falls into that where you actually don't get charged back. So I just found that interesting because, you know, I had a conversation with Joel from Easterns after the conversation or after that podcast. And also full disclosure, LoJack is a sponsor of the podcast. So I want to disclose that as well. Massachusetts based company too. They were founded in Massachusetts. Yeah, but I just found it really interesting that, you know, it's not charged back and that anyways, so Easterns said that they use that. And again, this is not the only product that can fall into this category.

Paragraph 1: So, you know, by all means, you know, do your homework. But anyways, I just found that interesting. And, you know, when you speak about kind of, you know, we're on a 5% margin business, it is a good way to be able to, you know, not just take less risk and retain more of that margin. So anyways, that's my closing thoughts.

Paragraph 2: The other ship theft is on the rise. We got hit here. So it's in that those are the worst days we had. We just we we just had people break in like two Sundays ago and our camera system got them. Thankfully, but, you know, got them off the site, but it's very much on the rise. We had to upgrade our system big time to all live monitoring and everything. It's it's been tough.

Paragraph 3: I also tweeted this the other day, which I think could be helpful to lots of people, but put an air tag on your dealer tags. Right. So all your dealer tags by from Amazon, just like, you know, Otterbox for air tags. That's like, you know, wind, hail, rain, sleet, shot, whatever proof. Put on the air tag on it and then screw it or like glue it or something to the back of the dealer tag. I can't tell you how many times this has saved us in the past. It was just and look, it doesn't matter how good your your dealer tag tracking system is and your your log and doesn't matter. Just do it.

Paragraph 4: It's like so easy. And for that one customer that leaves it on their car and drives home or the salesperson, it's just like, oh, there it is. So it that also comes up huge with that we're demoing a a different the doing. It a different way because if it falls off on the highway or something like that, you know, you got to have the Bluetooth to use the air tag. But, um, you know, we were using it. Yeah. Yes. One of the bottom line is like, we know we're talking about tracking cars. That's one thing, but also track your dealer tags. I mean, it's here.

Paragraph 5: Yeah. So, yeah. Anyways, we're getting into esoteric territory here. So, um, Michael had a ton of fun. Thanks for coming on. And we'd have to do this again at some point in the future. Sounds good. Thanks for having me. Thanks for what you do. All right. 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.