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The Visionary Creating Unusual Profit Opportunities in Automotive | Car Dealership Guy Podcast

发布时间 2024-06-04 17:00:36    来源


Welcome to the Car Dealership Guy Podcast. In this episode, I'm speaking with Tony Wanderon, CEO of APCO Holdings, home of ...



From a risk perspective, I would tell dealers don't ever re-insure your gap program. It's no secret dealers have started facing profitability headwinds and searching for new ways for their businesses to succeed. But one industry visionary is laser focused on creating new profit opportunities. Today I'm speaking with Tony Wanda on CEO of Apco Holdings, home of EasyCare, an F&I solution for car dealers. Don't forget to click subscribe so you never miss an episode.
从风险角度来看,我会告诉经销商们永远不要为你的差额保险计划再投保。众所周知,经销商们已经开始面临盈利困难,并在寻找新的业务成功方式。但有一位行业先锋正在集中精力创造新的盈利机会。今天我将与Apco Holdings,也就是EasyCare的CEO Tony Wanda对话。EasyCare是一个为汽车经销商提供的财务和保险解决方案。别忘了点击订阅,这样你就不会错过任何一期节目。

But before we dive into the show, this episode is brought to you by CDK Global. CDK Global has been empowering nearly 15,000 dealers with the tools and technology they need to build deeper relationships with customers. Their team is keenly aware of the state of dealership technology and while many vendors promise seamless experiences between your CRM, DMS, digital retail and fixed ops, most of these bolt-on solutions tend to break workflows and cause more harm than good. That is why CDK has launched a new dealership experience platform. This new integrated software consists of everything you need to operate a dealership officially while delivering an unparalleled experience to your customers. Basically, everything working together, not separate, one system to run your dealership as opposed to 10. CDK developed it with an outside-end approach listening to dealers every step of the way.
但是在我们深入节目之前,本期节目的赞助商是CDK Global。CDK Global一直致力于为近15000家经销商提供所需的工具和技术,帮助他们与客户建立更深入的关系。他们的团队对经销店技术的现状非常了解。尽管许多供应商承诺在客户关系管理、经销商管理系统、数字零售和固定业务之间实现无缝连接,但多数这些外挂解决方案往往会打破工作流程,弊大于利。因此,CDK推出了一种新的经销店体验平台。这款新的一体化软件包含了运营经销店所需的一切,同时为客户提供无与伦比的体验。基本上是让所有系统协同工作,而不是各自为政,一个系统运行你的经销店,而不是十个。CDK在开发时采用了由外到内的方法,倾听经销商的每一步需求。

You can learn more about CDK's dealership experience platform by visiting CDK Global.com slash DXP or clicking the link in the show notes below. 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 into customers. But here's the problem. 40% of shoppers report that they are not getting timely or helpful responses from dealerships.
你可以访问 CDK Global.com 斜杠 DXP 或点击以下节目说明中的链接,了解更多关于 CDK 的经销商体验平台的信息。本期节目还由 Cars Commerce 赞助。该平台简化了关于买卖汽车的一切,包括所谓的“跟进”。让我解释一下。对于经销商来说,快速而有效的跟进对将潜在客户转化为顾客至关重要。但问题是,有 40% 的购物者表示,他们没有从经销商那里得到及时或有用的回应。

This is a huge problem because your own team could be leading four out of every 10 sales opportunities on the table. Cars Commerce makes it simple to measure and improve your follow-up performance. A Cars.com experience report tracks the percentage of leads your team is 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 carscommerce.ink slash experience or click the link in the show notes below.
这是一个大问题,因为你们自己的团队可能会错过每10个销售机会中的4个。Cars Commerce让你轻松测量和提升跟进表现。Cars.com的体验报告会追踪你们团队对潜在客户的回复率以及客户对这些回复的评价。而"dealer inspires retailing"技术可以让你的团队快速发送包含个性化金融选项的跟进短信,以充分利用每一个机会。要了解更多关于如何测量和提升你们团队跟进表现的信息,请访问carscommerce.ink/experience或点击下方节目说明中的链接。

Lastly, I want to thank EasyCare for coming on as a guest and also supporting this podcast. Tony Wanda Ron on the CDG podcast. Tony, welcome. Thank you. Thank you for having me. Good to have you on. I was looking at your website. I started at GWC logo that brought back some memories from the independent dealership days. Yeah, we've been part of that organization now myself for the last 15 months and they're an amazing group of people and spread their wings out through the independent dealer channel and starting to expand into some of our franchise dealers as well.
最后,我想感谢EasyCare作为嘉宾参与并支持这个播客。Tony Wanda和Ron参加了CDG播客。Tony,欢迎你。谢谢。谢谢邀请我。很高兴你能来。我看了你们的网站,看到了GWC的标志,让我想起了那些年在独立经销商工作的日子。是的,我已经在那个组织工作了15个月了,他们是一群了不起的人,不仅在独立经销商渠道中大展拳脚,现在也开始向一些特许经销商扩展。

So excited to hear that you were a customer of ours at one particular point. Oh yeah, early adopter back in the day. You've had your hands in quite a few things and you've been very successful in many parts of this industry. I found it very interesting as I was looking through a background. You were a part of a Take 5 oil change just as an example, something that I didn't even imagine. I was like, oh wow, Tony's involved in that. You had EasyCare for, I want to say close to a decade, got acquired by APCO Holdings of which you know, CEO. Can you tell us a little bit about your journey?
很高兴听到你曾是我们的客户之一。哦,是的,很久以前你就是早期的用户。你涉足了很多领域,并且在这个行业的许多方面都取得了成功。在查看你的背景时,我发现了一些非常有趣的事情。比如,你参与了Take 5的换油服务,这是我之前完全没有想到的。我当时心想,哇,托尼也参与了这个项目。你在EasyCare工作了近十年,这家公司后来被APCO Holdings收购了,你现在还是他们的CEO。能否跟我们聊聊你的职业历程呢?

Yeah, I'll back up a bit. I started off in the business through an agency down in Miami and that company, and I'll go through a little deeper, but that company was acquired by Allstate and I ran that for 11 years. I left Allstate in 2011 and started a company with my sister, Courtney, called Family First Dealer Services and we sold that company after two years to a private equity group, Trives. Trives was our first private equity investor that came in and they also owned a bunch of other companies as well. One of them was Take 5 oil change. So Troy Templeton, who is managing partner at the time, felt that it would be good for companies within the portfolio to be able to sit on the board of those companies and help drive profitability and business for them.
好的,我来稍微解释一下。我最初是在迈阿密的一家机构进入这个行业的,那家公司后来被Allstate收购了,我在那家公司干了11年。2011年我离开了Allstate,和我妹妹Courtney一起创立了一家公司,叫做Family First Dealer Services。两年后,我们把公司卖给了一家私人股本集团Trives。Trives是我们的首个私人股本投资者,他们还拥有其他多家公司,其中之一是Take 5油变化公司。当时的管理合伙人Troy Templeton认为,让他投资组合中的公司在各自的董事会中占有一席之地,能促进这些公司的盈利和业务发展。

So Take 5 was similar to us on the service contract side, working with vehicles and working with customers on the product side. So it was more of a relationship through Trives than it was a singular focus on being on the board of Take 5. You were the CEO of National AutoCare. It got acquired by APCO Holdings. Today you have APCO, you have EasyCare.
所以,Take 5 在服务合同方面与我们相似,处理车辆并与客户打交道。因此,通过 Trives 与 Take 5 的关系比单纯担任 Take 5 的董事更为重要。你曾是 National AutoCare 的首席执行官,该公司被 APCO Holdings 收购。现在你有 APCO 和 EasyCare。

Can you give us just a clear picture of why this happened, what brought you to this point in your career? I think as we've discussed, we've been part of a couple of private equity companies. We've done five transactions over the past 25 years and those have accelerated over the last few years as Family First was acquired by National AutoCare and merged in. We became CEO of that company.
你能给我们一个清晰的解释,说明这件事为什么发生,以及是什么促使你在职业生涯中走到这一步的吗?我认为我们讨论过,我们参与了几家私募股权公司。在过去的25年里,我们完成了五笔交易,并且这些交易在过去的几年中有所加速,因为Family First被National AutoCare收购并合并了进来。我们成为了那家公司的首席执行官。

We transacted again four years later and sold to Lovell Minic and grew that business through that growth and through that strategy four years into that relationship. We went back to market and APCO was one of the companies that were very interested in bolting on our organization to theirs to become one of the larger players in the marketplace. Since January 3rd of 2023, we've been part of that organization of leading that company, which as you said encompasses easy care, national auto care, GWC, Relentless and our most recent personal fusion acquisition. We have seven different companies under the APCO holding company name of which I control CEO.
四年后我们又进行了交易,将公司卖给了 Lovell Minic,并在接下来的四年里通过增长和策略发展了这项业务。之后,我们重新进入市场,APCO是其中一家非常有兴趣将我们公司并入他们的公司,以便成为市场上的大公司之一。从2023年1月3日起,我们成为了这个组织的一部分,正如你所说,这个组织包括 Easy Care、National Auto Care、GWC、Relentless 以及我们最近收购的 Personal Fusion。我们现在在 APCO 控股公司旗下有七家不同的公司,我担任 CEO。

Tell us a little bit about what do you do today at APCO? You have multiple companies as you just mentioned. How do all these different companies impact different parts of our industry? We have a motto, it's protecting what moves you. Anything that moves, we're looking to protect and that could be in the RV space, that could be in the power sport position, independent use car dealers, franchise dealers, manufacturers, financial institutions. Really the credit unions, the encompassing of all the different areas of support that work within an auto or distribution channel that has a power sport or RV as I said.

So our focus has really been over the past 15 months is to try to bring all the companies together from a branding perspective. We just did a rebranding of our easy care brand. Everything will be falling under that. GWC will remain independent from a branding perspective because their distribution channel is within the independent space and they've grown a very strong brand in that particular area. And our RV and power sport programs operate under our member care program and are managing through our Relentless relationship too, who we purchase out of Indiana.
我们过去15个月的重点一直是从品牌角度将所有公司整合起来。我们刚刚重新为我们的Easy Care品牌进行了一次品牌重塑,所有相关内容都会归在这个品牌下。而GWC在品牌方面将保持独立,因为他们的分销渠道属于独立领域,在这个特定领域已经发展出非常强大的品牌。我们的房车和动力运动项目则是在我们的Member Care计划下运作,并通过在印第安纳州收购的Relentless关系进行管理。

I think it's important to know we've been on a very aggressive M&A strategy over the last four years and they've acquired well over 30 different agencies and companies to help us grow our business from an organic standpoint and an organic standpoint.

You've said something interesting which I've been hearing a lot which is RVs and power sports. A lot of dealers have been asking me about this. Very general questions about what's happening in that market, its growth. On the other hand, I've also seen lots of dealers just talk about that diversification in this market. There's a lot of uncertainty in the macro thinking about EVs, direct to consumer, how that impacts dealers. What type of growth are you seeing in that segment of our market?

Obviously, it's not traditional automobiles but just when we think about power sports and RVs and you clearly have a very close your fingers on the pulse here. What are you seeing in terms of growth? It's hard to put your fingers around what has happened since COVID. If you think about what really did spike RV and power sport and marine was the drive around being with your family and by yourself, not going to a hotel, not staying in a crowded place. Our V's exploded. We saw growth 30, 40, 50, 60 percent in some cases over 100 percent where dealers just couldn't get enough inventory. People were lined up at the doors and they were purchasing RVs or travel trailers, tow behinds, whatever it might be. On the power sports side, people wanted to spend time outside and they wanted to enjoy the time that they had available to them. Power sports really grew tremendously in multiple different areas around the country.

As far as the dealers looking for diversification, many of our dealers are in the power sports side either owning Harley-Davidson dealerships, Off-road Polaris type dealerships as well. One of the great things I think of a car dealer going in and purchasing one of those distribution channels is their sophistication and understanding of how to move inventory, how to market their products, how to get digital. It really does help build their market share.

I think consumers have grown accustomed to having what they want. When they want it, RVs are a little bit different, especially if you're talking about class A or B vehicles, which are the bigger, larger RVs, very expensive. Interest rates have had somewhat of a negative effect on that, but it is an acquisition or purchase that you make because you want it not because you need it.

You're probably in those particular spaces a little bit more susceptible to economic issues that happen and puts you in a position to be thoughtful about it. I think it's a great investment and has been for many, many of our dealers around the country. Got it. What are the general economics of these businesses? First of all, two sides here. When I think about your involvement in VSC products, we know traditional car sale, you're going for the vehicle service contract, for the gap insurance, you're going for the tire and wheel, and on and on and on. What does that look like on the RVs side and the power sports side? Is it similar? Is it different? Yeah.
你可能在这些特定领域中更容易受到经济问题的影响,这让你不得不更加仔细地思考这个问题。我认为这是一项很好的投资,而且多年来在全国许多经销商中都证明了这一点。明白了。这些业务的一般经济状况如何?首先,我们这里有两个方面。谈到你参与的车辆服务合同(VSC)产品,我们知道传统汽车销售中你会推销车辆服务合同、差额保险、轮胎和车轮保险等。那么在房车(RVs)和动力运动(power sports)方面,这个情况是类似的吗?有区别吗?对。

The products itself are fairly similar when you look at it from a structural perspective, but there could be some things that are a little bit different and unique because of that customer. It could be towing. It could be because on an RV, think about it, they're not going to be within 20 to 30 miles of a dealership in many cases, or they're traveling during the summer months. So you have to take care of that customer in a different way. They're going to be handled by probably a dealer that's not associated to your store. The products might have different roadside coverages.

There might be different limits of liability. And because RVs, when they are built, they're built with different components in everyone. We're a vehicle. We know if we buy a Camaro, we know what's in that Camaro. In an RV, we don't. An RV could have 15 different refrigerators in it, different appliances, different mechanisms, different interiors. So it's much more custom and handling the customer in that perspective is a little bit takes a little bit longer, but it also takes some longer to have those vehicles repaired because there is continuing to be a shortage of technicians in those spaces and really all over the industry.

When it comes out with push comes to shove, do you see that trend just continuing to grow in light of the fact that we're several years past the rush? I say that growth from top line sales and also profitability. How do you see that trend continue? No, I listen, I think dealers are consolidating everywhere. And part of that is consolidating things that are very similar. And again, protecting what moves you or purchasing what moves you seems to be really resonating pretty well in that auto dealer space. Again, I have one dealer who has purchased probably 35 different rooftops and half a dozen of them have been Harley-Davidson locations. And they're not only from the profitability perspective, but just from the experience of the ownership of a Harley store and the lifestyle that that brings and the different types of events that you can do with the customer there versus what you do with an automobile.

I think it treats a lot of dealers and puts them in a position to really help during challenging times be profitable where maybe a dealer before that wasn't or also to be able to expand and get better cost control because of the size of their organization. So it's really not just on the power side, it's on the auto side too. Consolidation is here to stay. And I think dealers are looking for good investments anywhere they can because they have had such great years over the past several years and looking to invest in growing their organizations.

You mentioned the term want to have versus need to have. And what came to mind right away was I had a conversation with Rick Reicart from Ohio from Reicart Automotive. And I won't forget he said something that really stuck with me said, you know, the power sports business is great, it's strong margin. But you have to remember, it's a customer that they want to keep investing in this vehicle. It's not like a hey, you buy a gap insurance, a warranty and you're done. And so really, really big opportunity if you do it correctly. And again, that's the big if right because it is more niche and you got to specialize in it, but really big opportunity.
你提到了 "想要的" 和 "需要的" 这两个术语。而我立刻想到的是,我曾与俄亥俄州Reicart Automotive的Rick Reicart有过一次对话。我不会忘记他说过的一句话,真的是让我印象深刻。他说,你知道吗,动力运动业务(如摩托车、全地形车等)非常棒,有高利润率。但是你必须记住,这是一个需要客户持续在这个车辆上投资的领域。这不像买一个间隙保险或保修就完事了。因此,如果你做得正确的话,这确实是一个巨大的机会。当然,这是个很大的“如果”,因为这更偏向一个细分市场,你需要在这方面专门化,但确实是一个巨大的机会。

And I think all that said, it just really big testament to continuing to see dealers horizontally integrating here with all these different types of businesses where traditionally it wasn't a conversation that I remember having with many dealers as they spoke about growth, it was like the traditional hey, let's just acquire dealership and another one. Now it's you know, it's gotten a lot more creative.

I do want to transition to dealership FNI, which is where you spend most of your time. What are you currently seeing in the market today, you know, in the FNI office, our industry to just a table set with the audience, dealer profitability has declined over the past year, year and a half about 25% on a net basis. It's still over two x greater than 2019. It's outpaced inflation. So you know, in an aggregate, dealer profitability is still doing very well.

Of course, a major driver of profitability, as we know, is the back end, the products, and it's not the actual car. And so, let's just starting very high level, what are you seeing in terms of dealer profitability trends with respect to FNI vehicle service contracts gap and all the other products offered? Look, I think you hit it on the head. It's been coming from where we've come from, where we have limited supply of vehicles, customers were paying less plus in many cases, and happy to do that.

Attachment rates for the products in the FNI department were at peak levels, because I think people had affordability was in line, interest rates were low, dealers were experiencing just monumental years. Coming out of that, what we always have told our dealers at that time is, hey, realize that we're going to come back to normalize interest rates. We're going to get to normalize depreciation, which is honestly, in my opinion, the most critical area right now, the challenge that you have is negative equity that's growing on a daily basis, where you had a vehicle two years ago that was worth more than what you paid for two years before that.

You now have a vehicle that's probably down five, six, seven thousand dollars from the peak point, and now going into negative equity. We're seeing just huge negative equity swings, which puts pressure on them being able to go out and purchase another vehicle. Interest rates being higher, which puts it at a more expensive monthly payment, or going out longer term, and then effectively causing that negative equity to even go worse, because you're buying a new car today with negative equity carryover, and then you're going into the future with a lower amount and a higher interest rate.

That customer is going to take longer to come into some positive equity to purchase a car. Overall, dealers are still, as you said, very profitable, primarily focusing on fixed operations. Fixed operations, if you look at the inflation rate on parts, labor, in some cases have doubled over the past three years. So dealers are starting to generate vehicles out on the road on average 12 years now, so those cars need repairs, and fixed operations is that place to really drive profitability when you might be having a little bit more of a challenge on the front-end side.

Not to say that anyone's hurting. We're nowhere close to where we were in 2008 or 9, but we're in a position of kind of change, investing, having to invest in digital retailing, having to invest on the training and development, and the regulatory things that are going on in the marketplace, looking for ways to reduce their costs, and that's why M&A, an acquisition on the auto dealer side is happening, because you can have synergy costs tremendous if you really do focus your attention on that, and you can drive underperforming stores at a much higher level.

The dealers overall are still very strong, and in particular markets, and depending on the manufacturer, if you look at Honda and Toyota, they're still doing really well. We're seeing a pause in EV, which I think is good for in many different reasons, but overall, I'd say dealers are in a, they're about 80%, 70% of where they were. My concern would be is that you still see that negative equity drop, as I said, and customers are locked out of affordability and just having challenges with credit.

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.
本期节目由我个人的汽车经销商伙伴——Industry Jobboard(行业招聘平台)赞助。CDGJobs.com 是我建立的行业招聘网站,连接汽车行业的顶尖人才和最佳公司。对于 CDG 的听众来说,这个网站将永久免费,可以发布和招聘公司职位。这个免费招聘平台适用于所有汽车行业的人员,包括供应商、经销商、贷款机构、制造商以及汽车技术人员,全都可以使用。

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已经有超过100家公司发布了招聘职位,包括Lithium Motors、Recurrent Credit Acceptance、Vero’s Credit、Cars Commerce、Shift Digital、Plug、Full Path、Westlake Trade Pending等,你明白的。这其中最棒的部分是,当这些公司通过CDGJobs.com招聘时,他们招聘到的是市场上最了解情况的候选人。因此,不要犹豫,今天就可以通过访问CDGJobs.com或点击下方节目注释中的链接来添加你的招聘信息。就是CDGJobs.com。

You have multiple VSC companies under your roof. Why do you think the pause in EVs is a good thing? Well, I mean, from our perspective, I don't think anybody realized what the true risk was. There's all this comment around how EVs are much less costly to drive. For our average claim, on an EV is $11,000. Average claim for an MDI for service contract claim. So you're talking about much more sophistication, much higher cost for components, much longer it takes for parts to come in on EVs. Some technicians are not as experienced as probably they need to be and will be as time goes on. But what's happening now is I think it really does it.

We've gotten to a point of the cost factors are just so out of whack. And that's why I think you're seeing these slashes in incentives or reductions in MSRP's on a lot of these vehicles. I mean, if you look at Tesla, it's taken three or four or eight or cost reductions over the past six months or so, 12 months. The market's just changing dramatically. I think what the factories were trying to push on the dealers to really invest in their facilities for EV has taken a little bit of a pause. I think they're great vehicles and they'll be there forever than I've gone away. But I think it takes a little time to kind of ingest it and understand it and really start to determine what the risk is of selling the EV versus the NIC unit.

Do you think based on what you just said, what's driving these costs, right? I guess first question is what's your average claim on a non-electric vehicle, whether it be hybrid, which is partial electric or internal combustion? What's your average claim there? Between $1,500 and $2,000.

Wow. So that's very meaningful. That's like over 5x greater. Now, so what's driving that? Is this something that you think the market can over time absorb and just get better at and it comes down significantly? What's really driving that 5x increase? Yeah, look, even when I see, so I can go back and I've been doing this for 37, 38 years now, any new component that would come out new, so when you went from a standard headlight to an LED headlight to now what we have, those lights went from $100 to $1,000 because there was no aftermarket ability. So there was what I wanted to set it for and how much over time would it come down by another competitor coming into the market to replace those headlights? Just take as an example, 10 years ago, you didn't really have this brain unit with an 18-inch screen on your dashboard. You had analog and older technology that was in those vehicles at that time.
哇,那真的很有意义。增加了超过5倍。那是什么原因导致的呢?你认为市场能随着时间的推移吸收这种变化并逐渐改善,使成本大幅下降吗?到底是什么导致了这5倍的增长? 是这样的,我回想过去,我在这个行业已经干了37、38年了,每当有新部件问世,比如从普通大灯到LED大灯,再到现在的产品,这些大灯的价格从100美元涨到1000美元,因为当时没有替换市场的选择。所以我可以随意定价,而随着时间的推移,通过其他竞争者进入市场来取代那些大灯,价格也会慢慢下降。举个例子,10年前,你的仪表盘上不会有带18英寸屏幕的中控系统。那时的车辆都配备的是模拟和较老的技术。

Now we're seeing, you know, if we lost a radio before, it was $200 and now it's $2,500, right? If that radio is bad, that's really tied into the overall control system of the vehicle. So the sophistication and the lack of aftermarket products put us at a peak point. I'll use an example when a new technology comes out on a TV, you know, it used to be via a 55-inch TV set for $4,000. Now you can buy it for $400 or less with better quality. So competition drives down costs. I would expect that they would happen over the next several years on the EV side too. Right now, you know, in my mind would be buyer beware. And if you do buy it, you should buy a service contract.

Yeah, look, I think technology, the euro to your point is generally deflationary. There's this cool chart online you can find where it shows you like the prices of things over the last decade. And you see like just like TVs, everything just plummeting. So technology is definitely deflationary. But I want to think from like a from an optimistic perspective, like do you have any dealers in your network that are using your products and doing very well with EVs? Like where's the opportunity? If I'm putting my, you know, capitalist hat on right now, and I'm saying, okay, so clearly I've spoken to many dealers that are just not touching EVs right now. If you listen to my prior podcast from last week, the dealer on the pod specifically said, and by the way, very sophisticated to you to deal are very data driven. He's like, I won't touch it. And when I hear that, I think opportunity.

And so, what are your thoughts on this? I mean, are there dealers that are outperforming in the EV space? How are they doing it? What's your take? Yes. So last year, was out in LA with one of our larger dealer groups. And, you know, they made a comment, we're opening up an EV use car lot. Because finally, if you think about it, how long is really Tesla been out there marketing maybe seven, eight years, truthfully?

So most of those, most of those vehicles released, almost all of them released if they didn't pay cash for. So, you know, when you look and you see that there's no used cars, there's not much you can do with them because you really didn't have any EVs to distribute up until the last couple of years when they started to come into play, right? For the OEMs and normal OEMs outside of Tesla. So I think the opportunity is, EV is needed out there. The values depreciating down to a level that Tesla's probably eating the residual value difference, because those leases come off lease. And those guaranteed residual values are probably below where they expected them to be.

Those vehicles are now becoming much more affordable on the secondary side to a consumer than they were before. So they might have been 40,000 a year ago, they came off and now they're 25,000. So I think from an affordability perspective, a customer need, and some people are very much not going to drive an ICU unit. They're going to want EV and you need to present them with that option. The only caution I think a lot of us have in the industry is how is that vehicle taking care of? What's the longevity of that vehicle? What are the repairs going to continue to cost? How happy am I going to be able to source parts for that vehicle when a customer has a problem?

Because they're surely not going to be mad at the manufacturer when the vehicle's not ready. But when you bring that car into that dealership through that service drive and it's sitting in their shop for two to three weeks because of an ups because they couldn't get the part, they're going to blame the dealer and they may not come back and buy a car from them. That's why what I imagine your dealer that you talked to last week had that concern was does it hurt my brand? Does it hurt my reputation? I'm able to support the customer the way that I support them on an ICU unit. That's right now probably a little bit suspect.

The tier point, sometimes it's good to go on the opposite direction of others and set that up and drive that market opportunity. And EV could bring that out there. I'm not diminishing it at all. I'm just saying think about the costs that are associated to it. Think about the impact of your brand. Think about the investment you'd have to make. You also need to think about how quickly that car could depreciate if Tesla comes out with another $5,000 reduction in their MSRP.

Yeah, well stated. To your point, I think that there's always opportunity. And so, hence why I was curious from your perspective, what that looks like. I do want to talk about Non-EV for a sec. One thing that I appreciate about VSC companies and when you offer vehicle protection is that your interests are aligned with the dealers. There's other businesses in our industry where the dealer and maybe the vendor are conflicting and don't have in aligned interest necessarily. But here, the more a dealer sells, the better it is for you. And of course, the fewer claims in the long run, the more profitable everyone is, it's great.

How are you working with dealers to really create the most profitable experience while selling these products and while selling the VSCs while still managing your great customer experience? How are you doing that entire process? And again, I have to imagine you're working with thousands of dealers and so can imagine that this is probably systematized. But what does that look like for you? It's interesting. We do business with thousands of dealers, as you said, some of the largest dealer groups in the country and some that do single-digit sales per month. The reality of it is our focus needs to be on the customer. From our perspective, we're a partner with a dealer and working with them on helping them increase their profitability, but also helping them increase their customer satisfaction and the experience that the customer has when they come into the dealership. Trying to put them in the right vehicle, trying to put them in the right lending environment, the right terms and conditions and products that fit for them.

But our main goal is really to partner with a dealer to determine what their goals and objectives are, focus our attention on the F&I office as a primary focus and training their F&I managers, product, how to present, needs analysis, follow up with the customer. But it doesn't just stop there. It really does encompass the entire organization.

Several years ago, one of the things that I've always felt that we've done a very good job with is finding different things to help dealers support their overall profitability and to solidify our relationship with that dealer. So we started investing in fixed operations training and hiring a team to come in and really start to work on not only how the customer is when they're in the showroom, but how we're treating them and offering them value added products within their service drive area as well.

That then expands out to how do we handle really multiple products. So we've made, as I said earlier, about 35 acquisitions over the last couple of years and our most recent one, Crystal Fusion provides a much different level of protection than our other products. So we're trying to always fill the bucket back up with new products that fit for the customer of today and their driving experience and also making sure that we're hitting our number one goal is to put the customer first in everything that we do. And it doesn't matter what part of the dealership it is from reinsurance to F&I development to fixed operations.
这也延伸到我们如何管理多种产品。正如我之前提到的,过去几年中我们进行了大约35次收购,我们最近的一次收购是Crystal Fusion,这款产品提供了与我们其他产品截然不同的保护。所以我们一直在尝试用适合当今客户需求和他们驾驶体验的新产品来填补市场空白,同时确保我们实现首要目标,即在一切工作中把客户放在首位。无论是再保险、金融与保险的开发,还是固定运营的任何部分,这一点都是一致的。

We focus our attention on really what the dealer needs. And while there is a systematic approach to that, it's also individualized as well for each dealer. While there may be similarities in the dealer, there might be differences in how they present their customer what products they would like to put on their vehicles and offer their customers. So you got to listen, you got to hear, you got to really focus your attention on the need of that one particular relationship versus trying to say, hey, you're a cookie and we're going to cut it off the same way for everybody. That's not how we do it.

So my Spark knows version of that is lots of process, lots of training, which, okay, it makes sense. Now, is that the key difference you're seeing from dealers that are over performing versus underperforming in your market? Does it come down strictly to process? Is there anything else? I mean, number one, it's the dealer. It's the direction that that dealer that owner has and how they want to treat the customer and what they want the customer experience to look like. Not only their customer being in one purchasing the vehicle, but their customer being their employee, right? And what value can we bring to that individual when they come in from our perspective?

If somebody new comes into a store, our goal is to make them better than what they were and better time and time again that we spend time with them. But it really does come down to ethics. It comes down to disclosure. It comes down to commitment to the customer because at the end of the day, the most expensive thing that you can do is not treat your customer correctly. It costs dealers $1,000 to try to get that customer in the door when they're advertising promoting expenses that they're having to put into play.

That customer needs to come back and buy again and again, getting them back into the service drive. It's your point earlier about Harley Davidson and Riker. That brand experience brings that customer back in that they're buying t-shirts and they're buying aftermarket items for those units. And we do the same thing on the auto side. You should be proud of the brand that you're driving. And if you are, that excitement, I think, really kind of is brought from everybody that customers in touch with, from their family, their friends, and anybody they know to tell them where they got that car and how they were treated.

So the best investment is taking care of their customer. I can't tell you how many customers and most dealers listen to this can resonate. But I can't tell you how many customers we've had over the years that maybe they're via the expiry or who knows what happened and you still take care of them. It's really important to just view it as a marketing expense at the end of the day. It's the cost of keeping the customer happy. And even though you may be correct and maybe they've had the vehicle for x amount of months at this point and whatever happened and maybe they did something incorrect, whatever it may be.

But at the end of the day, you have to just think with a long term mindset. Is it really worth it for me now to have a detractor and on the street? I hate her. Someone that is just really upset talking to 10 different people posting on Facebook, posting on Google. There's a fine line and many dealers have different tolerances for the stuff. I would tell you, I had a pretty high tolerance, meaning I would really, really want to take care of the customers, even if I knew that they were probably wrong.

And it was because I really cared about a reputation. And so for me, it was investing in the long term and thinking about, okay, how can I really make sure that they leave off happy, especially if it's something that's manageable. And maybe I can just allocate a reserve account on a monthly basis for these types of situations. So that's how we dealt with it. And I'm sure you've seen many other dealers do the same. 100%.

And that's always been that way that you made exceptions for a customer. Is it the one that screams the most or the ones that need it the most? I think there's a little bit of a balance that you've got to look at. But the reality is that in today's world, customers have a voice. And it's way bigger than their voice used to be. Right? So if I'm looking to build a relationship with consumers within my geographic area, I need to be concerned on what they say and how they talk about us. And that is really something that if you try to do the right thing, because every customer you know on a claim, if you don't pay 100% of it, they're not happy. They're going to complain.

But the reality is we might pay a $4,000 claim and they have a $250 uncovered component or part. And they are not happy and the dealer eats that $250 or we need that $250. But to your point earlier, it is critical more so today than ever before to make sure that you're thinking about that customer and what they're saying about you. Because it has ripple effects that can really negatively affect you for not just today, but for a long period of time.

Tony, you mentioned, you mentioned when I asked you earlier about what are you focused on and your interactions with dealers, you mentioned that exploring new products. Are there any new products on the horizon that you're anticipating the areas that you're looking into? I think when you think about the products that we offer, everybody makes comments like gap is commodities, service contracts, just a commodity. So what's different about you? What things do you do differently?

And the reality again goes to, I think all of us in the industry that are at the top tier are looking to do the same things, offer similar products. And if a new product comes out and I've developed a few products on my own and brought out to market, you got fast followers. If you're a leader, usually it takes you a little bit longer because you're the first one to market and you're spending more money on advertising and marketing it and trying to get it into stores and changing that shelf life. There's only a certain number of products you can sell to a customer. I think they're not going to buy 13 different products. I don't care who you are and if they do, there's a problem. So you want to make sure that they're getting the right thing.

But at the end of the day, how I look at this is that if you got a head start, you only got a firm in it. And if you got it for that minute, you better take advantage of it. And right now, to me, the one thing that really stands out is the lack of understanding of the risks that you have as an owner of a vehicle today because of the connectivity of that vehicle to anybody that wants to hack it. And while it's been discussed, we're going to come a time where we're going to have some type of a hack that's going to be a little bit more broad than one individual car, two individual cars that will gather some challenges.

The other piece of that is all the privacy requirements that we all have. And many dealers have taken that into account of when you trade your vehicle and most likely you haven't cleared any of your contact information or all your personal information that might be on the vehicle and they're wiping it out. But you need to be very careful there too is that you're not selling cars that have personal information from the prior owner and make sure that we basically start to build these products that really cover your vehicle, not only from the component perspective, but the external threat perspective that could come from hackers or anyone that could take over your vehicle.

So is that what you're thinking about nowadays or do you actually have products that are tackling these issues already in the market? We have products that are tackling that issue. The challenge becomes self-space. And you think about when the financial crisis hit, Hyundai came out with an insurance program that said, if you lose your job, we'll make your car payment for you up to 12 months. While that was out there before, that one really 2008-09, to go through that financial crisis drove Hyundai to be one of the top performers during that struggling time.

So there may be a product out there that's a need, but it's not enough need for the customer to invest in it yet. And to me, it's probably the cheapest time that they get invested in it. Because the unknown risk out there, there's going to be an assumption of what the cost might be, but it's not been determined yet. So I want to imagine one or two events that happen will turn the product on pretty high level. And dealers that are proactive in thinking about it, we've even built things where you can build it into the purchase of the vehicle and we give you a free year of coverage and making sure that not only your car is covered, but any car in your household is covered as well.

Given what you just said, given lots of these products are commoditized, what is your edge? How do you grow? I want to get into deep into your mind of a CEO of a company like this, and how do you continue scaling the company? I think it all comes down to the people that are within that organization, the investment that's being made and keeping the products and the services up to date. We're in a more regulated environment than we ever have been. So making sure that you choose the right company that's going to not only support you from a product perspective, but also from more importantly, from a claims perspective, what dealers are buying from us are our support and product mix, but more they're buying security and knowing that we're going to be there to take care of their customer when they have a claim.
鉴于你刚刚所说的,考虑到许多这些产品都已经商品化了,你们的优势在哪里?你们是如何增长的?我想深入了解像你这样的公司CEO的思维方式,你们是如何继续扩展公司的? 我认为这一切归根结底在于组织内部的人员、所做的投资以及保持产品和服务的更新。我们现在所处的环境比以往任何时候都更受监管。因此,确保你选择的公司不仅能在产品方面支持你,更重要的是在理赔方面支持你。经销商从我们这里购买的不仅是支持和产品组合,更是安全感和我们在他们有理赔需求时会照顾好他们客户的信心。

And that because we become part of their overall experience of purchasing a car, and really the one that is the most challenging for a consumer is to bring or an auto appeal owner is to bring that vehicle in for a repair. So if we're not taking care of it the right way, working with their service advisors, making sure that we're giving them the right components and approving it in a very efficient manner, that's not a commodity. That's a service that needs to be upheld. And the investment that we have to put into all the regulatory environments that are out there now that are coming at dealers left and right that we're making sure. But number one, how long have you been in the business? Can you support us as we grow? Are you going to make sure you support my customer? And when I call you at two o'clock in the morning, you're picking up the funds because I'm a partner and trust me dealers are a call no matter what time of the day it is if you're not doing your job right.

You mentioned the word shelf space. I think about this a lot, right? You, as a dealer, I can't sell all the back end products in the world because I'm limited by what the lender allows me to or the dumb out of room I have in the deal. And for anyone listening that's maybe not has never been on the F&I side or is not in management, you sell a car, you can only sell X amount of products in the back end, 2000, 3000, you're capped, right? You can't sell unlimited things because at the end of the day, the payment goes up and a customer can't afford that. So this, I thought I had was like, is there a world, talking about like, how do you build a competitive edge? Is there a world where someone like yourself acquires an actual lender and plays around with the margin where you're not actually you're actually lowering your interest rate, but you're increasing your back end availability for the dealer. So it actually makes you as the VSC provider more competitive, because now I can sell more VSC products if I sell with this lender. But net net, it makes the VSC company more profitable, because it puts more product on the street. Am I like in like cloud nine right now, or is there a world where you can actually basically what I'm saying is there is there a way to create more shelf space in this industry, or is it there's no way this is, you know, we're at a fixed amount. And the only way we're going to put more product in the street as you know, vehicles, vehicles, service product or whatever it is, is by eliminating another product. What are your thoughts? A lot a lot to cover there. One, I think if you if you really do look at it, there are service contract providers, administrators that are owned by the OEMs, right? And those OEMs are the finance source as well, right?
你提到 "货架空间" 这个词。我常常会想到这个问题,对吧?作为一个经销商,我不能卖所有在世界上可售的后端产品,因为会受到贷款方的限制,不然就是我的交易中没有足够的空间。而对于那些可能从未做过财务与保险业务 (F&I) 或没有管理经验的听众来说,当你卖出一辆车时,你只能在后端销售一定数量的产品,比如2000或3000,你是有上限的,对吧?你不能无限制地销售这些产品,因为最终付款会增加,客户可能负担不起。所以,我有一个想法是,是否存在这样一种情况,那就是通过收购一个真正的贷款方来建立竞争优势,并在利润空间上进行调整,比如降低利率,但同时增加经销商可销售的后端产品,从而让作为车辆服务合同 (VSC) 提供商的你更具竞争力。这样,如果我通过这个贷款方销售VSC产品,我就可以卖更多的VSC产品。但最终,这会让VSC公司更加有利可图,因为它在市场上推出了更多的产品。我是在异想天开,还是这种情况真的存在?就是说,是否有可能在这个行业中创造更多的货架空间,还是说这是不可能的,我们已经达到了一个固定的数量。唯一能在市场上推出更多产品的方式是通过淘汰其他产品。你怎么看?有很多东西需要讨论。一方面,我认为如果你仔细琢磨,会发现一些服务合同提供商和管理员是由原始设备制造商 (OEM) 拥有的,对吧?这些OEM也是资金来源。

I mean, in my earlier career, we had Nissan was a client, we provided third party field support for them, we marketed their security plus product to their customers, their field force was ours. You know, we were connected there, but from a risk perspective, you really have to look at both of them separately, because the financial risk, even though your margins may increase, because you get a little bit, you're still having competitive pressure coming from independent companies like ours. So you've got to be cost effective, so your margins really aren't going up that much. You've got to be credit quality needs to be in place. You know, one of the things that we've done over our career is work with pretty much every financial institution and lender and providing gap or some product for them to embed in their loans or market it under their brand name. And, you know, again, I think it's a great way to generate additional revenue for yourself, but the two factors are completely different.
在我早期的职业生涯中,我们曾为日产提供第三方现场支持,推广他们的Security Plus产品给客户,他们的现场团队是我们的合作方。从风险角度看,你必须分别考虑两者的风险。虽然利润可能会上升一点,因为有一些附加收入,但独立公司的竞争压力依然存在。因此,必须在成本效益上做到最好,利润增长其实并不大。信用质量也必须有保障。在我们的职业生涯中,我们几乎与每一个金融机构和贷款人合作,为他们提供嵌入贷款或以其品牌推销的产品。我认为这是一种为自己创造额外收入的好方法,但这两个因素是完全不同的。

To your point around, I only have one time to sell, that's true. And what we've tried to do in the industry is put together bundled products that might have three to five different types of coverages in it. So it's on one form. But to your point earlier, you do get capped from the lender, right? And how much can I sell? The one thing that I think dealers overall need to do a better job of is after sale, after the sale of the vehicle, the customer, in most cases, 30 to 40% of the time bought a service contract. There's 60 to 70% of them who didn't. So, you know, there's ways to market the program, which we have and other companies do too, when their manufacturers warranty come to expire offering them another chance at it with a finance plan that, you know, they can get their products more cost affordable.

Every time a customer walks into that service drive, there's an opportunity to sell them something else. It could be window, it windshield protection, it could be ding and ding, right? It could be multiple different things. The challenge is the service advisors tapped out sometimes, doesn't have the time to offer it. They're not really in the sales mode, they're in the value quicker mode. So there, you know, some of the technology that's embedded in the vehicles today, you can extract information out of that, find out how many miles they have, and do some very targeted marketing. And also invest in your digital marketing as well too, making sure your websites are up to date with the products that are out there. Because today, I might not think it's important. But after I brought that in for a warranty repair, it would cost me $5,000. That service contract sounds pretty cheap right now, doesn't it? Oh, yeah.

But you just said something which I love, which is the after sale, upsell or whatever you want to call it, right? Which is 50% of people don't buy that VSC or whatever, 40%, 60, it doesn't matter. But a very large percentage. So first of all, going back to my prior question, right, the answer is, you don't quit your day job because that is not the way to put more product in the street. But then fast forwarding, it's like, hey, instead of looking at the direct ability of creating more shelf space that way, there's all these people that didn't buy that product for X, Y, and Z reason.

So my question on that is, how do you actually measure that risk, right? Lots of dealers are reinsured, which means in simple terms, right? They have their own VSC company where they share profits or they share in the underwriting profit and loss, of course. So how do you measure risk for someone that did not buy a VSC at point of sale and now wants to buy one? How do you actually do that? Yeah, the two factors there, one, they still under factory warranty with maybe six months or expires. So you're not getting a vehicle that probably is going to have pre-existing condition, right? Usually where you do have to claim this problem would be a high mileage vehicle that doesn't have a service contract. You sell them one, they have a claim within a week or two. And it's a fairly large one.

So you need to go through the inspection process, you need to qualify that vehicle. If I have that customer in my service drive, I can qualify the vehicle doing inspection and offer the program to them with more coverage. If they don't have an inspection, you sell them a product that has a little bit less coverage. And the reality of it is that our job is really to be able to provide the dealers what their loss ratio is, trends by part by service advisor. We provide very detailed information to those dealer-owned captives, those owners so that they can see where their claims are coming from. And if we need to, we either cease marketing the product in that area or we increase the premium or reduce it if the loss ratio is looking pretty good.

So I don't think there's bad risk in many cases. It's a bad price. You need to put more into that reserve account. But one thing I'll tell you is, I don't know how many phone calls and TV or radio ads have you heard of somebody selling a service contract. I mean, I don't think I can get in the car and drive my seven miles to work and not hear two or three of them. So those guys are making money somehow. And that really is something in my mind that should be going to the dealer. And they would be much more, they'd be taking care of much better than these independent shops that are out there selling through radio, TV and late night ads. Where are these? I know exactly what you're talking about. I've seen these ads a ton. So they are very heavy in marketing. But like, where were they really after here? Are they after the customer that did not buy a dealer or are they after the person that's owned that car for 10 years and thinks that they need a repair and they're like, let me go get after the VSC company because you know, they'll pay for my damages. I mean, who is that customer? Is that really an opportunity?

Hey, let me let me let me qualify that with one more thing. Just one more thing I want to call. So the last five years, what you've seen a ton of is like, we'll buy your car, right? It started out with we buy any cars. And I know car max has been doing it for like 50 decades. But for the most part, it was we buy any car was like the big one. And you know, of course, then you had car max, carvana, and then it kind of, you know, dissipated into the dealer community. And I don't think dealers did it for extra margin. I think dealers did it because they needed the cars. That was the forcing function, right? It wasn't, Hey, you can make a little bit more money. That wasn't enough of an incentive for the average dealer, in my opinion, right? It was, Hey, you can sell, you need the inventory. This is how you're going to get it. So what is it going to take to get dealers to do the same thing for what you just mentioned? I think what ends up your original question was, what kind of customer is buying this product? The one that needs it most likely, the one that feels a higher mile product that, you know, they're having a little bit of a problem. I'm not going to say this happens with all, but maybe a very hard close environment with a monthly payment that is spread out over 12 to 24 months. The affordability becomes a challenge. Cancellation rates are really high. Denials of claims are high.

The best place to buy a service contract is from your dealer. I don't care who the administrator is. I don't care if it's an OEM program or independent. That dealer is invested in you more than anybody else from an ownership perspective. The independent companies like ours that might sell, which we don't sell directly to the consumer, have to transact at a higher price because there are closing ratios during single digits, low single digits. So instead of them being able to sell something at a more affordable price, they're having to sell it at a higher price. And I just, the cancellation rates on them are very, very high. The loss ratios are usually very high. The only way that I see it really working well is, number one, you market your product to that customer when they need it. And that could be a year from now, two years from now or three years from now. And you really then provide them a cost that's effective.

If not, like I said, we're developing and some companies have it this monthly or quarterly or semi-annual service contract that becomes much more affordable for the customer today. So when they do get into a little bit of a financial situation, they're not canceling that credit card recurring payment. They're keeping it because it's of value to them and it's cost affordable. So I think it all really does come down to if you look at penetrations on vehicles that are financed versus not almost non-existent when you have a cash customer because it's a check out of their pocket for today versus you're able to spread it out, that service contractor gap or whatever it is over the term of the contract.

So the cost affordability monthly is the most important factor that I find for any of the products that we sell to the customer. Tony, do you find lots of variability in profitability between dealers or should I say profitability percentage? I remember, again, I'm thinking back to our reinsurance company and I was always told, you're performing super well. I think we were at a 40% loss ratio or something. Now, mind you, we were selling off-least cars 30,000 miles factory warranty. So these weren't 100,000 miles cars or 30 to 40% loss ratio, I should say. And of course, that kind of oscillated over time. But is there a benchmark for anyone listening to this if they have a reinsurance company or if they're just curious about the economics of running an automotive warranty company or selling automotive VCs? Is there a benchmark? What does that look like?

Yeah, I think it depends on the manufacturer and the area of the country that you're in, the credit quality that you have to your point earlier. Your credit is going to be driven on what the advance would be. So you better your credit. Usually you get a higher advance amount. I think when you look at the captives, the dealer-owned captives, they're extremely successful for dealers. And loss ratios range anywhere from, to your point, low 40, but that's not normal. Normally it's in 60, 70, 80% loss ratios. That's typical on the insurance side of the business. And it really is, again, driven by the work that we do for our dealers and the partnership that we have to really go over where their losses are trending to and making sure that we're doing the right thing and pricing the product the right way. But it ranges dramatically, depending on the area of the country and the dealers. I can tell you, in windshield protection for us in Texas, seven to eight times higher in loss ratios than it is in Kansas City, in Missouri. I mean, so just dynamic. Any of the other products, the dynamic of it is much more dependent upon the area of the country you're in. Yeah.

And I should also qualify that with, it comes down to, from my experience, how much money you're spending in recon, first of all, right? You're spending more money in recon, more preventative. So that's not going to reflect in your loss ratio, but you're going to take that, you're going to make that investment or expense on the front end, obviously. If you're going to help that customer out and it's not going to hit the warranty, that's an expense. Again, it won't reflect in your loss ratio, but you're still going to, it's still going to come out of your pocket. So it does also, to your point, it does depend on that specific dealer. And then what about gap reinsurance? So we talked about VSC reinsurance. Do you see that as, is that a pretty popular product? Do you see a growing, declining, in different thoughts?
从我的经验来看,这还取决于你在预防性维修(recon)上花了多少钱。首先,你在预防性维修上花的钱越多,花费就越高,但这些花费不会反映在你的损失率上。不过,这笔钱是在前期投入的。如果你要帮客户处理问题,而这些问题不会计入保修范围,那这也是一笔支出。同样,这不会反映在你的损失率上,但还是需要从你的口袋里掏钱。因此,这确实也取决于具体的经销商。 那么关于差额保险(gap reinsurance)呢?我们之前讨论了VSC再保险,你觉得差额保险是一个受欢迎的产品吗?你觉得它在增长还是在减少,有什么不同的看法?

Well, I don't know that there's anybody out there that sent gap as long as I have, we started a gap in 1983. Saw a little ad in automotive news from a guy that was in London that was putting together the product and brought it here and put it together. I've been called the Godfather of Gap for it. I can tell you it's one of those products that you're either making a whole lot of money or you're getting your butt whipped. I'm not into getting my butt whipped. So from a risk perspective, I would tell dealers don't ever re-insure your gap program. It has too much flexibility in it. And honestly, because a captive has such a consistent, in most cases a consistent look, you don't have that fluctuation. And that would be, I've never seen dealers get so upset when we told them not to do it and they have. They say, why'd you let me do it? Don't do it. I'm laughing right now because I've never re-insured Gap, but I have explored the opportunity.
好吧,我不知道是否有任何人像我这样长时间参与 GAP(贷款差额保险)业务。我们从1983年开始做 GAP。当时看到《汽车新闻》上有一则广告,是一个在伦敦的人正在组装这个产品并带到这里来。我被称为 GAP 之父。我可以告诉你,这种产品要么赚很多钱,要么被打得很惨。我不是那种会被打得很惨的人。所以从风险的角度看,我会告诉经销商们永远不要重新投保你的 GAP 计划。它有太多的不确定性。老实说,因为自家保险公司在大多数情况下都比较稳定,不会有那么大的波动。这就是为什么,当我们告诉经销商不要重新投保,他们却做了时,我从未见过他们如此生气。他们会说,为什么你当初允许我们这么做?不要这样做。我现在笑了,因为我从未重新投保过 GAP,但确实探索过这个机会。

And I personally, I'm nowhere nearly as knowledgeable as you about this. But the reason I never did it was because I felt like I needed to do too much volume to where if there's a very high risk that I'm not going to hit this level of volume and I hit the bed. And so that's why I never did it. But it's pretty funny to hear you say this because it seems like you're very strong opinion on this clearly for good reason. There's no doubt, again, if you kind of go back, we sold our original agency administrator to all state, took them up at a peak point. We're doing 200,000 Gap contracts a month. So we had pretty much 60% of the market at that particular time. And I can tell you it was very hard sometimes having to sit down in front of the people that I reported to and say, we lost a certain amount of money this year.

But here's the plan to make it up. In the reality of it was we had such a big market share to your point around you've got to have scale. We had such a big market share that we could raise our prices enough to cover that adverse loss development where other people couldn't do it. They really had to follow our pricing structures. So today, honestly, Gap needs to go to the next level, which is to start to take risk from a three or four price product. It needs to get down to make model and average area of the country. It should be priced almost like auto insurance to some degree and not just be such a fixed price. Now, if it gets to that point, then yes, I'd say, we ensure it takes some of that risk because it's much more focused on the risks that's associated to it.

Everybody three years ago, four years ago, are upset because it didn't take gap. Now they're wanting out. But you can't just jump in and out because you have a six year tail on it. It still takes five to six years for those contracts to earn out. So your decision you made three years ago is affecting you today. And that's a big part of our business is we have to make a guess and they call it actuarial science. We have to make a guess of what that risk is going to be like two or three years from now. Trust me, no one three to four years ago thought that we'd have inflation on parts 40, 50, 60, 80, 100%. We never thought we'd have labor rates that are now exceeding in some cases, $275 to $300 an hour.

That's what we used to pay our attorneys. That's what we're getting on hourly charges and the script has changed. The script has changed. Yeah, even the complexity of the vehicles now, we're prepared used to take an hour. Now is an hour and 15 minutes. So all of that plays into part of loss ratio. But let me see, don't do gap. If I learned anything big, it's definitely that. Although I feel like you just subtly ideated a billion dollar opportunity, which is to create a product like gap that actually works and takes in way more factors than just three prices. I mean, is that, am I missing something? Is that not a huge opportunity?

No, the problem is that simplification is really critical on the auto dealer side and really having the ability to price based on the risk is a little more challenging. Right. So we don't, as an industry, get down into those finite little things that you look for in auto or homeowners or other lines of business. You can try to generalize it. And if one section of it goes off a little bit, that's where you need to find the right administrator to be able to make that adjustment. So you're not in a situation two years, three years down the road. You go, why did I do it? Again, gap to me is the most valuable product to a consumer there is. My point of my dealers, if you're not one of our dealers, that's fine. You should re-insure it because then you're going to want to come to us and do business with us because you'll be met at your current provider.

In this case, we want you to write it, but we don't think you should take that risk. We can blend it out a lot more balanced than you can in your area. We'll state it. Tony, before we wrap up, a general question, what's exciting to you nowadays? What's going through mine? What are you thinking about? It's exciting to me to see how the dealers have really started to come together again to focus on the customer as much as they are.

For me personally, it's been, as I said, I've done five transactions, even though in the same seat, part of a lot of different companies because of the equity that we've made and the mergers that we've done. I'm excited about the people that we have in our organization, the opportunities that they bring to us as a group. But to me, the most exciting thing right now for us is bringing all these great companies together that we have underneath our abco umbrella, working with some of the best dealers in the country, and learning from them just as much as they're learning from us.

I'm excited about our partnership with Bob Merito and the racing team that we're working with and Jordan Anderson Racing, which from our size and our organization, we never had the opportunity to do those kind of things before and we can now. Honestly, I think the auto business is one of the greatest businesses. There are out there, they drive so much opportunity for their local communities and really do a lot of work for a lot of charities around the country too.
我对我们与Bob Merito以及我们正在合作的赛车队和Jordan Anderson Racing的合作感到非常兴奋。从我们的规模和组织来说,我们以前从未有过这样的机会,现在我们终于可以实现了。说实话,我认为汽车行业是最棒的行业之一。它们为当地社区带来了很多机会,也为全国的众多慈善机构做了很多工作。

While people may talk poorly about car dealers sometimes and service contract providers, I haven't met a better group of people in my lifetime. I'm excited about that, but it's some particular point I'll probably miss them too. Maybe not that much, but just a little. Well, I'm a fan. I'm a big fan, especially the story just mentioned about gap insurance and your history with it. That's really remarkable. I didn't know that.

If anyone wants to learn more about easy care, I have the website pulled up here, easycare.com. We'll throw up the link in the show notes as well. No, listen, I appreciate the time and I didn't tell you this story, but I found you on the way on a little golf jinket that I was going with my son on and some other podcast and I was checking through the phone and saw you have gone and listened to it for about four hours that day.
如果有人想了解更多关于Easy Care的信息,我这边已经打开了他们的网站,网址是easycare.com。我们也会在节目附注里放上链接。感谢大家的时间,说起来,这件事我还没告诉过你呢,我是带着儿子去打高尔夫球的时候,在其他播客中发现你的。当时我在手机上看到了你的节目,那一天听了大约四个小时。

Very impressed, excited to be a part of your organization, what you've built in a very quick period of time. So thank you for the opportunity and look forward to hearing more and more from you as the years go on. Appreciate you. It's only the beginning. We just launched CDG News and a lot more to come, so we're growing quickly as well. I want to have it up last. Tony, thanks for coming on. Had a lot of fun. Thank you. Appreciate it. All right.

Hope you enjoyed that episode. Please give the podcast a rating. Consider subscribing to the show and check the show notes for links to what we talked about. Thanks for tuning in. I'll see you guys next time.