There's an aging use car bubble growing on dealers' lads, and this ex-dealership general manager thinks his team has the solution. To them speaking with Brian Kramer, EVP of cars, commerce and general manager of Accutrade, an integrated vehicle appraisal tool for car dealerships that lets consumers conduct self appraisals and save dealers money. We discuss catching $48 million in undetected appraisal errors for car dealers, rising the ranks from a lot poorer to general manager in only six years, why he eventually walked away from the dealership business and went to the vendor's side and much more.
Don't forget to click subscribe so you never miss an episode. What's up everyone, this is CarDealershipGuy, you're listening to the CarDealershipGuy podcast which is my effort to give you access to the most unbiased and transparent insights into the car market. But before we get into the show, this episode is brought to you by Valvoline. You might know Valvoline is the original motor oil. After all, they've been at it since 1866, but to their dealership customers, there's so much more. When you partner with Valvoline, your dealership not only gets access to legendary Valvoline products but also to their customer business solutions, marketing resources, consumer promotions and other programs that go beyond the traditional supplier partnership. Valvoline can help you drive your service department by streamlining operations and increasing revenue with hands-on technician and sales advisor training, state-of-the-art service lane technology and a robust preventative maintenance chemical program. They even have programs to help you sell more cars and increase trade-ins. What other fixed ops vendor can say that? So what's all this mean for you? Fewer vendors, more value and a brand your customers know and trust. Valvoline is reinventing how supplier partners with the dealership. For more information about how Valvoline can become your ultimate fixed ops partner, visit partner.valvoline.com or click the link in the show notes below.
Before we get into the show, I'd like to thank Cars Commerce for coming on as a guest and also sponsoring this episode. So I started off as a lot poorer, which is somebody who organized a lot and moves cars around at an old mobile Pontiac James C dealership in Columbus, Ohio. Double Ohio right outside. From there, I've had every position in a dealership from block Porter all the way up to running multiple dealerships most recently for a dealer group in Ohio and Florida. I ran their Florida platform, multiple rooftops. Did you always think you would stay in the car business?
No, absolutely not. I don't think that many people get into the car business to stay into the car business. I think it was quite the opposite, but it's easy to fall in love with. There's plus and minus the hours and there's sacrifices that you make, but I don't know of anything that's as addictive as retail automotive and all the multifaceted perspectives of it. To your point, I didn't think I was going to say in the car business either. I think that's a common thing with people in the car business. It's like, oh, yeah, this is just a stepping stone. I thought, I want to do what I grew up. I'm still there.
So what was that time period for you? How long did it take you from lot Porter to GM? Can only imagine, you say that like, oh, this is what I did, but you can only imagine everything you went through and throughout that process. Give us a little bit more insight to that. So I was in the right place at the right time. Timing was good the years. I think that because of my age, I'm Gen X. There's not as much competition. So I think it gave me an edge. And all the people I went to college with went to school for marketing, radio, TV, newspaper, by the time they got out, it was not relevant anymore. So I was kind of at a level playing field with everybody else because I didn't go to college. So I took about three years before I realized that because I was just dabbling, but I needed to make an income. So I'm working really hard and you get used to making that kind of money. What were you making? In sales, $3,000 to $5,000. But once I figured it out and I got with the right group that had the right culture and treated people right, I mean, it was $10,000 to $15,000 a year. I was not even old enough to drink alcohol. So I got it's $10,000 to $15,000 a month. And how old were you at the time? 19, 20. Wow. I mean, that's real money. Right. And there's that opportunities there today for with technology, you know, to assist. And it's a lot easier for the people coming in now that it was back then. I'm sure every generation says that.
But then I went into the finance office and that was also just by, you know, chance. And then shortly after that, sales manager and sales manager, you make a right today. Definitely managers make more than sales managers. But back then sales managers made more than the finance managers did.
And then I took a 50% pay cut to be a general manager because I didn't ask what it paid. And it took me a minute to put it out. That was a temporary thing because it, you know, it was a turnaround, which is always your first dealership. It's always some train wreck, you know, Afghanistan type situation.
Well, that's interesting, though. So you're saying, right? Like you took a step back to take, you know, three steps forward. You said, Hey, I want to grow in this opportunity. And so you're saying you took, you took on a turnaround dealership. Where was this act? Like give us some more details there.
It was in Columbus, Ohio. So it was a dealership we acquired. There was a three dealer, three gentlemen, prior to me, and I had no experience. Uh, no formal training whatsoever of that position in 18 months. So a lot of adversity, nobody knew what I signed up blindly and trusted the, uh, the people that were mentoring me and I luckily had some people to lean on for help. But there's, there's things that you know that happened in a dealership that you just can't be prepared for.
I mean, I pulled a gentleman that was stuck on a toilet and there's no standard operating procedure for that. And it ended up being my appointment that he was coming in. And I said, you know, after I pulled him off, because he was stuck. I'm laughing because, you know, we had, I just had another conversation and there was a conversation about the restrooms and seems to be a recurring theme in the podcast. Oh, it was, I mean, it's, it's, it's a, it's an absolutely crazy story. But after he came out, I said, let me get you to where you're going. Cause I'm here to see Brian Kramer, because I got a problem with my car and I'm like, oh, you know, but we sold him the oldest, uh, the 735 day old new car that we inherited as part of the buy sell. And, uh, it all worked out.
So then I got to actually go to bigger dealerships and then, and they, once you prove yourself in that, in a tough situation, which is typically like a Cadillac or a Lincoln dealership that doesn't do as much volume. Back then it was Mercedes Benz for me. Then they put you in a little bigger dealership and another dealership, you'd like a big Toyota dealership, like I ran, you know, at the end of my career in retail. Nobody's just going to put somebody in there because the, if you make a mistake in a store like that, it's like, you know, running an aircraft carrier into a, a, you know, iceberg instead of a small boat. And there's so much damage that can be done in a very short period of time.
So how long was this entire process for you? Right? From a lot of Porto to GM. How many years we talking about here?
那么,整个过程对你来说用了多长时间?对吧?从波尔图到GM,我们要说多少年的时间呢?
It was fast. It was, um, those six years.
这是非常快的。嗯,就是那六年。
Wow. And what do you think was like about yourself, right? So I'm sure there's some people listening that would love to have that type of career trajectory. What do you think about yourself? Was it?
And there's always a function of you and also your environment, but like, what was it that allowed you to do that? To just grow so quickly within the organization.
Well, at the beginning, I had to make money and had some debts to pay off. And so I didn't have a choice. And then I think that instilled the motor and I just kept that going. And I also, I would say this is extremely important because I see this all the time in automotive retail where, especially I used to work for other nation and the publicly traded companies, this is random, I really all of them. If I managers are making so much money that they said, well, hey, to get the training, the knowledge to be able to be a GSM general sales manager or a general manager and a dealer should be going to take a step back. And they, they frequently say, well, how much am I going to do? And it's still a lot of money.
What's a lot of money like when you say F and I managers make a lot of money, like, what are they making?
当你说F和I经理赚很多钱时,指的是什么?他们赚多少钱呢?
Well, I don't know about the last few months, you know, I guess, I mean, I can talk to 2023, but 2023 is also not reality, but they're very well compensated. I mean, it's, and it's a grueling job. You're clear. You're there till midnight, you know, sometimes later locking the doors or the last person there. There's an insane amount of pressure six days a week, but you're talking 15 to $40,000 a month, $50,000 a month.
Yeah. And when you see these roles and then you look at like a GM, right? Like what's like a typical pay cut that you see in that transition when someone goes from the management into a GM?
Well, the pay cut would be due to the size of the store, because typically a GM gets paid. Well, Brett Morgan said it what it was with $10,000 and 10% of it net income. So a smaller store is going to be that. But you have to go into a smaller store to be able to learn that. It's almost like going to college in reverse and you have to take that to pay your tuition, right? So you're never going to be less than 200,000, regardless of them. And they've been like the standard. They're going to make sure that that works or maybe a little bit more. But I know I know general managers that make more than $5 million a year. And what type of stores are they running? Toyota does pretty much all Toyota. Maybe I don't know anybody to then store making that much. Yeah. You got to be selling north of six, seven, eight hundred or more.
A car is a lot more. Yeah. I mean, you're you're it's an enterprise at that point. It's not, you know, no small store. So yeah, the Toyota store I ran. We we have a separate rental car agency. I mean, you you just talked to the euro from long go to it. The number one dealership in the world. I mean, they that the operation they have, there's absolutely insane. There's businesses within businesses and DMV in there. And you can you can scale it to as big. And that's the one cool thing about automotive retail is there is no limit. Yeah, definitely definitely lots of opportunity, especially, especially when you think about, you know, like you one department is maybe semi mature, but you can always expand another one. Yeah, like right now, if the dealers that are struggling are not strong use car operators or their service because it's shifted to those two departments, right? And you all it's like a constant balancing act with however those things are going.
Take us to 2020. When we did some research on your background, we saw that you had launched this virtual reality car buying experience or metaverse, whatever you want to call it. I was so intrigued. Like, why did you do this? Like, how did all this even happen? Give us the back story here. So we got to the point where we developed the process to sell vehicles paperless, right? And we did end up doing 12,000 transactions that way with not one piece of paper, no wedding zero. So you as the GM, you implemented this process? Well, with the team, I mean, it's, yeah, of course, it took a lot of war room and, you know, process mapping. But yeah, so as we figured this out, a lot of people are like, OK, we did that or whatever. And I'm like, but we can keep pushing the needle on this and how far ahead because my thought was, that's great. And then it's going to not long after this, everybody's going to be there. And then what's next and what happens after that? So I'm trying to look out two, three chess moves ahead because that's typically what happens, right? It's not what happened, surprisingly.
And I was walking across the used car lot to the new car building, you know, it's like 100 yards over. And I said to my general sales manager, hey, look at the valets that are doing these inspections on the service drive, why can't we just give them the AccuTrade app and let them appraise cars? And he's like, oh, but the cool thing is, is that he was very supportive and willing to try anything, which I think is a trait that everybody needs.
So I we did it and we did it too fast, too much at first instead of a crawl, walk, run strategy and it blew up. It was it didn't go for it. So it really backed.
So one second, so you were running this, you were doing all these virtual deals, which was like, you know, innovative, right? Like I saw you got all this press and whatnot. And so you came across this tool, which obviously today you run this tool and, you know, you're, you've really evangelized it big time. But I think it's interesting. Like you're saying you were first exposed to this as an actual customer, you're as an a client of it. Yes. And I didn't, I started looking at it. I'm like, you know, many different things you could do with this. So I said, why don't we just give them to the salespeople to do it on the service drive? And if we can do it on the service drive, why don't we give it to them so that when they go to public, they can appraise cars there or a volleyball game.
So the next thing was the metaverse. What was it? What was it actually at the time when you started using this tool? What was it actually providing for your operations? Oh, it was, it was just to provide inbound leads off of our website, widget to try to get clients further down the funnel. Yeah.
So like explain that even more. Like I think for anyone listening, it's not familiar with Accutrade. Like what, what is the, what is the thesis behind it? What does the tool do? Like, can you give us all the background? So it's the, it's the most accurate vehicle acquisition tool on the planet. And the values are a different conversation, but there's a lot of pedigree and a huge background behind what, what makes our value so accurate. But it also, it's like five, four or five products in one.
It's a website widget. So when you get onto a dealership's website, top value, my trade, they all have it. Some of them provide ranges, some of them provide guaranteed value. Some tells you just to come in and won't give you a number. Our widget is transactional. We can do either one, but it can allow you to go all the way through and actually complete a transaction because we're going to guarantee that value. And it's going to be competitive similar to some of the large online youth car aggregators. So, you know, you can just get on there and get, find out which car is worth.
Right. So check. I wanted to be able to do what they did. And I wanted to do it better than they did at a local level. So there's a lot of national brands that can do that. And they will come to you or we'll do this. And I thought to myself, why can't we do that? And why can't we do it better? And our team did. And I don't, I think that every dealer needs to think about that, that if somebody else can do it, there's no reason why you can't. There's no reason why you can't do it better unless there's some technology that you don't have, which is one of the main things that we're trying to do. Of course, commerce is we're trying to democratize that and we're trying to enable salespeople, you know, service advisors, anybody in the dealership. It doesn't, you know, the lot quarters, the valets. It's so paint by numbers simple that anybody can do it in three minutes or less.
So when you can enable that many people and empower that, many people who have praised that many cars and the consumers to appraise their own cars, you get so many more leads. We triple quadrupled our amount of appraisives per month. So we didn't buy a car from the auction after 2019.
So everything you just mentioned, right? You're now GM of this Toyota store and, you know, we fast forward a year. You're running this product at cars commerce, which is publicly traded company. I mean, night and day from an automotive retailer.
I think the multimillion dollar question here is what gave you so much conviction to uproot your life. You know, you've been a dealer for, you know, over a decade, uproot your life and go evangelize this product and, you know, really all show it, you know, show it to the entire dealer community and really leave your job. Like why did you decide to do that? Because I really believe that it's the technology that's going to revolutionize and decentralized on a retail.
It's like the last frontier. You can do a credit application online, select your vehicle online. You can transact on any other product. We live our life every day with just always constantly online. But the one thing that you have doctor's office appointments, you can do it online before you get there. But you can't buy a car because of the trade, the trade is the biggest friction point and it's so frustrating. And once we unlock this, then it's obviously a lot of change management, a lot of letting go of the past because it's different and, you know, I got any, you know, paper book.
Oh, there it is for anyone that, yeah, the NADA book, you pulled it off. I love it. And get updated once a month and EVs don't operate like that. It's real time. It has to happen immediately. And if you don't have access to that type of data, because that is the crude oil of this century, if you don't have access to that data right now, when you need it, you get risk averse and you don't make aggressive decisions.
So when we unlock that Rubik's Cube, if you will, it's not only did we in a market after COVID, when the volume was going down, we increased it, but everybody was more profitable. So our profit was, you know, in the five X before all the crazy, that profit increases. So, you know, the Godfather of wholesale automotive, that's wholesale 50 million cars in its career, Robert Hollins had, who was on your show. Yeah, he's been on the podcast before. Yeah.
He reached out and tried to figure out just by looking at the data, what, you know, cold, cold, what are you guys doing? How are you doing it? And then started brainstorming with him. He introduced me to the CEO of cars commerce. We talked about it. He said, I think that you could take this model, scale it across the country. Yeah. I said, I don't know why everybody does it. So then he said, well, they both said, why don't you help us do it? And I think that it's a, it's a change that's needed to happen for decades. And the reason that that core wasn't able to come out of the bottle was literally because of accurate, it turns digital retail tools from a lead generation tool to a transactional tool.
Everybody wants to debate about that. I think any deal are listening to this and every consumer, many of us can think of a time when, you know, you're faced with a trade-in that you don't have perfect or great information on. And like you said, you just lowball on it because you're concerned that you're going to miss, miss the mark big time and lose, you know, lose your pants. On the other hand, as a consumer, right, you've been lowballed on, on trade-ins or on, you know, evaluation, suddenly someone gives you an offer that's $5,000 better. Right.
And then to your point, I think where I grew through here is like it all comes down to access to information. And, you know, what can I do with this car? Right. Is that do I have the proper information on this car? Can I really hedged out amount of risk? Yeah. And if they're not confident, a dealer is not confident in their process and they're not transparent. And the transparency is going to become, as you know, the new cars, FTC rule that's coming out later this year. It's going to force that.
I just wrote about it. Yeah. I don't think everybody really fully understands the impact of that, but that's going to make this even more important. And what I found is by just giving the client the information, they transact more. It's not, you know, I don't, you might be too young to remember this. But when I first was at Oldsmobile, the rule was unless they were committed and they gave you some item or their wallet or something that they were committed to do business today, we didn't give them a price.
And I think that not giving somebody a price online or anywhere they want to is just as insane as what it was back in the 80s and the 90s of not doing that. I mean, that's, it seems crazy now. And I think a few years from now, we'll look back up this and say, that is so crazy. How did we let that go as long as we did? And why would we do that to consumers? What is it about, you know, this specific tool that makes it different from, you know, just like the legacy trading tools and KBB, instant cash, whatever, whatever.
So take that one level deeper. Like, why are the numbers so accurate?
那就更深入思考一下。比如,为什么这些数字如此准确?
Well, the other tools that that exist out there that you're talking about are competitors were designed by that Godfather of wholesale. So trade in marketplace by auto trader Kelly Blue Book, instant cash offer. He was the creator of both of those. This is like version 3.0, the most evolved version that he's come up with.
And instead of, you know, selling them to who he sold them to, he parted up with cars, commerce, because we wanted to integrate across the platform through our websites embedded in a native format. So it looks like what you see on Amazon or Shopify where everything's fully integrated, where we don't need as much information from you, because we're going to already have it if you're a cars commerce customer, if you're in the cars, commerce garage, we won't have to request so many things. That's one thing that's also the audience.
But the primary thing is his buying team, the most experienced buying team.
但是最重要的是他的采购团队,这是最有经验的采购团队。
Nobody. What do you mean by that? Like, how does that impact his tool?
没人。你是什么意思?比如说,那对他的工具有什么影响?
So typically to dealership, let's say it's a 200,000 mile car that maybe they don't specialize in or a F450 diesel, they're going to call somebody and they're going to call somebody and they're called a wholesaler. So that wholesaler calls somebody else. And it's a daisy chain and each person is getting a cut as this car gets bid from this person to this person. And what I've learned since, you know, knowing this gentleman is that all roads seem to lead to him or one member of his team. So he's got specialists on exotic cars. The black rock of used cars. That's a perfect analogy.
The black rock of used cars and 80% of the moves run through him in one way or another. He's got the EV specialist that know that market and everybody calls him for that or somebody calls him on this. And it's amazing the information that Gordon Gecko thinks that the information flow that passes through him. So if you can go straight to the source, you know, if you will, and you don't have to have all the people in between the distributors and you're just going, which is what Accutrate is. You're dealing directly with the source of the data that everybody relies on for theirs.
Yeah. I mean, it's pretty much his data. And I mean, it's there, you know, there's no whisper down the lane. You know, there's no broken telephone. Yeah. I do. You're not making any mistakes. You're kind of getting it all spoon-fed to you. And they're looking at it. They have to be very, very competitive because what we're trying to do is we're trying to enable the, you know, one, two, less than 10 rooftop dealership groups so that they're on equal playing ground and have an equal arsenal against a 300 store group when it comes to trades because I don't want to be, you know, exaggerate this. I actually think I'm playing this down, but without Accutrate, you're just like a significant disadvantage to anybody else that has Accutrate.
I think the use car market in general has been crazy the last six to 12 months. And I would say like a bad crazy for the industry, at least, meaning, you know, prices have been coming down. Um, but more specifically when prices come down and that car is on your balance sheet, to, you know, to your books, you're losing a lot of money. And so what do you think, like just thinking out the next 12 months, what do you think?
I, what are the biggest changes you think that are going to happen with just use car management?
我认为在二手车管理方面,将会发生哪些最重大的变化?
Ultimately, that's going to impact pricing, but just give us that first insight.
最终,这将会影响定价,但首先给我们这个初步的洞察。
Like how do you think just the next 12 months of use cars, valuations, pricing, where is that, where are we all headed here?
你觉得下一个12个月的二手车使用情况、估值、定价会怎样?这一切会走向何处?
So I think, well, I might see it already. And that's one of the cool things to be in the cars, commerce is that I can see a lot more data than I did at one dealership and I can see trends all over the place.
And I know that I was living in a bubble because in a dealership, you're supposed to not have any, the goal is to not have a car over 60 days old and inventory. That's kind of the rule.
Yeah, that's like, uh, some people follow some dome, but neither way, I agree with you. That's sort of like the standard. And 34 days on average is when the margin runs out.
So that's what I explained that for a second. So there's the car depreciates. It's like a consumer's car does every day. Some cars depreciate, which is something we share with our dealers is what's the daily depreciation rate of every single vehicle. At the point, and this is what I'm talking about when I'm talking about, like, everybody thinks the world is flat and use cars. Our system shows them that it's round and some people have a hard time swallowing that concept. But here's the thing.
Yeah. So if 60 days is the day, you're not supposed to keep cars and that's a, you know, just the standard. Everybody that I talked to says they don't keep cars less than 60 days. I pulled the numbers this morning and on 2.3 million use car listings, 33% of the inventory in the country. So there's over 600,000 cars are over a third or over 60 days old. But here's the more concerning thing. 20% are over 91 days old. And this spike just happened in the last 45 days. Wow. So, so what was it before? What was it like three months ago? That's well, 33%. Well, yeah. So it was in the teens. It was in the teens. Okay. So you're seeing a huge run up in aging right now, a huge aging bubble. And it's mostly in expensive vehicles, electric vehicles, a lot of vehicles where they're not seeing any auction because everybody's keeping their inventory. Because like, well, you know, the auction averages this. I don't want to get rid of it, but somebody's going to at some point and then it's going to come tumbling down our software tells them what laws and to see around the corner and through the windshield and so through the rear view mirror and determine that from day one. So you'll know on day one, what's the average depreciation? If you do hold it, it's more of a risk management tool. Then the managing your inventory by days and inventory. It's managing it like you would a four one K portfolio. What do you mean by that? So there's certain funds that are more risky than others. There's some that are conservative. But nobody manages their nobody determines their risk tolerance as a dealer. It's very intuitive and it's kind of reactive.
And if you think about it from a logical standpoint, if the average car and some of them depreciate $10 a day or $3 a day, some of them depreciate $100 a day. And the supply and demand and how many cars are aged determine all that, right? Versus the search demand. We share all that data, which nobody else does. And if you know for a fact that you don't have cars any 60 days old, why would you keep a car that's 100 days in stock or 100 market day, you know, 100 days on market on average? It's not a good decision. You know, it's going to lose money from day one, but all the other software can't tell you that. So the dealers are blind. Why? They're like driving in the dark with no headlights and the. That's a, a, a must you know for sure that you can sell this car and you sell them consistently. You need to look at that data and you need to assess whether or not you're the best then user.
What's happening is the dealers are really good at that. A lot of our dealers are up significantly and use car sales year to day. And I, I talked to one dealer on the same, same street to be on one side of the street. One dealer's having a great year, great month, record, all these records, little like across the street. And it's, you know, I can't, I don't know what's happening or we can't find cars, the auctions have dried up and they're not self sufficient.
It's kind of like having two legs on a chair. They don't have the other revenue streams to source cars or acquire cars. We handle all these sources, all the channels, service drive, sight unseen appraisals, which is if somebody's at home and they want to estimate for their vehicle, that's a friction point in most dealerships because the employees are not enabled to do it easily or the manager is a blocker. And I'm glad you have this platform, CDG, because those are things that need to be talked about because it's kind of a backroom where the industry, you know, myself, my team included would say, Hey, just get them in. Well, the customer wants to know what the car is worth. Just get them in. Well, they don't want to come in unless they know what it's worth. So then that tug of war happens in a dealership internally, you know, behind the scenes, customers can typically sense that the dealership associate is going through that. So they come in after they sold their car to another, you know, use car only retailer and they still buy the car from the dealer and they never know. And that's why they have such a shortage of inventory.
Do you see that the trade in process is broken? Like when I think about, you know, you can get a junk trade, you said you can get the 20, you know, 2023 F two 50 that you have no business having on your car lot. Like, do you think that that that just entire trade and process is broken? Or do you think that, you know, like what you just mentioned, what you're doing with AccuTrade, pretty much anyone should be able to take any type of trade as long as you have the right data, there's no reason you shouldn't take that vehicle and dispose of it in some way to get the deal done. Like, what's your thoughts on that?
I agree 100% of what you just said. And a lot of people are comfortable saying that. I'll say it. We're which part the four, the former, the latter, which, which statement both. So it is broken. It is based on the data, but the lack of data is partially why it's broken. But there's also this misnomer that wholesaling cars, even within your own group is a sign of weakness at the dealership level. The ego will allow it to happen and they remove logic. When in fact, if you bring a Dodge Challenger Hellcat 170 into a dealership, I don't know what that thing's worth. You don't have praise cars every day. I'm going to have to rely on a backstop or it's going to take me hours and hours and hours to get that number, whereas I can get it with AccuTrade in seconds.
It were like I just experienced earlier this afternoon, there's five sales people waiting to get the cars appraised. The time that our, the sand going through the hourglass is they're waiting for the one person that's empowered to be able to appraise cars because typically stands for the hourglass. Typically, there's one person and it takes three years to upskill these, these people, because it's like an automotive technician back in the shop. You, there's so many mistakes you can make. It takes three years to upskill what? A good use car manager. There's like an apprenticeship program. I mean, they sell cars for a certain period of time, then they follow a use car manager round, look out for this, check this, you want to watch this and do all those things where you, I get it up to speed so you can hear that. You know, there's a lot of like, well, just like a apprenticeship going on.
But with AccuTrade, there's an OBD to OBD to tool that scans 109,000 operation codes of the vehicle, which has just recently changed because the right to repair act. Now everybody can have that information. That previously wasn't available until a few years ago. What's that? What's the right to repair? Tell us more about that.
So the right to repair act was enacted, I think it was in 2019, 2020, but when it, when it went into effect, it used to be that let's say, let's say a German or a Japanese automaker, you had to pay $25,000 a month as a dealer to have access to the software, the right to repair act allowed independent shops to have access to that data. They didn't have to have the $25,000 a month tool.
So when that happened, these OBD two tools now allow, you can scan the whole vehicle. Ours is integrated into the appraisal, translated into what the dollars and the cents are, but you can avoid massive mistakes that happen all the time. I mean, $719 is the average mistake that our tool detects. And I think it's on every fourth or fifth scan.
But last year alone, dealers saved $48 million in detected errors that were internal misfires in the engine. Kind of let it converters remove things like that, that normally they would, there's no way that they would be able to detect that. So it allows them to be more aggressive on consumer squarts. Was that $48 million on trade ins that they would have otherwise purchased? It's on internal parts that they wouldn't have found out until the following day, that they were able to find out prior to the appraisal. So they're either talking to the customer about it or they're making a decision or they're making a decision to take it in or not to take it in. But they have that much more information. God.
So you're saying $48 million is the total sum of inaccuracies that your software detected and likely from a trade in from a customer or whatnot? Yes. Got it. So if you think about dealers, how can they get more aggressive? Yeah. Well, yeah, those, one of my questions, like, what is actually the net effect here? Like when you look at this, like on a, on a per unit basis or like, I don't know, you look at like a dealership's bottom line, right? Like, what do you see? Like how, how much do you see this tool really move the needle when it comes to it being more efficient?
Well, when it's fully mature at my other, my dealership that I left at last year, it was it was well over $5 million. It was probably closer to $5 million. Why? And that's per year. Yes. Well, how many trainings were you taking there? 230 to 275 to 300 a month. So we didn't buy any first the auction for after 2019. Zero. So that alone, the difference between an auction purchase.
And what did you do? Like, did you start advertising to consumers, come sell me your car? Like, did you get really aggressive with that? Like, what was your, what was your strategy around that time? We changed our whole concept. We stopped advertising price and we started advertising the experience. And we started, which was actually really hard because it was simple, fast and easy. So when you're not simple, faster, easy, which I thought we were more when I started than we were, they all ended up my office, the consumers.
And they said that's false advertising because the demand was so overwhelming. It was, we had to hire a bunch of additional staff right at the beginning of COVID because so many people wanted that experience. And I had no idea that that demand was there. They would rather have that than $10,000 off or whatever rebate program you had, but they wanted you to do it. And you actually have to be transparent. You've got to just treat the customer like they deserved to be treated like a family member. And a lot of delicious associates aren't enabled to do that for consumers. And that's the one of the things that that I'm trying to fix with being here is helping dealers get over that hurdle.
Now, is this something that like do consumers have the ability to, you mentioned earlier, consumers can appraise the vehicles, just like dig into that for a second. Does that mean that I can just go online right now and do it myself? Do I have to be able to deal with shit? Like what really happens here behind the scenes as a consumer? If I want to, you know, like someone actually asked me this morning, they said, Hey, I have a 2018 X two. How should I sell it? Right. And it's like, OK, how should you sell it? Right. Like who's going to benefit from that car the most? Right. Because the dealer in the street, Joe Schmo might not need that car. Maybe car max once that six year old, you know, low mileage use vehicles. So it's actually not a, not a simple answer when a consumer asks you that. How are you solving that?
Part of the big part of our differentiation is the scale of the car's commerce platform. So the first thing that I would do is they get, they need to get on the cars.com hero page, you know, landing page, home page. And on the right hand side, it will save value your trade. That's going to be a guaranteed offer from us. And we'll forward that on to a local dealer to honor that. That we're going to follow up with the customer. They're going to tell us if they're satisfied or not. Because obviously we want them to be satisfied, but we're sending it to one dealer so that they have the opportunity to provide that experience. We don't want a bunch of dealers calling the client and giving them a less than desirable experience if the first dealer can solve that problem for them.
Correct. That's the ideal state, right? But that we determine who the best end user is because internally dealers will bid if it's a BMW dealer and they're a better user on BMWs. We have an internal tool that allows them to offer more, which will be the price that's displayed to route it to them. So if it's a Mercedes Benz dealer, maybe they're stronger on that. Or what we also see is a lot of independent dealers, especially these large independent dealers, in many cases, as soon as a luxury Jaguar Land Rover go out of warranty, the independent becomes, in many cases, the strongest, best-end user. Because they obviously they have different strategies on how they're going to sell it.
But the other thing that I see is the reconditioning. And I think that's an epidemic across the country. That's something the Carmacs does really well and for all the large publics. But the average variance of what we see, what's estimated in terms of reconditioning. So I'm talking tires, talking bumper scratches, second keys, things like that. The dealers that are really good and invite the client in. And they said, yes, as long as it's just the way you said it is, which is what they should do, then we're going to honor it. And then when they get in, they're going to verify it. But a lot of dealers aren't confident in their process. And this is a huge problem for consumers and for dealers that needs to be fixed. They need to, when the client arrives, they need to do what we call an active appraisal. Active appraisal means walking out with the client, with their vehicle, taking the pictures, checking, verifying that everything is the way that they said it was, which in most cases it is. And then going in and having a logical discussion, if there is a variance on that, after you scan it with the OBD, sometimes the codes were cleared prior to arrive or things like that. But that's an outlier. It's not the norm, but we treat the industry treats consumers like they're the exception and don't give them the benefit of the doubt.
And that difference is $1,800. So dealership has poor processes or they don't feel confident. They're either their associates are going to go out there or the manager has time to do it. They hold back and they get risk averse. So that's the competitive advantage of a dealership that has all these pieces, the technology, the process, the people. When you have those three things in line, you can be $1,800 more aggressive than to deal it on the street without costing yourself a dollar or profit. Yeah, because you're, again, because you have better data.
Do you think it, do you think it matters where the car and like cars come from? I mean, again, I'm trying to think of like all the nuances and, you know, having purchased lots of cars, you know, if the vehicles from a certain region, a certain state, you're just going to value that differently. And do you think that, do you think that matters here?
Oh, 100% it matters. We've got an, we've got an interim ranking system for that.
哦,百分之百重要。我们有一个临时排名系统来处理这个问题。
Oh, so you, you take down the consideration.
哦,所以你,你把这个考虑给摒除了。
Yeah. And you're in the business, the car in Naples, Florida versus the car in New York City or Chicago or Detroit or Minneapolis, you know, markets like that, where there's a lot more traffic congestion, there's salt on the roads.
Yeah, that's exactly what I'm thinking right now. Which car is going to get picked first? Always going to pass on that one. God, I love me and off leads from, from New York with no, no, no, no service records. Tires are worn out, but it only has 10,000 miles. How much, how much of the same car is running down the lane and one of them's from, you know, Sarasota, Florida and one of them's from Chicago. How much more do you think you see them pay for that same car? If it's a Camry, the 20,000.
I mean, I think, I think that's the crazy and efficient part about the use car business in to a certain extent, right? That you have this, this asymmetric information where, you know, like what you said, you're trying to bring that to the masses. But the reality is lots of people still don't have this information. Naturally, you're disadvantaged because you don't know. Well, you don't have that exact perfect info on that specific vehicle. And so you may end up underpaying or you made up over, or if you underpay, you're not going to get it. If you overpay, you just lost your pants.
You know, one of the biggest challenges that we deal with around this is skepticism that our data can reveal these issues, which is just fact. But it's, it's a lot for people to some, some people that have done it a certain way for a long time to wrap the mind around. Yeah, it doesn't surprise me though. Like if you told me like what would be like, you know, top skepticism that something actually works, I think that's, you know, I think that's valid actually. What do you think?
Oh, it's 100%. We see it, you know, consumers want, uh, or dealers want better quality leads from consumers is what they're asking for right now. But what they don't realize is that this process is what creates a better quality lead. So the more transparent you are in making digital trust with a consumer so that they start trusting you and they give you more information and they start sharing more things with you because it's a law of reciprocity. I gave you something and I told you this, no obligation, no big deal. They feel obligated to trust. They trust you. And that's a big piece of the, though these leads aren't good. Well, the leads aren't good until you nurture them, give them information. They give you more, pulls them further down the purchase funnel and, but they got to think of leap of faith first.
Yeah. What's your hope? Like, what's your hope for the use car business? I mean, what do you think this just, how does, how is our industry going to evolve here over the next couple of years given just all the craziness of the last couple of years to run up to run down now in valuations? How do you see things playing out here over the next couple of years?
Well, I worry for the dealers that aren't evolving and adapting because I feel like I'm watching a train coming down the tracks and wait, still way out there or a tidal wave. And I'm like on the beach going, hey, you need to think about this. And everybody's like, kind of like that movie, don't look up. But they don't realize this is that, you know, we, we, we have all the major groups, as clients of ours. So I get to see what they're doing and I get to see what others are doing. And I see that the more well capitalized the groups are, they're, they're hiring data scientists and they're looking at that and they're looking at AI solutions. They're going to power a lot of these things. As are we, and we already had a lot of that stuff that's, you know, in the background working, uh, creative that we're going to be talking about in any day with a few things about that. But if, if dealers aren't thinking about that and they're just living in the moment and not looking around the corner, that's what I was doing, the metaverse. I want to do that. And then what happens after that? And what's the next, the next thing that I should be looking out for so that somebody else doesn't grab my market share and somebody else doesn't gobble me up because I don't want that to happen. They have to be more strategic or they have to rely on us with the technology so that we can give them the data because we have it and give them, enable them. They also have to be able to enable and empower their employees. But that's a huge epidemic.
There's dealers that I see that many dealers, uh, you know, single point of contact, the salesperson takes it all the way through, that defies every religion thing that I grew up with, but I see them join a wild success with it. We had 53 people appraising cars and I see some groups that have more than that. We have one of the top four groups that's going to go into the process of allowing every salesperson to praise their own cars because you need that bandwidth in order to, in order to please the customer and we can onboard somebody in three days versus three years. Do you think that's the, I was going to say future, but frankly, do you think that's the present where, you know, a customer can expect to come into a dealership and that one single point of contact can just take them from beginning to end very, very smoothly regardless of the fact that, you know, there's a couple other dependencies in between or, you know, an F&I manager or whatnot. But do you think that's the really how automotive retail is evolving?
Oh, I think it's already been there. I think that I was one of them. I was holding off because there's so much profit in that finance model, but now I see this other model can be just as profitable, if not more. And I see dealers doing it. I'm open minded. I'm, I'm objective. I think it's maybe it's been there in theory, but the reality is like you just mentioned about, you know, all these dealers holding on to this inventory bubble, right? All right. Yeah. Everyone says, Oh, I saw my cars at 60 days. Well, you don't.
I think of this on the same token. Like everyone says, you know, Oh, you know, we have great salespeople this and that. But at the end of the day, you posted about the start of the day or today and, you know, people are still spending hours of the dealership. Why is that happening? Well, because different people need to contribute to different deals and things just take more time, right? He, this person is busy. That person is busy. So, you know, maybe some of the big groups or, you know, maybe even some of the smaller groups have implemented this kind of, you know, one person, you know, front or start to finish. But the reality is, I think it's a similar thing where there's still so much inefficiency when it comes to an opportunity when it comes to, you know, bringing that customer in a store and actually getting a deal done.
I think it's like gambling. Because, you know, every I talked to, when I come back from Vegas, I never talked to anybody who lost a lot of money. You know, but the public is so big. Except that one friend, except that one friend, I like loves bragging about losing money. Right. And everything else like you or everything else is going wrong. But the interesting thing is that's how many use car managers look at the that's a good analogy. Yeah, it's a good analogy for their appraisal.
So like, well, hold on a second. There's that one time. So we're not doing that because on the last EV, we appraised two years ago. We don't take in Teslas anymore because remember that one, we lost a grand dog. So hit them all 10 grand light because you never know what's going to happen. And, you know, think about like Amazon or Shopify. If they did that, well, you know, what if 3% of these people return the items and they're not satisfied? Well, bake it into your process and understand that there's a there's a loss ratio like any business on earth. They have this is going to be some sort of loss ratio. But it's interesting to me. And I was there that car dealers don't factor that in. They don't they expect zero mistakes whatsoever. When there's that many inefficiencies at the beginning of the appraisal process that can clearly be eliminated and they choose not to. Well, I said my friend.
Well said, if anyone wants to learn more about Accutrade or if anyone wants to get in touch with you, can you just give us? Tell us where they can go. Absolutely. You can obviously go to the Carves Commerce website. I've got a YouTube page with all things about vehicle acquisition. It's just YouTube backslash Brian Kramer or my LinkedIn page, which is which is the same. So plug them all. Not to help anybody with anything vehicle acquisition. We're just trying to move the industry forward and help dealers become more relevant, specifically service drive acquisition or anything virtual with vehicle acquisition.
I love to see it. Yeah, you've been very active and social. So I think it's a, you know, it's good. It's definitely. You're watching your moves. I'm actually learning a lot studying how you're engaging. Yeah, it's it's definitely, you know, people are like, oh, it's a full-time job. Like it's more than a full-time job. Because you want to do it well. If you want to keep up with you for a few days on Twitter and I'm like, no, I'm not. Yeah, it's it's definitely all consuming, but I like it. I have I have fun with it. So Brian, thanks so much for coming on, man. This was awesome. Thank you. 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.