Further Investment in Fixed Ops, EV Service Training Safety, Pop-ups Here To Stay

October 17, 2022
Let us be the first to welcome you into a fresh Fall week as we survey what Dealers are doing across the country by investing in fixed ops. We also talk about a cogent warning for EV service safety, as well as the pop-up retail trend that will be sticking around well past the holidays.
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  • As new car supply continues to struggle and the used market is riding the pricing roller coaster, many Dealers continue to invest in fixed ops to take hold of the opportunity to gain market share and to build resiliency into their future profit model
  • Many dealers like Brian Godfrey of Pat Milliken Ford in a Detroit suburb has immediate need for multiple techs and additional bay space as sales continue to rise by double digits
  • Can only handle existing customers
  • Customer service and retention remain the focus of keen operators as they know data shows over 70% of customers choose non-dealership repair shops once warranties expire
  • Shortage of new cars will exacerbate the issue over the next 36 months
  • Publics and privates are seeing sales growth and adding capacity
  • Group 1 is up 16% YoY through through the first half
  • #1 Cochran Automotive in the Greater Pittsburgh Area is adding 27k sq ft to expand wholesale parts business
  • Adam Simms, owner of Price Simms in the San Fran Bay Area built a commercial fleet center that is seeing continued growth.  "I'm very bullish on the small commercial fleet business," Simms adds "can't invest enough money" in service and parts

The new EV service game is about training, procedure, critical thinking, and safety as a new battery (pun intended) of testing systems can solve electrical problems and avoid the pinnacle issue that will stop an EV, ‘energetic failure’.

  • Different than ice procedures where there are few ways to get in fast trouble while diagnosing or repairing a vehicle, EVs require extra caution due to extreme voltage at multiple points
  • PPE, ABC fire extinguishers guard against shock and small fires, but ignoring thoughtful procedure can lead to electrocution the ominous ‘thermal runway’
  • Thermal runaway is when a battery cell short circuits and heats up leading to a chemical reaction that is near impossible to stop like in this video of parked electric busses
  • The encasement of battery cells in several layers of aluminum make it difficult to direct suppression at the seat of the fire
  • Physical damage is one of the primary causes while overcharging can also be an issue leading us back to proper equipment, procedure, and critical thinking being essential to continue servicing EVs safely

  • In an oxymoronic kind of way, Pop-up retail stores are becoming fixtures of the post pandemic retail space with many retail experts seeing the trend as a component of successful retailers in the future
  • Opening for only a few months allows r

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Kyle Mountsier, Paul Daly

Paul Daly  00:00

Hi yo, it feels so long since we've had a normal day in the office. This show is actually shaping up to be a really, really great one. It's great to talk to you Monday morning to talk fixed ups, EVS pop ups, all the things on a Monday, beautiful, beautiful all season.

Kyle Mountsier  00:42

Like you got the volume up on that today. I don't know. I gotta push it.

Paul Daly  00:46

Push it on Monday. Tonight, we got to wake up. We hope you are gearing up for an amazing Monday. Amazing week. We still got three Saturdays left. Do we really owe three Saturdays left?

Kyle Mountsier  01:00

Why is that? Paul? Why is it five?

Paul Daly  01:02

Saturday? Monday? Yeah, it is. I don't I don't think anyone noticed that. On the sales side. Especially no one knew how to service departments view of five Saturday month. It really depends. They're great.

Kyle Mountsier  01:13

They're good. Okay. Yeah. I mean, that's how that's all bunch of especially like I've seen so, you know, back back when I started in the car business. And this isn't that's not that long ago, most service departments were open to like one or two on Saturday. Yeah. And so many more are opening to four or five, even six, like regular workday hours, just because there's so much out there to be had from a service perspective. And like people need to get their car serviced on Saturday, because the rest of the week is a little weird. You know,

Paul Daly  01:40

my first job in automotive was as a service advisor, but that was 20 years ago. It's like weird to think about that was 20 years ago. I was just say feels. I mean, it feels like really recent, but we had limited hours on Saturday. And it was always like, it was always for me like when I had to work a Saturday they had this like rotating shift. And it was always tough. Because like you had like very limited support. Right? And if it was anything other than

Kyle Mountsier  02:01

based Hearts is hard. It's and it's not just hard because like your parts department is sometimes unlimited. It's other parts other parts departments, right, like your third party event, you know, all that type of stuff. So I get it's a different world though.

Paul Daly  02:12

We're 20 years later, it's a different world, buddy. Everybody's

Kyle Mountsier  02:15

pumped about a five Saturday month, no holidays, and and it's just ready to go.

Paul Daly  02:20

Yeah, if we went down the list of things that didn't exist 20 years ago, like YouTube. All kinds of stuff like cell phones that had anything more than text messaging. But we got some stuff to talk about today got a lot of stuff going on. We're just gonna announcements wise, we're gonna be doing a creative track at the modern retail conference, go to a cio.com forward slash MRC and see what we're up to there. It's very, very special. It's gonna be a very, very special time. Also, we got some more podcasts coming out that are you know, triggering some more we get emails when we hit like benchmarks like this many downloads, 1500 downloads, et cetera, et cetera. So, check out the auto collabs episodes dropping this today. David Meltzer auto con Soto con session. So

Kyle Mountsier  02:59

two con sessions. It's a 15 minute fire session, he dropped some stuff about automotive that was really insightful. So just like if you're thinking, hey, is automotive being paid attention to by people outside of our industry? Just listen, take a listen. It's like 15 minute podcast, you're gonna want to check it

Paul Daly  03:15

out. Very cool. Very cool. All right. Well, we got three stories to talk about today, we're gonna run this like new track, like, Hey, we're gonna try to keep the pod tight. Because we know we get a little long and we had a lot of things to talk about. So we're gonna try to keep it tight knowing that you have things to do. You want to hear the news? Want to hear a little commentary? Maybe laugh, maybe throw something at the radio? I don't know. Do you listen to it on the radio anymore? throw something at the radio. I just imagined a family their coffee in their car. They're like dealers calling the next generation of car dealers just sitting Indian style around the radio listening to the automotive troublemaker. That's kind of what I imagined in my life. And then we'll have an oval teen ad and we'll be ready for the holidays. All right, here we go. First story. As new car supply continues to struggle in the US and the US market is riding the pricing roller coaster, many dealers continue to invest in fixed operations to take hold of the opportunity to gain market share and build resiliency into their future profit model. Many dealers like Brian Godfrey of pet Millican, Ford and Detroit suburb has immediate need for multiple texts. Sound familiar? I wish I had four more texts.

Kyle Mountsier  04:18

I wish I had six more bays, right? Because they're saying if we could do that, then we can actually expand the business. But right now we're doing everything we can to just service our existing customer base. And that is a common thread we got to it is I would say that more often than not I talked to service managers or general managers or owners that are saying there they are still booked 345 days even weeks out. So speak of the five just hired a month and people open and Saturdays longer like this is a reality for so many. There are more conversations now talking about like 24 hour open days or two shifts and and yeah, it's hard to handle that. And well and it's because I think that the OEMs in like the early 2000 10s really saw this as like the way to succeed from an OEM perspective in the data and in the dealership side, and started focusing more on retention and focusing more on customer satisfaction in the service department focusing more on things like video and the technologies like, you know, so many more people putting Hunter machines or UVI in the service base to create a better service experience. You know, the pickup and delivery that started in, you know, you just all these opportunities, where the majority of the industry was focused on variable for so long, it shifted its focus toward fixed and we had to, especially during the pandemic time, and so that has continued like those service managers didn't go over and revert to that not that none of those tactics so, and none of those communication patterns, so it's just a reality of where we're at.

Paul Daly  05:50

And FTD said, you said the service experience talking about the hunter machines, and I just My mind just went for a second on like, what would it what would like a seamless experience like driving through and having like a UVI or a hunter, and not having to staff up on the service right inside? Majan? If you drove through, and on your phone, it was like, Hey, here's what we found. Do you want this yes or no? Do you want this? Yes or no? Do you want to talk to somebody about this? Yes or No, I don't know. We're just either way. But I actually go, that's what happens to us, right? There

Kyle Mountsier  06:17

are people there are things doing that. Like I know that the x time app has like a check in pattern, and it has a couple little quests while you're in there. While you're in there. Now, it doesn't relate right now, we'll say any of these technologies as you drive through. But like, I mean, even myself, as a dealership employee, I would pull up to the service lane and walk away with my keys in the car and not even say hi to the advisor because like I could tell they were doing something I needed to get to a meeting, I would book book book for for questions here

Paul Daly  06:47

on trade. They're done. I know it's like, it's like the way we like to check in hotels, I don't want to see anybody. I don't want to see anybody at the front desk.

Kyle Mountsier  06:56

The last two hotels that I know

Paul Daly  06:57

we won't go there, we won't go there. Man. Like I can't believe this beautiful hotel hasn't figured this out yet. So and also an interesting stat based on service. And this kind of parlays into the next point of this article is that 70% of consumers wants their warranty is up on their new car, they choose a non dealership solution. So 70% So everybody knows like, if you're going to keep those customers, you really have to give them a reason to stay. Because right now only 30% of them are staying at the dealership and 70% are obviously pursuing either a more convenient experience or a perceived cheaper experience. We don't we look at the numbers actually doing business at a dealership isn't more expensive when you really start to compare things out and broaden it out. Might the perception of savings, perception of convenience, and sometimes real convenience. A lot of people are also concerned that the shortage of new cars right now in 24 to 36 months is going to translate into a shortage of warranty work. And you know, you put those two things together, there aren't a lot of new cars. And then 36 months from now, most of the people are going to transition out of a dealership service experience. There are reasons to be alarmed. So but so far, Publix and privates are both seeing sales growth and adding capacity as much as they can. Group one is up 16% in service in parts year over year through the first half. Number one Cochran Automotive Group. It's in the Greater Pittsburgh area. They're adding a 27,000 square foot facility to grow their wholesale parts business. So right here's them going deeper into the ecosystem saying how can we get get market share even in the wholesale side, and also Adam Sims, the owner of price Sims, in the San Francisco Bay Area, luxury group, great building, commercial fleet center, that is seeing continued growth. Adam sim says I'm very bullish on small commercial fleet business, I can't invest enough money in servicing parts right now. So

Kyle Mountsier  08:49

if I'm an owner, operator, if I'm a dealer, I am spending the lion's share of my focus on both people and process on fixed ops right now. And not on sales. Like I'm not looking at Dr platforms, or sales processes or anything like that. I'm sharing spending the lion's share of my time and resources, especially on people and process on fixed apps.

Paul Daly  09:11

It's funny, I'm feeling like I'm in a time machine because like five, six years ago, right, this was like all the conversation, fixed ops, fixed ops, fixed ops, fixed rate. And what happens it's like, well, because it's little bigger

Kyle Mountsier  09:22

swindells. When you have bloat inventory, and you are reducing prices, in order, no money, you're not making any money. So you're focused on fixed ops because the money's all green, right? Yep. It's all green. It's,

Paul Daly  09:34

that's for sure. I like that. I like that. What are we going to do from here? Let's talk about more fixed ops. It's fixed ops Monday speaking.

Kyle Mountsier  09:44

I love segway. Fix UPS Friday.

Paul Daly  09:49

Yes. We don't get to rhyme. It's, it's pros, man. It's pro supposed to be poetry. This story actually disturbed me a little when I saw some of the visuals but then Eevee service game is about training procedure critical thinking and we would say safety as a new battery of testing systems, pun intended, can solve electrical problems and avoid the pinnacle issue that will stop an Eevee called it. I love this energetic failure. I've experienced some energetic failures. But energetic failure. This is a great Ward's automotive article kind of breaking down the Evie service complexities, especially when it comes to how do you basically diagnose and stay safe. So different than ice procedures, there are a few ways to get in fast trouble while diagnosing or repairing a vehicle EVs require extra caution due to a little thing called extreme voltage at multiple points. Well,

Kyle Mountsier  10:43

it's interesting because like when you talk about ICER internal combustion type of procedures, you talk about wearing gloves, wearing goggles, and having those fancy little water machines in case you get anything in your eyes. Flush station, you're kind of good, you got a fire extinguisher to around,

Paul Daly  11:00

but stay away from the gas tank. Right? Right. Not the reality.

Kyle Mountsier  11:03

When you look at the these new procedures, I mean OEMs are spending this is where, you know, we've talked about like the independence having access to Eevee repair technologies like some of these OEM manufacturers, just the tools alone are costing hundreds of 1000s of dollars for shops, to own the tools to be able to work on these cars, let alone all the protective gear you know, all of the rubber, you know, different tools that just a mechanic needs to be able to work on some of like the easiest parts of the vehicle, let alone the hard parts, which is the bad battery technology or any anything collected connected to electrical chain, like you think about the level of expertise, like, like relate this real quick the level of expertise that elect electrical engineer or electrician has to have to be able to be certified a certified electrician and to go in and to work on your home or commercial property or anything like that. The an auto technician now has to have that level of expertise with electric electricity because of the battery.

Paul Daly  12:05

And let me you know, if you don't know, I know enough about electric to know that the working out outlets in your home, or even working on two to 40 like the main panel in your home isn't even close to the amount of voltage flowing through a direct current battery. Right. And if not ever forgot to flip off the switch and accidentally tag yourself on just take like 120 It's like pow Oh,

Kyle Mountsier  12:28

that was a thing.

Paul Daly  12:29

Just like that times 1000. So, you know, like special fire extinguishers, you know, procedures, all the things you said. But there is something. So what it was called energetic failure, right? So energetic failure is basically when there's a failure for energy to transfer so that the vehicle can power on. And this can happen in a lot of ways it can happen at the charging port, it can happen, because of the software thing it can happen because the actual battery terminal like there's some safety cut offs that aren't worked, or it can be because there's a major issue due to like a collision, or I didn't know this, but the car being towed improperly. So if you think about it when an Eevee is towed, right, when those wheels are spinning, right, there's like attached to generators, right? They're moving current, right? And so there's actually procedure to tow these vehicles that could actually cause this so that could here's the ominous worst case scenario, we have a video for you, we're gonna we're gonna show you this in a second. Don't play, don't play. Okay, so the ominous term is thermal runaway. And it's exactly what you think it's when a battery cell short circuits and heats up leading to a chemical reaction that is just impossible or near impossible to stop. Because if you think about it, the batteries are encased in multiple layers of metal, you can't get the fight or the suppression chemical to the source. So the chemical reaction keeps happening and just like you would think of like a runaway. So we're going to play a clip right now and then for those of you

Kyle Mountsier  13:52

that water worked on an electrical fire,

Paul Daly  13:54

oh my gosh, like like never. So go ahead Isaac roll the clip, and then we'll explain it for those listening. Oh, so we're looking at his in line of five full size Evie buses, one show some smoke and immediately burst into flames. Then the next one, and then the next one. And then the next one every time I don't know how I don't know how to get to the fifth bus and then a little hold dumpster fire. But

Kyle Mountsier  14:15

these buses are sitting 27 and 631 for buses completely engulfed in flames due to an explosion on the first one. And then the really ironic part is that there's a couple of dumpsters right next to it

Paul Daly  14:29

that are also on fire. Yeah. Which probably like you were saying earlier got put out in like 30 seconds the dumpster fires out and the buses so like not to be too ominous, but like physical damage overcharging right improper equipment and then back to improper procedure in the service department can lead to this. So again, this is something we haven't heard talked about a lot, which is why we're talking about it on the show today. It's not all roses and you know, you know environmental melodies going and here's the thing So what,

Kyle Mountsier  15:00

what do we do from a service department, educate your customers, educate them on why servicing with you what you've done to prepare for their evey vehicle, right to make sure that they are taken care of. And then from the sales department, this is a proof case as to why people should return to service why people should trust us as retail retailers and service departments, like communicate this because this is a large task that like if you're a salesperson, or you're a service advisor, that you're operator that your GM that your service that your service manager has taken on to ensure that your shop can handle these types of, you know, specific issues and service. And like, that's just an education piece that we can pass on to the customers about what it takes to care for these vehicles.

Paul Daly  15:45

And I know we'll figure it out. I think there was probably a little bit of fear when people like first started working on gasoline engines. And we're like, the last time I worked on a horse, it never exploded, right? Where's the horse, I knew what the horse was going to do. So again, just another iteration of things we're going to figure out speaking of figuring things out, segue in an oxymoronic kind of way, pop up retail stores are becoming fixtures of the post pandemic retail space, with many retail experts seeing their trend as a component of a successful retailer in the future. So this is the kind of story that shows up opens for a few months, right? It features a brand, a product, whatever, and then they're gone. So opening for only a few months allows them to make a splash, build brand, build interest without long term commitments, and still allowing the landlord to get some income from the space. But also have it available for a long term tenant within a short period of time. Like

Kyle Mountsier  16:44

I like Yeah, it's like, it's like everyone just wants to be a Halloween store. No, I

Paul Daly  16:49

don't think anyone wants to be a Halloween store. No, when I look at those look, because no one expects a real great experience from a Halloween store well, right boxes of costumes, right? The old brandings probably still, this

Kyle Mountsier  17:01

is what I love about these pop up stops because actually, I mean, this has been happening for the last like five or six years, this is pretty popular in the two major Nashville Nashville malls in particular is like you see these, this kind of like rotation of the stores if you go in often enough, and i we i The dealership I used to work at was right next to them all. So I'd like take walks in the winter in there. And what I love about them is that they are and the article kind of pointed to this that they they actually they really are focused on whatever that seasonality is, you know whether it's like a campaign or a type of clothing or something like that. And so they they actually build the entire retail experience so you think about like a retailer has to has to build the experience around a generalized retail, you know, opportunity and then like kind of create point of sale materials in order to to cater to that season. But they just build the entire retail experience around that season. And so it feels really good as a customer so you you're you're seeing and learning about the product in a space that makes sense for what you're purchasing. So I love I love the environment of it because it kind of has a lot of that like entrepreneurial spirit within a legacy. Oh, yes.

Paul Daly  18:15

You know, like technologies like 5g You know cloud based warehousing POS all that inventory management make it so much more. So much easier to do these days. But I think you keyed on the right thing. Right? You said I love the experience of it. Because experiences create feelings. Feelings are how people actually connect to a brand. I happen to think this is a major opportunity for auto dealers, especially in an Eevee world when the other talks around Evie, Evie pop up in the local mall. I think you have the opportunity to create a super experience educate people on EVs get leads generated, especially brands especially in

Kyle Mountsier  18:55

this like next two and a half months when people are flooding into malls. They're where

Paul Daly  18:59

the people are. They're there. They're there. So I don't know. We've gone from fixed ops, to evey battery safety to retail marketing brand Best Practices that's just Monday we have a lot to do you have a lot to do but go out there we still have three Saturdays less if you didn't remember that from the beginning.

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