In-Showroom Interview with Patrick Abad, GM of Beaver Toyota, Car Repos, Subscription Seats

‍SPEAKERS

Kyle Mountsier, Paul Daly, Patrick Abad

Paul Daly  00:22

Hey, it is Wednesday, July 13, Kyle and I were just comparing the read on our fitness rings because we got barely any sleep last night. We spent the day in Atlanta, but we brought you all something home from the trip. We're not the kind of people that go away and come back and don't bring gifts,

Kyle Mountsier  00:41

no gifts, right?

Paul Daly  00:44

One of the fun part when when you're a parent, you're bringing little gifts home when you travel. So yeah, we were in Atlanta yesterday. If you go back to our social media feed, you'll see some of that. Got to spend time with Dan, one of our favorite people. Patrick Abad at Beaver toilet and just the space is inspiring. We'll talk about that in a second. We have an interview with Patrick that we're gonna share with you in just a few minutes. Just saw the inflation let's start on an up note. Just saw the inflation numbers come out. 9.1% Which, unfortunately means we're gonna have to raise the price of this podcast. Yeah, thanks me. Have we been holding off?

Kyle Mountsier  01:15

Yeah, I think we're gonna go 9.1 9.2% Just to stay ahead of inflation. So for all of you, you're responsible. Yeah.

Paul Daly  01:23

Be responsible. Oh, man. Well, so we're back in the saddle. We had like just literally like, single digit sleeps last night. Well, we always have single digits for like two and three hours of sleep because we just got home late and then the kids and then the wake it up and slap in the face and all that thing. Parenting Life is good. Don't let us detract from it. Because without warning, very rewarding. The way that my kids ran at me this morning, you know, after after having been gone a day like that's worth all of the Miss sleep. That I guess. Ah, that big hug. It's

Kyle Mountsier  01:55

a little bit longer. Right. So yeah, it's character. It's builds character

Paul Daly  01:59

here. We are. Just want to give a little update on ASOTU. Obviously, tickets are for sale ASOTUCON.com. Yesterday, Patrick was like, Hey, I had somebody call me out of nowhere. I haven't talked to forever, they have this big position somewhere. And they were like, Hey, is this a soda content great because it looks really good. I'm buying a bunch of tickets we're going we've never heard of the person we didn't even know they were in our community. But somehow they saw the soda con fire and they're coming to so if that's you, and you're listening to this this morning, we can't wait to meet you. But people were buying tickets, you really should get your tickets sooner than later. Because once we announced all the speakers this week, and all the other fanfare, they're gonna go much, much, much faster.

Kyle Mountsier  02:38

Yeah, we realize we realized there's probably some people even listening this podcast that are just like, well, what are we actually going to be doing there? What's the actual timeline? We can say it with words on a podcast, but we're gonna get all of that stuff up to the website, content speakers, the whole nine yards over the next five to six days. So you'll have a really clear picture of like, what is the content going to look like who's going to be speaking who's going to be involved in what people have already committed to come? So that'd be really good. And speaking of people that have committed to come that time. We are really excited to have Dave Meltzer yes, many of you may have seen on clubhouse or LinkedIn or even at our year end extravaganza last year or at our Vegas event and just a really high level business thought leader understands the market environment understands a retail mindset, you know, realism, content, the whole nine yards, right? And, and so actually, Paul, you're gonna be on his LinkedIn live today. Just kind of talking about the event and what we're doing with this.

Paul Daly  03:46

Yeah, it's called Office Hours office hours on LinkedIn live at 1115. It's at David Meltzer, Emil Tze. Our hope you join us we're gonna pull Kyle up there, I'm pretty sure we're gonna we're gonna have a good time talking about the his office shot. Our show, by the way is next level, you should see some of the guests he has on that show a little bit higher than our pay grade, which is why we're on Instagram Live, not a go. But I will take we'll take it. We want to hit a couple new stories quick and get into the interview with Patrick because whenever we can have you hear from a dealer we know that that's kind of the most beneficial thing for all of us. And his his perspective is one that I think we need to hear more often. But first, let's talk about a couple stories we may have missed because we were kind of on the run yesterday. You know, what's this thing about BMW offering a seat subscription for heated seats? So BMW

Kyle Mountsier  04:35

i was looking for the button. This is what happened to me You get three hours of sleep we're like it's right there.

Paul Daly  04:43

I promise there's been no alcohol involved in the production to this podcast. A little bit slower as Ward

Kyle Mountsier  04:50

Yeah, guy saw all the comments 18 bucks a month and they'll unlock a you know, there's gonna be some hackers out there. Just review hot wire that sucker right? hot wire basically hot wire in the software side of this system, but 18 bucks a month 180 bucks a year or $300 for three years $415 For the lifetime access to keep

Paul Daly  05:14

your bum warm, heated seat.

Kyle Mountsier  05:16

Keep your butt

Paul Daly  05:17

warm in the wintertime so some places don't care if you're in the Northeast like look I used to be like heated seats but living in the Northeast in the wintertime now it's like the heated seats are pretty awesome. So you know this is kind of a Liberty ceiling no look I thought it I thought it was ridiculous for the remote start in my Kia that was ridiculous. The heated seats are next level like talking about feeling like you're gonna get nickeled and dimed. I think it just makes a terrible customer experience. Think feeling like now

Kyle Mountsier  05:44

you can buy a full set of aftermarket heated seats for your front two seats, have them installed and everything for 415 bucks, aftermarket. And a lot of times they go up the back right? Like

Paul Daly  05:58

I know maybe they're gonna maybe they're gonna try to like value like add value into some packages and include the subscription right? It's like a giveaway. The takeaway it was the telling it like we see it in our email so if you don't have the email go to a soda.com get on the email list because we pump this stuff out every day. And here's here's what the Telling It Like It Is it building cars with features that may never be even be turned on during a chip shortage seems like a really strange plan. Right? Let's put chips in the cars for features that may not even ever turn on. And we'll just make less cars.

Kyle Mountsier  06:32

Yeah, exactly. Yeah, I know we're running out of these chips, but we're gonna put them in in case someone wants to rent to sit there. They can

Paul Daly  06:40

rent it on a monthly basis. All right, we got to move on so we get the Patrick's interview. Another one this is an article in Barron's. So Barron's is cite a source that will probably start looking at more often, we don't say too often about Barron's very high level economic view, taking a broad look so when they focus on automotive, we lean in and pay a little bit of attention. So they talk about this rising rate very quick rising rate of repossessions happening and that being an indicator of what might be to come as far as people having gotten in over their head in their payments. Lucky Lopez is a car dealer has been in the business for 20 years. First of all, the name lucky low a lot of car dealer names right? His parents were Car Guys, you name your kid lucky with your parents, your parents for car peeps. So he goes to auctions and bids on repossessed cars, and he noticed some common characteristics on defaulted loans. And that's most of the recently repossessed cars originated in 2020 and 2021, when typically speaking, repos would have a whole range of loan origination dates. And so really this is indicative of people having more money and what does it say? It says part of the problem is consumers income are temporarily high as the pandemic brought about debt forbearance, pandemic stimulus checks, PPP the whole thing, and I guess people, you know, just kind of assume the gravy train wasn't going to end. And and they just bought cars they could not afford. Yeah,

Kyle Mountsier  08:06

I, you know, I approach an article like this was the some hesitancy because as an you'll, you'll hear this in our in our interview with Patrick like, there are some people that the gravy train ain't slowing down, you know. So I approach it with some hesitancy but we've been talking about affordability and the reality is is that the last two years has been a lesson in how to approach affordability and whether or not we can continue at the pace that we have been continuing in the retail market. And so early indicators like this are definitely things to be aware of, not just for, you know, what consumers are doing with past purchases, but what consumers are doing with current purchases like,

Paul Daly  08:47

right, yes, yeah. One final note from the article. Pamela. Pamela, phooey. The F ohe. Why will you got

Kyle Mountsier  08:55

lucky Lopez and Pamela

Paul Daly  08:58

Cooley Law professor at Cardozo School of Law at the Shiva university that is a very important sounding law University have never heard of it before. She warned in 2021 of an auto loan crisis. She said then that they were heading into the pandemic auto loans outstanding were at record levels already. And auto loan delinquencies were hitting new highs every quarter. And she said back then she thought the bubble was about to burst and then the pandemic hit and short circuited all that. So just a little another source that we don't usually talk about but car loan repossessions, kind of an early indicator of like, hey, maybe people are starting to have trouble paying these loans. Let's wrap that around into this conversation we had with Patrick because Patrick, we talked about, you know, the recession and we hear the talk all the time. It's in the news this morning. He's got a perspective on it that I think a lot of car people a lot of dealers and people in the industry are starting to adopt, you know, thanks to some people sneaking some levity into the situation like Jonathan smoke from Cox automotive saying well will will will will. It's it's very popular to talk about it. It's ever everywhere. But let's look at the situation for what it actually is and then be a little bit prepared. So here we go. We're gonna roll our interview with Patrick yesterday, and then we'll come up and we'll close you out with a little high five. We're gonna sleep for 10 minutes.

Kyle Mountsier  10:12

We are sitting here at Beaver Toyota coming Georgia, just north of Atlanta hanging out with Patrick Abad, good friend of ours, he's been so gracious to let us hang out with his store today and just see what his team is doing and hear from that. And you know, we were having this conversation earlier a little bit, and just kind of want to get a little bit more feedback from you. That obviously, there's a lot of talk about EVs and agency model and recession looming, and everything coming in from market forces. And really hearing that a lot of dealers maybe aren't exactly feeling that within their walls, either in their business, and, you know, there's some things that Publix are saying or OEMs are saying, and then what dealers are saying, and so what are you doing? Or what are you feeling you're hearing within your store, with that from like, outside looking in, but also what's happening on the ground level with you and others that are in your seat?

Patrick Abad  11:05

Well, I would say on the ground level, I think you got to control the mindset a little bit. We say it all the time, it's still ship, we have our bubble, let's protect it. And being aware of what's going on outside the bubble is important. But the mindset in the bubble is more important. And like we use an example, use cars is a perfect example. 30,000 Used cars are sold in Georgia every single month, do I really care if that goes down to 18? As long as I get my four or 500. Right? That's the mindset that you have to have. And, and you got to have obviously the policies, the procedures, the processes and the mindset to back that. But that is going to be our philosophy through this is like, it doesn't matter what happens outside here. It only matters what happens inside here. And I think if most dealers take that philosophy, they're going to be just fine.

Kyle Mountsier  11:47

Yeah, and what did I guess from because you're talking to customers every single day? What's the sentiment on, you know, engaging with your business on, you know, looking for cars, and, you know, shortage of inventory and prices and stuff like that? What's the real consumer sentiment from the ground level? Not the surveys, not the Gallup polls, anything like that? What how are communicating customers are working within your business,

Patrick Abad  12:09

truly, there hasn't been much of a shift other than the rate increases? I think that is the only one that we're really hearing the talk from the consumers aren't, is the rate increases, but at the end of the day, the majority of our customers finance, right 80% of them finance. So they care about what comes out of their pocket today. And what comes out every single month. That's it. So as long as you can control that, I think he I think you're aligning with where the customers are at.

Kyle Mountsier  12:33

That's awesome. You know, Paul, we talk a lot about just how, you know, you said the bubble inside and outside of that, that a general awareness of the market is really important for everybody. Right. But that controlling what you can control? And, you know, I think that that a lot of what we talk to dealers about right, is this what what are the controllables? What are the things that you can do right now to make sure that your business is sound and safe. And, you know, Brian Binstock and David's V Zakho, like, they're probably not the first ones to say it, but they say it a lot. Right, but the phrase is that, you know, fix the roof while the sun is shining. It's a beautiful day, actually here. So it's very nice over the right day to say that but you know, fixing the roof while the sun is shining, there's still a lot of sunlight in in the out there. And so continuing to fix the roof and make sure that processes and inventory and all those things that you were talking about our data is super important.

Paul Daly  13:30

Well, you know, there are a lot of things like one of the things we love is that we get to travel, we could see a lot of stores, we can see a lot of dealerships meet a lot of people, you by far have one of the most unique places in the retail automotive industry I've ever seen. And everyone says they have an awesome spot. But you have some features in this building that I have never seen anywhere else. And it's really driven by your mindset for consumer experience. Can you talk about some of the unique decisions you've made in this building? Including including the one you showed us a little bit earlier today? And why you think that is important for retail experience?

Patrick Abad  14:04

Well and the reality is it started with Mr. Mrs. Beavers vision for what they wanted to provide for the consumer and for their employees. Right. So this building is like it's not just built for consumers. A lot of people go so heavy on consumers but it's also built for employees right? We have a full full gym upstairs, right? Everything from peloton to free weights to machines that our employees can use. Anytime there's showers upstairs. There's a laundry room upstairs for our employees, you know, and then yes, and then you have the consumer side, right? We have two massage rooms that are for our consumers. Then we as you saw we took a conference room that was like not being used. It's like okay, we use this conference or once every couple of weeks. What can we do better? Very well. Let's put a hair salon that's obviously the

Paul Daly  14:44

next show. Yes.

Patrick Abad  14:47

Listen, you need a magician and artists for this right

Paul Daly  14:50

and you're bringing in someone who you're not you're not running, you're bringing in someone who knows how

Patrick Abad  14:54

to run. It's just like our restaurant. We have a full blown restaurant down here. That's an outside company that's in here and the same Anyone at the salon it'll be somebody's personal business within inside our business. Now the only the only caveat to being inside our businesses, they have to provide world class service and a world class product.

Paul Daly  15:10

So, and you're also one of the only auto dealers. I wonder if you're the only retail auto dealer that has a liquor license.

Kyle Mountsier  15:16

He's not he's not. I actually know of a isn't Alexis store. I believe that like, they, they have a liquor license, and they have people that intentionally go like postwork to do that. So I'm sorry, you're not the first. But I think you're gonna do it in a unique way where you're actually going to host things like watch parties, right?

Patrick Abad  15:42

When you look at outside, we have the firepit outside with a big TV. I mean, you're talking about college football games out there, you can come here, you can have a burger, which is we call a badass burger, right? You can have a badass burger, right? You can have a beer, you can watch a football game and you get your hair cut, right? And it's like, oh, it's a car dealership? What do you need all that crap for? What do I need an empty conference room for? Right? Right? You have this place? Yeah, that's cool. It's

Paul Daly  16:07

super. Okay. So a lot of people might look at that and say, Yeah, I don't think I can talk my dealer into putting in a salon or getting a liquor license. But all these decisions are kind of like driven by a similar philosophy. What would you say to dealers who maybe can't make that kind of investment or don't have the space? Or don't have the support to do that? How would you encourage them to take a step in the direction? Well,

Patrick Abad  16:28

I think it's really just staying connected to the community. I really do. I think, you know, if people can come here and you have the best burger in town, right? It What do you want to eat? I really want that burger a beaver. Right? Oh, and I can you know, you have a world class product upstairs when they when the salon opens. Have you need a haircut? Right? I really want to I gotta get get my hair cut. And we don't have beaver it staying connected. Kenny and you don't need a salon and you don't need a restaurant to do that. Right? You could do things like let your conference room be used by the police department so they can have their meetings there or the T principals in your local county do that too. We do do that too. Yes. But but those are things that keep you connected to the community that people just they they forget, like when you when you have a successful business, you have a responsibility to be good to the community, because it is that community, it makes you successful. And I think a lot of times and these things, I'm letting them use your conference room by eating breakfast, and they'll you'll look like a hero, you know? Yeah.

Paul Daly  17:23

All right, Kyle, you. You've paid a lot of attention to consumer experience. Because when you were in a dealership, you did what you could with what you had, right? What are some of the similarities that you see in the way Patrick approaches consumer experience is as you did when you were at Mazda?

Kyle Mountsier  17:39

Well, yeah, so and we didn't we didn't have that massive space. Mazda showrooms

Paul Daly  17:43

are a budget. Yep. You had to do a lot with a little well,

Kyle Mountsier  17:47

we were we were intentional about the coffee. Right? Like we made sure that Kyle was right. You

Paul Daly  17:54

were just making sure it was right for you. But we'll pretend it was for every No,

Kyle Mountsier  17:59

I mean, we put in a lot of intentionality around there was actually we took a team mentality to stocking everything right. So we there was a goal to never ever have to have a customer ask us like, hey, are there straws? Or Is there coffee or anything like that. So it was a team mentality to make sure that the water everything was stocked, so it was always a focus? The other thing that we did is we built the showrooms, with a very community atmosphere in mind. And we worked with Mazda actually to do this. And it wasn't actually a ton that I did. But I know that my, that the leadership that was in our stores working with the architects was really about how do we create an energy in the store. So we knew that, you know, if there was laughter happening, so we had open showrooms with open sales towers, and, and there, it was something that actually our customers said a lot was like I came in and it just seemed like everyone was being friendly, and everyone was laughing together. And there was just something about the environment. And so we actually, we were intentional about how do we create that? How do we create this kind of like, every touchpoint has an energy about it. And so I think that that's something that people can really do is, is how do you you know, remove the barriers, you know, make sure that there's not you know, things that you can't see over places you can't go so that there is always an energy about the retail environment. The more you can do that then then I think what you do is you you create the opportunity for people to say yes more often actually to being

Paul Daly  19:24

there. So this is the kind of stuff like when we branch into hospitality and retail, right when I look at the store, I think hospitality and retail, right not car dealership, we're going to be talking about a lot of things in this vein at a show to con and I think you're going to be there you going,

Patrick Abad  19:39

you know, I'm going I wouldn't miss it. Listen, hang out with some of the brightest minds in this business. No, but seriously, that subtle, calm, super pumped just to hear some of the names that are gonna be there. It's gonna be an experience that I think I've been wanting to go to and be part of, so I'm super pumped. When is that September? are 11 through 13?

Kyle Mountsier  20:01

Yeah, yeah. And we were talking about it today, you know, from the schedule perspective, we're gonna start at 530 on Sunday night. So you can make an A nice, like, take your time, get there on Sunday, and then Tuesday will be done by noon 1230. So you can take that afternoon flight, get home Tuesday, be in your own bed or be even back to the store if you need to, for some people on the East Coast. So it'll be it'll be a high energy, high intensity, short time, but it'll be really focused and really intentional about what do we do about connecting the retail side of our industry to the way a lot of other retailers think and so we'll be taking practices from outside and inside of the automotive industry on that. So, Patrick, thanks for hanging out with us today. You've been a friend since clubhouse and a mentor, but also a business confidant and friend. So really appreciate you. Thanks

Patrick Abad  20:47

for coming. I mean, listen, I love when you guys walk in the building, and you guys alone, just bring a cool energy that my people love. And I think it's fun.

Kyle Mountsier  20:54

Yeah, awesome. All sounds good. I'm sure we'll see you soon. And we'll throw it back to us actually live.

Paul Daly  21:00

I like it how we throw it back to ourselves. Oh, my goodness. Oh, hold on, Kyle. I can't hear you. You're still muted. You're still muted. today. Yeah, you're back, end your back. And it's okay. It's fun to throw it back to yourself back to us in the studio tomorrow morning. After three hours asleep. We got this? No, I

Kyle Mountsier  21:20

actually I was just enjoying listening to Patrick. Because sometimes when you're in an interview last night did the same exact thing. Yeah. And you're like, I know what you're saying. Because I have to engage in this interview. But then when you listen back, you're like, oh, man, that was some really good stuff.

Paul Daly  21:34

Better than I remember. It was good. But that was like us. Great, actually. All right. Well, thank you for hanging with us today. You know, we're trying to bring you more and more angles on everything that's going on. We're trying to bring you more and more in store interviews, talking to dealers, getting our hands in the dirt, right, because that's what the asoto community is about. It's not just telling you the news. It's not just you know, bringing you a little this little that it's actually hands in the dirt, bringing it all together as it's relevant. So obviously, we're going to keep doing that we have new podcasts coming. We have, oh gosh, there's gonna be hundreds of pieces of content on the way as we start making content with all our speakers over the next 60 days. So what you just saw there, there's a lot more of that coming. Get your tickets, have a show to conduct calm or just subscribe to the email at a soda.com so you can get one of these insights. Thanks for spending time. We got him to retire we got a lot of work to do on the grind baby

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