Paul Daly: 0:04You're listening to his soda con sessions by effective live from a soda con 2023. Okay, I'm here with Joel Bassam, president of Easterns. Automotive. Thank you so much for giving us a few minutes of your time today. So all right, we have applause already from the background. Thank you. That's, that's our one fan. We have two fans now. For Here we go. I gotta say the best response we've gotten from the podcast stage,
Joel Bassam: 0:33
that was the best$5 I've ever spent.
Paul Daly: 0:37
So we don't know each other very well. We kind of like circle have a lot of similar circles, and that is LinkedIn. But give me a little background on how you got into the car business. Sure.
Joel Bassam: 0:46
Yeah. I mean, I've got my PhD just like Rick, you know, my father got into this business in 1988. I'm lucky enough to have applied for the job and got it. So
Paul Daly: 0:54
he's a PhD just like wreck. What do you mean, Papa had a dealership?
Joel Bassam: 0:58
So yeah, yeah. Yeah, yeah, exactly. Yeah, apply for the job. Got it. And you have been working there since I was 12. So really enjoy it and love, love the car business? What's in your blood? You can't get it out? You know, I
Paul Daly: 1:10
know. I know. It really is one of my favorite things about the industry. Is the family dynamic. I don't think there's any industry that's more family oriented. Yeah. And to be people often forget, the number one retail industry in the country is actually a family business.
Joel Bassam: 1:24
That's totally, totally true. And this industry also has that unique thing where you go to conferences like this. And you might see the same people where they're at a different company, because once they're in this orbit, it's you know, the gravity just keeps you around.
Paul Daly: 1:35
And I love boomerangs, right? They they leave, they think the grass is greener, and they're like, Hey, I went into like pharmaceuticals or I wanted to, like PCG. And like, I wanted to, you know, consumer packaged goods. It's PCG CPG. Yeah. And they come back and like, they're no fun over there. Like, that was crap. Like, come back to automotive. This is where I belong. So tell us a little bit about your group. Yep. And so we can kind of get a level set for the conversation.
Joel Bassam: 1:59
Yeah. Easterns is a family owned and operated business. So if we've been in the market since 1988 35 years, we're actually in this market. We're 20 minutes from three of my stores right now. And
Paul Daly: 2:08
right now, if you if you don't know right now, we're sitting in Baltimore, just south of Baltimore. That's correct. Yeah.
Joel Bassam: 2:12
And we have eight retail locations. We're a completely independent group. And a quick version of our group. And how it works is we're a full hub and spoke model. So everything's run out of a central reconditioning and corporate facility, makes all the decisions for all of our stores. And our stores have one focus that's just selling cars. And that's it. That's our only source of revenue. No service, no service. Wow, our purpose is any car anyway, for everyone. And everyone in the company doesn't matter what you do you sell cars for a living.
Paul Daly: 2:38
So you you do your own service reconditioning? Right. Yeah, no cars, no retail service, correct. Wow. Yeah. So what happens to the customers that, you know, buy a car? Where do you send them for service? Sure. Yeah. I
Joel Bassam: 2:49
mean, we, we have phenomenal vehicle service, contract penetration. And we say, if you bought a BMW, try BMW dealership first and work your way outwards, we have relationships with individual groups around each store. But that's because you
Paul Daly: 3:00
obviously have internal so that if there's an issue, like you have to sell you fix, you can you can take care of those quick and internally, Oh, 100%.
Joel Bassam: 3:08
And then some repair stuff is different for sure we handle all those. But as far as pay work, we don't want to, you know, we kind of lovingly say when a car leaves or reconditioning center, we hope to never see it again. That means we did our job, right?
Paul Daly: 3:18
Wow, I love this so much. I love learning about like very unique groups like yours, who are really putting customer experience first, and are operating without the obligations of an OEM. Sure. So you can you can really kind of explore the space. Yeah. And you can kind of make decisions that in your estimation are like, Hey, these are the best for the customer experience, which by the way, I think is a great way for even franchise dealers to learn, by your example, and figure out how it fits into their model. So like you, you kind of like, right, no strings on you, you know,
Joel Bassam: 3:53
that's a good way of putting it. Yeah, I think that's one of the things that gets a bit frustrating is the only word that comes to mind with other dealership groups where they come and they say, well, we can't do that because of this, or we can't do that. Because of that. Sure. And you know, the concepts around that. Being an independent, it's, we only make decisions that add profit to the bottom line. And so whether it's marketing, whether it's tech stack, decisions, whether it's digital retailing decisions, centralized BDCs, sales centers, whatever you want to call it, how we pay our salespeople, it doesn't matter. It's about what makes the best fit for our company culture, and what makes the best fit for our customers. And so those are the only decisions that we make, it's all based on that.
Paul Daly: 4:29
So give me a give me an idea of geography. You explain it, but like how far how far are the two for this? You know, satellite locations. Sure.
Joel Bassam: 4:38
Yeah, we operate in the DC and Baltimore dma's with you know, some future plans that we'll be announcing relatively soon and other markets. But yeah, it's the farthest one is six, seven miles, which doesn't sound like 667 67 Okay, which doesn't sound like this area in this area that oh, god yeah. Might as well be like 300 miles in like In the middle of the country, exactly
Paul Daly: 5:01
how long does it take you to get 10? Miles? Exactly,
Joel Bassam: 5:03
yeah, it's all about timing. If it's, you know, six, seven miles in the middle of the day is very different than four o'clock. Oh, my goodness, yes. But you know, that actually is a unique value proposition for our company as well, because, again, this is all benefit of being independent. You know, one of our value propositions to our customers is every car is available to every customer, it's at their convenience. And we structure that not only in the customer experience when they're physically in the store, but on our website. And in our digital retailing, it's actually one of the things that limits our ability to use some of the off the shelf digital retailing tools that exist in the space, all of them are defaulted to contract in the entity in which the car is parked. And we actually have to consistently push against that to say, hey, you know, Paul's applying for a loan on this Toyota Sonata, or Hyundai Sonata, doesn't matter that, you know, his convenient location is Baltimore right now, because that's the closest to us right now. I want to contract in that entity because that's where his he wants to pick up and story because the
Paul Daly: 5:53
car, the car likely isn't there, right? You centralize your inventory. So when I shop your site, I get every location correct. And then it'll probably tell me where the car is located. Yep. And but like, you're saying, like, if I'm in one spot, and the cars in another spot, but I want the car that's in another spot, right tools are default, not conducive to that
Joel Bassam: 6:11
correct? Yeah, and so we've actually kind of, you know, square peg round hole, a lot of those products into making it work for us. But you know, it works for its again, at the end of the day, it benefits the consumer, first thing that customers see when they get to the lot, or they meet a salesperson, or what we call a customer advisor, because they're non commissioned to make hourly rates, you know, as I'm so and so that's probably the first thing. Second thing is don't limit your options by what's in the store, what's parked here, we have another 1000 cars to choose from, I can have any of them here within 20 minutes. And so you don't have to read one, we'll get a blue one here, you know, within a few minutes, and that's pushed upstream to our what we call a BDC, which is internal marketing, or what we call sales center, which is internal marketing for BDC. Same thing customers are shopping online, we ask the customer where they want to pick up the car if they want to deliver it. That's the first question because that designates where we're going to actually start selling the car to and through,
Paul Daly: 7:02
because you're going to pick it up, then or even delivered. You try to get the car sold from the closest location to their physical address,
Joel Bassam: 7:09
correct? Yeah, that'll be most convenient for the customer. And that's what matters the most. So we right now we're selling about 30% of our cars before a customer physically arrives in the store. And we use roaster to do that. And you say
Paul Daly: 7:19
selling how far through the transaction. Are you getting contracted? Done?
Joel Bassam: 7:23
Yeah. Approval done, signed, contract unified, done. And they show up and transactions NPS scores over? 80.
Paul Daly: 7:30
There you go. Yeah. Done. Yeah. So you know, I was just I was listening to what was it? I was listening to Alan Haig. And he was talking about the independent dealer in the entrepreneurial nature that it takes to make an independent work, because, yes, you don't have the restrictions of the OEM, right. But you also don't have a lot of the advantages of being with an OEM, mainly captive financing. Yep. Right floor plan, all the things that the OEM basically subsidizes, either through reputation stability, or as an internal product, you don't have those things. So on the one side, you get the advantage of doing what you want, but the disadvantage of not having anybody to help.
Joel Bassam: 8:11
Correct, right. Yeah. And that story is one that actually leads a lot of independent groups when they're in the growth process to add a franchise point to get over that hurdle. Right? Does that mean in a day, if you're an independent out there, and you're listening? There's a check box on a form that says whether you're independent or not, and a lot of those banks and financing partners, you know,
Paul Daly: 8:30
once you check that box, oh, yeah, right. It's over. So have you ever considered that model? Well, we're getting an OEM. Yeah, we've
Joel Bassam: 8:39
had franchises in the past. And but either way, we've been around and established. And you know, a lot of this is really, you know, because of the relationship My father has built over the year and the trust, and I attribute the
Paul Daly: 8:48
track record for the banks to be like, Rex, there it is. Yeah.
Joel Bassam: 8:51
I mean, internally, with leadership, it's when we're making decisions about long term thinking. It's not about short term profit, it's about where we're going to be in five years. And the decisions make on that. And that means, you know, it maybe sounds a little silly, but when our buyers are buying cars, they're considering the performance of the loan portfolio for the way that, you know, that customer is gonna actually finance that car. I mean, that's, that's how far down the funnel we're thinking. We're thinking about loss ratios for vehicle service contracts, and all that's happening before we buy the car, not after, right? Because we want to be a profit business for all of our partners and our stakeholders. And that has allowed us to really open those doors. So we're the exception for a lot of banks were exceptions for a lot of floorplan companies. And we're proud of that it is somewhat of a risk, especially in an uncertain financial space that we find ourselves in today's economy, but it's one that we think we can continue to push through. Now, that being said, you know, if the opportunities arise, we buy we buy property, and we buy dealerships the same way we buy cars, it's opportunity based, right and there's no doubt that in this market, there's a lot of opportunity and a lot of exciting things coming down the pipe. By the time this is released, we should have the two points open a one of which should be a franchise which I can't talk about yet, but okay, Okay, that's just an opportunity based thing a lot. It's not to get over those hurdles. It's because it's the diversification of our company a lot. It's funny, the the conversation that you're talking about with Alan is actually one that him and I have had before the table, which was the blue sky on the independent dealership is the dealer principle. Right? Right. That's it. There's no established multiple, because there's
Paul Daly: 10:19
a lot across the street, I can buy my own used cars and hire your staff. Yep,
Joel Bassam: 10:22
exactly. Well, that's the thought. But that's funny. That doesn't happen.
Paul Daly: 10:25
That's true. But I'm just saying like when you look at potential acquisitions, right, like, that's kind of what they think unless you bring, like the dealer principal, or some significant developments in process. Right, right. Things you figured out like your Hub and Spoke use car model. Let me ask you this one. This will be the last question. There's so much conversation around efficient use car departments. It's just one of the things that any dealer can control. Yeah. So pricing, major cause of major consideration right now. Um, can you let us know how you approach like the mentality by which you approach acquisition and pricing?
Joel Bassam: 11:01
Yeah, I mean, it's, it's all based on volume, scale and speed. So acquisition for vehicles? The consideration is that it's a you know, let's say things are somewhat normal, which hasn't been the case for a couple years. But no, no, we buy a car that normal the day the grab, the gavel stops, you know, the timer starts the car is depreciating, we're paying interest in my car. And so time to market is more important than cost the market in our mind, and because we're focused on turn and efficiency when it comes to that, so we've built all of our processes around that central concept, which is why we've you know, really consolidated all those efforts into a single point, it is generally less expensive when you get really good at it. But that was never our you know, that's not what we set out to achieve. It was all about how can I get my days and recon to single digits. And then once we got into single digits, which we achieve pretty easily now. It's how do we get it below five days, six days? You know, what are what are we averaging? Can I get it the four days? Is that even possible? Right? And we were achieving that for a long time. And when you had cars that we were the first time we sold a car and as days in inventory was single digits in the US space. It was like, Man, this is all we got to do the gross of the deal.
Paul Daly: 12:05
Let's get good at this one thing. Yeah. And everything else will fall in line. Right.
Joel Bassam: 12:09
And honestly, that's a core concept. And this is a funny story that you'll definitely appreciate is, you know, my father came United States. He's worked in a pizza chain. He ended up working, he got moved up to the DC area to work for a chain called cheese. And if you're gonna say to you, I know what I remember. Yeah. And
yeah, I I still remember. And then
Joel Bassam: 12:28
he ended up like they he moved on to a Domino's and he worked there like, man. They've got to figure it out. He's like, I can make Stromboli I can make, you know, breadsticks. I can do all this stuff is like, no, no, we just make pizza. Let's focus on one thing. And they thought everything they were dicing the cheese different so that it wouldn't clump. They were at a spinner. They'd measured the sauce. And it's all because they had 30 minutes or less. That was the whole thing so as to be friends. That's how we think of the car business. It's like, yes, we can have a franchise model. Yes, we can do customer service, but it will take away focus of just being the most efficient use car seller we possibly can be. And so everything's built around that
Paul Daly: 13:01
oh my gosh, we have to have another conversation because there's so much to unpack, Joel, thank you so much for spending a few times with us today or a few minutes with us on a so called session by effective Thank you for listening to this. So to concession by effective if you want more content like this, you can check out our other podcasts we have a daily show called The automotive troublemaker Monday through Friday, here and podcasts also live streamed on YouTube, and LinkedIn and Facebook. We also have a long form podcast called Auto collapse auto collapse. And if you just want to go a little different in this community, you should sign up for our regular email we put our heart and soul into it. You can get it for free by going to a sotu.com We'll see you next time.