You Get A Discount, You Get A Discount, Everyone Gets A Discount

February 21, 2024
It’s February in the car business, meaning it’s not without its challenges.
Listen On
Apple Podcasts IconSpotify Icon

It’s February in the car business, meaning it’s not without its challenges.

Fortunately, the panel on the ASOTU Wheelhouse is here to help you navigate through it. Host Daniel Govaer is joined by Paul Daly, CEO at ASOTU, Matt Haiken, President & Dealer Principal at Prestige Collection, Colby Joyner, VP of Marketing & Strategy at Cavender Auto Group and Ashley Cavazos, Marketing Director at DeMontrond Auto Group.

They break down what it means to be successful in the new landscape of higher supply and lower demand, the (ongoing) challenges of marketing and selling EVs, what all this means for dealership pay plans and share some toxic traits to avoid at dealerships.

Here’s what’s covered:

0:00 Intro and Disclaimer

1:59 Around the horn with today’s panelists

4:44 What does gross profit and discounting look like this year?

12:11 Tackling the affordability issue

20:55 Discounts, Discounts and More Discounts

30:26 Should changing car prices mean a change in salesperson pay plans?

36:53 Relationship Advice: Toxic Traits To Avoid

Ashley Cavazos: 0:00

We're looking at recruiting a new generation into our workforce. And it's not always about how much money are they going to make, but how are we going to accommodate their lifestyle too? And that's some of the balance we have that you know, at least I see when I'm when I'm talking to new generation, they're like, Well, do I have to work every Saturday? Well, how many vegetables do I have to work? Right? What are the benefits that come with it? Because there there are people don't get me wrong, there are hustlers out there and the younger Gen. They want to make as much as they can. However, there are people who want to work to live not live to work.

Daniel Govaer: 0:42

Welcome back, everyone to episode number 17. Who would have thought we made it but we did not quite to 20 of the wheelhouse and this is actually going to be an incredibly fun episode and everyone's got podcasts, but really nobody's got it like the wheelhouse does, guaranteed So joining us today, we've got Mr. Paul Daley, the CEO of ASOTU, and then join next to him or just diagonally from him depending on if you're watching the podcast. Matthew Aiken President dealer principal at prestige collection, you may know him from the cargo dealership podcast also, Colby Joyner, VP of marketing strategy to Cavinder Auto Group and Ashley Cavazos Marketing Director at the demand Tronic Auto Group, and I'm getting better at saying all of that. So that's, yeah, that's a macaroni and my hat. But all right, you know, as always, we're gonna just quickly we're just gonna go ahead and say that, obviously welcome everybody to the wheelhouse and the opinions that are spoken about here. And the views are represented solely by the speaker's themselves, and not by their affiliates, their companies that they may represent or may employ them. Alright, we're gonna go around the horn each but each panelist gets 30 seconds. I want to know, so far this year, is this shaping up to what you thought it would be? Are there any surprises? Is there anything not shaping up the way you thought it would be? Right, and Kobe is, as Welcome to you, we'll let you open up here and 30 seconds on the clock for you.

Colby Joyner: 2:01

Thank you. Honestly, the it's it's not shaping up any different than any other year. I mean, you're starting out, you're starting off January's typically, kind of down from December. Luckily, on our side, we had, you know, opportunities that matched what we had in December. So overall, you know, we're looking forward to the spring, we have a lot of plans. And luckily, you know, over the last year, we've been putting a lot of initiatives together and they're all coming to fruition. So right now, I

Daniel Govaer: 2:29

think we're you're on pace. Okay. Yeah. All right. No surprises there. All right, Matthew. 30 seconds on the clock. Tell me about your

Matthew Haiken: 2:39

January, February totally suck. And it hurts so bad. Because I think the last two years we kind of avoided it. But it's back to normal. Or February. And of course, we don't forget what happened in the past. And it's it's hard to talk for everyone. And you know, Presidents Day weekend usually kicks off the spring selling season. We had a great weekend. But yeah, we were ready to move forward. Pretty, pretty tough.

Daniel Govaer: 3:04

Just Just get me through this month, basically. Please. All right. Ashley, how's it how's it looking in your world with 30 seconds on the clock for you?

Ashley Cavazos: 3:12

Yeah, I'm excited with where we're headed. I mean, as kind of what we've said January, you always expect some kind of hangover from December. But opportunity wise, the shoppers are out there. And that has been really pumped up. Because the trends that I had been tracking over the last six months, we had seen a pretty substantial decline. And we're up you know, we're looking especially for February, we're trending if I had 31 days in February, I would have more shoppers than I did in January. And that's really exciting to see for for the market.

Daniel Govaer: 3:45

Remind everyone who's listening just what part of the country are you located in? I'm in Houston. Okay. All right. And, and Mr. Daly? So

Paul J Daly: 3:55

I see the dealer sentiment trickling into the industry partner side for sure. Probably a little faster than I expected. Because usually there's a little bit of a delay lag, but I see on the industry partner side because I'm on it, that people are looking for much more efficient use of their development dollars, and their sales and marketing dollars. They want to get things get wheels to the ground quickly and don't want to burn time with dealers. You don't have time for them.

Daniel Govaer: 4:22

No, that makes sense. That's actually that's actually good to hear too. I mean, all right. We're gonna dive right into some of our topics all pretty much are centered around a similar topic and they're all going to lead us to the place that we want to be at so that we always want to give you something that's at least actionable and something that's sticky that will last with you after you listen to the podcast that you can use at your store. So the first thing up big six public auto retailers. You're hearing a lot about how much they've increased revenue, but really when they've also dropped in gross profit. So first thing is personally me I don't understand why Wall Street loves an increase in revenue when it's not related to an increase in gross profit. And as we've said before, as, as a used car manager or general manager, I've never been able to be in a meeting, like, but my revenue is up when my gross profit is down 30%. Right would indicate that you're selling true story, but you're discounting quite a bit. So is this an indication? Is this a continuing indication of lower demand? Is this people giving into sort of the circumstances that are around them in the affordable and the ghost of affordability? Is that something that you guys are seeing in your stores? Even when you say you're up? Are you up? And just units? Are you you know, are you moving them via discounting? And are you seeing discounts going across the board? In your lineup? So let's kind of tackle let's tackle that. And Ashley, you since you know, just heard from you that you guys are up? And in a major metro market? Why don't you tell us about what you see there?

Ashley Cavazos: 5:43

Yeah, I mean, it is an interesting time. So our shoppers are up. I think we're also and we've been talking about it, it's almost like a broken record, where we keep saying, like, we need to get back to the basics of selling cars. What we do, right, so although my traffic is up, I am in a competitive market, I have, you know, a ton I've got all the public's are in my backyard. You've got prices, interest rates that you're competing against. It's a very interesting time. I'm glad to see that the shoppers are out there. But to your point, what do we have to sacrifice to sell those units? Um, great. So the inventory is coming in. But it's a very different time for us, I think about when we had the pandemic, right, we were like out of toilet paper for how long everybody was going to buy toilet paper, because we were like supply and demand. And now the cards are out there. And we're almost in a similar situation where customers aren't running to buy that car right away. They're kind of making taking their time. They're also looking at experience, there's a number of factors that they're putting into that.

Daniel Govaer: 6:42

Are you are you discounting pretty much across the model line? Is there are there a few cars, it's don't don't discount steal, or a

Ashley Cavazos: 6:49

few few cars. But we're we have to be competitive with this market. We are in the fourth largest metro in the United States. So we've got a lot of things happening that we have to consider and you're in the oil and gas industry. And on top of that, so when you're looking to sell EVs, it's an interesting conversation. And

Daniel Govaer: 7:06

isn't it? Isn't it interesting that this report comes out about the Publix and you said you have Publix in your backyard? Maybe your experience is different. But in my experience isn't always the public's that are going to the maps first and their discounts? Aren't they always the ones that are discounting first 100%.

Ashley Cavazos: 7:19

And it's something I'm not used to because we didn't have the Publix in Minneapolis. So for the past 10 years, I've been studying a very different market, being in the Midwest. And now I'm like, Okay, let's see what's going on here. Who do I need to go up against? Right?

Unknown: 7:33

Okay, who else?

Colby Joyner: 7:37

So like on our side? Yes, we understand that gross profit is, is going to erode a little bit, there's going to be lower, you know, gross on a per vehicle basis, what we're doing on our side, and we and we knew this going into this year as the way that the latter half of last year worked is you know that, you know, that rocket money app, like where you can go there, and it analyzes everything that you're spending, and it says, Oh, by the way, you're you're spending twice on Netflix, like that's what we're looking at, from our deals, we're looking at every expense not to, not to lower or to, you know, try to be, for lack of better words dumb about it and just like eliminate expenses, but like, Hey, where are we spending money? That's dumb, or where did we when everything was good, just start saying, Hey, cool, like, add that and add that add this. So we're being a lot more granular when it comes to what is attached to every deal. So that we can maximize the use of that money on a per vehicle basis, knowing that we're not going to make as much per, we have to just kind of clean it up a little bit. And that's what we're doing right now. So we knew that was coming in. And so we've been kind of very detailed going through all of

Daniel Govaer: 8:43

your VP of Marketing and the strategy is the strategy for marketing to show an increase discount across the model lines, and you guys represent a lot of brands. Is that part of the strategy? Yeah,

Colby Joyner: 8:53

it's not. So we discount across across all brands, the only I think the only one that really don't discount much is the if any, is the the higher end of the of the Landrovers you know, and then the the upper echelon of Cadillacs, like the black wings or Escalade, V's those kind of things. But we also don't have any addendums we don't have any get you know, required add ons, there's none of that it's sticker or less, right. And so and but we've also been kind of discounting it doing that all of last year, so it's nothing new for us from a discount standpoint. We're not having to increase discounts or drop lower. It's the the value prop is like hey, the presidency is what you pay. This is what it is and it's just trying to make that

Daniel Govaer: 9:34

expat want to make sure you get a chance here.

Matthew Haiken: 9:37

Yeah, you know, I'm here listen, inventory is back to pre pandemic levels. And now we have interest rates for our floorplan that are basically if you're selling luxury cars, so they're like mortgage payments, you know, we sell$100,000 cars. I mean, most people's first homes, were, you know, 5060 $70,000 like we're paying a mortgage payment on these cars every single month. They have Don't go away, we have to move on no matter what it takes. So we've got we've, we've got a gun to our head, and you know, it's back to 2019. But the rates are through the roof, and it's affecting the business. And, you know, we're passing along and most affordable payments possible. The manufacturers also they raise prices so much, and all these cars and as dealers, you know, we take the brunt of it, and they're always blaming us, but the MSRP to MSRP, from 2080 to now is like through the roof, so something's gonna have have have to happen. And it might not be in the form of traditional, you know, rebates and incentives that are cool residuals, but something's gonna have to change. And right now, we're, we're at a boiling point,

Daniel Govaer: 10:42

pod. And I didn't get to you. But I mean, is there anything else for you to want to throw in there? And Matt was so calm on that one, too. I know, it took us all by surprise.

Unknown: 10:49

Thank you. I'm trying to

Paul J Daly: 10:51

yell at me, Matt. So it

Matthew Haiken: 10:55

takes so much energy

Paul J Daly: 10:56

for the days, I think the only time you know, to your marketing question to call me that, like higher, lower profit for higher revenue might be justified as if there's another strategic element to it. For instance, if you're trying to grow market share, and you can show that you've gained market share, and maybe you've been investing money, you know, either on the hood or in the backend efforts to make that happen. But aside from anything that was very strategic like that, I don't, that

Daniel Govaer: 11:23

was always the catchphrase was like, this is a market share, deal. Maybe some market share deal, right?

Matthew Haiken: 11:29

Again, like as car dealers, we live in the real world, we deal with real people. And the manufacturers that are publicly traded, they live and die by Wall Street and Wall Street loves this fantasy, all the revenue

Paul J Daly: 11:42

on Wall Street to is like, Oh, is this an indicator of you know, growing demand for the product? Right? And like, No, right? And this,

Daniel Govaer: 11:50

if you recall, like four years ago, five years ago, we're often having discussions about what inflated demand is, or artificial demand is, right. And it's, this is so for anyone who didn't get to see the the, the proceedings for how you get to you know, we're in the epilogue right now. But we're also getting into the prologue of how you get back into an artificial market. And this is exactly how you get into an artificial market going along those same lines. Wall Street Journal again, pointing out vehicle affordability concerns are making headlines every day, we've got gas prices, somewhat in check. We know from the economist, the Saudis typically don't like it going up much more over 80 cents a barrel. But generally speaking, that's going to be kind of unknown costs, but everything else is higher, and specifically pointing to insurance premiums that are across the board. 20% higher than they were last January. So one year ago, 20% year over year increase. And that's especially unusual, because we've just absolutely stated you're not seeing a 20% year over year increase in your gross. But you neither are neither our customers unnecessarily in their paychecks for the most part. So everything of us so the article literally says other than gas, everything about your car is getting more expensive. Agree, disagree showing something different? How are you battling that?

Ashley Cavazos: 13:05

I mean, if I would have to say I totally agree, we'll even look at what the average monthly payment is for a car. Right now for new car, the average monthly payment, and I think it just came up maybe a few weeks ago, but I thought it was like $720 or 700. I think I wrote it down.$726 is the average monthly car payment. And we look back on you know, a few years ago, we're looking at 499 599 What percentage of customers are

Colby Joyner: 13:34

curious how much of that payment is I'm curious how much of that payment is the the upside down that they brought

Ashley Cavazos: 13:39

over? Yes, I down the interest rate on top of it, right? The average interest rate is like 7%. So it's a crazy, it's crazy to look at the ownership and we were talking about in this previous discussion, but I we talked about what are we parking our cars at but also what are we doing on the back end for finance? And what are you doing to help with ownership? So I think about you know, what is your dealership doing to help with the service part of maintaining your vehicle, we see a lot of service plans out there to help make sure that you're getting your maintenance covered, but that's also raising your payment as well.

Daniel Govaer: 14:12

It's interesting if you asked do the exercise or maybe you do this and ask your salespeople like what you think the average payment your dealership is. And it's always either way higher or way lower, right but and the other interesting thing too and I used to do this when people would come to us from other brands to interview is ask them like what their average payment is at their store and I would you know check it and then ask them if it's hard for them to you know, the average payment in my store is $980 Let's just say and it's a struggle for you to get to$700 and when you come to my store like I need you to know that upfront, right if that's something that you think about it that's in your mindset if you think money control something that you should know that but Matt, you're giving me Give me your you're looking at me I can't know what I

Matthew Haiken: 14:50

did. No, no, no, no, we're we're in tri state. We're right outside of New York City where a major lease market we're luxury so 80 to 90% lease Penn. Obviously lease payments have gone up, all you have to do is look at interest rates where they were three years ago to where they are now, a lot of customers are trying to buy out their, their leases at the end at the end and not release. And they think that's the most affordable thing to do. And it could be for some people. But again, you know, when you've got all these new cars on the lot, you got to move them somehow. And putting them into a maturing lease is the only tool we have. So again, affordability is always top of mind. But for us, it's all about that lease payment. i On another note, like and I've said this in the past, I really think these manufacturers have to get to work on their CPO programs, I think we have to go back in time. I mean, the quality of cars in the last five years are better than they've ever been. So the fact that we're only certifying, like 21 to 20 twos now is crazy. Like, let's come up with a certified program that goes back to 18. Yeah. And that would help all of us with affordability and getting more people and

Daniel Govaer: 15:55

if you're experiencing good quality and your brand is That's amazing. Because that's not across the board. But

Matthew Haiken: 16:00

listen, in the last 24 months squatty has never been worse. But that's not the car. That's software. That's that's chips. I'm saying as a whole you take out the computer system and teaching people how to use the car,

Paul J Daly: 16:13

or something. Things coming from, like their angels getting their wings.

Matthew Haiken: 16:18

I'm on Do Not Disturb and my message

Paul J Daly: 16:26

for Mr. Go, bear has now dropped out of the podcast, maybe in shame. Now, Matt, Matt, I think you're in charge of the show.

Daniel Govaer: 16:38

I was actually going to ask, though, real quick. What about a loyalty program? Has anybody put a loyalty program in place to help mitigate help give additional value help earn value inside the dealership? Does anyone have a

Colby Joyner: 16:50

middle? We're in the middle of building that right now. And we're building it through an app. So within the app, there's going to have all the loyalty points and everything within there. So I'm excited to finally get that launch. So it'll be probably mid March.

Daniel Govaer: 17:05

Yeah, yeah. I mean, everyone's gonna have an app at some point to track it. Right. But yeah, I mean, you just want a company that will make it customizable for you. But yeah, I mean, I think that's, that's one way of showing additional value in the dealership. But anyway, anybody else Matt, that I that I cut you off mid thought was there was no no.

Matthew Haiken: 17:21

I'm looking for I want to bananas referral program that's done easily through an app through a click of one button, where you know, we can take care of referrals, touch a button, send something to them or their house, me send it to accounting, get it tracked. If anyone has an idea, or knows anyone, send them my way, I would love to learn a new system for that. I can

Daniel Govaer: 17:44

get you as far as pressing a button and getting a banana. But other than that, I'm interesting. Oh, what do we miss?

Matthew Haiken: 17:51

I am a monkey. So oh, I

Paul J Daly: 17:53

don't think we've missed anything. Okay. I mean, yeah, I just, we were talking about insurance a little bit. I mean, it's just you just see, like, there's nothing, it just feels like insurance always feels like a helpless, like you're in a helpless state, I wouldn't say that. Some, some buyers might not understand that insurances increased how much. And when they get into a new vehicle, they might be very surprised that not only is it more expensive, because they bought a new car, but it's that additional 20% Premium higher, and that could make a meaningful difference to their monthly payment. So, you know, I think that a dealer could serve consumers while especially if they're very budget minded, like you don't want to put them in a position where when they get the insurance bill, they're like, now I really can't afford this car.

Daniel Govaer: 18:37

Well, so isn't that a fair question, though? If your salespeople or salespeople encountering that as an objection, you know, I was gonna look at this car, but I can't because party insurance, is that come up? Because insurance is more because parking is more because my taxes are more because Right? I mean, doesn't it I'm saying it all adds up. And to say that it's just about insurance. I mean, it's not just about insurance. But I mean, that's become a viable objection. And at the end of the day, we don't get paid till we sell a car. So that's, you know, that's one of the things I want to bring it up. But if you're listening to this, and you've got ideas on how to do that, like, you know, we're here to listen to ideas that we all get better, you know, together.

Ashley Cavazos: 19:11

Well, and then also a thing if you have a lot like we have Allstate located in our offices that are dealerships, right. So that kind of helps you start that conversation, like because you do have some of those questions that come up, like what is my insurance going to look like with this car? It's more cards more payment, what does that do for my insurance? But if you can have your agency that's on site, can I help with that or get that conversation started? And then you're starting to pause point, you're starting to build that education piece for them. Yeah,

Colby Joyner: 19:39

we have. We have our own Kevin or insurance, like our own insurance agency in house and it's all involved with every deal that's going out there so they can get an understanding quote, and what it may be based off of the new car new payment and how that's gonna get structured and how is that different than what they're currently in? And we may not be the best rate on it, right? There could be somebody out but at least it gives them an idea of hey, moving into this the least there's the biggest thing about it all is its clarity or transparency. It's like, hey, affordability, you can't make affordability better, right? It's all about just that these are the prices, either you're going to lose your butt on the car deal to try to get a customer which, in the end, most of those customers are not coming back to you because they're just trying to get the best deal. So it's all about hey, do they trust us? And as long as we're upfront and transparent and clear and say, This is what it is, we can't really change this. Then that's where more often than not the customers can say, okay, that makes sense. I can't take this Denali trim, I'm gonna go to you know, an SLT, right? Because it does everything I need, it's gonna fit in my payment and when I can afford the Nidalee I'm gonna come back to you because you were clear with us the whole time. That's

Daniel Govaer: 20:49

actually a good segue. So hang on to that biscuit as we lead into the next one here for just hot off the MarketWatch presses, talking about how we're sweetening the deals that Americans have bought a record number of luxury cars in the recent months, and Evie prices have tumbled almost 11% compared to a year ago, you read the article, you'll see average new car sold for 4741 in January, that's already an almost 3% drop from December, but they're down almost three and a half percent since last January. So besides all those percentages, a year ago, America's car dealers had 750,000 fewer cars in stock than they do today. And incentives made up about 2.8% of the average new car sale and in January, just as of January, inventory approaching pre pandemic norms discounts were 5.7% of the average purchase price. And it's not the same across the board and reason I was saying that was going to be a good segue. According to the article, luxury vehicles and full size pickup trucks had some of the highest discounts in January. Conversely, incentives for small pickups full size SUVs and minivans were well below the industry average in January averaging less than 3%. So if you can kind of keep that in mind that the industry average just count is 3%. However, you use that as a negotiating tool on whichever side of the desk whether you're above or below 3% And why. And they said a handful of brands including Toyota and Kia still have historically low inventory numbers. But most of those are now at or above the supply of new cars. They tried to keep pre pandemic and luxury prices again leading that market lower.

Matthew Haiken: 22:16

Alright, did these authors like Asterix and take EVs out of it because like the average Evie discount is probably like 20 to 30% Right? You're

Daniel Govaer: 22:25

like that article. Line has Evie. Discounts are almost 11% compared to what they were a year ago. So just hadn't gotten to that Evie part yet. Yes, Cox automotive and Kelley Blue Book revisor. Evie transaction prices and data to more accurately reflect the growth in the electric market. price paid for an electric last month was 55 353. And Evie prices have fallen almost 11% compared to a year ago numbers. January, Evie prices were higher month over month by little. But in December, you're talking about an average sale price of 53 611. The lowest point in the last 12 months. So yes, the lowest point for EVs in the last 12 months and massive discounts across the board. Are is that and that's kind of your point to Matt. Right?

Matthew Haiken: 23:05

Yeah, yeah. Huge, huge. And I don't know how at least, those numbers, but this all makes sense. Is 3%.

Daniel Govaer: 23:11

Are you 3% off of gross for everybody? That makes sense. I

Matthew Haiken: 23:15

wish I was 3% off of gross. I'm sure 3% is a good average. But we are well, well. Well. More than 3%.

Daniel Govaer: 23:25

You're more than 11 to 12%.

Matthew Haiken: 23:27

I would say so

Paul J Daly: 23:28

do you feel that's indicative just the luxury market?

Matthew Haiken: 23:32

I mean, I think every market is different. But where we are we're right outside New York City. There's so many dealers, there's so many brokers, there's so much going on, there's so much inventory. It's January to February, and we're paying huge floorplan bills, so the cars have to go. Because we know when when spring selling season comes, there's going to be even more inventory. So yeah, it's not, you know, this is the norm. This is the norm. And we've got to adjust our playbook to selling cars this way. And we we've had we have for a very long time.

Daniel Govaer: 24:02

What part of this makes sense, automakers don't want to be making all of these EVs as much as they're making them. Consumers don't want to be buying as many EVs as we have to sell like why are we Yes? And yes. I mean, why are we in this circle of just just I bet

Paul J Daly: 24:17

if you got if you blindfolded everybody and put them in a room, and dealers and consumers and and you said to them who wants more EVs in your life? I don't think there really be any hands up. I mean, it's obvious by the numbers. It's obvious. You know, I think OEMs have been putting this position through government incentives that this is the future you have to do this or else right. We saw today that the Biden administration start to back off their 2030 regulations of emissions and what percentage of cars had to be EVs went from 67% down to 60%. It's probably going to keep going because you're

Daniel Govaer: 24:55

telling them like we'll take the fines like cheaper for us to take the fines and to build the absolutely

Matthew Haiken: 24:59

right But what we're doing is we're turning the Titanic like we can't shut it off on a dime like, these are these we've made these plans years and years previously, we've made, you know, previous commitments to suppliers to government agencies. So this is like turning the Titanic if you're if you're a publicly traded company, and you've made promises to these investors that x is going to be equally certain x is going to be this. You know, they've got to go back and write a new screenplay of what they tell their their stakeholders on why they're adjusting their plants. And that affects that

Paul J Daly: 25:38

it does it. I mean, if you think of it that way, though, like the people, the investors who were excited about that was when there was a very clear popular opinion demand that we want EVs right and that is obviously shifted. They didn't

Matthew Haiken: 25:53

want EVs they want to Tesla value cash. Now you wait, yes, based on Tesla, when I when where why are they pack? Why are we valued like a legacy?

Daniel Govaer: 26:05

The best way he said you guys in the United States look at it is if there's an Eevee market, we look at it as if there's a Tesla market. And then there's everyone else trying to build electrics, and we can't market because we're not Tesla's and I think that's one of the smartest things that I've heard. But like right now, let me just ask this blanket quite let me just ask this very blanket general question. Right. Is there a way is there an Eevee? A way to sell an Eevee? Right now that you have available? Is there a way to sell an Eevee? without discounting it at all?

Matthew Haiken: 26:33

If I have absolutely. Absolutely. Absolutely not.

Colby Joyner: 26:40

The hammer that we have the Hummers that we get we don't have to, but the supply of them so small. Yeah. What's the MSRP on that? One? Something?

Daniel Govaer: 26:50

Yeah, they're not 100 over now either, though. What? No,

Colby Joyner: 26:53

we're not. We're not asking Oh, for over I mean, but we're also not having to discount which is a plus. But

Paul J Daly: 27:00

I mean, that's that's the only one and supply is very

Ashley Cavazos: 27:03

minimal. What you have available and you

Paul J Daly: 27:07

know that that car is like bragging rights only.

Daniel Govaer: 27:09

Right? Okay. So imagine when the electric G Wagen comes out, it would be the same, like same way, but I'm just saying what we have. Okay, so Palmer's you don't just that's fair, fair. You're not to discount those other than that, is there an Eevee that you don't have to discount to sell?

Matthew Haiken: 27:21

No, not at all. No. I mean,

Paul J Daly: 27:25

the dealer at NADA said I have 20 Ford Mustang Maki's. I'm putting 5000 on the hook. Because I need to get rid of them. And even after that he could only sell three. Like

Colby Joyner: 27:38

I had our Cadillac store, we have the lyrics, right? I swear those things are like rabbits. They're they're making babies. There's more than yesterday. Yeah. And it's, you know, I think one of the biggest things and so surprisingly, I'm actually going to buy an Eevee for the experience of having an Eevee so that I can understand how to market an Eevee and understand the struggles and difficulties of that. So I'm trading in my beloved Bronco, which I frickin love. But I'm going to get an Eevee because I want I need to be able to experience it,

Daniel Govaer: 28:12

taking this thing that I love, and I'm getting an Eevee and I'm doing it for you people, all of you people again,

Ashley Cavazos: 28:18

that's the thing is like, we have tried every strategy to market these cars. And and it's it's very difficult to get that just to get one like your cost per lead and your cost per sold on an Eevee is way above the averages that we should be hitting. And it's like why at the root of it. Like why are we having that problem? I think a lot of it is education on the customer, right? Even when they have they're like where do I charge my car? I live in an apartment. You know, you see the videos in California of people lined up down the line of the parking lot. Why would I want an Eevee if I'm going to have to wait an hour just just to get in line to park my car to charge it. Not even to charge it. I have to do that

Matthew Haiken: 29:03

EVs based on the tax laws and how everything's set up. They are built to lease them. If you're gonna get a new Eevee you will lease it if you're going to buy an Eevee you buy a pre owned Eevee last week I heard like The Godfather of the used car business he was chatting I don't know if I'm supposed to drop names. And you know he wants to spend it's known as the pop pop pop Hollinshead it was chatting. Yeah, you know, I was gonna get you know, he always drives a rolls and calls them a roll or I love that statement. I've never heard a roll it's called a roller. I think that just gangster. Like it's the end of the year leave and I saw the new Evie rolls and I was like I was gonna I was gonna get it. I was gonna get it but then I thought to myself, why would I get that I'm gonna watch it go through the block and I'm gonna get it for 50% off sticker because that's what EVs do at the blog. So we bought a new Kali and he didn't buy the new Evie rolls and then the new Evie rolls is beautiful, but EVs are built to live He's, and if you're gonna buy, right which, which I

Daniel Govaer: 30:03

use the winning formula where the government has to also threaten to find the automakers and incentivize consumers heavily to buy new also incentivize consumers to buy pre owned. I mean, it's, it's always a good it's whenever the government has to give money out in order for people to buy stuff and also threatened to find people for not making it like that's always that always makes sense but moving on. We've all agreed that these transaction prices are changing, they have changed, they have been changed, they are done changed. It just happened we are in we're in this new world as anyone changed their pay plans to affect that, to respond to that. Who's got or should we change pay plans? Or was your pay plan just miraculous and didn't need to be changed in the first place?

Matthew Haiken: 30:44

Listen, pay plans always need to be adjusted based on on the changing marketplace and the goals of the store. I'm a dealer, though, whether I give someone a raise, or we have to make an adjustment. It is never a good a good conversation. You know, even if you're handing people free money, it's a change, and people have their radar up. So I need your advice. How do you even implement this? What do I do first? Because yeah, we need changes all over the place. And now's the time when you usually do it. You don't do it in December for the holiday time. You make it through January, people start looking for new jobs. mid January, early February. And yeah, we need to make a lot of adjustments, and

Ashley Cavazos: 31:22

whatnot. And I'm sure you're seeing and hearing it too. But we were getting all of these high gross, you know, roses coming in? And so are our managers or teams are used to making a certain paycheck, if they're paid on gross, and they're not there. And they're like, Well, how do I afford, you know, this RV that I bought, when times were really good, and the boat that I bought? And now we're in this place? Where like, how do you balance that? Because we're back to where we were getting back to if we're not already where we were three years ago? And it is a tough conversation to have on, on how do i Where do I put my pay plan? And how do I continue paying them what they've been used to making when we're still trying to get to your point, you know, we're having discount cars, and we have more inventory on the ground.

Daniel Govaer: 32:09

Paul Colby, any, any anything you guys have seen?

Colby Joyner: 32:12

We I mean, we've we changed our pay plans and adjusted ours to be more volume based and it was gross based. I mean, just just knowing that the shift is going to be happening, knowing that that's the direction that we're going to be going as a group is, you know, we've made the proper adjustments on that to make sure that our staff and our employees understand what the what the the goal or the goal is for us and what our what our journey is going to be and that they're happy. And they understand that they're going to be supported in that volume base goal.

Paul J Daly: 32:43

I've been seeing a lot of that amongst the dealers, I you know, interact with and work for a lot of volume based shifting going on, like through and through. And I think that's just indicative of the fact that like dealers have, like they understand this is how it's going to stay. And also I think taking the opportunity to shift the mentality of the store Legacy A lot of people moving toward one price, negotiation free, single point of contact, even some in some cases. And, and it's this is kind of like while everything's like shaking up, it's a great thing to put put a few stakes in the ground, right when people aren't, you know, as sensitive to every little thing because they're worried about the big thing. And so, the volume base pay plans do seem like a strategic move on a lot of dealers, radar to like move people toward this mentality. Right. I

Daniel Govaer: 33:32

mean, f&i is what f&i Hasn't so much been impacted? I mean, we can still know Yeah, so I mean, if we're not paying salespeople in some way off of f&i, that's something we could consider. Right?

Paul J Daly: 33:39

I've actually seen I've actually seen a lot of f&i transition or the groundwork being laid to minimize the role of the f&i department or, you know, expensive f&i managers in stores as a result, like I see these two things kind of moving forward at the same time.

Daniel Govaer: 33:56

That's another discussion. I just think, you know, for salespeople I've seen, I mean, there's a 1% Pay Plan that I've seen in luxury stores that I like a lot. It's 1% of the selling price. And then there's kickers based off obviously, you know, enhances based on volume, and you can participate in back end and things like that. But that's, that's because it goes off transaction price and it's transparent. Right. And I think that's one of the things I think a couple things to remember first of all people now people look for jobs every day. I think there's and I'm not saying you're wrong, man. I do, obviously around the Atlanta natural transition period in the year I'm sure that causes people to look at things but salespeople aren't cicadas like they don't have a specific time of year they have to come out and look for a job it's but it's going to be all the time why because I can see on social media where my friends are you know having a great time in a dealership and where their paychecks are still doing all right and I can see on you know from my connection to be I have a much broader Can we all have people that we would consider like somewhat friends that we've never met but we communicate with frequently online and you know that we see them on social media and we can see you know, they'll show us what they're making or we can see how they're doing things that their dealership people aren't waiting for. specific time to emerge from their dealership out into the open streets and be like what dealership will have me now. But I think it's every day that it makes sense if someone's if you're not adept plus how much time do they need to give you as a dealer to adapt? Right? Because like, God,

Ashley Cavazos: 35:15

I was just insane, but also we're looking at recruiting a new generation into our workforce. And it's not always about how much money are they going to make? But how are we going to accommodate their lifestyle too? And that's some of the balance we have that you know, at least I see when I'm when I'm talking to new generation, they're like, Well, do I have to work every Saturday? For how many vegetables? Do I have to work? Right? What are the benefits that come with it because there there are people and don't get me wrong, there are hustlers out there and the younger they want to make as much as they can. However, there are people who want to work to live not live to work.

Daniel Govaer: 35:55

Absolutely. And you don't have to have the same pay plan for every single person on the Salesforce has to be available to everybody they can choose you're gonna have to to pay plans, three pay plans, you can I mean, as long as you can compute it and and easy for the office to understand. Your salespeople can have a choice of pay plans, you don't have to force everyone into the same pay plan. But I think what Ashley saying is 110% invaluable and we've set it now on to wheelhouse people look for more than just what's on the paycheck they look for, you want to see transparency in my pay, I want it to be easy to calculate, and I want to have the flexibility to live my life and have my work be a part of it. Not all of it. But moving moving into that as we do a

Matthew Haiken: 36:29

whole discussion on like this, and I think I've been super valuable. Okay,

Daniel Govaer: 36:34

then that's coming up next time on the wheelhouse discussion on pay plans and, and cost cutting measures also. But in the meantime, we're gonna segue on into a brand new segment that we have here on the wheelhouse is we also pay attention to trends out there on social media. And we understand that relationships are important. There it is. There's my there's my dating game there. So we're looking at what are some workplace red flags where you might be in a toxic relationship at your dealership? If, right and so and I did a sort of an informal poll on on my Instagram, and we'll probably move this over to LinkedIn to get some wider responses, I'll go ahead and kick it off. Here's a few of what I got. If HR is really only involved in gossip, that's a red flag. If, if you're if your dealership has recently cut off, or canceled your forms of training, that could be a red flag. Right? Let me open it up to the floor here. What else? What else? What else would you guys consider to be a red flag at a dealership?

Ashley Cavazos: 37:37

See for me, and I'm a woman, a red flag to me as I see no female representation on my showroom. Right like

Daniel Govaer: 37:47

100%. Okay. And also if they've been recycling managers, that was another one I got. We fired this guy like a year ago, we just hired this guy back

Paul J Daly: 37:55

I think rock when there's a rockstar salesperson that does whatever they want.

Unknown: 38:00


Daniel Govaer: 38:01

Well, I support Jordan rules. The problem is, is that not everyone's Jordan?

Colby Joyner: 38:06

Actually, I saw Simon Sinek there was a post about it, but he was having a sin cya emails to make sure that your job is validated. Yeah, that's a big one. You know, if you're going and you're gonna go work at a place and the requirement is at the end of every day, you got to send an email to say what you did every day to upper management or somebody else and say, Hey, this, these are the tasks and duties that I did. And there's a significant last lack of trust in your ability, therefore, what are you doing the whole time, you're just trying to beg to maintain the job. I'm not saying that you shouldn't send reporting emails or things to you know, show what happened, but if it has to be detailed, like I had a call at this time and then I spoke to this person and then we organize this and we did this and that that's can be very micromanaging and not allow someone to want to stay they're going to want to have a little bit of that autonomy, autonomy and freedom.

Ashley Cavazos: 39:05

If I had to spend more time explaining what I did with my day than actually doing what I need to do in my day, yeah,

Matthew Haiken: 39:13

right. I am by no means perfect but if you are in any of these relationships reach out to me I got a lot of opportunity. A lot of

Daniel Govaer: 39:21

guy over there recruiting also family for over if you're using the word family at work, plenty of resources on why that can actually that you're actually putting toxic pressure on people by telling them like what were family you because you're not because you're also not and you're also the relationship that I have with you is not that a family, right? And my family can't cause me to lose all my in generally speaking isn't going to cause me to lose all of my income, or allow me to make more income. Or also my family isn't going to sit there until well. I can't be told by someone who's never had an issue making their mortgage payment, telling me but we're family at a time when I'm trying I'm struggling to make that payment Cool. So think about that. So think about that coming up. In another two weeks we'll have we're gonna have some great episodes and we'll have some if you want to be on it, just let us know. We're going to be covering things like pay plans, we're going to be covering things like is there actual HR in dealership, in the dealership world? And we're going to be covering more things about red flags in dealership and if it's in the dealership and it's time for you to start talking to a recruiter or looking around what are the things you should be asking those dealerships. All that and more coming up on future episodes of the wheelhouse. Thank you to our panelists for joining us. Thank you so much to JC and Nathan for putting this show together couldn't do without you guys and we will see everybody here on the wheelhouse in another two weeks. Thanks.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.