Latest / Auto Collabs / The View From Down Under with Michael Johnson

Transcript

The View From Down Under with Michael Johnson · Auto Collabs

• 0:00
  What do kangaroos and cars have in common? [upbeat music] This is Auto Collabs. They're both pests. They're both in one of the countries that Michael's podcast, The Dealer Playbook, is- That's literally it...
• 0:17
  published in. [laughs] That's all of it. That's the whole thing. That's the joke. [laughs] That's... There was nothing better than that. That when people meet me in real life, they know I can fit inside of both.
• 0:26
  [laughs] That's a good one. Wow. No. Oh, well, today's guest, the CEO of Saleslogs, Michael Johnson, is an Aussie through and through, and he's bringing that energy into our world [laughs] in this ecosystem.
• 0:41
  It's been amazing. You know, it was, uh... It's interesting because there are so few people that really understand the dynamics of some of the things that Paul and I throw out there into the world.
• 0:54
  [laughs] One of those things being, we're like, "You know, we're thinking..." You know, this is back in the summer.
• 0:59
  "We're thinking of doing a swag shop, but we were gonna print bucks and then give people the bucks- Soaked in bucks... and they were gonna buy them, and we're gonna have someone sponsor that. Sounds good?"
• 1:09
  And someone threw down and said yes. And then later this summer, we were like, "We should do a soccer scarf," said nobody in auto. [laughs] And so you know who we, who we talked to? We were like, "Hey, Saleslogs."
• 1:21
  And they were like, "Huh." And we said, "We are gonna do a soccer scarf. You wanna be on it?" And like true Aussies, they said, "Absolutely." [laughs] Yes. Yeah, I mean, there's something about the energy.
• 1:32
  So I'm, I'm, I'm not a, I'm not a soccer fan. Right. But I, I don't have anything against it. Rugby? I, I... Probably less. I don't know. I mean- Ooh... I did watch- He doesn't like lacrosse either. I'm sorry.
• 1:44
  Yo, look, Syracuse is like, we're lacrosse- Hockey... started. [laughs] I mean, I get it. Doesn't even like it. [laughs] There's a bias there. He was a, you know, Syracuse clogging champion, so. [laughs] Who, who was?
• 1:53
  You. You. [laughs] I've seen the photos. Oh. Really? Oh, man. Learning to dance. I don't even know what you're talking about. Well, enough about us. [laughs] We're really excited to kinda hear how- Please...
• 2:02
  uh, hear what, uh, is going on over there at Saleslogs, and how, uh, a bunch of Australians have, have l- looked to serve us, us plain old American folk. And, uh, can't wait for you to, to meet Michael Johnson.
• 2:20
  [upbeat music] Oh, man, I am excited to hang out with Michael Johnson.
• 2:28
  Uh, and only, and maybe not only because, but a major reason why I am excited about this is he is up in the future. Tomorrow, w- Paul and I are here on- Meet us from the future... on a Wednesday.
• 2:41
  [laughs] And he is on, in Thursday in Australia. Uh, Michael, thanks so much for joining us on Auto Collabs today. Awesome. Hello from the future. [laughs] It's, uh, it's, uh... Morning.
• 2:53
  It's great to be here, catch up with you guys. Um, we're very excited. It's- Yeah... uh, it's nice and, it's nice and early here, so we're, it's just after 6:00 AM, so, uh, we're, we're ready for a big day.
• 3:03
  [laughs] I love it. I love it. That's awesome. Well, you know, the first time I met you was actually back at Digital Dealer in, it was pre-pandemic, so, you know, there's the blitz there. Yes.
• 3:14
  I can't even remember what year. I think it was 2019. 2019. And you all were a small booth in the back corner of Digital Dealer, and I was like, "Well, who are these guys?" I didn't even know this. Yes. Yeah.
• 3:24
  So, so- I didn't know you in person. Yeah. So that's the- Yeah, yeah. [laughs] So that's the first time we met. We saw each other again at Digital Dealer this year.
• 3:34
  Uh, and, and so, uh, you all have been operating Saleslogs in, in Australia for the longest time, but are, are, are looking at entering, uh, this kind of US market at this point.
• 3:46
  So, but I'd love to hear the, the story behind the story a little bit, because you've been in automotive- Yeah... for quite some time. Um, what- Yes... what, what... 'Cause you had a retail journey in auto.
• 3:57
  Tell us a little bit about, like, how you came into that, and, and what your retail journey was like. Yeah. So, uh, I, I've always loved cars.
• 4:06
  So even at a young age, uh, the guy who lived directly across the street owned the big dealer group in, in my, my city.
• 4:14
  And, uh, so I always was quite interested in, you know, what new cars did he have, and we were always sort of over there having a bit of a, a, a look.
• 4:20
  And, um, I, uh, I, I went into, to a retail telco business for about 10 years. And when I wrapped that up, it was like, "Okay, I'm gonna do something different. I've always loved cars.
• 4:33
  I'm just gonna start selling cars and, and just work my way into the industry."
• 4:37
  So, you know, and, and the general manager who hired me at, at this BMW dealership, uh, as my first gig, you know, he's, uh, he said, "Oh, like, we're in the people business, you know.
• 4:47
  It's just the medium of exchange is cars." And, and that kind of resonated with me- Mm-hmm... because all through my telco journey, it was always around customer experience, you know.
• 4:56
  You were always delivering that exceptional customer ser- experience, because what differentiates you from, from your competitors, right? And so, uh, so that was the start of my journey.
• 5:05
  And, and my first month, like, I sold 20 cars. And, uh, a- and everyone was sort of like, "Whoa," like, "This guy's never sold cars before.
• 5:12
  And, and, and here he's pulling 20 cars straight off, off, off the bat," which, uh, impressed these. I, I worked for BMW, um, with...
• 5:19
  Was my first gig, and, and I then worked my way through a, a few different roles, so into a sales management role, uh, and then into a general manager role. So it was, uh, it, it's been an exciting journey.
• 5:31
  Um, I then used Saleslogs as a customer for, for a majority of that time as well, that I was in dealership land- Okay... and thought like, "Wow," like, "This, this-"... tool saves me so much time.
• 5:42
  So that was where I met John, our founder, and, and he started selling cars straight out of high school as well.
• 5:47
  So, you know, we're, we're, we're both car people who have had a, a significant tenure in retail, that have then moved across into this vendor space to, to find a tool and solution. So, yeah.
• 5:58
  I lo- we always love it when people have real-world experience, and then either you have used a product in, like, the dealership or, you know, just understand what it's like by living in both sides of the fence.
• 6:11
  So that goes a long way. Let's talk for a second, because I know a lot of the folks that are gonna be, um, watching this, listening to this, um, are not familiar with the company or the product.
• 6:21
  The people who are on the ASOTO email list are, because you, you've, uh, promoted, you've been promoted in some of the emails and, you know, people are- Yes... are very, seem very interested in the product.
• 6:30
  But can you start by telling us a little bit... Let's get a little tactical, 'cause we like to introduce, you know, our, our audience to the people and the personalities and the products, right? So I think we're out...
• 6:40
  Your personality's coming through already. Um, yes. [laughs] Yes. [laughs] And I, I feel like we're just about to crack that can open.
• 6:46
  Um, but let's talk about the product for a second, because, um, it's important that everyone has some context.
• 6:51
  Can you just tell us quickly what Sales Logs is and the extent of the reach you have in the Australian market? Yeah. So, so Sales Logs as a product is essentially, it, it's your daily y- your sales log.
• 7:04
  It's your daily deal book. Um, we sit separate to the DMS and we sit separate to your CRM because we find that there's this gap in the process. That the, the DMS is your accounting system.
• 7:14
  The CRM's tracking all of your leads and, and inquiries and, and sales sort of process, right? So what do we do to track all of the deals that we've done? What gross do we expect?
• 7:24
  And all of that checklist of things, we do it in a spreadsheet, right? So we find all these spreadsheets, they're built by people in the business.
• 7:32
  So, you know, they're not data analysts, they're sales managers generally who are, are building these spreadsheets and tracking this data. So that comes with a lot of risk and, and complications with that.
• 7:43
  So we've built an online platform that's in the cloud. So think Google Sheets on steroids, like it's completely just set on fire and, and just with so much more features.
• 7:55
  So we've built out all of those things that become a problem or a challenge or still a restriction with inside those environments, uh, and fixed them so everybody can see it. Anybody can customize their view.
• 8:07
  Give us, give us one, give us one, like, what's the most used instance of your product? Like, give me, give me like a real tangible use that people, like, rely on it for. Yeah.
• 8:15
  So sales managers are looking at, so counting their gross, uh, and units and volume, uh, what retail report information that they've done, um, and, and just basically tracking every deal from start to finish.
• 8:27
  What have we sold? What are we delivering? Especially in the current environment, we've got stock, you know, stock shortages, chip supplies, things like that. Oh, yeah.
• 8:35
  And the American market's now shifting that, you know, you're not walking in and buying a car and taking it out a few hours later anymore. You know? There's, there's order pipelines now to contend with.
• 8:45
  So how are dealerships managing that pipeline? You know, who have we sold to? When are we expecting it to come in? And how are we communicating internally about those vehicles?
• 8:54
  Uh, so we track all of that as well inside the system. So- Gotcha. That, that makes sense. And- No, that, that, that's a very practical and, and timely, obviously, use for it.
• 9:03
  Uh, tell us about your customer base, um, existing, you know, in Australia, because again, like we wanna give an idea for like the actual adoption of it for other dealers that might not be US dealers. Yeah.
• 9:15
  So we, uh, so we work with about 700 dealers currently across Australia and New Zealand. Um, so we've got about 6,000- How many dealers are in Australia and New Zealand?
• 9:22
  [laughs] Uh, I, I think there's about 12,000 or something. There- Okay. I just, I, I just- There, there's still, it's a good number. Okay, okay. Are there really 12,000?
• 9:32
  Yeah, so- That kinda blows my mind- It seems like there's a lot more... 'cause the la- it seems like... That, that seems a lot to me. 'Cause US is like 16,000 in the US, it seem- Yeah.
• 9:42
  Maybe it's, maybe it's not that many then. Like we're, it's, there's still- [laughs] We've prob- we've probably got about tw- I think we have about 20 to 25% of the market. Okay. Yeah, so it's, um- Wow...
• 9:51
  yeah, there's still a lot of opportunity, we'll call it. Yeah. [laughs] Um, so there's, uh, then across the- He's on the metric system. Yeah. [laughs] Yeah. I'm just kidding. [laughs] We were just throwing numbers at me.
• 10:00
  It's too early in the morning for this. Um- [laughs] He said numbers? That's for the data analysts. That's why we have graphs in our software, right? [laughs] Yeah, that's exactly right.
• 10:11
  [laughs] Um, so we've, uh, yeah, so we, we w- we've got about six and a half thousand users signing unique every week. So we're seeing, yeah, quite a number of people in our platform.
• 10:21
  Um, some people just sign in once or twice a week. Some people live in it, you know, they, they're there all day every day.
• 10:27
  Sales managers, um, you know, stock controllers or inventory managers, uh, they, they're the primarily, you know, the, the big users.
• 10:34
  Um, you know, you've got general managers and, and business owners who are spending more, a bit of time sort of having a look at the, the dashboards and the graphs.
• 10:41
  They'll sort of look at how's the business tracking and performing. We've got automated daily reports that come out, um, just to keep everybody in the loop of, of where things are at, so. Very nice. Very nice.
• 10:51
  So, okay, so we have this platform that helps, that kind of lives in this world between the DMS and the CRM for pertinent information that is, like, very real-time sensitive.
• 11:05
  It's literally decision-making information that you're providing, right? Yes. Like, in real time. You have 6,000 unique logins every day, so people are relying on it. What, what do you hear...
• 11:19
  You know, I asked you a specific use case. Mm-hmm. What, what is the biggest pain right now that... Now granted, markets could be a little different, but there's a lot of similarities, supply shortages.
• 11:28
  What is the biggest pain that new customers are coming to you to solve? The transparency of data.
• 11:37
  So, you know, a lot of, a lot of new customers who come to us, they've got these spreadsheets, they've got data that they're tracking, uh-And they can't share it with everybody or there's limitations.
• 11:47
  People break spreadsheets all the time. There's so many formulas and things in the background that people have built out. You make one mistake of just deleting it, and it breaks the whole system. Mm-hmm.
• 11:56
  Um, putting it in the cloud. So people are trying, you know, they've got these monster spreadsheets. The size is getting too big. They're trying to migrate it into the cloud.
• 12:03
  You know, they go and put it on things like SharePoint or Google Sheets, but then it gets too complex.
• 12:07
  And so they're, they're, they're trying to work out what is the solution for us to not have to spend hours and hours building and maintaining this thing?
• 12:15
  We just want our team to be putting the data in, tracking the information, getting the answers in an instant, not having to become data analysts and, and building these products.
• 12:26
  Are, are you starting to see that, that there are, like, profit gaps that are found or filled because there's a, there's a reporting system, like, outside of the DMS, outside of where the accounting is getting done?
• 12:41
  Are, are people finding or, or discovering those gaps early enough to kind of, like, stop loss or, or increase profitability because of their ability to kind of track down trends, uh, sooner than, like, when accounting closes the deal?
• 12:56
  Yeah, absolutely, because we've got, uh, you know, the transparency around what is the forecasted gross. So if you've got a sales manager, you know, telling their GM, "I've got, you know, X amount of gross.
• 13:06
  I've got $300,000 worth of gross covered so far this month." But then by the end of the month, if we end up at only at 280, well, where is that $20,000 gap? And, and at the end of the month, that's too late to see.
• 13:17
  But as we're sort of tracking and delivering vehicles through the month and accounting or reconciling those deals, we're highlighting on every individual deal.
• 13:24
  Sales manager thought there was three and a half thousand dollars in this deal. There was only 3,200 in the deal. Then identifying where the gaps are. You can then leave notes and comments with inside our system.
• 13:35
  We've got automatic email notifications that come off the back of that to go, "There was a variance, and it related to this."
• 13:40
  So if we start to see consistent comments about the same thing, is that a training opportunity for that manager? Or do we have the right costs loaded in our DMS for pre-delivery charges and things like that?
• 13:51
  So when you see those comments, it, it, it enhances. Like, I, I know I've, I've experienced that personally myself. I had a sales manager once who, um, was terrible at grossing up a deal.
• 14:02
  And forecasting was always telling me there was way more in the deal. [laughs] Like, two, $3,000 more every deal.
• 14:09
  And then we very quickly worked out that he just couldn't read the profit screen inside the system properly to know that this is actually the number that you should be counting. Right.
• 14:18
  So, um, you know, and, and, and, and that's where we, we need to then train our staff, highlight the information. But also forecasting through.
• 14:27
  As, as we're tracking through the month, we wanna know, like, where is the needle? Are we on point or are we not? And, and keeping a close eye on that. And we need to know that now.
• 14:35
  It's no good when you're running a report that you're having to collate together at the end of the week or towards the end of the month from your DMS, which is looking in the rear view mirror. Right.
• 14:46
  It, it's what's happened. It's what have we closed off and done, and there's your report. So there's that gap. Well, and I, you know, the, the biggest interesting thing that I'm really intrigued about is this.
• 14:58
  You kinda, you kinda threw this out there that people are dealing with, obviously, a, a large amount of orders or pipeline sales. And we start to... You know, you start, you're like, "Ah, we sold one today," right?
• 15:11
  You write it down, and all of the sudden you're like, "Oh, actually, that one's gonna get delivered in three and a half weeks when the truck drops it off." Yeah.
• 15:18
  And so now you can actually potentially manage profitability in the future and now in a more accurate way because you're looking at how, how we're trending and tracking over, over a certain period of months.
• 15:30
  And so there's, uh- Yeah... it sounds like you're solving for that sort, sort of fo- forecasting too. Absolutely.
• 15:37
  And this is where we're seeing that shift in the way that the, the US market is operating and how consumers are able to buy a car, not how they want to, because we're impacted now by stock supply.
• 15:47
  In Australia, we don't have local manufacturing. So if I wanted to order a car, we were waiting months already. Even pre-pandemic. Right. It was three or four months wait for those cars.
• 15:58
  So how do you manage to know, well, what have I sold? What am I delivering this month? What's gonna carry over? What gross is associated with those deals? What F&I is attached to those deals?
• 16:09
  What revenue is coming in a- associated with it? But what trading is, is associated with that vehicle as well, because we all need to inquire that inventory when it comes in.
• 16:17
  So the used car manager wants to know what trades do I have coming in when, where that communication happens between those two, you know, new vehicle and used vehicle managers.
• 16:27
  Because at the moment, we don't really communicate and say, "Hey, that trade-in's coming in on Friday at 4:00."
• 16:34
  Um, now our system is just unconsciously telling them because the new vehicle manager or the delivery coordination is occurring around getting that new customer their new vehicle.
• 16:44
  We don't really care too much about the trade-in coming in because it doesn't impact my department. Interesting. However, there's a new, there's a used manager. Oh, my goodness.
• 16:50
  So, like, let's say I got a Mercedes coming in off trade. I'm a Honda dealer. I know I'm gonna have to do an oil change. I can go ahead and pre-order that Mercedes filter, and all of a sudden my speed- Yeah.
• 17:03
  Now, now you're talking about, like, speed to retail, which is also important because many franchise dealers are becoming much better used car operators, which, which means- Yep...
• 17:11
  speed to merchandising is really important. And now on all of your trades, which are already quick turns into merchandising, you go even quicker.
• 17:19
  You could almost get that vehicle up, like, within hours of it being there, especially if it's kind of a frontline ready because you know it's coming. You put it in the pipeline for detail.
• 17:28
  You put it in the pipeline for reconditioning. It's all ready. It's all there. Yeah. You know, the- Yeah...
• 17:32
  it seems that, you know, what you just explained as far as, like, what the just general environment in Australia is as far as needing to order and plan, it's like you've already played the game for so long that- Yeah...
• 17:45
  the US market has to play now and is learning how to play. So it seems to me [laughs] that you're actually, you were, like, built for this time.Right? Like there would be a- Exactly.
• 17:55
  [clears throat] Like this is a better time to come to market than it would've been in 2019, like to come strong. Yeah. Because, like, you're solving the, the problem right now. [laughs] Yeah.
• 18:03
  It's a completely different conversation, and it's quite interesting when you say, like, 2019 versus to 2022, right?
• 18:10
  Uh, when I first met a couple of our dealers who, who came on board with us in 2019, after that first Digital Dealer, they, they're like, "How many carry overs have you got?"
• 18:19
  "Oh, like two [laughs] a month" [laughs] You know? And, a- and they're selling, like, 800, 1,000 cars. You know, like, the top performing dealers in the country here are selling 200, 300 cars a month.
• 18:33
  Um, a- you know, and I remember sitting at lunch at Digital Dealer one day, and these, these two ladies were talking, sitting next to me, and she's like, "Oh, I've been working with this BMW dealership. It's only small.
• 18:44
  They only sell, like, 100 cars a month. It's hardly worth my time" And I'm sitting there going like- [laughs] "If my BMW dealership was selling 100 cars a month, like, I wouldn't be here.
• 18:54
  I'd still be working there" [laughs] Like. Right. Wow. That's amazing. That's amazing. That's amazing. So- So let's do this. I th- I think we talked about the product, right? And we get kind of a good overview.
• 19:06
  Give us an idea of, like, the personality of your organization.
• 19:10
  Give us some idea for the size and the scope, and, like, what the mentality is inside Saleslogs, how, how you approach sales, how you approach customer service, because that is just such a big question mark, and I think a very, very important thing to dealers.
• 19:25
  Yeah. Like, yeah, I know, like, I could turn the software on, but what's gonna happen when I have questions? What's gonna happen, you know, when something doesn't go right or I need something changed?
• 19:34
  So give us, give us a little overview. Like, what's the, what's the attitude, mentality, and the personality of, uh, the Saleslogs organization? Yeah. So f- for us, because we are car people, we get it.
• 19:44
  So when there's something pops up in terms of people go, "Oh, hey, I wanna do this" or, "This is the outcome I'm looking for" or, "I'd like to see a report on a particular thing", we'll always take that feedback on board.
• 19:54
  And a lot of things are very easy for us to just build, develop, and deploy. So for example, I had a meeting the other day with, uh, a Toyota dealership, and they wanted to look at a specific metric around F&I.
• 20:05
  So we didn't have that report built in the system, so I went, "Oh, w- we'll just go and build that for you" And, um, two days later, "There's the report. Just click here.
• 20:13
  Here it's, it's built, ready to go" Um, so of course, you know, they're amazed with that. Um, our customers love our product. So we don't, we don't lock anybody into a contract.
• 20:23
  This is how much we believe in our product- That's awesome... that it will make your life better. Yep. There's no setup cost, and there, and there's no contract term.
• 20:30
  If you pull the pin after two, three months, that, that's okay. W- you know, we, we're okay with that. We get it.
• 20:35
  Um, because our product needs to enhance your current process and, you know, take it to this next level, uh, replace what you're doing currently. So we're car people. We get it.
• 20:47
  We understand when people ask things, and, you know, we can pivot and sort of move across. And because we're not a huge corporate organization, we don't have to jump through all these hoops.
• 20:57
  You know, talking to me and saying, "Hey, I'm looking for this solution" or, "I'm trying to do this. Can we build this feature?"
• 21:03
  You know, between John and I, we're the ones on the front line making those decisions with our customers daily to go, "Yeah, I can see what you're trying to do, so we'll go off and plan that and build it."
• 21:12
  Because when we release functions and features, we release it to everybody, because it's a benefit. If you're asking me for something, it's important to you. There's probably- There's a good chance...
• 21:20
  another 10 people- Right. [laughs]... who also think it's important to them. Well, see, it sounds like you've built the data in an ef- in an, an efficient way, where it all kind of sits in a warehouse.
• 21:29
  And it's just like, "Oh, that's an insight someone wants? Poof" You know? Yeah. You just pull it out, and it, and it makes sense. That's amazing. You know, I wanna ask- It's- I, I wanna ask two questions.
• 21:40
  One is, uh, so you guys are coming to a SoDoCon, which is, that's just a big deal to me. For you all- By the way. Look. By the way, let me interrupt this- [laughs]...
• 21:47
  because I have something really special sitting right here. There it is. Look at that. Hey. Hey. Look at that. Well, first of all, you all threw down with us and are hosting the, the swag, uh, with us, which is- Ah.
• 22:03
  I love it... un- Like, I, uh, initially, I was like, "Paul, we should do a scarf", right? 'Cause I'm a big soccer fan. Yeah. And then- Yes...
• 22:11
  and then some Australians, which, like- [laughs] Happen to know a thing or two about football. Happen to know a thing or two about soccer- [laughs]... were like, "Hey, we'd love to partner" Yeah.
• 22:20
  And you guys, it just made a whole bunch of sense, [laughs] which is great. And I gotta tell- Yeah...
• 22:24
  so I, I didn't grow up watching soccer or, and Kyle has kind of been my, my first touch into the game and understanding the culture and the community that actually happens around the game.
• 22:36
  And so when it came time, like, this is the very first soccer scarf that's ever been around my neck. And, and I honestly- Excellent... I, I'm in love with it. [laughs] Excellent. Yeah. That's amazing. But- Yeah...
• 22:47
  but you told me something else that I think that you might be bringing. Now, I might be committing you to something more than you meant. Oh.
• 22:53
  [laughs] But, but you sent to me, you said, "I think we're gonna bring some," I think they're called Tim Tams. Is that, or Tam- They are. Okay. Tim Tams. So- So, so which is amazing.
• 23:05
  [laughs] And I don't know how many you're gonna bring. People might be, like, knocking down the doors to find out- What is it, T-I-M T-A-M? T-I-M T-A-M. Is that what it is? Yes. Talk to us about- Okay. Yep...
• 23:13
  what a Tim Tam is and, and why- [laughs]... why you're gonna bring it to SoDoCon. Now we're getting to the real conversation. [laughs] So it is, it is a chocolate biscuit or, uh, you might call it a, a cookie, I guess.
• 23:26
  Um- [laughs]... it is absolutely delicious. And, uh- [laughs]... I'm gonna bring, I'm gonna bring quite a few. Nice.
• 23:34
  So, uh, w- there, there should be plenty, provided, [laughs] provided I don't have any issues at, like, customs. [laughs] Customs, yeah. Yeah. Like- Just smuggle them in... um, very, very hungry. I'm gonna call.
• 23:43
  I'm gonna have to pick you up. We're gonna have to pick up Michael from customs. We're gonna be like, "Uh, are you gonna claim this guy?" Right? "He's stuck here in the- Yeah...
• 23:49
  Philadelphia airport" [laughs] That's great. That's great. Yeah. And it'll be like, "Um, what, what do you need all of these biscuits for?" Like, [laughs] you know we've got food here, right? Very hungry.
• 23:59
  [laughs] Very, very hungry. That's great. And then my other question- Yeah, so-...
• 24:02
  is, is a lot more, uh, a lot more intentional on what specifically a lot of dealerships here are talking about right now, which is not just this inventory squeeze, which we'll be, which we'll be talking about, but there's been a lot of conversations about what's happening at an OEM level at-...
• 24:16
  uh, in Australia, and I'm sure some of your dealers are starting to deal with some of the conversations that are coming out about how franchises are, are, are, are organized, how, how OEMs are relating to dealers.
• 24:28
  And just wanted to kind of see, like, have there been insights or conversations around that, and how are dealers approaching that conversation with the OEMs in Australia?
• 24:37
  Because I know that there are a few OEMs that have started to push the boundaries of those relationships, right? Mm. We, we started to see a lot of the shift around this agency model, uh, with EVs coming out.
• 24:49
  So we saw a few brands going, "Okay, you can have the full electrifica- electrified version of this particular vehicle, but it doesn't count to your retail targets or basically your OEM numbers."
• 25:01
  So they were doing delivery on behalf of. So there was a couple of brands that were doing that specifically for their electric vehicles.
• 25:08
  And now, of course, we're seeing one particular manufacturer, Mercedes-Benz, that you wrote about, uh, the other day, uh, off the back of obviously the article and, and there's, uh, there's a court case and everything going on here at the moment.
• 25:21
  A lot of it is just people sitting back watching to see what happens with this particular example because it's gonna set the precedent, right- Mm-hmm...
• 25:29
  of, of where dealerships are going to go in terms of their relationship with the OEM, um, and what that looks like. Um, you know, the dealerships had to sign their agreement.
• 25:39
  They, they were down to the wire of sign today or take your sign down tomorrow morning kind of thing. Wow. So they didn't really have a choice.
• 25:48
  Um, you know, they, they had to just jump on board and go, "Well, we've spent all of this money on, you know, facilities and brand and,
• 25:57
  you know, loyalty in our community," to then kind of feel like they're handing that over, um, to, to the OEM and going, "Well, this is, this is kind of yours." Um, huge impact with, uh, with another, another brand.
• 26:11
  Honda, for example, you know, they, they changed to agency model last year. Their, their sales have taken a big dive, which they were expecting. Uh- Wow...
• 26:20
  you know, they, they were re- they were reducing that anyway, um, as part of that plan. But what sort of happened off the back of that is dealers then were no longer dealers.
• 26:30
  So with the transition with Mercedes-Benz, every dealer moved through into agency. They didn't take anybody off the, the list and go, "You're no longer gonna be a dealer." Honda didn't do that.
• 26:41
  So that was where there was a big change. So, you know, long time Honda dealerships, 30, 40, 50-year dealers, no longer dealers. Weren't invited along for the ride. Whoa.
• 26:53
  So, um, yeah, so that, that's, that's also another court case that's sort of going through because, of course, there's all that goodwill associated with it, where those customers now get directed for service because, of course, they were then told, "Oh, that service center has closed."
• 27:08
  Uh- So where- "Your nearest service center is..." Yeah, where, where- Wow... are people getting their Honda serviced? [laughs] Well- That's wild... they're, they're an independent dealer now, so they're still open.
• 27:16
  They can still service that particular customer's car because they're, they're in their database and everything. So but they actively went out and said, "It has to-" They're an independent.
• 27:23
  They're a used car dealer at this point. Yeah. Very- How about warranty work? Well, they wouldn't be able to do warranty work because they're not a dealer. Wow. So, um, yeah.
• 27:33
  So it's, it's been- Wait till Bendstock hears about this, right? [laughs] Yeah. No, I, I, I, you know- Yeah... obviously I don't want, I don't wanna put all the pressure of like, you know, what do you think about it?
• 27:46
  That's not the idea. Yeah. But I think- Right... you know, you obviously- Yeah... are connected to 700 dealers that are going through this.
• 27:51
  They're watching their friends that are down the street go through it, or they're, or they might be e- experiencing it on their own.
• 27:57
  And, um, uh, you know, I just think that, like, there's wisdom in understanding that this is a reality across the world in developed countries- Yeah... that are, that have the same leadership.
• 28:07
  Like, it's not like, you know, the Honda leadership in Australia doesn't talk to the Honda leadership in, in the US at any point. And so- Yeah...
• 28:14
  being cognizant of those changes and how they took place, I think, is really important for us to understand.
• 28:18
  And whether it's a six-month timeline for US dealers or three-year timeline or 10-year timeline, that, that that's a reality happening at the OEM level that, that we just need to be cognizant of.
• 28:28
  And, and so to hear that, like- Yeah... firsthand experience of, "Yep, it's happening to dealers in our network and it's happening... You know, w- we s- we see it and, and we know it's happening.
• 28:38
  These people are becoming independent dealers overnight almost," um- Yep... uh, uh, that's a, that's a wild deal, so. Yeah. Like, we... You know, we had, we had GM exit from, uh, from the Australian market.
• 28:50
  So, you know, they, they exited from right-hand drive vehicles, um, which, which of course that was a bit of a shock, um, because Holden as a brand, it's iconic. You know, Australian brand, the Holden Commodore.
• 29:03
  Um, you know, I, I remember as a kid that you either had a Falcon or a Commodore. Like, that was, you know, that was the two car choices, Ford or a Holden.
• 29:10
  And, um, yeah, like when, you know, local manufacturing exited, but then when Holden exited, you know, the market of right-hand drive, uh, and now we, we have GMSV, which is the special vehicle.
• 29:22
  So we, you know, we see some Silverados, you know, starting to get around and things in, in imports.
• 29:27
  But it was quite a change to sort of see that shift out and, and of course that caused some waves and sort of upset losing that sort of brand, and now going down this path of agency models with other, with other brands.
• 29:40
  And w- we saw one customer, they had three Honda dealerships. You know, they weren't invited along for the ride. You know, they had to close all three Honda dealerships because they just downsized.
• 29:50
  You know, and we're talking about metro dealerships as well. Mm-hmm. Not like they were in country and regional areas. They were metro dealerships and just went, "Nah, we, we don't need your locations anymore."
• 29:58
  Wow.Well, look, I think that everyone who watches this is going to be excited to meet you in person- Without a doubt... and not just for the Tim Tams. Not just for the Tim Tams.
• 30:09
  [laughs] He's gonna have a big trench coat going through security, and he's [laughs] gonna, right- [laughs]... he's gonna have Tim Tam, full of Tim Tams are gonna be falling out as he walks along.
• 30:16
  I think that people are gonna be very intrigued to learn more about what's going on in the Australia market, but also to learn about the product, because you're solving so many problems that US dealers are, are just trying to wrap their arms around for the first time.
• 30:28
  So thank you so much, uh, for, for being in the ASOTU community, and, uh, being a part of ASOTU, and being a collaborator. But also, thanks for giving us some of your time today. Like- Yeah...
• 30:37
  I can't wait till we can jam in person. It's a big deal. Yeah, pleasure. Yeah, it's not long to go. I'm, I'm, I'm almost, like, doing the countdown timer. Yes, absolutely. So when I get on the plane to head out there.
• 30:46
  So not long to go. Looking forward to catching up in person. Thanks so much for your time. [upbeat music] It's really easy.
• 30:57
  I mean, coming from Canada, I find it really easy to, to kinda get sucked into the American vortex, where it's like, "Oh, this is the way the industry works."
• 31:05
  When you meet American industry professionals, sometimes we speak as if this is just the way things happen all over the world. And of cou- Yeah... of course, there are some similar threads.
• 31:14
  But there is nuance, there is difference.
• 31:15
  And I think this, this conversation really kinda underscores that, no, Au- like, Australia is dealing with some really interesting context and nuance that Canada's not dealing with, or America's dealing with something that they're not dealing with.
• 31:28
  Yeah. And I think that's the power of, you know, what, what we're working on here in this Auto Collabs, is bringing in as many vantage points as possible. So I thought that was really interesting.
• 31:37
  Well, and what's so cool is that actually something that they've dealt with for quite some time, in needing to order inventory and not, uh, having a lot of home, uh, uh, you know, production in-house, essentially, in Australia, is that they've managed their inventory and managed profitability differently, which is exactly the way that auto dealers in the US are starting to have to deal with that.
• 32:00
  Right. And so there are learnings that go both ways, right? There are, maybe, maybe the franchise system is really good and should be passed on to other countries.
• 32:08
  And so there might be other countries that kinda look and go, "Hey, actually, they are doing it really well over there in the US. We gotta still figure that out." [laughs] And then we can learn from- What a pinhead...
• 32:17
  inventory management strategies and, and all of that from potentially other cou- countries.
• 32:21
  And I think, you know, what Michael and his team at SalesLogix are doing, and allows us to learn some of those dynamics in a way that has a perspective not based on, "Oh, we just have to figure this out."
• 32:32
  Oh, no, it might have actually been figured out by someone else. Yeah. And we can copy that to Jim McKelvey's point, innovation stack that's already been... Yeah.
• 32:40
  Uh, I remember hearing, like, a couple years ago, was the first time I ever heard that, oh, well, like in Europe and Australia, a lot of people order cars. Like, it's more common for someone- Right...
• 32:50
  to order a car and wait 60 to 90 days. And I remember thinking how ridiculous that sounded. Like, no one's ever going to do that here, ever, right?
• 33:00
  And now we're faced with the fact that we are dealing with that, and we'll likely do a lot more of that in the future. Now, look, it'll balance out a little bit, but getting...
• 33:09
  I'm so excited that SalesLogix and Michael are bringing all that over to, like, say, "No, actually, this is how it works really well, actually, in your favor, and in the customer's favor," now that the customer mindset has been a little retrained.
• 33:22
  And look, I'm just really excited for the moment he gets that football scarf, we'll call it, around his neck. [upbeat music] And, uh, I'm excited for the industry to meet him, because he's just a great guy.
• 33:32
  So on behalf of Kyle Mountsier, Michael Cirillo, and myself, thanks for listening to Auto Collabs.
• 33:36
  Sign up for our free and fun-to-read daily email for a free shot of relevant news in automotive, retail, media, and pop culture. You can get it now at asotu.com. That's A-S-O-T-U dot com.
• 33:49
  If you love this podcast, please leave us a review and share it with a friend. Thanks again for listening. We'll see you next time.
• 33:56
  [upbeat music] Welcome to Auto Collabs. [laughs] [laughs] Are we recording?
• 34:12
  [laughs] Are we rolling yet? Not yet.