Latest / Automotive Informants / The Future of Car Sales: Amazon, AI, Compliance & the Next Downturn

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The Future of Car Sales: Amazon, AI, Compliance & the Next Downturn · Automotive Informants

• IgniteUps.ai: Welcome back, everyone. My name's Chris Martinez. I've got a special guest today. Zach, ⁓ unfortunately couldn't be here with us, but we've got Max Zan, and I'm am I pronouncing that right, Max? You know? Okay. And you know, we've got a a a lot to talk about today, Max, but before we jump right into it, if you can just tell the audience who you are, your background, that way have a little bit more insight. Max Zanan: Yes, sir. So I spent my entire career in automotive. I started back in 2001 selling cars. You I finished as a general manager running multiple rooftops. and then I transitioned into F and I products, ⁓ training, reinsurance. like you, you know, I wrote a bunch of books on automotive, five of them. I had four them translated into I think yours are translated into Russian as well. And spend of my time in Spain, but I do all my business in America. IgniteUps.ai: That's awesome. It's Spain. I'd I you know, I've been to Spain, b Barcelona. It's amazing ⁓ country and it's it's pretty amazing that you you get to hang out there. I I've I've told my wife when kids are gone and graduating on on their own, my goal to to live abroad at least a couple months out of the year. So that that would be a lot of fun. I can only imagine ⁓ the experiences that you get to to go in day in, day out. I think I encourage everyone i ⁓ in the United States to to get out there. more and and take a look if you have the opportunity to go abroad and and see what life is like outside of the U.S. although the U.S. I mean we've got a lot of amazing places here too so but still they still need to you guys still need to find a an opportunity to go at once in your life. It's it's pretty amazing. Well Max you with your background we have several topics we wanted to get I want to get into but there's one specific topic to to get it kick started. JD Power Study 2026? ⁓ came out just recently. And I ⁓ I found interesting about this topic or this ⁓ was that it was more geared towards lenders. So dealers, it was a survey that they reached out to all these dealers and asked, you know, what how can do a better job? And ⁓ What I found interesting though is that it basically sounds like what consumers are saying. From the dealers like when they're talk complaining about dealers, I feel like the the dealer was complaining about lenders. Like wanted to be a little bit more consistent, faster, less friction. And I all of that, I just thought, you know, maybe we should kind of look in the mirror because if we as dealers are, you know, saying that about lenders, you know, maybe we should be doing the same thing for the consumer. What do you think about that? Max Zanan: know, I really f I it hard to believe because i you know in twenty twenty-six and and before, most of the right, when you submit a deal on dealer track is algorithmic. Right? ⁓ really, if you know your structure as a finance manager and you understand ⁓ to income and then to debt to income ratios, you book out the car properly and structure according to the bank's program, it's going to be an automatic approval, right, within a nanosecond. So if the dealers are complaining that it's taken longer, could it be a reflection the F and I department ⁓ knowing how properly structure and submit a deal? IgniteUps.ai: Well, me push back on that a little bit. and all depends on the the lender specifically, like your captives. You know, when I worked at Mercedes-Benz there was some challenges there. of course there was definitely, you know, auto approvals and that, but you know, I would say about a year and a half ago, every the matrix and there was challenges you know, they stopped financing c customers over at over seventy two months and really you couldn't get anybody over sixty months with back end. So if you wanted to get back in, you had to finance them at sixty months instead of seventy two months. So or you had to make some kind of exception. But and then it depends on the dollar amount too. So if there was a customer that was trying to go for over a hundred thousand dollar car You'd have to sometimes, you know, submit extra information. because I've had customers that were eight hundreds, made, you know, five hundred thousand dollars a year, has financed vehicles, but never financed anything over a hundred. So that took another approval. And so those kind of things, so you know, it's not as black and white as you describe. For the most part, it is with other lenders, like maybe Capital One. ⁓ ⁓ well S Fargo companies like that, but still, know, from as a percentage like dealers that rehash, maybe there I I would say thirty percent of your deals are probably rehashed because you're trying to get y some kind of improvement in some of the deal structure just because maybe your advance is a little too much or the the credit buyer is maybe you're you're just asking for a little bit more in certain back end products. there's there's there's several different reasons why I would say that I could see it from a dealer's lens, but yeah, I think you're right. Mo f for the majority of the time it should be, you know, just as easy as knowing your your guidelines and structuring it based on that. ⁓ But you get a lot of negative equity. I mean there's there's different reasons why you need to call in See if you can get that structure. Max Zanan: I agree with you and and and I think that's why you know talented F and I director or a talented F and I manager would have relationships with multiple banks, right? Because there are different circumstances. You cannot put all your eggs in one basket and just say, just because I'm a Honda, I'm gonna use Honda Financial 100% of the time. Right? Because it ⁓ maybe it's not a fit 100% of the time. And then it comes down to relationship building. Right? cannot expect a rehash with a complete stranger that you've never spoken to before, that never ⁓ invited your Christmas party, that you've never visited the buy-in center. Right? These are relationships that you build over the years because don't forget, you know, business is very ancestral, right? So ⁓ you could working for Honda Financial today as a credit manager. And tomorrow you get a job at Mercedes, right? And you know, you were a general manager of a Mercedes store, but nobody knows. Maybe in a couple of years you'll be a general manager of a Toyota store, right? that you know maintain these relationships throughout your life. IgniteUps.ai: Yeah. Max Zanan: Because these are the people kind of in a position to dictate your income, right? Because at the end of the day, majority American car buyers their vehicles, you know, without paying cash. So you have to have these healthy relationships with banks and really understand the program. So you're not calling to waste time on a rehash, right? Because ⁓ if just against guidelines, that credit manager or the buyer cannot Overturn the decision. Right? So you still need to understand the specific program the ⁓ profile of the customer. So the more we spend educating finance managers, and again, it's really crazy, right? If you think about it, ⁓ managers are very highly compensated. However, there is no educational barrier to this profession. Right? You don't IgniteUps.ai: You know, I don't understand it. Like I'll I'll give you an example. When I was at Carmax, they flew me to Atlanta, Georgia to learn finance. I actually sat behind I was at their CarMax Auto Finance division and I was listening to call finance or sales managers rehashing deals and listening to what they were saying. I I got to see how the analyst scores or how they look at deal structure in the back end. I mean I spent several months there amount of training I got to really understand how to help customers, you know, get deals bought. and and it wasn't so much relationship with those types of lenders. It wasn't until I got to the traditional side of things that I realized it was very much a relationship business in finance. But You know, I had a lot of training. You know, when I went into the traditional side of things, I felt like I was ahead of everybody. Like I get more deals bought than anybody because I just read all one, I read all the lender guidelines. And number two, I just, you know, I probably rehashed more deals than most people had ever done at when I was at CarMax. You know, you know, the last store I was at, we were selling 700 used cars a month here in San Antonio, and the credit challenges were the worst in the country. Like the store I was at had the worst. worst credit in the whole United States of all the stores that they had at the time. so it's interesting. When I went to the traditional side, I felt like I just excelled because I just I had way more experience than your average finance person. And not just on lenders and deal structure, but because I seen how lenders, ⁓ you know, dictate you know, their matrix and what they do to get that deal bought. I felt like I had an an advantage. So I you know, finance managers, like you said, just really don't get a lot of training and the training they do get, they send them to some four hour class to learn how to present product and that's really it. Max Zanan: Right, because ⁓ think of it this way. If you wanted to be a barber in New York City, you have to get a license. Right? I'm not kidding. IgniteUps.ai: Yeah. Max Zanan: But if you wanted to be finance manager. You can just be finance manager as long as you get hired. There's no licensing requirement, there are ne no background checks requirement. You know, you and I cannot sell stocks or bonds being licensed, having series seven, series sixty-three. Right? We would be breaking the law. But if you think about it, right, a finance manager, let's say on average, sees anywhere from 60 to 80 customers a month. And let's say an average loan balance is 40,000. thousand dollars right so this person We're gonna take 40,000, multiply it by 70. Right? He's basically underwriting of dollars of loans. Right? And it would be in everybody's interest, whether it's the dealer principal that hires that finance manager, the finance manager himself or herself, right? You would like to know more, right? To be more effective and earn more. And it would better for the consumer if they knew that they're dealing with licensed professionals. IgniteUps.ai: You know, I'll tell you what's what's fascinating. So we I have an AI platform and we've helping finance teams, we record and the AI analyzes the whole conversation and it's amazing we we when we every time we it in a store, right, everybody thinks they are compliant, right? But then they the AI understands compliance and understands what to say and what not to say. And immediately you'll these these finance managers that we have to correct or the AI corrects pretty quickly because they've probably worded things or phrased it eight different, know, word tracks that they probably had that just weren't accurate and were out of compliance. And so it it's kind of now like before. You an example. I used to record all of my finance managers. We'd have a video in the office and we'd record the whole session. And every week I would spend at least an hour a week reviewing the tape, understanding what the finance manager was saying to see if I could coach them to get better, the word tracks, how to overcome objections, things like that. See if there's anything out of compliance. It wasn't easy because you have to sit there for an hour, right? with the AI, ⁓ does it instantly and it tells you exactly where to look, what of conversation you need to look, and it just highlights all of that. And you it go you can go right there and say, Yep, that's that's wrong. You should have said it this way. Easy, quick thing that changed the whole trajectory of how they do business and can help improve their PRU. Max Zanan: Right, I I agree with you that this is a good tool, but in in the defense of finance managers, right? If there is no ⁓ whether it's or selling products or getting deals approved, how do expect them to be compliant? Right? Because ⁓ they not school graduates, right? And ⁓ yes, you can get AFIP certified, ACE certified. IgniteUps.ai: That's true. I think that I think AFIP's the only one that I know of. I imagine there's more. but I remember here in Texas I did the A AFIP certification, which was not easy, by the way. I mean you still you still had to Max Zanan: I am agent certified as well and it's a lot of work. And you and you can't cheat, right? You gotta go to the testing center, right? And they basically strip you down, right? So like there's no cheating. You either know it or you don't. And and the test is about three hours long. IgniteUps.ai: ⁓ yeah. Yeah. Well, here's the other thing. You're supposed to do that like every couple of years to make sure you maintain your your your certification. Max Zanan: Yeah. Right. So to me, know, I I think there are not that many AFIP certified F and I professionals. And every time I see like a help wanted posting or an ad for an F and I manager, I almost see ⁓ AFIP as requirement. IgniteUps.ai: Agree, you know, I haven't you know, I've hired many finance managers and that's never been one of my requirements. but because I would always just I would ask it in the interview and I just knew that we were gonna get them the certification if they were good. If they're good we'd definitely pay for it, but yeah, doesn't really that wasn't something you really put on the disclaimer for the finance manager by no means. I I don't see it that often. If at all, yeah. Max Zanan: Right. And I think it should be, because again, the the dealer principal whose name is on the door will be the biggest beneficiary if he has AFIP certified finance managers. Because at least he can say, Look, guys, I hired the best of the best. Everyone is super certified. And if something went wrong, at least you have some mitigating circumstance. IgniteUps.ai: Yeah. Well, you know, I'll tell you, those videos used to help me a lot because when customers would say, Hey, he never offered it, or he didn't I never he never told me that, I'd go back, listen to the video, and I go, Yeah, you did, and here it is, and I'd show the video to the consumer and they'd be like, ⁓ yeah, you're right. And I would say, Look, but here, this is what we're gonna do, and we take care of them and all that. But yeah, it's it's interesting. Well, let's let's jump to this other topic. This one is ⁓ Amazon this new partnership or new agreement between the La Fontaine Automotive Group, forty of their retail locations, nearly sixty franchises are going to am Amazon autos. What do you what do you think about that? Think it's it's something good, that's ⁓ something that dealers should be doing and and or paying attention to? What do think? Max Zanan: So so here's my gut feeling, right? My understanding is that it is absolutely to join Amazon Autos. And when I hear something like that, I immediately know, right, that there is nothing free in life. Unless it's cheese and the mousetrap. IgniteUps.ai: Yeah. Max Zanan: know, so so think that the real danger is that Amazon is going to somehow cannibalize the process and it'll the customer that belongs to Amazon more so than to the car dealer. IgniteUps.ai: Well, you know, some of I'll tell you what some of the things that I heard from dealers. ⁓ some of the dealers are saying, Hey, you're giving up the ownership. think about that. I mean, now you they can buy the car directly from Amazon and then now do they own the customer and then they continue to keep, you know, ⁓ to those people. th th there's I I the idea that they're there's, you know, T millions of people, if not, you know, you know, billions of people on the application every day. I mean, so they get a lot of eyeballs, so I get that. but you know it is it another, you know, auto trader, cars dot com. Why not? Max Zanan: No. I d I don't think it's an auto trader. IgniteUps.ai: W Why or why not? Max Zanan: Because I hope ⁓ is not gonna stand for these what's the politically correct term we're looking for? dirty that you know third-party sites employ in terms of FTC regulations, right? Where ⁓ you a car, you low bowl. It rates you as number one somewhere in the bottom, you say you gotta buy Low Jack for $2,500, you gotta buy this and that. know, so I hope Amazon orders is not that. IgniteUps.ai: Well, it won't and I mean, this kind of leads into that other topic was the FTC because they're very involved in in in enforcing a lot of the laws that are in place today. I think that's at this point. I mean, there's still some dealers that are gonna be you advertising like that, but for the most part, cars dot com, auto trader, true car, all of these organizations, if you don't list your addendum in the price, ⁓ they're not gonna delist you, is from what I've read. Max Zanan: haven't done it s haven't done it yet because I had a conversation with a dealer he owns ⁓ Nissan and two Volkswagen franchises in New York City and he the who told me that they're actually thinking of bringing legal action against all of these third party websites because their transparent pricing doesn't rank. But their competitors, you know, who use these dirty tricks as number one, number two, and number three. So again, don't think Amazon orders as that, but again, I learned with ⁓ you know, to more and more paranoid. And and I recently a book ⁓ by Blank Five, who used to be the CEO of Goldman Sachs for 12 years during the financial crisis as well. And he has the entire chapter dedicated to paranoia. Right? Because being paranoid is part of the job. And if you're not paranoid, you know, you go by the way of Bear Stearns or Lehman Brothers. you I adopt this of paranoia. And in my paranoid mind, Amazon has the resources to have a very long-term vision. And me, the catastrophic event will be Amazon buying carvana or Amazon buying carvana and Jify Loop. And then it's game over. IgniteUps.ai: Yeah, that that that would be that would be a big big deal for sure. ⁓ 'cause you if you remember, Carvana at one point was trying to get dealers to put their inventory on their website. And they were doing that successfully. There was there were several dealers I knew were putting the listing their cars on Carvana's website. They ended up, you know, sunsetting that program in twenty twenty two, I believe. but that that could be ⁓ that be a a different game altogether. And they could, they could afford it. I mean, even though they've got probably got a fifty billion dollar market cap, you know, Amazon of all people could could do that pretty easy. ⁓ Max Zanan: Right, and it grows the top line revenue, right? Because Amazon is a publicly traded company the top line growth is way more important for investors than the bottom line. And selling items like cars will do wonders for your top line growth. IgniteUps.ai: Yeah. Well yeah, and the Jiffy Lube angle, I mean, I don't see why Carvana hasn't already picked up something like that, because that's where I think their Achilles heel is because you know anytime even Mercedes standpoint or when I was at Toyota, they literally would we'd they'd s maybe sell a car to car or buy a car from Carvana. But then from a service standpoint, they wouldn't go back to Carvana, they'd go to Fan franchise, even at Carmax. CarMax, I mean, a lot of times they would service like basic, you know, oil changes, things like that at CarMax, but like like OEM type Mercedes parts, things like that. I mean, they they couldn't service them. They'd go they'd have to go to the competing dealer to those cars. So yeah. Max Zanan: Listen, I I'll give you something that really bothers me lately, you know. so think of it this way: Jiffy Loop services 19 million people a year. Valvellin, 30 million people a year, Meida Keen Minus, another 12 million. G and we're not counting Goodyear, Pep Boys, independent mechanics. So they're literally probably IgniteUps.ai: It's and you know that's that number's growing and let me tell you why. Because new car prices have gone through the roof. There was a a report, you know, a couple of weeks ago where they said that by twenty forty the SAR is gonna drop to fourteen million. So it's literally two million cars are gonna just fall out of the sky and just no longer be available to sell. Or they'll still be available, but nobody'll be buying ⁓ because I mean, what new car price today is what, fifty thousand or forty nine thousand. But what's it like in ten years at this continued growth? I mean, what's it gonna be? A sixty thousand, seventy thousand dollar average price point so then who's gonna be buying these new cars at that price point with the income levels still you know lower than ⁓ the the income to price everything is kinda overinflated and it's just it's unreal. Like Just put things in perspective, the Spider Man franchise just came out ⁓ s a touting that they beat the Avengers Endgame box office numbers. And I'm like, well, I mean I think the prices had a little bit to do with that too, which if you adjust it for inflation, I imagine it w it came in at half that. But because the numbers are so you know, the box office numbers like the sale the ticket price are so expensive now that that had a lot to do with it. Max Zanan: Right, so so I'm gonna tie it back to Amazon orders, right? Because I'm sure ⁓ the Fontaine Auto Group made that decision order to sell more cars. Right? That's the only motivation here. And every dealer, I would say 99% of dealers, because they came up through sales, right? Like according to NADA, 97% ⁓ of deal with principles and operating partners. IgniteUps.ai: Yeah. Max Zanan: up through sales, not through service. So they're wired to solve all the issues by selling more cars. Right? However, If you know that there are literally 100 million customer pay labor repair orders being written outside of the franchise network, right? Why not focus on that? And this is the only way you can compete with Carvana, like you said, right? Because they're not famous for their service departments. Right. So so it I think every dealer should really refocus their attention on fixed stops because, like you said, the cars are too expensive, so that means people will hold on to them longer you will have to fix them ⁓ that they can keep running. And look at the margins in fixed stops. Right? You cannot get those margins in the sales department even if you jump through hoops. IgniteUps.ai: Yeah, th I think ⁓ dealers are losing a lot and you know There there's reasons for it. I mean, y you think about how quickly the the door rates and labor rates have actually increased over during COVID. I mean, it was and because dealers know that people are servicing cars more often than they are ⁓ So, you know, labor, you know, it's hard the short shortage of tax. I mean, there's a lot of reasons why those numbers have kind of incre increased and crept up, but I think ⁓ you know, even from a parts standpoint, there was a big parts merger that just happened. you know, when I think about where the the the industry is going, I think there's just gonna be a lot more people ⁓ maintaining cars than there are people buying them long term. And I think about I had this discussion, you know, last week I think about you know, why other countries Wha that get extreme inflation, what they end up doing and like Venezuela and and what's the other one? Cuba, where they just maintain these cars forever. So I I'd hate to think that we go down that direction. I still think, you know, we're in the land of, you know, opportunity for sure. And and I think, you know, there there's opportunity here, but when you think look at things like this that are happening, is it like a in your eyes you're looking at it like a almost like a train wreck that is just waiting to happen, right? ⁓ Max Zanan: Well, I I look at it differently, you know. I look at it like there are millions of dollars on the floor. All I have to do is bend over and pick it up, right? But I don't see this burning among dealers to go after JifyLoube ⁓ Meineki Midases of the World. ⁓ IgniteUps.ai: Well y it it just just think about i y ⁓ know, ⁓ when I was at Mercedes, just trying to get a a an actual a service appointment at like say Land Rover, for example, oftentimes it's like a two month waiting period before you could even get in there. So ⁓ Max Zanan: You gotta know a guy who knows a guy. IgniteUps.ai: You know, there's a reason for it and I there's there's dealers we we have op options to help drive more service revenue and the dealer's like, Hey, I just can't handle it. Like I I'm not built for that kind of, you know, volume. Max Zanan: So, you know, you know, I know Brian Banstack for many years, you know, and I gotta give him credit. you know, his service department is now open 24/7. And I don't know any other dealer in New York City that's open 24-7. And it's doable, if he did it. He didn't doable if he did it. IgniteUps.ai: Yeah. ⁓ absolutely. I'll tell you when I was at CarMax Well, I'll tell you when I was at CarMax, when we w we had to, you know, pump out a lot of used cars reconditioning, we had people on the round the clock twenty four seven reconditioning used cars to so we could sell more. I don't see any reason why Yeah, ⁓ like I think it's it's of Mr. Ben Spock and really think about the space they have in New York. You've I've driven by his facilities. I mean, it it tiny, ⁓ right? you you've gotta you gotta ⁓ Max Zanan: It is type. There you can do it anywhere, I think. Right. I'll tell you another thing. You everybody is obsessed with selling cars online, right? But I read somewhere that I think only ⁓ 7% people go through the entire process without speaking to anybody, right? So we're not ready as people to do this. IgniteUps.ai: Well, but here's the thing. Carvana and ⁓ Carmax, they sell a lot of their the that those vehicles online. Carvana primarily that's the only way really they sell it. they they sell what five, six hundred thousand cars a year. Tesla, the only yeah. Tesla, the only way you can buy a Tesla is online. ⁓ Max Zanan: Trying to eight thousand in twenty twenty six. But you still I think with Carvana you still get with somebody on a phone. Especially if there's a credit issue, you know. So there's IgniteUps.ai: Yeah, yeah. Well, like like give you an example, Tesla, they they sell a couple million cars a year. I forget exactly what the number is, but like when I bought my Tesla, like you literally did everything online. If you had a question, you could text someone, you could call someone at a certain point. really it was so easy that you just you just kept moving forward. And I at one point I didn't even realize I had already bought the car. Max Zanan: Right, but but my point is that I think right it is way easier set ⁓ online than cars. And if you really wanna master e-commerce, right, if you're a car dealer, why not start small? Start selling parts online. Right? I promise you it's way easier to sell ⁓ a $20 wiper blade than a $50,000 car. IgniteUps.ai: Yeah. I don't disagree. And I think think about why these companies are successful selling the even the cars online, because that's really the only way to the front door. Like you can't just go knock on the the vending machine and say, hey, let me look at your cars. Like you you gotta go in there with an appointment to test drive a vehicle. more importantly, everything is done like there's only one entrance to that facility and it's online. So you you have to like if there was no other option, like that's If you want to do business with them, that's the only option you have. So I think if dealers really wanted to get there, 'cause look, Texas Direct did it, they did a great job of it. ended up selling it. Broom took over they ended up, you know, doing knows what how they failed, but they they had shut their doors and now they they do something else for dealers. I forget exactly what it is. I think it was I wanna say was Car Saver or I I don't know what specifically they do now, but the the the model can a hundred percent bulletproof. You know what I mean? Because one company's already kind of gone out and for the longest time people thought Carvana was going out. So do you think Amazon really can jump in and and dominate at a level? 'Cause they've had a lot of failed products too. Max Zanan: I I I think they have the the firepower to do it. think their name is compared to Carvana's in terms of trustworthiness. So you know, I they look at it strategically, big picture, and I anybody who car business knows all the money is in fixed ups, and I It's really not in selling cars. if Amazon takes that approach and has network of Amazon service centers across the country, it becomes reasonable decision to buy a car from Amazon. Because if I buy a car from Amazon, but I gotta go, I don't know where to go to service it, you know, ⁓ rather go buy it from a local dealer then. But if Amazon can do this you know, I think a lot of people will take it into consideration. And I think already understands that the money is in the extended vehicle, extended service contracts, right? Because if you try buying a electric toothbrush, a printer or a TV from Amazon, what do they offer you right away? IgniteUps.ai: Yeah. They're offering you a warranty pretty quick. So yeah. Max Zanan: That's right. That's right. That's right. And then you talk about reinsurance, and then you talk about tax benefits. And then it becomes a really, you know, compelling proposition for Amazon. Right? So you basically look at selling cars same way Hewlett-Packard looked at selling printers. Right? Printers were cheap. And they got you on the ink. And think this is the same thing. This is the same play. Yeah. ⁓ IgniteUps.ai: Yeah. They're gonna get there, huh? That's awesome. Okay, well, here we got a few more minutes. there's more I wanna jump in before the last one, but this one last one ⁓ before we get into the other topic or the final topic is an article ⁓ on spend and it ⁓ s it got me thinking, you know, is TV still ⁓ gonna be the the where dealers should be spending a lot. Here's ⁓ some interesting numbers, right? So here are the five biggest automotive TV advertisers for July. This Volkswagen spent eleven million, Toyota nine point six, Kia eight point two, Jeep six point eight, Ford five point nine million. That's almost forty-two million dollars from fry five brands, it was really generated around the World Cup. The problem is TV spending was up. But impression share was down twelve percent. So was it's been down year to date, but it was actually up year over year for July. But the impression was actually down. So what do you think? You people are spending more but less eyeballs? ⁓ Max Zanan: I think, you know, just another example of inflation, right? Probably the coolest one I want. Right? So the surface, you are spending more, right? But getting less. ⁓ know, and I think if you're looking to dominate your local market as a dealer, there is nothing wrong with advertising on cable in your local market. IgniteUps.ai: Yeah. Yeah. Max Zanan: Right, because people still watch T V, you know, you y I I don't believe that everybody's watching Netflix twenty four seven. Right? Like I just I just cannot believe that, you know. People IgniteUps.ai: Well, here's the thing. It's it's it's just super fragmented. Like I I'll tell you my home, we don't watch any TV, but we'll watch Netflix, we'll watch streaming TV, we'll watch more importantly, you know, social media, which that in itself has gotten to be TV, you know, with their videos. Max Zanan: But I think still watch news, you they they they still watch sports, and then there's a lot of ethnic TV, right? So let's assume your dealership is in a Greek neighborhood, right? It'd be a if you didn't advertise on the Greek cable channel. IgniteUps.ai: Yeah. Max Zanan: You know, so so I think you have to be strategic about it and can't take a shotgun approach and just like, you know, pull the trigger and say I wanna be on TV. You you really gotta cherry pick ⁓ and and at what time and for what reason you wanna be present on that channel. IgniteUps.ai: Yeah. I I mean I think is still ⁓ number one driver, right? So as long as people still watch sports, I watch sports like I to. I'll tell you though, my son's in soccer ⁓ and this really first year I've really gotten into soccer. And I even don't like calling it soccer just because it's more football than anything, but It was amazing like to see all of these guys playing here. because we don't really have the privilege unless you buy the extra channels for soccer, they don't really have like when you think about all the leagues like the Premier League, the La Liga and all these other leagues in the c in the world, we just Max Zanan: Right. IgniteUps.ai: don't really get to see ⁓ because you they're not on our TV. You have to go and buy these channels and they're oftentimes at weird times in the day that 'cause they're overseas, right? So, ⁓ but I really enjoy watching it. So I think long as there's sports like that, people are watching it, I I do think there's still a real base case for that. But half the time there's commercials, there's Other things that people spend their time on because you know if you if you saw my house, you'd see us watching the sports, but then every couple minutes, if there's a commercial or timeout or something, first thing people are is on their phone, on on Instagram reels or TikTok or Facebook Reels or something, to kind of you know Max Zanan: Right. Well listen, I think I think you answered your own question, you know. Then if you're a car dealer, right, you have to put out quality content and be on these Instagram reels and be in TikTok. you gotta have discipline for that. And you know, I follow a bunch of TikTok pages of car dealers across the country, right? And you click on the profile and it just says ⁓ they posted three times. Right? So somebody wants to try. ⁓ IgniteUps.ai: Yeah. Well the worst thing ⁓ the worst thing they don't even have one or they don't even have one. And I'm like, What are you doing, man? Like, you're missing a whole like segment. Like that's crazy. Max Zanan: Right, right. And there's no consistency. So I open it with there are three videos and and it says business since I don't know, nineteen seventy eight, you know? IgniteUps.ai: I see those all the time. And there's some people do an amazing job on social media. Like you look at ⁓ and you're like, Wow. Yeah. And and the even their paid ones are are just funny. They're, you know, you get you you're like, man, you know, I'm gonna go check that out. Like it it's all about frequency, right? The more times that your you know, your name is out there, the more likely you're gonna they're gonna wanna come see you. So Max Zanan: But but they are the exception, they're not the rule. But but that's you can't, you know, you can't have judgment and say, my dealership is going to be on Instagram, but I'm gonna stay take a stand and not be on TikTok or ⁓ is not for me, right? You just have to be everywhere. IgniteUps.ai: I think that Yeah, yeah. I think frequency is is super important. I think people are ⁓ underestimating that, but I do think TV could be a pretty good strategy if you're focused on these event type things like, you know, sports, news. Outside of that, you get some really cheap stuff, like, you know, at crazy times of the day and just focus on the those weird spots, maybe. I don't know. ⁓ Max Zanan: I gotta tell you, on on Telemundo they have some amazing telenovellas that people religiously like they're glued to the TV. IgniteUps.ai: Yeah. ⁓ yeah. You know, I used to watch th novelas. Th that was l the a thing of mine. Like I with my grandma or my grandmother, I used to watch these t telenovelas and they were they would get interesting. It was like, man, this is kinda cool, you know, 'cause they get a little they get a little colorful, sir. So it's it's kinda cool. Yeah, yeah. Max Zanan: But the viewership is there. IgniteUps.ai: Yeah, I could see that. Especially Spanish TV, right? Like that, that to me, I think, is is a good option, especially if you get one of those number one shows and stuff. So yeah, I I could see that. So so the the the end result is TV's not dead. T there's still an up option for TV in to have in your strategy, but social media if if you don't want to break the bank. last topic before we leave, Max. And you brought this one up. This one was interesting because you're not the the first person that's I've heard this from. I've actually heard this I think people have been saying this since twenty twenty three. it every day it just feels doom and gloom, right? It's wisdom. Max Zanan: Gets closer. IgniteUps.ai: I've talked I've heard about the everything bubble. I've heard about everything it's gonna be a self-made crisis because just needs to pop. I I've it. Like, you know, I've gone down rabbit holes ⁓ online that you you know, I'd I'd rather not talk to you about because the it's some conspiracy theory that I've I've I've ⁓ read and just like you you just don't know, right? But I'll tell you if history is any indication. There is gonna be something that'll happen. So that history has a funny thing about repeating itself oftentimes. So what ⁓ what's your base case? Max Zanan: So I I don't have a conspiracy theory. I'm not an economist. I'm gonna I'm not gonna pretend to play one on TV, right? But last financial crisis was 18 years ago, right? And if we agree that economy is cyclical, again, we have a crystal ball, but that cycle has to repeat itself. And it's been long time because before 2008, there was another crisis, which was the dot-com bubble, right? And that was eight years apart. So you know, we're going on year eighteen and IgniteUps.ai: Well, I'll tell you some people could argue that twenty nine or twenty nineteen, twenty twenty, when happened, ⁓ ⁓ because there was a lot of businesses that shut down, primarily restaurants during that time, and a lot of those restaurants never came back. I'll tell you, I really didn't feel it in Tulsa, Oklahoma during that time, but when I moved back to Texas I heard all of the horror stories of how the the economy was shut down basically for a long time and a lot of restaurants shut their doors and never came back. So but then we had those we we did have those booming years after that for sure. Max Zanan: I I agree with you, but Yeah, but but I'm looking at it from the perspective of car business because two thousand and eight was devastating for car dealers. Right? And IgniteUps.ai: Well, for for some, yes, for some. I could tell you in two thousand eight where I was at, we did pretty well, but there was dealers down the street that committed suicide, like because they just lost everything. I I I read and I I heard a lot of craziness that happened during that time, but you know, I I think there there is s ⁓ just doesn't feel right. Like the def something definitely feels off, but it's been feeling like that for, you know, two, three years now. It just it just seems like it's just not Max Zanan: So that's my point exactly, right? So y you and I are not alone thinking this. you I'm sure you would agree with me that in 2008, car dealers had nothing to do with subprime mortgages. Car dealers were not the cause of the crisis, they were the victims. Right? ⁓ So point is that When the crisis comes, nobody knows what flavor it is going to be, right? usually crisis means that people unemployed, ⁓ have no income, and stop buying cars. IgniteUps.ai: Well well look at this. Here here's a here's another thing I can throw in. So tricolor, big subprime thing, Big issues there. Hispanic community that was buying a lot of this inventory is no longer here because of the deportations. there's lot of reasons why you could say that we're we're already in it. Like we're we're in the recession right now. I mean, I hear a lot of dealers ⁓ singing doom and gloom that The numbers just aren't there like they used to. then on the flip side, there's a lot of dealers performing at a level that they'd never been performing at. ⁓ but I think that's like that in any place. Max Zanan: Because I'm I'm talking about a recession. Two thousand and eight was borderline depression. Right? It was borderline nineteen twenty nine. Right? So IgniteUps.ai: Well, that's what they're saying. We're getting near the 29 bubble. Like, is it a hundred years? We're due for that correction. Max Zanan: Right. I'm talking about a cataclysmic event, right? And ⁓ you have to war game it if you're a dealer because the the beauty of a crisis is that it comes instant and without a warning, right? Like told Bear Stearns that they be gone within ten days. having eighteen billion dollars in cash in the bank account. Eighteen billion dollars in two thousand and eight dollars, which is probably like fifty billion now. Right? And they were gone within ten days. I mean JP Morgan Chase bought them for pennies on the dollar. And Lehman brothers filed for the bankruptcy in the world's history: six hundred and six six six hundred and sixty billion dollars. Right? And these guys employ nothing but Harvard MBAs and analysts and economists, right? ⁓ And didn't see anything coming like an iceberg. Right? So now if we agree on the fact that something might happen. The the exercise should be very simple. What do I do in my car dealership if demand goes down by 50%? How advertising do I cut? Who do I let go? What is the level of staffing I need? Do I completely refocus on fixed stops? And if that's the answer, why am not doing it now? IgniteUps.ai: Yeah, a hundred percent. Well, I mean, you you make so I I don't know if you're familiar with a guy named Ray Dalio, but he talks about, you know, the two hundred and fifty year cycle, like these bigger cycles. He looks at the bigger cycles and he thinks that, you know, the you know, the US Max Zanan: Yeah of course. IgniteUps.ai: ⁓ rain could be, you know, winding down, right? And so then you start thinking about the war that's happening, the self-inflicted war that we've created overseas. a lot of different reasons why everything feels like we're it's about to hit the fan. but I you're right. I think as long as you stay paranoid and you stay ready W do the things if if it did hit the fan today, what are you gonna do? Why not start implementing the strategy now kind of shore up those ineff inefficiencies and more importantly so that you can go through those shaky waters You know what I'm saying? Like you can come out, you know, being one of those operators that could effectively dominate and and be the one of those those operators that is ⁓ going through those seas easier than ones that have a little tugboat. Max Zanan: Right. my point being is that Ray Dalio is right, right? He's talking about super cycle of an empire. It's usually about 300 years. But back in 2008, the thinking was very similar. Even if let's say American economy shuts down, there was a concept at the time called decoupling. And that you know, Brazil, Russia, India, China, BRICS countries, you know, will take over. I'm telling you as someone who spends you know a majority of the time in Spain now, the only economic engine of the world is located in the United States. There's no decoupling, there's no emerging economies, there's none of that. All the innovation comes from America. ⁓ built different this point, I believe, on the DNA at the DNA level. Right? We are not afraid to take risks. We're not afraid to work long hours. We're not afraid to pursue American dream. there's a reason why it's called an American dream, because there's no such as a ⁓ Spanish a Greek dream, a German These concepts don't exist. So We can only rely on the American economy. And if you happen to be a car dealer and you understand that at some point it will hit the fan, I am to urge everybody just to get ready ⁓ you can come out on top. But ⁓ you're gonna wing it, right, you might not have enough time or cash reserves to survive it. Because when Lehman brothers file for bankruptcy on September 15th, 2008, lending I don't care if you were 800 credit score. You weren't getting a car loan that day. IgniteUps.ai: Yeah, no, it was ⁓ it was I I remember. I was it was not w there was a weird feeling, but it took it almost like everything stopped, right? I remember feeling like, damn, where did all of our customers go? And about days it felt like it kind of started moving back to the way it was. ⁓ Not right but a lot of dealers really just kinda ended up closing doors and and losing big. ⁓ Like I tell this one guy here in in in San Antonio, he had five locations across San Antonio. But he ended up, you know, committing suicide unfortunately and you know, 'cause he lost everything. The the the the was due. Like they said, Hey, we need the money and he didn't have it and he was Max Zanan: Right. A lot of it has to do with inventory management, right? Because those curtailments are common. IgniteUps.ai: And I mean, some dealers I know have already kind of shut down but the some small little note lots because they took some some chances on floor plan. And now back then ⁓ in 2020, 2019, floor plan everybody was doing well, and then now floor plan at six percent, it's just doesn't make any economic sense for a lot of companies. Max Zanan: That's right. That's right. So but but again, you you have to manage your inventory, right? And understand that on day 90, right, you gotta write a check. Not mention all the interest that you pay daily for 90 days. Right? And and if it hits the fan and lending freezes, ⁓ they will curtailment payment that minute. IgniteUps.ai: ⁓ yeah. It's it's not fun. Max Zanan: In your dealership holding titles. IgniteUps.ai: Yeah. I've had to go through that ⁓ a couple of times. So especially when you know, th there's there's options that come and start auditing you and you go through all that and then the next month they do it again and you're like, Come on, really? But Well, Max, this has been a lot of fun. We've talked about We've talked about efficiencies on on the dealer side with JD Power. We talked about the the financial crisis two point or ⁓ what whatever we're on now. I mean, we you know, the whole world has gone through this several times for you know since they've been keeping record. but You know, how can dealers navigate through all of this? before we leave, just kinda, you know, give me a w you know, one minute recap and how dealers can can navigate these waters today. Max Zanan: I I think things, three things. First, ⁓ have to be paranoid 24-7. Only the paranoid survive. Number two, you to reduce friction in the process. That's what ⁓ Amazon's obsession ⁓ reduction in And the final thing is you gotta be focused on fixed ops because the money is there. And it's just going through your fingers and somehow lending in the account so Valvine, Jiffy Loop, you know, Walmart. You know, I learned that Walmart is the number one tire seller in America. This is crazy. I would never think of buying tires at Walmart. IgniteUps.ai: And they're crushing it. Yeah. That's in that's impressive. I d I didn't even think about that. Yeah. know, it's funny, I just recently had to get my registration sticker for the first time in years, right? decades, right? Like 'cause I've been on a demo for as long as I can remember. And this is first time I've I've actually had to go and na maintain my car and it's it's just a different a different transition sure. But no, I I I I agree. I I thank you for for coming on and well just last minute what my thoughts are. I think everything you said is is spot on. I think the dealers that win in any down market or up market stay paranoid. And you just, you know, the winners win. So thank you guys for or thank you, Max, for jumping on and for everybody tuning in. Thank you. continue to ⁓ support the channel by liking, subscribing, commenting, and more importantly, sharing. until next thank you, Max. I appreciate your time. Max Zanan: Yeah, thank you, Dress.