Latest / Auto Collabs / Used Cars & Human Nature with Todd Caputo

Transcript

Used Cars & Human Nature with Todd Caputo · Auto Collabs

• 0:00
  All right. There are very few people that will tell it, tell you like it is. [upbeat music] This is Auto Collabs. In a way that Todd Caputo will tell you like it is.
• 0:16
  Um, I worked for him actually as a vendor, my first company, Image Auto. And I just remember he comes in, he's got this way of, like, just dead staring you.
• 0:24
  But he's actually listening and waiting, like, to give you a meaningful response. But you're just like, the eye contact and the intensity is just quintessential of the type of person that Todd is.
• 0:34
  And that, that's, like, goes all the way across the spectrum of savvy businessperson to caring individual. Yeah. Like, right through. Without a doubt. Without a doubt.
• 0:43
  So actually, the second text I ever got from Todd Caputo, the first time, uh, uh, Paul recommended me kind of meet Todd and we got on the phone real quick. He had kind of set up a time for us to meet.
• 0:54
  We got on the phone. And the second text I get from him, uh, after the one about, like, "Hey, when are we gonna meet?" Was, like, a few weeks later. And e- he texted this: "Hey, Kyle, how's your family?"
• 1:07
  And I was like, "Oh, man, that is, like, someone that I am, am looking up to, follow in his lead and, and, and to listen to his footsteps and watch what he's doing" because that level of empathy, uh, is what I w- I definitely wanted to aspire to.
• 1:25
  Oh, yeah? Well, when I meet him- [laughs]... and he starts sending me text messages- He's got, he's gonna be so awesome. [laughs] I got nothing. But I am so excited. Just the way you guys have positioned- [laughs]...
• 1:35
  uh, Todd, I am so excited for us to dig in and learn from him and, and learn from his industry experience. If I understand correctly, he's been on both the franchise and independent side. Is that right? Yeah. Yeah.
• 1:47
  So, well, he actually, his, his, his dealer group, which he sold to Sonic Automotive, uh, about two years ago, um, became EchoPark locations- Ah... the used car outlets.
• 1:56
  'Cause he had, he had basically five independent locations of used car outlet, and then he had a Chevy store, so. Okay. He's kind of really played in all the spaces.
• 2:05
  He's also been an early investor in, in tech companies that you know and love and probably use their products.
• 2:10
  He really is, uh, he's one of those sleepers that I think from the outside, you might like, "Oh, he's just a car guy," right?
• 2:17
  But the more texture and the more depth you get, you realize, like, "Holy crap, I need to listen to what this guy's saying." Well- So-... hey, you have an opportunity to listen to what this guy's saying.
• 2:26
  We hope you enjoy this interview with Todd Caputo. [upbeat music] Todd, you get to actually do this interview in person, which is- I know... so much more than we're able to do with most of the guests.
• 2:42
  It's always good to see you at your, uh, amazing facility you have here. You've done a great job, Paul. The place is beautiful. Oh, man, it's, it's fun to just be a, be a part of the motion in the auto industry.
• 2:50
  Remember, remember I saw it before it was any of this. Yeah, you did. I, I saw it in the raw. You saw it in the raw- Yeah... in the same form that my wife looked at it- Yeah... and was like, "You wanna do what?
• 2:58
  You wanna buy what?" I know. So I appreciate that. You're a man- Yeah. The place is beautiful. You're a man with some vision.
• 3:02
  So, um, I think this is a stage in your life and career when you've built your own thing, right? Your, your dad started the dealership, and then you took it over from him. We'll talk about that in a minute.
• 3:14
  And then your stores sold. You sold to EchoPark or Sonic Automotive, and then you got to spend two years inside a publicly traded auto group, which is the opposite, really, of where you had spent your time. For sure.
• 3:27
  And so now you have a, a new perspective, right? And you've broadened out, you've relocated, and you kind of are moving around between a couple locations.
• 3:35
  You're starting to work with dealers in actually a consulting mentality, but you're also, you know, you've been an investor in a lot of tech companies that have hit. So I think a lot of people don't understand.
• 3:46
  I've, I've seen it from knowing you for a number of years. Yeah. And, and I always call you a sleeper. I was like, "Oh, it's... Caputo's a sleeper." Like, you don't even- [laughs]... you don't even see him coming.
• 3:54
  So, um, why don't, why don't you... we talk a little bit about, like, what, what the last three years of your life have been? Like, start, like, from sale through Sonic, and then kind of what you're focused on now. Wow.
• 4:04
  My God, I don't know where to start. So the first thing I'll tell you, Paul, and you know me very well, I would tell you that I'm blessed. Um, extremely blessed.
• 4:11
  Blessed with a wonderful family, um, and, um, blessed with the fact that I was able to, um, you know, sell my business and, and exit when I did.
• 4:20
  I, I miss it, but, um, the last three years have gone by for me, like, in a flash like that. Yeah. They've been happening so quickly because COVID just kind of hit us, like, all of a sudden.
• 4:30
  Like, I remember being at NADA, at NADA, right? Yeah. And it was right before COVID hit, and we were kind of like, nobody was wearing masks yet, and we had to, like, sani- No one ever wore a mask. N- yeah, nobody was...
• 4:41
  Yeah, there was no masks, right? It was, like, something people did in other countries sometimes. We had little bottles of sanitizer, though. That's what we did, right? I remember that.
• 4:46
  We walked around NADA, we shook somebody's hand, and we walked away. Oh, and sanitize. Yeah, yeah. A little bit more sanitizer on your hand. And then all of a sudden, you know, five, six weeks later,
• 4:54
  New York, I mean, we were shut down. Yeah. And, um, you know, thank God that I had done all the things that, um, I'd done in my business the last few years to pivot, um, to really do omni-channel the right way- Mm-hmm...
• 5:08
  um, and really brand myself the right way. Become r- one price, become single point of contact.
• 5:13
  I saw how all those things that I kind of knew g- in my gut that I had to do- You know, those were just good for, like, a retailer to do. They were good for business regardless- Yeah...
• 5:23
  but they were great, especially for the first probably nine months of COVID. Because in New York, we were really restricted as how we could sell and service cars. Yeah.
• 5:30
  And we could only do it online for a while, and remotely, and we were geared for it perfectly. And you were able to do it. So we were able to sell a lot of cars with not nearly as many people and still- And buying cars.
• 5:40
  Let's not forget that, right? And buy cars. We still have a function.
• 5:42
  So, um, you know, having the opportunity to, um, meet up with, uh, with Jeff Dyke and, and David Smith and the team from Sonic and, um, have themBuy my businesses, take my people in.
• 5:57
  Um, not just my used car store, but my Chevy store as well, and treat me and everybody the way that they did was amazing. And then I worked as a director for delivery center operations for, you know, a year and a half.
• 6:08
  Mm-hmm. And I, um... Jeff asked me to open up these delivery centers for him all across the country, where basically they were in markets where they didn't have a physical location. Yeah.
• 6:17
  Uh, where there were cars, right? They were just small locations where people bought cars online and over the phone- Mm-hmm... and took delivery there. So it really, it suited me well, that job.
• 6:26
  Uh, but the culture was very much the same because of the fact that, you know,
• 6:33
  um, at Sonic, one of the reasons why I like the company and, um, I sold to them was because of the fact that, you know, there were definitely layers of people, but it wasn't hard to get to the top and there wasn't a lot of layers, if that makes any sense.
• 6:46
  So some pretty free flowing communication. It is.
• 6:48
  Like, if you wanted to reach out to, to Jeff Dyke or to David Smith or to Tim Keane or to anybody, you know, um, on the seventh floor, which is what we call it at, at Sonic, right, it was a matter of a text message or a phone call or an email, and somebody always got right back to you.
• 7:02
  Yeah. And I thought to myself, "Wow," you know, to be, uh, a part of a company and to sell to a business where it's so flat at the top, um, really made me feel good about my decision.
• 7:12
  Because that was how you ran your business, too. E- exactly. Yeah. Like, anybody that worked for me at the time that I worked with could get ahold of me 24/7/365. Same with my customers, right?
• 7:21
  They wanted my phone number. They had my personal number, they had my personal email address, and I always got back to people. It was the same thing- Mm-hmm... at Sonic.
• 7:28
  Um, what I'll tell you was different, though, is, you know, I guess the speed that gets things done and the things happen are definitely- Well, I think you're the kind of person that...
• 7:37
  You know, have you ever seen that movie Zootopia? Yes. Where the sloth is at the DMV, right? I, I bet you're the kind of person that often feels like the rest of the world is moving at the sloth speed. Yeah.
• 7:47
  I like to move at a, a, a pretty quick pace. And not to say that decisions didn't get made, but they did. But, you know, it's so different. Complex, right? It's complex.
• 7:58
  There's layers and layers of people, and one decision, um, you know, has- It's a public, right? It's a public, right. So there's all kinds of complexity there. For sure.
• 8:06
  And there's so many people that one simple decision that you would think when you own a small business, "Well, we're just gonna get this done.
• 8:12
  We don't need, you know, several meetings with all these people to discuss it. We can just, just get it done." Yeah. "Let's try it. Let's do it." "Let's try it. Let's do it." Well, it doesn't work that way. Mm-hmm.
• 8:19
  And, um, I struggled with that for a long time. Mm-hmm. Because when you own your own business like you do, right- Yeah... you make your own decisions. You surround yourself with really smart people.
• 8:28
  I always surrounded myself with brilliant people, smarter than me. I'd be the first one to admit it.
• 8:32
  Um, and we would all gather around a room, and I would come up with ideas or we would come up with ideas, and ultimately, I ended up making the decision, uh, as quick as or as slow as I wanted to. Mm-hmm.
• 8:42
  And it was hard to do that in that environment. Um, but I had a blast. Yeah. Like, I learned so much. So how long, how long has it been since you've stepped down from your position there?
• 8:50
  Um, Memorial Day was my last day. So it's, it's- So- You look relaxed. I do. I feel relaxed. [laughs] And I was relaxed when I was there, but, you know, I, I feel like me again. Yeah.
• 9:00
  Because I'm back working for myself- Mm-hmm... which is really, really good. And I'm... I get to be in, um, in showrooms, right?
• 9:07
  Small stores, where it's really, I mean, I get- Yeah, because you're doing con- you're doing some consulting now. Doing some consulting now. Yeah.
• 9:12
  And, you know, I was at a Chevy store in Holland, Michigan, a few weeks ago, and I walked in there and it went, "Wow." It reminded me of my old Chevy store. Felt like home. It did.
• 9:20
  You know, I was with, um, um, one of the guys, one of the owners, the owner's son, um, Dominique, and we were walking through the, through the service department, and he had three or four or five different people coming at him with different questions, and he's kind of like answering this guy's question- Yeah...
• 9:33
  answering a phone call, texting somebody back, dealing with a customer with a complaint. Same happy customer, right, right. Yeah. So, like, I'm like, "Wow." You know, I remember. It all kind of came back to me. Yeah.
• 9:42
  And it felt really good to not only be back in a family-owned, smaller store helping them out- Mm-hmm...
• 9:47
  but to be in a Chevy store, obviously, because I've been a Chevy dealer, I was a Chevy dealer, I should say, for, you know, for 28 years. No doubt. It was great. Yeah.
• 9:53
  So, so, like, I wanna talk about what you're seeing with your perspective on the industry, because it comes from real grassroots to go and then, like, real high up on a public- Yeah... right?
• 10:03
  And you, you kind of see that.
• 10:04
  But before we go there, I would love to talk about your involvement and iss- interest in the technology space in automotive, because, um, you've made several really great picks over the years- Yeah...
• 10:14
  in, in companies where you saw the potential. Um, I don't know if you're, if those are public or if you mind talking about the, the two that I'm thinking of.
• 10:21
  I don't know if you know what the two that I'm thinking of are. No, I don't, but we'll, I'm sure we'll probably [laughs] get there, right?
• 10:26
  [laughs] So, you know, when it came to technology, um, I was always very open-minded, um, when it came to technology, um, in my businesses.
• 10:33
  I always thought that it was wise to, to, to be knowledgeable about all the different technologies- Mm-hmm... um, in the auto space and outside the auto space as well. Mm-hmm.
• 10:42
  Um, you know, you can still do business traditionally in the car business, especially now, and probably get by just fine.
• 10:48
  But, you know, back in the day, I was building photo booths 15, 20 years ago when no one even thought about it, right? I know it. Um, you know, buying cars off the street, we were doing it forever.
• 10:59
  Um, you know- Well, let's talk about buying cars, right? Yeah. 'Cause that's kind of where my, my mind is going. Yeah. The used car business is- I'm still b- I still am buying cars. Oh, I know you do. Yeah.
• 11:08
  So I'm- No, personally, you're buying cars. But let's talk about the- Well, no, no, I'm buying cars for dealers, too. Right. So I have a- That's what I meant. Yeah... so I'm seeing...
• 11:15
  I'll have to tell you what I see, um, that I think is important for, for people. You know, I'm attending physical auctions still- Mm-hmm... 'cause I'm buying cars for a few of the dealers that I consult for. Mm-hmm.
• 11:25
  Um, at the physical auctions and online, 'cause I love doing it. Like, when I had my s- my stores, like, I bought cars and everybody else did the rest because they were great at what they did.
• 11:33
  And you love buying cars and you're good at it. And I was, and I was... and I love buying cars, and I was really, really good at it, right? Yeah. I'm not saying that humbly. Yeah.
• 11:38
  But I was very good at it, and it was a gift that I have. That's why you're still doing it, 'cause you like doing it. 'Cause I do. But what I'll tell you is this.
• 11:44
  I think that dealers are getting really, really sloppy, and I'll tell you why I say that.
• 11:50
  Because when I go to a physical sale and I see a dealer running 30, 40, 50 or 100 cars that are, quote-unquote, "overage" and I look at the condition of these cars-I, I see why they've aged up.
• 12:02
  Uh, I spend a lot of time on online auctions as well, especially ACV. ACV has the best condition reports in the industry, hands down, the most detailed- Mm-hmm... the most accurate, the best.
• 12:11
  And I look at the condition of these lower mileage, late model cars, and these are coming off of dealers' front lines, and I'm in, I'm in shock.
• 12:21
  And I, I feel like a lot of dealers, not all of them, but a lot of them have gotten very, very sloppy over the last year because new car dealers have been making a lot of money, um, selling new cars for sticker or better, forcing consumers to maybe take an F&I product or two or to finance just so they can actually get the car- Yep...
• 12:41
  'cause they can't get it, which, you know, I don't necessarily think is the right thing to do, and I think it's gonna come back to haunt people.
• 12:47
  But I think they've gotten very sloppy with merchandising their cars, uh, physically on their lots and online as well, and I think now the market's starting to turn a little bit, and I think some of these bad habits are, are gonna come to roost, and they're gonna show up, um, as basically losses on dealers', on dealers' financial statements.
• 13:05
  So when you say the condition they're coming, you say dealers aren't putting the time and energy into reconditioning the vehicles. Mm-hmm.
• 13:10
  And they're saying like, "Hey, we don't know why, but these aren't selling, so we're gonna start rotating our inventory." Or we're just gonna, we're just gonna lower the price, right? Mm-hmm.
• 13:17
  We're just gonna get on Viofo, or we're gonna get on First Look, and we're just gonna lower the price of these cars.
• 13:22
  Well, there's a reason why a car doesn't sell, and this is what I always stress when I own my own businesses, and I stress it with the, with the dealers that I work with now.
• 13:30
  There's a reason a car doesn't smell or a good car doesn't sell. It might smell, which is- [laughs]... which is what I was gonna say, right? Get outside and look at your cars. Drive your cars. Walk around your cars.
• 13:42
  What do they look like? What do they smell like? How do they drive? What does a consumer see? Get online and look at your inventory. What does a consumer see on your website?
• 13:51
  Um, do you look in Viofo or First Look at reports that show your inventory and where it syndicates, right? Like, I lived in Viofo when I owned my stores. Mm-hmm.
• 14:00
  And one of the things I looked at when I, before I priced a car was whether or not that it was, the pictures were actually showing up on third parties.
• 14:08
  Just because you use HomeNet or Viofo or another company to syndicate your inventory, I got news for you, it's software. It doesn't always work. Doesn't mean it's gonna be there. It doesn't mean it's gonna be there.
• 14:16
  And all of a sudden, if you think, well, geez, the, I, I, I'm, I'm the lowest price on CarGurus, well ge- well, maybe you're lo- maybe there's no pictures. Yeah.
• 14:25
  Or maybe the pictures that you thought were gonna be- Maybe there's one picture. Maybe there's one picture- Yeah... or two pictures, and you have 40 of them uploaded, there's a problem with the software. Mm-hmm.
• 14:33
  You have to have someone that inspects that stuff on a daily basis and have processes set up to make sure. So, you know, digital merchandising and physical merchandising of cars is, is really, really important.
• 14:45
  And I don't understand why, um, you know, we feel this need to just go out and just start slashing prices on cars. Every car has a story, right? Why is it not selling?
• 14:56
  So you're saying- There's typically always a reason...
• 14:57
  I mean, what you're saying right now goes against some of the conventional wisdom that I'm hearing in this day and age of people saying like, "People are buying anything," right?
• 15:07
  They're just, they're buy- they're looking at the price and looking at the model, and you can sell it kind of sight unseen, and that people aren't paying as much attention to that, which I think is driving the, this- See, I di- I-...
• 15:17
  hypercommoditization. I, I disagree, and I'll tell you why. Right. It s- it sounds like you do. Yeah. And, and obviously you're saying, like what you're- Yeah... seeing is proof that you're right.
• 15:26
  I think six months ago or even a year ago when inventory, especially used cars, was really, really short- Yep... um, it maybe didn't matter to some dealers.
• 15:35
  It always mattered to me because you gotta take pride in what you're selling, right? Absolutely. It was, it was part of how you, why you won. But now,
• 15:41
  look at, if I'm a consumer and I'm gonna go buy a, a 20,000-mile, two-year-old car and it costs the same as a brand-new one- Yep... that car better be perfect. It better feel new. It better feel new. It better smell new.
• 15:54
  It better drive new. Yeah. And it better look new. Yeah. And I'll take it one step further.
• 16:01
  If I'm a consumer and I'm buying an 80,000-mile car or 100,000-mile car, uh, for a monthly payment of what used to be a 20- or 30,000-mile car, then the car should be reconditioned properly as well. Mm-hmm.
• 16:13
  It may not have to be perfect cosmetically. People can accept that. Mm-hmm.
• 16:16
  But mechanically, I could tell you right now, a consumer is gonna demand that the car is, um, is, is mechanically reconditioned properly with 89 to 100,000 miles on it. It has to be, because that car's overpriced too.
• 16:32
  Right. That, that used car is 30% more than it was with 80,000 miles on it, and it's almost 40% more than it was with 20,000 miles on it.
• 16:41
  So as a dealer, uh, and an operator, you have to really make sure that your cars are reconditioned properly.
• 16:49
  And if you don't and you get sloppy, I think you're gonna have a problem, especially going into the fall or the winter. So w- that's one side of the equation in the used car business. Yeah. The other side is buying cars.
• 16:57
  Mm-hmm. Um, so much conversation, so much more focus in the last 24 months in buying cars off the curb than ever, right? You were kind of on this train early- Yeah... which is why you were set up for the pandemic.
• 17:09
  But now a lot of people are talking about it. It kind of has turned into some sense in the measurement of how successful you're gonna be in the used car business and how well you can buy cars off the curb.
• 17:20
  Um, w- who do you see, like what's the mentality that's winning? Who is doing it best, and why are they winning? So, you know, there's, there's two schools of thought with this.
• 17:29
  Um, there's a school of thought that you can have a widget or a form on your website that a consumer fills out, and it gives them an instant value on the car every single time. Mm-hmm.
• 17:41
  And it's an algorithm, and it, it... But I don't necessarily believe in that, and I'll, and I'll, and I'll tell you why.
• 17:50
  Whether you're a public like a Carvana or a CarMax or a Sonic or whoever, because every car is different. Every used car is different. I'm a firm believer in show a consumerA range of what it's worth.
• 18:05
  You know, uh, th- that car is worth between 15 to $16,000 or $17,000 depending on condition. Mm-hmm. And then here's some market data to, to, to go along with it. Yeah. Kind of like, like what Trade Pending does. Yeah.
• 18:17
  Trade Pending does a really good job of that. Mm-hmm. They give consumer data. Now, whether or not consumers totally understand that, I don't know.
• 18:23
  Um, sometimes I don't understand it either with some of the things they put on the screen, but at least it, it, there's- Give something that substantiates the number... th- there's valid- there's validity there. Mm-hmm.
• 18:30
  And there's, um, a breakdown of what it's worth retail, what it's gonna cost to, uh, you know, a dealer to recondition it, and a justification of the price.
• 18:37
  But for someone to get a firm offer on a car, I believe, and if you wanna get someone who really wants to sell their car and isn't just fishing for a number, the ability to use a tool, um, for the consumer to actually upload photos of the car.
• 18:53
  Um, and I'll give you an example of sometimes how these algorithms get broken.
• 18:57
  Um, if you choose aftermarket wheels, if you choose that the car has damage, um, if you choose, um, you know, that the car's maybe been in an accident- Mm-hmm...
• 19:07
  or there's some kind of defect, it throws all the algorithms off. There's no question about it. It just does. You need the human eye to look at the stuff if you really wanna buy every car off the street.
• 19:16
  Once you get to that point. Correct. Once you check one of those things, right, then there's a whole other layer of human interaction that's required. 100%.
• 19:23
  So you have to have a human being- Or you're gonna price it wrong. You're gonna, you're gonna put the wrong number on the- You're gonna lose deals... you're gonna put the wrong number on the car. Yeah.
• 19:29
  You're either gonna put too much on it and- And you'll be under... and you'll be under, or you're gonna upset a consumer. And you'll lose deals. And you're gonna lose deals. Mm-hmm.
• 19:35
  So I believe that the best tools, and there's several of them out there that vendors have, um, I have my favorites, right? Yep. That, um- You can say your favorites. This is Auto Collabs, right?
• 19:46
  Okay, so, uh- What do you like to use?... Roadster, Roadster's tool is hands down, I believe one of the best. Yep. Um, I've, was an investor in Roadster, and I'm not just saying that because I was an investor. Yeah.
• 19:54
  They already sold it, doesn't matter- Yeah... right? Like, their tool is hands down, I believe the best. It worked extremely well for us- Mm-hmm... especially during COVID, to appraise trades remotely- Mm-hmm...
• 20:03
  and to buy cars off the street.
• 20:04
  But when you get a consumer who's actually engaged enough to take photos of their car very, very simply with their phone in a very simple process, you'll be surprised at how good the photos they take actually really are.
• 20:15
  I've heard that time and time again. David Long was saying that. Oh, yeah. Saying that when consumers send photos through, he's like, "They're gonna be really good."
• 20:22
  Well- Like, people are used to taking photos now, honestly... well, they, they take pictures of what's actually wrong with their car. Right. Which is actually really a good thing, and I'll tell you why.
• 20:31
  Put yourself in the consumer's shoes. I wanna sell my car, and an algorithm gave me $20,000. Mm-hmm.
• 20:38
  And it didn't allow me to send pictures in, and I show up at the dealership, I think I'm gonna get a check for 20 grand. Mr. Used Car Manager walks out with his iPhone- Yep... right?
• 20:48
  With his vAuto or his Accu-Trade or whatever. "Oh, something's wrong with that car here. Something's wrong with that car here. We're gonna give you, um-" 18 seven. "... $18,750." Yeah. Right?
• 20:59
  Wait a minute, I thought I was gonna get 20 grand. You're disappointed all of a sudden, right? Not only that, I'm also busy, right? I always looked at the pictures that people sent in of their cars.
• 21:09
  'Cause you learn a lot about a consumer from their car that they're driving. Yeah. Yeah, I'll give you an example. You see two car seats in the back of a car. Yeah. Um, you see sporting gear.
• 21:17
  People don't have time to go to four different car dealerships. And you know what? They get annoyed. Yeah. So we, we live, it's 2022.
• 21:25
  If you can upload eight or nine pictures and a person can look at them, so somebody can get a range of what the car might be worth and then a firm offer 15 or 20 minutes later- [laughs]... or even an hour later. Yeah.
• 21:35
  I got news for you. They'll wait before they gotta get into an hour, put their kids in the car and go drive to a dealership and then sit there and wait. Yeah.
• 21:42
  Because you know damn well when they walk into the store, no one's gonna wait on them immediately. They're gonna have to sit at the store and wait till they drink coffee. They gotta wait.
• 21:48
  Their kids are running around the showroom. Yeah. People don't have time and they don't wanna deal with that.
• 21:51
  So the dealers that I work with, I'm advocating for them that they use a tool where consumers can upload photos if they choose to or if they want to. I think it's super important.
• 22:01
  And there's money to be made buying cars, um, obviously for retail for your lot, but for wholesale as well. Mm-hmm. You know, it could be a $500 car, a $50,000 car, or a $500,000 car. It doesn't matter.
• 22:14
  You have to pay the same amount of attention to no matter what it is, because if you don't, somebody else will. Mm-hmm.
• 22:21
  And you're gonna lose, um, you're gonna lose an opportunity to buy a car to make money with it retail or wholesale. So you have the used car side of the business, the acquisition side of the business.
• 22:31
  Um, my last question for you today- Mm-hmm... is, is really just kind of zooming the lens out for a second. You, you see and you pay attention to the news and what's going on. Oh, yeah.
• 22:40
  So you see everything that's happening with the change in this consumer mentality toward the automotive industry.
• 22:46
  Um, I've been saying that cars have become part of pop culture again in a really serious way with EVs and this whole energy, no pun intended- Yeah...
• 22:53
  around battery-operated vehicles and OEMs starting to position how they want to position, and legislation doing what it's going to do.
• 23:01
  Um, the online abilities of dealers changing and shifting and what's going on in Europe. When you zoom out and you look at the whole thing,
• 23:10
  what is your thought on what dealers should be focusing on in this next 12 to 24 months? So there's a couple ways to look at this.
• 23:20
  Um, I, I think that it's really nice to think that every car is gonna be electric in five years. I don't think it's reality.
• 23:29
  Uh, I, I think that if you're Mary Barra or another CEO of a large automaker, I think you're definitely gonna gear up for electric, but I wouldn't be throwing out ICE cars- Mm-hmm... altogether. Mm-hmm. There's no way.
• 23:39
  Mm-hmm. It's impossible. Mm-hmm. There's not enough infrastructure in this country, uh, in, on the highways, let alone neighborhoods, to sustain everybody plugging in their car. Yeah. It's great.
• 23:51
  Like, look, I own three Teslas, right? You know this. I l- I really like- I didn't know you owned three. I, I ha- yeah. You own a lot of cars. I, I own a lot of cars, right?
• 23:57
  [laughs] And I got a few Teslas, and I love them, right? They're good cars. Yeah. Um, but I can tell you from being a consumer, the buying experience with a Tesla... is relatively simple, it's relatively painless.
• 24:10
  But the service side of it is challenging. Mm-hmm.
• 24:13
  I've had to service, I, d- matter of fact, before I came up to New York, um, I had to take my son's Tesla, uh, to the Tesla store because a c- there was a crack in the, um, in the roof of the car, in the glass. Mm-hmm.
• 24:24
  Mm-hmm. Something sharp hit it and it cracked the glass. And I had an insurance claim, I had to get it taken care of. Mm-hmm. It took weeks for me to get into Tesla to get it done. Mm.
• 24:33
  I had to wait there for a long period of time. I've had Tesla come to my house before for other repairs, um, and they're backed up. Yeah. You know, you know I live in Charlotte now, right? Yeah.
• 24:42
  There's one location for Tesla. [laughs] So I think there's opportunities for franchise dealers to be able to service electric cars. Mm-hmm. Um, not necessarily at their store, but maybe at other locations as well.
• 24:55
  Um, it'll be interesting to see if any of the independent used car or, uh, the independent service, um, companies, like your Meinekes, your Tire Kings- Yeah... your Goodyear's- Goodyear's, yeah...
• 25:07
  whether or not they actually really get into EVs. They have to. They have to. They're gonna have to. They have to in that way. But it requires- Right, I mean, like just think tires a- alone, right?
• 25:13
  Tires alone and then you start, start thinking of w- battery, whatevers. I don't know, what goes wrong with an EV? So, um- What goes wrong- What goes wrong with an EV? We don't, we don't know yet.
• 25:23
  I, I can tell you from owning some. Yeah. It's mainly cosmetic. Yep. You know, my wife's carved up the wheels on her Model 3 a couple times. Yeah.
• 25:29
  So if I had to have the rims fixed, um, you know, you might get a recall, but this, it's, it's all over their software. Yeah. That leads you to the question you just asked me, right? If you're a dealer- Yeah...
• 25:40
  um, you better be prepared, uh, for a shift in your fixed operations, in what you're gonna be required from the factory. Mm-hmm. Um, you're gonna need space to put batteries.
• 25:50
  You're gonna need a forklift to move batteries around. You're gonna need really, really smart technicians that know how to work on these cars and fix these cars.
• 25:56
  You're gonna need a lot of bandwidth coming into your store. You're gonna need a lot of electricity coming into your store.
• 26:00
  It's gonna be a big investments, and I think that's why, like, that's one of the reasons why I sold, right? Like, I saw- Yeah... a lot of this coming. Chittenango, New York, okay, beautiful place.
• 26:09
  You know what that store was. Yeah. There's gonna be, have to be a lot of money invested in, in fixed operations in places like that- Mm-hmm... to be able to sell and service EVs.
• 26:19
  Um, and there will be a downturn in fixed operations, there's no question about it. So I think if you're not someone who's really good at marketing for service, which,
• 26:29
  you know, I don't think a lot of car dealers are great at that. That's why independent service facilities- Well, because it's kind of built, it's, like, a built-in revenue stream that- Correct...
• 26:36
  ma- makes you a little lazy and take it for granted, right? It does, right? It's warranty work. Yeah. It's, it's internal work. Yeah. But we weren't great at grabbing the, the, the oil changes- Yeah...
• 26:46
  and tires and brakes- Mm-hmm... and staying open later hours- Mm-hmm... and Saturdays and Sundays, being able to compete with a lot of these companies.
• 26:52
  Yeah, people, I think people typically think it's inconvenient to get service work done at a dealership. They do. They think it's inconvenient, number one, and number two, they think it's expensive. Expensive, right.
• 26:59
  So if I still owned a store, I would tell you right now, I would, I would guarantee you that, um, you're gonna see your, your warranty work go down. This is way longer term, right? Yeah, yeah.
• 27:11
  When, when we're selling more EVs. You're just gonna have less work in your shop.
• 27:14
  You're going to be able to depend on, um, getting the public to come in that own cars that are powered by gas, that still need tires, that still need brakes, that still need fluids, that still need filters, and be able to fix those cars fast and inexpensively.
• 27:30
  So coming back to 12 months, 12-month plan for dealers. We'll, we'll take it from 24 and go to 12. If you're a dealer, what things are you focusing on? In the next 12 months? 12 months.
• 27:40
  I'd be really, really cautious about my used car inventory, and I would keep it really, really tight. I don't think the market's gonna collapse. I don't think it's gonna just dive off a cliff. Yep.
• 27:48
  But I still think there will be a slow decline. Yep. Um, I, but I don't think it's gonna be drastic. So focus on used car inventory acquisition and pricing. And merchandising. Yes. Merchandising first. Right.
• 27:59
  If you merchandise things, everything else will fall into place properly. Look, you can ask more for a car than other people if your car is nicer. Absolutely. People know it.
• 28:06
  They'll know it by looking at it online, and they'll know it when they show up at the store. Absolutely. Um, and having the right inventory too. Yep.
• 28:11
  You know, I wouldn't stock normal, run-of-the-mill cars, especially if they're used. I'd be buying oddball cars and cars- Mm-hmm... that people can afford, and really look at affordability. I read an article yesterday.
• 28:20
  It was saying, you know, there's people with income over $100,000, and the majority of them, I think it was, like, 38%. I was reading an article on CNBC.
• 28:27
  38% of people with income over $100,000 are still living paycheck to paycheck. Interest rates have gone up. I think they're gonna continue to go up.
• 28:35
  I don't think we're gonna collapse into some big, awful recession because unemployment, I think, is gonna stay low. There's such a huge demand for labor. Um, I'd be focusing really on tuning in, um, your operations.
• 28:46
  Mystery shop your store. Mm. Right? Like, you know, w- we, you cannot afford to be sloppy. There is gonna be more new car supply. Um, dealers won't be getting sticker or better for everything for a long period of time.
• 28:58
  There are gonna be rebates coming again. There will be an OEM that all of a sudden decides to flood the market with product. I don't care what anybody says. Yeah, it's gonna happen. Human nature.
• 29:05
  We can all guess who it's gonna be. I've got my guess, right? We know, we all- Write it on a napkin and slide it across the table to me... Yeah, we all know who it were in the past, right?
• 29:11
  [laughs] Um, they've changed their name four times. Begins with an S now. [laughs] Um, but they always seem to be the ones that drop their drawers first, right?
• 29:17
  Like, it will happen, and then all of a sudden there's gonna be $8,000 rebates on trucks. Yep. It will happen all over again. And the race, the race begins, right? The race to the bottom is gonna begin again.
• 29:25
  Uh, and then all of the order takers are all of a sudden gonna have a wake-up call. Mm.
• 29:30
  And that's what I believe we have right now, is a lot of order takers, a lot of people that have made a lot of money, justifiably so. Yep. Right? People working a car dealership all day long. Yeah.
• 29:38
  They worked for it, right. It's grueling. They worked for it. For sure. They've earned it. They've made a lot of money. Car dealers deserve to net,
• 29:44
  uh, a very good percentage of the revenue that you generate because there's a ton of risk. Mm-hmm. There's a lot of money tied up in real estate, a lot of money tied up in inventory.
• 29:51
  But the days of netting six, seven, eight percent to sales in some cases, in my opinion- A few, right... are gonna be over with very soon, so I would save your money. All right.
• 30:03
  Well, Todd, I can't wait to hang in person with, at AzotoCon. Yeah, I can't wait. Be able to introduce you to a bunch of people I know, meet a bunch of the people that you know. Yeah, for sure.
• 30:10
  Um, thanks for coming by and doing this in person. All right, man. Thanks a lot. [upbeat music]You know, I think that, uh, he, he, probably Todd Caputo was the first one to actually coin the phrase, "Just do it."
• 30:25
  He was actually pre-Nike. [laughs] And, uh, [laughs]
• 30:28
  no, uh, you know, I think that was my, one of my favorite parts of this interview, even though it was a, a, a small portion, was this idea of, hey, we just have to go get that done, and that speed was so important.
• 30:40
  So whether it's him picking up his phone and being available to his customers or his people, or just making these small business decisions and not taking the time that a lot of times we go through all of these steps in business.
• 30:54
  And it's like, "Oh, nope, we gotta have a meeting about a meeting about a meeting, and then maybe we'll get something done about the next meeting," right? Mm-hmm.
• 31:02
  And he's like, "No, actually business, half of business is just doing something and figuring out whether it's gonna succeed or fail right off the bat."
• 31:12
  Um, and I think that we've, you know, I've seen that in just looking back at his, um, the way that he's done business and the way that his, uh, stores, like, becoming the first, uh, the first, uh, person to say, like, "Hey, forget the, the group website.
• 31:28
  I don't care about that money over here 'cause I wanna serve my customers better. I'm gonna make a decision to go over here, create a website that actually our customers wanna go to," right?
• 31:35
  And that's, that's a person that can make decisions, um, with intentionality, and I, I really appreciate that about his personality and his, his activity.
• 31:44
  There's also this other layer, um, that is just, I don't wanna use the word loyalty in a, in a trite way, um, because there's a level of loyalty I've seen behind the scenes to Todd that is a very, very rare thing.
• 32:02
  We all have some relationships, or hopefully we all have the, the benefit of a few relationships in life where we realize that person has our back.
• 32:09
  Like, I could call them at any moment, and if I needed something, again, I, I don't wanna make light of it. Because, you know, people always say, "If you ever need anything, call me." No, this is, like, for real.
• 32:20
  Like, he would be there. And it goes back to Kyle's comment at the beginning of this podcast, right? How's your family, right?
• 32:24
  There's a level of loyalty and attentiveness to the person in the relationship that is, you know, really, really second to none. You know, that comes from what I believe is a sense of responsibility.
• 32:35
  If you look at the meaning of responsibility, it's really, the root is to respond. Mm. And so, like, Kyle, what you were saying about him not being like, "Hey, is there anything I can do for you?"
• 32:44
  Which is typically how we, we would, you know, behave. He's, he's proactively observing how to respond. Mm. "Hey, I'm giving you something to give back to me so that I can respond." I think that is so awesome.
• 32:58
  I can't wait to meet up with him at ASOTU CON. If you haven't got your tickets yet, you definitely gotta do that. Head over to asotucon.com.
• 33:06
  On behalf of Kyle Mountsier, Paul Daly, and myself, Michael Cirillo, thanks so much for joining us on Auto Collapse.
• 33:13
  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.com.
• 33:26
  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.
• 33:33
  [upbeat music] Welcome to Auto Collapse. [laughs] Welcome to Auto Collapse. [laughs] Why are we recording? [laughs] Are we rolling yet?
• 33:51
  Not yet.