Latest / CBT Live / How Houston's No. 1 Chevy Store Uses AI, Fixed Ops, CarMax Up 13.8% (09.29.26)

Transcript

How Houston's No. 1 Chevy Store Uses AI, Fixed Ops, CarMax Up 13.8% (09.29.26) · CBT Live

0:00
SPEAKER_03: What does it take to be the number one Chevy dealer in Houston for six straight years?
0:04
SPEAKER_03: We're talking to the dealer who's done it.
0:06
SPEAKER_05: I jumped in there.
0:07
SPEAKER_05: The two fixed ops numbers could tell you a lot more about what's really happening in service in your service department.
0:13
SPEAKER_05: All that more coming up now on CBT Live.
0:24
SPEAKER_05: Hey everyone, I'm Jim Fitzpatrick.
0:26
SPEAKER_05: Thanks so much for joining us on this Tuesday, September 29th, this Tuesday afternoon.
0:30
SPEAKER_05: It's now lunchtime, right?
0:31
SPEAKER_03: That's right, here on the East Coast.
0:33
SPEAKER_05: That's right.
0:33
SPEAKER_05: That's right.
0:34
SPEAKER_05: I am Jim Fitzpatrick, as I mentioned, joined by my lovely partner, Bridget Fitzpatrick.
0:38
SPEAKER_03: Hello, everyone, and welcome to the show.
0:39
SPEAKER_03: Happy Tuesday to everyone.
0:41
SPEAKER_03: We're so glad to have you with us today.
0:42
SPEAKER_05: That's right.
0:43
SPEAKER_05: Sorry I stepped on your line there.
0:44
SPEAKER_05: You know what?
0:45
SPEAKER_05: It's live.
0:46
SPEAKER_05: It's live.
0:46
SPEAKER_05: It happens.
0:47
SPEAKER_05: That's right.
0:47
SPEAKER_05: Keep it working.
0:49
SPEAKER_05: I don't even care.
0:50
SPEAKER_05: It is a great show.
0:51
SPEAKER_05: Great show today.
0:52
SPEAKER_05: By the way, did I do did all of you see that uh uh I want to just jump in here and talk about this?
0:57
SPEAKER_05: Because I think we might have missed this when it happened uh last week.
0:59
SPEAKER_05: But um Jim Kuhnz of Coons Ford sold his company, as you know, back in 2023 for 1.2 billion dollars, will it be?
1:07
SPEAKER_05: Nice.
1:08
SPEAKER_05: Uh yeah, kudos to Kim and to Jim Coons and his family.
1:11
SPEAKER_05: Uh Kuhn's organization and DC there is an incredible, incredible company.
1:16
SPEAKER_03: Well, great people come out of DC.
1:17
SPEAKER_03: Oh, that's right.
1:18
SPEAKER_03: For those that don't know, that's where I'm from.
1:20
SPEAKER_03: Bridging is from Northern Virginia.
1:21
SPEAKER_05: That's right.
1:22
SPEAKER_03: That's right.
1:22
SPEAKER_05: But um uh yeah, so Jim Coons just donated$30 million to Northwood University.
1:28
SPEAKER_05: And uh Northwood University is just a great, great school.
1:32
SPEAKER_05: It is, and uh so many incredible car people, I say car people, but today's car managers and dealers and what have you.
1:38
SPEAKER_05: There's been so many.
1:39
SPEAKER_05: In fact, Jim Coons in 1973 graduated from Northwood University, so he's an alum there.
1:45
SPEAKER_05: And uh he feels very passionate about the work that they're doing.
1:48
SPEAKER_05: Uh and uh uh LG Wright is uh is over that.
1:53
SPEAKER_05: That division there.
1:54
SPEAKER_05: Um and uh yeah, they do just an incredible job.
1:57
SPEAKER_05: I'm glad you brought that up.
1:58
SPEAKER_05: Incredible car show every year.
2:00
SPEAKER_05: And uh yeah, fantastic.
2:01
SPEAKER_03: But no, great, great cause and um a very, very generous donation from the crews.
2:06
SPEAKER_05: It's gonna be interesting to see what they're able to do with that kind of money there, you know.
2:09
SPEAKER_03: I know.
2:10
SPEAKER_03: That's exciting.
2:10
SPEAKER_05: Yeah, really.
2:11
SPEAKER_05: Glad you shared that.
2:12
SPEAKER_05: Thank you.
2:12
SPEAKER_05: Thank you, Jim Coons.
2:13
SPEAKER_03: Yeah.
2:13
SPEAKER_05: Making us look good in the car business.
2:16
SPEAKER_05: And now he only has, unfortunately, like$1.1.98 billion dollars left.
2:21
SPEAKER_05: Something like that.
2:23
SPEAKER_05: I know.
2:26
SPEAKER_05: No, but it's great to see that he you know he sold that company and he's just he's spreading the love around it.
2:31
SPEAKER_05: You know?
2:31
SPEAKER_03: Well, that's what we would do.
2:32
SPEAKER_03: If we had millions, we'd be right doing the same thing.
2:36
SPEAKER_05: That's right.
2:37
SPEAKER_03: Good stuff.
2:37
SPEAKER_05: Exactly.
2:38
SPEAKER_03: We have a few stories to go over before we get to our great guests today.
2:41
SPEAKER_03: Um one of them is we talked to John Murphy a few uh a few weeks ago about the new vehicle redo redesigns and how that's slowing down.
2:50
SPEAKER_03: Yeah.
2:51
SPEAKER_03: So Murphy expects automakers uh to redesign an average of 9 percent of their lineups each year from 2026 through 2028, and that's the 20-year average is about 14 percent.
3:02
SPEAKER_03: So that's that's going down.
3:03
SPEAKER_03: Um but the Wall Street Journal recently talked to a New Jersey Cadillac dealer who told them that his customers are questioning why they should pay more when the car looks the same.
3:14
SPEAKER_03: He says, quote, I literally have people saying, I am not leasing this car again.
3:18
SPEAKER_03: It's the same car and the price keeps going up.
3:22
SPEAKER_03: And I get that.
3:23
SPEAKER_03: If it's the the design hasn't changed, and I know a lot of it um for me anyway, I like driving a new car.
3:30
SPEAKER_03: And I my ego likes people knowing that that car is new.
3:34
SPEAKER_03: So the redesign says, I'm not afraid to say it.
3:38
SPEAKER_03: I think a lot of people feel that way.
3:39
SPEAKER_05: Well, you're right, but then look at if you look at Tesla, I can't tell the year of a Tesla.
3:43
SPEAKER_03: I don't own a Tesla.
3:45
SPEAKER_05: No, but if you pull up next to a 20-year-old or a 10-year-old Tesla, you have no idea.
3:49
SPEAKER_05: Is that a new car?
3:49
SPEAKER_05: Well, I have no idea what year that is.
3:51
SPEAKER_05: And I know that's the same thing.
3:52
SPEAKER_05: It's the same model.
3:53
SPEAKER_03: Technology is is being updated on that, but I guess for these new redesigns and the technology is not that much more advanced than the year before.
4:03
SPEAKER_05: Right.
4:03
SPEAKER_03: Um but yeah.
4:04
SPEAKER_05: It's true, everybody does want to let their neighbors know that they just bought a new car.
4:07
SPEAKER_05: Can't do that.
4:08
SPEAKER_03: But my my ego goes way back.
4:09
SPEAKER_03: Do you remember the Jeep Wrangler?
4:11
SPEAKER_03: Um so in 1992, I was the first year I bought a brand new car on my own.
4:15
SPEAKER_03: I was really proud of myself.
4:17
SPEAKER_03: But it was the first year the Jeep Wrangler had shoulder belts on the back seats.
4:20
SPEAKER_03: Right.
4:20
SPEAKER_03: So the roll bar looked completely different.
4:22
SPEAKER_03: But I thought it was so cool.
4:23
SPEAKER_03: I had the new model and the new roll bar.
4:25
SPEAKER_03: And so it goes, my my problem goes way back.
4:29
SPEAKER_03: My ego goes back to the 1992.
4:32
SPEAKER_03: But anyway.
4:33
SPEAKER_03: So CarbMax reported its latest results this morning.
4:36
SPEAKER_03: It sold more than 227,000 used vehicles at retail last quarter, up nearly 14 percent from a year ago.
4:44
SPEAKER_03: But its gross profit per retail vehicle fell by$111 to$2,105.
4:52
SPEAKER_06: Okay.
4:52
SPEAKER_03: So they they're using the price to bring in buyers, but they're losing over$100 on a car.
4:58
SPEAKER_05: Yeah,$100 a car.
4:59
SPEAKER_05: Yeah, yeah.
5:00
SPEAKER_05: And by the way,$227,000 units and haven't hasn't discounted any one of them.
5:05
SPEAKER_05: I think that's a huge lesson and a takeaway for the rest of us in the auto industry that thinks you have to greet a customer and say, you know, welcome to ABC Motors.
5:14
SPEAKER_05: Uh we'll give you the biggest discount on the block.
5:17
SPEAKER_05: You know, and so many times it's the salesperson, excuse me, that brings up discount before the customer has even asked about one.
5:25
SPEAKER_00: Yeah.
5:25
SPEAKER_05: And uh they typically want to know about the car, they want to know about how it drives and the features of the car, and we all too often in the industry, I know I'm painting with a broad brush here, want to jump right into the best deal.
5:35
SPEAKER_05: You know, well, I didn't bring up the best deal.
5:37
SPEAKER_05: I I I'm looking for the best car that's gonna fit my needs.
5:40
SPEAKER_05: But 227,000 units and they do not discount their cars.
5:44
SPEAKER_05: As we know, we have purchased vehicles from CarMax, and I've tried them on for size and said, You're gonna let me walk over$100?
5:52
SPEAKER_05: We just that's just not our, you know, they tell you that's just not our business model.
5:55
SPEAKER_05: You know, you like the car, buy the car, this is the price, and it is that has resonated with a lot of people.
6:00
SPEAKER_05: Yeah.
6:01
SPEAKER_05: And Carvana, same way.
6:02
SPEAKER_05: So a lot of takeaways there.
6:04
SPEAKER_03: And why go ahead.
6:05
SPEAKER_05: No, I was just gonna say put they are in a little bit of hot water.
6:08
SPEAKER_05: They're trying to figure some things out of CarMax, and uh, even with the 227,000 vehicles that they've sold, um, they put in new leadership because they did get into a little bit of hot water there and they're trying to work themselves work their way out of it.
6:20
SPEAKER_05: Right, right.
6:21
SPEAKER_03: So and their prices fell over a hundred dollars a car.
6:24
SPEAKER_03: Right.
6:25
SPEAKER_03: Growth.
6:25
SPEAKER_03: Yeah.
6:26
SPEAKER_03: All right, while we're talking about used cars, there is a new training camp interview airing today on CBT News that dealers should see.
6:32
SPEAKER_03: Adam Marberger sat down with Rob Ruth, the owner of Rob Ruth Ford in Pennsylvania.
6:37
SPEAKER_03: And Rob talked about why his store built its own used car buying center when it needed more inventory.
6:43
SPEAKER_03: He says the dealership was selling about 200 vehicles a month five years ago, and today it's selling in the mid-400s.
6:51
SPEAKER_03: Yeah.
6:51
SPEAKER_03: So that's pretty cool.
6:52
SPEAKER_05: Yeah, guys, I I had the opportunity to interview him as well when he was here in the studio uh with Adam, and uh the guy's just incredible.
7:00
SPEAKER_05: Yeah, just doing a great job.
7:01
SPEAKER_05: Little tiny store as you can see, and doing a huge volume.
7:05
SPEAKER_05: And uh that that's you know, that's what you want to see.
7:07
SPEAKER_05: Nice low overhead.
7:08
SPEAKER_05: Yeah, you know.
7:09
SPEAKER_03: So you can see that full interview at cbtnews.com.
7:12
SPEAKER_03: It's a great one.
7:13
SPEAKER_03: So don't miss that.
7:14
SPEAKER_05: And Adam is coming in uh first week of October with a whole nother group of uh dealers from around the country.
7:20
SPEAKER_05: That's right.
7:21
SPEAKER_05: So uh we love it when he comes comes in and we do.
7:24
SPEAKER_05: And uh yeah, he does a great job.
7:26
SPEAKER_05: Does a great job.
7:28
SPEAKER_03: All right, so I would like to thank today's sponsor.
7:30
SPEAKER_03: Today's sponsor is Conversica.
7:32
SPEAKER_03: Ignite by Conversica is an AI native revenue activation engine for automotive retail.
7:38
SPEAKER_03: It connects dealership data, assembles customer and vehicle context, and applies AI reasoning to identify and activate specific sales and service revenue opportunities across the dealership.
7:49
SPEAKER_03: Mm-hmm.
7:50
SPEAKER_05: So there you go.
7:50
SPEAKER_05: Conversica's been around a while now, and they're doing a great job of dealers.
7:58
SPEAKER_03: All right, let's get on to our first guest.
8:00
SPEAKER_03: Today we're talking with Antoine Burks, General Manager of MacHike Chevrolet, about the market and where AI fits into his store.
8:08
SPEAKER_03: Antoine, thank you so much for joining us on the show today.
8:10
SPEAKER_03: That's right.
8:11
SPEAKER_03: Welcome in, Antoine.
8:12
SPEAKER_05: And uh and how's business at your dealership?
8:15
SPEAKER_01: Uh business is steady, business is strong, and uh we're always looking for ways to improve.
8:20
SPEAKER_01: Yeah, that's fantastic.
8:22
SPEAKER_01: So thank you.
8:23
SPEAKER_03: Yes, talk to us.
8:24
SPEAKER_01: Thank you for having me.
8:25
SPEAKER_01: Thank you for having me.
8:26
SPEAKER_01: This has been I enjoy your show.
8:28
SPEAKER_01: I I watch it as I work out in the morning.
8:30
SPEAKER_01: So thank you.
8:31
SPEAKER_03: Oh nice.
8:31
SPEAKER_03: That's great.
8:32
SPEAKER_03: It's great.
8:32
SPEAKER_03: You're looking sharp in that suit.
8:34
SPEAKER_03: I was telling Jim we could see.
8:35
SPEAKER_03: I said, wow, that is a suit that looks like one that you would wear.
8:38
SPEAKER_03: It's really nice.
8:39
SPEAKER_03: Love the tie, the whole thing.
8:40
SPEAKER_03: It's you're looking sharp.
8:41
SPEAKER_03: That's right.
8:42
SPEAKER_03: Jim's a little more casual today.
8:43
SPEAKER_03: Yes, man.
8:44
SPEAKER_03: I usually wear a tie.
8:45
SPEAKER_03: I know, I know.
8:47
SPEAKER_03: That's right.
8:47
SPEAKER_03: Yes.
8:48
SPEAKER_03: All right.
8:49
SPEAKER_03: So Mack Kike Chevrolet won number one Chevy dealer in Houston six years in a row for volume.
8:56
SPEAKER_03: And you're also number four Chevrolet dealer in the United States.
9:00
SPEAKER_03: Talk to us about that success.
9:02
SPEAKER_01: Uh, the success has been from our people and what they give every day.
9:08
SPEAKER_01: And it's a combination of culture and accountability.
9:12
SPEAKER_01: And we make sure that one is that we have a positive outlook every single day.
9:18
SPEAKER_01: When we come in here with me and my managers, we want to make sure that everybody feels like they can be successful for the day.
9:26
SPEAKER_01: And we also have like rules that we want to make sure that set you up for success.
9:31
SPEAKER_01: You either sell a car a day or you generate two appointments.
9:35
SPEAKER_01: But we always want everybody to be effective and putting their best foot forward as soon as they walk into the dealership.
9:41
SPEAKER_05: Yeah, that's great.
9:42
SPEAKER_05: What goes into building a good uh culture and a good team in today's dealerships?
9:48
SPEAKER_01: So it's based on the principles of the leader, and that's the way I like to look at it.
9:53
SPEAKER_01: So when I'm interviewing someone, I'm always thinking about how they're gonna fit in with our store, what are their values, um, what is motivating them?
10:04
SPEAKER_01: Because that's the first question I ask them is what is your motivation?
10:08
SPEAKER_01: And I need to know that to understand you, and then also how you're gonna fit in here.
10:14
SPEAKER_01: Are you able to be a sponge?
10:16
SPEAKER_01: Are you open to being coached?
10:18
SPEAKER_01: And I think a lot of times um that's what makes it very important as a salesperson to kind of fit into somewhere new is okay, can you bring your strengths here?
10:29
SPEAKER_01: And if we see some things that you lack, can you also do a lot of self-improvement?
10:35
SPEAKER_01: Because that's sort of the things that we focus on every single day is how can we get better?
10:40
SPEAKER_01: 1% better every single day.
10:42
SPEAKER_05: Yeah, that's great.
10:43
SPEAKER_05: That's great.
10:43
SPEAKER_05: Let me ask you this question.
10:44
SPEAKER_05: What do you what do you do, and tone, Antonio, it's with somebody that um is a number one um uh a number one salesperson sells a just a a you know boatload of cars for you, but they don't adhere to all of the rules in the dealership.
11:00
SPEAKER_05: They don't come in on time, they don't go to the necessary training or or the sales meetings.
11:05
SPEAKER_05: What do you what do you do with an individual like that?
11:07
SPEAKER_01: So typically the individuals that work for us, they want to make sure that they are cooperating with management because they understand the image that it gives uh if you're selfish, if you're a diva.
11:24
SPEAKER_01: So our top performing salespeople, they also participate in everything that we ask them to do.
11:31
SPEAKER_01: Um, as far as scheduling and being on time, we have a rule.
11:35
SPEAKER_01: If you sell over 22 cars a month on average, you can make your own schedule.
11:42
SPEAKER_01: Uh you can come and go as you please, because typically those individuals already have what it takes and they don't need a lot of oversight and they have it in them already.
11:51
SPEAKER_01: They're autonomous.
11:53
SPEAKER_01: So those individuals, they come and go, but typically they're always here because they are our top producer and you have to be at work in order to produce.
12:01
SPEAKER_01: So we don't have those problems.
12:04
SPEAKER_01: Um, a lot of times uh with our store, it's a fit-in-fit-out culture.
12:10
SPEAKER_01: And typically, if you don't fit in and you're kind of diva, the store is gonna spit you out.
12:14
SPEAKER_01: I mean, it's a machine.
12:16
SPEAKER_05: Yeah, that's that's uh that's funny.
12:18
SPEAKER_05: That that uh by the way, forgive me for mispronouncing your name, Antoine.
12:22
SPEAKER_05: That's uh that that that uh my my mistake.
12:25
SPEAKER_05: But uh so let's jump into this because we're talking about uh today uh with you uh um AI and you know where it fits into the operation of a dealership.
12:34
SPEAKER_05: So uh let's let's talk about that.
12:36
SPEAKER_05: The implementation, what does that look like uh in in your store today?
12:40
SPEAKER_05: And and how are you using AI to run the store better?
12:44
SPEAKER_01: So, I mean, first with AI, you know, it's coming from a lot of different places and spaces.
12:51
SPEAKER_01: And when you attend conferences, uh everyone wants to approach you with AI and trying to figure out how it fits best into uh your culture and your process of the store is super important.
13:04
SPEAKER_01: Uh I remember uh we started with one voice AI, and a customer was complaining about how artificial it was.
13:15
SPEAKER_01: And so you have to find the right program that makes sense for what you do.
13:19
SPEAKER_01: And one of the things that we practice is we don't want AI to replace our people, we just want it to be an enhancement.
13:26
SPEAKER_01: So we look for where it can enhance the productivity at our store instead of replacing it.
13:32
SPEAKER_01: Uh one of the things that we use is through our CRM for long-term follow-up.
13:37
SPEAKER_01: Uh, we use AI.
13:39
SPEAKER_01: We use AI for our service drive and vehicle acquisition and also light touch points, um, so the customers know that we're still thinking of them.
13:49
SPEAKER_01: Like it's automated, but yes, we thought to make this automated to where we want you still engaged with our store because customer retention is like the highest priority I have as a general manager is to keep our customers, make them happy, make them feel like this is a place where they want to buy a vehicle, and uh out of all things, make sure that they come back to us for all their needs.
14:14
SPEAKER_01: We really want to be your car concierge so you think about us when you think about vehicles.
14:18
SPEAKER_01: That's great.
14:19
SPEAKER_01: That's awesome.
14:20
SPEAKER_03: So, Antoine, what you're you focus heavily on AI, but you've said that the business is still human first.
14:26
SPEAKER_03: What can you talk to us about that?
14:28
SPEAKER_01: Well, yeah, because like we are trying to remove the friction that we have in our business, and I love our business.
14:37
SPEAKER_01: Um, I've been in the car business for 22 years, and I I'm also a consumer, so I want how I would approach buying a vehicle, what it feels like to remove all of the pain points that we have in our business.
14:54
SPEAKER_01: But people will always buy from people, no matter what.
14:58
SPEAKER_01: You still want to go back to someone, especially someone who has a higher authority and credible in what they do and ask questions and be guided in the right way.
15:08
SPEAKER_01: And I think improving our people and product knowledge is is so important because we came out of a time where you didn't need much product knowledge.
15:18
SPEAKER_01: Opportunity was abundant and um inventory was scarce, yeah.
15:24
SPEAKER_01: So it made it easier for everyone to sell, and now we're back to the real car business, and we have to improve our people at the point of contact, and that's something that I really strive on is training and making sure that our people uh know how to answer the questions for the customer.
15:42
SPEAKER_02: Yeah, for sure.
15:43
SPEAKER_05: Technology is only as good as the people using it.
15:46
SPEAKER_05: How do you get your team to embrace some uh to embrace something new without making them feel like technology is being brought in to replace them?
15:55
SPEAKER_05: Because we're hearing a lot about that with AI that oh, it's it may end up replacing you.
15:59
SPEAKER_01: Oh, I tell them immediately AI is not gonna replace you.
16:02
SPEAKER_01: Yeah.
16:03
SPEAKER_01: Because again, I just feel like this is a people first business.
16:07
SPEAKER_01: Like you're buying for people.
16:08
SPEAKER_01: You can't.
16:09
SPEAKER_01: I mean, there's some structures that have that are disruptors to our business that you might think ultimately we won't need people, but you're gonna need people.
16:23
SPEAKER_01: And so what I do is first I tell them to embrace it.
16:26
SPEAKER_01: And you know, the level of volume that we're have, that that we do, I mean, we're a large ship, so it takes time to move, but you have to make sure that you inspect what you respect and that you're going in the right direction that you want your store to go into because some tools are valuable, some tools do help you.
16:47
SPEAKER_01: Yeah, and when you can embrace that and it makes your your your work life and your workday more efficient, that should help you, and you can see it, and then you start to buy in more on your own.
16:58
SPEAKER_05: Yeah, for sure.
16:59
SPEAKER_05: Um, switching gears for a second, uh, the FTC, as you know, has come down on dealers and said, Look, you gotta sit up and fly right, otherwise, we're coming after you with some hefty fines.
17:10
SPEAKER_05: Um have you changed the way you do business at your dealership, or have you had to change the way you do business at your dealership because of the new FTC uh rules and and uh and and the pressure that they're applying on dealers?
17:24
SPEAKER_02: I'm so glad you brought this up.
17:26
SPEAKER_01: Um, one of the things about us is that we were proactive.
17:30
SPEAKER_01: So we've been practicing transparent pricing for the past two, two and a half years.
17:35
SPEAKER_01: Oh.
17:35
SPEAKER_01: Because yeah, we saw the writing on the wall.
17:38
SPEAKER_01: Yeah.
17:38
SPEAKER_01: And um one of the things uh that my predecessor, Josh Potts, always talks about is like when you lose your reputation because you have customers coming in on one expectation, and then when you get there, you blindside them.
17:54
SPEAKER_01: And so we don't want to blindside people.
17:57
SPEAKER_01: Whatever we offer is something that we offer, and we don't force anyone to buy anything.
18:03
SPEAKER_01: When we when we actually did have addendums, we never forced it on it.
18:07
SPEAKER_01: We never said, you gotta buy this or you can't buy our vehicle and you have to leave.
18:12
SPEAKER_01: We never treated people like that.
18:14
SPEAKER_01: And I really believe that it hurts our business to advertise one price and then when a customer gets there, you surprise them with an add-on to make the deal manageable when it really should be your salesmanship that sells the vehicle, not just low pricing and attacking on extras later.
18:36
SPEAKER_05: Okay, gotcha.
18:37
SPEAKER_05: I think we've got a question that's uh written in here.
18:40
SPEAKER_05: How does your dealership ensure the uh AI tools have updated and accurate info?
18:46
SPEAKER_01: Uh we make sure that our data is clean.
18:49
SPEAKER_01: That's the first thing that we want to do is make sure that we do have accurate information and we heavily respond to feedback.
18:58
SPEAKER_01: Um, we test it, but also if something happens and a customer informs us that something isn't correct, we jump on it immediately.
19:06
SPEAKER_01: And our AI isn't very uh people intensive or very front-facing.
19:12
SPEAKER_01: We make sure it's playing in the background and we set the correct parameters in order for it to operate.
19:18
SPEAKER_05: That's fantastic.
19:19
SPEAKER_05: So let me um let me ask you this.
19:21
SPEAKER_05: I I've talked to a dealer recently that's got 10 dealerships, and he said that in the course over the course of the next 10 years, he should be able to run his dealership on about 25% less people because of AI.
19:35
SPEAKER_05: Do you think he's he's uh he's right or or wrong, or do you see where that could possibly be the case?
19:41
SPEAKER_01: Well, I mean, it depends on your business structure.
19:44
SPEAKER_01: Um and if there's always gonna be tools that make your business more efficient, and if if a tool makes your business more efficient where you can uh cut out some expense, that's that's completely understandable.
20:00
SPEAKER_01: Uh because there has been a lot of developments over the history of our business that has created greater efficiency for you to cut out expenses.
20:08
SPEAKER_01: Yeah, but again, I would never look to completely replace people with AI.
20:14
SPEAKER_05: Yeah, yeah.
20:15
SPEAKER_05: I gotcha.
20:15
SPEAKER_05: I gotcha.
20:16
SPEAKER_05: Hey, those awards behind you are pretty impressive.
20:18
SPEAKER_05: I should I think we mentioned in the opening that you are the number one volume dealer, Chevy dealer in Houston for six straight years.
20:27
SPEAKER_05: Uh, I know the Houston market, that's one of the most competitive and biggest markets in the country.
20:32
SPEAKER_05: So that's uh quite an accomplishment.
20:34
SPEAKER_05: Talk to us about that.
20:36
SPEAKER_01: Uh thank you.
20:37
SPEAKER_01: We uh it's something that we're super proud of every day.
20:42
SPEAKER_01: Yeah.
20:43
SPEAKER_01: And it is challenging to stay in the lead because how I always describe it, it's like just say, man, I'm I mean, I'm super into racing, right?
20:55
SPEAKER_01: So if you're in second place and you're gunning for first place, you have a target.
21:01
SPEAKER_01: But when you're in first place, you're your own target.
21:04
SPEAKER_01: Sure.
21:05
SPEAKER_01: So you have to make sure that you're beating your last fastest lap every single time that you come into dealership.
21:13
SPEAKER_01: And so that's how we approach being in first place.
21:17
SPEAKER_01: And again, it's feedback and having taking your ego out the equation.
21:25
SPEAKER_01: Because a lot of times we'll have situations where somebody has a great idea, because I have an open door policy, and no matter where that idea comes from, if it's better than what we currently have on the table, we will replace our idea with that idea.
21:38
SPEAKER_01: Yeah.
21:39
SPEAKER_01: And that's how we approach continually being better and not resting on our laurels and making sure that our reputation in the community stays strong.
21:49
SPEAKER_01: And that's what we've did.
21:51
SPEAKER_01: That's actually how we got ahead um in the city because during the inventory shortage when everyone was charging.
22:00
SPEAKER_01: Over a sticker and that's your business practice.
22:03
SPEAKER_01: That's fine, you know.
22:04
SPEAKER_01: We chose not to.
22:06
SPEAKER_01: So what that allowed us to do was we turned more inventory faster, which allowed us to get more inventory from the factory.
22:15
SPEAKER_01: Now we have this inventory where no one else can compete with how many vehicles we have, and that's how our lead just kept getting greater.
22:25
SPEAKER_01: And every month we went from being competitive to winning by 20, 30, 100, 200.
22:32
SPEAKER_01: And that's what it means for us.
22:35
SPEAKER_05: That is fantastic.
22:36
SPEAKER_05: Let me ask you this for the people that didn't hit their objectives for the month, do you use those bats on the wall behind you?
22:43
SPEAKER_05: Because that would be pretty intimidating coming in.
22:52
SPEAKER_04: Because I wouldn't want to be called the Ruffus if I didn't hit the number.
22:55
SPEAKER_04: You know what I mean?
22:56
SPEAKER_04: You just gotta reach for the bat.
23:02
SPEAKER_03: Well, we can see why you're the number one in Houston and number four in the United States.
23:06
SPEAKER_03: Congratulations on all your success, Antoine.
23:08
SPEAKER_03: We've really enjoyed this conversation and look forward to talking to you again.
23:11
SPEAKER_03: Yes.
23:12
SPEAKER_01: Thank you very much.
23:13
SPEAKER_01: I appreciate you having me.
23:14
SPEAKER_01: Uh may y'all continue doing what you do.
23:17
SPEAKER_01: You're bringing a lot of news and highs and expectations to this business that I personally want to help make it better and make what people think about us a lot different.
23:27
SPEAKER_05: Well, thank you so much for those kind comments and uh would love to do a follow-up with you to see how things are moving along.
23:32
SPEAKER_05: Absolutely will love it.
23:34
SPEAKER_05: Awesome.
23:34
SPEAKER_05: Thanks so much.
23:34
SPEAKER_03: See you next time.
23:35
SPEAKER_02: Thank you.
23:36
SPEAKER_02: See y'all next time.
23:37
SPEAKER_05: What a nice guy.
23:38
SPEAKER_03: He did have the right attitude on so many things.
23:41
SPEAKER_03: Yeah.
23:41
SPEAKER_05: And and uh the fact that you know, when he said uh about not charging when all the other dealers were and and that was happening around the United States, he was like, ah, it's COVID and uh we got the car and we're gonna charge you 10,000 over.
23:53
SPEAKER_05: People do remember that.
23:54
SPEAKER_05: Yeah, you know, they're like, all right, I'm gonna buy the car, but you know, I'm gonna remember that.
23:58
SPEAKER_05: And obviously he did right by his customers and said, We're not playing that game.
24:01
SPEAKER_03: He did, and there were a lot of things he was talking about.
24:03
SPEAKER_03: I was like, oh, we could bring him on and talk to him about culture alone and you know, the fact that he doesn't use the bats as a good culture.
24:10
SPEAKER_03: But there were some other things he was touching on about culture that was like, okay, this this is there's there's a reason, like I said, he is number one.
24:17
SPEAKER_05: He he also said um that I thought was something that was worth noting, and that was about the fact that when you got somebody that's selling north of 22 units a month, that's not the individual that you focus your daily activities on.
24:29
SPEAKER_05: Right.
24:29
SPEAKER_05: Help the people that are eight to ten cars a month and they're trying to get over the hurdle and they're trying to go to the next level or what have you.
24:36
SPEAKER_05: Um if somebody's selling north of 20 cars a month, that that's an individual that you just say, hey, you make your schedule, you do what you got to do, and keep going.
24:44
SPEAKER_03: And did you do that when you were working in dealerships and did it?
24:48
SPEAKER_03: Well, I know you did that.
24:49
SPEAKER_03: When you were managing and owning dealerships, were you did you say you can make your own schedule if you're doing a certain number of things?
24:54
SPEAKER_03: Yeah, you do.
24:55
SPEAKER_03: Because how does that go with the the rest of the the team and telling you?
24:58
SPEAKER_05: That's a great question.
24:59
SPEAKER_05: So it's often looked at as kind of the reward.
25:02
SPEAKER_05: If you've got somebody that's a senior salesperson that is selling 20 cars a month, they get to pick out the office they want to sit in, they get to pick out, you know, the the the uh you know, what whether it be the whether it be the office they're in or the parking lot, I mean the parking spot I should say.
25:17
SPEAKER_05: Um so there's a lot that goes into that, but it should give the rest of the team that um that inspiration to say, I want to sell more than 20 cars a month.
25:26
SPEAKER_05: Yeah.
25:26
SPEAKER_05: Plus you kind of you you as as managers, as GMs in the business and and sales managers, you lean on those senior salespeople to help you manage the rest of the store in some cases.
25:37
SPEAKER_05: Yeah, yeah.
25:38
SPEAKER_05: Okay.
25:38
SPEAKER_05: Yeah.
25:38
SPEAKER_05: Okay.
25:39
SPEAKER_03: Yeah.
25:40
SPEAKER_03: But then is that really their responsibility?
25:41
SPEAKER_03: They should be like, uh, yeah, I sold my 25 cars, I'm out.
25:45
SPEAKER_05: So there's there's two kinds of 20.
25:47
SPEAKER_05: It's a good question.
25:48
SPEAKER_05: There's two kinds of 25 car um a month salespeople.
25:52
SPEAKER_05: One that goes, I'm out, I'm selling my 25 cars, don't call me, I don't want to know about anything, I don't want to help the greenpeas.
25:57
SPEAKER_05: And then there's the other 25-car salesperson that goes, I actually want to be the GM one day.
26:02
SPEAKER_05: Or I want to be the sales manager, the GSM, whatever the case might be.
26:05
SPEAKER_05: And therefore, I realize that the management team in the dealership is going to be looking to me and looking at me as to how I handle myself.
26:13
SPEAKER_05: And am I helping the other Greenpeas or the other people, you know, that sell more cars or helping out in FI and you know, whatever the case might be.
26:22
SPEAKER_05: If you're going the extra mile, that is definitely noticed by the GM, the GSM, and the sales manager that you're that type of an individual.
26:29
SPEAKER_03: And that's in any industry that you're in.
26:31
SPEAKER_03: It is an individual.
26:32
SPEAKER_05: It is.
26:32
SPEAKER_05: There's no question about it.
26:33
SPEAKER_05: And uh and the other the other thing too is that if you're selling 25 cars a month, you better have a good CSI score.
26:38
SPEAKER_05: You know, there's there's the 25 car a month individual that that does not treat those customers the best.
26:46
SPEAKER_03: You know, are they selling 20?
26:47
SPEAKER_03: They sell that many cars.
26:48
SPEAKER_05: They're closers.
26:50
SPEAKER_05: They are scared.
26:52
SPEAKER_05: I worked with them where they are closers, but I will tell you, they're probably not selling another car to that family.
26:57
SPEAKER_05: The customers leave and go, uh, I I I bought the car, but I'm not buying another car for breaking night.
27:04
SPEAKER_05: It wasn't a fun experience.
27:05
SPEAKER_05: But there are those hammers in the industry that you go, uh, you kind of, you know, you kind of look the other way and you go, okay, they're getting us 25 cars a month, but it's definitely affecting the CSI score.
27:15
SPEAKER_06: Yeah.
27:15
SPEAKER_05: Yeah.
27:16
SPEAKER_05: And then of course there's 25, there's 20 car a month people that are doing a great job and they've got a great CSI score.
27:22
SPEAKER_05: Keep doing what you're doing, by the way.
27:24
SPEAKER_05: Um, I want to say the industry needs both of them, but I think the person that's the hanger is kind of a thing of the past, right?
27:31
SPEAKER_03: Right.
27:31
SPEAKER_03: Uh yeah, I would say that the other one is who you want all day, every day.
27:35
SPEAKER_03: It's one that's you know a team player and trying to lift the team up with them and does a good job with the customers.
27:40
SPEAKER_05: Yeah.
27:41
SPEAKER_05: You know, for to build a business.
27:44
SPEAKER_05: Rising tide lifts all boats.
27:45
SPEAKER_05: Yeah, no, no, that's the rising tide.
27:49
SPEAKER_04: Fool me one.
27:50
SPEAKER_03: Fool me.
27:51
SPEAKER_04: We just turned into George Bush.
27:53
SPEAKER_04: Fool me once.
27:54
SPEAKER_04: You can't ever fool me again.
27:58
SPEAKER_03: But anyway, for those of you that want to date.
28:01
SPEAKER_03: Do we have a newsletter at CBT talk about?
28:04
SPEAKER_03: For those that you want to stay up to date on all of the information that we're posting here on CBT News and all of the live shows, make sure you get your updates.
28:12
SPEAKER_03: Our goods are going to comment on our newsletter.
28:14
SPEAKER_03: Okay, sorry.
28:15
SPEAKER_03: Be sure to sign up at cbtnews.com.
28:18
SPEAKER_03: And also be sure to like, follow, and subscribe on your favorite social channels because we're there.
28:23
SPEAKER_05: That's right.
28:24
SPEAKER_05: You know what else I saw on that newsletter?
28:25
SPEAKER_05: What?
28:26
SPEAKER_05: Was the banner for the used car week?
28:28
SPEAKER_03: Yes.
28:29
SPEAKER_03: So we are looking so forward to that.
28:31
SPEAKER_05: Looking so forward to that.
28:32
SPEAKER_05: That's going to be in San Diego, beautiful San Diego.
28:34
SPEAKER_05: Who doesn't want to go to San Diego and spend a week on the used car uh topic of used cars?
28:40
SPEAKER_05: Everything used cars, by the way.
28:41
SPEAKER_05: We're talking buying them, selling them, shipping them, reconditioning, financing them, everything that you want to know about used cars.
28:48
SPEAKER_03: We will be bringing you the live show from San Diego.
28:51
SPEAKER_03: We'll be doing interviews on the floor at the show.
28:53
SPEAKER_03: So if you're there, be sure to let us know and we will talk to you while we're there through camera.
28:58
SPEAKER_03: Um but we would love to see them there.
29:05
SPEAKER_05: Uh here uh uh shortly so that you can direct it from the basic That's right.
29:11
SPEAKER_05: That's right.
29:13
SPEAKER_03: Oh my gosh.
29:13
SPEAKER_03: You know what?
29:14
SPEAKER_03: That's okay.
29:14
SPEAKER_03: We will do that.
29:15
SPEAKER_03: We'll talk more about the at the time.
29:17
SPEAKER_05: Yes.
29:17
SPEAKER_05: The news car week to make the reservations now in San Diego.
29:21
SPEAKER_03: That's right.
29:22
SPEAKER_03: Dealers track plenty of numbers and fix stops, but are they tracking the right ones?
29:27
SPEAKER_05: That's right.
29:28
SPEAKER_05: That's right.
29:28
SPEAKER_05: Lee Harkins, our good friend, president and CEO of M5 Management Services, says two metrics can tell you a lot about what's really happening in the service drive.
29:38
SPEAKER_05: Additional sales requests, closing percentages, and the parts to labor ratio.
29:43
SPEAKER_05: He joins us live to further explain that.
29:46
SPEAKER_05: So welcome into the show.
29:48
SPEAKER_05: So glad to see you.
29:49
SPEAKER_07: How y'all doing?
29:50
SPEAKER_03: Doing great.
29:51
SPEAKER_05: Doing great.
29:51
SPEAKER_05: We're not in San Francisco like you, but we're doing great here in Atlanta.
29:56
SPEAKER_07: I uh I am not in San Francisco.
29:58
SPEAKER_07: I'm at the office.
30:00
SPEAKER_07: But uh that would be a nice place to be.
30:03
SPEAKER_07: That's right.
30:04
SPEAKER_05: We we thought you were right at the one side of the Golden Gate Bridge, you know, and South Leto on the other side.
30:09
SPEAKER_05: That's right.
30:09
SPEAKER_05: That's right.
30:10
SPEAKER_07: I set that as a background.
30:11
SPEAKER_07: That was my favorite of all of them.
30:13
SPEAKER_07: Yes, that that is nice.
30:14
SPEAKER_07: I figured that's a good one.
30:15
SPEAKER_04: Did you take that picture by any chance or no?
30:17
SPEAKER_04: No.
30:17
SPEAKER_07: No, no, no.
30:18
SPEAKER_07: That was that was a canned picture that uh that was in my background, so I thought I'd throw it up.
30:24
SPEAKER_07: I got you.
30:24
SPEAKER_07: So y'all doing good?
30:25
SPEAKER_07: We're doing good.
30:26
SPEAKER_07: We are doing good.
30:27
SPEAKER_03: Lee, I was just thinking how long we've known you.
30:29
SPEAKER_03: We've been interviewed since 2012 when we started, and we've always appreciated your contribution to CBT News and your friendship.
30:38
SPEAKER_07: Well, if if you remember the day that y'all started CBT is the day I started M5.
30:44
SPEAKER_07: There you go.
30:44
SPEAKER_07: That's right.
30:45
SPEAKER_07: That's exactly right.
30:46
SPEAKER_07: Within just a few days of each other.
30:48
SPEAKER_07: Yep.
30:49
SPEAKER_07: That's right.
30:49
SPEAKER_07: Uh we had a mutual friend that hooked us up, and here we are.
30:53
SPEAKER_07: That's right.
30:53
SPEAKER_07: I love it.
30:54
SPEAKER_07: It's been uh what's that been 17 years now?
30:57
SPEAKER_05: Something like that.
30:57
SPEAKER_05: It's been been crazy.
30:59
SPEAKER_05: Yes.
31:00
SPEAKER_05: And uh you've made a lot more money in your company than we have because we're still running a nonprofit.
31:05
SPEAKER_05: No, I'm just kidding.
31:05
SPEAKER_05: I know better than that.
31:08
SPEAKER_05: Wiley.
31:10
SPEAKER_05: My daughter said, I want to go to work for a nonprofit.
31:12
SPEAKER_05: I said, Come to work for the family business.
31:14
unknown: There you go.
31:15
SPEAKER_07: That's uh that's part of the part of the program when you sign on as a small business.
31:21
SPEAKER_05: We talk about it all the time.
31:23
SPEAKER_07: We do.
31:23
SPEAKER_05: No question about it.
31:24
SPEAKER_05: If you want to get up every morning and get your teeth kicked in and uh, you know, your kneecaps broken, become an entrepreneur.
31:30
SPEAKER_05: It's a lot of fun.
31:31
SPEAKER_05: That's it.
31:32
SPEAKER_03: Well, we all prayed for this day years ago, didn't we?
31:34
SPEAKER_03: We're all like, hey, one day we want to be there.
31:37
SPEAKER_03: We're here.
31:37
SPEAKER_07: That's right.
31:38
SPEAKER_07: Loving everybody.
31:40
SPEAKER_07: This is what we prayed for, and we got it.
31:43
SPEAKER_07: Now we got to work.
31:44
SPEAKER_07: That's right.
31:44
SPEAKER_07: So that's where work really starts.
31:47
SPEAKER_05: Well, I'll allow you to get back to work here and jump into the question.
31:50
SPEAKER_05: So let's start with the additional sales request or ASR closing percentage.
31:55
SPEAKER_05: Uh, what exactly are you measuring there and why does that number matter?
31:59
SPEAKER_07: All right.
32:00
SPEAKER_07: So, Jim, there's a lot of really good vendors out there that are that are providing stores with video MPIs.
32:07
SPEAKER_07: And so the stores have uh bought into it and have done quite well.
32:13
SPEAKER_07: The OEMs are behind it.
32:15
SPEAKER_07: Great value.
32:16
SPEAKER_07: But here's the here's the downside.
32:18
SPEAKER_07: I was in a store just a few weeks ago that they're doing an outstanding job with doing the video MPIs.
32:27
SPEAKER_07: Okay.
32:28
SPEAKER_07: But the challenge that they had was they recommended in a month over a half a million dollars worth of business that they found that was um in their store, on their racks.
32:42
SPEAKER_07: Uh, technicians said they needed it, and they only closed less than 20% of it.
32:47
SPEAKER_07: Yikes.
32:48
SPEAKER_07: Um huge opportunity for us.
32:51
SPEAKER_07: But what I found was the particular vendor, and I'm not dissing the vendors by no means, but the but the part that they missed out on is measuring the opportunity versus the close, right?
33:04
SPEAKER_07: So uh when you think about car sales, we measure closing ratios every day.
33:10
SPEAKER_07: But in the say in the after sales on the service side of it, the opportunity that we have is huge.
33:16
SPEAKER_07: Um the advisors, you know, there's two things that we can directly relate to them menu closing ratio and the ASR closing ratio.
33:28
SPEAKER_07: So a couple tweaks here, a couple tweaks there, a little focus on it, it can change dramatically.
33:35
SPEAKER_07: Uh, we have stores in in the 50s and 60s, so that would be quite a shot in somebody's arm when you look at how much they're bringing in and how much they've found and what they're recommending, but not closing.
33:49
SPEAKER_07: Yeah.
33:49
SPEAKER_07: So I think that's a great opportunity.
33:51
SPEAKER_07: Yeah.
33:52
SPEAKER_03: So Lee, is the issue usually the number of recommendations being made, the way they're being presented to the customer, or what happens after the recommendation is made?
34:00
SPEAKER_07: Well, there's a couple things happening.
34:02
SPEAKER_07: In this particular store, which I find in a lot of stores, is they have more business than they can handle.
34:09
SPEAKER_07: And that that you know, after Labor Day in certain parts of the country, it's gonna slow down a little bit.
34:15
SPEAKER_07: So this isn't necessarily true.
34:17
SPEAKER_07: But during the summer months, May, June, July, and August, they are usually slammed with business.
34:23
SPEAKER_07: So what happens is the technician takes their time, does a really good video MPI, takes it to the advisor, and the advisor says, Listen, we're not gonna even try and sell that right now.
34:36
SPEAKER_07: I got five more cars to get in.
34:38
SPEAKER_07: It's two o'clock in the afternoon, and I got to get these people in.
34:41
SPEAKER_07: And so what happens in a lot of cases that uh we're just doing a poor job of presenting the needed service.
34:51
SPEAKER_07: Yeah, uh the advisors are calling the customers and sounding like a bunch of auctioneers.
34:56
SPEAKER_07: You know, we got your car and you got to check down, you need me do it.
34:59
SPEAKER_07: And it comes across like they're trying to force the customer into buying something.
35:04
SPEAKER_07: So, you know, we we found slow down, talk to the customer as if it's your a family member, take your time, closing ratios go up.
35:12
SPEAKER_07: And and Jim, I'm I and and I I'm not trying to oversimplify it, but it's about that simple.
35:21
SPEAKER_07: Yeah, yeah, it's about that simple.
35:24
SPEAKER_07: But the minute a customer feels like they're be they're having pressure placed on them, yeah, um they're gonna bolt.
35:31
SPEAKER_07: Yeah, and and and and we're just not we're just not comfortable in a in a position where we feel like we're being pressured to buy something.
35:38
SPEAKER_07: That's right.
35:39
SPEAKER_07: That's right.
35:39
SPEAKER_03: So, Lee, let's talk about the parts to labor ratio.
35:42
SPEAKER_03: That's a number dealers have always looked at, but you're taking a different approach to it.
35:46
SPEAKER_03: Can you talk to us about that?
35:48
SPEAKER_07: Yes, ma'am.
35:49
SPEAKER_07: I I think that parts to labor ratio is the second most misleading measurement that we have in our fixed department.
35:57
SPEAKER_07: Um, and the reason for it is if we go back to COVID, you know, post-COVID, there was a lot of stores, like everything else in our lives, they they lifted their their labor rates and they drove those labor rates up.
36:12
SPEAKER_07: The minute they drove their labor rates up, they lowered their parse to labor ratio.
36:16
SPEAKER_07: A lot of people use a parse to labor ratio to be a gauge to forecast sales, and it is a poor gauge.
36:26
SPEAKER_07: Um, I've done I've done a number of profiles and case studies on probably about a dozen stores.
36:34
SPEAKER_07: And generally speaking, by using a uh parts to labor ratio as a guide to forecast sales, they're gonna miss their sales forecast by about 15 to 20 percent.
36:46
SPEAKER_07: Um what we've been using, and it is a lot more accurate, is a part sales per flat rate hour at cost.
36:55
SPEAKER_07: Okay.
36:56
SPEAKER_07: All right.
36:56
SPEAKER_07: Now, here's my theory.
36:58
SPEAKER_07: The theory is almost every brand out there is gonna put their parts into inventory based on the book cost.
37:07
SPEAKER_07: If they get a discount or a volume discount or an incentive from the OEM, they take that below the line.
37:15
SPEAKER_07: That comes in into an adjustment uh uh account, but they put that parts part into the inventory.
37:23
SPEAKER_07: So one, I can more accurately forecast part sales, number one.
37:29
SPEAKER_07: Number two, since we're putting it into inventory, it's a more relative comparison between stores.
37:36
SPEAKER_07: So I've I've got a um a group of stores that I'm working with right now, they have uh five of the same make.
37:44
SPEAKER_07: And we can without question show you that uh store A is outperforming B, D, and C because they're selling more parts.
37:56
SPEAKER_07: And and we've had a lot of uh really good success with measuring it because it's an accurate measurement.
38:03
SPEAKER_07: Parts to labor ratio is just in a is just not an accurate measurement.
38:06
SPEAKER_05: Yeah.
38:07
SPEAKER_07: For a lot of different reasons.
38:08
SPEAKER_05: So how do these two metrics work together that you're talking about?
38:11
SPEAKER_05: Can you still have a strong ASR closing percentage, but still have a problem with your parts to labor mix?
38:18
SPEAKER_07: Yes, because what happens in service, if you if you think about service, we have two types of business.
38:25
SPEAKER_07: You got maintenance and repair.
38:27
SPEAKER_07: Maintenance type labor operations are not parts intensive.
38:33
SPEAKER_07: Uh on the opposite side, the repair business is usually very parts intensive and high requires a higher skill rate.
38:42
SPEAKER_07: So we can in in none of these measurements, Jim, I want to back up and say one thing.
38:47
SPEAKER_07: None of these measurements are hard, fast rules.
38:50
SPEAKER_07: What they are is indicators.
38:52
SPEAKER_07: Here's a number, go and investigate it and see what's going on and see where your opportunities are.
38:58
SPEAKER_07: But when you look at that number, it it is a it is a more accurate comparison number and is also a more accurate forecasting number.
39:09
SPEAKER_07: But um, you know, obviously the part the the sale rate or in the closing percentage has a dramatic impact on you know our uh part sales per flat rate hour.
39:21
SPEAKER_03: So ultimately, what should a general manager or fixed ops leader be able to learn from these metrics that they may not be seeing in their current reporting?
39:31
SPEAKER_07: Um You know, in a lot of and let's take the closing ratio first.
39:37
SPEAKER_07: In a lot of cases, what I've found in two or three different vendors, and I'm not broad brushing all of them, but we don't have an accurate closing percentage.
39:44
SPEAKER_07: We have a declined uh uh number, we have a sold number, and it's a manual calculation.
39:51
SPEAKER_07: So in some cases, Reggie, you might have to do a manual calculation until the vendors catch up.
39:58
SPEAKER_07: Uh that's one way of doing it.
40:00
SPEAKER_07: Some of them have it have it camouflaged into another definition or another term uh because they're all wanting to be a little bit different and enhance their product, which I I respect and I understand you might have to do a little bit of digging.
40:14
SPEAKER_07: But worst case, you do a manual number and and see where you stand.
40:19
SPEAKER_07: Um then the follow-up usually is well, where should I be?
40:23
SPEAKER_07: Um I don't have a number.
40:24
SPEAKER_07: I I would tell you if you're below 60 percent, I'm probably very concerned.
40:30
SPEAKER_07: Now, some of the business that doesn't get sold today will come back.
40:36
SPEAKER_07: Someone gave me a number, it's usually 20, 25 percent of that business will come back at a later date because the customer just didn't have the money today to do it.
40:45
SPEAKER_05: Yeah, yeah, for sure.
40:46
SPEAKER_05: There's a there is a ton of cash waiting in those uh in those declined services at any dealership.
40:55
SPEAKER_05: I don't care where you go.
40:56
SPEAKER_05: And it's and it's all about the follow-up, isn't it?
40:59
SPEAKER_05: And I think maybe this is one of those areas, see if you agree with me on this, that AI maybe can help because it could make those basically hundreds of calls as reminders and uh and and also to be able to send text messages or emails about that service.
41:15
SPEAKER_05: Because a lot of times when somebody drives out, as you know, they kind of forget about it after the first few days.
41:19
SPEAKER_05: You know, they're like, ah wait, I'll worry about it tomorrow, or you know, I my car still runs, so I don't know what the big deal is.
41:25
SPEAKER_05: But a lot of these things are preventative uh maintenance things as well that need to get done that the consumer just doesn't focus too much on it unless they get those constant reminders to say, hey, you know, remember those things that you declined and you didn't want to have done right now?
41:40
SPEAKER_05: You gotta get the car back in here.
41:42
SPEAKER_05: We highly recommend it.
41:43
SPEAKER_05: Um that does help because it wears on that that uh you know that car driver that just says, uh, hey, I I better I better pay attention to this.
41:51
SPEAKER_05: Otherwise, it might be a lot larger repair bill, right?
41:55
SPEAKER_07: Right.
41:55
SPEAKER_07: And and the one thing I would say to that, Jim, is that a lot of stores have the technology to do a follow-up, uh mailer coupon.
42:05
SPEAKER_07: Yeah.
42:06
SPEAKER_07: But what we've gotten into is we've gotten into what I call discount itis.
42:11
SPEAKER_07: All right.
42:12
SPEAKER_07: Everybody wants to give them a discount.
42:14
SPEAKER_07: So all we're doing is conditioning the customer.
42:16
SPEAKER_07: If they say no today, I'll wait a week and I'll get a coupon for 15 off or 20 off or 10, whatever, and I'll go back in and get it done.
42:24
SPEAKER_07: Right.
42:25
SPEAKER_07: We got to stop doing that.
42:26
SPEAKER_07: I I think most important what we've got to do the first move.
42:30
SPEAKER_07: We can all that's that can always be our fallback position.
42:34
SPEAKER_07: Yeah.
42:34
SPEAKER_07: But I really believe the first move is call them and tell them you're concerned.
42:39
SPEAKER_07: Yeah.
42:39
SPEAKER_07: You didn't have us do it.
42:40
SPEAKER_07: We saw that your your your uh you know your your brakes needed to be replaced.
42:45
SPEAKER_07: We're concerned that you didn't have us do it, and we'd like you to reconsider having us do it.
42:50
SPEAKER_07: That's right.
42:50
SPEAKER_07: It doesn't cost me a cent for that phone call.
42:52
SPEAKER_07: No, we can use AI to do that, and we can hit every single one of them.
42:56
SPEAKER_07: That's right.
42:57
SPEAKER_07: Or we could have a person call.
42:59
SPEAKER_07: And I think that that might be the best of all the above is someone calls and sincerely says, we're concerned about you.
43:05
SPEAKER_07: That's right.
43:05
SPEAKER_05: You're saying a real live person call another real live person?
43:09
SPEAKER_05: Is that what you're saying, eerie?
43:11
SPEAKER_05: Isn't that a novel idea in today's environment?
43:14
SPEAKER_04: Wait a minute.
43:16
SPEAKER_04: How can that be?
43:17
SPEAKER_04: Right?
43:18
SPEAKER_04: Yeah, where did that go?
43:20
SPEAKER_04: That's exactly right.
43:21
SPEAKER_05: The uh that there are so many things in the fixed ops and and sales, but we're talking about fixed ops today that if you were to just pick up an extra few percentages on any one of these uh in any one of these areas, you know, you could make as a dealer so much more money just by picking up you know, just by doing a couple of these different things and moving that needle just a little bit, right?
43:44
SPEAKER_07: Right.
43:45
SPEAKER_07: We we I do training classes all the time.
43:47
SPEAKER_07: I was with a group last week and uh I had a group of general managers and we're going through and calculating the performer that we use.
43:55
SPEAKER_07: And uh I showed him just a couple moves.
43:58
SPEAKER_07: Increase your production 10%.
44:00
SPEAKER_07: Percent, get a dollar on your effective rate, decrease your expenses by two grand a month, and all of a sudden the store made huge money.
44:08
SPEAKER_07: And he goes, This is wrong.
44:10
SPEAKER_07: I must have calculated this wrong.
44:12
SPEAKER_07: I said, No, you didn't, because it is a very straightforward calculation.
44:17
SPEAKER_07: But a little bit here, a little bit there, Jim, to your point, absolutely makes all the difference in the world.
44:23
SPEAKER_05: And that's something.
44:24
SPEAKER_05: It really is.
44:25
SPEAKER_05: And yet in the industry, as you know, if a dealership is doing well and they're making money and they maybe they've increased substantially already, and we just get we get for the lack of a better word right now, we get complacent and we get lazy and we go, you know what, the store's making so much in fixed ops, it's doing good, it's got a good uh absorption rate in the store, and you know, so so we're giving away a few points here or there, but there can be a whole nother million dollars sitting there for the dealer at the end of the year.
44:54
SPEAKER_07: That's exactly right.
44:55
SPEAKER_07: Yeah, you know, Jim, it it it comes down to discipline and consistency.
45:00
SPEAKER_07: Yeah, you know, the discipline to to do the the basics every single day, even when you don't want to do them, or you don't see a need for them, or you're doing to your point, we're doing so well, we don't need we we're good.
45:12
SPEAKER_06: Yeah.
45:13
SPEAKER_07: Yeah.
45:13
SPEAKER_07: That's wait wait till wait till the next time our industry takes a downturn.
45:18
SPEAKER_06: Yeah.
45:18
SPEAKER_07: You know, one of those severe downturns Obama.
45:21
SPEAKER_07: Oh yeah, for sure.
45:22
SPEAKER_07: A little wake-up call.
45:24
SPEAKER_07: Clunkers for doing Obama, you know, that that was a wake-up call.
45:28
SPEAKER_07: Yeah, that was a serious wake-up call.
45:30
SPEAKER_05: Yeah, no question about it.
45:32
SPEAKER_05: Lee Harkins, president and CEO of M5 Management Services.
45:36
SPEAKER_05: Thank you so much for joining us once again here on CBT Live.
45:39
SPEAKER_05: Yes, yeah, as you know.
45:40
SPEAKER_03: Thank you, Lee.
45:41
SPEAKER_03: It's always great talking with you.
45:42
SPEAKER_05: Yeah, it's always great.
45:43
SPEAKER_05: We're doing uh the live show every single day, Monday through Friday, and we appreciate, as Bridget said earlier, all your contribution to CBT over the years.
45:50
SPEAKER_07: So hey, I'm I'm here anytime you call me.
45:53
SPEAKER_07: Awesome.
45:54
SPEAKER_07: Thanks so much.
45:54
SPEAKER_07: Great, take care, stay tuned.
45:56
SPEAKER_05: Take that time.
45:56
SPEAKER_05: Bye-bye.
45:57
SPEAKER_05: It's it's funny.
45:58
SPEAKER_05: He when he talks about that and he comes in, you start thinking about, you know, if you just change this little percentage here and there, and you know, I know all of a sudden you find yourself instead of having you know a hundred thousand net profit, all of a sudden you got two hundred thousand.
46:11
SPEAKER_05: Yeah, and you didn't spend another nickel in advertising or headcount or anything, you know?
46:16
SPEAKER_03: Yeah, so yeah, he makes a lot of sense.
46:18
SPEAKER_03: Yep, he does.
46:19
SPEAKER_03: And he's a CBT OG, yeah.
46:21
SPEAKER_05: He was, yeah, or he is what he was.
46:23
SPEAKER_05: Yeah, no problem.
46:25
SPEAKER_05: That's right.
46:26
SPEAKER_05: One of our first one of our very first guests on CBT News.
46:29
SPEAKER_05: Yeah.
46:30
SPEAKER_05: And because he was, look at his company now.
46:32
SPEAKER_03: You know who knew that CBT had that kind of attract.
46:35
unknown: That's right.
46:37
SPEAKER_03: He was doing great.
46:38
SPEAKER_03: We love having him on.
46:39
SPEAKER_03: He's a great guy.
46:40
SPEAKER_03: Yes, very, very.
46:41
SPEAKER_05: And for dealers that saw that, if you're looking for somebody in your corner on uh first fixed stops that you want, it's it's vitally important uh many times for a dealer to have somebody come in um from outside the company, you know, and and and to to I don't want to say mix things up a little bit or shake things up, but every service department, every department needs that.
47:02
SPEAKER_05: But Lee can come in and go, hey, here's where you're a little off.
47:05
SPEAKER_05: Yeah, here's where you're doing a good job, here's where you can stand some improvement.
47:10
SPEAKER_05: And um he's not probably always welcomed by fixed stops managers because he's got that ability to come in and say, here's what's broken and let me help you fix it.
47:18
SPEAKER_03: Ultimately, I'm sure.
47:19
SPEAKER_05: But dealers like that.
47:20
SPEAKER_05: Yes, yeah, you know, the dealer principal needs that and likes that.
47:23
SPEAKER_05: So keep doing what you're doing.
47:24
SPEAKER_03: So we've got a great show coming up for you all tomorrow.
47:26
SPEAKER_03: We have Mike Gilson from Conversica, and we have leadership training expert Dave Anderson to come tomorrow.
47:32
SPEAKER_03: So tomorrow's gonna be a great show.
47:34
SPEAKER_03: We're looking forward to that.
47:35
SPEAKER_03: We're looking forward to seeing you all again tomorrow at noon Eastern.
47:39
SPEAKER_05: Yep.
47:39
SPEAKER_03: And we'll see you tomorrow.
47:40
SPEAKER_05: That's right.
47:43
SPEAKER_03: We usually do.
47:44
SPEAKER_03: Be right.
47:46
SPEAKER_05: Be right back here tomorrow.
47:48
SPEAKER_05: Noontime.
47:53
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47:58
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48:02
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48:08
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