Latest / Automotive Informants / Carvana Is Winning. The Dealership Model Is Breaking.

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Carvana Is Winning. The Dealership Model Is Breaking. · Automotive Informants

• IgniteUps.ai: Welcome back, everyone. My name's Chris Martinez. This is the Automotive Informance And we've got a special guest. We've got a legendary guest, someone that's a living legend here in Automotive, Mr. Tom Stucher. Thank you for doing this and jumping on with ⁓ Zach and myself. Mr. Stucher, I've followed you for the last, you know, 23 years. I've been in automotive, and helped me more more times than you you know. you know, I've read a lot of your scripts. ⁓ tom stuker: you IgniteUps.ai: and and use those ⁓ throughout the cr my career. it was it was helpful. So I I definitely want to thank you for that. ⁓ but you know, if you if you w got a couple of like one two second, you know, blurp, if you if for the for those of the people that I can't imagine don't know who you are, if you could just say, you know, one, two, a couple of things about, you know, who you are and and your whole in like a a minute or so. tom stuker: Okay. All right, well, let's not get too braggadocios here. I've been doing this for 126 years, think, including this year. No, actually, this is, let's see, what is it? 1980, January 1, So what does that make it? 46 years I've been in the consulting business. I started in the car business as a salesman in 75. I was a GSM I couldn't even spell GSM. IgniteUps.ai: Yeah. tom stuker: But you know, for enough money, would an expert at anything. But I mean, I've always been very proactive. I've always been, always, always since I got out of the car business and started to understand what really makes a difference, is I've always been about coming to work to sell cars and not waiting around for people to buy them. So I'm very big about turning your CRM into an ATM. For those who don't know it, yes, I'm the old fart that started the BDC back in the 80s. It was originally for the first year or two, was with salespeople only, but the managers screwed up by emptying out BDC and saying, we need people on the floor, even though there was no traffic, but don't even go there. That's another subject altogether. But the BDC, as you know, I started it back about the mid ⁓ 80s. And one the first stores that we put it in, was a Van Tile store at the mothership in Kansas City, Oberlin Park. And another one was Buena Park. Buena Park, what was it? Mercedes was one of the first ones too, so. IgniteUps.ai: That's awesome. No, you have you you you've had an amazing career. tom stuker: but I don't want to go. I say about anybody that's really done big in the phone training business started with me, starting with you know who. IgniteUps.ai: think we might have lost them a little bit there. Zach Fritz: audio hiccup. IgniteUps.ai: Lot little audio. Zach Fritz: It happens. IgniteUps.ai: Mr Stuker, y you might the y the audio kind of just cut out a little bit so we we're not we don't hear you specific there you go. tom stuker: But I knew the first day he came on board, he was leaving. IgniteUps.ai: Well. Well, we did have a little quite delay on your audio, but thank you for for joining us. We do have a couple of different topics that definitely looking forward to hearing your opinion. the first one just recently, this is the one of the headlines, and really it was something that I wrote just because I I felt like it was it was good news to understand. I've had a lot of pushback from dealers and not believing any the the numbers. but I really love to hear your opinion. Carvana just broke their all time record. Actually, they sold nine hundred and ninety eight cars at their one Phoenix location, Casa Grande. And the number two dealer, you know, was three hundred and twenty three vehicles. So what do you think? Is that is it just a lot of fluff or is it real? What are your opinions? tom stuker: Any questions? Okay. Well, it's real because it's reported, ⁓ or what's really interesting, wasn't this a company that many people in the business thought wouldn't even be around today? mean, this a business that said, these people just, they don't have what it takes. I don't think they get it, right? Obviously they get it and we don't because I've taught I know for a fact that the other competitive dealers in the Phoenix area their sales their month to month sales haven't dropped. So where the hell are all these sales coming from? I mean either have to be conquest and have that many people given up Chevy and Ford for a Dodge these days. I think so. So I mean, I don't know. I mean, are they pump-ins from another market? mean, are they the Smith out of Idaho that's doing internet all over the world? I don't know. But I have clue. I just saw the numbers, but I saw that the other dealers are staying pretty in touch their numbers. So how do 700 dodge? fall from the sky in Phoenix, Arizona. IgniteUps.ai: That's that's one you know, I'm glad you said that because that was one of my questions was are they cannibalizing the market and are they just, you know, taking from Peter to pay Paul, are they truly, you know, conquest and they're actually taking from other OEMs? And you I guess you answered my question. I don't know that that I ⁓ where are they coming from, but you know, that store was selling thirty new cars a month when they took it over. tom stuker: you IgniteUps.ai: And now to sell within about 20 month period to 998 cars. mean, it's impressive. I mean, they had just broken 700 cars last month, or there's a month before. I remember writing about it. And now to 998 cars. I know from a personal level, I helped to take a store from 150 cars a month to over a thousand cars a month. It took us four years to do it. This window of time frame. tom stuker: Okay. IgniteUps.ai: is pretty impressive and even in the market that they were in. I know it says Phoenix, Arizona, but Casa Grande, I think it's outs on the outskirts. I don't know exactly where it's at. but it's it's not, you know, I they they have to be doing a really good job of of pulling in from that Phoenix area. tom stuker: So where all of a sudden does a thousand units of inventory just pop in from a store that was months ago doing 30? I mean, and IgniteUps.ai: Yeah. tom stuker: And about their service department? Holy Moses. I mean, did they have 80 bays that were just left empty all these So, mean, where's the infrastructure here? I mean, what about the sales? I mean, there's so many questions that I have that, like everybody I mean, how many salespeople, what are the grosses? I the big question is, where does... Zach Fritz: Thank tom stuker: 700 extra buyers from the sky in a month. IgniteUps.ai: that's I then you what you I think you hit the ⁓ one of the other questions on my mind and Zach maybe hearing from you like from a service standpoint, you know, logistic wise, you know, how are they, you know, PDI ing all those cars that quickly in that short of a time frame? And where then like you said, where'd they get the inventory? Zach Fritz: This is an area where you want to talk about a irrelevant or pointless PDI, it would be on a Dodge, right? Because nothing you see during the PDI is going to reflect how that vehicle drives or operates given their past performance on reliability. But that's neither here nor there. I think the largest thing that I see is I would love to know how many technicians are working at this dealership. Are they pushing these PDIs through quick service? Are they actually going through the vehicles? Because that level of volume tom stuker: I'm not a pointless PDA. Okay. Okay. Zach Fritz: while also keeping up with the other vehicles or the vehicles that come off the truck and have issues with them and run into long diagnosis, they've got to be running at least what, 40 techs to try to keep up with this and their regular service department load. I just, I see how that pops. tom stuker: But Zach, Zach, many takes did they have two months ago? I mean, did they, was this all in the master plan where they go, okay, in May, we're gonna get another 30 techs and techs aren't easy to get today, right? So when do they get 30 extra techs to just say, oh no, we don't have the work now, but next month we're gonna sell a thousand Dodges, so we're good, you know? IgniteUps.ai: Well that Zach Fritz: Where did they come? Right. IgniteUps.ai: Yeah, I that that's another great question. cause when you think about I I'm just trying to think, okay, how did we do it at a Toyota store in Austin, Texas? Right. We had a hundred bays. We already kind of had the infrastructure. because it was like a a dealership that had it was made up of like four or five different stores that we just got blessed by having so many bays. But most of these stores, like, I don't know that they had ⁓ they must have tom stuker: you IgniteUps.ai: Done all their PDIs at their recon facility. And how does the OEM allow that one to happen? And then number two, you know, every Dodge dealer has, you know, I have Dodge stores that I've I've are using my platform today, they don't allow certain vendors or certain web providers. How do they get past using their own website without having the approved certified vendors that they have to use? How do they get around doing all of that? Zach Fritz: think an interesting part too is if you look at Dodge and the promotions they're running on financing, I could see that actually pushing customers, but Tom, to your point, who's in and dropping their Fords or their Chevys to go pick up a new Ram truck? I mean, otherwise, what does Dodge really do? tom stuker: 700? 700 in one location? IgniteUps.ai: Yeah. tom stuker: I mean, at the same time, the market share, it's the market share for Dodge that is jump sky high because the other dealers haven't really dropped significantly at all. They've been holding their own at the same time. So where do these buyers come from? Zach Fritz: Like. only thing that I can honestly think of ⁓ is this a people buying these trucks in bulk and taking them across the border? I mean, ⁓ what, what is happening? ⁓ IgniteUps.ai: Well that was one of the pushbacks Yeah, that's one of the pushbacks I had in the comments. People were saying that tom stuker: I thought we were flying them all home. Zach Fritz: No, no, hear me out. They're coming in, they're taking the trucks, they're buying them and then across the border where the banks are going to get hit holding the loan. That's what's happening. tom stuker: Sorry about that. IgniteUps.ai: Yeah. it's funny because I had I had dealers even saying that they're they're you know, they're all fleet cars, they're selling ⁓ to the the Hertz, 'cause they have a relationship with Hertz. 'cause at one point Hertz was selling was listing cars on their website. so that partnership could be there. Then I've ⁓ even had other other people say what how long before they try to acquire Stellantis and what what's the probability of them tom stuker: ⁓ Okay. IgniteUps.ai: you know, doing this test as something where they can, you know, change how their their current model is. Zach Fritz: Well, haven't you heard? Hertz cars are new. IgniteUps.ai: Yeah. Zach Fritz: Which, real quick, just small little, you know, detour. I have got to say when it comes to Hertz and their marketing, that is the biggest fumble I have seen in probably 10 years. With their whole commercial talking about Hertz cars are new and the, you know, jazz song that went with it. It was awesome. I mean, hell, the third time I saw it, my wife was singing that song along to the commercial. And now they have this stupid camping under the stars with a dog and nobody's gonna, nobody cares. I just, I don't understand their marketing anymore. It just makes no sense. Whoever's in charge of that PR department and work. IgniteUps.ai: Yeah. It well they had they had Tom Brady doing it for a little bit, but you know, I don't know that he could ⁓ was able to get them out of wherever they're at. But Tom, you know, there's another question that kind of you know, when I look at the dealers that you said that that there was no cannibalization, they were actually discounting their cars more what Carvana was doing. How do you think they're they're navigating that and how are they demanding a a higher price than tom stuker: Bye bye. Thank Okay. IgniteUps.ai: The traditional dealer. tom stuker: Well, again, if you're going to if the grosses are there, it can't be all fleet. mean, I mean, I mean, it hurts. It hurts. It's going to hurt. mean, you can't move all those cars fleet and you can't be shipping them to Maryland. mean, nobody's going to pay, you know, an extra. bonus just so they can say I bought it from Carvana there's no special you thing there I think this is something we're gonna have to send Nick Shirley in for this IgniteUps.ai: Nick Shirley. doing really good at uncovering some stuff. tom stuker: Yep, he's one that uncovers all the fraud. So we're going to have to send Nick Shirley a deep dive on this one. IgniteUps.ai: Yeah. I think I think you're right, because he's he's been doing some pretty amazing things. Well, you know, one of the things that I think is ⁓ helpful you when I think about how they're they're pricing these cars and the transparency, no haggle. Do you think, you know, Carmax kinda w spearheaded that in the beginning and then Carvana kind of jumped in. ⁓ Zach Fritz: There you go. tom stuker: So, IgniteUps.ai: But you know, for me and the the dealer body in in general, I think they've always had this this, you know, negative thing that Carvana is just the little brother of ugly duckling or drive time. but they they've done, you know, and they've been in the news for other things for sure that weren't the the the ethical of times for drive time and you know, with the ownership. What do you think? how how do you think they've been able to turn that branding around? where people really consider Carvana over Carmex from what I see on the street. tom stuker: It's been widely pretty much known fact that like places like CarMax, mean, none the good sales managers would go there because they didn't pay anybody. the salespeople pretty much the same way. the salespeople are just a step above best buy salespeople, right? And the managers were paid like, I don't know, I just, I think they were almost volunteer work. but. IgniteUps.ai: It it was almost volunteer work. I I worked there. That's where I started my career. So I could I could tell you a vouch for that for sure. Yeah. I started there in two thousand three. tom stuker: ⁓ did you? Well, I mean, it's got to be some some corporate genius that literally basically says, here, just follow the bouncing ball and you're going to do a thousand units next month. I mean, just I don't want say something stinks because it the opposite of stinks is amazing. And would say I just don't know what side of the spectrum it's on. Is on the stink side or the amazing side? All I know is that Dodge is not complaining at all. IgniteUps.ai: No, they're not. And well, and I think part of that success, I I know you you you guys were kind of joking about, you know, no one leaves Chevy or Ford and and goes to Dodge and somehow they manage to, you know, generate a thousand units in a month. But I will tell you, Honda just recently, and I'm just gonna jump to this quick article, Honda just recently announced the CRV took leadership in the US for the first time. because of F one fifty and Rav four shortages. So, you know, this shortages in F one fifty and even the Rav Four, that mean people that ⁓ they're going for the cheaper or less expensive option that Dodge may have? tom stuker: Okay, well, but you're looking at. IgniteUps.ai: Yeah. tom stuker: You're looking at a market that's very competitive. mean, there's some big players in Chrysler and Phoenix with Dodge and everything. don't you have, you got Earnhardt out there, don't you have, what's his, used to be, gosh, what's name of it now? Not ABC, but, the big group, I lost it for a second, there's very big competitive and well-run Dodge stores in the Phoenix area. And for them to be holding steady while all of a sudden 7, 800 jumped to this one dealer just blows my mind because people do shop around. IgniteUps.ai: Yeah. And and to me, like the the real question I have, because they have the number one store in the country, but they also have the number three store in the country. Their Dallas store sold two hundred and fifty cars last month, and that was number three in the nation at Dodge for new cars. So is it, you know, just a matter of time before all seven of the stores they've acquired now start selling a thousand cars a month? Or is this one anomaly? And and that's it. Like it this is it just gonna does the one store, it's a thousand cars, or are they gonna start pumping seven thousand cars a month out of all these other stores total? tom stuker: Okay, well, first of all, there's no secrets in the car business. Everybody finds out everybody's secret within a short period of time. So somebody at that store is gonna, mean, someone's gonna find out what's the magic pill they're taking there in Dallas. And then ⁓ stores will basically say, well, we can do that too. I mean, what they doing with the exception like Zach was saying, well, maybe they just got a... literally a truckload, to speak, from Hertz fleet. Maybe they just got an unbelievable deal with Hertz fleet. they got really big deals other giant fleet departments around the country. But again, you're telling me the grosses are there. So how can the grosses be there if the majority of the deals are fleet? whatever they're doing, whatever doing, I mean, Chris, you've operated stores. What are they doing that you couldn't eventually duplicate? IgniteUps.ai: Well, I think a personal standpoint, I looked at w how they started in at like during COVID. I felt like their their marketing strategy was probably better than everybody's at the time because they were spending a fortune ⁓ social media when companies like Carmax and all these other, you know, OEMs just weren't there. Like I saw I saw more ads on TikTok and Instagram than I'd ever seen in my life during COVID. And I felt like that really that reach and frequency they had there really kind of honed in their market base that now everybody really looked at them like they're some kind of tech company that you could just buy a their, you know, like if you're ordering a pizza, you could buy a car the same way from your couch. And I really feel like that was r really the message. And once they got that message across, I felt like everybody. tom stuker: And I'm going to end here. Yeah. Yeah. IgniteUps.ai: was kind of just that's how they surpassed CarMax. I mean, they they're more profitable this this first quarter of the year than CarMax, than AutoNation, than any of these OEMs from a net profit standpoint. And I really do think that they went all in on that that that media strategy where everyone else kind of just did the same old thing. tom stuker: Okay, but question still lingers. Where do 700 Dodge sales from the sky when the rest of the dealers are fairly status quo? IgniteUps.ai: Yeah. No, and I and I don't disagree because they still had to build that inventory. Like they sold seven hundred cars two months ago. Where'd the other three hundred cars come from? So are they just is Stillantis just feeding that store? Because it took us four years to grow the inventory. And but you, I had to go and buy and try to find, go to brokers, do everything I could get my hands on inventory so I could sell it. And I know that. You know, the manufacturer's not just knocked on their door and said, Hey, I'll give you the X many cars and, you know, go at it. And I don't know how they they did it. I th that to me is gonna probably raise more questions than anything because it's a t it's supposed to be a turn and earn type of scenario. And because they're are they just turning all their inventory every month that the that the manufacturer's saying, Okay, you're a hundred percent turn. Here's your here's more inventory and this is how you grow it. tom stuker: Yeah, well, you know, when it comes to with getting inventory, you have to have a preference. have to have, you have to have, you have to be allotted inventory in advance. mean, so how, so when the allocations, when the allocations are X amount to this dealer, X amount to that dealer, and all of a sudden one of the dealers says, oh, by the way, I need 40 % more of all the allocation in my market. How does Dodge go? I mean, how does Dodge go? Well, that means I'm gonna have to tell the other Dodge dealers that not gonna get this many Rams. They're not gonna get this many, whatever. gotta give it to these guys cuz they're selling them. IgniteUps.ai: Well and and I'll I'll tell you just to kind of piggyback on that, so when I'll I'll tell you we were and neck when I was in Austin, we were gonna be the number one Texas Toyota dealer in the in Texas. but two months into the last end of the year, there's two months left in the year, and a happened in Houston. As a result, all those cars got wiped out, and somehow Toyota you know, coughed up an extra couple thousand cars for, you know, several of the dealers there. And one of the dealers that we were competing with the whole year, I mean, we were within fifty cars of them. They normally sell, you know, thousand cars a month. And they sold two thousand cars that month. ⁓ So it's, you know, because they somehow just got all the inventory and allocation. I don't know where they got the inventory, but tom stuker: Okay. IgniteUps.ai: You know, they they fed them and and they they figured out and they crushed us, right? Well, it I think the same thing's happening here where the OEM is their Dodge is looking at ⁓ and seeing the traffic and where they're at. They sold seven hundred cars and they said, Well, let's just keep feeding the machine and see if we can sell a little bit more. And and they did. And I think that's kinda I I felt for the other dealer body that maybe is asking for extra inventory and not getting it. And tom stuker: Okay. IgniteUps.ai: You know, the response to Stellanis might be saying is we'll sell to zero and we'll give you more, like like ⁓ Carvana might be. But then it raises the question, are they now? Well, that how many trades did they get out of it? That's the other question. Fifty percent of them are they all trades, or they were a hundred percent of them trades? tom stuker: So are they still in the used car business? I don't know and where are those cars? Where do they store all this stuff? Is that was that dealer really that big for a physical plant to store all those units? IgniteUps.ai: Yeah, well, if that from my understanding they're off site locations, but there was a I I I gotta go back and watch this video, but there was a couple people, David Spisak and Brian Kramer who went to that location to s to investigate and see what it looked like. And it didn't look like any activity happening, no cars the ground. They looked at it, it looked almost like it was closed, from what I heard. So I'm gonna have to go back and listen to that video, but tom stuker: Okay. Okay. IgniteUps.ai: from what my understanding is it it just looked like a ghost town and they kinda asked the the question to the salesperson that was there, you know, how many people come in for test drives? And they said one of every hundred customers that comes in asks for a test drive. But most of them just buy ⁓ online. tom stuker: Wow. Wow. IgniteUps.ai: Yeah. Zach Fritz: Are they possibly taking their trade-ins and selling them to Odessa? And that's how they're pumping these numbers up, and that's why the lot's empty. IgniteUps.ai: Could be. I mean, I I I would think they'd want to retail them. They make more money retailing ⁓ So especially I mean, some of the numb numbers that they give some of these consumers. I mean, ⁓ you know, the last time I saw a couple of these numbers, I mean, they were a thousand, two grand higher than the market. and that's what they generally do when they go buy cars at auction. And I I know, you know, dealers have to really compete at a high level in order to Zach Fritz: Cause I'm also thinking of transport. tom stuker: Thank Okay. Okay. IgniteUps.ai: take those types of deals, but I'll tell you what, anytime I had a customer show me a Carvana or CarMax appraisal, I just matched it and we moved on. So you know, it's it's interesting that how many used they might have acquired from that. And I don't know what the mix retail to wholesale turned out. tom stuker: Okay. Well, think dealers, first of all, the dealers, there's some really great operators down in the Phoenix area. mean, for a long time, that's been a really strong car market. And like said, really good operators down there. So I'm thinking, think of what heck, like I said, whatever secret is, it's going to be copied they'll be freaking lawsuits. IgniteUps.ai: Probably. Well, you know, I think I mean this goes into one of the other topics I wanted to discuss was, you know, recently those ninety seven l letters that were sent by the FTC to dealers letting ⁓ know that, hey, you know, you things are changing, you gotta be transparent, you know, whatever's on your worksheet at the dealership needs to be online. so these five thousand dollar addendums. tom stuker: Okay. IgniteUps.ai: I mean, they've gone a kinda gotten rampant here in Texas these last couple of years. You know, five thousand dollar addendums was like almost normal. I know when I was initially, you know, at a store in Austin, I remember ⁓ you know, a tint as an addendum, then you see what some of these other guys were doing. It it's it's gone, you know, a little out of control in my opinion. What are your thoughts on on this pricing transparency? tom stuker: Well, of all, dentists aren't new. My wheel ⁓ exposure to addendums outside of like the automatic rust proofing or stripes they put on a car. mean, but the back in the mid eighties, I think it was when Toyota and Honda ruled with the Camry and the Accord and both companies were really from a retail standpoint, were working on two and three day inventories. Right. I mean, the truckload of Camry's coming in. Maybe one was available for retail, other ones were already sold. addendums back then were $2,000 to $3,000, probably a $2,500 ⁓ which was very, it was you want to buy a Camry, you're going to pay $2,500 over. So, and addendums specialty cars still exist and have, whether it's a Corvette or whatever specialty car. So long as it's transparent and it's priced the window and on the website, I think on the website, you're going to have to be, I'm sure got to be transparent too. when they have they were not worried about getting their 2,500 over or their 5,000 over, but to have ⁓ a 5,000 addendum a normal retail car that can be bought for normal retail and less around the country so you could jack up the trade allowance and all that kind of stuff. That's what FTC is going to come down on that kind of stuff. you know, a car is worth what someone's willing to pay for it, I guess. IgniteUps.ai: Yes. And I think for me, when I look at these ⁓ addendums, I think, you know, you're right on the specialty cars, those markups, they're gonna be there because they're specialty cars and you know, I don't see that ever going away. But now instead of seeing an MSRP, you're gonna see the true value or true markup that that dealer has. You know, Mercedes-Benz, you know, we had G Wagons fifty K over, a hundred K over, depending on the the time of the market. tom stuker: Yeah. ⁓ my God. IgniteUps.ai: You know, when they were hot, when there was no inventory, I saw people paying almost two hundred grand over MSRP. So it was was definitely an interest I mean, because he only had the one in the market in, you know, fifty states you you you could s you could ask for it, you know. But if there was more than that, then you know, the the market adjustment, the the market dictated that. So, but when you when I started looking at some of these addendums that people are Zach Fritz: All IgniteUps.ai: you know, charging, you know, a thousand dollars for window tent you some warranty that the customer may or may not not ever use ⁓ that matter you had to get it or it's part of the price. ⁓ Yeah, are the things that that I didn't necessarily agree with, but it it it was was just w some of the things that I saw and then these dock fees, you know, Florida's pretty, you know, you know, up there in in dock fees. I see ⁓ tom stuker: Yeah, forced options, yeah. IgniteUps.ai: I've seen some for like twelve hundred bucks. know, in Texas they're like two fifty, two twenty five, but you know, different parts of the country, they're, you know, thousand bucks, eight hundred dollars, five hundred. So they're all over the place. and I don't know if this is gonna, you know, put everybody on the same playing field and make everybody adjust according to the market, or are they gonna see more regulation like Texas where they cap you at two fifty? tom stuker: I'm pretty sure that's not Carvana's problem right now, but. IgniteUps.ai: Ha ha. tom stuker: Yeah, I don't think they moved an extra $700 with a $1,500 vehicle procurement fee, but the... IgniteUps.ai: That's definitely not their problem. Well the yeah, I've even heard they're not even doing dock fees there. all. Like not even a hundred bucks. Like it's like no dock fee. Like it's just you pay taxes and the price of the MSRP, it is what it that's what it is. That's what I find fascinating. ⁓ then ⁓ tom stuker: Like I said, it's all going to come out. I'm sure TMZ is going to have something about it probably next week. IgniteUps.ai: we get Nick Shirley to do it. tom stuker: Yeah, Nick Shirley's got to come in and solve the problem because there's got to be fraud somewhere. the okay, getting back to the addendums and stuff. mean, there's always been, I mean, gosh, I've been in the business for 51 years and there's always been kinky pricing. mean, somebody's got IgniteUps.ai: Well w do you think I know we talked up we did talk about it earlier. Do you think that, you know, is the retail current retail model broken? I mean, w wh what are your thoughts on tom stuker: Well, first of all, retail model was When it ever working? Right. I I really, feel in 50 years of doing this and I'm going to write a book and the title about the car business in 50 years is it's going be called the theory of equal incompetence. All right. Because everybody makes the same mistakes, but nobody gets hurt. Cause they gotta buy a car from somebody. I mean, you think about some of the things, the basic way we run a retail operation. mean, Moses. I mean, there's not dealer in the country, and anybody that hears this podcast and wants to challenge me on this, there's not one dealer in the country that I would rate on a scale of A to F that I would even give a B to as far as how they... run their CRM to for owner fall-up and prospecting. right. And then you take you take the and I'm not going to mention the names of some of these companies, the ones that they do the ones that they do data scrubbing on and they put them in five or six buckets like, hey, this guy's, know, obviously the easiest is the one with the least renewal. But here's here's a guy with equity. Here's a guy. six months left in this contract. mean, and here's the script and God help the people who makes these stupid scripts they write, right? I mean, no offense. I mean, that is my wheelhouse, looking at anybody does this and I have a dealer to spend DS4 ⁓ stores he spends 200 grand a year on one of these companies, right? And I they set an all time record for Never call me again. Take me off your mailing list. I don't want to be called again. I'll never buy from you people again. What a great marketing approach. I mean, spend money on getting salespeople to pick up the phone and wham bam thank you ma'am type of approach on the phone. God, happened? What happened to God, what's the name of the dealer in Carl school, Sewell, building customers for life. Gosh, these companies now with the data scrubbing, it's destroying customers forever. I mean, we just don't know just. IgniteUps.ai: Yes. Current. tom stuker: What's going on in dealerships? Hiring? I mean, they're still using the breath on the mirror for hiring people. I mean, they still hire bodies and everybody hires for the floor and they don't hire for the market, which is again, I mean, oh my God, don't even get me going on how inept the dealerships are being run in our country, you know? IgniteUps.ai: Well, you know, I'll tell you, it's always funny. The dealers that I see, like just even recently, the comments that I've seen in some of these posts that I do about Carvana that how how many cars they've sold, these hundred car dealers, the ones that sell a hundred cars a month, are usually the loudest. And they're usually telling you how they're amazing and they're the real car guys and this and that. And I'm looking at ⁓ like You know, there's a reason why every every time I've gone into a market, I've I've pretty much, you know, dominated and we've grown because th they have these backward processes. And more importantly, they're not really teaching or training their salespeople. As great as they think they are, I'm just as confident as you. I can walk into any store in the country and I I guarantee you I could, you know, incr improve that profitability and and volume pretty quickly. And I just think I think you're right. I I don't know that, you know, they're they're doing any kind of accountability, any kind of training, any kind of real process. And it and it's interesting to me to see that I don't know if COVID made it worse because you had a lot of pretenders in the even more pretenders in the business where, you know, you the customer would come in because they needed the car you h had the only one car. So because you made, you know tom stuker: you Okay. IgniteUps.ai: five grand over sticker and the the dealer paid you on all that commission. You thought you were just, you know, King Kong, but I don't know. You've been you've been training longer than I've ever ⁓ done it. So, you know, is it just always been like this? tom stuker: Yes, yes, it's always been this way the industry is really run by seven car a month salespeople. That's who controls our industry because you got a dealer that says, well, I can't get my GM to do this because he'll leave. And then the GM goes, Well, I can't get my managers to do this stuff because they'll leave. And then the managers will go, I can't get my sales people to do this because they'll leave. So we're basically holding the dealer hostage by seven car a month salespeople. IgniteUps.ai: Well, do you think it's because the dealer doesn't he just wants to, you know, go hang out and just, you know, let them do what they gotta do or or what? I know Zach probably has a lot to go on because he he's seen the same thing on the advisors and the technician side too. tom stuker: Well, yeah, okay, Chris and exactly agree with this too. If a dealer's making two million dollars a year and he's got an attitude of if it ain't broke, don't fix it. Right. But the thing is, it's like saying, well, if I could get there on my bike, what's the problem? Yes, but you have a rocket ship. Right. Why are you riding a bike? Right. I mean, the amount of money that dealers leave on a table takes something. So dealers spend millions of dollars on customer acquisition, millions over years for acquisition. And then how much for retention? How much for retention? Because you're looking at when you start building a customer for life, the amount of money that that one customer generates over a period of a lifetime is an unbelievable value to the dealer. so with that in mind, Would owner follow-up and prospecting be something that is a job responsibility that you're held accountable to? You would think, but it's barely an encouraged activity. It's barely an encouraged activity. Show me a dealer where owner follow-up and prospecting done effectively is a job responsibility and they're held accountable to that. I mean, just, no, still rewarding. We're still giving salesmen of the month. We're still giving Salesman of the Month to some lizard, and that's a polite way to say floor whore, right? But we're Salesman of the Month to a lot lizard who might have a 18 % closing ratio, who brooms everybody just to get the quick, know, he smells the deal, he knows there's a deal, he blows off everybody else to get that guy. Doesn't follow up people because... don't even get me going. I mean, I love this business, but you know what? It's unbelievable how people just can't see the forest through the trees anymore. IgniteUps.ai: I agree a hundred percent. Zach, I wanna I wanted to hear your take on on your on the on the advisors and the technicians, your thoughts. Zach Fritz: think the entire model's been broken because not only do, you know, Tom, to your point, we have lot lizards out there running everything. The dealerships are controlled by people who have PhDs, which does not refer to the education. It's pop ahead of dealership. It's nepotistic hires. It's people who have zero business doing it. The only reason they run or work at the dealership is so they can afford their boat payment. And then... tom stuker: Yeah, yeah, I got you, know. Yep. Yep. Zach Fritz: We turn around and we want to talk about customer retention and building customers for life. How many customers are coming in once a year to buy a car? This is an every five to 10 year purchase. How do you actually make a customer for life and prevent that churn? That's your service department that everybody overlooks. And nobody wants to come into a service department because every single time, just like whenever they hit that front lot and they're shopping for their next vehicle, it's like walking down an alleyway, getting jumped, bent over and crammed. tom stuker: Amen. Zach Fritz: How many times is that gonna happen before you say, I'm not gonna walk through that alley anymore? Same thing with the addendum. Same thing whenever we say, hey, we're gonna charge, you know, over sticker because the market's good and we can do it. At what point do you lose trust? And then you screw your service department, then you gotta make the money back up on sales and charge more and more. And it's this vicious cycle of Just sell the car for what it is. I mean, I'm here in Denver and I saw... tom stuker: Okay. Zach Fritz: post the other day with a Ram TRX 40,000 over sticker and it took every fiber of my being not to call that guy up and just say, screw you, you are everything that's wrong with the industry. And look, I understand selling a G-Wagon for 50 to 100,000 over sticker, but then you're going to complain about not having customers and then you're going to go blow your wad new leads or auto-dialing any of the other crap and then that pisses people off further? You can't have it both ways. tom stuker: Okay. Okay. IgniteUps.ai: Well Well, I'll I'll let me just to just to kind of push back on that a little bit. I'll tell you the marketplace, when you were when I was buying used cars, I was one of the few that was like really growing my used inventory during that time. And so I would be paying crazy prices for the used inventory. And I'd be paying five, ten grand over sticker on a used car. So it was only for me, I couldn't see myself selling a car at MSRP because Because I'm buying these used cars for over MSRP, how am I gonna give away a new car? Like it didn't make any sense to me. So there's a reason why we raise the prices on MSRP. if that's the similar case that's happening in the TRX market, I don't know what that market looks like today. Then maybe there is valid concern. Cause I can tell you right now on a Porsche at 911, they were getting like 25 grand over ⁓ on a used car at auction. ⁓ tom stuker: Okay. Okay. IgniteUps.ai: And so if I'm gonna sell a new one, I I'm gonna ask for a lot more than what I can go and buy that car at auction for. Zach Fritz: But that doesn't... that's fucked because you look at it, that's like saying, I got so now I'm going to go bully this other person. But then whenever I get in trouble for it or I get told that's bad thing here... IgniteUps.ai: It just it it just kind it's just it's just business though. Like you think about the market. I mean, if I'm gonna go spend five grand tom stuker: That's market driven. mean, can't fight market driven pricing. I mean, look the airlines do it, the hotels do it, everybody else, every other industry. IgniteUps.ai: Think we lost his audio there. Zach Fritz: Bad timing. IgniteUps.ai: Bad time I wanted to hear it too. It was gonna be good too. Tom, we got you we we got you you got cut out there a little bit, Tom. The audio went away. Zach Fritz: I did too. sure he's not muted. IgniteUps.ai: Okay. You got it. We got it now. Zach Fritz: Good luck. tom stuker: Okay, we're back. Okay. So we talk about market driven prices. Did you hear me talk about the Knicks game? Okay. Okay. Well, so we talk about market driven pricing when the Knicks were in the playoffs. standing room ⁓ in the back ⁓ Madison Square Garden, which is another zip code. You know, it was five to six thousand dollars for standing room only for the game. Highest prices for a sporting event like that. Zach Fritz: Yeah. IgniteUps.ai: No. Zach Fritz: I did not. tom stuker: ever because I don't know if why doesn't so w why does a dick why does why does a dog lick whatever? Because he can, right? So, you know, it's a it's a matter of it's a matter of i I've got a client that that that has that that CRX or whatever it is that's coming in ⁓ in the fall and don't charge a penny over over a sticker, not any. And everybody else I know is. IgniteUps.ai: Hundred percent. tom stuker: And I said, why aren't you putting addendum on there? He goes, We just never were met those kind of people. So I mean, morally, yeah, the these guys ethically, super great. As far as profitability, you know, it kind of like to, you know, take it when you can. I mean, just like with you know what when you're scalping tickets, everything's market driven for Pete's sake. I mean, like I said, hotels, airlines, you can be in one one one row with six seats in an airplane. And six people pay six different prices for their seats, so IgniteUps.ai: Yeah, no, I agree a hundred percent. It it happens more often than you you think. I mean, even like if they have certain events here in town, if you go get an Airbnb, you they've raised the prices depending on seasonality and of that. So I could see that. Zach Fritz: I get that. I understand it. But at the same time, you know, we want to talk about customers for life. Well, that dealer who you said is not profitability wise, killing it. He has customers for life. That's the difference. IgniteUps.ai: Well, not n not necessarily. And I could I could give you examples of dealers that didn't charge, you know, over market ⁓ during COVID ⁓ they're not selling any more cars than they they were prior to COVID. So and you got other dealers that you know are growing their business and they were charging more during COVID. So, you know, there's for every one you have, I could show you a couple more on the opposite side. But Hey, Tom, I real this this time went by really quick. I can't even believe it's already gonna be eleven. but I I definitely wanna thank you for for coming on board. Before we go though, I always try to ask, you know, based on the conversations that we've had today, what does a dealer need to do to either wake up, get better, ⁓ or can they improve based on some of the things that we've we've talked about today? tom stuker: Well that first of all as As always, the number one is you're as you're as good as the people you surround yourself with. And number two, you gotta I I still think dealers overplaying the whole AI thing. I'm not saying it's not real. I'm just saying what i ⁓ it and don't want to say go back to the basics. I say we need to go forward to the basics and the basics of Any business is the relationship you have with your customers. And and all about building customers for life. I'm about the customer I'm all about every time when when I'm in a dealership teaching people on the phone, I said every every time you talk to a customer, they're either gonna feel better about your dealership or worse about your dealership. Not the same. So if you're not making good calls, you're making bad calls. If you're not making good presentations on the floor, you're making bad presentations on the floor. So, you know, get the good people, get the people that are customer driven, get the people that are all about building repeat and referral business. Get people that wanna build a career in the car business and not wanna do this till their Amway catches fire, you know? IgniteUps.ai: No, I appreciate that, Tom. And Zach, before we go, same thing. How how can based on the conversation we've had, how do how can we get the dealers better? How can they improve? What what can would they apply today? Zach Fritz: piggyback off of what Tom said, I think it comes down to cultivating and continuing to work on those customer relationships and doing the right things for the right reasons. I think as long as you're doing that, you really can't lose. And with the amount of shadiness and sloppiness and churn that we see across the industry, if you are continuing to do the right things for the right reasons, 100 % of the time, regardless of what the market says, regardless of while so-and-so down the streets doing it, well, at the end of the day, you're at least winning over a customer. And whether or not data supports that, whatever. Let it be damned. At least you can sleep at night. tom stuker: For God's sake, will you please train your salespeople how to sell cars? IgniteUps.ai: I agree. I think I think everything you guys just said and and then and then some and the training. I think everything comes down to training your team. this has been ⁓ hopefully this is an eye opener for a lot of dealers and sometimes you just people just need to hear it again. You know, I I think a l oftentimes go ahead. tom stuker: Crisp, Chris. One w really thing that needs to be pushed than anything else. The weakest part of our of our industry is sales management. And I'm not blaming the sales managers who on Friday were selling 20 cars a month and Monday became new car managers and didn't get to the Wharton Business School over the weekend. We do not train our managers how to hire, train, manage, and hold people accountable. We don't train our managers. And that's what I concentrate on right now. And I got the best management training coming out this year. It'll blow people away. And that's what needs to be focused on. We're as good as our managers are managing our people. IgniteUps.ai: Amen. Amen to that. Well, thank you everybody for joining us. again, follow Tom Stucker. Where can they follow you, Tom? tom stuker: Okay, well, my new name of the company is is Tom Stucker Global. And ⁓ can get me my email address is ua1flyer at yahoo.com. And yeah, either me or Instagram me or whatever, right? I only take a handful of clients, but I'm building an online platform, which I want to talk to you about, Chris, by the way, right? IgniteUps.ai: Absolutely. I I I tom stuker: The next year will be the best online platform ever. IgniteUps.ai: I'm in. I'm I'm I'm I'm in. So thank you for for joining us today. And and Zach, thank you as always. ⁓ tune in, informants, and ⁓ thank you. tom stuker: Exact, you too.