Halftime Adjustments: Winning Strategies for Used Car Dealers

Transcript is auto-generated from the episode recording and lightly formatted. It may contain transcription errors.

Chris Keene (00:04): Welcome back folks. Here we are. Season two, episode nine. I'm Chris Keene, one of your co-hosts. I'm joined by the all great John Anderson and the esteemed Ronaldo Leonard. You are tuned back in to Lot Talk powered by Lot Pop. John, we're gonna elaborate today even deeper than what we aired live this last week with Jasen when we were up at the corporate office. Did he just not throw like bomb after bomb after bomb and really start relevel setting the field? John, I don't know about you, but what he threw down, oh my gosh, even though it's stuff we know, I left there going, my gosh, I I forgot about this. I forgot about that. Thank you for refreshing my brain. What about you, John?

John Anderson (01:03): Yeah, I mean, excuse me. That's uh you know, that's what I've always said about Jasen, right? We've got all this stuff packed in our brains for spending years with him. But, you know, it's it's the stuff when he's, you know, when he's doing a cutting a video, uh, for the folks out there or like on Friday when we were interviewing him, just the recall and the way he delivers it. Um, yeah, it just kind of resets things and like, man, he's right, you know, or or sometimes it's just the way you think about things, right? You put things in your mind. Uh you pack your mind full of you know, we sat in the room with him for two days at our Q3 meetings and talking about all kinds of things, right? You pack those things in your mind and then you kind of frame them the way you frame them uh and then to hear him reset sometimes, um yeah, it's uh um you know, I watched, you know, on certain on certain subjects he'd bring up and talk about, I could see my body motion. Right. I was like, I' I'd do one of these when I was looking at him. It's like, you know, he's spot on.

John Anderson (02:12): It reminded me of why I enjoy doing what I do so much, honestly. Um because uh it's bringing those things to the table that can truly make a difference.

Chris Keene (02:22): Yeah, 100%. John, I mean, those are the things that truly make a difference. Ronaldo, I know uh you had to travel and you were on the move. Uh you had an opportunity to kind of dial in because we went live, you know, and when we were talking about that bucket management and when we were talking about, you know, hey, this market has shifted, you know, what were some of the things that stood out to you in that as we were unpacking it? It sucked, brother, that you weren't there. I mean, I kind of felt like, you know, I was missing a body part.

Renaldo Leonard (02:57): Yeah, let me tell you. Uh, yeah, we had to get going. But um you know the thing that whenever I'm sitting in a room with Jasen and it it it happens from the first moment that I've met him, I sit there and I'd listen to him say something and just put it in the file and I'm like okay. Yeah. Because my granddad always told me if it don't come out in the wash it'll come out in the rinse, which means that eventually it's going to come out. But every single time that I've ever sat down with him and had a conversation and he would say this is what's about to happen, and he had put a time period to it, he say hey over the next 45, 60 days you're going to see this, but in order to get ahead of it strategically this is where we need to be, and time and time again it's it's proven out. And then when I think about coming you know in the spring talking about bringing some of those sales forward

Renaldo Leonard (03:59): and it was gonna, you know, things when you start to look for that decline that we always see in shopper counts, this is what's going to happen. If you're not running lean and clean, you're going to be faced with an overabundance of inventory and you're going to have to do this to correct.

Renaldo Leonard (04:19): And what's so interesting about this past week is that talking about this, you know, 180 days, 90 days, you know, and when I guess when things started to kind of slow down a little bit, uh coming out of uh coming out of the late spring, early summer, said you'll you'll see when we get through August, September, there are going to be a lot of guys that are going to be, you know, struggling. They're going to have a lot of aged inventory on their hands, but those guys that are lean and clean are going to be looking for inventory and so you'll be able to cash in because you got guys that are trying to get rid of it. And so, um, that was the that was the the thing about this week that just kind of blew my mind, even strategically planning for what's ahead for our company as a whole

Renaldo Leonard (05:18): and the direction that he sees, you know, our tool, the the consultation that we're giving dealers, what to prepare for. I'm I'm liking, you know, it's it all makes sense and we're right on stride.

Renaldo Leonard (05:34): But it's gonna be fun to watch and it's definitely going to be fun to be able to to do that for our dealers, you know, on a daily basis to give them that that heads up about how to stay ahead of the market and how to stay uh stay in tune to those indicators that let us know a shift is coming. Prepare. And so, yeah, that's that's uh that's the thing that really jumps out at me. And um yeah, I I'm looking forward to an opportunity to dive into it a little bit further with you guys today because I know that you guys uh you guys are as uh attentive minds and and with your expertise levels and experience in the industry, man, I was just soaking it in, trying to prepare myself to do my job as best as I can.

Chris Keene (06:25): I think we're all in that same boat, Ronaldo. And and you know, from I got to thinking about it, when we were doing when we were doing the live with Jasen, he's giving the market update. I wanted to throw this out there at the listeners and viewers today is it may sound like, you know, we're putting Jasen up on this huge pedestal because one, he's ultimately at the end of the day he's all of our boss. But if you go back, and I encourage everybody to go do it, go back and look at the videos that he's cut three months ago, six months ago, a year ago, two years ago. When he's forecasted something, it has come to fruition

Chris Keene (07:13): every single time.

Chris Keene (07:15): So when you talk about work the facts, that's just a factual piece. I mean, this guy's been studying trends, you know, in this industry, in this market for many, many, many, many, many, many years, and he works the facts and they come to fruition. So, those that may be tuning in for the first time, number one, if you're tuning in for the first time, do us a huge favor, subscribe and like it, so that way you can continually get the updates. But go back and watch, go back and listen, go back and read anything that he's put out there. It has come to fruition each and every time. So yeah, we're going to put him up on this because he has been the brain trust and child behind everything that we do here. And to your point, Ronaldo, he's dumped an enormous amount of knowledge into each and every last one of us. And anybody that tunes in and listens to him, he dumps that knowledge in. We threw it out there on Tuesday when we went live. We told people, "Hey, reach out to us." And I threw a bombshell on everybody. You guys know me, make a decision on something to help our dealers out and ask for forgiveness later. But I threw it out there of, hey, try it out. Get on a call with Jasen for four weeks and I promise you he'll find something to help improve your business. And he jumped in and says, "I'll find 10." And we are offering that at no charge. So people are taking advantage of that. I mean, just the other day, we had somebody reach out, hey, I'm in. Sign me up. Let's do it. Why? Because they've been following. They've been watching. They've been reading and everything he said has come to fruition. John, am I right or wrong?

John Anderson (09:20): No, you're spot on. I, you know, I would add to what you said, Chris and Ronaldo, that and again, you know, I heard you right, we don't want this to sound like, you know, that he's the end all be-all. We know there are other experts out there, but you know, having been uh with him for nine years and watched what has been developed with our company, um I mean, it works. I can't I can't, you know, I'm sitting there trying to think of a a a wordy thing to say and I can't. It it works. If if if you take uh the data and and uh and are coached through it and disseminated in a way disseminated in a way that it was and you follow uh and your goal is to have volume and what he's developed speaks to exactly that. It ex it speaks to exactly running both volume and gross at the same time. Everything that he has developed is that vertical alignment between lead management and inventory management.

Chris Keene (10:35): And we've said it a million times over, folks. You could manage your inventory via the leads and you can manage your leads via the inventory. And we unpacked a lot of that on Tuesday when we went live. And we unpacked a lot of, hey, bucket management, you should be looking at this, you should be looking at that. With that being said, it goes even a little bit deeper and that's what we wanted to talk about today of some things that we've been seeing in the market with our dealers. And it's been more now over the last probably 60 days, I would say. Excuse me. 60 days I would say that we're seeing so much fluctuation. And today let's unpack that a little bit more. And as always, we're going to give you some takeaways from this meeting to be able to go back into your stores and start looking and finding some of these areas of opportunity to go win at. Now, obviously, if you're one of our clients, a little bit easier to do, but even if you're not, we will give you some things to go look at to dive back into your inventory, to dive back into your leads, and dive back into your inventory management tool, into your CRM, and be able to start catching some of these so you can stay ahead of the curve, and instead of falling down these big, deep valleys, when that market shifts as it's shifting right now, you can stay farther ahead of the curve. So Brett, do me a favor if you wouldn't mind. We've got some things backstage that we want to pull up to the stage. Brett, if you would throw uh throw those up there. That's perfect. So, one of the things that you know, John, you pointed this out. This was a dealer that you were talking to the other day. Unpack this for the the viewers and for the listeners. And listeners, what we're sharing on the screen is a trend showing how a dealer started a piece of inventory, never made a change to the pricing of it. Fine. If you don't want to, that's fine. But the messaging that John is going to share here is how it moved in the market but never made a change. John, go ahead.

John Anderson (13:13): Well, yeah. I mean, this is this is data uh we pull in from inventory management and it and it just showing the pricing where they started the vehicle out at um price-wise and uh you know the market as we all know, the market starts to shift on us and you know the important thing to do is to stay ahead of the market, right, if we start to see this. So, you know where they started the pricing out uh at 22170 at 101%. And then you can watch over time what happens with the market on this vehicle and and it coincides with what's right now in the market. People are starting, it's the market's starting to shift. And that and more importantly, the reason why I felt like this was important for us to talk about today is uh we're just seeing this a lot in across our dealer partners. Um when you when we start digging in, part of what we do with them on on our consulting calls is to dig into their inventory side with them and start looking at inventory that is bleeding through and not moving. And if I remember correctly, this dealer uh has a pretty substantial uh bleed through and lift out of their first 30 into their 31 to 45-day inventory. So this is an example of why that why that's happening. The the price to market is backing up and raising on them. Now dealers and listeners, viewers and listeners, when you think about this from a practical standpoint, is a customer going to walk in your door and say, "Hey, why did this car go from 101% to where's it at now, Chris? Where's it priced at now?

John Anderson (15:16): Yeah. So, why why did this car go from 101 to 103? You're never going to hear that question, right? But what happens, you you're not the only one using using this technology. So you have a savvy operator out there in your market that stays ahead of the market on their inventory and they're a student of this and they're a student of their dealership with their people in their market and understand where their inventory is transacting at and understand the adjustments they need to make. Well, then they make an adjustment. You don't. And your car is sitting out there similar to the ones to that dealer. And when everything else is similar, guys, let me ask you, where does a customer go to? Typically, the first go-to is the lowest price when everything's similar, right? So, when you're sitting there and not making those type of adjustments, these are the types of cars that when we dig into it with our dealer partners, we hear these kind of comments. Man, this car's this car is all there. It's got a low day supply. I don't understand why it's still sitting in my inventory. Am I wrong, guys? Is that the kind of stuff we hear from dealers? They don't understand why the thing's still sitting there.

John Anderson (16:29): And and it's just it's pretty simple. This is what's happened. The market's backed up on it and we're not staying ahead of the market and thereby customers are going elsewhere because your price technically is above everybody else's in the market that that are that are that are uh analyzing uh their inventory and analyzing their data on a daily basis.

John Anderson (16:51): So, it's just a backup in the market that we're not catching. And this happens to be a car that's bleeding through on them. And so then they get the they get the double whammy, right? They're priced high. It's bleeding through and the end result, you have no relevancy in the market.

Chris Keene (17:11): Whoa, whoa, whoa. Time out, folks. Time out. Time out. Time out. Time out. So, you've tuned in to Lot Talk podcast for a reason. You've tuned in because you're like, "Hey, let me get some nuggets. Let me find a way to help improve my business." Volume and gross and running those simultaneously is the end goal. And for anybody that told you that you can't run volume and gross simultaneously, if you go to lotpop.com, here's what I want to do. I want you to book a Lot Audit. It's the very first thing you see when you get on there because what we're going to be able to do is we're going to be able to shine that spotlight on these areas that we constantly talk about here on the podcast. So, I want you to go to lotpop.com, book a Lot Audit, and I promise you, we are going to find challenges inside your process and your inventory that is going to help inch you closer to selling volume and gross simultaneously and be able to stay ahead of your market. Lotpop.com. So, thanks for letting me butt in here for a minute. I look forward to spending more time with you one-on-one.

John Anderson (18:17): Well, here's the other thing, too. That's a good point, Ronaldo. Here's the other thing. Here's the other thing that happens, right? They've let this they've let this vehicle sit all this time on that money, right? And and by the way, they're at 22170. $22,000 is a huge price bucket. It's uh it gets a it's in the top 20 search buckets because it's 400 a month.

John Anderson (18:37): So for 170, they're missing that huge price bucket. That's just a side note. But here's the next thing they t we see dealers typically do is they'll let it ride all that time and now all of a sudden instead of making small adjustments over time to stay with the market, now they've gotten behind the market and the next move they'll make, and it's typically when they've got leads on it. So they're they're we don't reach out to our leads. We just go in, a manager goes in and they'll take that thing from 22170 down to $21,000 or $20,000 and make this huge drop in price. And there's no reason to do that if I'm staying with the market. There's no reason to make a huge drop in price. Just little incremental uh changes and then talking to our customers will have an effect that will sell your inventory faster instead of making those big chunk price drops.

Chris Keene (19:29): Absolutely. Well, to that point though, John, is you you got the guy that goes from you look back here. I mean, this was 31 days ago when this guy acquired this piece of inventory. He priced it. And if you look at this, 23 days ago, this vehicle was at 22170. And you see how Okay, cool, something happened in the market and that 22170 came down here and it was just right at or below 100% of the market, and then he hasn't touched the price and then it goes up, then it comes back down, then it goes up, it comes back down, now it's going back up again. Well, why is the price to market going up? Supply is, demand is decreasing, shopper index is decreasing. So for you that are listening, for you that are viewing, you're like, "Well, my gosh, Chris, I have 175 vehicles in stock. How the hell am I supposed to, you know, keep up with every last one of these? You're telling me I need to make price changes, to look at my inventory every day?" No. This is the vertical alignment of inventory and lead management. Are we telling you that you can't sell at 101, 102%? Absolutely not. There are those situations where the market is shifted. To John's point, a customer doesn't know you're at 101. What they know is it's at a price point that's within their budget. People shop by price, purchase by payment. Now, the vehicle has become relevant to that customer. We're saying go look at your inventory without activity. Okay? Your car that's priced at 104%, your car that's priced at 96% or anything in between there, or anything at any price point, if it has activity, I don't need to worry about the car. It goes back to the old school. Is it the money, the machine, or me? Well, if I have activity on it, it's not a money problem or a machine problem because people aren't going to submit activity on a vehicle that's out of their budget and it's not of their interest. So, now it becomes a me problem and it's not an inventory problem. It's a lead management problem. What we're saying is is go identify your inventory without the activity and that's what you need to focus on because things like this right here is what's happening. Cars are shifting and moving in the market and you've got a piece of inventory here which John did the call with this dealer, you know, earlier this week and he pointed this out. Hey, I get it. You're the number two, number three dealer in your state and you're crushing it. You're doing a great job, but here, let me shine some light on a blind spot that you've missed. And here's the blind spot that he's missed. He's missed the fact that he's had this vehicle that is his core product that he does well with. I sell these price point vehicles. You know, this is what the dealer saying, but yet you've missed the fact that you've had it for 31 days. You've dismissed the vehicle. It's shifted and moved it throughout the market, and you've missed it. So, we encourage that you go in, takeaway number one, go back through your inventory today. We're in the, you know, start of a new month. Go back into your inventory today. Go look at all your cars that have no activity. Go in there and look at the cars that you haven't had a price change in the last seven days. But just because you haven't had a price change in the last seven days doesn't mean go in and whack it. What it means is is go look at the machine. Go look at your merchandising.

Chris Keene (23:20): Go look see if you've had another customer that maybe was on a different vehicle that you have no longer have in stock and see if this vehicle works for them. Go make sure you're metatagged right. Go make sure your photos are speaking to your description and your descriptions are speaking to your photos. What do I mean by that? If you're telling the consumers out there in your descriptions or in your checked boxes of highlighted features that it has Apple CarPlay, cool. Tell them it's got Apple CarPlay. But are you showing them that in the photos? If you want your vehicle to go draw 101% of the market or if you want your vehicle to go draw 103% of the market, are you giving them a reason why it's 103% of the market? That's what I would tell you as takeaway number one. Ronaldo, anything to add to that?

Renaldo Leonard (24:27): Oh, I was just going to say that. Yeah, I think we lose we lose sight of the fact that those photos and that description is the only opportunity that we have to present a vehicle to the marketplace. And if I have it priced at I always try to look at it as if I'm presenting a vehicle that I'm asking price to the market for. So, and in layman's terms, if I'm asking 22 grand for a vehicle, I'm going to make damn well sure that this vehicle comes across as something that's worth 25 grand.

Renaldo Leonard (25:08): The value has to exceed the investment we're asking that customer to make.

John Anderson (25:15): Great point.

Renaldo Leonard (25:16): Thank you.

Chris Keene (25:18): Yeah, great point. John, you were gonna say something there. Go ahead.

John Anderson (25:22): No, I was just gonna follow both your guys' points. In today's market, in today's market and and listen, hear me out folks, sometimes it's sometimes I think we come, you know, we're received as u because I've heard it before, sometimes I think we're received as as being negative. This this is not negative. This is factual. You know, that's what this that's what this acronym on the front of our shirt is. It's it's you know, sometimes it stands for the urban dictionary side cuz sometimes we look at what dealers are doing, we're like what the But for our company it it stands for work the facts. And the facts are on the screen right in front of you. This is not this is I mean we're not we're not saying this uh just to be uh talking heads. I mean this is this is what's happening right now. Shoppers and it happened, I mean, we can go back to two we can go back to 2004 when Google started tracking this stuff. This is the time of year that shoppers start to retract from the market. There's a lot of stuff happening. You got, you know, NFL starting, college football starting. That, listen, that's huge in our country. You got kids going back to school. So, people's interests are shifting now. And it their interest won't come back typically on the auto industry uh overall until we get to the end of November to the middle part of December and then they really don't start taking action until we get into the end of January, first part of February. You can go back and look at it yourself. These are the trends. So, if I'm going to ask 110% for a unit right now when I got customers retracting from the market, I damn sure better get that thing online within 3 to 5 days. I damn sure better make sure that my photos and my descriptions are absolutely flawless because I'm asking customers to overspend in a time where customers are retracting from the market. That's just the facts.

John Anderson (27:29): Now, I I get it. I' I've got dealer I've got dealers every now and then that will tell me, "Hey, John, we sold a car for over." Listen, I I personally couldn't be more happy for you, right? But I want that to be the norm, not the occasion, right? It's like a car that bleeds through and a dealer will tell me, "Hey, we sold this car at 55 days and we made $3,000." No, you didn't. Taking into account the holding cost and that stuff. So that's all I'm saying and that's all we're saying and I and I'm passionate about that right now because I see it everywhere as I'm getting into dealer data. If if we're going to if we're going to ask and we're going to get, then we got to make sure it's flawless and we've got to get it on. If if I want to sell it in the first 30 days, that thing can't hit that can't that thing can't hit it day 13 online and then me treat it as a day one car. I'm fooling myself. I can't treat that as a day one car.

John Anderson (28:32): And and let me add this too, guys. Do not try to manage your gross by controlling your gross. It's not going to work. If I've got a high cost of market in it,

John Anderson (28:43): that's not that. Don't mark that thing up because I'm trying to control my gross from day one. Listen, when the market moving and you got people, people are buying cars and it's moving and shaking, I I can I can I can have that cushion. I can do that. And and typically a lot of times I'll get away with it.

John Anderson (29:01): But when it shifts like it is right now, that's a thing I can't get away with. I've gotta, that's why that's why I need to understand, Chris says this all the time,

John Anderson (29:12): I've got to understand what my store with my people in my market is doing. I've got to understand that first. Where am I selling cars at? What cars am I selling? What cars am I heavy in? So, because I've got to take that into account when I'm when I'm as my inventory is coming in, as I'm launching it, I got to make those little adjustments across my inventory so I stay ahead of the market and continue to stay fresh.

John Anderson (29:40): And here's the last thing I'll say on this is why do why is this so important? Why are we why are we why are we this is our second call on this topic. Why is this so important? Because as I enter into that uh enter into that end of November, uh middle of December, end of January, I want to be a dealer that is lean and clean because when customers start coming into the market and looking, if I've got a ton of aged inventory, guess where they're going to start feeding on my inventory? They're going to start feeding on that aged inventory, which has the lowest price point. And that's where dealers say, "I can't make any gross on my inventory" because you've got a bunch of aged inventory and dealer customers are going to come in and shop that lower price point inventory. If I don't have that aged inventory, guess what they're going to do? They're going to come in and shop my fresh inventory that I've got the best chance to make a spread on. That's why this is so important. And then on top of it, I can take advantage of those dealers that have a bunch of aged inventory and are trying to get rid of that inventory. Now I've got a now I've got an opportunity to source some inventory at a lower cost of market. So there's huge benefits by making these adjustments right now going into this time of year.

Renaldo Leonard (30:59): Absolutely. Absolutely. And you know the thing, John, that I thought about, you you you made a point there. There are so many variables that go into once we get a vehicle to the market. You know, talking about our sales team, talking about the demand in the market, so many things that play into it that we cannot control. The facts that we have in front of us

Renaldo Leonard (31:28): are the things that have to drive our decision. That's going to give us a better opportunity to convert on what we're looking at. Right at the end of the day, we're just trying to turn that inventory as fast as we possibly can, take those dollars so we can reinvest it and also identify where we're winning so we can duplicate it, where we're losing so we can mitigate loss, but bring in that inventory so we can attract more attention to it. Uh, but those variables that we can't control, you got to execute to perfection in order to make sure that we're getting the ROI on that investment that we're making.

John Anderson (32:08): It's not easy.

Renaldo Leonard (32:10): Yeah. No, it's not easy.

John Anderson (32:12): But if it were

Chris Keene (32:13): No, because if it was, everybody everybody'd be doing it, brother. You know that. And Right. This this ind this industry is not for the weak of heart. That's for sure.

Renaldo Leonard (32:23): No. No. But I mean, there there's just too many indicators out there that a dealer can focus on that sets them up for success. And if they would just, you know, execute on it and work the facts like we're saying, uh,

Renaldo Leonard (32:42): you know, there's there's success to be had even in lean times, you know, difficult times.

John Anderson (32:49): No doubt.

Renaldo Leonard (32:50): You know, I will always get that question. You know, why or what are dealers doing today? Or h how's it going out there? I said, well, it just depends. Depends on how you're approaching it. You know, great dealers and great operators always have success because they got process and they pay attention to the metrics that matter most for their business. And then you got other guys that are on that roller coaster. You know, they're subject to the market. Subject to the market. But the the information is there.

John Anderson (33:25): To your point, Ronaldo, I think

John Anderson (33:28): I think about our best dealers, our best dealer partners. To your point, Ronaldo.

John Anderson (33:33): And think about some of those guys. As I'm talking I've got I've got dealers coming into my mind. Those guys are students of the game and they're consistent throughout the year. They it just never it just never bends. It just continues to because they are students. They study uh they study study study and they make the appropriate adjustments proactively. And and when you look at their data trends, they're just about as consistent as you can get. So it can, to your point, it can be done because it's being done, right?

John Anderson (34:09): Even all year round when the market's up, when the market's down, they just stay consistent. And and so you know, to your point also going back to our CEO, what's he always what's he say?

Chris Keene (34:20): I was just going to ask you, I was like what's the one question they never ask?

John Anderson (34:24): What's how's the market treating everybody else?

Renaldo Leonard (34:30): They don't care. Right. They don't care.

John Anderson (34:35): No, because they know what they they

Renaldo Leonard (34:41): Right. Right. And going back to Jasen, you know, what does he always say to your point? Control what you can control. You got to control what you can control.

John Anderson (34:51): Right. The other stuff you can't, you just And so that's why I think you know our best performing dealers when you talk to them, man, you know, I can promise you this. Our best performing dealers, if we ask them about a unit or we ask them about a lead, they don't have to look at anything. They'll tell you right now what's happening with that unit, what's happening with the customers on that unit. They know they know it's a detail. They'll spit it right out, right?

John Anderson (35:18): And some of them have, some of them have, you know, some of them have 400 units on the grounds, right? So, it's not like they're it's not like they're they know and they're they got a 20 unit inventory. They got 400 units on it and you can ask them about any car and they know it. They know it.

Renaldo Leonard (35:33): Yeah. Absolutely. Absolutely. But that's somebody who's maximizing the information they have at Yeah. I'm sorry. They're just maximizing the information they got at their disposal.

Renaldo Leonard (35:45): They know where everything is that they need to make decisions on

John Anderson (35:48): and they're looking at it constantly.

Chris Keene (35:51): So, they're constantly looking at it, but they're seeing things like this as well, that best-in-class dealer, that guy that is Steady Freddy. And you guys, listeners, viewers, you've heard me talk about it a million times. You've heard people from LotWalk talk about it a million times. That valley. Okay. Well, what is that valley? That valley is is when there is something that has changed. Whether the market has changed, whether your inventory has changed, meaning you had just an increase of inventory because you didn't do a real stellar job of your acquisition and feeding the beast and bringing your inventory in. Or maybe you just had one hell of a new car month and you took a bunch of trades in. That valley is when you've had that increase in that inventory and then your sale rate decreases because of all the time it's taking to get, you know, the vehicles to the shop, get it photoed, get it detailed up, all that fun stuff. Okay. But then that valley can also occur when that market is shifting. Brett, do me a favor. Throw the screen back up on stage. And I want to point something out here because it ties back into what we started with earlier that, you know, or last week when we were live on Tuesday with Jasen giving a market update. This is a dealer again, one of the, you know, arguably one of the best dealers in the state of Ohio. But if you look right here on August 13th, what I'm showing on the screen, and it's very specific, this yellow line creeping up and continuing to trend up. This is what we call bleedthrough. This is inventory that bled through from their 16 to 30-day old inventory into their 31 to 45-day old inventory. Now, I want you to pay close attention and take mental note. This is on August 13th when this inventory started bleeding through. Excuse me. Now, I'm going to put a bunch of dots and tie them all together here for us. Inventory for this dealer that is doing really well in their state, it bleeds through on August the 13th. Now, I want you to watch something here. I'm going to change the screen. And I'm going to go back to what we were talking about earlier this week with Jasen, and that the red line that's on the screen now showing a sharp decline as John was just talking about, shoppers retracting out of the market. Very simply put, there are less in-market shoppers in the pre-owned world. Now, I'm gonna hover over something and I'm gonna show everybody the date on this. Keep in mind, August 13th is when he started having a lot of bleedthrough. This is no coincidence. Look at when the market took a decline, August 12th. We went from a 60 on the shopper index to where we're standing at a 51. A 9% decrease in the market. But yet our inventory has stayed the same and grown. And at that same period of time, this dealer started experiencing a lot of bleedthrough. Tie it back to what John was talking about earlier of paying attention to your inventory from day one and every day throughout that it's not getting activity. This is part of the reason why he's bleeding through. A car starts out at 101% of the market. Fine, take your shot. But for 23 days not touching the car and it goes from 101% to 103 because you took your eye off the ball. So, no matter how great of a dealer you are, how well you perform in your market or in your state, you have blind spots you're not seeing. And we're imploring you to go in and look at your inventory. What's not getting activity? Why is it not getting activity? Is price 100% it? No. Go look at everything else before price. And if everything else is right, then yeah, you got a pressure problem. But you're not going to know that unless you look every day.

Chris Keene (40:46): Feedback to that, gentlemen.

Renaldo Leonard (40:51): I just think probably the most important thing that we could drive.

John Anderson (40:54): I would say I would say look, Chris, show them the show them the green trend line. That's our dealer partners. Look at the same date. Look what happened in our dealer partner sale rate. Now they they've bounced back and I think that's, you know, I think that bounce back is some of our best performers, right? They made that adjustment they need to make to get that sale rate bouncing back. But look on that same day, look at that drop across our dealer partners and sales.

Chris Keene (41:23): Okay. But the valley, but you're right, John, but look at the valley.

Chris Keene (41:27): It's short. Okay. It's very short-lived.

John Anderson (41:30): So you sit there and see.

Chris Keene (41:31): Absolutely. Because they they responded,

Chris Keene (41:34): Yep. They responded very very quickly. Okay, here's right here. Our dealers' sell rate declined and then very quickly it bounced right back up. Now most dealers, what happens

Chris Keene (41:53): students of the game. Most dealers, what happens is they get through the month of August and they're sitting at the round table going over the financial statement in September going man guys, what could we have done better, man, we fell apart halfway through the month, da da. And then the nine million things come out. Well, you know, uh school started back up and football's here now and all these things that come out. Well sure, but guess what? Every last one of these dealers are in the United States of America and they're experiencing the same thing as you, but yet they bounce back. Why? Because they're paying attention to what the hell's going on in their market.

Chris Keene (42:32): They're paying attention to what the hell's going on in the market. So, their valley was very, very low and they came right back up. So, John, I think that's the the message there that you know, you're saying, "Hey, look at that green line." People started bouncing back.

John Anderson (42:53): Even though this market is declining, you got dealers still bouncing back that have their eye on the ball.

John Anderson (43:05): Well, and that's why we look at everything in 15-day increments.

Chris Keene (43:10): So, hey, Ronaldo, do me a favor. Uh, I want to pick your brain a little bit. Texas Tech, when you guys were going into halftime,

Chris Keene (43:21): what but what was that like when you went in, what was that like when you went into halftime? What were the coaches what were the coaches talking to you about? What was the point of emphasis at halftime when you guys went in? And then uh what happened when you come out of the locker room? What was going on in that locker room at Texas Tech when you guys went in at halftime?

Renaldo Leonard (43:45): Well, going into the game you always knew exactly what you had to do in order to win the game. So we always have what we call must-haves. So during that fact, after that first half is over, somebody's already crunched the numbers. How are we according to our must-haves and what we have to accomplish to win the game? Wherever the deficit is, they've already got it pin pinpointed. Came down to two or three plays and it was either or something we couldn't control. And then how do we correct that so that it doesn't happen again during the second half? So, you make your adjustments. Whether it's, you know, if we're playing a cover two, are we going to have the corner cover underneath routes with a safety over the top? Or you roll out the linebacker and let the corners drop back and you got maybe four deep with safeties playing up a little bit, but you're making an adjustment to game plan based on your most recent activity, because we study trends and all the tendencies before the game. But if they made adjustments going into the game, you got to make adjustments on your game plan that you brought into the game. So you make those adjustments and then from there you're just going to execute on that game plan. But that happens, you got 15 minutes, that happens in three minutes and then everybody is wrapping their head around what they got to accomplish. And then the rest of it, you know, you you've broken down those individual adjustments by position. Then you get your side of the ball. So your offense or your defense and then everybody else comes together and you wrap it all up and say, "Okay, here we go.

Renaldo Leonard (45:47): Let's get after let's get after it."

Chris Keene (45:52): That was perfect.

Renaldo Leonard (45:54): I appreciate you giving me a heads up to walk through it.

John Anderson (45:59): No, because that's exactly Listen, listen, guys. You did great, brother. That's perfect, man. Cuz here here isn't that I look that's that's college football at the top level, right? And that that's the same thing that happens in the NFL, right? And and why do you guys do so much film study, right? So that that stuff you understand, understand that stuff coming in, right? You right. Exactly. Right.

Renaldo Leonard (46:28): You taking facts, tendencies, right?

John Anderson (46:31): Right. So that's all we're talking about here, guys, is is look at don't set it and forget it. That that's that is not a strategy. Set it and forget it is a hope. That's a that's a hope method. That's not a strategy, right? And that's why we look at everything, exactly what Ronaldo just said.

John Anderson (46:55): That is why we look at everything at Lotpop in 15 day, every day in 15-day increments so you can make those halftime adjustments based on the study that you're doing. And that's why I wanted you to point that out, Ronaldo, because that that's that's what I talk, that's what I say to dealers. I mean, this is your halftime report. What you you're looking at the first half, the last 15 days. What do I need to make adjustments on for the next 15 days so that we get the areas that as Chris referred to, those hidden areas that we just don't see every day, to get those areas going the right direction.

Chris Keene (47:37): That's spot on. Go ahead, because I want to I want to hear this thought because I think it's down the same road I'm on. Go ahead.

Renaldo Leonard (47:43): Well, and I was just going to tie it back into football. You ask why do we watch film?

Renaldo Leonard (47:48): And and there's there's an old mantra is that the eye in the sky never lies.

Renaldo Leonard (47:54): That film that you're seeing from up top, everybody, you see what everybody on the field is doing

Renaldo Leonard (48:02): and you know where everybody's supposed to be going when the ball snapped. But if somebody misses a step, it's visible. And then you know how to correct it. You know exactly how to shift what that game plan is to put the correct action in place.

Chris Keene (48:20): And that that right there, my friend, is exactly where I was going.

Chris Keene (48:29): The eye in the sky never lies. And those facts, you know, the metrics that we bring to the table every single day, you know, your two week sell rate, your first 30, your predictor, that's a true indication of what's going on with the inventory, not how you feel about a red C 350 because you like it or a friend of yours traded it in. The numbers tell you what it's going to do, right? Every single time.

Renaldo Leonard (49:02): It's just

John Anderson (49:03): But there there's just so many influences though that we even though you watch all the game film, in the middle of the game, we don't even see everything that's going on.

Chris Keene (49:19): And one last football reference here before we move past this, but you got to hear this very closely. I was watching an old clip from UCF and Boise State. UCF is fourth and a million.

Renaldo Leonard (49:36): Okay, hold on. Hold on. Both John and I are falling over because you didn't mention uh OU. Wow.

Renaldo Leonard (49:45): I can't believe it. We were waiting for it, but No, go ahead. I'm sorry.

John Anderson (49:50): But so no OU tie-in.

Chris Keene (49:55): No Sooner tie-in here whatsoever. Okay. But UC UCF and Boise State, UCF is fourth and a million. They're going to punt formation. Everybody gets set on the field. You got the punter 30 yards off of the line, snaps the ball, and throws a 40 yard strike down the field for a touchdown. The reason why I bring that reference up, listeners and viewers, because nobody was paying attention to what was on the field in that moment. Everybody was still wrapped around the game plan

Chris Keene (50:38): versus what was in the moment.

Chris Keene (50:41): And nobody noticed that the punter that was back there wasn't the punter. It was a third string quarterback. Nobody was paying attention. Right. But hey, check this out. What led up to that decision to run that play at that particular time? Film study indicated that they don't pay attention to that.

Renaldo Leonard (51:08): They don't pay attention.

Chris Keene (51:10): We can come in and make a play.

Renaldo Leonard (51:12): They play one deep man and Boise State is notorious in that situation for bringing everybody off the edges. That That's what they saw.

Chris Keene (51:23): So they knew that they'd have a guy out there, one man coverage. So I mean this the point being to that, folks, is this, bringing it back to automotive. If you're not looking at the entire landscape of your automotive business, you could have that punter out there that's not the punter throwing dimes on you. Or you could send your punter out there and punt it off and have missed a great opportunity to turn the tide.

Chris Keene (51:57): Million%. It goes both ways. So, flipping it 100% back to automotive. Some of the things that we're hearing this week, man, we're sold a bunch of cars. I had to go buy a bunch of cars at the auction, but we ain't making any gross. We're hearing that right now. Ronaldo.

Renaldo Leonard (52:18): Well, before this, I need to remind I need to remind everybody of something.

Chris Keene (52:20): Here comes the OU reference.

Renaldo Leonard (52:23): Nope. It's not even an OU reference. It's just straight up I've made this mistake reference before a million times over, you know, when I was still on the retail side.

Renaldo Leonard (52:32): And it was nothing like walking back into the dealership with all of my green slips. Everybody said, "What'd you buy? What'd you buy? What'd you buy?" Man, I stole this one. I stole that one. I I bought this. I bought that. And I'll never forget it. My mentor looked at me one day and he says, "Hey, let me ask you a question, man." What's that? "Was you the last one with your hand in the air?"

Renaldo Leonard (52:55): Well, yeah. That's how I got the car.

Renaldo Leonard (52:59): "So, you didn't steal it? You gave more money than everybody else, but you stole it?" I guess you got a point there. Light. Light bulb.

Renaldo Leonard (53:14): Funny. I mean, it's You talk about take all the air and deflate it out of my balloon. It It happened that quick. So, I was just like, "Ah, I guess I didn't steal it, you know?"

Chris Keene (53:30): So, but to that point though, right now dealers, I get it. You're having to go buy cars at the auction. You're having to go source inventory. Maybe you're not good right now yet, that maybe you don't have a system or a plan in place to source inventory. You don't have a good service acquisition process. You don't have a good street purchase process right now. You're working on it. You're trying to get it put together, but in the interim, you need cars. So, you do what we all have the capability to go do is go to the auction and buy cars. Well, if you're going to the auction and buying cars, Ronaldo, what is the number one thing that we have coached our dealers and expressed to our dealers about the cars they go buy at the auction?

Renaldo Leonard (54:15): It's trade bait or filler. You are just filling in your inventory. If your acquisition strategy doesn't start day one within your rooftop, you're making a mistake. You go to the auction to fill in holes in the inventory. What is it? Uh, period, end of paragraph.

Chris Keene (54:34): Period, end of the paragraph, baby.

Renaldo Leonard (54:36): That's it. That is it, man.

Chris Keene (54:39): Hey, John, you talked about it earlier. You were in a conversation with a different dealer of ours this week, and it was the same situation. I mean, he told you, you know, the Dodge store, I've had to go buy a bunch of cars. We're running out of inventory, this and that, etc., etc., etc., but you know, God, we ain't making any gross on these things. Well, no, I mean, your cost of ownership is on average $1,500 higher. You know, two cars may both be worth 20 grand, but the car you got to go buy at the sale, you're gonna own it for 21-5 on average because you got your auction fee, your PSI, your transportation, etc., etc., versus the car that you traded for, you picked up off the street, you don't have all those fees. But the key piece, John, and I loved how you expressed this to the dealer, the key piece he missed in the middle with his salespeople. What was that?

John Anderson (55:34): Well, so first, let me let me set the stage. I mean, he's a new dealer to us and so he the the guy is absolutely a student of the game. And listen, to the point that uh you made Friday, right? I I did that with him. I I similar offer you threw out there, right? We I I offered to put his data in our in our uh our system. Uh and as a result of that and having some conversations, he decided to partner with us and and so he was just a student. He was gobbling it up from day one. And so he started making the adjustments. His inventory started speeding up, more volume and he started selling more out of his fresh inventory. And so now what happens after that, right, you start to put pressure on all those downline systems, right? So now I've got to feed the beast to bring more inventory in. And so he put an emphasis on finding inventory. But the emphasis was on the auction. And as a result, as he brought the inventory in, his cost of market started going up. And as a result of that, his sales his salespeople started to complain that they were missing out on gross opportunities because the margins, right? So then he starts adjusting, he starts adjusting based on on that and starts trying to control his gross and so trying to control it by pricing it up from cost to market. It's a natural thing to do when when you're f you're you're you're new to this concept and you start selling a lot of inventory. Now all of a sudden I've got to go replace it. Um, and so, um, you know, we just had a discussion about, you know, bringing all your people in, explaining to them what's going on, and then involve them in the process, right? Have them start looking for inventory for you, right? That, you know, look out in the community, get on Facebook Marketplace, get on Craigslist, all those avenues, right? Engage your entire staff in the process of finding inventory for your store. They'll do it. Pay them for it. Look, if you're going to pay $500 to $800, sometimes a thousand bucks to pull a car in from the auction by the time you include fees and and and transportation, why not offer some of that money to your staff? And if they bring a car in your service department, you inspect it, and you decide to buy it as a result of that, pay them for it. They'll be your best uh they'll be your best megaphone out there and digging and searching and trying to buy inventory. So, um, you know, it's it's, uh, when things start to shake and move, you got to have again that halftime, right, that Ronaldo talked about. I got to make adjustments, right? So, um, and and that adjustment is when I when I've got when I know I've got to lean heavily on on auction inventory, I can't take a personal interest in that. That's the other thing I wanted to say with what you guys are talking about. Chris, you talked about you coming back and say, I remember those days, you know, I stole this inventory, right? And then I bought this inventory and and it's not my inventory, right? It's my owner's inventory. I say I bought it. I used his money, right? And I'm stocking it on his lot. And then what I do is I get to pay too much.

John Anderson (58:47): Yeah. And Yeah. And then I get all bowed up, right? And then I'm gonna I'm gonna prove a point. Damn it, I bought this unit. I'm gonna make sure I sell this thing. And then it goes to 35 days. And then it goes to 42 days. And then it goes to 49. Damn it, I'm going to prove a point. Right? And next thing you know, I got a 61 day old unit that I took personal interest in. Uh, and I'm going to prove a point, right? That's that's edging greatness out, right? That's ego is what that is. That's edging greatness out because I'm I'm the used car manager or I'm I'm the GM and I'm going to try to prove a point with my owner's money and I end up costing him money. Don't do that. Don't do that.

Chris Keene (59:24): No. Yeah, you definitely can't do that. And you know, I think the bigger point is is when you set the stage with your team, hey guys, we're out of inventory. We got to have some cars. You know, we we're not trading for we're not trading for enough inventory right now. And obviously, we all know our trades make the the better margins, but we can't sell from an empty shelf. You know, the show must go on. So, I'm going to go buy a bunch of cars and just understand it's a temporary. It's a temporary right now.

Chris Keene (60:06): Margins are going to get depleted a little bit. But the reasoning behind this is number one, we can't sell from an empty shelf.

Chris Keene (60:15): Number two, the inventory that I've purchased is inventory that is for our market, the way you guys sell, the way the store sells. And we're 66% of our inventory is comprised of trades. So, there's a 66% opportunity that we're going to get more trades off this inventory that I've purchased. So, just bear with it for a minute. Here in a couple weeks, we'll have some more inventory back in, but you can't walk around this inventory because it is inventory that sells in our market with the way you guys sell inside our store. So takeaway number two would be as you backfill your inventory in the most non gross profit optimal way in efforts for you to continue the momentum of the volume to obtain the gross, you got to move on it quicker. Don't sell from cost, sell from market. Keep your entire staff on point with the reasoning behind it, but also share the big picture that as we do this, we are going to get back into a position to have the more profitable inventory in our system that is fair for the consumer, that is fair for us. But you got to share that big picture with everybody. Takeaway number two, share the big picture with everybody. If not, you're gonna be like a lot of dealers out there as this market has shifted. We've shared it all week long how the shopper index has declined. You're going to be there with the rest of the dealers crying the blues. Oh, we ain't selling nothing. Our volume's gone down. Our gross has gone down. Da da da da da da da. Man, I sure can't wait till March. Well, guess what, guys? We got four months left in this year and then another two months until March. So you got six more months before we get back to that traditional selling season. So what are you going to do in the meantime?

Renaldo Leonard (62:27): What are you going to do in the meantime?

Chris Keene (62:30): Gentlemen, uh

John Anderson (62:33): can I add to what you just can I add to what you just said there?

Chris Keene (62:37): Last 60 seconds. We're We're at the top of the hour. Last 60 seconds, baby. Wrap it up.

John Anderson (62:43): Please train your people, to follow up on what Chris just said, please train your people on how to talk to your customers about trade and and purchase units all day long.

Chris Keene (62:53): Hit the nail right on the head.

Renaldo Leonard (62:56): Nailed it like a split hog.

Chris Keene (63:05): Yeah, you hit the nail right on the head, John. Train your people. Train your people on it.

John Anderson (63:10): Oh yeah. Well, listen guys, we when we start with dealers, the average conversion of trades on leads is somewhere between 10 to 15%. That that that needs to be better. You you you need to you need to move that. Look in your CRM, see how many trades you have on leads, have that discussion with your team, and drive that number north. Uh dealer dealer managers that are buying inventory, that's an absolute treasure trove for you there to go through. That's an opportunity for you to change the discussion with your with your with your the customer of not talking to them about uh not talking to them about what you're trying to sell them. And Chris said it a couple weeks ago, you shift from taking to giving at that point because you're trying to help them. You're trying to help them and and they will receive that in a in a most positive way if you'll pick up the phone. And just let your salespeople enter the information on the trade. That's all you're asking them to do and then you as a manager pick up the phone and have a discussion with the customer about their vehicle, right? That's important uh from a sourcing aspect. It's a treasure trove for you. So, try to drive those numbers north.

Chris Keene (64:24): Million%. And it is it is building your own internal run list versus looking through the run list at all the various different sales. And listeners, I have a trade script that also speaks to the consumer selling their vehicle outright themselves. If you want that, reach out to me. All my contact information is there. If you want that script, reach out to me. I'm happy to send it to you. Lottalkpodcast.com. You'll find John's info, my info, Ronaldo's info there, and I'm glad to send it to you. It doesn't cost you a damn thing except for the 30 seconds it takes for you to go to the website and either click my phone number to text me or click my email to quickly email me and say, "I want the trade script. Reach out to me." I'm happy to send it to you. Ronaldo, wrap up. Anything you got to add in the last 30 seconds?

Renaldo Leonard (65:24): I'm just going to piggyback on the point that John just made and I think it was takeaway number two around acquisition. Everybody in the world knows that you sell cars. Let's do a better job of letting them know that we also buy cars. And if we will drive home that point,

Renaldo Leonard (65:50): we'll see that that percentage of our inventory being made up of trades or vehicles that we acquire off the curb, we'll see it go up.

Chris Keene (66:04): There we go. That's all we got. So, that being said, listeners, viewers, thank you so much again for tuning in. As always, lottalkpodcast.com. Reach out to John, reach out to Ronaldo, reach out to myself. Any additional information you want from us, you are welcome to reach out to us. We'll share anything that we've shared with you uh from these podcasts, we'll happy to share it with you. We'll dive deeper with you on your inventory. And like I shared when we went live, if you want Jasen Rice to go live with you for four weeks straight and go through your inventory, go through your leads with you to help find some blind spots, we will do that for you at no charge. And if he can't find opportunity for you, we'll send you a $100 Amazon gift card. So on behalf of Mr. John Anderson, Mr. Ronaldo Leonard and all of our Lotpop family, we thank you for tuning in to Lot Talk powered by Lot Pop. We'll see you next week. Same bat time, same bat channel. Take care everybody. Wreck 'em.