Sourcing That Sells

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

John Anderson (00:00): In this week's episode, we find out what made Ronaldo say this.

Renaldo Leonard (00:05): I'm almost ashamed to tell you guys what I'd be willing to do for an extra 500 bucks.

John Anderson (00:13): Welcome, welcome, welcome to Lot Talk powered by Lot Pop. Man, we are at uh season 2 episode 10 already. I'm excited. Um, I want to welcome my brother from another the same father, our father in heaven, man. Right right next to me, Ronaldo Leonard.

Renaldo Leonard (00:33): Yes, sir.

John Anderson (00:33): We got our little brother with us, man. And no, Chris Keene has not shaved his head and wearing glasses. And now it is uh it is our brother Erik Vigil, another brother from uh the same father. Um, and so uh Chris is on a secret mission this week. Um, so, uh, we brought Erik aboard with us. Erik, uh, introduce yourself, Erik, and tell us a little bit about, uh, your background and what the heck are you doing around a bunch of, uh, crazy car guys like us.

Erik Vigil (01:06): Man, I tell you what, uh, being around these crazy car guys that you talk about has has been a blessing. Um, my name's Erik Vigil. I'm the new account manager here with uh with Lotpop and couldn't be more thrilled to be a part of the team in the podcast this morning. Um have 19, 20 years now she she worth of uh car car business uh experience, been in the retail side for a little bit but have worked with a lot of big-name companies in our industry uh the vAutos of the world, Automotive Masterminds, um and you know couldn't be more thrilled like I said to be a part of of this team.

John Anderson (02:00): Vigil, we go back like Cadillac seats, way back, and um you know we are thrilled and excited to have you as part of the team. Um, but was interested when you came in, to as you introduce yourself to the folks, to see if maybe you could give a little bit of your perspective on how things are a little bit different from within Lotpop as opposed to some of the other com companies that you've worked with in the industry and uh the differences that you see in what we provide for our dealers and um you know those other organizations you've been a part of.

Erik Vigil (02:26): For sure. You know what? Um, like I said, I I have nothing bad to say about any organization I've worked for, but coming into this situation and over the last 30 days learning what we do and what we provide for our dealers,

Erik Vigil (02:41): it's really unmatched, man. You know, it's uh we're we're sitting in in a position that we we don't just silo ourselves in terms of inventory management or we don't silo ourselves in terms of merchandising or in terms of lead management. We take all of the different pieces of the business and pieces of that puzzle that everyone has been trying to put together and we complete that puzzle, you know, and it's uh it's been refreshing that uh when I do talk to some some dealers, I feel right now they're all searching for answers, you know, and um the good operators are anyways, that that that are searching to become better. Whether they're struggling, whether they're doing good, whether they're doing great, they always want to elevate their position. And I feel that we're in the driver's seat to to help every dealer, no matter which position they're sitting in.

John Anderson (03:33): So, Erik, what uh give us some feedback, brother, on uh on I know you've been talking to a lot of dealers. I know you've been you've been blowing it up talking to uh to a lot of dealers out there. Um and a majority aren't aren't our partners as of now. So you're you're getting a good scope of what's uh what dealers are facing out there. So give us some feedback on what you're hearing when you're when you're engaging with dealers out there on a daily basis.

Erik Vigil (04:01): Yeah, I I think um I think right now our dealers are searching for answers, right? Um I I think I hit on that earlier, but they're searching for answers. They're they're business has slowed a little bit in their eyes. Um inventory is still pretty hard to get and they realize, hey, guess what? If I'm gonna buy inventory, I better make sure I'm buying the right stuff, right? I can't just fill my lot to fill my lot. Um, I can't just fill a hole and hope and pray that that car sells. They have to go into it with intention. And I think that's again where we come into play because, you know, like it says on your shirt, work the facts, right? We we we got we got to actual data. And and and and I think that's what separates the the the really good operators with the ones that are just slinging from the hip and hope it works. You know, you got to have uh you got to have a game plan and uh that game plan's got to be as bulletproof as possible.

John Anderson (04:58): Let's chop it up a little bit about that. I you know what's going on because we're Would you guys agree? And Ronaldo, I wanted to get your take on that, too, because obviously you're in the uh man, you're you're grinding with the you're grinding with the the new dealers that come on with us and then you're also grinding with the management team at stores, right? You're you're helping engage with them and train them. And so, uh, are you hearing some of the same things that Erik alluded to? Are there some other things that are coming up uh as you're training some of these managers that their concerns are? I want I want to chop it up a little bit this morning about this right now because I you know we are in a in a major transition from a uh it's not a surprise. It happens every year around this time, right? But we are in that transition right now. And so what are some of those things that uh that we're hearing out there that maybe we could share with uh our listeners and viewers to say, "Hey, these are some things you guys want to be paying attention to and proactive to um because this next 60 to 90 days are going to be critical uh to the success and then going into the new year."

Renaldo Leonard (06:11): Yeah, absolutely. And I'm I'm hearing the uh hearing the same thing that Erik is is uh is witnessing and during his conversations, but I get to see it from two different perspectives. I get to see it from uh from dealers that are coming in fresh and new into Lotpop and into our world and our culture. Uh who the majority of them are in a situation where they haven't been exposed to the warnings that we've been giving them over the last 60, 90 days. You know, when Jasen started back in, you know, late uh late spring, saying, "Okay, here's what's going to happen." Because we're pulling some of these folks out of the market, we're pulling those sales ahead. Uh what you are going to see is that there is going to be a an influx of vehicles that are out there in the market. And at the time a lot of guys were just kind of glut gluttoning them themselves on the inventory that was available out there. And he said at the at the time what's going to happen, it late summer early fall you're gonna have a lot of guys with a lot of aged inventory sitting in their lap, and and those are the guys that are coming in now. They they realize hey I'm buried, what do I do, how do I get out of this and uh you know what strategies can I put in place. But then the guys that we have who have been a part of our ecosystem for a while, you have kind of found themselves in a in a trick bag because they got to drop the ball. Left had a lot of success through the summer. Dropped the ball on some some units that they saw some bleed through on and they've got some aged inventory, but they're trying to figure out to Erik's point, how do I how do I acquire inventory strategically and make sure that I'm bringing in the right stuff for how we're selling. And so, um, you know, the answers, the answers are there and Vigil touched on it. It's looking into the facts and making a decision on what you're going to do. At the end of the day, both of those guys got to yank the band-aid off, right? Um with the aged inventory that they have uh that they have in stock. But then when it comes to making sure that we don't repeat the same mistakes, you know that what was the definition of insanity? Uh you know, we don't want to go through this again and still have the same conversation, you know, in the next 90, 120 days. Um talking to them about those particular segments where we've had success. Talking to them about those particular segments where we have an overabundance of leads that have come in on vehicles that we don't have in inventory and dialing in that that followup or follow through process to make sure that we take those opportunities and apply it to the inventory that we have on the ground, but also look in the our most recent history with those vehicles we've had success with. And that's what we target as far as bringing into the inventory and being laser focused on finding the right inventory because of what's selling in that market at that store and with those salespeople and the information that we provide for them. And and even if they're not using the platform that we provide, you know, taking the time to go through whatever pricing tool they're using and showing them exactly where they can find that information and how tedious it is to find that information and then tell them, you know what, there is a better way to find it. And so, uh, let us help you with that. But not by no means trying to force uh what we offer on them, but giving back, which is the reason that we do this, you know, giving them the information, giving them the opportunity to better position themselves moving forward.

John Anderson (10:11): When you're onboarding and training a new dealer, tell tell what uh are you seeing similar things, Ronaldo, whe when when it comes to uh inventory and and do me a favor. Uh some some of our some of the folks out there listening and watching may not understand the term bleed through. Um explain a little bit what you mean by that. And then when you when you're looking at their inventories overall uh and they're heavy in aged inventory, what does that look like? Is a lot of it higher priced inventory? Is it spread ac across the whole gamut? What are you kind of seeing at when you're looking at both sides of that?

Renaldo Leonard (10:55): So, um, let me start with, uh, bleedthrough. So, two of the key promises that we try to deliver on when we're working with a new dealer is to establish the fact that first of all, we want to work with them to make sure that they get to the point where they're stocking what they're selling and selling what they're stocking. And the way that we measure and manage that is by taking a look at what percentage of their inventory they sell in a two-week period of time. All right? So, and the goal is to sell half of your inventory every 15 days. You do that consistently, you're working through the inventory and your turn is going to be rapid enough that we're getting through everything that we've brought in if we are stocking what we're selling and selling what we're stocking. Now, the second part of the promise that we make and that we work on with dealers is that we want them to sell the majority of their inventory when it's most profitable. You know, in that first 30 days that a vehicle is going to be in inventory. And so with those two concepts in place, if you have a vehicle that is getting well beyond that 31 to 45 day bucket, we call that bleedthrough because it's it's bleeding through your age buckets. And um as it the further it gets down in those age buckets, you know, we've exhausted all of the opportunity to get a profit on those vehicles. And so it it's kind of been a mixed bag because the dealers that I've been dealing with over the last 30 days are coming in and they are all over the place. I mean, you will have some dealers who have been focused on selling um you know what we would call the the cheap stuff, anything that's below $15,000. And the majority of that stuff is going to be, you know, older model, higher mileage, and um they've come to us with the mindset that I'll just put it out there on the lot. Somebody's going to come in and buy it and and not worried about the amount of time that they keep that piece in in that in inventory. Uh they just have the mindset that it's going to sell eventually. But then you also have on the other side of it, you do have that higher dollar value stock because of the fact that people uh you know, it's just a fact of today's economy, people are are don't have as much disposable income as they used to. And so that higher mileage stuff kind of handcuffs some folks. They're out of that market. But dealers that were kind of trying to plan ahead and brought a lot of that in at the beginning of the summer when we started to see that stuff slow down, they they still have it, still having it in inventory. And you when you sprinkle on top of it individually how people are being affected by the economy, you know, banks are starting to slow down on that higher dollar stuff and lending on those. And so, um, you know, like I said, the information was out there to be able to be proactive about it. And for those dealers that haven't, um, they've got it and they're like, "What what do we do? What do we do?" And so um uh to answer your question, I see it on both book ends, and even you know the the data when you look into what people are shopping for in the marketplace, you know between 20 and $35,000, that's where your most popular searches are. And so dealers that have been close to the vest, have been managing and making sure that we don't have bleed through in those age buckets, are the guys that are sitting in the catbird seat right now. Um, but with new dealers that are coming in, I'm seeing them, you know, they're getting sandwiched uh because they've got an overabundance of inventory on both sides of that fence.

Erik Vigil (14:50): Right? I'm hearing that on my sales calls as well.

Erik Vigil (14:55): They they they they thought, "Hey, guess let's let's buy a bunch of cheap stuff" and now it's sitting. Or they bought stuff that's, you know, expensive and it's a unicorn and it's sitting. The fact remains as those cars age, they're never going to get more profitable, right? You know that the money that they're going to make on them, it's it's never going to get better than it is today, right? Tomorrow's going to be less than today, you know, the day after tomorrow is going to be less than tomorrow and so on. So, they got to make that decision. And you know, a lot of dealers that they they don't want to admit it, but they get emotional when it comes to the decisions that they've made in the past, right? And you know, that's where, you know, that band-aid that you talk about has to get ripped off. Hey, guess what? It's okay. We made a mistake. Let's move on and let's make sure that we don't replicate that mistake moving forward.

John Anderson (15:47): Oh, yeah. Absolutely. But yeah, when you uh get get when you're uh when a dealer talks to you about sourcing and it's an issue, right, we we all recognize I mean this this issues since COVID, right? This has been an issue. Um and and you know, I have my own thoughts on this. You know, one of them is, you know, we did an excellent job. We did an excellent job during COVID training our customers, right? That you can sell your car separately from trading it in. Right. So,

John Anderson (16:20): so you know that's been a major transition that I don't think is talked about as much, right? From a from a sourcing aspect and Ronaldo um we see it um Vigil if you've if you get in our tool and I know you have, you've been all over it. You you you see it when you look at uh when you go to the lead side and look for trades on leads, right?

John Anderson (16:47): The average dealer we have coming in, that percentage is somewhere between 10 to 15% of trades on leads. We're just not having those conversations and we need to because we trained our we trained our our cons the consumer back in COVID, hey, you don't need to buy a car from us. We'll buy. We needed inventory so desperately back then that hey, we we'll buy we'll buy your car and then you had dealers competing to buy that car. Well, you know, consumers get, you know, consumers are intelligent and like, okay, hold on a second. You mean I can sell my car to one dealer and buy a car from another dealer, right? And so, a lot of times their car, they've got their car spoken for, and I just don't think we're having those conversations. So, Erik, when a dealer talks to you about uh man, I'm struggling getting inventory, what what's some of the what are some of the things you share with them uh from a perspective of, you know, here's what I'm seeing uh that we can help you with and and some uh uh some direction that you give them uh when they tell you, man, we just we can't find the right inventory and that's where we're struggling at.

Erik Vigil (17:59): Right. I I think it comes down to a training issue. Um, you know, my background again, you know, I I came from vAuto Stockwave specifically where I was all about acquisition, right? You know, expand that net and let's buy some cars at as many different auctions as possible. But if I think about really what makes a big difference in a dealership is, to your point, getting as many trades as we possibly can. And that conversation needs to happen on every single transaction. You know, ask them if they're adding to their fleet of of cars in their in their household. And if they're not, are they planning on donating it or selling it or, you know, do they have a buyer in mind? Um, again, every single time, every single salesperson needs to bring this up and it opens that dialogue of, all right, yes, I do have a vehicle. I'm planning on trading it or selling it on my own. Ask them if they know what that entails, right? Are are you willing to let a stranger come to your house when maybe you're working late and it's just your wife and kids at home? Do you want them to come to your house? I know me, I'm I'm pretty protective. I I don't want that happening in my household, you know, or, you know, do they know the tax implication of if you do trade your car, what that what's that going to do to your payment, you know. So,

Erik Vigil (19:15): that's a big one. Asking some questions and in and in in and educating our our customers in terms of why it is an easier road to trade. And for us as a dealership, you know, hey, guess what? We're going to get that car and we're going to own it better because even if you own the same car at the same money, you know, you bought it at auction for 20 grand, you traded it for for for 20 grand, which car do you own better? Well, the auction or the trade car? The trade, 100% of the time, right? There's no auction fees, wholesale inspections, there's no transport fee. We don't have to wait for it to get to our our store three, four, five days because at the end of the day, once we buy that car, the clock has started, right? We got to make sure that we we're getting out of that vehicle as soon as we possibly can.

Renaldo Leonard (20:10): And you you know the thing that I try to I try to convey to dealers is that you know everybody in the world knows that we sell cars as a dealer. You know because everything that you put out there, you know from your organic website to the third parties, screams that we sell cars. But how many times do we convey that message to the consumer out in the street? We also buy cars and and we need to acquire vehicles from, you know, individuals in order to keep that stream coming in. And so training, whether it's training salespeople, acquisition managers, I'm always trying to drive that point home. We need to have those conversations and we have to plant that seed in the back of their head. You know, yes, we sell cars, but we can't keep the doors open if we don't actively buy vehicles. So, if something happens and we don't do business on this vehicle you're interested in, I want to give you too much for the car that you're driving right now.

John Anderson (21:00): Yeah. Oh, yeah. Well, and and we, you know, yes, dealerships are a retail um uh for selling inventory, but to your point, Ronaldo, I everybody should be in the mindset of looking at our store, our dealership as a buying center, right? Because whether we go through the process and and and you know, we have a dealer partner of ours that absolutely blows it up with a buying center. They've developed over, it took them, it took them some years, but they developed, they developed a monster buying center now where they're acquiring 500 units a month through that buying center. And they're guys, they're out in the middle of nowhere. So, they're not next to a major metropolis where they're doing this. They're doing this they're doing this out there because they've worked at it. They've trained. They've developed. But we don't you don't have to go to that extent. Um, it you can point your store towards a buying center by informing everyone that you're in the market to buy cars and and employ employ your dealership uh as agents, a representative of your store out there in the marketplace looking for opportunities to bring to your service department to get those inspections on vehicles. You know, pay your staff to if you're going to pay $500 for an auction fee and then you look at the uh to get the car there, then, you know, why not why not pay our staff from our lot porters to the guys and gals working in the office, our salespeople, um our techs, right? They're out there. They go home from the dealership and they're out there every day. Uh on the weekends they're they're moving about and they could be looking for inventory for you, you know. So, start thinking in that mindset if sourcing is an issue for you. You know, look at your store. Yes, you are a retail location, but you also can be a buying center. And so from from just the jump street, you know, a lot of times we'll pull up uh pretty much all the time we'll pull up the merchandising side of a dealer

John Anderson (23:18): and and Google them and pull up their account, right? And and very rarely do I see on that on that Google page right before you click to open up your website. I see it occasionally, but it's a very small percentage where I can see right there that that dealership is in the in the uh in the buying mode, right? That that there's a lot about here, look at our used car inventory, look at our new car inventory, get service, but I don't see anything about, hey, we want your car, sell your car to us, right? And and just starting there and leading the customer down that that trail. So, I think this is a good because of some of the things, Ronaldo, that you and uh Erik brought up in in your great points that you made.

Renaldo Leonard (24:04): Yeah. Can I tell a funny story?

Renaldo Leonard (24:06): So, la uh last week Yeah. Last week I was in uh I was in Virginia Beach with my my in-laws. The place where I was staying was four blocks from the pier at Virginia Beach. And we're getting in the car. We're headed to dinner and we drive five blocks and I'm kind of quiet. I'm sitting in the back of the seat and they're, you know, conversation's going on and they're like, "Ronaldo, you're quiet. What are you thinking about?" And I was like, "You know what?" I said, "We're five blocks from the house and I've seen six vehicles with for sale signs on them." And they were like, "Dude, you're sick. Don't you think about anything else?" And I was like, "Yeah, yeah, yeah, well, yeah, I do. I think about a lot of other things, but I just in this particular point and it was the day that you and Chris and I had shot um last week and so I was like I was like if I lived here and I was a dealer I would just drive up and down the street and see all these cars with for sale signs on them and I would stock my inventory and be able to flip them real quick. And so, um, I know that there's a when you brought up the fact that we should give that money that we're paying, you know, to wholesalers, to auctions, you know, whatever we're paying that 500 bucks to, we should give it to our lot porters or everybody else. I mean, man, if if I were just some guy on the street, and I actually thought about this, I just take down all this information, call a dealership up and go, "Hey, man, you guys buying inventory? I got five cars I want to run by you and see if you'd be interested in any of them."

John Anderson (25:51): But there's there's

Renaldo Leonard (25:53): And and I apologize. It just popped in my head. I wanted to share that.

John Anderson (25:56): No, I love that. You know,

Renaldo Leonard (25:58): opportunities are everywhere. You just have to keep your head on a swivel

Renaldo Leonard (26:02): and and think about the possibilities of where you can and you can source it from anywhere and everywhere.

John Anderson (26:09): You the the the inventory is out there, right? So the inventory is out there, right? It takes some work, right? But and then you said the other thing is man, how much how much more lift do you get from a personnel standpoint if a guy knows I can make a I I have another avenue to make a little bit more money right at this store, right? I'm get look I I get paid an hourly wage as a lot porter but now my store has extended another opportunity for me to have another avenue. Listen, I I did a little bit this I did a little bit of this at the store uh that I ran and I I'll tell you this uh one salesperson comes to mind. Uh Ryan, if you're listening to this, you'll know I'm talking about you. But um you know if he was having and he was one of the best salespeople there, if he was having an off week man he would be he'd start digging in Craigslist listings and trying to bring vehicles into the service department to get inspected that if we bought them he he knew he was getting that that was bumping his income. Right.

John Anderson (27:19): Absolutely. Now, this has been this has been 11 or 12 years ago, but we were paying 275 uh 275 if we bought a car to to anybody within the dealership. If they brought a car in and we inspected it and we bought it, we paid them 275. So, you know, those guys, listen, it was bigger than a mini deal, right? And they're out there, they're out there digging to to to to boost their income. So to your point, Ronaldo, what a um how much how much kick would you give your employees if they knew, man, these guys have just given me another opportunity to add to my income and all I've got to do is be extra eyes and ears out there.

Erik Vigil (28:00): That's it. Right in the just like you said, salesperson's driving down the street and sees those five cars. He's stopping and taking notes and and and calling the customer and trying to get get them into the dealership. So, yeah, that's fantastic.

Renaldo Leonard (28:13): I was just going to say, I mean, I think you all know that I'm I um I'm almost ashamed to tell you guys what I'd be willing to do for an extra 500 bucks.

Renaldo Leonard (28:22): And and just offering up a vehicle for an inspection. I mean, that's easy. 500 bucks is 500 bucks, man. Hey. Hey, think about that for a second, man. If you walked out the front door and dropped 500 $100 bills on the ground, how hard would somebody fight to get that money? I I know I know I'd come out with shoeing everybody's pants in my mouth by the time I got my hands on that money, right? It's like,

John Anderson (28:53): oh man,

Renaldo Leonard (28:53): sorry guys, I had to eat my way in there to get get that money, brother. So, you're exactly right. That's hilarious.

John Anderson (28:59): Oh, yeah.

John Anderson (29:01): I saw this data. This is uh Erik, this is this is your old stomping grounds, brother. Uh Cox Automotive. So, you know, they're the they're the 800lb gorilla out there, man. So, their data, you know, I'm always interested when they put out data. So, this came out recently. Um, and so, uh, live market view data and and so you're looking at million unsold used vehicles as of June 2025. So, day supply of 43 days. What this was alluding to is and and I'll scroll down. You'll see the charts, but it's alluding to the fact that, you know, we're we're uh the used car supply is dropping off somewhat. Now, again, I'm going to show some other data, kind we kind of push back and forth with that from a listing perspective, but look at the look at the next this amazed me. Average listing price of a used car, 255 basically, right? But look to the right of that. Look at the average miles of the used car out there nowadays, right? So yeah, now now listen, this might be the old man in me. And I know you know Paw John, right? This may be me, but dude,

John Anderson (30:18): paying 255 for a 73,000 mile unit, right? That that man, that just exploded in my head. I'm like, whoa. Right. So, it even it even drove home the point that we're talking about, man, is I've got to find a way to source inventory. If this is what if this is what the average listing price and average miles are and and a lot of this stuff's getting traded around the auctions, you know, I've got to find a way uh to uh to find inventory outside of that, right? I've got to fill my coffers. And listen, it I wanted to say this too to get your guys' thoughts. Uh because it I always go to this because it was one of our one of our dealer partners that shared it with us. As a matter of fact, the one that uh has the Monster Buying Center. Um I think too often we're we're we get and I'd be interested in your guys' feedback on this. I think too often we get ourselves pinned uh pinned in a position where we feel panic because we had two or three good sales days or maybe a week and then we're out there trying to fill every one of those those spots on the lot in a short period of time. So I think a lot of times we make decisions that are not very good decisions based on what we should be looking for because we're just trying to fill uh spots on a lot.

John Anderson (31:40): And so what I loved about what this what this dealer shared was and it fits in with what we do, right? They look at their two they use our software to look at their two week sell rate and they try to match their 0 to 15 day inventory to that two-week sale rate. I love that strategy because your two-week sale rate is going to ebb and flow and you you can fill those. You don't have to go out and buy 30 cars, right? If I sold if I sold 15 units in the last two weeks or 20 units in the last two weeks, as long as I understand that because I'm looking at it every day, I can work every day to to to to buy four vehicles. I don't have to sit there and try to feel like I got to go out and find 30 vehicles and then you make poor decisions. What's your guys' thoughts on that and that and that that suggestion that that dealer made?

Renaldo Leonard (32:40): Yeah, I I think it's a great strategy because it sets you up once you once again to be strategic. You know, when those guys who will look up after two weeks said, "We sold 20 cars. I got to run out and I got to get 25." To your point, you mentioned this, you don't buy in panic mode. That's when you always make bad decisions is because we are just kind of grabbing anything that we can get our hands on so that we can fill those spots on the uh on the lot. But strategically, if you're watching that two week sale rate and I know that, okay, last two weeks I sold 50% of the inventory, but I'm sitting back and I'm I'm looking at static auctions. I'm not going to the lane or if I've got a buying center in place and they're hitting all of the social media sites for individuals that are trying to sell vehicles. You know, we can be a little bit more diligent in the research that we're doing. Does it fit with those cars that have left the inventory? And the ones that left, how long did it take me to get them out of the inventory? And at what percentage price to market was I able to, you know, have them leave. All that all those data points that all of the best, all of the best people in our industry, all of our highest performing dealers, the steps that they go through on a regular basis is methodical

Renaldo Leonard (34:07): and it is strategic. But if you have that plan in place, I've sold these many units. This is what I'm going to concentrate on bringing in today. Then I can be aware of shifts that happen in the market. And those shifts happen every single day. And if we can plot them out, we know what shifts are about to happen and we know when they're going to happen. And so just using that data and slowing down a little bit. Sometimes you got to slow down to speed up. Right.

Renaldo Leonard (34:37): Right. You can put yourself in a catbird seat and uh and make wise buying decisions and make sure that you don't get into a trick bag where you are caught behind the eightball and have to run out and and and panic. And so I think that's a great strategy and I man I'd love to have have them on to talk about it a little bit more, give us some insights.

Erik Vigil (35:01): Yeah, I think I think it's important to have your finger on the pulse of what's happening in your store every single day. You know, so many times I talk to a dealer and they're like, "You know what? Can't call me on Thursday because that's sale day. I I'm buying my cars, you know, every Thursday." And if you're waiting for one specific day of the week to buy your cars for the following week or the following two weeks, it's it's not going to work. You know, you have to be able, like I said, to have that finger on the pulse and seeing what's selling, seeing what's not selling, and fill those cars with intention or fill those holes with intention rather, rather than just saying, "All right, I know I need to buy seven cars today, or I know I need to buy a truckload because I want to cut down on my transpo costs." Well, you're you're you're looking at things in the wrong in the wrong framework. If you're if you're talking about cutting down transpo cost, you're you that's not having your your your finger on the pulse of your store. We got to buy what we need for our store with the guys that are selling the stuff in our inventory, right? I mean, waiting at that time. Great

Renaldo Leonard (36:08): Yeah. That's kind That's kind of like going to the convent to look for a date.

John Anderson (36:13): It's a bad strategy. Well, so let's let's bring in Okay, so let's bring so we've we've we've talked about this from uh from a sourcing standpoint um and thrown out some ideas uh hopefully some uh ideas that would trigger some thoughts from folks out there listening watching. So let's now let's insert the time of year that we're in, right? So, um, we're in this time of year that shopper counts typically, and they are, and again, I'm going to I'll flip the slide here in a little bit and show what we're seeing, but shopper counts are retracting from the market. Uh, which they typically do this time of year. You know, uh, we're out of summer, we're going into fall. Um, you know, there's a shift that happens. The summer selling season is over now. And so we typically see the shopper count retract and then it picks back up again. Look at these charts that are on the screen right now. Look at the trend right. So it the chart on the left is showing for our viewers and listeners, chart on the left is showing available uh supply of used cars. And when and when you look at the trending it's almost running it's it's right on top of 2024. So it's mirroring 2024 supply. Uh almost identical. Uh and then from the day uh the day supply, it's the day supply is a little bit lower than 2024, but it's mirroring the same trend. It's it's dipping right now, but but as we get into the late, which we're in September, we're in September, you you're starting to see a trend up in day supply and you're starting to see a trend up in available supply. Uh when you look at 2024, uh this data only runs through, it was in June, so the current year data is only through June. But when you look at 2024 and the trend and you look, you can look at 2023 and 2022, they do the same thing. So this time of year typically is when things start to slow somewhat. So it it's it's almost like that day supply discussion. Uh you know, we're looking back 45 days and a lot of times we're making decisions based on what we've what we've done, not where we're going. And that's why this is so important, right? Because uh it that's why I think that two week looking at what I've sold in the last two weeks and and looking at my 0 to 15 day inventory, that's why I love that strategy so much because if my sales are slowing down as a result of uh not as many customers in the market or vice versa if it's picking up, as long as I'm matching that my 0 to 15 day inventory and I'm to to Erik to your point I can't do this just on Thursday, I've got to be looking at it every day. And as long as I'm keeping that within that range of what I'm doing in that 0 to 15 day, my inventory is not going to get out of hand and I can manage it so that I back to your point, Ronaldo, I'm not I'm not experiencing that bleed through. Now, there's a lot of other things that have to go into that to not experience bleed through, but at least I'm not overloading my store with inventory when the market says no, things are starting to retract. Um, you know, Ronaldo, when you're in with new de I'm I'm curious to this. When you're when you're in with new dealers, are you seeing when you're jumping in their inventory management tool and looking at market, I I'm seeing a lot of this. I'm seeing I was just on with two dealers yesterday and I'm pulling up inventory and I'm seeing uh now these were these were two vAuto users. So, when I was looking at the market data on these on as we're pulling up inventory, I'm seeing that, you know, two weeks ago they had a car uh and it was priced at the same price it is today, but two weeks ago it was at 98%. Now, today it's at 103. Right.

Renaldo Leonard (40:26): 103. They're they're sitting on it.

John Anderson (40:30): Right. Right. So, yeah.

John Anderson (40:32): Are you seeing a similar thing when you're in when you're in the in the tool?

Renaldo Leonard (40:36): Absolutely. Absolutely. And the question that I ask is that how can you go 7, 10, 14 days without looking at that piece of inventory to figure out what the market is doing around that vehicle. And um you know in our tool, you know part of part of what I do is train them on how to use the tool and we have something inside of LotWalk called lot dots and every vehicle that hasn't been touched in 14 days gets a big red dot or a big uh yellow dot, gold dot, that identifies you hadn't touched that vehicle in 14 days. And I get the question why is that important? I said, "Okay, look at here. When you priced it, it was two points below what you normally sell that unit for, and you go in today, it's nine points above. So, you went from 96% to 105%. How does that happen?" And when I asked that qu I mean this this particular dealer that I was I was speaking to, I asked him what do you think happened in that two weeks that made that price to market percentage go from 96 to 105? Couldn't tell me. They said, "Well, if you don't know how the market is affected and the end result on that vehicle that you're trying to sell, then we got to go back to the basics and just explain to you that every single day these vehicles and this market is adjusting. And if you're going to manage these assets properly, you got to look at it on a regular basis every single day. Do you check your bank account every day?" He said, "Well, yeah." I was like, "Okay. All right. This is the same thing. Somebody's entrusted a bucket of money to you. You got to check that balance every single day or you're not going to manage it properly." No, I don't get it. I don't get it. Maybe there aren't a whole lot of variables that are affecting his bank account the way it affects mine. So it doesn't have to look at it as often.

John Anderson (42:53): Right. Right. Let's talk about that a little bit. What would you two What would you two suggest to a dealer? So let's talk about that a little bit. Just to use your example, Ronaldo. So you know, we get on a price point and we see that the price to market has gone from 98 to 104. What's the strategy? What do you recommend to that? What do you recommend to that dealer as a strategy now that that now that the market's dropped on that car? It's sitting there. Now listen, let's be realistic. No customer that I know of has ever walked into a dealership and said, "Hey, I was looking at this car two weeks ago and it was at 98%. Now it's at a 104. If you sell it to me at 98, I'll buy." I mean, that that conversation doesn't exist, right?

John Anderson (43:47): Right. Um, but it's all about So, if if we believe I'm going to throw this stat out again, right? The average customer sends out 12 to 15 leads when they enter into the marketplace. So, if I've got a savvy dealer out there that's watching and catches that market drop and makes an adjustment, most people, if you got two similar cars, people are going to look at the car with the lowest price point. Let's be realistic here, right? So, that's where this comes into play is if if there's a market drop and one dealer sees it and adjusts and the other dealer doesn't, the dealer that adjusts has a higher percentage opportunity to pull the lead on that vehicle. So, what would you what would you suggest to a dealer if you see that market drop? Where would you what would you tell them to do?

Renaldo Leonard (44:40): Well, the first thing I tell them to do and I ask him is like, have you gone in and reviewed exactly how you've got that unit positioned in the marketplace? You know, have you looked at your photos? Are they all being syndicated out and show up on all of the third party advertisers that you're using? You know, I'm going to check the basics first. What do my photos look like? Have I made an adjustment in the description, the way that I describe that vehicle out in the marketplace? Am I using keywords that people are looking for so that that vehicle shows up in as many searches as possible? If I can check those two boxes off and say 100% of the time I'm on the money with my photos, with my descriptions, then and only then am I going to look at making an adjustment in the price. And then I'm going to look at my competitive land landscape. What am I comparing my vehicle to? What's a realistic competitive set? The majority of dealers are gonna I mean, hell, they might go 700 miles to look at, you know, a Toyota Corolla and there's one on every other corner, right? I'm gonna pull it in to get a realistic competitive set and see how I'm compared against those vehicles that are, you know, within a throne uh a stones throw. And and and once I get that narrowed down, all things being equal, if I've got my vehicle and there's another one exactly like it four streets down the down the road, uh then I'm I'm going to make my adjustment, but even then it's going to be situational. What do my SRPs and VDPs look like over that time period? You know, am I getting more more eyeballs on it? Am I getting less eyeballs on it? Do I need to move a little bit closer to that vehicle that is closest to me? I may be fine where I just by tweaking the relevancy on my merchandising or the merchandising aspect of how that vehicle is presented, if I can add something to that description that elevates how somebody looks at my vehicle compared to the other one. And you know just diving into the details and working the facts, that's going to dictate what I move or how I move and if I move.

Erik Vigil (46:59): Yeah, I think that's big. I mean, um there's nothing that happens just by chance in my opinion. You know, there there's a reason why a vehicle is not moving. You know, is it priced wrong? Are there leads on the car? If there's leads on the car, are we working those leads? You know, if there's not leads on the car, is the description good? Are the photos good? You know, if it's a a 78,000 mile used vehicle, does it look like it's been driven 150,000 miles and they're still paying $25,000 for it?

Erik Vigil (47:32): Or is it a 75,000 mile vehicle that looks like it's coming off the showroom floor, right? So, not everything is created equal. We got to make sure that we stand above our competition. And it takes dissecting every little bit of of of of the facts within that vehicle. And I get it. Our dealers are busy, right? I get it. But that's why, in my opinion, you you get a second set of eyeballs on it. You get a team to shine that light in terms of areas that they didn't know there was an issue. And then we can attack that issue, right? And then when that happens, whoa, magically that car sold. Well, well, why? Right. Wasn't necessarily us pulling that lever of price. And it's not a race to the bottom. It's, hey, let's make sure we know why that vehicle is not moving. It's not by chance.

Renaldo Leonard (48:23): Yep. Oh, John, you'll love this. I'm sitting with a new dealer the other day. Had a vehicle. I mean, low mileage. It was a cherry, you know. Um, I think it was averaging something like 4,000 miles a year. And it was a four-year-old vehicle. Had a shift. So, it went from 96 to 101%. And can you take a look at this vehicle? Tell me what's wrong with it. So, I pull it up, look in the vAuto, check my usual spots. I go to look at my uh description and I notice the vehicle hadn't been published.

John Anderson (49:03): Makes it hard to find? Makes it hard to find when it's not published, man.

Erik Vigil (49:06): Nobody knows you have it.

Renaldo Leonard (49:12): And and my question was, do you think that could be the reason why it's still there in the inventory?

John Anderson (49:19): You know, I was think when I asked the question, I was thinking, you know, would would we instruct the dealer? Um, you know, if I'm at 98 two if I was willing to go to 98 two weeks ago and now I'm at 104, should I be willing to go to 98 now? Maybe I need to go to 97 because the market's back. Maybe I need to try to go a little bit more aggressive to get ahead of the market, right? But, you know, I wasn't considering um both of you brought up great points, man. You know, before I make that move, I want to I want to look at all those other areas. To your point, Ronaldo, here's a car sitting here that I don't even have online, right? So, you know, get it out there online. So, great points. I want I want to finish real quick at least with the because I alluded to it earlier. I scrolled down a little bit and I just wanted to read this for those that are listening. Affordability remains a challenge for consumers and the used vehicle supply is more constrained at lower price points. Used cars priced below 15,000 continue to show low availability with only 31 days supply, 5 days lower than the same time last year and 12 days below the overall industry average. The top five sellers of the month were listed at an average price of 23,779, almost 7% below the average listing price of all vehicles sold. Once again, Ford, Chevrolet, Toyota, Honda, and Nissan were the top selling brands, accounting for 50% of all used vehicles sold. So, um, again, I I point that out to say, um, uh, that strategy, Brett, you can take, by the way, Brett, you can take that that slide down. Um that strategy uh of employing looking at your store as a buying center, right, and employing your team because when I re when I read that, right, and we know this uh that lower price point car is is non-existent. Look, for the most part, right, it it and it's just not people are holding on to their cars longer. Prices are new car pricing, used car pricing are as high as they've ever been. So, you know, thus the higher mileage car sitting there at 25 grand on the used car side. So, you know, having those folks out there looking uh for, you know, with our tool, we we can print them off a specific list of vehicles that they performed the best with by sales, right? They've sold it fast. They've they've they've made good money on it and and we you can export that to an Excel file. You can hand that list to everybody in your dealership and go, "Hey guys, look for these out while you're out there. This is this is the inventory we need." Right? So, uh, you know, I that to me, um, you know, we've got to understand what's happening out there from a perspective because again, when we're talking about sourcing, I think a lot of times we get locked into doing what we've always done. And doing what we've always done is not yielding the same things that it used to yield now. It's just not.

John Anderson (52:34): So, you know, we've got to we've got to force ourselves to be outside the box thinkers.

John Anderson (52:39): And, you know, there's plenty of excellent tools out there to help us with that, right? If we we if we're there's plenty of excellent tools out there that can help us with this to to narrow it down and really give us a target of where we need to go. Just because I go out and buy uh you know, how many times you guys seen it? Dealer sitting on a good chunk of, you know, $20,000 and under inventory, but it's not selling, right? Just because you get a bunch of $20,000 under inventory doesn't ensure or doesn't mean that you're going to sell it right away, right? Um, so, you know, I think this is a this is a vital area. You know, again, it's it's u it's one that it's one that drives the machine. And so, you know, I think, you know, as a dealer, I've got to have we spent so much time on which we should on the retail side on our websites, everything we do, right? We're spend so much time talking about our inventory, getting our inventory out there. But I, you know, again, we need to shift that. We need to shift some of that emphasis to acquiring inventory. Um, yeah. And and talking about it, right? Again, Ronaldo, you know, um Erik, you're hearing it on your your calls with dealers. You know, how much conversations happening with the dealership about uh getting getting acquiring trades, putting them on leads, all the things that all the things that we need to do. So, you know, again, I think this is a this is a vital conversation for what's happening out there in the marketplace.

Renaldo Leonard (54:21): Yeah. And you know, when you were going through that data, the one question that kind of popped into my head when we talked about the uh the scarce availability of those vehicles that are in that $15,000 range and below. Is has that been created by us and by dealers being hesitant to bring in some types of vehicles that might like the question or the the answer that I always get when I ask why did you pass on this particular vehicle that you appraised or this one? Well, I didn't want to bring anything that might be a problem for a customer down the road. And so, have we by sidestepping that dollar value of vehicle on the retail side in the appraisal process created this situation where if somebody wants to buy a vehicle in that price range, they got to go and buy direct from a consumer or someone who's selling that vehicle on their own

Renaldo Leonard (55:26): as opposed to bringing it into the inventory. And then I mean think about any piece of inventory that a dealer might have on on the ground at the dealership. I mean we have products in the F&I office that could protect that customer against anything that might go wrong with that vehicle. So why in the world would we not bring one into inventory? Because we're we're afraid that we'd get a phone call from a customer one day and say, "Well, you know, my my uh the blower motor, you know, dropped out of it or, you know, my air conditioner doesn't work." Ah, no problem, man. You You did buy that uh you bought bought that extended warranty on it, didn't you? That I told you about when it locked you in F&I. Uh there's just so many opportunities that we bypass because we think about the acquisition process, you know, I a little uh a little wrongly, put it that way.

John Anderson (56:29): Right. Right. You created a word. You created a word, Ronaldo. I like it.

Renaldo Leonard (56:34): All right. You heard it here first.

Erik Vigil (56:39): Love it.

John Anderson (56:39): Well, folks, we appreciate it. Uh we spent a long time on sourcing today, but it is the number one uh issue. And so Erik, any final thoughts? Uh anything you want to share with the folks out there when it comes to what we talk about or what you're seeing? Well, any final thoughts?

Erik Vigil (56:59): You know, final thoughts. I again just wanted to thank you both you gentlemen for allowing me to be on the panel today. I know uh I have some big size 11 uh boots that I had to fill since Chris is on that secret mission. So hopefully uh he gets back and doesn't uh doesn't relieve me of my duties. But uh you know it's been uh it's been great. Um past 30 days have been you know some of the best in my automotive career. You know, being able to uh teach and coach and dealers in terms of ways that not even buying our product, but just being better versions of themselves, you know, and if I can help them be better versions of themselves, and it aligns with them buying Lotpop, then guess what? I'm all for it. But, uh, it's, uh, the auto industry has blessed me in more ways than I can count, and, uh, I'm excited to do the same for all of our dealer partners.

John Anderson (57:51): That's why we love having you on the team, brother.

Renaldo Leonard (57:53): Oh my goodness. Uh, let's see. Well, first thing, uh, Chris's secret mission, you know, he said he was going to be incommunicado. I've already heard from him twice this morning, so he can't help himself.

Renaldo Leonard (58:08): Yeah, we we ain't send him far enough away. Um, but, uh, yeah, final thoughts. Um, you know, there's opportunities out there everywhere. Uh if you uh if you got you've got questions you can't find the answers to, give us a shout. You know, you've got all of our contact information. And as Erik said, I mean, you don't have to buy anything from us. Just give us an opportunity to uncover some opportunities that you you can't see yourself. Uh that's why we're here. Some people poured into us. Give us an opportunity to kind of pour uh back into you. Um you know, it it can't hurt. You got nothing to lose. Uh the only thing that you can do to coin Erik's phrase is become a better version of yourself. Um but aside from that, um you know, hey, keep your head on a swivel. There are vehicles out there in the marketplace that fit a need that you have to fill. Uh you just got to open your eyes to it and be more aware of your surroundings and you'll you'll get it locked in. That's for sure. Uh, and then the last thing, Texas Tech Red Raiders taking on Oregon State Beavers this weekend. Wreck 'em.

Renaldo Leonard (59:21): I'll leave it at that.

John Anderson (59:24): Good stuff. Good stuff. Well, folks, listen. Uh listeners, viewers, man, we can't tell you uh from the bottom of our heart, we appreciate uh the opportunity to serve and we appreciate uh you listening and and tuning in and watching. And as always, reach out to us. Our here, I can't get there it is. Cell phone number right there. Um www.lotpop.com. Um access our website. You can find us through there. Uh any questions, any challenges, you know. Hey, listen. If you're listening to this or watching this and you're like, I, you know, I think they're full of crap on this. Listen, I love that. I love having different viewpoints. This is how we grow. Some of our best ideas that we have in our software have come from those type of conversations with our dealer partners, right? Because we certainly don't know it all. Um, we're just a bunch of we're a bunch of car guys that are data geeks and and and we're ble as Erik said, you know, we've been blessed by this industry. Uh, and we want to give back. That's what this is truly about. So, if there's anything we can help you with, the the the offer still stands. Hey, listen. If you want to reach out and you're willing to share some uh usernames and passwords, we'll put your data in our tool and then we can have a discussion, no charge, uh no and no expectation, just help. We'll put your data in our tool and and meet with you and have a discussion about what's going on at your store. So from the bottom of all three of us, on behalf of Erik Vigil, on behalf of Ronaldo Leonard, and myself, John Anderson, thank you for tuning in to season 2, episode 10 of Lot Talk, powered by Lot Pop. Y'all have an awesome and successful weekend, and we look forward to talking to you next week.