Stop blaming the market. The real reason your margins are shrinking.

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

Chris Keene (0:00): Here we are folks. are back. This is lot talk powered by lot pop. I'm Chris Keene, one of the co-hosts joined by the infamous Mr. John Anderson and the renowned Mr. Ronaldo letter gentlemen. Good morning. Good morning. Good morning. How are we?

John Anderson (0:15): Man. man. I was going to still want to run all those lines. “ rena I love that too. Renowned Ronaldo, man. “ love that. That kind of, that kind of flows. That flows doesn't it? Yeah.

Renaldo Leonard (0:28): you

Chris Keene (0:28): That was all the fly.

Renaldo Leonard (0:30): I don't think it's gonna stick. Yeah, right. That's usually how it works out, Yeah. No, man. Yeah, it's all good on Good Friday, for sure. Absolutely.

Chris Keene (0:40): Now that you said that, it's sticking. “ Yeah, you should have never said anything. For sure. And for you viewers and listeners don't realize it, but yes, we, air this, you know, throughout the week, but we actually do film on Fridays and today is good Friday and love it. I absolutely love it. You know, without a cross the too many borders, too many lines here. Uh, good Friday is a great day. And, uh, it's the day that we all need to be extremely thankful for. So, uh, you know, that Lord and savior, Jesus Christ, man, he's it is, is as rough around the edges as I may be. Man, I still don't forget. That's my guy. That's my guy right there.

Renaldo Leonard (1:23): Come on, brother. You're smooth as a stucco bathtub. What are you talking about? No roughness about it.

Chris Keene (1:29): I don't think I'm that smart. So no, it's good stuff. mean, you know, before we get too fired off into the realm of what we have to talk about today, which is usually on the fly, you know, because of our world of being in the virtual dealerships each and every day for hours upon hours.

Renaldo Leonard (1:49): “ dang.

Chris Keene (1:50): “ I want to make sure that the viewers, want to make sure the listeners that you guys remember something we have got moving and shaking right now. And it is our first 30 challenge. So viewers, listeners, it does not matter. Hear me close. It does not matter if you are a client of lot pop. This is open to the automotive industry. But our first 30 challenge is an in-person one day event where you're going to be with our CEO, our president, our founder, the big brain of our company. And he is going to do a in office one day intensive, but then he's going to spend 30 total days with you and working with you each and every week. to help you stay ahead of the curve. So that way, as our markets has its infamous ebbs and flows, you can stay three, four, or five steps ahead. But guys, spots are very, very limited. So please, if you are interested in sustaining what success you have, but then taking that success ceiling, punching through, making that your new floor and elevating to the next level, you need to go to first30challenge.com. First 30, that's the number 30. The word first, the number 30, challenge.com. and get yourself registered. The spots are very, very limited, very limited, but it's going to be worth your time to get registered, break through your current ceiling, set your new floor and stay three, four or five steps ahead. So please, you're even considering it, get signed up, get your spot reserved, get your travel done. Make your way to the office. So I want to make sure that everybody understood that we have that out there and it is available for every last dealer that we have. Managers, GMs, C-suite members, owners. Okay, we've always had owners showing up to our events where we're educating. So please take the time. First30challenge.com. The word first, number 30, the word challenge.

John Anderson (3:45): .

Chris Keene (3:45): Get yourself registered. that being said, you know, John, he sent a internal message to Ronaldo, myself, Brett, our producer, and we have a separate chat talking about, you know, lot talk. And I love the transparency that John had with this, with this, uh, uh, question or message that he sent us. And like Bernaldo and I do, when one of our brothers is down, we go lift him up. Okay, we go lift him up. And he felt like, because he has not been physically in a retail dealership for 12 years, that maybe the way that he's been delivering some of this great content that we we delivered you guys each year of the week that it didn't sound very convincing. Well, number one, John, you can't help but be convincing because your voice is about 35 octaves higher than anybody else's in deep and booming. OK, so you ain't got no choice. He got a boom. OK, but you know, and I understood because John, of all people, he and I and gosh, John, I hope you don't.

Renaldo Leonard (4:48): Has he got that boom?

Chris Keene (4:50): like punch me in the face for saying this, but one of the things that I've expressed to John a million times over is he's a player's coach. Okay. And he has so much empathy for people in general. And he cares very deeply about just humanity in general that sometimes he felt like he was, you know, sending a message of being unsure. Maybe a little too harsh sometimes. I mean, shit, John, if anybody's harsh, it's me. And it's not because I'm trying to be an ass. It's because I want everybody to get better. So, you know, so but John unpacked that a little bit of your sentiment. then Ronaldo and I are going to come back in and share what our sentiment was about what you were feeling.

John Anderson (5:35): Yeah. Yeah. Yeah. Well, first of all, Chris, you're a coach. uh, you know, coaching, gotta, you gotta hit people where they live at, right. Uh, from a coaching perspective. And so, and I'm athletic coach coach in general. Right. And so, you know, and you know, the look. It just, was doing it. Here's how it started. was doing, I was reading my devotional the other morning and, “ in the devotional Proverbs 18 to fools have no interest in understanding. only want to air their own opinions. So that's how this started. It just kind of, it kind of hit me. started thinking about it. was like, Wow. Right. “ As am I, you know, am I too, am I too heavily slanted on the opinion side when, “ when I'm talking with dealers, “ when we're, we're doing our podcast, right. And I get fired up. “ and to your point, Chris, I, know, when I get fired up, I do raise my voice. “ and so, you know, am I being The fact that I've been out of the dealership for 12 years. Am I adding too much of my own opinion and not, “ not leaning more on the factual evidence that, that the three of us see day in and day out as we do our job. So it was just kind of a, aha moment where I got convicted and I'm like, man, I got to really reset and really talk. And that's why I threw it out to the group to say, you know, should we.

Chris Keene (7:07): Mm-hmm.

John Anderson (7:07): “ should we, “ invite more dealers on the podcast, give opportunities there, “ to, to hear it from their point of view. Cause they're, they're in the trenches living it every day. Now that, with that being said, and then I'll kick it over to you guys. Well, that being said, obviously, you know, we're in the trenches with them. So, “ you know, What we see is what we try to bring on this podcast to those who are listening and watching is real time of what we're seeing and what we're working with and what our dealers are seeing “ day in and day out, in and week out “ right now. know, and things shift as we all know, right? Things shift.

Chris Keene (7:51): Mm-hmm.

John Anderson (7:51): You know, it's funny, it's funny. know, I always, we always say, you know, what we do is a change in philosophy. I'm sitting here thinking while I'm talking to you guys, you know, we're still measuring things as a dealership, right? We're, we're, we're in the month of what April. And so we're, we're talking about goals with our dealers for the month of April. Well, hell. things. That's a change in philosophy, right? Because it shifts every day, every week now. So, I mean, I know we have to know we have to fiscally manage it from a month, right? But hell, things can change in one week “ now. with everything that's going on out there with all the technology with with “ now AI being pushed on the scene, right? So, man, it's just so I.

Chris Keene (8:40): Yeah.

John Anderson (8:40): That's where it really set me back. thinking, my gosh, I haven't been in dealership in 12 years. can't imagine how different it is now “ to sit in that, sit in that chair with everything coming at you. But with that being said, but with that being said.

Chris Keene (8:57): Well.

John Anderson (8:58): there are still “ principles that still hold true today. So yeah, that's where it just really, it really set me back and I thought about it and threw it out to you guys. So.

Chris Keene (9:10): So Naldo, I'll kick it over to you because you had a great response to him about that.

Renaldo Leonard (9:16): Yeah, well, and my first, after reading that, my first inclination after I thought about it for a second, I looked the scripture up myself and read that entire chapter. you know, I asked him, was like, well, if you were, if you had been in the dealership for 12 years, these past 12 years, is that going to change the way that you interpret data? and manage an inventory on a daily basis at all. And just sitting here and reading that and knowing John the way I do and the way that I feel about John and trying to kind of put his hat on for a second to think about that. I'm like, my man, you know, I think that you actually bring more value because of the fact that you hadn't been in the dealership at that amount of time.

Chris Keene (10:06): Mm-hmm. Mm-hmm.

Renaldo Leonard (10:07): because of the number of conversations that he's had on this topic and being able to see things from a 30,000 foot view, but also understanding and knowing exactly what it's like to be there amongst the trees. And so that brings so much more value to the opinions that you share because it's all factually based. And the way that we take that data and have seen

Chris Keene (10:30): Yeah.

Renaldo Leonard (10:30): the way that we suggest dealers handle their inventory make a change, not only monthly or annually, but on a daily basis, that brings more more value than it ever possibly could have been if you were still at a dealership. And so “ I wanted to just kind of reinforce that, you you are in a seat that brings a lot of influence, brings a lot of... “

Chris Keene (10:54): Mm-hmm.

Renaldo Leonard (10:55): just elevated status to the opinions that you share. Don't ever think that your opinion should not be put out there, you know, in exchange for somebody else's view because we're always “ two things are going to happen when we have a conversation with the dealer and we give them the data and we make a suggestion on the direction they should go. They're either going to take it or they're going to leave it. And that's beyond our control.

John Anderson (11:23): Right, right.

Renaldo Leonard (11:23): But what we've been charged with our walk here and what we've set as a mission for this podcast to get back, that's all we have, right? And so, yeah, bro, I feel you. I love you. And don't ever have any doubt that I don't feel that your opinions matter and that they bring a lot of weight to what we do on a daily basis. So, wow.

John Anderson (11:47): you

Chris Keene (11:48): And you know where I also went with that with you, John, and viewers and listeners. Okay. I want you to think about this for a minute. John has been in the automotive industry. Since the transition from horse and buggy to the model T. Okay. You knew I was going to throw that out there, but yes, he's been gone. He's been.

John Anderson (12:10): you Ha

Renaldo Leonard (12:10): You

Chris Keene (12:11): He's been gone from the retail side of it in a store for 12 years. Hell, I've been gone for 14 years. Ronaldo has been gone for longer than 14 years. So, but we've been on the indirect side of things. So by general, just conversation, human nature is to sometimes use the terminology in my opinion. Well, let me kind of peel this back almost two years now to why we started lot talk. And this is where I'm gonna kind of get off and everybody's business here. Cause these aren't our opinions. These are facts. the people that we have brought on as industry experts, some of the dealer panel that we've brought on before, the things that just the three of us have shared with you guys is not based upon an opinion, but it's based upon WTF, work in the facts. And what we see, no matter if you're in Toe Jam, Texas or LA or Portland, Maine, It makes no difference. We have clients across North America, Alaska, Canada, United States, lower 48. We have clients all over the place. Big, small, highline, ultra highline, independence. On this inventory management tool, that CRM. This marketing strategy, that marketing strategy. Here's the difference though. We know the car business. But we are not on a 30 day clock like you are. You're only as good as your last month. And that's what your ownership, that's what the industry, that's what your C-suite leaders, that's what everybody in the business does. Cool. What have you done for me lately? I don't care that you had a record March. Now they may not come out and say it exactly like that. Some may be a little bit nicer. Okay. But that check is already cashed from March. What are we gonna do in April? And that's where we come into play because we see things like this.

John Anderson (14:01): .

Chris Keene (14:02): I'm gonna share my screen. So for the listeners, go back into YouTube and you'll be able to rewatch this and you'll be able to see it, but I'll do my best to explain it. But for those that are on Spotify, those that are on YouTube, you'll be able to see this right now. And let me share this screen here, okay? One of the things that not only our company, our president, founder, CEO, Jason Rice shares, but a lot of other people in the industry are sharing is, we're in a downturn right now. We're in a downturn right now. And yes, that is true. The shopper index, red line here, you can see where it peaked back in February. This right here is a peak, okay? So you can see where it peaked back in February. And then you can see where it just took a nosedive and now it's starting to curl out. Okay. starting to curl out some and flatten. Which it's prototypical. Numbers do not lie. What's that?

John Anderson (15:02): What's that percentage, Chris? What's that percentage? What's that percentage drop right there? Just, just from, from where it peaked or where it's at now.

Chris Keene (15:11): Yeah. Yeah. So we went from. Yes, sir. So we went from in a shopper index of 68 % fell 14 % all the way down to 54. Okay, so. Is it something to be concerned about? Yes. Is it something to start hitting panic buttons on? No. I'll tell you now, the number one thing that you could do. when the market starts shifting because please understand what I'm showing you here, folks. I'm not going to do it right now, but you can kind of see it. You could go back and you could look at February of 25, February, or excuse me, April of 25, April of 24, April of 23, April of 22. They all took their dip then. And that dip lasts until about mid May. Then we get through graduations and getting kicked off for summer. Then our summer selling season starts. So we are not telling you it's the end of the earth. But what we are going to tell you is this. The success you had in March. Do not get ridiculous and go out there and start buying a bunch of cars and get loaded up. Because what's going to end up happening is those cars that you bought today that is on 45, 60 day old data from all the market reports you're looking at. We're in that downturn. And if you go load up and do not hear me close, if you do not stock what you sell, then you are going to be in trouble. Then you are going to be looking up in, in June, flushed in some inventory, taking a beating on. Well, this is what I hear all the time, guys. You, you don't understand, Chris. I can buy these cars now. I can sell more later because I can pick them up pretty cheap. Okay. And the market's down. The market's compressing. Well, here, let's talk about that for a minute, John Rinaldo. I'm going to get my two cents worth and I want to hear what you say. Margin compression. And I don't know the exact. I don't know the exact fault. And you'll understand what I mean by this when I say it. But margin compression. partly is because you as a dealer. Partly it's because you as dealer now, Ronaldo, John, I want to hear your opinion on that. That my opinion is dealers. They will literally compress their own margins. Now I use the word opinion, but I'm going to show you a fact. Why I say that. No, no, what's your thought?

Renaldo Leonard (17:41): I think a lot of it is self-inflicted and you know, hell I've done it myself. Rather than focusing on what's most important when you're looking at a vehicle to acquire. A lot of guys right now are just kind of transfixed on what they're going for on the wholesale market. You can't get that back of, you know, two grand of MMR.

Chris Keene (18:03): Mm-hmm.

Renaldo Leonard (18:03): Okay, I'm out on that vehicle. Yeah, all right. But the first thing that anybody should ever consider when they're talking about acquiring a vehicle and bringing in an inventory is what can I sell it for? And then you work... Right.

Chris Keene (18:18): Don't get me started on MMR. Okay, don't give me so that but go ahead go

John Anderson (18:23): Yeah, are you a retailer or a wholesaler? Right. That's that's yeah. Spot on, Ronaldo. Yeah.

Renaldo Leonard (18:29): And so, I mean, it's just all just like many of the issues that we discover with dealers and that we pinpoint. What we're thinking about when we start the process is off base. But if we stick to the fundamentals, I mean, it's not a complicated gig, right? You buy low, you sell high. Watch, rinse and repeat. Just losing focus on what is the most important thing for any task that we're trying to accomplish on daily basis. But when it comes to buying inventory, because the golden rule is you make money on the buy, right? But you start the buy by knowing what you can sell it for. And it's just that simple. And it clears up a lot of things. especially the urgency in having that accomplished, which is the end goal is to sell it retail unit, right? Having that goal accomplished in 30 days because, know, if we've said it once, we've said it a million times, everybody agrees that the sooner you sell it, the more you make, right? And so that's my two cents. I hope it was fact base. I don't think that anybody will be able to come to the table with some statistical data that'll refute it, but if they do, I'd love to hear about

Chris Keene (19:44): There he is.

John Anderson (19:45): be a great discussion. Be a great discussion.

Renaldo Leonard (19:48): And that's all I gotta say about that. Yeah. Oh yeah. Oh yeah.

Chris Keene (19:53): John, what's your thought, brother?

John Anderson (19:54): No, I'd, Ronaldo nailed it. You know, I was just taking some notes while you guys were talking, right? dealers, managers. One of the things I do right now is I would go back since COVID I'd go back to look, but from 2000, really to be honest, probably wouldn't include 2001. Cause I think that was a little bit slanted because that's when we were coming out of that. But I would, I would go back 2002 or 2000, 2001, 2021. I'd go back to 2022, 23 and 24 and 25. And I would look at what my store did in April and may. I want to get a, I want to get a baseline. What do we do in April and may? Then I would look at how much inventory did we have? How many use cars we have sitting on the grounds. Right. Um, and so I would want that. I would want that information if you, if you're not already looking at it, I would go look at it because you were in April and you got may coming up and to Chris's point. Yes. June, July, August. So when you typically start to see shopper counts increase folks coming back into the market, right? What? Yeah.

Chris Keene (21:07): Hold on, John, go, go back because we say it very loosely. Okay. We say it very loosely because it's normal for us. I want you to go back and tell the dealers again, what they need to go back and look at.

John Anderson (21:22): You want to look at how much inventory did you have on the grounds? Right. And I would look if I was knowing what I know now, if I was back in the chair, I would even dig a little bit deeper and go, how much of that inventory was lot ready? I had, I had a full set of photos on. had, you know, was I having a, you know, was I having a battle in getting my inventory to frontline ready at that point? Right. I want to dig into all that stuff. “

Chris Keene (21:56): Mm-hmm.

John Anderson (21:56): And then I “ want to look at how much of it was fresh. And then I want to look at the sales side. How are we selling it? I want to be armed with all this over these next few months, “ two to three months, because if I want to be proactive, I've got to take a proactive stance towards these next two or three months. Because the factual data is, is typically, um, and this is not, look, we had this discussion before we come on here, right? That some of the stuff that we talk about or our, our president, founder, and CEO talks about as perceived as negative. It's not, I think the facts are the facts and the facts are, and you can look at it yourself, uh, folks, you don't have to rely on my voice that this time of year. it, and look, depending on where you're at in the country, It varies somewhat, right? Some people are still in the spring selling season because spring just kind of launched for them because they're in “ upper peninsula, upper Northeast, right? And so, you know, so there is a little bit of variance, but overall, when you look at it, “ you know, April, May, things start to pull back somewhat. So do I... The question is, do I do what I've always done or do I try to be proactive in making sure that through that period of time, I don't end up. Here's what we always caution dealers. I don't want to end up when I know that the market, so “ January, February, March, and then “ into June, July, August, those are typically when you see spikes, spikes in business. Right. And so.

Chris Keene (23:38): Mm-hmm.

John Anderson (23:39): I'm coming into that time, if I'm coming into those times, I don't want to be sitting on a bunch of aged inventory because it what it does is it “ Chris talks about Chris, you asked the question about, you know, “ margins, right? Shrinking margins. is it a dealer situation? Right. “ that effect? Yes, it would be a dealer situation. If I if I'm not managing.

Chris Keene (24:03): Mm-hmm. Mm-hmm.

John Anderson (24:03): my inventory and I've come into one of those times a year and I've got a bunch of aged inventory, I have just reduced my opportunity dramatically to maximize my gross profit and my net profit during those times a year. Because I'm sitting on a bunch of aged inventory and typically anything sitting over, look, if you're a dealer that aged in the 46 to 60 day, right? If you're a dealer that ages in the 61, day plus, the fact of the matter is if I've got aged inventory to that point, typically I've got that inventory price lower than any other inventory “ on my lot and “ as a percentage. so guess what customers will do? They're going to go, they're going to go to that sort of, want to see your lowest priced inventory. And so typically that's where you see the inventory

Chris Keene (24:54): Hehehehehe

John Anderson (24:55): being fed on and a lot of that too is leads follow that inventory as it ages. They follow it from day one. If you get a lead on it day one and they don't, you don't sell it, it just rolls with the car. And so you got a situation where now you got a bunch of inventory, it's age between holding costs and you marking it down. Now I've got “ virtually no margin or negative margin. And that's where I'm selling a lot of cars and dealers are going, I don't understand why I'm not making any gross. Well, you're not making gross because your inventory is slanted.

Renaldo Leonard (25:33): Okay. you

John Anderson (25:34): Right. You got too much of it in an age position and you're in a time of year where things have slowed down. So now to finish my point, now you come into a time where customers are coming in, they're starting to transact, they're buying cars and guess what? Cars are buying from you are negative or virtually zero balance on in a time where you should be maximizing what's happening at your store for your people with having fresh inventory so that you maximize the gross margin and

Chris Keene (26:05): Mm-hmm.

John Anderson (26:06): And your turns, your turn speeds up. Right. So to that point, Chris, “ yes, I do believe that a lot of it is, “ dealer induced, know, self, self induced. Right. “ that look, I lived that. So I was there. So “ get it. I had, I “ that issue and then I met a guy by the name of Jason Rice and he opened up a whole new mindset for me. Right. And I'm not blowing air up Jason, but he is talented and, “ and what he does does work.

Chris Keene (26:38): Mm-hmm.

John Anderson (26:38): Right. Um, the other thing I'd say is this come from one of our dealer partners. Guys, if you want to manage your inventory, look at your last 15 day sales and make sure that that number is in your zero to 15 day bucket. Look at it every day. You'll never get too far over out over your skis and you'll never get too far behind. Right. If I've sold 45, if I've sold 45 in the last 15 days, I want to have 45 of my zero to faith zero to 15 day bucket. And then if I dropped the 30 in the last 15 days, I want to make sure that I'm selling that down. I've got 30 in mine. So you'll never get too far out over your skis or too far behind. “ And then to Renato's point, buy low and sell high. I love it. Right. And so “ when's the, when's the lowest, when's our lowest cost of market on inventory?

Chris Keene (27:37): When you own it. Day one.

John Anderson (27:39): When it's fresh, when it's fresh. So what, why do, why do we.

Renaldo Leonard (27:43): I'm

Chris Keene (27:44): Okay. But John, John, hang on though. This is what we hear all the time. And some of y'all may be on there going, okay, who on earth is able to buy low right now? Okay. Here's why. And this is where we're going to say, change your mindset a little bit. If I have, if I have a vehicle, I don't even care what it is. Let's say it's $30,000. If I buy it off the street. It's worth 30 grand. If I take it in as a trade, it's worth 30 grand. If I acquire it out of my service department, it's worth 30 grand. If I buy it at the auction, it's worth 30 grand. Here's the difference.

John Anderson (28:26): I'm going to press, Chris, let me press time out real quick for you. All right. This is some, this is semantics, but I'm going to, I want to pull you out on the semantics, right? It's worth what it's worth. What somebody's willing to pay for it. Right. Right. But here, let me finish. Let me finish here. No, I know. But the reason why I brought this up is you're right. You're probably going there. The reason why I brought this up is that's why you need to know. That's why you need to know what you sell your inventory for.

Chris Keene (29:01): Okay?

Renaldo Leonard (29:02): for somebody to pay for.

Chris Keene (29:03): I'm going there. Hang on, I'm going there. Thank you. OK, so but you guys are sitting there. Chris, everything's bringing three grand over MMR. OK, I'm going to touch that here a second. But the first three places I named the value of the vehicle hasn't changed is worth 30 grand. If I go to the auction. It's worth 30 grand. The only difference between the first three and the auction. Is with the first three. My cost of ownership is still $30,000 with option number four, which is the auction, which is still a good place to buy cars. Contrary what all the press releases tell you. Okay. My cost of ownership, not the value of the vehicle, my cost of ownership gets a plus plus plus. By fee PSI if you PSI your cars, which I think everybody does in transportation. So the value doesn't change. It's the cost of ownership to John's point and to Ronaldo's point. And when I got a little fired up about MMR. If I'm going to the auction to buy a vehicle. And I'm a retail dealership. I want you to really think about this for a minute. If I'm going to auction to buy a vehicle to fill on my lot for a retail sale. What in the hell does MMR matter? Because I'm not buying it to turn around and wholesale it. MMR is your wholesale guide period into paragraph. But what John was talking about, what Ronaldo was talking about And what I was talking about know how your store in your market with your people sell, which comes back full circle. Yes, we're in a downshift in the market right now as a whole. Yes, in some markets, they're just now in their spring selling season because they're finally done with snow. OK. But if I understand and I know in my store, in my market with my people, how we transact MMR doesn't matter. What matters is how much can I sell the car for? That's what matters. MMR doesn't is MMR an important tool? Yes, it is. When used properly, a hammer is an important tool. But if I need to cut glass, I'm not using a hammer. I'm going to use the right tool. So what John is saying is what Ronaldo is saying is understand your market and use the right tool. Stop getting lost in the press releases. Stop getting lost in all the different widgets here. I'll show you all a prime, prime example of one of the best operators, arguably in the entire United States. So on my screen, what I am sharing is yes, this is our software here at lot pop called lot walk, but this is a day one vehicle. Now my cursor, I'm going to take it to it, show you it's day one. It's got 33 photos. So in the digital dealership, it's on display. A customer can. Look at all the feature advantage benefits, the hot buttons and establish that if this is a vehicle that fits their buying motive. OK, great. Good job. This dealer is taking it to market at 89%. 89%. But the part he has missed in his store, in his market, with his people, they have been selling this attribute of vehicle in 19 days at 96%. That's in the last 60 days in the last two weeks. The now market what's going on right now that is not lagging. What's going on right now? His market, his market has shifted upward on this vehicle by 2%. He's selling that attribute of vehicle at 98%. Let me pour a little salt on the wound here. vehicles that are fresh in his zero to 15 bucket. He's selling over a hundred percent. That's his data. That's not ours. That's his data. So why on earth do you think it's the market that's compressing? This is a prime example of my opinion as a fact. That is dealers.

John Anderson (32:55): It's not market data, it is data.

Chris Keene (32:57): You compress your own margins more times than not. I don't know what else to say about that, gentlemen.

John Anderson (33:04): You know what, Chris, now that we're looking at it live here and I didn't catch it while we were talking about it earlier, but I see what he's doing. So let's talk about this. is a great topic of conversation because you're basically saying, Hey, no, we all say this, right? No, your inventory with your people “ in your market, right? Because everything else screams, everything else screams market.

Chris Keene (33:28): Mm-hmm.

John Anderson (33:28): And I've said this a million times and I'll say it again. “ When I was in management and a dealership, I used to have things happen like this at the end of the day. Hey boss. I know we had a tough day, but I called the Ford and the Chevy store down the street and they had a tough day too. And I'll be honest with you guys. I wanted to smash my desk when, when that was, when that was uttered to me, because here's why.

Chris Keene (33:59): You

Renaldo Leonard (34:00): Hmm

John Anderson (34:00): I don't care. I don't care about what they're doing. has no, that has no other than maybe I look at, know, if we have some similar vehicles sitting on a lot, I look at kind of where their pricing them at, just so I have an understanding. But that's about all I care. I don't care what they're doing because that has no bearing on me, my dealership or my team. I care about what we're doing. And so that's the comparison I would tell you about what we do at lot walk and lot pop versus all these. tools from a marketing perspective. Yes, they are valuable. Yes, I want to know what's going on out there, but more important to me is what's happening with my store, with my people in my market. And I, and I just caught this look at the, in the last 60 days, they've sold four 2022 escapes in 29 days, 88%. So I'm sure that's where this guy looked at that and, and why he's going to trying to hang his hat.

Chris Keene (35:03): Mm-hmm. is trying to hang his hat.

John Anderson (35:05): And what do we always say when you're looking at market day supply? That's a look in the rear view mirror by 45 days and a lot can change them 45 days. We always say that don't hang your hat on market day supply. Yes, I want to, I want to understand what it is, but don't hang your hat there because it could get you in trouble, especially this time of year when it's starting to shift. Right. If I'm looking at market day supply right now, I'm going back 45 days. And when was that? We're at the beginning of April. That's right in the.

Chris Keene (35:42): Mm-hmm.

John Anderson (35:43): middle of the spring selling season, right? And so

Renaldo Leonard (35:46): Mm-hmm.

Chris Keene (35:46): Here, 45 days ago was right here at this peak.

John Anderson (35:50): Yep. Yep. Exactly. And so we hold ourselves, we hold ourselves to the same accountability. And that's why we show the zero to 15 day right next to the 60 day. A lot can change in the last 60 days. Right. So to Chris's point, right, I'm seeing a lot of upward movement and we got a car that is one day old. I'm going to understand where I sold that car at as a store.

Chris Keene (36:16): That, that, that,

Renaldo Leonard (36:17): Yep.

John Anderson (36:17): but I'm going to take a shot for a few days, maybe two weeks, and then I'll cut to the chase if the car doesn't have any activity, right? Because it's a fresh unit and I want to try to make margin on the unit. So to Chris's point, that's exactly right, but that jumped off the page. mean, Chris, I didn't catch it when we looking at earlier. I guarantee that's what he's doing. He's looking at those four units he sold in the last 60 days. Yeah.

Chris Keene (36:48): “ I saw it. I saw it, but here's my thinking. Okay. Listeners and viewers, ask yourself this question. $20,000 vehicle, pretty hot commodity. Yes. Compact SUV with the short odometer, pretty hot commodity. Yes. Okay. How many short odometer compact SUVs are up for grabs out there? Not many.

John Anderson (37:05): Really hot commodity.

Chris Keene (37:06): And as you see, we're breaking this down here. Compact SUV. In the last two weeks, this dealer is selling them at 99 percent. As you. Yeah, as you see. OK, fine, 15 to 17,500 dollar vehicles. He's selling at 101 percent.

John Anderson (37:21): in 13 days.

Chris Keene (37:22): I guarantee you, if I went and looked at this guy's. Twenty thousand to twenty five thousand dollar inventory, he's selling it equally as fast. So there is a huge appetite in his market for number one, compact SUVs and number two, the upper end of the seventeen thousand five hundred dollar inventory. Yeah, he's got it priced at seventeen five. But everything in here says. Don't compress your margins and in your market, contrary to what all the talking heads are saying. Your market has shifted 2 % on this particular attribute of vehicle. That doesn't mean go out and raise all your inventory 2%. Every car stands on its own. And when you can understand that. It doesn't matter. How hard the market downshifts. You may hit a little valley, but you're not going to be there long because you understand your market. Nalda, your thought.

Renaldo Leonard (38:13): baffled, Because, “ know, “ know the way I think about it, right? I'm going to go to the well. And I've got a vehicle that is in high demand. And of course, I know that “ I bring it into inventory, right? “ And I “ so trained “ “ to get inventory that is in demand in my market. So I'm going to look at the “ that I've captured. And when I bring that vehicle, I'm going to ask for all the money and I'm going to have every conversation that I possibly can with people that I know are looking for that vehicle and tell them and bring the juice. I just traded for a vehicle and you were the first person I thought about. I wanted to give you dibs so that when I price it, they wanted 105%.

Chris Keene (39:03): Mm-hmm.

Renaldo Leonard (39:04): They don't care what it costs. They're just thrilled to death that they got a car guy in the business who's thinking about them and looking after them, right?

Chris Keene (39:14): no, no, I didn't even pull that part up, but he has “ dealer has 22, 22 “ opportunities in his CRM that has been looking for a compact SUV in that price range.

Renaldo Leonard (39:25): I know.

John Anderson (39:26): about to ask, I was about to ask you about that Chris, he have, did he have those opportunities? I knew he did. I was just, I was, yeah. Yeah.

Renaldo Leonard (39:37): Well, but that's one of the things, I'm sorry, I was going to say that's one of the things that bring on this compression that everybody's experiencing. When they are looking for vehicles that they're bringing into the inventory, are they looking at their opportunities to sell and what people in their CRM were looking to buy?

Chris Keene (39:56): Go ahead, no, no, no, no, no, no, no,

Renaldo Leonard (39:59): in order to go ahead and find vehicles that they're looking for. to bring in on the acquisition phase. Does that make sense? So if I know I got 20 people out there looking for a compact SUV in a $20,000 range, before I even get, you know, held up in that fog of “ MMR and how much they're going for on the wholesale market, I know I got a captive audience. I know I'll be able to sell it. I mean, if my skills have not diminished on the sales side,

Chris Keene (40:32): Mm-hmm. Mm-hmm.

Renaldo Leonard (40:32): I know I could sell this thing at 105%. The dad is telling me I'm selling it at 101. Is that what you said? In the last 15 days? Boom, I'm locked, cocked, and ready to rock. I got those 20. I'm gonna go back to my Rolodex and pull up those 20 people. I may even call them before I even buy it at the auction and say, boom, tell me exactly what you're looking for. Because I'm going to the sale and this is what I'm gonna be able to sell this unit for.

Chris Keene (41:06): Yeah. Yeah.

Renaldo Leonard (41:06): and approach it that way. yeah, this just baffled me. But it just goes to show, just goes to show that even guys that are knocking it out of the park, I mean, keep in mind, we're looking at an industry leader here. Everybody in our ecosystem, everybody knows the great job that they do. But just goes to show you the devil's in the details and we all miss things occasionally.

Chris Keene (41:31): It's it's bath like.

John Anderson (41:33): operate.

Renaldo Leonard (41:33): Right? But it's something that's so, I mean, it's simple. What we're missing here, you know, it is simple. And I'm pretty sure that they'll, that'll be corrected by three o'clock this afternoon. “ But with that being said, guys are doing this, I mean, as a way of operating their business on a daily. Right? We just found this one example with, you know, this is This is like looking at Michael Jordan game film with Dean Smith and Dean Smith saying, Michael, right there, you did not pivot when he went to his left. And that's why you got missed and somebody scored a layup. This is an opportunity that we're missing. If we repeat it over and over again, we gonna die. We're gonna die on the vine. But you know, that's the benefit of having conversations.

Chris Keene (42:22): Ha ha ha ha ha!

Renaldo Leonard (42:23): these conversations. “ Having this information as data, not to toot our own horn or turn this into an infomercial, but that

Chris Keene (42:31): No, it's, it's, we're not even telling them about, you know, we're not even telling about really what we do. But John alluded to it or didn't allude to it. had him talk about it twice. Go back and look at your data. Okay. Yeah. Is there a different way to do it? And can we splice it and, and put all the data and reporting together for you and, all the coaching and everything? Yeah, sure. We can. But you do this on your own dealers. This just going to take a minute.

John Anderson (43:03): Yeah, absolutely. Absolutely. It's not proprietary.

Renaldo Leonard (43:06): Right? Absolutely. But this, yeah. Well, but so, I mean, if they are using our proprietary data, what they can see, and this is the thing that I love having a conversation about, I love to listen to you have this conversation, Chris, when you're talking about what differentiates what we bring to the table or the data that we put in dealers' laps, as opposed to what they can get with market data. and how those two differ. So when we go back and we took a look at what they were doing over last 60 days compared to the last 15, that's substantial difference. And if you're looking at that information on the regular, you see that shift. And you take advantage of that shift. But it's all about being proactive as opposed to being reactive. And so, “

Chris Keene (43:54): Mm-hmm. Mm-hmm. and about being objective toward it versus subjective.

Renaldo Leonard (43:58): Which is probably the biggest part, right?

Chris Keene (44:00): Because yeah, because when you're in the middle of the fire and you got, you got bullets whizzing by your head all day long and you got ownership and leadership inside your company, breathing down your throat, wonder why you ain't running 35 % net to gross. Why you a run of $50 million a copy and why you a cell and you know, 300 cars on 150 car inventory. And while you're trying to be a counselor.

Renaldo Leonard (44:27): you

Chris Keene (44:28): and a cheerleader and a coach to your staff. And then, “ not to mention all the problems that you have outside the dealership. It's it's really hard to be objective in. Work the facts. And see the force for the trees. You know, it's hard to do that. But here's the end, but this goes back to the invite.

John Anderson (44:48): There you go.

Chris Keene (44:50): We do invite you to reach out to us. And if you want a little bird's eye view on how you're doing and where you could improve. Reach out to John Ronaldo myself, go to lot talk podcast dot com. Reach out to us and we will gladly. At no charge.

John Anderson (45:07): free of charge.

Chris Keene (45:08): give you a bird's eye view of what's going on in your industry, what's going on in your store, in your market with your people at no charge. You just got to reach out to us. We've had dealers do it. But we, you got to do that before we run out of time because we're about to.

John Anderson (45:28): Hey, Chris, real quick. Let me, if you don't, if you don't mind, I did, I want to go back to, I want go back to this car you show you were showing, right? This vehicle. Well, I just want to give, yeah, go ahead. Cause I want to give some, I want to give a little bit more context because, because I'm, yeah, I'm circling back around the discussion that, that you basically started out this.

Chris Keene (45:55): Go ahead, go ahead. “ Okay, let me pull it back up. Let me pull it back up. Okay, hang on, 30 seconds. Go ahead, go ahead and give the context.

John Anderson (46:06): podcast with, was great, Chris, in the fact of margin compression. Just background to the dealers that are listening and watching, whoever's listening and watching. A little background is, before we jumped on here, we were talking about a lot of times things around this time of year perceived negatively and It doesn't have to be that way. can be, there's a lot of positive and that's what we wanted to hang our hat on today. Right. And so, yeah, we, Chris identified this vehicle and so for context, it's a compact SUV. Right. “ the price point, the price point is, you know, the 20 grand and under it's a low mileage on average mileage unit. And so I just, this dealer. Just for some context has 314 used cars on their lot. They are tracking based on their last two weeks. So rate, if they continue their pace, they will sell 372 units with 314 and stock. Now, again, I know we just cracked into April, right? But we track this every, “ every day, the last 15 days to help dealers be proactive and how they're selling. So they're tracking to sell 372 with 314.

Chris Keene (47:14): Mm-mm.

John Anderson (47:15): compact SUVs, have 63 in stock. They're tracking to sell 66 and they're selling them in 13 days on average at 99 % and their average selling price is 19,597. They actually need 16 of these units based on their cell rate. Right? So to Chris's point, if I understand that about what's happening at my store with my inventory and my people, then why would I ever come out of the gate with a price point initially in that percentage, right? I want to try to give myself a shot to maximize based on what's happening at my store with my people and my inventory, right? Because we're selling way more than we're stocking. We're selling 80 % out of our first 30 days. I've got a

Chris Keene (47:59): Mm-hmm. Mm-hmm. And they're doing it at 99%, but yet we take this one to 89.

Renaldo Leonard (48:05): .

John Anderson (48:05): Right, right. We're 10 % below where we're selling at and I'm, and I need these things. I've got a need for these units. I've got a need. So why wouldn't I want to put myself in a situation to maximize everything I can understanding what's happening at my store with my people in my market? So just a little context, a little background with that.

Chris Keene (48:28): Million percent, million percent. So that's, I'm glad you brought that up, John, because that really puts it even more perspective. You got a dealer stock at 315 cars, pays at 375. You got a dealer selling at 99%. Okay. So this isn't just a one-off situation here. Okay. It again, it's not an opinion. This is working the facts and the facts are in the collective some hole. We're selling $20,000 vehicles. selling at 99%. We're selling these things in, know, what would you say his days were?

John Anderson (48:59): 13.

Renaldo Leonard (48:59): 13, 19,

Chris Keene (49:00): Okay. 13 days. The guy's doing a great job feeding the beast. He's doing a great job loading inventory back in, but you got 22 customers that have been looking for this specific attribute vehicle. And of those 22 customers, many of them were on that 19, five, $20,000 compact SUV. Why would you not recycle your ad dollars? Instead of spending more money to get leads that you're not going to take care of. Why don't you just take and recycle your ad dollars and work those 22 customers to this rig right here. Okay. Cut the number in half. 11 of them won't buy a Ford Escape. Cut that number in half again. Five of them. You mean to tell me that you don't have a one in five chance. And if you looked at your close rates and many of y'all will sit there and start screaming about your close rates being at 30, 35%. You know, when we get them in the house, 40 % when we get them in the house, 50 % when we get them in the house. Okay, great. You can sell two people this vehicle. You got one. So why are we why are we compression on our margins makes no sense, but that takes me back before we run out of time here. Okay. I told y'all when I first pulled this vehicle up, this guy's doing a fantastic job is day one. got 33 photos out there. It's merchandised up, et cetera, et cetera. The vehicle is findable. So hear me close on this. When you do have a downshift in the market. And there are less shoppers in the used car market. You have to be above reproach with your marketing. And I'm not talking about what you're spending or what you're doing with it. I'm taking it back to the simplistic. You got to make sure it's described right. You got to make sure you got good photos. You got to make sure you ain't got dead trees in the background when things are blooming four inches of snow in the background, a thermostat and outside temperature showing 11 degrees. When some of y'all ain't seen 11 degrees in 45, 60 days, you got to make sure that those things are right. Because then you run into, I'm going to share a different screen here. Then you run into situations like this. If you don't do it right, where you leave all kinds of gross on the table. This truck is a “ one ton ram longhorn Laramie, not a Laramie, not a crew cab, but a mega cab. And I had a conversation with this dealer yesterday. He had this thing priced below. What his market was doing in large pickup trucks. He had it priced in a price bucket that made no sense whatsoever. And here's what I will tell you, folks. Stop thinking like a car guy. Think like a consumer. Because it's not the car guy in your competitive sets that are paying you a profit. It's the consumer that pays us a profit. So when I say think like the consumer, not like a car guy, don't get your competitive set so wacky that you look good don't get your competitive set so wacky that you look good because your price to market your, your price ranking or your price to market plus, or your V rank price it, how a consumer is going to shop. We raised this vehicle $2,500 and he looked at me like, okay, if you wouldn't have done this with me last week, I would think you're psychotic because in the previous week he had an intermediate SUV that we raised $2,000 because it put it in a price band where consumers are shopping three days later. sold it. Stop racing your own cells to the bottom. And if you want your inventory to bring a premium dollar. You first have to make sure that if I'm a consumer searching for a one ton mega cab Longhorn Laramie, it's got to be a one ton mega cab Longhorn Laramie that's going to get served back up to me in the search. So start there, guys. Yeah, we showed you here earlier. The market's downshifting. Red line going straight down. All that means is there are less shoppers out there. That does not mean that people are not buying cars. You just got less shoppers.

John Anderson (53:19): All the time. All the time. Look around how many cars you see on the highway when you're driving. People buying cars. All the time.

Renaldo Leonard (53:27): I

Chris Keene (53:28): Yeah. Ain't nobody ride no horse or buggy. That's why John had to get out that business. Okay.

John Anderson (53:34): Well, Bure is the country that's riding horse and buggies, but for the book.

Renaldo Leonard (53:39): “ He just didn't want to move to Ohio or Pennsylvania. Off in that little band there. “ Yeah. “ You know, Chris, I always thought about it. When shop accounts are down. When I first started in the business, you know, it started raining on occasion out there in West Texas and everybody'd be moaning and complaining, you know, it's going to be a

John Anderson (54:01): Yeah. No or Northern Indiana. Yeah. Northern Indiana. Yep.

Renaldo Leonard (54:04): terrible day, it's raining outside. And there was “ one old guy sitting in the corner, had a pipe, and he would sit there and say, I love it when it rains. I was like, why is that? He goes, because if somebody walks through that door, they're buying. And so when the shopper counts are down, those people who are shopping are serious about finding a vehicle, right? And to your point, Chris, to your point, if you've got all your ducks in a row and you've executed

John Anderson (54:35): Yeah. Yeah.

Chris Keene (54:36): Yeah.

Renaldo Leonard (54:36): on your photos, your description, and price it accordingly, all you've done is drop that bait where the fish are biting. And you can take advantage of that opportunity to maximize on that basic principle, executing the fundamentals. That's it. That's it.

Chris Keene (54:51): Yes, sir.

John Anderson (54:52): Preach baby preach.

Chris Keene (54:53): I love it. So dealer.

Renaldo Leonard (54:54): I gotta save some for Sunday. “

Chris Keene (54:57): So listen very closely. Anybody listening, viewing, watching, replaying, which hopefully you guys are sharing. Hopefully you're liking. Hopefully you're leaving us reviews on Apple. We always ask for those, please, please, please. But this is an open invite. We wanna put a round table of individuals from the dealerships. BDC managers, BDC reps, salespeople, used car managers, new car managers, GMs, GSM, C-suite level, ownership. And we wanna put together. a roundtable and bring several of you guys onto the show. And let's have some real talk conversation. Let's have some real talk conversation. Yeah, we're telling you all the things we're seeing. We're giving you advice. not based upon opinion, but based upon fact, because we live it, we breathe it, we diet, we do this every single day. And we get to watch the lift, the benefit, the growth and the sustainability from the dealers that we work with. So sometimes for y'all that don't work with us, that listen, it's really easy to call bullshit. And we want to hear from you the challenges y'all are facing. We want to hear from you the wins that you're having. The success, the downfalls and the best way to do that is let's put a roundtable together. Get to lot talk podcast dot com. Reach out to myself. Reach out to John. Reach out to Ronaldo. Drop us a message. He'll drop a comment. When you're on YouTube or the Spotify, the Apple, wherever. OK. And say, yeah, I want to be a part of it. And when you do that, please leave your name, leave your email address, leave your phone number. Okay. But reach out to us and let us know that you're willing to jump up there and push back on us. Tell us we're full of bull hockey. Or dig a little deeper and ask some questions that we may not have brought to the table yet, but it is an open invite. We're damn near begging you. Take us up on the offer. Join us. You don't have to come on camera if you don't want to. Okay. You know, Join us, join the conversation. Join the conversation. Educate yourselves, educate us, educate others.

John Anderson (57:05): Yeah. I have lots, I have a lot to learn. I'm being totally serious about that. I would love to hear it. I would love to hear it from a current dealer's perspective. What, you know, what their thoughts, you know, what we do is, what we do is obviously a change in a shift in philosophy. And so I would like to understand some of those philosophies that are out there that are alternative to what we do. So yeah. And how they're working.

Chris Keene (57:35): Mm-hmm. So that be yes. Listen guys, we, we become educated in this fashion and bringing you all of these things we're talking about, not because we're geniuses, but because we are students to the game and we have learned 99 % of what we bring you guys. We have learned by being

Renaldo Leonard (57:53): you

Chris Keene (57:54): boots on the ground in the trenches with y'all. So go ahead, hold up.

John Anderson (57:58): Yep. Yep.

Renaldo Leonard (57:59): Hey Chris, want you to speak for yourself now because in North Fort Worth I'm known as BJ. boy genius. which is a lot to live up to. Now, the one thing that I appreciate about everybody that we work with on a daily basis is everybody has a thirst to learn and to grow.

Chris Keene (58:18): Ha ha!

Renaldo Leonard (58:19): our knowledge that we share with dealers on a daily basis. And so the invitation that you're making to everybody to join us and have these conversations, we are looking for things that we can learn, that we can throw into our quiver because it's only in our effort to give back. The more that we have in our arsenal, the more effective we can be in sharing the message.

Chris Keene (58:43): Mm-hmm. Mm-hmm.

Renaldo Leonard (58:44): and helping dealers on a daily basis. Helping those good become great, great dealers become elite.

Chris Keene (58:49): May it be said. Million percent. with that being said, thank you guys. Thank you, John. Thank you, Ronaldo. But more importantly, thank you, dealers. Thank you, viewers. Thank you, listeners. As always, we have much admiration and respect, you know, for our industry and for our folks in the industry. And as always, for that admiration that you may have for us as well, we still ask, please reviews, like, share.

John Anderson (59:14): Yes. Yes, sir. Thank you.

Chris Keene (59:16): Apple, Spotify, YouTube, please, please, please, you know, share this. Like it on Apple, please give us reviews until then we will see you next week. And on behalf of our entire family here at lot pop on behalf of Mr. Anderson, Mr. Leonard, I'm Chris Keene, one of the co-hosts. We thank you for tuning in and we'll catch you next week. Same bad time, same bad channel. We out.

John Anderson (59:41): Much success. Let's go.