Episode 15: Talking the State of the Auto Industry and Answering YOUR Questions

0:00 Accelerate your dealership success. This is the Car Guy Simple Podcast. Welcome back to CGS Car Guy Simple, the pod for the retail automobile business fixed or variable ops. We're in. Thank you for listening, watching, and participating. Don't forget to subscribe. This is your first time. Welcome. If you're back, welcome. Let's dive in. Should we dive in, Josh? Let's dive in. Let's dive in. Zero splash. You haven't fun yet? Wow. You talk about a challenging market. You know, we I've been getting a lot of phone calls lately.

0:42 You know, people that have been in the business for 10, 15, 20, 20 plus years. A lot different types of questions than people that have gotten into the car business recently. And there's people out there that um are using AI to assist in their wartime conciliary opinions and solutions. And I guess to a degree that matters. Practical experience and help is difficult to come by if you have any position in the car business and you're like, well, I uh I just left a meaning where I was asked, what are we gonna do about it? What are we gonna do about it is a very interesting question for people to ask, whether it's an ownership, manager level, or any member of the team.

1:26 What are we gonna do about it? What are we gonna do about it? What are we gonna do about it? Well, if you happen to be doing business, let's start there. If you happen to be doing business in a in a geography that has an exceptional mass transit um system, right? Planes, or rather, I'm sorry, not planes, uh uh buses and and subways and trains, you know that people still, you know, it's that's the American thing. I want to drive. I want to drive. And if you're not in an area that has a great mass transit system, um maybe a bus comes through, or are there any buses, right? That it's still a challenging. What are we gonna do about it? This market is challenging right now.

2:08 My dad was a dealer principal, multi-rooftop guy for 53 years. He was a successful dealer as a Dodge dealer in Brooklyn, New York, during the Great Depression, survived and didn't go out of business. And I learned a lot from him before I broke his heart and went out on my own. Well, that was an interesting conversation. The reality is he always used to say, when business is at its worst, that's your opportunity to be your best. So that when things pick back up again, because what do we know about the car business, like at most other types of retail economies, they're cyclical. At the bottom of the of the what are we going to do about it? questions, or things are bottomed out, we get perfection with our skills, our processes, our tactics, our beliefs, our tenons of doing business.

2:59 When things come to the top of the and things are rolling and you you're selling cars almost by accident, how much better will you be able to do? Tough questions yield fantastic answers. It's a challenge to overcome that stuff. It's not a roadblock. It's not, I'm gonna drive off the cliff. It's not gonna do any of that. Slow things down and speed them up, be willing to listen. You know, in the advertising business, which uh right, PMD powers this particular pod, and you all know that by now. How was gotten milk created? That that was the story of that. It wasn't some high power, you know, advertising executive.

3:42 It was somebody that said, Oh about anybody in this room, but the only time I really think about milk is whether or not I got milk. Bang. So, so sometimes it's more valuable to be really good listener. What's what's that old school expression? My dad used to say, Oh, that's right. We got one of these, and we got two of these. So as frustrating as things get, you know, do you have a bad weekend? Well, bad is defined by whatever your average weekend is, not a great weekend. Um, it wasn't even good enough, right? Like stepping up to the first T and blocking the ball, you know, 70 yards to the right and putting it in the woods and going, oh, all right. Does that mean that the rest of your day is shot?

4:23 No. What did you learn from it? Let's continue moving forward. So, so I believe that challenges like I just laid out over the last few minutes are opportunities. Opportunities to stay patient, opportunities to learn, opportunities to grow, opportunities to improve. Focus on those opportunities, and the consumer opportunities will follow if we're listening and paying attention to both the economy and the consumer. I really have never cared about what the programs are or are not being given by the manufacturer that we represent or manufacturers. Doesn't matter to me.

5:03 I if the back wheels go forward, let's roll them. Because in the alternative, we're not rolling any vehicles, and uh, well, there's always being a shoe store. So let's not get there. Okay. So let's let's take uh let's go to the next thing. Complete departure from what I just talked about leasing versus financing, right? Pre-COVID, we did a really good job, and I'm an old dog, right? I'm an old dog, O L E, not necessarily O L D, but uh either way, however you want to spell it. Um I was in the business at what's considered to be leasing's when it's at what is that is infancy, when it was just starting, right?

5:43 And I had to learn how to manually take a blank piece of paper and manually with a calculator, be given the the money factor, the residual and the term and the selling price, and calculate the payment with with just that calculator. Not those those old school calculators that would do the payment. Just do the math, right? Just do the basic math. Um, I still believe that in order to sell a lease to get people to understand the benefits of leasing, you have to understand the mathematical mechanics of how to get to that payment. I'd certainly be willing to help you with that if you if you need to. There's other people. I remember uh remember example, Ford's half a car.

6:25 Now that goes back a bunch of decades ago with the thing hanging on in the showroom and a scissors going through the uh the the Monroni label, the MSRP, right? The window sticker, right? That to get people to go, what does that mean? Right. And leasing took off. Because the common thing was, well, you pay for things that that appreciate and you lease things that depreciate, or all of the other puffery statements. Show the mechanics of it, you lease the vehicle, you build a portfolio. COVID come off the rails, everybody buys, most portfolios were slashed in less than half percentage, even in major metro areas throughout the country, leasing percentages have dropped really, really, really heavily.

7:06 Do we want to blame it on OEM programs? Well, in some cases, maybe, but do we really understand how to sell a lease? Do our salespeople understand how to discuss it? Because by discussing leasing, we're selling it. Why? We're giving people, think about this phrase, an alternative to traditional financing. Let me ask you a question. You're telling me the payment doesn't make sense for you. Am I right? Yes. Well, let me ask you a question. Um, am I right in in concluding that when you said to me, this is all I can put down, we're really all there? Yeah. Would you be open, and I understand, would you be open to a two-minute explanation of an alternative to financing?

7:48 You're talking about a lease? Well, some people call it that. Would you indulge me for two minutes? Now, when they say okay, that means that they really love the value proposition of the selling process that you put forward in the time that you've spent with that honored guest, right? And they're willing to listen to more. You won't close all of them, but you're gonna have an opportunity to get a higher closing ratio between your first-time close and your be back ratios. Okay. It only works if everybody on the showroom floor understands how to not only discuss the leasing, but explain it in a way that really reduces it down to two and two equals four.

8:34 You don't have to get into the heavy math and all the other stuff. I always like to challenge people in dealerships. Show me how you calculate a lease manually. Uh uh, well, the more you know, the more you right, Josh, the TV thing, the more you know. The more you know, right? That doesn't mean you have to unleash it all the time, but alternatives. Well, there's a closing process called the alternative close, right? I'm not trying to give this as a closing tactic. I'm trying to give different ways. Think about different ways to do business. Think about retirement. If CFPs, certified financial planners, right, they are geared to giving people that are trying to save for retirement options and different ways to assemble the cash to allow them to the their client, right, to unplug eventually and live their life.

9:26 There's not one retirement strategy. Can you imagine if that was the case? How would we be able to get from here to retirement if there was only one way? And that one way just didn't fit. Alternatives matter. Understand how to explain the difference between leasing and financing. Be ready to answer, well, I've always paid cash, and fortunately, even though what would that article recently uh currently the average is uh what 50 grand uh uh currently for the price of an of a vehicle? Uh people should understand their options, be agnostic to the options. That'll force you to not be salesy about the options.

10:09 Instead, it'll make you more of a counselor, right? Certified CFP, certified financial planner. Can't you be a certified vehicle salesperson, planner, or some other acronym thing that we're gonna do? That's why it takes time to learn this stuff. It's not about selling more cars, it's about retaining more thought processes to help people make great decisions and blame you for those great decisions. Wouldn't it be nice once in a while to get blamed for them making a good decision? I thought you might agree with that, so let's move on. Let's move on.

10:50 We just finished uh what Q1, Josh? Just finished Q1. 2026, Q1's done already. My goodness. Now we're into Q2. Uh forward planning. Forward planning requires us to bring, trot the mirror in to our office, our boardroom, our whatever, and look into the mirror, not to be punitive and beat ourselves over the head or beat somebody else over the head with the mirror. We have to ask the hard questions to learn, right? Knowledge is power. What are the hard questions that we need to ask in looking at Q1 that could help us in Q2?

11:30 Message, brand message, value proposition discussions, process amenities, the consumer speak. People in our business sometimes forget that they're not always, more often than not, they're not at all, their own customer. So if we're just constantly thinking that this will get them to buy or lease, and if you're not the customer, well, that's it, that's a miss. And even if you are the customer that buys or leases from from um uh from that uh for that particular manufacturer, that's great.

12:13 Think about it though. If we're able to listen to everybody, including the consumer, instead of maybe just sales meetings, what's your plan? How many, what's your goal, how many you're gonna deliver, not tying it back to any data. You know, our web uh early on in our episodes, I referred to a tool that we give away for free. It's even on our ad agency's website to allow salespeople, managers, and uh, and owners to forecast based on what their plan is, how many people they need to get in front of to deliver the amount of vehicles, the number of vehicles they need to deliver. It's called reverse engineering. Well, wouldn't it be considered reverse engineering if we uh took a little bit of stock in what people other than us are saying?

13:00 What worked, what didn't. What does the data show? I'm not talking about what your GA4 says. I'm not talking about any of that. I'm not talking about the digital results. Was it tonnage? Did it convert to show them sales? That matters. That should be part of your Q1 review. There are vendors out there potentially that maybe the crap, crap, crap is uh is splashing. Maybe they're not. Are we giving them enough budget? Is our per car spend working? Is a percentage of the per car spend working? What are consumers saying? When was the last time somebody in the organization called a block of business and said, let me ask you a question? Two, well, do you have 60 seconds?

13:40 Yes, fine. First question, 30-second answer. What was the major two reasons? What were the two most important reasons that you did business with us? Oh. Next is a 30-second question. Is there anything that you think we could add to make it better? Could you imagine if you did that, what a consumer might, might, might, might, might want to do? And then we have to worry about stocking the shelves. I know manufacturers, it the inventories are up and they're down and they're up and they're down. And used vehicles, I'm not paying$3,000 over MMR, and I'm having a tough time equity mining in my service department. And and and I'm trying to get cars over the curb just by purchasing them and getting consumers to, even if they don't want to trade and they just want to sell it to us.

14:29 What does that look like? How much are we spending internally and externally? Because it doesn't always have to be a marketing spend. Remember, when we train, when we review, when we discuss, it costs money, right? Because time is money, is it not? I I mean, I think it is. Think about that. Invest into everything that you can possibly think of investing into, whether it's time, money, or both, to understand what went on in Q1 to help drive what we need to be thinking about going forward in Q2 and not go, well, if the factory just would give us 50 more of these models in this particular engine and would put an extra 1500 on the hood of the vehicle, we'll do better.

15:18 And if I could just find a way to not have to pay over MMR, I could. Well, you can't sell from an empty shelf. And I hate to say pass the savings loan to the consumer, but if you had to pay for a particular used vehicle because it was tightright and out of sight, and it had a marketing value that was in demand, and you took a pass on it because, well, I can't make a big, you know, 10-pound deal on this one. It's only going to be a couple of pounds or whatever your expression is in your neck of the woods based on where you're located. Is that the end of the world? Units in operation, whether it's new, used, or otherwise. That's how we keep service absorption where it needs to be, build units in operation, help service, help parts, help accessories, and get people into our family so that when they are ready for their next vehicle, they're going to consider us.

16:11 They're going to refer us. They're going to love the experience. They're going to be driving our nameplate. Because it doesn't matter to me if it's news user or otherwise. What matters is that they're driving our vehicle. Some things to think about. Some things to think about. Think about the next segment because we're going to break in a minute and we're going to go to the mailbag. Okay. Because the mailbag's starting to fill up, and that's so rewarding that people are like, well, what about this? And what about that? And what happens if I paint my building blue or whatever? What happens? Stay tuned. We're going to be right back in just 60 seconds and we're going to talk about mailbag stuff. Thank you. Hang in there. I'll be back in 60 seconds. Thanks. Our full service ad agency specializes in providing creative solutions for new car dealerships looking to sell more vehicles, increase service numbers, and promote their brand image more effectively.

17:02 We use our experience in television, OTT, digital, social media, and more to anticipate challenges and find effective market-dominating solutions so that our dealership partners can thrive in an ever-changing landscape. You can learn more at pmdusa.com. Welcome back to CGS Car Guy Simple, the pod for the retail automobile business. Retail automobile business. Fixed your variable, welcome back. This is a really rewarding segment, and we'll do more and more of these because uh it's mailbag time, right?

17:42 So people are going to uh carguysimple.com and they're doing a form fill and saying, Hey, can you what do you think about this? Or how do you feel about that? Or could you talk about this? That's awesome. Keep it coming. Hey, uh Josh. Oh Josh. Yes. How you doing? Doing good. How you doing? Doing good. How you doing? That guy is just whatever. All right. Enough of that. Can we do some mailbag? Let's get into it. Let's get her done. So I think it's I think it's important to mention that you can also send us questions on our social media platforms, and we'd be happy to reach out to you there, too.

18:22 That was a paid political announcement from someone smarter than me because I forget all that stuff because there's nothing in front of me to remember. Okay, how you doing? The first question we have today is with manufacturers cutting EV incentives and production, should I be worried about EV sales? Yes. What did he just say? Yes, you should be worried about it. And here's why. Because if you hate that segment of the business and you will, for whatever reason, aren't paying attention to it, your competitor is going to. They already are. And you're gonna lose units in operation.

19:03 Think about it this way. I was taught a long time ago from when I was a kid, if the back wheels go forward, I can sell it. I can service it. Well, the the amount of maintenance on No, no, no, no, no. The question was, should I be afraid of EV sales? The answer, uh think about how I just inverted that. You should be very concerned about EV sales. Why? Because some retailers have figured out how to deliver en masse EVs, and others haven't. We had a Cadillac dealer recently. You heard me talk about how did we get in a couple of short weeks a bunch of EVs over the curb? Well, we made sure that everybody was properly trained on how to sell the value, how to do a good feature benefit presentation, all of the things necessary to give people an alternative to think about.

19:58 Good? Let's move on, Josh. The average price of a vehicle is now around fifty thousand dollars. What can I do to change the conversation? Don't why would you why panic about that? There's no panic in selling. Sure, not everybody can afford, you know, these big swoopy-doopy payments. How well versed are you in discussing, in helping to train the brain? Train the brain, train the brain of the consumer that you're selling to. What do I mean by that? There's other ways to pay for a vehicle than financing it for 8,372 months with breaking the bank, with hitting equity loans, with all this other stuff.

20:48 What other alternatives are there? How willing are you to get them out into your inventory, them being the consumer? If the vehicle isn't working for their budget, what are your alternatives? Throw them out, show them that, take them out to the street and go, well, the highway goes that way and it goes the other way, pick a direction. Uh adios. No. Can we not give them? If you did a great job in the meet and greet, qualify, select a vehicle, guest ride and presentation phases, and you get everybody go step eight, the close. That's where I sell the money. That's where I make all the money. And they just said no, they can't afford it. Uh throw them out? No. What you learned in the sales process can help you to say, you know what?

21:31 I got an idea. I can't believe I owe you an apology. I can't believe I didn't think of this. Follow me and take them and show them an alternative. Take the vehicle they just drove, pull it up next to the other vehicle that you want to give them the alternate choice. You know, this vehicle is X and this vehicle is Y. And here's the advantages and things to think about. That is an alternative that makes sense. You're gonna freak out? What is inexpensive today? Is a new pool inexpensive? Is a high Is a new lacrosse stick inexpensive? Is a steak dinner inexpensive? You find the value in that stuff, help the consumer find the value, help them make a good decision, and then you've earned the right to ask for referrals because now you're an advisor and not a salesperson.

22:16 That's my word on that one, Josh. I liked it. Thank you. All right. The next one is keeping my ads manufacturer compliant is getting in the way of my messaging. Is it even worth it? Yeah. Yeah, it's worth it. There's sometimes you're going to go off script and not get a strike letter. I'm not advocating for that. And I don't want to know what color the carpet is in the AG's office. That's not what I'm talking about. There's times where maybe from a bigger environment, there's a message that may need to be group wide and it's not co-opable, versus, you know, splintering it down to uh each individual store. That's really not, I think, the answer to this question. When we talk about this, should we not consider that there is a time and a place?

23:04 There's always a time and a place for everything, right? Sometimes utilizing your co-op makes sense. Other times, maybe not so much. A good creative, and I'm not plugging PMD, or am I, PMD USA.com, or am I. Kidding aside, there's a time and place to allow creativity to stay within the confines of the four corners of the co-op and or compliance rules that your manufacturer or manufacturers mandate in order to get reimbursement, right? You can still create a message, and I paused for a reason.

23:45 Create a message that will resonate in the consumer's mind. You're probably not your customer, but we don't know what's going to catch the code. What did he say? How much did he say? What was the benefit? Those are the things you need to think about. It's the creativity of staying within the four corners of the guidelines and still utilize the dollars and still drive traffic. Please, please, please, for the good of the industry, don't walk away from co-op money. Be careful with some of these mandates of, oh, I have to use this vendor or those vendors, and I have to have a percent spend. If you work together as a group with your vendor, maybe your ad agency or otherwise, and your internal people, you'll find solutions.

24:28 Slow down and think about it. Good Josh. Good. Okay. Did I get an A? You get an A plus. At least I passed. Okay. All right. Our last question for today is my manufacturer has no decent incentives. What can I do? Based on whose opinion. I mean, I have to start there. You hear me say this all the time. Based on whose opinion? On your opinion? On your boss's opinion? On the consumer's opinion? I'm pretty willing to tell you that if a consumer goes out and shops 17 different brands in 27 different locations, they're getting their ears hit with all this different stuff.

25:14 Even if you are your your buyer, your consumer, which you're probably not, but if you are, there's always a there's always a foot that fits in a sock. There's always a sock and a foot that fits in a shoe. You just have to work a little bit more carefully and diligently to figure out where is the value proposition landing best for your consumer to have them drive your nameplate. Um different manufacturers rig consumer incentives based on different reasons. Maybe it's day supply in a region or a or or or nationally or whatever the reason is.

25:57 I've always felt that the back wheels go forward, it doesn't matter to me what the incentives are as long as I make sure that when I'm at that stage in the sales process, I have absolutely engaged the customer to A, make sure that I review with them what they qualify for and why those qualifications matter. Just to say, are you a Costco member? Okay, you got$1,000. What does that mean? What does that mean? What does that mean? So what? What I was taught in the qualify stage initially when I first started selling, when you feature benefit, the what and the so what? The what is the item, so what? So what is the so what? And that's the benefit, right? Well, what about incentives?

26:37 Can't you build a value case regardless if you like the incentives or not? Everybody wants to order or buy a vehicle at zero down 300 a month or zero down to 200 a month or whatever, right? That's great. It's wonderful. Value propositions work, whether it's incentives or otherwise. That's where I would start and branch it out from there. I could probably go on for another two hours about that, but I think Josh would probably be very disappointed in me if I did that. How'd I do with that one, Josh? Good answer. Wow, yeah. Golf clap. Golf clap, golf clap, golf clap, golf clap. And I think that brings us to the end of this particular mailbag segment. And we'll have more of those because they keep rolling in.

27:17 Hey, please, please, please, please, please. Josh, repeat it again. How do people send in mailbags? You can visit our website. Website. Or you can post it to us on any of our social media handles. We are on TikTok, Instagram, we are on Facebook, reach out, even LinkedIn. So all of that. And of course, carguysimple.com. That's carguysimple.com. Go it, use it, be it, do it. Thank you again. Right? I'm having fun with this, and I hope you are too. It's not indentured service, right? 20% of the American workforce is involved in the car business at the employee level.

27:59 Don't be an outcast. Join us. Cannibal into the deep end of the pool. Let's share thoughts. I look forward to hearing more of yours soon. I'm Joe Levine. Thank you for spending the time on this podcast. We really appreciate you and look forward to speaking again really soon. Have a great selling day. Stay healthy, stay happy, stay wealthy. Follow us on Instagram, Facebook, LinkedIn, YouTube, and at CarGuysImple.com to learn more and see behind the scenes action. If you have a topic you want us to discuss, we'd love to hear from you. Feel free to send Joe an email at Joe at CarGuysIple.com. This is the Car Guy Simple Podcast.

28:41 See you next time.