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  • 4 days ago
You AUTO Know #6: Nov 16, 2021

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😹
Fun
Transcript
00:00:00Well, hello, everyone, and another great Larry Julius production.
00:00:08I think you're a former DJ, Larry, but we have a really exciting You Ought to Know seminar
00:00:12going on today with some of the top experts in the business.
00:00:16I want to thank Larry again for putting this together and turn it over to your host, Mr.
00:00:21Julius.
00:00:22Well, thank you, Tina.
00:00:24And no, I was not a DJ in a former life, but you couldn't get me away from the radio back
00:00:31back then.
00:00:33So we got a lot to cover today.
00:00:37As always, promise to get everybody out of here at noon.
00:00:40So we're going to jam pack this.
00:00:43And welcome to You Ought to Know 6, which is You Auto, A-U-T-O, no.
00:00:50So traditionally, our company's largest spending category is automotive, local dealerships,
00:00:57dealer associations, and of course, the car companies.
00:01:00But since the start of the pandemic, automotive hasn't been all that and a bag of chips.
00:01:07As a matter of fact, it's a shortage of chips, computer chips, that is, that in part is contributing
00:01:12to the challenges of every player in the auto business.
00:01:15But it's actually much, much more than just chips.
00:01:19So today, we'll be looking at where the industry is today, where it's heading, and what resources
00:01:26we have at Beasley to help our automotive clients not only to survive, but maybe even thrive
00:01:32during these, these, and I hate to say it, challenging times.
00:01:36As always, this session is being recorded and will be available tomorrow afternoon on
00:01:41Beasley Academy.
00:01:42Also, if you have any questions for any of our guests, please put them in the Q&A box, not
00:01:47the chat box, but the Q&A box on your screen.
00:01:51And we'll try and get to as many of the questions as we can.
00:01:54So it wouldn't be You Ought to Know without co-hosts.
00:01:56So I'd like to introduce you to two of our co-hosts for today.
00:02:00The first is Tim Jorgensen.
00:02:03Tim, if you want to mute yourself and put yourself on the screen, thank you very much.
00:02:07First of all, Tim, you all know, is our digital automotive director.
00:02:13And although Tina has given me credit for today, it's, I just sort of picked up the flag
00:02:19and led a parade that Tim started.
00:02:22Tim provided the inspiration for today's session and did most of the heavy lifting to make
00:02:26this happen.
00:02:27So thank you, Tim.
00:02:28And also joining us is one of our most prolific integrated sellers at Beasley, Chrissy Winters,
00:02:36who is a valuable contributor to our sales success in Las Vegas.
00:02:41Welcome.
00:02:42Morning, Holly.
00:02:42Welcome.
00:02:43Good morning.
00:02:43And Tim and Chrissy, real quick, in just a few words or less, can you share with us how
00:02:47long you've been with Beasley and where you both were before we were lucky enough to have
00:02:53you join us?
00:02:54So, Chrissy, where have you been?
00:02:56I have been with Beasley almost 20 years this April, Beasley Vegas, and I was in radio in
00:03:04Portland and radio at Seattle before that.
00:03:07Yeah.
00:03:07And I've been in radio over 30 years.
00:03:10Which is amazing.
00:03:11And I'm only 35.
00:03:12I was going to say, we hired you when you were 10, clearly.
00:03:16And Tim, what about you?
00:03:19So my experience, I've been with Beasley now for eight months.
00:03:22Previous to that, I was with a competitor in the auto side, too, for marketing.
00:03:27And then before that, I had 26 years experience in auto dealerships and running them.
00:03:33Excellent.
00:03:34So a lot of expertise there.
00:03:36So as always, Tim and Chrissy is going to be the voice of the audience.
00:03:41They'll be asking the questions that you all in the audience would be asking.
00:03:46They'll be asking for clarity and follow-ups.
00:03:48So thank you very much.
00:03:50And our first guest is somebody I never met until just about a few weeks ago.
00:03:56But I felt like I already knew him.
00:03:58His name is Tyson Jomini, and he's vice president of data analytics at J.D. Power.
00:04:03Now, the reason I felt like I knew Tyson so well is his name shows up regularly in the
00:04:09Wall Street Journal, the New York Times, CNN, ABC News.
00:04:12And any automotive publication you read, you will probably see in the course of any given
00:04:19week or month, you'll see Tyson's name.
00:04:22He is an expert that just about every news organization turns to when they want to know
00:04:27exactly what's going on in the automotive industry.
00:04:30And that's what Tyson will be sharing with us today.
00:04:33Welcome, Tyson.
00:04:34Hey, appreciate you having me here.
00:04:35Thank you, guys.
00:04:36We are so fortunate to have you.
00:04:39But before we get into the current overview of the automotive industry, can you tell us
00:04:44a little bit, you know, just besides racking up tons of ink in the automotive and business
00:04:50press, what is J.D. Power and what are your responsibilities with the company?
00:04:56Well, I hope everybody knows J.D. Power on the call.
00:04:58I mean, the trophies, the awards, you know, customer satisfaction, sales satisfaction surveys.
00:05:04So we're famous the world over for, of course, market research.
00:05:08However, I work in data and analytics.
00:05:09I'm on the other side of the house.
00:05:11So everything you know about J.D. Power, I don't do.
00:05:13I'm on the other side.
00:05:14I'm basically the auto sales analyst.
00:05:16I work with work with data, the VP of data and analytics, help automakers plan price and
00:05:22volumes, basically.
00:05:23And I'm coming to you today from Los Angeles.
00:05:25It's the L.A. Auto Show going on this week.
00:05:27So I'm out here for that.
00:05:29I'm normally from Nashville, Tennessee.
00:05:31And I'm also normally not just jaundiced.
00:05:33This is a hotel light shining in my face.
00:05:34So hopefully you guys will cut me some slack for being on the road.
00:05:38Well, we will cut you lots of slack because it's, it's, you're on Chrissy time.
00:05:43It's, it's what, 8, 8.08 there?
00:05:45No.
00:05:46Yeah.
00:05:46Excellent.
00:05:47Well, I will, we're going to start.
00:05:49We're going to talk about the, the auto industry.
00:05:52I just want to make sure.
00:05:54Does everybody see the big green dot?
00:05:58No.
00:05:58I hear a lot of no.
00:06:00So let me just try that one more time.
00:06:03I think I can make this work.
00:06:06Okay.
00:06:08Yeah.
00:06:09There we go.
00:06:09Yes.
00:06:09Yeah.
00:06:10Okay.
00:06:11So I think, uh, Tyson, you'll be able to, to, to advance the slides on your end.
00:06:19If you don't just tower and I will have the software open.
00:06:25I wonder one second, one more second, because someone else needs to use it.
00:06:30Let me just restart it.
00:06:35All right.
00:06:36Okay.
00:06:42I think now we are good to go.
00:06:45So let me just.
00:06:50Let me share that.
00:06:51All right.
00:06:53And I think you should be good, Tyson.
00:06:57Says you're in.
00:06:58All right.
00:07:06We can go old school.
00:07:07Sorry.
00:07:08But yeah.
00:07:08Yeah.
00:07:08It's okay.
00:07:09Just tell me when you are ready and I will, we'll, we'll dance the slides for you.
00:07:13Oh, good.
00:07:13Good.
00:07:13You have my, uh, my Twitter handle on there.
00:07:15That's, that's where I'm people normally know me from.
00:07:18I mean, you have to be looking for a quote in the wall street journal.
00:07:21See my name, but Twitter.
00:07:22I'm, I'm always there.
00:07:23So if you guys want to, uh, join in on the fun of what happens day by day in the auto industry,
00:07:27minute by minute, that's, um, where you could find some of my, um, I don't know, not fit
00:07:33for public, uh, quotes there or something.
00:07:35So, uh, let's advance and, uh, we can jump right in.
00:07:37I only have a few slides here just to talk about 21.
00:07:39We'll take a brief look at the end of where 22 may go.
00:07:42I know how important the sector is, uh, to everyone on this call.
00:07:45So you guys probably, uh, have a lot of questions.
00:07:48So we're going to try to blast through this as fast as we can.
00:07:51So next slide.
00:07:52So how are things going for the year?
00:07:54Well, I'm not going to go back in time.
00:07:56All the way back to COVID, because that is ancient history.
00:07:59All I'm going to say is, as we came out of COVID, we were, we're actually, we're recovering
00:08:03quite well.
00:08:04I mean, uh, the, the growth rate was, was pretty astonishing.
00:08:07We got all the way to that point in April, we got to 18.3 million SAR.
00:08:11That's a industry term.
00:08:13Most of you probably have heard it, but you know, we, we take the monthly sales pace and
00:08:16we adjust it seasonally to create an annual view of what that meant.
00:08:20Right.
00:08:21Um, and so this, this SAR view of April sales is 18.3 million sales.
00:08:27That was the sales pace for April.
00:08:29That's the number four all time SAR in the industry.
00:08:32I mean, we're talking all the way back to, you know, post nine 11 GM keep America rolling
00:08:37campaign.
00:08:38Number one, uh, later GM did, uh, their employee pricing for all, uh, campaign a couple of years
00:08:43later.
00:08:44That's it.
00:08:45Those are the only sales paces that were stronger than what we saw in April.
00:08:48And then you look here in, in the span of five months, we went from a record all time
00:08:53sales pace to what I let, I let this number on the page.
00:08:56This is my only, uh, hangover from September.
00:08:59Cause I, I, I love this September.
00:09:01Our sales pace, the SAR was 12, two, which is actually below the sales pace of September
00:09:07Oh eight.
00:09:07You guys remember what happened in September Oh eight.
00:09:10A bank called Lehman brothers went bankrupt.
00:09:13Um, and that was basically the jumpstart of the great recession.
00:09:17The sales pace for last month was worse than the great recession sales pace.
00:09:23I mean, let that sink in for a second, October.
00:09:25Now we've come up a bit.
00:09:26So this metric doesn't work, you know, October Oh eight things really went bad.
00:09:29If it went down to 10.
00:09:31Um, so things got worse back in Oh eight, but right now we're, we're basically at recessionary
00:09:37level sales pace in this industry.
00:09:39And of course, um, you know what, we all kind of know the reason why we can jump to the
00:09:43next slide, but we have nothing to sell.
00:09:46I mean, we sold out of everything.
00:09:48Um, and so, you know, inventories in this industry used to run around 3 million.
00:09:53Um, and those, those were falling of course, during, during the peak of coronavirus.
00:09:57Um, but note that they were building throughout, throughout most of, uh, of last year and really
00:10:04to about, you know, January.
00:10:05And then they started to come down as, as the production challenges started to mount.
00:10:10And we, we blame the microchips, but it's far more than that.
00:10:12It's not just microchips.
00:10:14I mean, we've had resin shortages for paint and tire shortages.
00:10:17I'm sure we still have some parts stuck on a boat in the middle of the Suez canal.
00:10:21I mean, it just, the auto industry is global and the supply chain is fragile.
00:10:25And when things like this happen, um, the very hard to produce cars.
00:10:28And so what we've seen here, um, starting with that April, you know, that, that really
00:10:33strong star we just talked about and into the collapse of sales is that we completely
00:10:37ran out things to sell and that now for the first time ever in this industry, the sales
00:10:42pace was exceeding inventory on the ground, which is sort of remarkable in an industry
00:10:47that has, you know, sometimes 70, 90 days on the ground, we were turning over our inventory
00:10:52every three weeks.
00:10:54So right now days to turn that it's 20 days in the industry.
00:10:58There's no vehicle sitting around at dealerships.
00:11:00In fact, 54% of vehicles sell within a week of arriving at the dealership, which is essentially
00:11:06like they come off the truck, you know, vehicles arrive at the truck on these big trailers and
00:11:11the, and there's a consumer there, like basically driving it off the truck and going right home
00:11:14with it.
00:11:15It doesn't even stop moving.
00:11:17Um, so, so Tyson, if I, if I may interrupt, did, did nobody see this coming?
00:11:25We, we saw it too late really.
00:11:27Um, because we kept, we kept a lot of incentives and kept the man, uh, item strong, um, well into
00:11:35the start of 21, even as we knew the, the problems were, were piling up.
00:11:39Um, however, you know, the microchip, I'm, I'm debating whether we should have known this,
00:11:44you know, we, we can't just run out of chips.
00:11:46Right.
00:11:47Um, and, and if coronavirus never happened, would we still have run into this issue?
00:11:51Um, and, and it's likely we would have maybe on a smaller scale.
00:11:54Um, and are, are the chips, are they there and they just can't get to us or has chip production,
00:12:00uh, which, which generally happens in, in, in Asia, right?
00:12:04Has that, has that stopped?
00:12:07It, it hasn't.
00:12:08It's just, it's a global market for chips and chips going to everything now.
00:12:11You know, you can't even buy a refrigerator or, you know, a toaster without there being
00:12:15some kind of interaction and internet of things inside.
00:12:18I mean, everyone wants chips for everything.
00:12:19So the demand for chips is, is very strong.
00:12:23Um, and in particular, the type of chips that the auto industry uses, um, is, is a fairly
00:12:27common one that you see in a lot of places.
00:12:29So demand remains strong and the auto industry kind of got out of, out of line.
00:12:34I mean, when, when we weren't selling anything in March and April of last year and we weren't
00:12:38able to open our plants, there's no reason to order parts.
00:12:40I mean, the way the auto industry works, a plant with a lot of inventory, you know, work
00:12:45in progress inventory is four hours in the auto industry.
00:12:48So when, when we're not going to produce for six weeks, we don't just keep receiving parts.
00:12:54You know, we have to shut that off.
00:12:56And we did that and basically we got out of line and now we're finding out it's very
00:12:59hard to get back in front of the line again, because there's a lot of people want these
00:13:03chips.
00:13:04And, and do you know, as your researcher, are any, is there any manufacturer, uh, that
00:13:08has, uh, that has been able to maintain that's, that's sort of, or at least beating this
00:13:14downward curve?
00:13:15No one can beat it.
00:13:17You can only manage it.
00:13:18And, and some have managed it very well.
00:13:20Hyundai and Kia have, have managed it very well.
00:13:23In fact, probably there's something there with their associations of the corporations
00:13:27in Korea with the producer of chips that kept them going a lot longer than anyone else.
00:13:32BMW seemed to have stayed out of it for a very long time.
00:13:34Uh, Tesla is, is, is known that they have, have done a great job managing it.
00:13:38Even though now they are removing things from their car very famously this week, they're
00:13:43removing the, the USB chargers in the back seat and leaving.
00:13:46I heard that on the news this morning, which was incredible that they're shipping Tesla's
00:13:51$65,000 cars out without the USB port.
00:13:54Open holes just sitting there.
00:13:56So is that an option for all the other dealers, like to put cars out without missing product
00:14:03or, and then come back as a recall or something to get the chip that's missing?
00:14:07It's possible depending on, on where and what it is, right?
00:14:10I mean, some, some things you can't put in the car and then later add the chip.
00:14:13Um, for the most part though, um, we're just trying to get things out and get them to consumers
00:14:18and consumers aren't stopping.
00:14:19I mean, you know, what, what I showed a minute ago was sales, but sales and demand are not
00:14:23the same thing right now.
00:14:26Um, so real, real quickly though, we, we talk a lot about inventory, inventory, inventory.
00:14:31My, my take, my, my sort of, uh, you know, counter-cultural take on this is that inventory
00:14:36doesn't matter anymore.
00:14:37It's production.
00:14:38It's only production.
00:14:39You know, we saw the sales slide and you can see how low inventory got.
00:14:43Um, it doesn't hurt us anymore.
00:14:45They can't do anything to us.
00:14:46You know, we can't tell the doctor to show us where they hurt us anymore because inventory
00:14:49is over.
00:14:50It's now based on production.
00:14:51Whatever we build, we sell.
00:14:53And that's going to be the predominant theme for the next 18 months of this industry.
00:14:57Whatever we build, we're going to sell.
00:14:59Vehicles are going to turn as soon as they arrive.
00:15:01If you get vehicles, you're going to sell them and your sales pace will go up and inverse.
00:15:06And that, that, and correct me, you're the, you, you have the training in economics.
00:15:11That is the recipe for inflation, correct?
00:15:14Too few, too many dollars chasing too few products.
00:15:17And I think you're going to see that on the next slide.
00:15:19As a matter of fact, good, good transition, Larry.
00:15:21I'm glad we practiced.
00:15:24Price, right?
00:15:25How does this look?
00:15:27We're seeing prices up almost a third from two years ago, guys, a third.
00:15:34We were talking about $10,000 price increases in the auto industry.
00:15:38We've never seen anything like this.
00:15:39And this is why we get back to demand and sales are just unrelated concepts right now.
00:15:43Demand is very strong, and it continues to be quite strong.
00:15:49As vehicles come in, consumers are going out and getting them.
00:15:5186% of consumers right now are paying near or above MSRP.
00:15:56There's no negotiating going on at dealerships right now.
00:15:59You're lucky to get a car.
00:16:02You're lucky to see something that's there.
00:16:04If you don't want the price, the next person coming in with their family on that Saturday
00:16:08right behind you, they're going to take that vehicle.
00:16:10So that's why things are turning fast, that there's no negotiating, and that's why we're
00:16:14seeing these kind of transaction prices.
00:16:17But on the next slide, I kind of break it down to see who's driving it.
00:16:20And this is what's kind of interesting is we have a number of different channels of who
00:16:25we could say is to blame, if that's the word, for these prices.
00:16:29Now, this is just looking year over year.
00:16:30A second ago, I was comparing versus two years ago.
00:16:32This is just from last year.
00:16:34Consumers are basically that first bucket, $1,000.
00:16:39Consumers are buying more expensive vehicles.
00:16:42They're buying more SUVs and trucks.
00:16:43I didn't think it's possible to be buying more SUVs and trucks.
00:16:46We just set an all-time record for that.
00:16:4881% of sales in October were trucks and SUVs.
00:16:53That's a complete all-time record.
00:16:54You think about the 19% being cars, much cheaper.
00:16:57So as consumers continue to shift, we're seeing prices go up just because of that.
00:17:01And then, of course, you get to the two middle buckets, which are mostly OEM-driven.
00:17:06What are OEMs doing in response to having fewer chips?
00:17:08Well, they're prioritizing what they send to dealers.
00:17:10More expensive models, more expensive trims, more expensive options.
00:17:14That's what that second bucket is.
00:17:15Can you just tell us what OEM stands for?
00:17:17Yeah.
00:17:17Sorry.
00:17:18Me too.
00:17:18Sorry.
00:17:18The original equipment manufacturer, Automaker.
00:17:20Sorry.
00:17:23So what you see there, that $2,300, that's OEMs, Automaker, sending more expensive vehicles
00:17:29to the marketplace.
00:17:30So instead of an XLT, they're sending a limited.
00:17:33Instead of a two-wheel drive, they're sending a four-wheel drive and on and on.
00:17:37Then, of course, if you have nothing to sell, they cut that back.
00:17:39So there's no incentives out there.
00:17:41The incentives are comically low.
00:17:43They average about $1,600 a unit now.
00:17:45Two years ago, they were $4,000 a unit.
00:17:49So now you get into the final one, which is dealer profit.
00:17:51Dealers are making $2,600 more per unit than last year.
00:17:56And a lot of people probably think dealers make a ton of money on selling cars.
00:18:01It's really never been true.
00:18:02They make about $300 to $500 per car they sell before the financing.
00:18:08Now they're making roughly $3,500.
00:18:13So that's where you start getting into who's owning this.
00:18:17So I made a, I don't know, it looks like a clown face or something over here on the right.
00:18:20The automakers are capturing about two-thirds of the gains here.
00:18:24And that's the first three buckets, basically.
00:18:26Dealers are only getting that last piece.
00:18:28But because their profit before was so low, this has been a huge windfall for dealers.
00:18:33They don't have a lot to sell.
00:18:34They are begging for more cars because of what they're making.
00:18:37You know, when you're making $3,500 or $3,000 a unit, you're saying, give me more cars.
00:18:42I need more cars.
00:18:43Guys, think of what I could do with more cars.
00:18:44And it's like, well, right, everybody wants that secret sauce, right?
00:18:48High price and high volume.
00:18:50But the reason we have high price is because we can't have high volume.
00:18:53So dealers are only making about a third of it.
00:18:56But that third for them is monstrous.
00:18:58Automakers are capturing about two-thirds of the gain.
00:19:00For consumers, payments are up about 12%.
00:19:03So as we're seeing prices up 30%, payments are only going up about 12%.
00:19:08And that's driven by higher trade-in values.
00:19:11I'm sure you guys have been out there on Carvana and CarMax and Vroom and others and checking out the trade-in value of your cars and going, I can't believe this.
00:19:19I bought a car five years ago.
00:19:21Like I just did my Jeep.
00:19:22I bought it seven years ago.
00:19:24And I'm getting an 80% residual on that.
00:19:26I mean, come on.
00:19:28Who wants a seven-year-old Jeep?
00:19:30And someone's going to pay 80% of the original MSRP for it?
00:19:32Fine.
00:19:33It's gone.
00:19:33I'm getting a new car.
00:19:35That's the kind of things you see.
00:19:36Also, interest rates.
00:19:37Interest rates are very low, much lower than they were last year and two years ago,
00:19:40which is also helping consumers.
00:19:43That's why payments run up 12%.
00:19:44I think I've got to start moving fast, too, if I haven't talked to you long.
00:19:48Real quickly, I think I've got two more here just on basically the used operations.
00:19:51So this is what franchise dealers are selling.
00:19:54So as you guys talk to your Nissan store and your Ford stores, this is what they're actually selling right now.
00:19:59They're selling a lot of used cars.
00:20:00And normally this time of year, they sell a lot of new cars.
00:20:02So that green dotted line is sort of that even.
00:20:06They sell one new car for every used car.
00:20:08Where you could see seasonally, it should be really far down right now.
00:20:11But because of the supply shock of new cars, dealers moved over to used cars.
00:20:17That's why you're seeing the trade-in values that you are.
00:20:19Because dealers are, if they can't get new, they run over to used and they bid up those prices.
00:20:23And now that's why consumers see such high trade values and why everyone thinks they're suddenly rich and they're just in par.
00:20:29So dealers are selling a lot of used cars.
00:20:32You know, it peaked in 2020 at 1.3.
00:20:34But I mean, we're basically back to almost peak kind of coronavirus levels here.
00:20:40And basically we're 1.25 used vehicles for every new that a new car dealer sells.
00:20:47You know, the industry on average now is a used car dealer.
00:20:49Wow.
00:20:51One more related to that.
00:20:52Next slide.
00:20:53Okay.
00:20:54Just wondering, our friend Mark Zalas in Tampa asks,
00:20:57is why is a brand like Honda advertising incentives like 0% financing when there are no cars in the lot?
00:21:05Is that to drive acquisition of used cars?
00:21:09Or is that?
00:21:10Yeah, pretty much.
00:21:12But depending on the model, they still may have some.
00:21:16Now, you know, if you have cars, cars are sitting around for a long time.
00:21:19Nobody wants to buy a car.
00:21:20So if you're looking for any kind of deal, you'll probably find it on a sedan somewhere.
00:21:24So APR is the only tactic that works right now.
00:21:27Nothing else really works.
00:21:29No incentive has any teeth right now besides APR.
00:21:32So if you need to move anything, you'll add an APR offer.
00:21:36We saw Ram add a 0% 72 offer.
00:21:40And Ford matched it two days later, even though neither one of them has any inventory to speak of.
00:21:44We do it to continue to drive consumer awareness.
00:21:47And there's a lot of people out there that, you know, still it's a truck sale.
00:21:51You don't have a truck to sell.
00:21:53Someone will sell that person a truck.
00:21:55Right.
00:21:55And you continue to drive them to your dealerships.
00:21:57And APR for those who haven't bought a car for a while is?
00:22:02APR, the interest rate you spend on your car loan.
00:22:05It's a car loan.
00:22:07Got it.
00:22:08I think I got one last slide here and then a brief look at where things may go.
00:22:14And I apologize.
00:22:15I'm probably behind.
00:22:16Similar slide to the new side.
00:22:18This is used prices.
00:22:19Used cars are on $30,000 game, guys.
00:22:21This blows my mind.
00:22:23You know, new cars have hit 44.
00:22:25We're now at $30,000 for a used car.
00:22:28This used to be like $20,000.
00:22:31And I'm not talking like ancient history, like the 64 and a half Mustang should be.
00:22:35I'm talking like three years ago, you know, used cars were $20,000.
00:22:40So prices are up on both sides of the house.
00:22:43And I mean, this shouldn't be shocking if everything you just talked about to see what
00:22:45new prices look like as well.
00:22:47So real quickly now to wrap up, you know, where are things going?
00:22:51And it basically just comes down to three questions, which is how many vehicles can OEMs build?
00:22:56And I think that's probably the most critical one that we're still dealing with.
00:22:59I don't think we're on to two or three yet and we're close.
00:23:02Can we build more cars and trucks?
00:23:03Can we get the chips?
00:23:04Can we get the resin and tires and the wiring harnesses?
00:23:08You know, one guy in Malaysia got COVID.
00:23:10He brought down the entire plant.
00:23:12That entire plant makes wiring harnesses for Toyota.
00:23:14Toyota lost production for a month.
00:23:16Like that's how fragile things are right now.
00:23:18So one, can we make more?
00:23:19And two, this is really as we get into 2022 and into 23, this question too is if they can,
00:23:27will they build more?
00:23:28You know, you see proclamations by Ford that they're going, they're going to continue on
00:23:32this path of, you know, ordering to build vehicles.
00:23:36Like we're not going to just produce vehicles and put them in inventory.
00:23:39We're only going to build what consumers want.
00:23:41And that's great.
00:23:42And I think, I think Ford is making a very good effort to change their business model.
00:23:46But honestly, if you're a dealer or consumer and you go there and Ford says it's going
00:23:50to be six weeks for you to get an F-150 and you turn around and look behind you and see
00:23:53a Chevy dealer with rows of Silverado, I mean, how long do you think Ford can stick with that?
00:23:59And so the question is, will they choose to build more?
00:24:02And some, I'm not going to name names, but some will choose to build more, particularly
00:24:06when prices are this high.
00:24:07They have business models that are based on pure volume at any cost.
00:24:10They will build more and that will kind of drag the rest of the industry forward if that's
00:24:16what's going to happen.
00:24:17Then finally, does that lead to pre-pandemic dynamics?
00:24:20Are we getting back to $4,000 a unit of incentive spend?
00:24:23Are we getting back to 3 million units on the ground?
00:24:26Probably not in 22 and definitely not in 22 and most likely not even into 23.
00:24:33We probably wouldn't see a return to those kinds of dynamics anytime soon.
00:24:37So the final page.
00:24:38Oh, yeah.
00:24:39I'm sorry.
00:24:39I just had a quick question because you're saying it's not going to return to 2022 or 2023.
00:24:44How will that affect the original equipment manufacturers or the main dealers and their
00:24:49advertising budget for radio or for digital?
00:24:53Because it is based on units sold, correct?
00:24:56And in addition to the OEMs, there's aftermarket products.
00:25:02Like you said, the Malaysian glass plant or a tire plant.
00:25:05I mean, it seems like it's really delaying.
00:25:09And obviously, the demand is low.
00:25:11The cost is high.
00:25:12I'm just wondering how the co-op is going to happen, what you see happening for ad dollars
00:25:19in the next coming two years.
00:25:21Please.
00:25:22Yeah.
00:25:23I mean, I talked to a lot of dealers.
00:25:24I talked to a lot of individuals in radio and try to deliver the same message to all of
00:25:29them, which is to remain in market and change your message right now because your message
00:25:33cannot be focused on the deal.
00:25:35And for too long, it's been focused on that.
00:25:36We need to continue to be in front of consumers and dealers, as mentioned, they have the funds
00:25:43to be in front of consumers and they need to be delivering a new message.
00:25:47We can do things fully digitally.
00:25:49If you can't find what you're looking for on the lot or on our webpage, call us and work
00:25:54with us because what you want, it's out there and we can find it for you.
00:25:59So there's a much different message that I think needs to be delivered for two consumers
00:26:04from right now and you have to focus on other elements than the deal because there's no
00:26:10deal that we've had and it's not coming back.
00:26:12But if you disappear, this is the thing I always tell them, if you disappear from market
00:26:16and say, I can sell everything without remaining there, then where will you be when consumers,
00:26:22you know, when that consumer does come back?
00:26:24Every consumer comes on a different timeline.
00:26:26They have a different budget.
00:26:27They're focusing on a different element of what they're buying.
00:26:30And if you disappear, you're gone.
00:26:32So you've got to remain relevant in the market.
00:26:35It's been my message to them, you know, to all parts of this channel.
00:26:40So where do you see the business going in the last minute that we have?
00:26:45I mean, basically, we're going to see very tight inventories throughout 22, basically.
00:26:51We don't see inventory really starting to budge till Q4 22 at the earliest.
00:26:55So we're going to see dynamics very similar to this.
00:26:58High trade-in values, very high new vehicle prices, and tough inventory.
00:27:04The longer this goes on, the more likely it is that these things will become permanent.
00:27:09Things like Ford trying to change.
00:27:11You know, if things go back very quickly, Ford's going to abandon that strategy to build
00:27:15the order very fast.
00:27:17But as things go on, the longer it goes, the more likely these things are that they're
00:27:21going to be permanent.
00:27:21All right.
00:27:27And then there it is again, your Twitter handle.
00:27:30That's it.
00:27:30Yeah.
00:27:31Tweet me.
00:27:32Well, thank you.
00:27:33I mean, I could talk about that all day.
00:27:37One data nerd tool, clearly another data nerd.
00:27:40That is awesome, awesome stuff.
00:27:42Well, thank you so much, Tom.
00:27:43I know you're busy out in California at the Auto Show.
00:27:46And we really, really appreciate you and appreciate you a few minutes this morning to share with
00:27:54us.
00:27:55Thank you, everyone.
00:27:56Have a great day.
00:27:56Thanks, Tyson.
00:27:56Thank you so much, Tyson.
00:27:57That was awesome.
00:28:00Tim, I think we have another guest to join us.
00:28:06We do.
00:28:06We do, Larry.
00:28:07So thank you.
00:28:07So our next guest is going to be Frank Lopes.
00:28:09He is the number one retail automotive sales strategist, performance coach, marketing agent,
00:28:16and author of the book, The 7-Minute Setup.
00:28:18Frank has a wealth of knowledge working with dealers on a day-to-day basis and guiding him
00:28:22through these fun and exciting times.
00:28:25So we were going to have Frank live, but we ended up having a scheduling conflict.
00:28:29So we recorded him last week.
00:28:32So we do have different shirts on, me and Larry.
00:28:34We didn't change between here.
00:28:36So let's take a listen to his insights.
00:28:39Excellent.
00:28:40And I will bring those up here and if I can find them.
00:28:45Easier said than done, Tim.
00:28:49Let me find it here.
00:28:51Let's get it up again.
00:28:57All right.
00:29:03It's 75 in Vegas this weekend, everyone.
00:29:07Oh, stop bragging.
00:29:09Okay.
00:29:09Here we go.
00:29:12Does everybody see the big Beasley logo?
00:29:14Yes.
00:29:15And we are ready for Frank.
00:29:20So Frank, thanks so much for joining us today.
00:29:24We really appreciate you taking the time.
00:29:27Absolutely.
00:29:28It's my pleasure to do so and I'm excited to get into it.
00:29:30All right.
00:29:32So Tyson Jomini from J.D.
00:29:35Power was just with us and he told us that inventory and supply chain shortages affecting the auto industry could last late into 2022 or early 2023.
00:29:45How are local car dealerships adapting?
00:29:48Well, look, I think, Larry, I think that all depends on the dealer that you're talking about, because this is a situation like this, to be honest, is no different than any challenge or anything like that that we face in life.
00:30:02If everybody winds up, they wind up reacting in a way that they feel is best for them, right?
00:30:09Or they're going to wind up reacting in the way that they've reacted to every other challenge that has come up in the past.
00:30:16There are some people that are going to look at this and see it as a huge opportunity.
00:30:19There's others that are going to look at this and they're going to want to stick their head in the sand.
00:30:24There is a huge amount, a huge, huge percentage of people, especially in retail automotive, that quite honestly are sticking their head in the sand right now.
00:30:35And they're just kind of like, well, I don't have any cars.
00:30:37And what am I going to do?
00:30:40Like, that's it.
00:30:41I don't have any cars.
00:30:42So I'm just going to sit back here and do nothing, you know?
00:30:45Yeah.
00:30:46So it really all depends.
00:30:48Most of the smart dealers are actually going all in right now because they're seeing that there's a huge opportunity.
00:30:57You know, as soon as the inventory started to go down, you have a huge percentage of dealers that they just start cutting back, cutting back, cutting back with the whole thing of, well, I don't have anything to sell, so who cares, right?
00:31:09So why am I going to spend any money?
00:31:11Why am I going to do this?
00:31:12Why am I going to do that?
00:31:13I may as well just go dark.
00:31:14And whenever that happens, that creates a huge, huge opportunity for the dealer that does want to step up.
00:31:22And maybe it's not a direct inventory play, like you're looking for an F-150.
00:31:29I have 50 F-150s at my dealership.
00:31:33Come buy one.
00:31:34Maybe it's a completely different play than that.
00:31:37But the smart ones are the ones who are looking and they're saying, okay, well, you know, there's a huge vortex that was created.
00:31:44And it basically sucked all of the weak dealers out.
00:31:48So what are the top, like, three to five things, in your estimation, that every dealership can be doing right now to optimize sales and profits?
00:31:58Number one, of course, would take their head out of the sand.
00:32:00So let's say they all did that.
00:32:01So what are the next three to five things or six, however many you have?
00:32:05What should they be doing right now?
00:32:07So they should really be looking at their dealerships and saying, okay, I know that new vehicle sales is a certain – that's one of the profit centers that I have coming in.
00:32:19I cannot control the amount of supply that's coming in from that one profit center.
00:32:25But I also have other profit centers in the dealership.
00:32:29How do I best utilize and strengthen all of those?
00:32:32So if you take new cars out of the thing, let's look at used car inventory.
00:32:37Now, a lot of dealers are – right away, you're going to get pushback, but, oh, the cars are so much money, blah, blah, blah, blah, blah, right?
00:32:43But the reality is, yeah, there's so much money, and they're also selling for so much money as well.
00:32:48There was an article that came out that I noticed this morning talking about how the value – the price of new cars are selling over – average of over 8% over MSRP across the country.
00:33:02And used cars are selling for 32% higher than they were a year ago.
00:33:08So, yeah, you're going to be scared to purchase the vehicle, but that's really a mental thing because you're thinking about what cars were worth 10, 12 months in the past.
00:33:18Get your head out of the sand and get your head out of the past, right?
00:33:21If you buy a car – you used to buy a car for $8,000, you would sell it for $10,000.
00:33:25Now you're buying that same car for $10,000.
00:33:27You're selling it for $12,000 or $14,000.
00:33:29So, number one, realize the fact that the used car market is a monstrous opportunity because the new cars are just not going to be there.
00:33:37The second part is how do you fuel that used car market?
00:33:42Well, let's get into the vehicle acquisition business.
00:33:45The big – the online retailers like CarMax and Carvana, this was a huge part of their business model in the beginning because of the fact that the retail dealer didn't care about it because he always had a supply of vehicles to sell from the factory.
00:34:01Now, the Carvanas and the CarMaxes, they never had that to begin with.
00:34:05They don't have new car franchises, so they have to feed themselves.
00:34:08They have to go out and hunt and everything.
00:34:10They don't have somebody just showing up saying, okay, here's a bunch of vehicles to sell.
00:34:14That doesn't work for them.
00:34:15So, your used car vehicle acquisition – now, because of the fact of when we're having this conversation, maybe that's a little bit late to the table because there are a lot of dealers that are already doing that.
00:34:27That doesn't have anything to do with the fact that your owner base, your customer base, your circle of influence that you have, people that you've sold vehicles to before or vehicle or people that service with that dealer, they're the ones who are more than likely to respond to a message from that dealer.
00:34:46So, being able to go into the acquisition business and basically to buy everything.
00:34:53And then another one is what about service?
00:34:57There are very, very few dealers in the country that are totally maxed out in their service department.
00:35:05They say that they are and they think that they are, but in reality, they're not.
00:35:10There are other ways that they can get more labor and more jobs out of all the technicians that they have.
00:35:16Most of the time, it's based on demand.
00:35:18So, if you can increase the demand for that, then, of course, your service department is going to run much more efficiently.
00:35:25So, the service business, that's a whole other thing that, to be honest, most dealers take it for granted and it's a dumb thing to do because it's the biggest profit center in the store.
00:35:39And if you can actually get a dealer to start to really talk to you on a really granular and technical basis, they're going to talk about something called absorption rate.
00:35:50And what that is, is that's how much of your total expenses in the dealership, how much does the service department, right, how much are they able to eat up of those expenses?
00:36:02How much profit are they able to generate to eat up the expenses of the entire dealership?
00:36:07And most dealers, they will, you know, the rule of thumb is 80 to 110 percent.
00:36:13So, most dealers are not there.
00:36:15Most dealers are somewhere in the 40 to 60.
00:36:19Some good ones get close to 80 or so.
00:36:22But when you get a dealership that will run at a 100 percent absorption rate, everything in the front is profit.
00:36:29Everything that they sell, everything else that goes on is profit, right?
00:36:32So, the smart ones will tell you that that's what they're actually looking for.
00:36:38But those are the three main different directions to go in.
00:36:42Can we go back to absorption rate?
00:36:43Because I think that's a term that most of us don't know.
00:36:46It will be new to most of, even our most seasoned automotive sales rep.
00:36:51So, absorption rate.
00:36:53So, when you say to be at 100, what does that mean has to happen?
00:37:00So, if the total expenses of the dealership are $100,000, right?
00:37:06I'm just going to use round numbers because I'm not good at math and I'm not smart.
00:37:10I can add, I can't do anything else, right?
00:37:12So, if the total expenses of the dealership are $100,000, the service department needs to generate $100,000 in net profit.
00:37:22That's a 100 percent absorption rate.
00:37:24All of the expenses of the dealership are absorbed by the service department.
00:37:29So, you talked about sort of three areas.
00:37:32They could promote their service because that could provide the absorption rate, a great term, that will take care of the expenses.
00:37:42They can be in the acquisition of used vehicles or they can continue to be creative with the way they sell the limited inventory of new cars.
00:37:52But all of that takes some sort of advertising and marketing, especially growing service, growing used car acquisition.
00:38:00And many dealerships depend on co-op to fund their advertising.
00:38:04At least they have historically.
00:38:06But because co-op is generated from new car sales and there are fewer cars being sold, then I guess my limited math skills tell me they're getting less co-op.
00:38:19So, are the dealerships that you're familiar with, are they managing their marketing budgets differently than pre-pandemic?
00:38:31So, there's two things here.
00:38:33Number one, Larry, you're totally right.
00:38:36There's a huge percentage of dealers in the past that they made all of their marketing and advertising decisions based on their co-op.
00:38:43And there are certain advertising reps out there that would take advantage of that fact to be able to sell inventory.
00:38:50That's great.
00:38:51No problem.
00:38:52But that's all in the past now.
00:38:55That's all gone.
00:38:57You know, that's all gone.
00:38:59I always, from day one, I always looked at co-op as gravy.
00:39:03I never looked at it as a number to make a decision on because that number is going to be variable and it's going to be controlled by a whole bunch of different factors that, man, nobody has control over except the manufacturer because it's their money.
00:39:20They're the ones who are handing the money out.
00:39:22Yes, maybe it's a percentage of the MSRP of the vehicle.
00:39:25Maybe it's a percentage of the net of the vehicle.
00:39:28Whatever.
00:39:28Still, the money goes back to the manufacturer and then the manufacturer says, okay, you have to do this, you have to do that, and then you do that, and then I have to look at it, I have to say it's okay, I have to give it the blessing, and then I'll give you half the money back for it.
00:39:44So I never, ever banked on it.
00:39:46Whatever came, it was just gravy.
00:39:48Now, it's basically, it's all gone.
00:39:52Yeah.
00:39:52It's, you know, it's all gone.
00:39:54So a lot of the excuse of no co-op, no this, there is no co-op, the co-op that dealers are getting is a small fraction of what it used to be, and it's not coming back.
00:40:08Don't be surprised in the future if we don't see a lot of these co-op programs, just go bye-bye.
00:40:13So in the last minute we have together, if you, Frank, were lucky enough to be a Beasley Media Group advertising rep selling digital or traditional radio, what would you be talking to your auto dealers about today?
00:40:29A media rep right now has to work in stealth mode.
00:40:34How many posts did you put on Facebook today?
00:40:37How many posts did you put on LinkedIn?
00:40:39The posts that you put up, what kind of information was in there?
00:40:43Every single Beasley media rep should go to Fox News, should find the article about the prices, should find all that type of stuff, right?
00:40:52And they should, number one, they should email the article, right?
00:40:55Hey, found this today online, thought you'd like to see it.
00:40:57Boom, and send it.
00:40:58They should take a screenshot of the article, go on to Facebook, post the screenshot of the article, and then in the comments, in the comments, not in the caption, in the comments, they should put a link to the article right there, right?
00:41:13And say interesting information today about new car prices, right?
00:41:18And send it out.
00:41:20It has to be, the reps have to become information outlets.
00:41:25They have to become professionals.
00:41:26They have to become people of knowledge and people of trust.
00:41:31Showing up with Dunkin' Donuts is not going to get you a schedule anymore.
00:41:35It's not.
00:41:36And I'm sure that the majority of reps have figured this out already.
00:41:41I'm not saying anything new, okay?
00:41:43But the problem is nobody's teaching them what to do next.
00:41:46That's the issue.
00:41:47And then they just become the, you know, they just become the radio rep.
00:41:51And then that's it.
00:41:53Like, oh, I'm not doing radio anymore.
00:41:54I don't have to talk to Bob, right?
00:41:56There's no reason.
00:41:57Hi, Bob.
00:41:58Nice to see you, but I have nothing to say to you.
00:42:00You have to become an asset to these people.
00:42:02You have to become a resource.
00:42:03You have to become a trusted advisor to them.
00:42:06And the way that you do that is by sharing information, whether they know it or not, does not make a difference.
00:42:13You can never share something thinking that, or not share something thinking that your audience knows it.
00:42:20Because the majority of them don't, number one.
00:42:23And number two, there's a huge amount of power in just showing up and sharing the information.
00:42:29The more that you do that over and over and over again, now you're not selling spots and dots, you know?
00:42:35You're not selling a digital package that your company came up with.
00:42:39Because that's what the dealer thinks.
00:42:41The dealer, you know, the dealer sits there and they look and they're like, well, you know, they can't sell radio anymore, so they've got to come up with this shit.
00:42:47So you're not doing that anymore.
00:42:49Now you've become a resource.
00:42:51You've become an information outlet.
00:42:53That is going to pay you dividends down the road, not just in this career, possibly in your next one, right?
00:43:00And it's going to make you so much more valuable.
00:43:02And that's probably true, not just with automotive dealers.
00:43:06That's with everybody.
00:43:07With everything.
00:43:07It doesn't matter.
00:43:09It doesn't matter.
00:43:10We're up against the time.
00:43:13So we appreciate, Frank, that you've joined us today.
00:43:16That was awesome.
00:43:17So if anybody with us today would like to reach out to you, I know they can find you on LinkedIn and Facebook, and they could just Google.
00:43:27And I think you own, like, the whole first page of the organic search results if you put in your name.
00:43:34But if people want to follow you, what do you think the best way to follow you would be?
00:43:41You follow me wherever you're the most comfortable.
00:43:44If you're most comfortable on LinkedIn, you follow me there.
00:43:47You're most comfortable on Instagram, you follow me there.
00:43:49I will be everywhere for you.
00:43:51And the best way also that you can get in contact with me and that you can really follow me if you really want to get granular with it is to join my text crew.
00:44:00So all you have to do is just text the word Beasley to 732, write this down, Reps, 732-561-1854.
00:44:10That will be a direct connection right here to this, right here to this thing.
00:44:15Every morning I send out a text message of motivation, inspiration, some type of education, something that you need to see at the beginning of the day because God knows you're going to wake up and this thing's going to be all full of problems by 9 in the morning.
00:44:30You need something good to be in there first as well.
00:44:33If you keep the good stuff in here, there'll be no room for the bad stuff.
00:44:38So you can join the text crew.
00:44:39Like I said, text the word Beasley to 732-561-1854.
00:44:46And all the texts that you send me on that number, they come right to this phone.
00:44:49That's the best way to do it.
00:44:50Yeah, and we'll put the number and the keyword in the chat box so people can just copy and paste it.
00:44:58So, Frank, thank you so much for joining us today.
00:45:05Wow, that was pretty awesome, huh?
00:45:07Yes.
00:45:08Yeah, yeah.
00:45:09High energy.
00:45:10High energy.
00:45:12Spoiler alert, we may go a few minutes over because of the awesome information that we got from Tyson and for Frank just now.
00:45:21So we'll hop to the next segment, which we're going to talk about a couple of the resources that we have here at Beasley that we can use to help our auto clients, like I said at the beginning, not just survive, right?
00:45:34But we saw that there's more profits now in new car sales, you know, they're selling more at service, which is a big profit center, used cars, is how we can help our clients not just survive, but probably to thrive.
00:45:49And one of those things is VinClix, right?
00:45:52That's one of Tim's initiatives that he brought to us when he joined Beasley.
00:45:57So elevator pitch, Mr. Jorgensen, what is VinClix?
00:46:00All right, so what is VinClix?
00:46:02So VinClix, everybody knows VinClix delivers personalized digital inventory ads to seriously highly engaged auto shoppers based on deep knowledge of their shopping behaviors and intent.
00:46:13So we use an auto shopper data to target and measure.
00:46:17We use technology platforms to deliver their ads.
00:46:21So what also makes VinClix unique is that we use omni-channel approach in marketing the dealer's inventory.
00:46:26So as everybody has heard me say, we use syndication, we use search, we use social, and we use targeted display.
00:46:33So in doing that, we produce results, our shoppers are more engaged, we create an environment where it's a be-back traffic, and we're the most cost-effective form of marketing or advertising in the digital space.
00:46:44So the bottom line is we drive shoppers.
00:46:46We drive shoppers that buy vehicles to these dealers' websites.
00:46:49And it's a superior tool that we can use to help our advertisers.
00:46:59As a matter of fact, we've had a number of our reps be very, very successful in introducing VinClix to a number of our auto dealers.
00:47:08And we've asked a few of them to join us today.
00:47:12We have Chuck Powell from Charlotte.
00:47:15We have Ellen Annapoli from New Jersey.
00:47:18And Jerry Drain from Tampa.
00:47:22And Chuck and Ellen, if you can...
00:47:27Here comes Ellen.
00:47:28And now we just need Chuck.
00:47:29There he is.
00:47:30It's not a party without Chuck.
00:47:33So I hope everybody's doing well.
00:47:35Well, I guess we'll start with all of you.
00:47:39And if you could take a second to answer this question, starting...
00:47:43Let's start with Jerry.
00:47:44How did you decide which automotive clients to target for VinClix?
00:47:51I chose to meet with somebody that I had a really nice, comfortable flow of communication with.
00:47:57Because times are so challenging right now, I'm careful about what and when I share information with dealerships.
00:48:04The gentleman that I have initially contacted is the general manager of a dealership.
00:48:10He makes all the hard decisions.
00:48:12He did bring his team in after the initial meeting that we had via Zoom.
00:48:18And the whole team is on board with VinClix at this point.
00:48:21They're happy.
00:48:23Yeah, that's all.
00:48:24And just for the right, what...
00:48:25You don't need to name the actual dealer, but what do they...
00:48:29Infinity.
00:48:29Infinity.
00:48:30Infinity, new and used.
00:48:31And this group has 10 other dealerships under their umbrella.
00:48:34So, I'm super excited for him to finish his 90 days so I can roll it out to everybody else.
00:48:40Yeah, that's a good...
00:48:41At his reservation agency?
00:48:44Or...
00:48:45Direct.
00:48:45Direct.
00:48:46Direct.
00:48:46Okay.
00:48:47Yeah.
00:48:47Ellen, how about you?
00:48:49Yes.
00:48:49How did you target your...
00:48:50How are you targeting your dealers with VinClix?
00:48:53Well, just in this market, what it was probably about 60% of my business.
00:49:02And for me, I went to someone who was not using radio first, who I had a good relationship with, but was not on with me spending money because I didn't want to lose money if there was a situation or problem.
00:49:14You know, Tim knew that up front.
00:49:16So, I went to someone who I could get money from that always wanted to work with me, which now is really opened up a...
00:49:25I mean, I probably have 100 people that I'm going to with this product now, and I've probably pitched it to about 30.
00:49:33I've closed five.
00:49:35And like Jerry, I'm in the same boat.
00:49:37A lot of these are multi-store dealerships.
00:49:39So, they have one store doing it, and if it goes well, it could potentially...
00:49:45It could roll out to...
00:49:47Most of these are multiple jerseys, very populated.
00:49:50So, in our market, the amount of dealerships is...
00:49:54I'm in Jersey.
00:49:55So, it's through the roof.
00:49:56And which brands are currently using it with you so far?
00:50:00I have a Nissan store.
00:50:02I have a Honda store.
00:50:04I have a Dodge Chrysler Jeep store starting.
00:50:08I have an Infiniti on the...
00:50:10I mean, I have some that are just waiting to get over that 50-car threshold to start with me.
00:50:15I probably have six dealers just maybe December, January, ready to go.
00:50:21Oh, and I have a used car store.
00:50:23It's one of the stores that just sells used cars.
00:50:25So, they're doing it.
00:50:27Ellen, who do you contact when you contact the client first?
00:50:30Is it the general manager, or do you go to a digital person as women?
00:50:33You know what?
00:50:34I know mostly owners and general managers.
00:50:37And then what they do is they tell me if they would like to bring in a BBC manager or a used car manager.
00:50:43It's not always used cars.
00:50:44Or sometimes it's the BDC manager.
00:50:46And what is that?
00:50:47What's BDC?
00:50:48Excuse me?
00:50:49BDC.
00:50:50That's people that are taking internet.
00:50:52It's purely internet sales that they either sell or they direct it over to a salesperson, depending on how each dealership runs.
00:50:59Sorry.
00:51:00Chuck.
00:51:00No, that's okay.
00:51:01The term I use all the time.
00:51:03Chuck, how have you been targeting your clients?
00:51:07Just one after both currently active radio clients and non-active clients, but maybe I've worked with them in the past.
00:51:12And one in particular I've had success with is a Kia dealership.
00:51:17And I want to say this is month four they're on now.
00:51:20But I'd say in terms of the numbers and the cost per click, I know it's got a $2 guarantee.
00:51:25They saw about 90-something cents the first month.
00:51:28And then the second month, it was in the mid-40s.
00:51:30And then month three was about 50 cents cost per click.
00:51:33So it's definitely performing extremely well.
00:51:37And they're happy.
00:51:38I'm trying to get him to expand and obviously get more people on the challenge.
00:51:41I'm just having, like I'm sure everybody with anything automotive these days is just getting people to either add budget or to switch budget to add this product.
00:51:49But I will say it's great.
00:51:50I love it.
00:51:51And the fact, too, that it's pretty easy once it is sold.
00:51:55Tim pretty much just gets the access information and done.
00:52:00And then as a rep, you're just like, all right, here's your monthly report.
00:52:02That's it.
00:52:02So I really want to sell it more because it's the easiest digital product we have to get going.
00:52:07Amen.
00:52:07So going back to Jerry, what did you, because our clients are expecting us to sell them radio or our traditional digital campaigns, how did you introduce VinClix, if this is something that you offered?
00:52:24I shared the cost effectiveness immediately because everybody is making money hand over fist, which makes them not want to spend it even more.
00:52:33And the attribution, you know, it's so hard to attribute exactly where a sale comes from.
00:52:40But with the VinClix reporting, not only were we able to drill down on every car that we either assisted or moved out the door, but we were also, like we could see in the reporting ones that like came in and were auctioned out right away.
00:52:55So it's easy to cut the wheat and the chaff and decide what worked.
00:52:59And I shared that right up front.
00:53:00And that was comforting.
00:53:02Yeah, I bet.
00:53:03Ellen, what did you, how'd you introduce VinClix?
00:53:06What did you?
00:53:07Well, I finally got to the point where now I am selling it to my radio clients and my clients that didn't do radio with me.
00:53:16And basically, I'm like Jerry, I kind of went in and said, you know, first of all, I always ask if they're using lot links because obviously we are a big competitor.
00:53:25And Madison Honda, my first client did a side-by-side test, gave both of us budgets.
00:53:37And by month three, he has now canceled lot links.
00:53:39So I know that I can be pretty confident that if they're a dealer, I've always asked first, if they're familiar with lot links, why didn't they do lot links?
00:53:49And then I go into what this product will do for them.
00:53:52Are there other comparable ones to lot links?
00:53:56Not really, lot links.
00:53:57Okay.
00:53:59Kind of the first question you would ask them, are you using lot links?
00:54:02Yeah, Tim, is there anybody else who's really in?
00:54:05No, lot links and VinClix are pretty much similar, the same product.
00:54:10There are other products out there, but they don't do the syndication, the search, the targeted display, and the social.
00:54:17So where we do everything, the biggest difference between lot links, when you go into a dealer, if he does have lot links, is our cost per VDP is half of what they charge.
00:54:26We have two times more time on site and two times more times page views.
00:54:31And VDP is vehicle description page?
00:54:36Tim, can I add one thing on lot links?
00:54:38Yeah, go ahead.
00:54:38They also package it differently.
00:54:40So you need to be familiar.
00:54:42They still are going with the $75 per vehicle.
00:54:46So the way they try to go in with budget is they're like, if you have 100 cars, we want to market 100 cars at $75 a car, and they try to scoop up a $7,500 budget.
00:54:58So they are still going on a per-car basis, which we are going on impression-based.
00:55:04That's a big difference as far as just pricing and how to talk to them.
00:55:08You should know that.
00:55:09Jerry?
00:55:10In the Tampa market, iHeart is using car clicks, and they are about $0.40 more expensive in their initial presentations.
00:55:20And I don't know if this is a national push or just the local iHeart cluster here in Tampa, but they're pitching three-size packages, and there's very little wiggle.
00:55:29It's like either $4,000 or $6,000 or $8,000, and the cost per delivery of a VIN display ad is double.
00:55:38So we're, so far, so good.
00:55:40You know, they haven't figured out that we're skinning the cat better so far.
00:55:44I know, and I'm waiting for lot links to figure that out, too.
00:55:48Yeah, but we still have more meat in our delivery of the media.
00:55:53You know, there's more subsubstance to how we're reaching the next best customer.
00:55:58Well, it seems to me, based on what you just said, Jerry and Ellen, is, you know, with a lot of digital products, the first one in the door probably stands for the best chance of getting an end sale.
00:56:10So it seems now that iHeart is selling, not necessarily a superior product, they have a product, we just don't want them to be the first in the door, right?
00:56:20Because, great, we need to be out there really.
00:56:23Also, relationship is going to play into it, too.
00:56:27I mean, I'm calling people I dealt with five years ago, and they're like, oh, my God, I haven't talked to you.
00:56:33So sometimes, really, just I've always been, I've always kept relationships with clients, even when they're not doing business with me.
00:56:40I keep people very close to me.
00:56:43So it pays off when you have an opportunity that you can, you know, they want to work with you.
00:56:48Jerry, I'm sure you know your people along the way.
00:56:51They want to do business with you, and now you're bringing them something they may have not wanted to do radio.
00:56:56And now they're like, oh, my God, we get to work together again.
00:56:58So, watch those managers that go to other dealerships.
00:57:03You know, managers move around, Jerry.
00:57:05I'm sure you do.
00:57:05Oh, they sure do.
00:57:07Just like radio reps.
00:57:08Yeah, I keep, I've been at my station for 30 years.
00:57:1220 years.
00:57:13Not that that's an invitation to go anywhere else, by the way.
00:57:17Yeah.
00:57:18But, yeah, definitely call on your relationships, because that's what's going to get you in the door, like, instantly.
00:57:26So the last question for the both of you, because we have, you know, several, we have, you know, over 100 of our colleagues on the line right now.
00:57:36What should they be doing right now?
00:57:38What is your advice for them to start introducing VinClix and having the same kind of success you've enjoyed today?
00:57:47What can they do today?
00:57:50Go ahead, Jeff.
00:57:51First, me?
00:57:51Okay, I like to know as much as I can about what they're currently spending on without asking them first, so that they know that I'm interested, frankly, and that I'm going to compare apples to apples, or I'm going to make sure that what I bring to offer them is something that they have a need for, right?
00:58:11Establish the need.
00:58:11And research, research, research, research, everything you can about their past, stay close in a relationship, which is one of my selling strengths, and make sure that I share the value in this product, which is really how I ask to get the appointment first.
00:58:30Yeah.
00:58:31And Ellen, what's your advice?
00:58:32In this market right now, I mean, definitely call everybody you know, or if you want to reach out to new clients, but usually I open with, I know this product might not be good for you right now, because I understand that your inventory might be low.
00:58:49Like, you almost say no to them.
00:58:51Like, no, I'm not going to sell this to you now, because I understand the market, but you should know about this product, because the minute cars start coming back into the market, use cars, that value is going to go down.
00:59:01And I know every dealer that I deal with is concerned about when that switch is going to happen.
00:59:07So new cars come into market, people aren't going to want those used cars, and suddenly they're going to be sitting on used cars that they paid a lot of money in their floor planning right now.
00:59:17So that becomes an issue.
00:59:20So knowing the market when you talk to these people and knowing what's going on will make you look informed, just like Frank said.
00:59:27You've got to understand their day-to-day operations if you're going to look educated.
00:59:32On their products.
00:59:33And Chuck, last word, what advice do you have for our colleagues to start selling VinClick successfully?
00:59:38I would just say share the success stories of other dealerships that are doing it, you know, because when they see that, they're like, oh, wow, okay, yeah.
00:59:44And they get it.
00:59:45That's important.
00:59:46And if you don't have a success story, who's a good person to call about that?
00:59:50Tim.
00:59:52Or Larry.
00:59:53Hey, one last question, because I know this has come up in some of our previous conversations today.
00:59:59Are any of our dealers that you were working with, Ellen, Jerry, and Chuck, are they using co-op or is this out-of-pocket spending for them?
01:00:07Out-of-pocket for mine.
01:00:08And it's literally his digital budget reallocated.
01:00:12It's a small infinity store.
01:00:14But so he took the whole budget and said, okay, you have it for three months.
01:00:18Show me the stock.
01:00:19So out-of-pocket for that.
01:00:22VinClicks is out-of-pocket.
01:00:24My radio is still getting co-op for some brands, like Dodge, Chrysler, Jeep, BMW.
01:00:29They still have co-op.
01:00:31Yeah.
01:00:31Excellent.
01:00:32I'll bring this up, too, Larry, that honestly, nobody really brings up co-op about the product.
01:00:37It's very rare.
01:00:38It happens once in a great while.
01:00:40And it's not talked about.
01:00:42And everybody that we have on, nobody co-ops it.
01:00:44Got it.
01:00:45Well, congratulations, Jerry, Chuck, and Ellen on the success you have with this new product.
01:00:50And you're an inspiration to everybody on the call, no doubt.
01:00:54Ellen, I'll send you my infinity deck so you have it.
01:00:57That would be great.
01:00:58If you would send it, I'll attach it on Academy when we post this.
01:01:01Okay.
01:01:02That would be great.
01:01:03So, Tim, we have one more thing to talk about.
01:01:05Again, we are going to go a few minutes late.
01:01:08But here's another important resource that we have.
01:01:11And I know Tim is going to talk about it.
01:01:12And that is email.
01:01:15So, and we have a special guest.
01:01:19So, I'll let you introduce our special guest as well.
01:01:22And I will.
01:01:22Thanks, Larry.
01:01:23Thanks, everyone on the Vink Clicks panel today.
01:01:25I appreciate your help and assistance in talking about it.
01:01:28But we have Jackie here.
01:01:29She's our key account manager from Site Impact.
01:01:32Hi, Jackie.
01:01:34Hey.
01:01:34So, what we're going to do is we're going to talk about email marketing and how effective
01:01:38it is for car dealers.
01:01:40And I say this because I go to car dealers.
01:01:42I talk to car dealers every single day.
01:01:45And when I ask them questions and are interviewing them, I know they're doing email because I talked
01:01:50to them about it.
01:01:51So, why not do email with us?
01:01:52Why not do email marketing through us?
01:01:54So, do you have my slides up?
01:01:56Can you throw my slides up there, Larry?
01:01:57I'm about to do that.
01:02:00You're great slides.
01:02:02Oh, here it is.
01:02:08Thank you, Tyson, Germany.
01:02:10I want those slides.
01:02:11We'll send those with everybody.
01:02:14And there we go.
01:02:15All right.
01:02:17So, why email marketing?
01:02:20So, it's targeted.
01:02:22So, let's talk about targeted.
01:02:25So, when we're actually talking to a dealer and we're going in and we're saying, let's
01:02:29talk about email, you can do targeted email.
01:02:31So, if they want to conquest their competitor, they want to conquest a different brand.
01:02:36There's so many different things we can do.
01:02:37I have the next slide that's going to show you how we can target them.
01:02:40Because a lot of people go, okay, I just want auto intenders.
01:02:42What does that mean when you go out and say, I need auto intenders?
01:02:45Well, that gets really granular.
01:02:47We can get into a lot of detail.
01:02:48The next slide, I'm going to show you that when we get there.
01:02:50The other great thing about email marketing is very cost effective.
01:02:54So, it's not going to be where they're wasting their money on print, postage, or anything
01:03:00with advertising rates.
01:03:01So, again, it's very cost efficient, cost effective for them.
01:03:04It increases their brand awareness.
01:03:06Right now, brand awareness is huge.
01:03:09People are deflecting all the time from one brand to another, from one dealer to another,
01:03:14because they don't have the vehicle or they don't know that they have the vehicle.
01:03:17So, brand awareness is huge to keep yourself out there and let people know that you're
01:03:21still there and you still have the vehicles and you have pre-owned vehicles.
01:03:25I talked to a dealer that they're switching everybody from their 2021s to their 2020s and
01:03:30the pre-owned lot right now.
01:03:31So, again, brand awareness is huge.
01:03:33Again, measurable and trackable.
01:03:35I know with me, everything that I like to do or everything I like to talk about or sell
01:03:40to a dealer is going to have some sort of measurability and trackability to it because
01:03:43it's so important to track what we're doing.
01:03:45If you can't track it, you really can't, you can't give any, there's nothing hard behind
01:03:49it.
01:03:50So, again, trackability of the campaign.
01:03:54And then, again, email has a strong return on investment.
01:03:57It really is.
01:03:57For the amount of money they spend and for the investment they get back, you know, I
01:04:01put some numbers together, just to give you an idea.
01:04:04If a dealer just sold 15 cars and an average, I put 2,500, that's what I used to use.
01:04:09We know they're making more than that.
01:04:10But, again, that's $37,500 and they spent $8,000 on a campaign, they're making $29,000
01:04:16net after what they spent.
01:04:19So, again, it has a very strong ROI or return on investment for the dealer.
01:04:24So, again, we talked about targeting and different targeting options.
01:04:27So, when you say you want an auto and tender, what's that really mean?
01:04:31Well, again, it could mean the dealer, you want to go after luxury because you're talking
01:04:35to a luxury brand or a non-luxury brand or a domestic brand.
01:04:38I mean, we just listed a few things here.
01:04:41Again, when you're targeting emails, you know, if you see the ad to the right to forward
01:04:44ad, there's four different vehicles there.
01:04:47That's great.
01:04:47Let's target those four people that own those vehicles and try to bring them back into our
01:04:51dealership.
01:04:52You know, at the same time, every email should have a service ad in it or a parts ad in
01:04:57it because you've heard it from Frank and everybody else, dealers are making more money
01:05:02in service.
01:05:02They're making more money in parts right now.
01:05:04They're making more money in the used car vehicles.
01:05:06So, again, let's put those vehicles on there.
01:05:09And guess what?
01:05:10We can target them.
01:05:11If you look for like in market for new autos, used autos, auto financing, auto insurance,
01:05:17parts and service.
01:05:18So, again, we can target customers that are in that market.
01:05:21If you're going to a used car lot and they like to target a little bit more fair credit,
01:05:24we can do that too.
01:05:25So, again, we have tons and tons of targeting options and we make it very efficient for you
01:05:33and the dealer to figure out what you want to do, who you want to target and go after.
01:05:37What else is very important is having layers in marketing.
01:05:41Okay, I'm going to see my slide came up here.
01:05:45Let me put them all up.
01:05:46This is easier that way.
01:05:47There we go.
01:05:48So, doing marketing layers.
01:05:49So, we just don't go and sell an email campaign.
01:05:52Great, we're going to sell an email, ship one email out.
01:05:55Oh, my God, it didn't work.
01:05:56It's not going to work.
01:05:57You need to have a good layered campaign behind doing email.
01:06:01You need to do an email campaign that's going to last 60 or 90 days with the dealer.
01:06:06And they're good with that because you need to show results.
01:06:09It's like anything.
01:06:10When you send an email, you target somebody, just because they clicked it once doesn't mean
01:06:13they're going to buy a car.
01:06:14You've got to stay in front of them at all times.
01:06:16We know that the buying process is less than 20 days now.
01:06:19But, again, you still want to stay in front of them.
01:06:21So, in doing marketing layers, again, we want to do targeted emails that we just talked about.
01:06:26So, we want to figure out, do we want to conquest that consumer?
01:06:29Do we want to go after the dealer that's down the street and conquest his email list?
01:06:34So, we need to figure that out.
01:06:35We need to do email re-drops or re-drops of the email.
01:06:38We can do it to people that view the email.
01:06:40We can do it to people that click the email.
01:06:42We can do it to non-viewers.
01:06:44We can do it to non-clickers.
01:06:46Or we can do it to all of them.
01:06:47But it's very important that we do an email re-drop.
01:06:50And then the other thing that I feel is so important in this whole campaign is that we do targets.
01:06:55Do we do display targeting?
01:06:56We do Facebook targeting.
01:06:57So, we want to re-target these consumers that open the email.
01:07:00We want to stay in front of them.
01:07:01We want to stay in front of them with the same type of ad that they have.
01:07:04So, again, when we do this, putting layers together.
01:07:08So, having that targeted email, doing the re-drops, doing the display targeting, doing the Facebook targeting, it all comes together.
01:07:14And it creates a great campaign for you and for your dealer or your client.
01:07:19So, again, we put strategies together for you, some different things here.
01:07:28But when you go into it, what you want to do is you want to do a 60-month or a 90-day campaign.
01:07:34You don't want to do a campaign that's just going to be 30 days, one drop at all.
01:07:37You want to try to set your emails apart.
01:07:39So, you want to do the initial email.
01:07:42Then you want to do the re-drop one to two weeks later.
01:07:44You want to focus on that same audience that you've already dropped to because, again, you want to stay in front of that same client because eventually, again, they don't buy the first time they see it.
01:07:54And then, obviously, like we said, you want to layer that email with the retargeting of Facebook and the display ads.
01:08:00So, we put a couple examples there, one without retargeting, kind of how I would do it, but then one with retargeting, too, at the same time.
01:08:07And, again, we're always here to help, ask questions, do whatever you need.
01:08:11But, again, doing consistent email, it will help out.
01:08:15It will sell cars for them.
01:08:17Matchback reporting is huge to me.
01:08:21So, I really, and it's one of the things that, again, attribution to anything that we do.
01:08:25But, again, we can show what the open rate was.
01:08:28We can show what the click rate was.
01:08:30We can show what the click rate was on each of the ads that are in the email that went there.
01:08:34So, did they click on a direction?
01:08:36Did they click on a vehicle?
01:08:37What got more clicks?
01:08:38Again, we get the reporting from the dealer.
01:08:41We can match back to their sales records.
01:08:43We can match back to their service records, who actually came into the dealership and actually purchased something or had a service done.
01:08:49That all can be done.
01:08:50We can do all that.
01:08:50And you want to do that because you want to show the value.
01:08:52And that's where you show the value of the product.
01:08:54And that's where you break it down.
01:08:55Like, hey, look, we sold 16 vehicles for you.
01:08:59Some dealers are going to say, well, and I always say this in my event clicks presentation.
01:09:01They're going to, we didn't sell 16.
01:09:03That guy was coming here anyways.
01:09:04Okay, great.
01:09:04Take them out of the equation.
01:09:06We sold 15 cars for you.
01:09:08But we will drive traffic.
01:09:09We will drive sales for the dealer.
01:09:11So, email is super important.
01:09:14So, again, we put one auto case study in here for you.
01:09:17Again, the goal is for the dealer to increase awareness of their special events and promotions.
01:09:21So, for two months, they sent a series of campaigns consisting of an email drop, display retargeting, and re-drops to the viewers.
01:09:29Then we ran the match back report to see what happened.
01:09:35Let's see.
01:09:35Let me go through this.
01:09:36Getting used to my clicker here.
01:09:37So, long story, the goal, the automotive dealer wanted to increase their awareness.
01:09:44We did the reporting.
01:09:45We matched it back.
01:09:46We had 86 new sales, a total of 86 new sales and service customers gained through the two-month campaign.
01:09:52So, again, email is huge.
01:09:55Email right now, dealers are doing it.
01:09:57They're spending the money on it.
01:09:59It keeps them out there.
01:10:00It keeps them in front of everybody at all times.
01:10:03So, again, automotive, what we're doing right now is we're doing automotive, buy your car, trade-ins, service, and bag credit are some of the larger ones that we're seeing out there right now that are happening out there.
01:10:15So, that's my two cents, but I can tell you that email is super important.
01:10:21It's one of the things that when I was a seller, I would go in with at all times because it does show attribution, and it's huge.
01:10:28It's just I can't say it more than enough how much dealers love it because it does drive that traffic.
01:10:32It drives that flow.
01:10:33So, Jacqueline, anything in there or any questions?
01:10:37No, I mean, I think that you really said it all.
01:10:40But, again, just highlighting the frequency, that is going to be key, especially because you said, you know, that buying period is 20 days.
01:10:47All of the data is going to be updated every 30 days.
01:10:50So, you're always going to have an updated list.
01:10:53We get that, you know, targeting from browsing history, from, you know, we can know that they're an intender for financing, for a used car, for auto service, just based off of, you know, putting in information on Kelly Blue Book or, you know, just what they've signed up for newsletters.
01:11:09But with that frequency and those different redrops, you have the capabilities to switch up your messaging.
01:11:16So, if you send to, you know, the first portion of that audience, you can see exactly where they're clicking in that creative, where they're engaging with most.
01:11:25So, as you design the redrop or even your retargeting banners, you can cater that ad based off of, you know, what happened to be most, you know, engaging for that consumer at the time.
01:11:37So, Jackie, I have a question because you have a good, good overview of this.
01:11:43So, email marketing is not something we are, it's not one of the things we sell the most of.
01:11:48It's one of our least utilized digital capabilities is email marketing.
01:11:55So, from your point of view, as you look across, you know, the Site Impact's market, how important is automotive?
01:12:01How big a part of your business is automotive?
01:12:04Automotive is our number one vertical.
01:12:08You know, we work with different types of agencies, newspapers, radio stations, TV media companies.
01:12:16And just from, you know, the type of campaigns that we see coming in, automotive is really, really heavy in that area.
01:12:22Just because, you know, dealerships are willing to spend a little bit more to get, you know, their messaging out there, especially at this time, going back to what Frank and Tyson said, that we need to switch up that messaging.
01:12:35We need to continue to engage with them.
01:12:37And email is a cost efficient way to drive that traffic directly to the landing page, whether it's to that used certified pre-owned inventory or any type of service sales that they're going on.
01:12:49I also really liked what they said about, you know, if it's not something that they currently have available, include something on your email that's saying, let us know what you're looking for.
01:12:59Reach out to somebody today and we can find, you know, a different way to go about it.
01:13:03But just continuing to drive that traffic to the landing page and get more information for the dealer.
01:13:08So I would just like to, I think that's a very telling point, is email is what we sell the least of, but it's what you sell the most of.
01:13:17So I see, Tim, a lot of opportunity and for everybody in the class, I see a lot of opportunity and including email marketing to help resuscitate our automotive business.
01:13:29Well, thank you all very much for joining us.
01:13:32Jackie, thanks for making the time today.
01:13:34Tim and Chrissy, you are awesome, awesome co-hosts.
01:13:40And remember is the playback will be available on Beasley Academy by probably midday tomorrow.
01:13:48And we will see you all in December.
01:13:52Thank you both very much.
01:13:54Have a great day, everyone.
01:13:55Have a great day, everyone.