This Zoom video call is a discussion between Todd Smith from 360Converge and Ken Rosenfield CEO of Rosenfield & Company a top accounting firm with a specialization in the automotive industry. We cover the current state of the industry and how dealerships are navigating the Payroll Protection Program and what is next helping dealerships deploy these funds for maximum returns. We also cover vendor negotiations and a whole host of other critical items dealers are doing now to not just stay in business but thrive during these uncertain times.This was a great conversation with lots of insights so don’t miss out.
Video Transcript
Captions
00:00
hey Todd Smith here CEO 360 converge
00:03
with ten rows and
00:05
chief a bottle washer washer and head of
00:08
all the ficus plants at rows and field
00:12
and associate top accounting firm that
00:14
does a ton of automotive dealers
00:16
nationwide and wanted to get ken who I
00:19
would normally sit down at the Corona
00:22
cigar and bar and hang out and talk shop
00:25
but unfortunately we’re not able to get
00:27
together right now so we decided to do
00:30
it via zoom not nearly as exciting with
00:32
no fear but anyway Ken what’s going on
00:36
man how are you doing SBA loan apps and
00:41
now we’re doing the computations for
00:43
loan forgiveness okay so let’s get into
00:46
this a little bit so how many of these
00:50
PPP loans have you done for dealers how
00:53
many do you apply for some 110 215 so
00:57
we’re not range okay so you did a couple
00:58
hundred so you have some really good
01:00
experience at I guess the process of it
01:03
right it looked pretty simple online any
01:07
unique characteristics of doing these
01:09
things that people have to watch out for
01:11
or was it just pretty straightforward
01:14
well for us we’re straightforward we
01:16
actually developed an algorithm so he
01:18
could use a trailing 12 months or an
01:20
average of 2019 okay
01:24
for car dealers we found a lot of them
01:26
paid some big bonuses 2020 okay up their
01:34
payroll so it’s more advisable for our
01:38
client our client base when we work with
01:43
developed an algorithm to compute with
01:46
the max amount of loans that was kind of
01:57
unique about it up loading the documents
01:59
between each work with
02:13
probably about 10 or 15 different banks
02:16
around the country complicated some of
02:26
our clients had to switch banks some of
02:28
the bigger banks will disappoint
02:33
institutions like that it’s amazing to
02:44
watch the banks in those small
02:45
communities turn around the loans
02:48
backwards really fast
02:51
add a few clients with two or three day
02:53
process never funded yeah I could see
02:55
like the small banks being better at
02:57
this than the large Chase’s Wells I’ve
03:00
already heard class-action suits against
03:02
Wells and some other priority funding to
03:06
their you know super class clients and
03:09
then everyone else got chucked so that’s
03:12
kind of interesting
03:13
so you process a lot of loans you said
03:15
what about half or so got funded right
03:19
yeah I hopefully in the next this week
03:23
ended this week maybe they’ll open up
03:24
another floodgate for some more funding
03:27
for some of these guys actually still
03:29
getting some still getting funded now
03:31
really so is that you think some of the
03:34
money that’s coming back from the
03:35
ashaming
03:36
that has been you know that well was
03:41
there hold I think well some of its the
03:43
banks getting processing the processing
03:45
done so I mean okay got their SBA
03:47
numbers maybe last week funding the
03:52
banks have been able to get their loan
03:53
documents turn around fast it’s just the
03:55
enormity of it so that’s been something
03:57
they’ve had to deal with
03:59
like I know West Bank for example is
04:01
funding some today you know during the
04:03
week where they had SBA numbers last
04:05
week was just fans hundreds of thousands
04:07
of loan apps right there just trying to
04:10
get that through now Wow okay that’s
04:14
interesting so dealers right now
04:17
obviously big thing has been the PPP
04:20
that money um what else is on
04:23
everybody’s mind the guys you’re talking
04:25
to
04:27
um well now it’s what to do next you
04:29
know it’s the only thing sitting with a
04:36
lot of our clients now what the
04:37
full-time equivalents are to some of
04:39
laid-off we’ve had some clients have
04:40
been like the New England area there’s
04:43
half right and they need to bring them
04:46
back and so we’re getting into full-time
04:48
equivalent ratios need to be in the
04:50
payroll amounts need to be you’ve had a
04:52
couple clients got funded and they won’t
04:55
be able to use their home loans you’re
04:57
gonna pay all those probably back by the
05:05
SBA because I can’t use all the funds
05:08
they didn’t let anybody go they stayed
05:12
through their other clients that were
05:14
laid off after staff and their so
05:16
they’re a lot more difficult and how do
05:23
you keep the balance between full-time
05:25
equivalents and and got paid down that’s
05:30
thing we’ve seen so far
05:32
coming up now next what I’d love to do
05:35
with that so it’s now it’s how do you
05:37
collect successfully deploy the funds to
05:40
get the forgiveness verse it being
05:43
ultimately also turned into a loan right
05:45
there’s a conversion mechanism there in
05:49
the back right yeah
05:50
go it basically goes from a grant to a
05:54
loan right then a lot of them are
05:57
interests how they account for that on
05:59
their books you know outside she’ll love
06:01
on their books long guess forgiving and
06:04
all those kind of things it’s not
06:06
taxable with me the government-backed we
06:17
don’t wanna plug too much we’re doing a
06:19
webinar Thursday with a bankruptcy
06:20
attorney contract was we’re having a lot
06:25
of issues with leases behind contracts
06:30
for the DMS systems this is good plug
06:34
this well when’s your Evans the webinar
06:37
your your audios cut nail
06:39
out so I’m sorry okay yeah webinars to
06:42
me Thursday two o’clock Thursday two
06:44
o’clock okay and no you’ll send me the
06:47
link and I’ll post it in this so I’ll
06:50
post this tomorrow and I’ll put the link
06:53
to the webinar in the post so everyone
06:56
can go I think people need the knowledge
07:00
right now and you know I would say I
07:02
know you guys are always ahead of the
07:05
curve and you’re probably ingesting a
07:08
lot of this information and figuring it
07:10
out so if you’re building models and it
07:12
Excel spreadsheets already and
07:14
algorithms to figure it out so we have a
07:17
whole SWAT team just a little I figured
07:21
he did man that’s all I want to talk to
07:22
you today so okay so ppb money that’s
07:26
and restructuring how that’s gonna work
07:29
for the employees and how that gets
07:32
passed through the organization’s a big
07:34
thing you guys have been working on with
07:35
dealers what else has been out there is
07:39
uh what else you’ve been working on
07:42
inside there
07:43
um another thing is uh how to sell cars
07:46
virtually you know what to do with the
07:48
staff how to keep them busy
07:49
yeah all of our clients are mining
07:55
pretty hard looking at lost souls have
07:58
had this business for a long time other
08:01
mining deepen to recall programs like
08:06
their airbags is a big one
08:07
which a lot of our clients mining high
08:11
recalls right a breaks is a big one I
08:14
create tune ups things like that just to
08:18
bring customers in my to pick up in the
08:20
delivery so a lot of salespeople that
08:22
work working as much or now being
08:26
delivery people for cars are back wonder
08:31
how that will work
08:32
what do you think I have talked a couple
08:34
guys about you know the remote like your
08:36
salespeople limited at the dealership
08:39
they’re kind of working remote then
08:41
they’re taking cars to customers keeping
08:44
track of people logistics movement I
08:47
think that probably will change
08:49
insurance requirements for some of these
08:51
guys
08:52
um how they’ll just deal with you know
08:55
having the liability of people on the
08:57
road when they currently don’t to be
09:01
able to just move stuff track people and
09:03
measure and manage them so yeah yeah um
09:08
yeah well that’s definitely an issue
09:10
some of our clients have been set up for
09:12
remote service so they ought to are
09:14
going on-site got a nervous about doing
09:18
little jobs and chemical jobs because
09:20
they don’t want to spill chemicals all
09:22
over somebody’s you know a lot of basic
09:29
engine service and things like that so
09:36
some of our clans have already set up to
09:37
do remote service I’m gonna picking up
09:41
big big trucks
09:42
well they might a service somebody’s
09:44
giant try some things on the highway so
09:47
I’ll do remote service for that if they
09:48
were set up for it so they’re finding
09:50
ways to keep a service busy okay our
09:53
client base we have seen that the
09:55
service business is picking up a little
09:56
bit okay they were slammed maybe down 80
10:00
percent I was maybe now the down about
10:03
forty or fifty percent so it’s starting
10:05
to pick up a little bit for them in
10:07
service and some like our big fleet
10:10
operators or trying to do service on the
10:12
fleet cars whatever you have a lot of
10:15
fleet cars yeah and if you drove around
10:18
the Orlando Airport recently but it’s
10:21
like a ocean of vehicles that came off
10:24
of the rental car fleets yeah that
10:27
aren’t out there and right now there
10:29
must be a couple hundred thousand cars
10:30
sitting around your land away or
10:31
analogous that’s it doesn’t surprise me
10:34
because I was talking with Steve
10:36
Greenfield last week and he drove from
10:40
Hertz from California to lanta and
10:43
dropped it at the airport and they’ve
10:46
been charging him like $100 $150 a day
10:49
because he just left the car there
10:52
because there was no one there to take
10:53
it in and they didn’t his credit card
10:56
and he keeps calling and they’re like
10:57
sorry but we just don’t have anyone
10:59
there to check the car into to stop it
11:02
in our system and I was like that’s
11:04
insane
11:05
but and they said no it’s just what we
11:08
have I haven’t been by the airport I’ve
11:09
kind of been stuck in my little bat cave
11:11
here downtown they need to create an app
11:14
for rental cars we could just check my
11:16
car in with a thumb or something like
11:18
that and boom yeah I think you I think
11:21
we’ll see new technology come out of
11:23
this you know I don’t know
11:25
then this destiny for stuff right so
11:27
that’s really interesting though when
11:30
what do you think’s gonna happen I mean
11:32
obviously you monitor dealers use cars I
11:36
think there’s something that’s gonna hit
11:39
with used cars and it doesn’t look good
11:41
I mean a lot of these guys had tons of
11:44
inventory and our most guys have
11:46
inventory right and the values already
11:49
seem to be dropping this month and we’re
11:52
only kind of halfway through what was
11:55
really gonna happen you know I talked I
11:57
think it was Todd Caputo a dealer a
11:59
couple weeks ago and he said look
12:02
because there’s no market place so
12:05
there’s no price and there’s no way to
12:07
set prices so that create this whole
12:10
dichotomy and as you said like rental
12:13
car fleets lease turn-ins wonder how
12:16
that is going to impact this a lot of
12:19
things have a dramatic impact is this
12:21
gonna be huge
12:23
I don’t you know Jim Ziegler he’s a good
12:27
friend of my house actually gonna do a
12:29
webinar Tim next week echo on on you
12:33
know what what the world’s gonna look
12:34
like from a sales perspective next week
12:37
that’s or next they’re actually touching
12:40
on used cars yesterday I’m what’s gonna
12:43
happen with that disp its inventory is
12:47
gonna be mammoth just with no value okay
12:51
a while and it’s you retell out of that
12:54
it’s gonna very interesting to see how
12:57
creative people get yeah that’s gonna be
13:02
you’re going to put on that creative
13:03
thinking cap of how you you’re gonna
13:06
have to move through that inventory
13:08
that’s now been stagnant for a while
13:10
right and get it going because that’s
13:13
money and I think you’ll see I’m some of
13:16
the things we’ve already heard talking
13:17
about
13:19
dealers on their own extended warranty
13:20
companies they’re gonna be kind of
13:22
priests certifying the cars maybe not
13:24
like to a CP o but their own C to go and
13:29
to slapping on extended warranties and
13:31
giving them away for free the first
13:41
service may be out of it but right
13:43
that’s aunt your ass might move it might
13:46
might move vehicles a little bit we’ll
13:48
see I might see some fleet used vehicle
13:52
sales had some talked to uh construction
13:56
companies about taking the huge pickup
13:58
trucks and things like that so they’re
14:01
starting to see some creative thought
14:03
coming out yeah what do you think I mean
14:07
for dealers the next 30 days I mean what
14:11
what will be the big focus do you think
14:13
next 30 days
14:15
um I think one of the things we’re
14:17
trying to get our dealers talking now is
14:19
use a vendor capital yeah besides
14:22
hoarding cash different payments to
14:24
their vendors which includes but uh
14:31
working under contracts on trying to
14:34
accelerate what they have for finance
14:37
companies maybe renegotiate commission
14:40
schedules on indirect finance
14:45
participation with other vendors on on
14:49
advertising you know how that’s gonna go
14:51
[Music]
14:53
sizing rates some kind of deferred
14:56
payment plans or performance we’ll come
15:00
out with new plans for advertising
15:02
companies so rather than just pay media
15:05
fees or something it’s or sales or UPS
15:09
or no legitimate right action so more of
15:13
a performance from the media and maybe
15:19
we negotiating some indirect finance
15:21
agreements and other contracts that they
15:24
have with other vendors so hope I see a
15:26
lot of that next couple weeks just a
15:28
reposition and try to keep your expenses
15:31
of mine
15:32
that makes a lot of sense right I mean
15:34
you have to this is probably a great
15:36
time to readjust the dealers like
15:39
expenses one of the things I had written
15:41
about I don’t know a while ago was you
15:43
know dealers right now should be going
15:45
through and really doing good technology
15:47
audit looking for those overlaps what
15:50
services are they paying for what
15:53
utility are they getting out of those
15:54
services you know I like said if you’re
15:56
not using a tech at least 80% do you
15:59
really need it you know how many people
16:01
does it touch inside the store is your
16:04
store going to change and is that still
16:06
valuable moving forward I think there’s
16:07
a lot of things inside there that
16:10
dealers could really work through and
16:12
find some economies well they always say
16:16
the good habits are made the bad times
16:18
and some of the things we’ve been
16:21
talking some of our clients about – just
16:23
from let’s say the pure accountant –
16:26
side of things is cross-training
16:28
accounting staff now because it might
16:30
need to do more with less
16:32
yeah so a lot of our clients who I said
16:34
well everybody can work each test they
16:36
know what it is and I was this is a
16:37
probably good time well it’s a down time
16:39
to slower to really have some good
16:42
cross-training in the accounting
16:44
departments so they can learn desks and
16:46
if you need to do more with less you
16:48
have more highly trained people in the
16:50
back office I can do more functions
16:52
worth more desks trying to work that
16:55
with some of our clients to be more
16:57
efficient different that’s because
16:58
people might stay unemployed or they
17:01
might have to do
17:02
downturn and takes a while to ramp up
17:04
sales again just have less people in the
17:08
accounting department doing more tasks
17:10
while still keeping internal controls
17:12
and those kind of things yeah that makes
17:14
a lot of sense
17:15
I think their cross-training at
17:16
something that’s really good thought
17:19
there and you know putting that into
17:22
play I think back office is critical
17:24
right and these I mean this is now that
17:27
time to make sure it’s really highly
17:30
functional for the dealership yeah yeah
17:34
I think now now is those times you know
17:37
I mean a lot of dealers I’ve talked to
17:39
they either you know cut staff
17:41
furloughed staff yeah some have kept
17:44
them all on
17:45
in their home and I feel like I’ve seen
17:49
every mix I don’t know how about you
17:51
ours is kind of geographically uh latest
17:55
or let’s say our clients in the Greater
17:57
New York area or New England are they’ve
17:58
laid off a lot of people they’ve back
18:03
some states like in Texas they’ve tried
18:08
to maintain or staff so certain parts of
18:10
Texas may be farther south have laid off
18:12
some staff some of the larger
18:14
metropolitan areas have been able to
18:16
keep their staff at a hundred percent
18:18
doing different things so they’ll have
18:22
literally sales people washing cars
18:24
doing videos on the inside of the
18:26
vehicles um
18:28
tweak the parts the parts people tweak
18:31
two parts ordering and that’s real
18:32
critical this time two part sales are
18:34
way down yeah you need to change the
18:38
parts department so they’re doing that
18:40
kind of thing they might be cleaning up
18:42
the parts department now as well doing
18:45
work just organizing departments and
18:49
things like that so the way just
18:52
changing somewhere whether staff do them
18:54
kind of redeploying engineering they’re
18:56
their functions well California we
19:01
dealers way out in the Midwest I mean
19:03
someone’s still doing very well down
19:05
there so Christine service we have
19:07
clients Wyoming it’s been like not
19:10
affected it at all interest actually
19:12
they’re picking up a lot of business
19:13
members they’ve been marketing Denberg
19:15
nice and Cheyenne and Laramie have been
19:18
marketing hard in the Colorado so we can
19:21
come up here you know we don’t have the
19:22
social distancing issues
19:24
yeah we’re fully functional and going so
19:26
they’re literally picking up sales out
19:28
of Denver which is hilarious that’s
19:31
pretty well a question talking about do
19:34
you think dealers now look they’ve
19:36
retracted a lot in staff and especially
19:38
the sales side you think they’re just
19:40
gonna bring them all back or do you
19:42
think it’s gonna be a slow kind of try
19:45
to do as much as you can with what you
19:46
have and kind of grow back out of it
19:50
well that’s what we’re we’re spending a
19:52
lot of time with our clients now that
19:54
have laid staff off you know how to ramp
19:55
them up are those that have received
19:57
funding from the PPP program
19:59
need to maintain or full-time
20:01
equivalents and that’s critical it
20:03
drives everything so that’s we’re
20:07
spending a lot of time with our clients
20:08
now is consulting what’s that mix
20:09
between full-time equivalents that need
20:11
to have eight weeks after you receive
20:14
your funding – and what the amount of
20:17
pay is so there’s kind it’s kind of a
20:19
balance between both of those items so
20:21
we’re spending a lot of times with
20:23
clients just trying to figure out what
20:26
that right balance needs to be between
20:28
full-time hey so we’re finding
20:31
everything across the board we’re
20:32
bringing people back some are bringing
20:36
less people back I could paying them a
20:38
lot more to meet the requirements and
20:41
some people are bringing more people
20:43
back I’m paying them less and like in
20:46
some areas let’s say for New York for
20:48
example where they’re unemployment that
20:49
could be making more money in
20:51
unemployment than they were prior to
20:53
going unemployed right that’s that’s
20:56
that’s novel so we’re now playing with
21:00
that a little bit or coming up with new
21:02
ways to maybe instill bonuses bonus
21:04
systems and bring people back or sign-on
21:06
bonuses we’re seeing some of that that
21:09
that makes bringing full-time
21:11
equivalents and the amount of pay eight
21:13
weeks after you get funded is critical –
21:16
you have to go through that gyration if
21:18
you receive a PPP law in order to save
21:20
it from keep it from being in grant so
21:23
you want to keep it as a grant you have
21:24
to go to that gyration yeah that makes a
21:27
lot of sense and I think it’s important
21:29
that they really need you that needs to
21:31
be mapped out like really well I think
21:32
right now and yeah you don’t want to
21:35
turn into a loan so well it’s it’s most
21:39
dealers cost of funds as cheaper and
21:41
what the loan is on the loan repayment
21:43
right most of them borrow money less
21:45
than that anyway once becomes low and
21:47
some some clients are like well we’ll
21:49
just pay it back still low-cost loan
21:51
we’ll just pay you also have to
21:53
understand that if you don’t use the
21:55
money they can still get clawed back and
21:59
like we have a client we did the
22:00
computation for yesterday the recipe
22:03
eight programs about a million five they
22:05
don’t have to put about three hundred
22:06
thousand back it’s gonna get clawed back
22:08
they didn’t let anybody off to keep him
22:10
to pay the same and just
22:12
they have no rent expense right Francis
22:17
so they’re actually and they’re fine
22:18
with it they’re that well capitalized
22:23
yeah well look the good thing is if it
22:27
keeps the dealerships operating it keeps
22:29
everything moving forward here’s that
22:31
time as you said maybe it’s they can
22:33
invest into cross-training you can
22:36
invest into analyzing your business a
22:40
little bit greater
22:40
you know you get it’s like that put in a
22:43
pause button which is rare
22:45
I don’t it’s never happened in my life I
22:47
don’t think your life either we’re just
22:50
get this you know and it’s like oh I can
22:54
I can I I said you can work on your
22:56
business not in your business which is a
22:58
rarity
22:59
so for these guys exactly what do you
23:02
mean it’s been interesting for us
23:05
because we’ve been able to work remote
23:07
for about twenty years right okay Clyde
23:12
it’s a feeling like New York which is ok
23:14
can’t come in New York
23:15
nobody wants come in New York you know
23:16
you want to stay as far away from New
23:17
York is you are steps like ok they took
23:21
their computer home plugged in at home
23:22
was like boom you know nothing it was
23:24
nothing change for them so it’s great
23:26
just right back into the groove of it so
23:29
thrive yeah using zum-zum since it came
23:32
out yes like nothing new for us either
23:38
yeah it’s really good yeah I mean it’s
23:42
an exciting time right I mean it’s
23:43
there’s a lot of opportunity I think
23:45
that will come out of this it’s just how
23:48
dealers will I think dealers are some of
23:50
the best entrepreneurs they’ll figure it
23:52
out you know how will they aggressively
23:54
leverage the market you know figure out
23:57
how to get out of the used car dip
24:00
that’s gonna happen what that’s gonna
24:02
look like you know leveraging the PPP
24:04
cash maybe restructuring they’re just a
24:08
dealership operation maybe headcount
24:11
will change on average per store I don’t
24:13
know I think it’s gonna be interesting
24:15
to see what they thought I probably need
24:17
at least from a sales standpoint need to
24:19
be right sized anyway um you know we’ve
24:22
always been a proponent of how to staff
24:26
dealership you don’t want salespeople
24:27
just sitting around doing nothing all
24:29
day during peak hours or non peak hours
24:32
there’s a lot of times in the morning
24:36
serviced and might just want qualified
24:39
people to know how to sell vehicles when
24:42
it cars in for service bragging on how
24:44
to get trade your car and now it’s
24:45
service will get it already and they’ll
24:48
do that so you might just want two or
24:51
three sales when they’re really good at
24:52
converting service vehicles into sales
24:56
brand and how your top no prima donnas
25:00
at the end of the day when people coming
25:02
in after work for sales and you want
25:03
people I can close quick boys been a
25:08
proponent of right sizing the right
25:10
sales people at that time customers you
25:14
have and matching the customer traffic
25:18
yeah so that’s always been big for
25:21
consulting and then same same with the
25:24
service is you want mechanics efficient
25:29
that can earn an extra bay by you know
25:34
just being able to work really
25:35
efficiently and they can work on two
25:37
cars at once some those are kind of
25:38
connection why so all those kind of top
25:42
performers will start showing their
25:44
faces during this kind of time that’s
25:49
strategies too now there’s another quote
25:52
I like to this is when the going gets
25:55
weird the weird turning pro we’re seeing
26:01
a lot of that too yeah I could yeah okay
26:05
that’s definitely gonna be happening in
26:08
our business oh yeah it’ll be
26:11
interesting though I feel like yeah the
26:13
next 30 days that’s that sets to me the
26:16
like that’s like your Keystone right
26:18
like what pal you’ll accelerate out of
26:20
this like how you prepare yourself and
26:22
you know position yourself for whatever
26:26
is to come you know I think now is that
26:28
good time to really kind of lock in your
26:30
you know your strategy your planning
26:33
take the time you know how you’re going
26:36
to deploy what capital you do have
26:39
and you know how you’re gonna leverage
26:41
and maximize your staff
26:43
I always think you’re right I feel like
26:45
this is probably the best and only time
26:47
we’re gonna get to Train retrain cross
26:50
train people because once business kind
26:52
of kicks in you forget about this things
26:54
you know you just you’re just too caught
26:56
up in the mechanics of doing the job
26:59
that’s actly yeah it’s um I mean even
27:03
like your parts ordering has changed
27:04
like in a lot of clients in Washington
27:07
DC area used to be a daily deliveries
27:12
every morning and every afternoon so I
27:14
get two deliveries a day will ask Wow
27:18
for the parts so that’s really changed
27:21
you know how they have to stack their
27:22
customers coming in and parts what
27:27
they’re gonna need they did a push for
27:28
brake recalls and they had all the
27:31
airbags I need it but they have like no
27:32
brakes so they can learn hard way out
27:36
kind of customers came in and they call
27:38
Toyotas okay we need 20 brake sets like
27:42
this is like Monday it’s all the cars
27:44
right now you know now what we do send
27:47
drivers around and go find brakes
27:50
everywhere so those those kind of things
27:52
are you learned the kind of the hard way
27:55
sometimes too so now they have to change
27:57
your whole dynamics parts ordering right
27:59
now so taking a good stock what they do
28:03
have then what they can sell parts they
28:06
have in stock and then what they think
28:08
they can get and try and try to like
28:12
pinpoint their marketing to align with
28:15
actual what parts are on ground which
28:18
makes a lot of sense again you know
28:20
things you’d normally wouldn’t think
28:22
about because you would never have to
28:23
think about it you would just normally
28:25
go hey oh I don’t have that part no
28:27
problem called distribution it’ll be
28:29
here in an hour
28:30
and now not so easy the other week yeah
28:33
yeah it’s it’s a whole different deal
28:35
yeah yeah we talked to someone I don’t
28:39
know maybe a week or so ago we were
28:41
talking also less people driving less
28:44
automobile racks big impact in body oh
28:48
yeah what’s that unless unless I’m not
28:53
lucky or not we had a client in in
28:54
Virginia and they had a drunk driver go
28:57
through their used-car lot at about 80
29:00
miles an hour and he took out their
29:02
tombstone sign in the front and all that
29:04
kind of stuff it’s like took out a whole
29:08
bunch of cars
29:09
it took out about fifteen cars lucky
29:11
didn’t hurt anybody except the driver of
29:14
the car but their bodies their collision
29:16
center ended up doing his car and you
29:18
know they got a lot of work my gosh it’s
29:21
like yeah that’s not being cozy that’s
29:26
really going gets weird weird during
29:27
probe there’s your weird turn fro yeah I
29:30
feel like yeah like New York I saw
29:32
somebody dead coming on New York it’s
29:34
just like yeah the number of collisions
29:36
just was collapsing right because no
29:38
one’s driving and that’s gonna affect
29:40
body which affects parts and it’s just
29:43
like there’s a whole trickle of these
29:46
economies we just I don’t know you just
29:48
don’t think about all that
29:49
infrastructure ever you know and now I
29:53
think the only it was kind of funny cuz
29:58
I use um he was driving her clients real
30:01
good friend of my was driving in the
30:02
office and he was telling me what’s
30:04
going on I said wow that’s crazy said
30:06
yeah it was especially having her body
30:07
shop just like 15 cars nobody got hurt
30:14
15 cars an insurance money sounds good
30:17
so no now see every dealer is so lucky
30:21
to have a drunk driver plowing through
30:22
there a lot you know I think you can you
30:25
believe that
30:25
where does that come from and that’s
30:29
that’s a dipper wake up in the morning
30:30
which says yeah the body shops busy now
30:32
yes and you’re like why he’s like up 15
30:36
cars
30:37
we’re stacked and wrapped and ready big
30:39
yeah exactly yeah it was like where’d
30:41
that come from
30:42
Lisa this driver was okay you know it’s
30:44
that hospitalized DUI
30:48
repair bill no problem does insurance
30:51
company probably drop them – oh I’m sure
30:53
yeah that’s pretty much it
30:55
first thing what else I mean what else
31:01
he sees good what do you think it will
31:03
happen trending wise the next bit I mean
31:05
the rest
31:06
this year what do you think it’d look
31:07
like for your clients is it you think we
31:10
get back to business as normal do you
31:12
think no it’s gonna be some modified
31:14
thing I know you mentioned more digital
31:16
retailing that’s obviously been a huge
31:18
theme of everybody I don’t know what do
31:21
you feeling like what your gut telling
31:23
you um I think it’s gonna be a stepped
31:28
path to get there and again it might
31:31
depend a lot on geographical areas I
31:34
think Florida will come back really well
31:37
and it’s a very resilient State great
31:40
weather anyway I think it will overcome
31:46
at and our clients in Florida that we do
31:49
it across the state are very well
31:50
capitalized very smart people act and
31:55
actually wow the habits they’ve had in
31:56
cleanliness it’s like this is nothing
31:59
new for them either they might have to
32:00
wipe things down more but I think
32:04
they’re used to it and they their
32:05
customers used to it especially like you
32:07
have errors I got on the villages for
32:09
example which that’s more the best car
32:13
markets in the country right art areas
32:17
but cars as well again yeah they sell a
32:20
lot of cars there there’s all of our
32:22
clients and the surrounding areas did
32:23
quite well and they’re used to
32:25
delivering cars after their business a
32:32
whole lot they’re doing fine yeah on
32:34
their service they’ve always picked up
32:35
cars and delivered cars and that kind of
32:38
thing so like they’re doing fine out
32:39
there and so that’s kind of business as
32:42
usual anyway you know Miami it’s been a
32:46
whole different kind of ball game know
32:48
they’ll have to adjust differently then
32:53
you like Southwest Florida they really
32:54
have been that impacted that much either
32:56
you know they’re doing fine they’re a
32:58
little bit older population customer
33:00
base but I think they’ll get through it
33:03
just fine and you get places like out in
33:04
Wyoming Colorado will bounce back your
33:08
walls gonna be like the major metro area
33:10
new york you know there’s still got to
33:13
figure out what they’re gonna do it and
33:14
they’re gonna open later anyway right no
33:17
I’m not see New York opening up anytime
33:19
the next fine to figure out away but
33:24
that’s gonna probably be a little more
33:26
problematic and you might see some
33:28
viewers crash if you’re not well
33:30
capitalized and those they have to be
33:32
ready for that or some year bender
33:35
negotiations and things like that
33:37
they’re gonna have to be a little bit
33:38
tougher with the lenders and banks you
33:41
see some by cells coming up I see a lot
33:45
of my cells coming up I remember in 2008
33:48
yeah and we went through that you know
33:51
I’m old enough to remember all that
33:52
pretty well and I was actually really
33:54
great here for us especially emerging
33:56
acquisition activity I think a lot of
33:58
dealers are gonna get fatigued from yes
34:02
even stir well-capitalized I think
34:03
they’re just gonna be fatigued so well
34:10
actually we’re starting to hear some of
34:11
that now we’re doing a bunch of
34:12
valuations on newer shows for estate
34:14
planning purposes or myself now so we
34:18
had a couple buy cells going on and just
34:21
really impacted those and we have a for
34:24
a Ford dealership out in the Midwest
34:26
that’s closing this week yeah you know
34:31
you saw that like Park Place that deal
34:33
with Asbury all blew up that billion
34:37
dollar deal and I don’t know if it was
34:38
all in part or part of because of this
34:41
stuff what was going on and then saying
34:43
well we better preserve cash but you
34:45
know that’s interesting I definitely see
34:48
that yeah look the opportunist dealers
34:52
are gonna take advantage of this and
34:53
grab the dealers the good areas the
34:55
points of guys that were edgy finding
34:58
and I think the next flow of used cars
35:03
that’s where I think it’s gonna hit
35:05
that’s gonna hit the statements really
35:08
hard you know so yeah I think um we used
35:13
cars is gonna be a jog or not in a lot
35:14
of ways it’s gonna be very interesting
35:16
happens that’s gonna take a lot of
35:19
creative minds might see some flea tail
35:25
used cars I don’t know the options as
35:30
well I just don’t think they have the
35:31
bandwidth for that
35:33
some creative ways to get rid of used
35:35
cars I mean one might be giving a lot
35:38
away like a type of certification
35:41
program that’s not the same the CP oh
35:43
close a center warranties and trying to
35:48
sell them more like a new car with with
35:51
cleaning a much better offering a lot
35:54
more free service or something like that
35:57
starting to see that now yeah let’s see
36:00
I think we see a lot more of that and
36:02
then yeah the creativity around just
36:05
used-car retailing is gonna have to take
36:07
a whole nother level of step up to get
36:10
through this I feel it’s like these
36:12
waves you know you get through the first
36:14
wave of having to get rid of like let
36:16
people go or fertile people and you’re
36:18
like okay we’re gonna survive and then
36:20
you look outside and see who knows you
36:22
could have a million dollars worth of
36:24
water sitting there that you’re gonna
36:26
have to now I have to get through that
36:28
you know just I think it’s gonna be a
36:30
lot of strain still so yeah I’m gonna
36:34
call it water I’d call more like Niagara
36:35
Falls it’s gonna be hard and like how do
36:40
you retail through that successfully in
36:44
a turbulent market with unfixed pricing
36:47
and a glut of like a glut of you know
36:50
least earnings and you know late-model
36:53
fleets all that’s gonna hit you know
36:57
it’s gonna be and then you have the OEMs
37:00
with these new programs the zero percent
37:03
eighty four months that extracts people
37:06
out of the market for long periods of
37:08
time right so that begins a challenge I
37:12
someone told me that they were talking
37:13
about another like cash for clunkers you
37:16
know kind of bailout just to get the
37:19
industry kind of restructured so I don’t
37:23
know it maybe if you take some satellite
37:27
photos of the port’s where the slot of
37:30
car sitting in Jacksonville and look at
37:32
these airports where all the rental cars
37:34
are just sitting there right now we’re
37:36
talking hundreds and hundreds of
37:38
thousands of vehicles now just rounded
37:40
right now that
37:46
so it’s right which kills you who’s very
37:50
creative at selling a youth vehicle yeah
37:53
yeah I think you’re right I think there
37:54
has to be to extend it like extended
37:56
warranties like whatever service
37:58
agreements you know obviously late
38:02
payments that’s kind of a banking thing
38:04
and issues always relate around that got
38:06
to make your first payment you can’t
38:08
play that game as well you know the OEMs
38:12
can play that game with new cars but use
38:14
cars that’s usually a different bag you
38:16
know to get there’s a bank I’d be very
38:19
very shy of financing musicals yeah and
38:24
you know it’s interesting now with and I
38:28
you saw like Jamie Dimon from chase
38:29
saying hey they’re gonna start
38:31
restricting it restriction restricting
38:34
mortgages great because they know
38:37
credits gonna get trashed right now so
38:40
wonder if that hits vehicles usually it
38:44
hits but not as great as the mortgage
38:47
mortgages you know a good hit first
38:49
wonder how that will also if they
38:51
tighten lending into the into the car
38:54
market because of how everyone’s
38:56
situation is so now you get people who
38:58
can’t buy because they don’t have jobs
39:00
and or whatever issue you have cars with
39:02
wrongly valued and banks aren’t going to
39:06
want to lend because they can’t look at
39:08
an auction report because of not enough
39:10
cars run through it and you can do a
39:12
predictive model but that’s not very
39:14
accurate so I would predict anything
39:18
right now now I’ll tell you what might
39:20
might be interesting as sees the buy
39:22
here pay here Lots yeah it’s funny I
39:26
talked to a dealer he said what cars
39:28
were moving are the sub ten thousand
39:31
dollar cars he goes you know what they
39:35
were moving and there’s a market place
39:37
for them but now let’s think about the
39:40
forty five thousand dollar pre-owned
39:42
Tahoe LTZ Savai’i lot that’s sale proof
39:46
yeah that’s I don’t think you want to
39:49
own that right now so no that might be a
39:53
place where to buy here pay here comes
39:55
then if they can get kind of a down
39:56
payment you put on credit cards or
39:58
something or
39:59
we see a lot of innovative financing by
40:02
your payers but those will do well
40:04
become sled sales you know though and
40:07
it’s a really interesting times then
40:10
yeah yeah those we might see dealers
40:13
with the capital we have some of our
40:17
larger groups have their own finance
40:18
companies right not you know it might
40:20
take a 550 beacon or something yeah take
40:26
the stretch if they can get it down or
40:27
the right deal or if something else
40:29
works yeah again that’s all creativity
40:35
man is I think is that time you just
40:38
anything’s possible you’re just gonna
40:41
have to work through it it’s always like
40:43
I loved the story of the Airbnb guys
40:47
they needed money which they keep they
40:52
they had a hard time like right at the
40:54
beginning getting funding for that
40:55
project and they ended up making like
41:02
Obama flakes or Obama O’s and Cain
41:06
flakes so they made cereal they took
41:08
cereal and they redid the boxes and sold
41:11
it to pay like 10 grand be able to go to
41:15
this event so they could pitch and I’m
41:18
like that’s so crazy
41:20
innovative had nothing to do with what
41:22
they did but they did whatever it took
41:24
to you know to make their to get to the
41:27
where they wanted to be with their
41:28
business and I was like I think we’re
41:30
gonna see more of that going gets weird
41:34
the weird turn pro hey I’m gonna stop it
41:38
at that because that’s a good spot to
41:40
end I love the quote man that’s awesome
41:43
so hey I really appreciate you taking
41:45
the time today it’s always good to talk
41:46
to you you know I can’t take credit for
41:49
that that’s a hunter s Thompson the old
41:52
gonzo journalist from the 70s that’s
41:55
okay listen that’s just from the 70s
41:58
that’s a while ago like my age Stein so
42:00
most people yeah yeah well cool man
42:04
thank you so much and hold on one second
42:07
let me do this
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