According to numerous projections, the retail auto industry is on track to face some tough challenges this year. Which means it’s more important now, than ever, to utilize every department in your dealership to its fullest potential. On today’s show, we have Tim Roberts, partner at Champion Chevrolet of Avon. We discuss how dealers can maximize gross profit in all areas of the dealership, and the importance of offering a certification on non-brand vehicles.
John F.: Glad to have you on the show Tim. Welcome.
Tim Roberts: Thank you Jim for having us, very honored to be here today.
John F.: Great. Let’s talk a little bit about the challenges that dealers have today when trying to turn a profit in their new car department. We hear so much about margin compression, do you find that to be the case? That it’s a little bit tough today?
Tim Roberts: Yeah. It’s funny that you bring that up because we just had that conversation at an LMA meeting for General Motors and Chevrolet. New car profitability has taken a turn in the last four years down because of this wonderful thing that we have called the internet today.
John F.: Right.
Tim Roberts: The competitive pricing that’s out there.
John F.: That’s right.
Tim Roberts: One of the things that we need to do as dealers is make it a completely transparent process with our consumer. When we’re doing 75% of our business today via the internet and our BDC departments, we need to be completely transparent and honest with the customer right up front.
John F.: That’s right.
Tim Roberts: When they see that price online, that’s what they expect to come into your dealership and pay. We’re all so darn competitive out there in this automotive world today, we put a whole bunch of disclaimers on there. Things that draw the customers in and unfortunately, they come in and that’s not the case that most consumers see out there. Especially the millennials today. They believe in that price that they see. They come in, that’s what they want to buy the car for so you better be ready to sell that car for that exact price. I got to tell you, it’s not about the profit when you’re selling that car to that customer. Today, it’s about selling the retention, selling the longevity of them and having them return to you as a consumer and referring their family or friends.
John F.: Sure. What’s your take on OEM stair step incentive programs?
Tim Roberts: You know, it’s a hard game to play in today. It’s based up on your previous sales experience. Some dealers like to play in the volume growth game. We need to become volume growth proof today at our dealership because if you’re going after an objective and you’re lowering your prices on your cars to get to that objective, what happens if you don’t hit that objective and you’re taking a big loss up front.
Tim Roberts: You need to put your best foot forward with your consumer today. Be completely, again, transparent with them. Make sure that that’s the best deal for you and the best deal for them. Then the other fruits of your labor will be rewarded at that point.
John F.: Sure. You were mentioning before we went on air here, that you’re in kind of a small town of maybe 15, 16,000 people. It kind of makes it tough too when people come in and they say, “Hey, here’s a price that I got on the internet and can you match it?” Meanwhile, they got a price from a dealership that’s already benefiting maybe from the price reduction or the stair step program offered by the OEM, right?
Tim Roberts: Yes, it’s so true Jim. You know we’re a destination spot where we’re located out here at our dealership. We’re seven miles away from what we call dealership row. Dealership row is owned by a conglomerate group locally, so we have a lot to compete with. We really have to set ourselves apart from them. Being that destination location again goes back to being transparent, educating the consumer on the pricing of the vehicles. We’re selling vehicles today for wholesale dollars. We need to be taking in our trades at wholesale dollars to maintain profitability and affordability. Our biggest goal is to make a difference in our employee’s lives, our customer’s lives and our community’s lives. We can’t just talk it, we need to walk it.
John F.: That’s exactly right. I know you guys are knocking the cover off the ball with regard to profitability in your service department. Talk to us a little bit about your success there. What kind of retention rate you’ve got among your good clients and your loyal customers I should say? What dealers need to focus on in 2019 with regard to fix ops?
Tim Roberts: We’re currently running about 81% service retention with our customers.
John F.: Congrats to you. That’s amazing.
Tim Roberts: Yeah, it is. It’s a blessing. It’s about taking care of our customer. As I mentioned to you earlier, it’s educating the consumer, making sure that we’re transparent upfront. Where it all really starts is in your sales process. You need to walk your customer through your service department. You need to introduce them to your service advisor. You need to introduce them to your service manager. This is who’s going to take care … If something comes up, there’s an issue, this is the person that you’re going to be dealing with. That transparent process just keeps on bringing the customers back to us. It’s also bringing out competition customers to us as well. Again, in a niche market, in a destination spot, we have to separate ourselves from our competition. Retaining your customers should always be your number one goal.
John F.: That’s right. The whole idea of you bringing your customers back to the service department during the sales process. You’re going to get some dealers that say, “That sounds kind of old-fashioned to me in this digital world that we live in.: Where everybody just calls the BDC, the guy sets the number, the customer comes in. They never even meet the service or parts manager. Or see the rest of the dealership for that matter and off goes the customer. Right?
Tim Roberts: Yeah, the old saying, Jim, if it ain’t broke, why fix it. You know? The old kiss method. Let’s keep it simple. Back to the basics. If you’re going to be good at something, let’s be great at the basics. The basics are taking care of our customer the minute they walk in your door or they pick up the phone and they call you or they submit an internet lead or they do a chat or they text. You got to be responsive. You got to be ethical. You got to be honest today.
John F.: Right. Now, let’s switch gears a little bit here. I know that you all made a huge commitment recently to your used car operation. Certainly that’s maybe the last frontier that dealers have or one of the last frontier that they have to earn any gross profit or dollars for their dealership. I know that’s probably near and dear to your heart as well. You decided to bring on a brand that is very, very well known to every consumer out there with a driver’s license. Talk to us about it.
Tim Roberts: How do you set yourself apart from the manufacturer’s certification program today? Because the only cars that you have on your lot as a franchise dealer, are the manufacturer’s certified pre-owned.
John F.: Right.
Tim Roberts: Everybody has manufacturer’s certified pre-owned as a franchise dealer. But what can you offer your consumer that has the recognition behind it? It has the processes behind it and that has solvency behind it? We decided after negotiations and a lot of homework and research to partner up with Motor Trend Certified Vehicles program. It’s just been a wonderful program. The owner of the company, Larry Dorfman. With Easy Care along with the Motor Trend processes and their employees have just embraced the same culture that we have here of taking care of the customers. Every vehicle that we put on our lot that’s a non-manufactured CPO, comes with the Motor Trend Certified Certification Program. Six month, 7,500 mile warranty. Comes with windshield replacement, dent repair, key fob replacement, and tire and wheel replacement as well on the vehicle. That’s given to every customer that purchases a used vehicle from us.
Tim Roberts: They have the option to wrap and benefit that program and continue that coverage out for as long as they own the vehicle, but we feel that for us to have a differentiator in the market that Motor Trend Certification in the vehicles today is huge. Everybody’s familiar with the magazine.
John F.: Boy, that’s for sure.
Tim Roberts: Familiar with Motor Trend television. The name branding behind it is huge. They’re very select on who they come across and who they partner with. We were certainly blessed with the opportunity to become a partner with them and be the only dealer in the state of Indiana that’s a Motor Trend certified dealer.
John F.: Yeah, I don’t know that it gets any stronger than a brand like Motor Trend for consumers to recognize immediately. It’s certainly a name that they can trust. It’s got such integrity to it. It’s kind of the Good Housekeeping seal of approval that maybe some other products in our supermarkets might have. Right? That makes you feel real good about that purchase. I think Motor Trend has done a phenomenal job and you’re right from what we can tell with the other dealers that we have spoken to on the Motor Trend program, they have been extremely choosy as to who they allow to use that Motor Trend moniker. Right?
Tim Roberts: Yeah, absolutely Jim. Being that choosy allows you to set yourself apart from the different competitions out there. A lot of dealerships decide they want to do their own internal certified pre-owned program and then down the road, after several claims and they didn’t recondition the car properly, they find out, hey, you know what, this isn’t really a profit maker for us. Let’s just stop doing it. What about the 200 or 300 used cars that you sold under that certified program? Are you going to stand behind it. When you have a name, Motor Trend standing behind you, the consumer can rest assure and sit back easily and understand that they’re always going to be taken care of.
John F.: That’s right. Not to mention, as you pointed out earlier, anybody can sell a certified, if I’m a Honda dealer, I can sell Honda certified. If I’m a Subaru dealer, Subaru certified and so on. If you’re a dealer that says well, 50% of my inventory are vehicles that are under the Toyota brand that I sell, they’re Chevrolet’s and they’re Hondas and such, I can’t offer a certification program on those. Therefore, I’m competing in the open market and on the internet with other CPO programs offered by those manufacturers. If I understand this correctly, through Motor Trend, you can now certify that non-brand vehicle that you sell. Right?
Tim Roberts: Yeah, absolutely. I can service any other manufacturer vehicle out there. It’s a wonderful, wonderful process that they allow us to do. It has a little bit more rigorous multi-point inspection than the manufacturer, so you know the quality’s behind there. We have to deal with tread depth on tires, cosmetic issues on the vehicles.
John F.: It’s the real deal.
Tim Roberts: Yeah. When you have a checklist that Motor Trend has, you know the vehicles gone through the gambit and it’s ready to be put out there. It’s front line ready and you stand confident behind it. Every vehicle comes with the 72 hour exchange policy. Every vehicle comes with the five day money back guarantee. Meaning if they find the same vehicle advertised for less out there, we’ll refund the difference to them in cash. It’s a big differentiator in the market today.
John F.: Very strong. Very strong. I would imagine it does help with your 81% of service retention in the sense that for somebody that purchases a vehicle under the Motor Trend program, certification program, they’re thinking, “Well, I really better bring it back to this Motor Trend Certified location.” While they could bring it to others, they’re probably going to bring it to your dealership since they purchased it there and they don’t see a gazillion Motor Trend shops all over. Right?
Tim Roberts: Yes, the consumer can take the vehicle to anywhere to have the vehicle repaired. That’s one of the benefits in the transparency of it. We didn’t hide that from them. We have customers that fly in from different states to purchase these vehicles from us. We do offer a concierge service to our current clientele that’s within local. We’ll even go pick up the vehicle for them, drop off the loaner vehicle for them, the complementary transportation, whatever they need so they’re not misplaced when their vehicles being repaired for us. Those are things that we have to do again, to retain that business in the marketplace.
John F.: Sure. In anticipation of our conversation today, we spoke to a couple other Motor Trend Certified dealers out there. One thing that kept popping up and maybe you agree with this, let’s see, and that is the training and the support offered by Motor Trend and by Larry Dorfman and his team. Have you found that to be the case as well?
Tim Roberts: Yeah, absolutely. It’s bar none. We talk about going back, they have a fantastic vice president in training in Steve Richards. He is one of the best trainers I’ve ever come across in my 31 years now in the car business.
John F.: Absolutely.
Tim Roberts: Steve has a philosophy of keeping it simple. It is what it is. Don’t lie to the customer. If you don’t know the answer to the question, don’t give them an answer. Find out the answer and then give it to them. He’s really helped us retrain our process and our sales process. We had some pretty good sales processes. We’re only as good as we think we are sometimes but when you have somebody come in that does this for a living, trains on their product, knows their product inside and out and shows us a better way of doing it. How do you go wrong?
John F.: Absolutely. Absolutely. Well, so talk to us about what the future holds for Champion Chevrolet of Avon? You’re planning a big year? I know that we might be looking at some headwinds coming our way in the auto industry but it sounds like it’s not stopping you.
Tim Roberts: Yeah, no, it’s not stopping us. It goes back to our employees, Jim. We definitely want to talk about retention with our employees. We want to talk about the longevity of our employees. We’re a big dealership that believes in promoting from within. We’ve definitely listened to our employees. We value their input. I have this old saying I learned a long time ago, “If you don’t listen to your employees, somebody else will.”
John F.: That’s exactly right.
Tim Roberts: The old Warren Buffet line comes in training, “The more you learn, the more you earn.” We definitely believe in training. We train every morning at 8:30 with our entire sales staff, our management because we always have to be key on our game. We don’t want to be actors. We don’t want to be false with our consumers out there but training is key to the game. Our consumers are so educated from the internet, when they come in you’ve got to be on your A game. You got to be at the top of your game each and everyday.
John F.: That’s right. You can’t afford any salesperson to be on the showroom floor or the lot or the phones and not be well trained. Right? If that person misses one deal and you’ve got 10 or 15 or 20 salespeople, you have the opportunity to lose 10 or 20 deals a month because of the lack of training. The lack of proper training. I commend you on that. That’s awesome that you make that a top priority within your dealership.
Tim Roberts: Yeah, absolutely. Thank you Jim. Our employees are our future. A lot of us do have children but our direction is what does the future hold in the next 20 years? Will our kids be the second generation or third generation in this business? Our employees are really the ones that carry us. They’re miniature franchises today. We provide the tool for them to go out and take care of the consumers and the customers. That retention is built upon the trust and relationship with that salesperson. If we’re being trustworthy with our salespeople, we’re taking care of them, we’re listening to them, we have them involved, we have them engaged, and they understand our culture in the store, it’s win win for the employee, the consumer, the community and for the dealership.
John F.: Yeah, that’s for sure. Well, Tim Roberts the partner of Champion Chevrolet of Avon, I want to thank you so much for joining us. It sounds like you’re doing things right. We commend you on that. You’re one of the good guys in the car business. We appreciate you taking all the time today with us and sharing a little about your Motor Trend Certification. Congratulations on that by the way. Hopefully we can have you back in a few months to talk about how things are rolling out with Motor Trend and the certification program that you just acquired.
Tim Roberts: Absolutely, Jim. It was a pleasure and an honor and thank you very much for having us here today.
John F.: Thank you.
Thank you for watching the official news source of the retail automotive industry. This has been a JBF Business Media production.