Finding New Paths to Profitability at Your Dealership – Trevor Gile, Motorcars Honda

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The annual NADA show is just around the corner, and just like us here at CBT you’re probably gearing up for the great events that lie ahead. Joining Jim today is Trevor Gile managing partner of Motorcars Honda, to discuss an event he is hosting at NADA called Bourbon and Bubbles.

VIDEO TRANSCRIPT: 

Jim Fitzpatrick: Glad to have you back on the show, Trevor.

Trevor Gile: Thank you for having me.

Jim Fitzpatrick: Sure. Last time we had you on, we talked to you about the alternative revenue streams that Motorcars Honda has been developing, like the Rain Forest Car Wash and the onsite insurance agency. Give us an update on how those businesses did for 2018.

Trevor Gile: Sure. For the insurance agency, we had a very profitable year for the first year coming out of the gate. We were really happy. Our original goal was to break even, but it ended up turning out to be really profitable for us.

The car wash was finished last month. We have three individual washes, finished with over 300,000 in sales in that one month, and so it was just amazing to see how they’re coming together, and knowing that these didn’t even exist a few years ago was something pretty special for us. Then our rental software that we built to manage our loaner fleet, that helped us save over 90,000 in company vehicles and helped us turn our inventory a lot faster to generate over 110,000 in sales in the front end of the business.

Jim Fitzpatrick: That’s phenomenal. I bet it probably had you and your family wondering why did we wait so long?

Trevor Gile: Yes. The amazing thing is they’re very low employees. At the car wash we only have normally one to two employees per shift and they’re doing up to 100 an hour able to wash at each location. The All State agency, we only have four employees with that and then the rental software, it doesn’t even require an employee. We were able to eliminate one so everything is designed to make us more efficient and capitalize the new revenue streams for the dealership, because we kind of looked at it as we had all these customers in our database and how could we provide a benefit for them while making it benefit for us and it kind of narrowed down to these after eight years working on the car wash model and these other businesses doing research. We felt that it was the right time and we’re just so happy that we did it.

Jim Fitzpatrick: Yeah, I bet. That is for sure great news, I’m sure for the dealers and the managers that are listening to pick up that extra revenue to the bottom line in your dealership. You’re already paying for the same square footage right now and in most cases, dealers have even the extra area on their lot to throw in a car wash, so perhaps for the ones that are listening right now, you just pushed them over the edge and said 300 grand is 300 grand. Let’s go.

Trevor Gile: Yeah. Most things that we’re just keep on looking around saying this makes too much sense. We’re excited for NADA to be able to talk to the dealers and share our success with them and make sure that they do it the right way because if you don’t know how to do it, it can be very difficult.

Jim Fitzpatrick: Yeah. Talk to us about that. I understand you and your brother will be hosting an event at the NADA show. Talk to us about that, the idea behind it, the motivation behind holding a dealer to dealer type event. Usually you hear of vendors doing that but you don’t typically hear of dealer principals taking the time and hosting other dealers to share with them some success stories. So many dealers are afraid of giving away the special sauce if you will, or the secret to the special sauce.

Trevor Gile: As dealers, I think it’s time that we realize that it’s gonna get tougher and tougher and the revenues keep on getting squeezed, and for the auto industry to be successful, we’ve got to get creative and now that we’ve found something that’s worked really well, we’re okay with it. Somebody’s not gonna come and go to our car wash and then compete with another car wash at another dealership, and so it’s something that we feel like it doesn’t matter if it’s somebody that’s 15 minutes away or 500 miles away, we’re more than happy to talk to them and share it. We’ve got some really good relationships with some of the manufacturers to even help if they’re interested throughout the whole process.

We just felt that it’s something that this next year for us, it’s a great way for us to kind of grow and expand into helping other dealers too.

Jim Fitzpatrick: It sounds great. It’s really something that I think dealers will get a lot out of. Talk to us about the venue and what day it is and is it open to any dealer that wants to go or invitation only?

Trevor Gile: Anybody that wants to go it’s open to. It’s at Tabletop’s which is right across from the west conference center in San Francisco at NADA. It’s gonna be Saturday from 1:00 to 4:00. My brother and I are also buying a bourbon case for anybody that wants to come or have another drink or food we’ll have available, we wanted to kind of thank everybody and celebrate for some of the awards we’ve had in the past two years on there and so it’s something that we’ve never done this, so we’re not sure how many people will come, but everybody’s welcome to join us and then we’ll be answering questions, talking a little bit. Even my father is gonna be there and he is up for a prestigious award, so he wanted to come and be able to talk to people too.

Jim Fitzpatrick: Yeah. Talk to us about that. Is that the Time Dealer of the Year award?

Trevor Gile: Yeah. We’re crossing our fingers. We think he’s made the final 50 and we think he’s got a really good shot at winning hopefully the number one Time Dealer of the Year for everything that he’s helped out with and we just recently won Fixed-Ops innovative dealer of the year and so we figured we might as well share some of our secrets that helped us get recognized as the most innovative dealer by Fixed-Ops and then this year I just made the 40 under 40, so we’re just really happy to be in the industry and be doing these different things and we figured we might as well throw in a party.

Jim Fitzpatrick: Yeah, that’s phenomenal. Congratulations on all your awards and your successes in 2018. Obviously you’re probably very excited about what 2019 brings. Speaking of which, there’s some experts out there and some naysayers that think that 2019 you might fall a little bit back or a little bit shy of 17 million new vehicles. What’s your take on that?

Trevor Gile: You know, I think there are a lot of factors that are gonna come into it and it’s very difficult to project it, but we’re preparing ourselves for it to go down by focusing more on these other revenue streams and that’s where we feel it’s more important for dealers to take this seriously. I think over the past three or four years we’ve noticed in our [inaudible 00:06:22] groups that the profitability in new and used cars has gone down hundreds of thousands of dollars and we don’t see a way for that to come back and so realistically you’ve got to accept the fact that the profits that we were making a few years ago on the traditional revenue streams are gonna be gone and so the way to grow and thrive is thinking of things like we’ve been doing. We might not have all the answers, but we just know that with our track record, we’re very excited about ’19 and thinking we definitely have the ability to keep on growing.

Jim Fitzpatrick: Yeah, with all those other businesses it really has you looking at the traditional dealership in a whole new light. Now it’s between the insurance and the car wash, and I think the last time we spoke you also have a restaurant or a café or coffee shop in there as well.

Trevor Gile: We have a donut and coffee shop.

Jim Fitzpatrick: Donut and coffee shop, that’s what it was. Right.

Trevor Gile: Then our marketing company has grown too. We started a marketing company to help dealers with social media and other forms. We have over 70 dealers right now. It’s less than two years old, but it’s grown every year more than double. We’re thinking this year we should be able to double on there and so I’ve actually had to take a step back as the general manager after 17 years in our dealership to focus on these other companies so it’s something of a completely different mindset that if you would have asked us a few years ago or 10 years ago if running other companies would be better suited than being a general manager or managing partner, I would have never thought that, but it’s time to adapt and realize that it’s okay to change.

Jim Fitzpatrick: Yeah, absolutely. I know for the dealers that are listening to you speak about these other businesses right now are … they’re probably taking some notes because it has been a little bit tough with regards to margin compression … I say a little bit, it’s been very tough for dealers with regard to margin compression here in the last five or 10 years in the industry and there does have to be other revenue streams going into a dealership today in order for them to maintain their same profit margin.

Talk to us about the insurance agency for a second. That’s kind of a unique thing. Is it an All State location?

Trevor Gile: Yeah. We did All State. We chose them, it was just the best fit for us for training wise and to establish it. They helped us launch it back in April it started where we officially went live, but it’s already definitely in the black after the first year. We thought that that was a no-brainer. It’s when the customer comes in to buy the car and they’re about to go into finance, we have the insurance agency. We call it the delivery coordinator who will talk to the individual, confirm their insurance while the salesperson is getting the paperwork so it doesn’t slow down the process, but lets them know that if they want a second quote or check their options, we’d be more than happy to provide it so it’s very low pressure, doesn’t interrupt the process or anything with it so it’s been a huge benefit. We got some really good feedback.

Jim Fitzpatrick: I bet. What’s next? You gotta have something on your pad there that says, “Okay, we’ve got the car wash and the donuts and the insurance.” What do you have next on there? Of course the marketing company.

Trevor Gile: This next year for 2019, I’m gonna focus on the car washes, help to distribute it to dealerships to do it, because 1.5% of dealers have the longer tunnel washes and so that means that everybody right now has an expense as opposed to a huge profit generator, so I would like to work with dealers and help them expand on that. Our loaner software, our rental fleet management tool that’s helped us, we are just doing our final beta test. It will be live for NADA, but it’s so simple, less than seven minutes to make and learn how to use it. It predicts the fleet size that you should have on there by focusing on managing your people and your product.

We’ve got it where anything that’s wrong with the loaner fleet, it turns red and if you hover over it, it will tell you what’s wrong and how to fix it. Everything we want to do is make it easier where it doesn’t have to disrupt the dealers, because we know as being a general manager and managing partner is we don’t want more on our plate. We just want to find ways to keep the revenue going. So we had everything in mind to make it a very simple product that doesn’t have to be complicated, just helps you make money. Not a bad deal.

Jim Fitzpatrick: That’s very, very cool. What do you think, you’re a manager and your family is owners of dealerships and now car washes, marketing companies, insurance agencies, and donut shops, but what are some of the concerns that you have for the year ahead and beyond?

Trevor Gile: Sure. I think electric vehicles is gonna be a big, big factor, just knowing how some of these manufacturers are gonna be pushing so hard to do that, and what that’s gonna do maintenance wise for dealers is they’re gonna lose that visit because the electric vehicles … I was just reading the difference between the number of parts in an electric engine versus a traditional engine, and it’s so much more in the traditional engine, and the way that these electric ones are gonna get fixed is we’re gonna have to be sending them somewhere else or they’re gonna have the automatic updates that are coming from the wifi.

I think those are gonna be a big factor but for us, when we looked at our business strategy, what we want to do, we were mostly afraid of Google, Amazon, and businesses like that could come in, because if all the sudden they really want to actually sell cars, we could lose out on that. So having the car washes was a business that really wasn’t competing with too much it, managing your loaner fleet internally that you already had wasn’t something that we felt was … it was a safer bet on it and having low employees has helped [inaudible 00:11:43] trimming down as much as possible on that.

Jim Fitzpatrick: Yeah, for sure. We look forward to speaking with you out at NADA and finding out how your event went.

Trevor Gile: Hopefully you’ll be there. We’re waiting for you.

Jim Fitzpatrick: Hopefully we’ll be there. You said bourbon? I’m in. I think if you said bourbon to most of our audience, a nice shot of bourbon in San Francisco free of charge, that’s not a bad offer right there.

Trevor Gile: No. We’ll have probably three or four different ones that people can try, some really good ones.

Jim Fitzpatrick: Very nice. Then I will certainly try to make it.

Trevor Gile: All right. Perfect.

Jim Fitzpatrick: We’ll do that under the auspices of covering the event for you.

Trevor Gile: Yes, and it’s Saturday so it doesn’t count.

Jim Fitzpatrick: There you go. Exactly. Well Trevor Giles, I want to thank you so much for joining us on CBT once again. It’s always a pleasure having you on and your vision for the auto industry is very interesting certainly and I know dealers that are watching right now are saying, “Hmm, I think I need to get a car wash, a donut shop, an insurance agency, and a marketing company to kind of round the edges out here on my profitability.”

Trevor Gile: Yeah. Please feel free to reach out to me on LinkedIn or somewhere.

Jim Fitzpatrick: That’s great. That’s great.

Trevor Gile: Don’t be afraid to ask for help or talk on there, because it’s [inaudible 00:12:51] that we found are worth it.

Jim Fitzpatrick: That’s very nice of you to make that offer to our audience and to dealers that are thinking about this. I’m sure they’ll take you up on that. Thanks again. We’ll see you in a couple of weeks in San Francisco. Until then, I hope you have much success.

Trevor Gile: All right. Thanks for everything that you guys do for the auto industry. We appreciate it.

Jim Fitzpatrick: Awesome. Thanks.

CBT automotive network, the number one most watched network in retail automotive. CBT is a part of the JBF business media family.

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