Want to Sell More Cars? You're Fixing the Wrong Problem

A totaled Wagoneer and salespeople who don't know the product 0:00

Steve Shaw: Dave Rogers, how you doing, sir? Welcome, welcome, welcome. What's going on?

Dave Rogers: Hey, man, I'm doing great. I'm sitting out here in, unfortunately, cloudy California, out by San Diego, at a business meeting for a day or so. I thought I'd come out here and enjoy the beautiful weather, and guess what? There is none. No, yesterday was perfect. They tell me it's a little hotter and a little more humid than normal here, but I'll take it. The funny thing is, people were complaining yesterday because it was eighty degrees and high humidity, and they didn't know what to do with themselves.

Steve Shaw: I'll take a seventy-five-degree San Diego day any day. Do you know what the best job in the world is? Meteorologist in San Diego, California. Today's seventy-five. Tomorrow's going to be seventy-five and sunny. You know what the next day is going to be? Seventy-five and sunny.

Dave Rogers: I've always heard it was sixty-five at night and seventy-five during the day most of the year. I talked to the driver who brought me here, and he's been here about forty years, retired. He says you can't beat the weather. He goes, "I go to islands, and the weather here's better than the islands. It's amazing."

Steve Shaw: It's a beautiful place. I lived in San Diego, in Encinitas, for years, and what a great place to be. So, you know what I've been doing?

Dave Rogers: What have you been doing?

Steve Shaw: Well, since I left your establishment, my Wagoneer got totaled. I called the dealership, canceled my extended service contract and got into a couple of discussions about buying a car. So I'm sucked in. I'm kind of hooked. I had done some research when my car was crashed about the different makes and models and styles. And what I found interesting, and you and I had this conversation months and months ago, is product knowledge. The lack of product knowledge by car salespeople is almost unforgivable. I can tell you now that I know more about Dodge and Jeep products than any salesperson in the greater Tampa and Miami area, because of everyone I've called.

I got hooked on the idea of buying a new one, so I called and said, "This is what I had. I had a Carbide edition." And they said, "Well, there's no such thing as a Carbide in '26." I said, "Okay, what's the equivalent?" "Well, they don't make that this year." Okay. But after my research, I found out it's the same exact model. They just changed the name and called it an Altitude. So a Carbide in '25 is an Altitude in '26.

Dave Rogers: Wait, you had to find that out? No one could tell you that?

Steve Shaw: I had to find that out. Then I start scouring around, because the people locally don't know any of this stuff. So guess who I called? Claude. Claude knows. Me and Claude had this great conversation, and I started learning about these cars.

Now I'm going to make a couple of phone calls and see what kind of deal I can get. Well, nobody in Tampa was really willing to make a deal. They were stuck at invoice price. And I'm like, okay, that's fine. I'm not complaining about your business model. But then I found that in Miami they were willing to give me the holdback, and trust me, on a Wagoneer the holdback is a significant amount of money.

So I get on the phone with the guy who answered my inquiry about buying a Wagoneer, and I go, "Can you tell me X, Y and Z about it?" He goes, "No, I don't know anything about a Wagoneer. I could get you a specialist, though." And I said, "Why the F did you pick up the phone to call me when I inquired about a Wagoneer? You called me, and you don't know anything about a Wagoneer?"

It's absolutely mind-blowing how these people work. For two days, all day Saturday, all day Sunday, and now half a day on Monday, I've been about as frustrated as any consumer could possibly get. And you have to ask yourself: are there so many car buyers out there right now that you wouldn't want to be the guy who knows everything about a Wagoneer when somebody inquires, or about any other particular car, for that matter?

Post-COVID laziness 4:16

Dave Rogers: Not that there's any excuse, but you probably got a BDC agent or somebody making the outbound phone call, just trying to book the appointment. Listen, this is the challenge today. This is what you're dealing with in the car business post-COVID. Nobody wants to friggin' work. They got spoiled. When things turned back on after COVID, let's say from mid-summer 2020 through 2023, salespeople, sales managers, the front of the business, made money despite themselves. They were all getting over sticker. Interest rates were reasonable for a while. There was a fight for cars, because there was no supply out there. Supply versus demand.

Any idiot could make a shitload of money selling a car. It was like shooting fish in a barrel. So this is the aftermath. You're dealing with a bunch of newbies who don't know shit about the car. They're not students of the game and never have been. They just came in and jumped on the bandwagon. Thank God a lot of them are getting out of the car business again, because they can't cut it in the real world. But this is what you're getting. It's post-COVID laziness. It's mind-boggling.

There are going to be people who argue with me, or who don't remember, but this is what it was like right before the economy took a shit and everything died in 2008, 2009. The cockiness in the market. The salespeople were so cocky, because you could make money selling cars, the economy was roaring and interest rates were zero percent, one percent, whatever it was. Everyone thought they were hot shit. And then the world ended. The financial crisis happened in 2008, 2009. It's like a good hurricane or a good forest fire every once in a while. You need that to clean the shit out. That's really what it is.

A lead lost before ten o'clock 6:28

Steve Shaw: Well, I laugh at all the stuff you read on LinkedIn about how every single person out there has an amazing operation. I called six, maybe ten stores over the weekend. I contacted one yesterday morning at nine forty-five, and I got a message back that said, "Hi, I'm so-and-so from the dealership. I'd be happy to answer any questions." And I go, "What's the out-the-door price on this?" And she says, "I don't know. There's no one here until ten o'clock to give you any answers."

Dave Rogers: Wow.

Steve Shaw: That's ridiculous. I typed back "LOL," and she goes, "I'm sorry." That was the end of the conversation. That lead went right out the window.

Dave Rogers: And that was a real person? That wasn't AI?

Steve Shaw: I'm guessing it was a real person, because I said "LOL" and she typed something back: "Sorry, I realize it's before hours. I just don't have any information for you." It's crazy-stupid that people operate their business this way. I sort of chuckle, but it's not funny for the operators and the owners who are paying money for a lead, paying money to get me to come to their store, and their people are handling it so badly. It's absolutely terrible.

Carvana: a Wagoneer in five minutes 7:56

Dave Rogers: Yeah. We've talked about it: the product knowledge, the depth of understanding, the commitment. It's just not there. That's why people are turning to AI. I'd told you that Carvana bought a few Stellantis dealers, and they're making a lot of news. I think it was the one in Arizona: when they bought it, it was a thirty- or forty-car-a-month store, and they sold nine hundred eighty-six.

Steve Shaw: Hey, listen, I can see why. I was sitting before dinner on Saturday night, and because you'd made that comment, I looked at Carvana. I sat down with my phone, running around in the yard with my dog. In five minutes I picked a Wagoneer, picked the one I wanted, picked the whole thing, the price, and literally all I had to do was press the button. "We will have one in your driveway tomorrow if you hit this button right here."

Simplicity at its best. And here I am two and a half days later, and I can barely get a price from a car dealer. I can't get any information. And then the one today was like, "Well, come on down and drive a car." And I said, "Bro, you think I'm going to spend a Monday at your dealership hoping you give me a good price? How about you give me a price, and then we'll decide if I want to come test-drive your truck?" My God, it's maddening. I can fully understand the consumer perspective in this whole thing. But Carvana, wow, what a great experience.

Dave Rogers: So how do you sign the paperwork? I guess in Florida you can do everything digitally. In PA you still have to have three forms wet-inked. Total digital isn't approved yet in Pennsylvania.

Steve Shaw: Well, it said "Press here to complete transaction." I pressed there, got the price, had everything, blah, blah, blah. And then I was like, I've got to run to dinner, I'll come back to it.

Dave Rogers: But was the price great? Because one thing I know Carvana has over everyone else is that I believe they're their own bank. They finance all their own deals, so that's where they can get a little room.

Steve Shaw: It was the invoice price I had gotten everywhere in town. So there was nobody for me to talk to and negotiate with and ask for a cheaper price. But then on Sunday, when all of a sudden the prices started rolling in seven grand cheaper, I was like, let's hold off. It was a whole different story when the extra money started coming in.

Fewer cars, worn trades and used car pressure 10:39

Dave Rogers: That's amazing. And I was having a conversation with one of my service managers: these dealerships are under a lot of pressure right now with used cars. They're paying top dollar for these cars at auction. Part of my rant has been maintenance. People aren't taking care of their cars for three years. They abuse them, they neglect them, whatever the case is. You get the car in to recon it in the shop, and it needs two or three thousand dollars on a volume brand, a Mazda, a Honda, a Toyota, a Hyundai, and your used car managers are flipping the hell out. Are you trying to trade anything in when you buy this car?

Steve Shaw: No. I did run a check to see how much my car was worth, but I don't really want to trade.

Dave Rogers: Because I'd be interested to see how that narrative changes for you with these dealers. With the pressure on new cars because of interest rates and a little bit of supply, there's nothing out there in used cars. Think about it. The world has to remember we've sold fewer cars every year since 2020. The biggest SAAR, the annual number, was in 2019, I think, at about seventeen million, and we haven't come close to that since. It's been fifteen million, fourteen million, thirteen million. This year every number you see is between thirteen and fourteen million.

I estimated one day that we're missing one full year of cars on the road for service and parts. That's one full year of cars and one full year of trade-ins, let's say fifteen to seventeen million cars. So your used car guys are under pressure. And the cars that are on the road aren't well maintained, because we've been telling people to neglect the goddamn things.

And this always boils down, with you, to the fact that you're not loyal to that dealership because they treat you like shit when you bring your car in for service.

Treat me badly in service, lose the sale 12:57

Steve Shaw: Well, that's the thing. I was at a place my buddy owns, at places local to me and at places six hours away, and I've taken my car in for service at most of these places. And they pretty much stink it up. So when they try to tell me, "We're going to do this for you, come to us for service," I say no, pretty much.

That argument holds no water, because you've already treated me like shit for at least a year and a half, and I've had my Wrangler for four years now. You've been treating me badly for four years. You can't come back to the value proposition. You can't tell me all the great things you're going to do for me, because I already know you haven't.

Some people might say I'm a real pain in the rear, but I think I'm actually very forgiving, much more than a real consumer would be, because I'm in the business. I'll forgive lots and lots of things a normal consumer would totally blow off. I'll also give you great CSI. I may or may not come back unless I have to. I have high expectations, but I'm forgiving, because rarely do they meet them. But now, when it comes to the purchase, there is zero to stand on. Nothing.

So yes, in Tampa they are negotiating, and the guy in Miami is willing to give me everything. It's a money thing for me. And I made the wisecrack: whoever wants to lose the most is who's going to get the deal. That's a poor business decision, but that's what the industry has come to right now. That's what I believe.

Dave Rogers: I wonder why the guy in Miami would do it. Maybe he doesn't have a lot of need for Wagoneers down in Miami.

Steve Shaw: He's got more on his lot than anybody. I think it's just a different metro area. Maybe there's an expectation, maybe it's a higher-volume store. Though this one's a pretty big store too.

Dave Rogers: But you don't make money if you're going all the way into holdback. The one guy who said he was willing to split it with you, that was pretty nice. Better than nothing. Holdback is generally the money the dealer keeps, though sales managers will give it away if they have the ability to. On some car lines like Mercedes-Benz and BMW, there's all this extra money that comes in. It's called holdback, but it's five, six, seven percent. It can be a lot of money. So it's interesting that he's willing to dip into it as far as he is.

Steve Shaw: Like I said, I'm not knocking the business practice. For a while, everybody was right at invoice, the same exact number. But after my research, after I found I could get it cheaper, you have to decide if you want to play that game or not. If you want to hold the line, fine. The guys in Tampa were still a thousand dollars more than me driving to Miami, and I said I could live with that. I'll do the deal at a thousand bucks over. It saves me some time, and there are logistics involved. I do drive right past this dealership on my way to Marathon, so it's not that bad for me. And because I know the person who owns it, I'll give them the extra thousand bucks.

But when the rubber met the road, they were only willing to split it, not give me the whole thing. So I'm like, well, forget it, then. Four thousand dollars is worth the drive, because there's no value proposition. There's no value left. It certainly wasn't worth four thousand.

And I think that's where we in the service department have to own it, and where our GMs have to own it, and you'll give the GM tip of the day. Our GMs and our dealers have to look at service and go, "Guys, it's time to step up." As a trainer who's out in the world, I see the nonsense that happens in service. If our dealers spent a day in their service departments, I think they would be blown away by the way their own stores are treating our customers right now.

What hotels know about names 17:24

Dave Rogers: Yeah, I agree. You're a direct result of the level of service a customer gets. You probably wouldn't be shopping as hard. If the first dealer you dealt with, the one that serviced your car, gave you invoice price, you probably would have said, "All right, I'll take it." You wouldn't even have questioned it. Why would you think to go into holdback?

I love the hospitality business. I flew into the airport Sunday, and a car service drove me down to the hotel. The guy driving was exactly what you'd want in a chauffeur. A BMW 7 Series, a nice luxury car. He had his black suit on, and he was very nice and very appreciative. He pulls up to the hotel, and the guy out there, Ron, has been the valet at this hotel for twenty-nine years. Ron says, "Man, you got the greatest driver." I said, "He was awesome." So he goes, "Can I bring your luggage up to your room?" I said, "Sure." "What's your last name?" I gave him my last name, and he goes, "All right, Mr. Rogers, we'll have your stuff up there." That was my whole conversation with him yesterday.

I walk outside this morning. I hadn't seen him since yesterday, because he wasn't there last night when I went outside to have a cigar. And he goes, "How you doing, Mr. Rogers? Good morning." He'd written my name down on a tag. I said, "How the hell do you remember my name?" And he goes, "I've been doing this for twenty-nine years. I take pride in remembering names." I said, "That's the smart thing about writing it down. You ink it, you think it." I've always believed that.

So we started shooting the shit about the golf here, the weather, different stuff. And I'm like, "Twenty-nine years?" He goes, "Yeah, I need to make one more year. I want it to look good on my resume." Like he's going somewhere after this.

That's the customer service from the hospitality industry. My driver had retired from the hospitality industry after thirty years, and I guess he did quite well. But it's that little experience: you pull up and they know your name. They hold the door open for you. "How are you doing today?"

Any service manager out there, watch your advisors when somebody walks in. I used to have an advisor in Jersey City, and I used to say he was the worst advisor I ever had. He'd write you up, Steve. He'd say, "How you doing?" pull you up in the computer, write you up and log your name, and you'd turn around and walk away. He'd look down and start writing something, and you'd walk back and say, "Excuse me, John," and he'd look up and go, "How can I help you?" You just wrote me up. "I did? What's your name?" A second later, no memory. I never saw anybody who couldn't remember somebody two seconds later. But that's what it takes. If people feel warm and welcome, if you have a good environment, they're probably going to give you a shot at selling them a car.

Steve Shaw: Yeah. I was sitting at the airport when I left Philly the other day, talking to a buddy of mine who used to be a dealership general manager and managing partner of a pretty big auto group. "What have you been up to?" He retired. He goes, "I got bored, so I'm driving Uber. I love it. I get to meet people. I'm hanging out." I'm thinking, God, somebody just needs to hire him. It's like he just wants to be a Walmart greeter. He just wants to be out with people. What a great person. He's just driving Uber around SoCal, having a good time, and I'm like, that's the guy we need standing in our drive.

Dave Rogers: Yeah, we need Ron, the guy here at the Park Hyatt. That guy needs to be in the drive. He's your greeter. That's the guy you need.

Steve Shaw: Exactly. But for some reason we'd look at him and we wouldn't hire him, because he's got no car experience.

Dave Rogers: No way. People who know me know this. I interviewed a guy one time back in Turnersville who'd been a retired detective, had worked for the police force and the casino commission. He had all this legal stuff on his resume, and he comes in applying for a valet job that paid about fifteen bucks an hour. This guy, Jim, when you talked to him, you just knew he was sharp as a tack. I said, "Stay here a minute." I grabbed his resume, ran over to my boss's desk and said, "You've got to meet this guy. We need a guy like this working for us here at the Auto Mall."

Jim is still there, head of security. He's been there since 2007 or 2008, probably. He never had experience in the business, but I said we could use this guy. And I ran into his son at a meeting, and his son's a GM of one of the stores there now. Jim's got to have been there almost twenty years.

Steve Shaw: That's awesome. Listen, I'm going to retire one day, and like everybody, I don't know what I'd actually do if I weren't doing what I do now. But I do love the business. I always kid around that I'm a high-priced porter as it is. I'd love to move cars and stand out in the drive. I told a story once about the guy who started out as the driver for a dealership, then became an advisor and a manager, and now he's eighty-five and driving for the dealership again, in Tennessee. I could see doing something like that for fun.

But I don't know that I could make it, because one of two things would happen. You'd look around and people wouldn't be doing their jobs, so you'd try to get them to do their jobs, and they'd tell you to F off and you'd quit. Or you'd end up being the service manager in about thirty days. And I'm like, well, I don't want to work that hard.

Dave Rogers: Right. You could elevate the people around you. When it's time to retire, that's something I would probably do. I'd go be a greeter at one of these stores and say hello to people. What do you care? You've got no skin in the game. You're making twenty bucks an hour, just doing it to keep yourself busy and stay on your feet so you don't shrivel up and die.

But the first impression when you walk into a dealership is that greeter, that valet. The last impression is the cashier, or your advisor if they don't have a cashier, or the valet who brings your car around. It's funny: when times are tough, your general managers and dealer principals always want to slash those people first, the cashiers and the valets. They should be the last ones to go. If you want to slash somebody, how about the $250,000-a-year sales manager up there? You've got no cars to sell. Get rid of that guy. He's the biggest waste of time in the dealership. Keep your twenty-dollar-an-hour valet, because that's what makes the experience. Or your cashier.

Buying cars off the service drive 25:09

Steve Shaw: There's no question about it. And I'm also thinking that I know there are some dealers who do a very good job of buying cars off the service drive. But I've got to think most of them do a bad job, because of all the stores I call on right now, there are one or two that do a great job and have that department or that salesperson. If we're not mining the drive, that has to be the biggest place we can make money right now. You have all these people standing around doing nothing who can't even answer the phone. Could we stick one on the drive to porter cars and be that greeter you're talking about, do all that wonderful stuff, and probably sell a car a day?

Dave Rogers: I used to have two guys who worked for me at my Nissan store, and I still talk to one of them all the time. One guy pulled thirty cars a month out of the service department, month in and month out. He now works for another group in South Jersey, and I think he's in charge of the people who do that. Last I heard, they're doing at least sixty, sixty-five cars a month out of the drive.

And a sales manager who used to work for me just started selling cars again. He told me on the phone last month he sold sixty cars himself, new and used, and he doesn't even work full-time for this dealer group. Thirty of them came out of service. He just does it. He goes inside, valets, greets them, sits in the waiting room.

It's a battle. You need to get used cars out of the service drive, and you need to have a presence out there. There is a little bit of a battle going on. I have advisors who get mad when the used car department talks to customers before they sell them a job. If they can keep the money on the recon, it's fine. But you hear this more and more: "Now we're just going to wholesale it." And now the service advisor does get beat. That's where I tell the GMs, you've got to put a spiff program in. You've got to give them something, two hundred bucks, two-fifty, a bird dog, whatever, because they are losing commission on it. It is a little bit of a battle. But it's the only viable place to get used cars right now, because you're paying way too much at the auction. It doesn't make any sense, and there's a lot of competition out there.

Steve Shaw: You know, I think we should make this its own episode, because as you're talking, I'm thinking about RO marketing. I was thinking about this the other day, and it could be a whole episode. If I'm going to market on the ticket, I'm going to market alignments and all these other items. Couldn't you have one person steady right there making offers to customers for their car? I could be marketing to every single person in my drive, if I wanted to.

If I drove in with my Wrangler, look, I've got a hundred twenty thousand miles on it. I love it. It's paid off. But if you made me a good offer, I'd probably get rid of it. Or if you made me an offer on a new car, I would consider it at any point in time. I am a consumer. And having that dedication to doing it is just like putting an alignment on every single ticket. You have the dedication. We were talking at your stores about having those people doing the pre-writes, having everything worked ahead of time. So why couldn't we have appraisals worked ahead of time, and so on? Subject to inspection, you know.

Dave Rogers: Well, they do. There's the Mastermind program out there, and Cognito, I think it's called, another one our stores use. It's tied into your appointment system, tied into Xtime. A lot of times when you make the appointment a couple of days before, a little note goes out: "Hey, Steve, would you like a free appraisal while your car's here?" When I brought a BMW in for service, as soon as I dropped it off, I got a text message telling me the range my car was worth. So there are programs out there, and we have them in some of our stores. They work pretty well. You get a few deals off them.

But I think what you need is that dedicated person who's going to work it. It seems like nowadays, no matter what you want to do, you have to have a champion who does it. To steal the latest and greatest term, you've got to have a champion. Otherwise it never happens.

Steve Shaw: Yes, absolutely. You have all the tools. Is somebody doing it? Because I've yet to get an appraisal. I can't even get an alignment printout when I drive over the tire profile machine.

Dave Rogers: I think Florida in your area is a little different bird, though. I don't know if it's that they're not aggressive, or maybe you're near retirement communities and there's just no urgency. You've got St. Petersburg, Clearwater, all that. The West Coast is known for its retirement communities, let's be honest. There's money, but there might just not be urgency in trading in a car. I can't explain it.

Steve Shaw: I just don't think they want to sell cars, period.

Dave Rogers: I'm coming to visit you this week. We're going to check out car dealerships and cigar lounges. We'll come down there Thursday and Friday.

Product knowledge and the GM tip 30:27

Steve Shaw: There you go. Well, you probably ought to give everybody a GM tip of the day.

Dave Rogers: The GM tip of the day, man. All I can say is that there are people out there who feel exactly like Steve does. And you've got two choices. You can kiss their ass and treat them right while they're coming in for service, make them feel warm and fuzzy and build up that level of trust, so maybe they don't shop you as hard. I think everyone's going to shop you a little bit, but if they're loyal to you, they're probably less likely to shop you as much as Steve's been doing. The numbers are the numbers: eighty percent of people will give the place where they service their car a shot at selling them their next car. So you want to be that place.

And then you might want to sharpen your skills as far as product knowledge goes, because, Jesus. If the sales department and the BDC people can't answer questions, get them a goddamn subscription to Claude or ChatGPT so they can. What the frick? How do you tell somebody they don't make that edition anymore and not tell them what they have now? That's the stupidest thing I've ever heard. You couldn't tell me the model went from this edition to this one? Again, it's the lack of being a student, the lack of ambition, education, knowledge, whatever the hell it is.

Steve Shaw: I guess that's why everybody's going AI. All right, man, I guess we'd better get out of here. Enjoy San Diego.

Dave Rogers: Yes, I've got to go. It's still early here, so I've still got time. No sun yet, but we're getting there. All right.