Leadership Podcast with Guest Stuart Landsverk
Transcript
Sean Kelley
nToday on the car motivators leadership podcast, we have Mr. Stewart Landsverk, the principal of Arizona car sales located in beautiful Mesa, Arizona. For nearly 16 years, he has sold used cars. But here’s the big difference. Stewart’s review scores are off the charts, not only for a used car dealer, but compared to new car dealers as well. But the excellence doesn’t stop there. Stewart has an auto finance company, sells auto insurance and owns a property company all to best serve the customer and quite frankly, not leave a dime on the table. He’s the epitome of efficiency, Stuart Landsverk. Thanks for jumping on with us and to provide some of your awesome auto industry insights. We are grateful to have you.n
nStuart Landsverk
nIt’s my pleasure Sean. And I’m glad I can spend some time with you and your other dealers.n
nSean Kelleyn
nIt’s an absolute honor. We’re really excited to have you. And I know that this is going to be a really insightful webcast. So for the car motivators, followers, guys, pay attention. This is a great learning opportunity. Stewart, you grew up in the auto industry and your family had a car dealership in the Midwest, correct?n
nStuart
nThey still do. It is funny that they’re one of the largest used car dealers in the Illinois area. So yeah, I literally grew up in the business that started, you know, washing cars, working in the office. And then when I was 16, I got the opportunity to start selling cars once I had a license. And it was quite the experience, especially when I’m working with guys, you know, three times my age. And I went to college and sold cars on weekends. The other other people that went to college, they’re delivering pizzas or doing something else and I’m driving home an hour and a half to go sell cars in Waukegan, Illinois. So yeah. was quite the experience and then went to get my degree. Figure, okay, well, I’ll just hang my hat here and figure it out until I get a management job. And because that’s what my degrees are in personnel and industrial relations management, but wow, the car business is something where you know that lifestyle is somewhat addictive in terms of, as I tell my kids this all the time, it’s the same thing every day only different. So I just stayed in it.nn
Sean
nHave you always wanted to be a dealer? Or is that something that evolved as you grew in the business?n
nStuart
nThat’s a good question. And working in a family business, there’s a lot of dynamics. I’ve had the privilege and honor to be in a family business and have the family dynamics to wear. Holidays or not, holidays, holidays are not fun. We’re always talking about business and things that didn’t go well usually carried over to that. And then I’ve had the privilege and honor of being an outsider in a family business, and seeing some of the dynamics that go back and forth with it and family members and just kind of had that standing to kind of pull off to the side there. So to circle you all the way back to your question, the answer is if I was ever going to control my own destiny, it wasn’t going to be in a family business with partners that were family members, it wasn’t going to be in another family’s business. Because unfortunately, as I learned, especially when I moved out here, the premise and promises of being a partner are only really a guarantee of a pay plan. Because if they end at the end of the day, if they want to let you go, they do. And so being a dealer was the only way that I really could control me and my family’s destiny. So that’s kind of where we were.n
nSean
nMan, that’s interesting. And you know, as an executive coach, I get to help a lot of dealer principals, owners, children kind of figure out, you know, where they’re place is in the dealership and the business. And it’s amazing how, you know, everyone thinks, oh, they’re the dealers, you know, son or daughter like they’ve got it easy, man, I would say that it’s actually there’s a lot of obstacles that people can’t even imagine.n
nStuart
nYou know, I have so many stories to tell you about owners’ children that I’ve had the pleasure and hilarity to meet. They have an expression Um, that what is it either Papa gave him a dealership FOK? And figure out what those initials stand for. I had to be the guy that was constantly grinding and pushing and learning and nothing I attribute this to, you know, my father God rest his soul, who passed away about 10 years ago. And he instilled that work ethic. He didn’t finish high school but as far as street smarts and business savvy, one of the more brilliant people that I ever encountered in my life. And so I tried to be as street savvy and book savvy and internet and podcast savvy as I possibly can, because I kind of equate life like an escalator, you’re either going up or going down and and if you’re not moving, you’re probably going down.n
nSo those are those are things that, if I to counsel an owner’s kid, and I whether I go to NADA, did Dealer Driving Sales at one of these conventions, and I do have the opportunity to meet an owner’s kid, I kind of pull them off to the side, and I kind of tell them, I go, look, I appreciate that you have the position, congratulations, you have the position. It’s kind of like you have the respect that you are the owner’s kid. But at the end of the day, you keep the respect and you get to a different level of respect by being able to do the job and God forbid, mentor other people into doing the job.n
nSean
nYeah, that’s so that’s such valuable advice. Because you know, it’s the three C’s of leadership, right? Character competence, and caring. And if you’ve got those, it doesn’t matter if you’re the owneru2019s son or some random manager, people will respect you and follow you. And I love that you pointed that out. And I want to shift gears a little and let’s talk a little bit about recent events in the car business, maybe over the past 12-18 months. Inventory sourcing has been a huge challenge for many dealerships during the pandemic. But I heard you folded up your sleeves and got busy, not only sourcing inventory for yourself, but others as well. Would you explain about that?n
nStuart
nYeah, I mean, we’ve seen this isn’t any great revelation, shoot we’ve seen with, you know, Carmax, and Carvana, and Vroom and all these other public companies they have, they’re all about buying cars directly from the customer. So fortunately, given the market constraints and everything that’s going on fortunately, we have directed a great amount of advertising and marketing, whether that’s social media groups, Google Pay Per Click whatever, into buying cars directly from customers, and we are able to buy a great percentage of cars directly. In addition to that, we’ve been able to work existing relationships with vendors that we had purchased cars directly from to bypass that auction channel where I’m not butting heads, with 20-30 people trying to pay too much for the car, pay two grand overbook and then have a two grand shop bill. So we’ve been reasonably successful with that, I think the market conditions as such, it’s harder to get price point cars. And I’m pretty picky on the kind of car we sell. As you can see from the reputation we have, every car has to go through 100 plus point safety inspection. brakes and tires aren’t optional. You know, we even replace wiper blades and the like. So if a car can’t pass that kind of test, without you know, spending two or $3,000 on it, we just re wholesale it. But yeah, we’ve amped a lot of our advertising directly to buying directly from customers. And then fortunately, we’ve been able to get some overflow inventory from, you know, existing partners bypassing two channels.n
nSean
nAnd I think that was a really smart tactic to adopt one of my coaching clients, a dealer in Nashville, we actually identified that buying cars was maybe for the first time ever, equally as important to selling them so the entire sales consultant team became vehicle acquisition and purchasing cars instead of, you know, just sales consultants, right, and that they adopted a dual job role and focused effort over the course of you know, 90 days, they were buying an extra 18, I think was on the low end to 25 vehicles a month, and they sold 80% of them within less than 30 days. So I mean, talk about, I think that was a really smart move. And I believe the dealerships that are doing that now are probably set up for additional revenue and success. I think that was really smart. And I see how important having the right vehicles is. I think a lot of dealers will, based on what you know, you’re talking about your choosy, you won’t just sell any piece of metal. And so you’re saying that’s had a big impact on your, I guess your reputation?n
nStuart
nWell, at the end of the day, it’s a new car to the person buying it, it may be a used car, but it’s still a new car to the party that’s buying it. So where I struggle, Sean is you know, I come from the Midwest where you sell cars as is and out here in Arizona, they have implied warranty, which is 15 days or 500 miles on, basically engine transmission. And yeah, I know I can ensure that reinsure that or whatever. But at the end of the day, if the car breaks down a week after they buy it, man, it just frost’s everybody’s cake. So I’ve always been a proponent that the money’s made when you buy the car, not when you sell the car. I mean, obviously, it’s when you sell the car that you paid for the car, but at the end of the day, you make a good buy when you buy the car, or, or you don’t make a good buy when you buy the car. We’ve all been guilty of overpaying. And we’ve been all guilty. When you buy 1000s of cars in a year, you’re bound to make a mistake, i.e. the last person that was perfect, unfortunately, they crucified. So you want to make sure that you follow your analytics and stocking whether it’s you know, be Auto Vin Que dealers like any of those programs there, you’ve got to have a process stay true to the process. It’s okay, if you vary a little bit depending on if it’s a car that’s super low miles, great history, great service history. Got eyeballs, but you know, for the most part, you got to stick to your knitting or otherwise you’re gonna get into trouble.n
nSean
nYeah, that’s a great point. And definitely, I think a focus on your used car operation right now is more key than ever, you know, ensuring that you are measuring the metrics and you’re in the auto or whatever tool you’re using to get your vehicles recon. I get to coach the coach of the I retired and founder a lot and his team and it’s it’s amazing how the dealers that really focus on getting their vehicles frontline ready quick and making sure their price, right, they have a good exit strategy, getting rid of the bronze vehicles, if you use the auto right trying to get the right value out of your platinum vehicles and golds. Totally agree with the analytics you had mentioned, in our call while preparing for this webcast, you kind of talked about how you really use analytics to drive behaviors and make changes. Any tips you’d like to share with the dealer community around that?n
nStuart
nWell, the here’s the thing Sean, especially like right now, time to line has always been critical, but it’s super critical now because it’s so hard to source parts, stupid little things like fuel filters and wiring harnesses and power window motors and God forbid, you know, yeah, body parts for vehicles. They’re harder to find, longer to source, more expensive to source. So it is absolutely critical. I’m a big fan of three controllables to the car business, personnel, inventory and advertising. So it’s important not to be overstaffed. And I think given the sales environment, I think most dealers have kind of got the right staffing. Inventory. Again, it’s important to stock what you sell, and replace what you sell, and don’t get too cute. And as far as advertising, when we talked about this, if the market is a hot market, you could pivot some of that toward sourcing and personnel hiring. There’s a bunch of different things you can do and conversely, you know, during the Great Recession, or depression as we had in 08t, nine and 10 those were absolutely critical. Stock is having that inventory level down. So if you floorplan you’re not getting killed an interest in curtailments, if you floor plan, that opportunity cost and you want to make the cash. And you certainly don’t want to put yourself in harm’s way by, you know, having high cost per lead cost per sale, and too much payroll.n
nSean
nThose are great tips and certainly something that needs to be focused on. And I mean, especially with the changing, you know, profit and with some pay plans that may have been perfect two years ago might be, you know, you might be way out of line now, one way or the other. And on the same token, you know, you might also be setting I feel like some dealers might be setting themselves up on their pay situation where they might be losing great employees, because, you know, maybe it was a volume based pay plan before, and I think adjusting as necessary and that’s, that’s a challenge a lot of dealers are facing.n
nStuart
nThat’s a great point, Shawn, and he literally just this morning, before our conversation today, revamped our pay plans, but I had a couple of longer term employees that were concerned about it and as a dealer, it’s all people. Itu2019s all people. So as a leader, you have to have great communication skills, you also have to understand that, okay, so if you’re managing by numbers and analytics, which I tried to do, and we try to have effective sales, competent, 20 ish percent range, if you have people who’ve been with you for a while, and they’re good people and are productive, people don’t get super caught up on percentages. And although it doesn’t quite fit, or a box or whatever, because they’re bringing in repeat customers, referral customers, they’re doing everything that you need to do, and it just speaks better for your organization, if you can hang those around. And I know, plenty of my dealer, colleagues community, you know, they’re super hung up, especially now where they have hate plans that were set up under the old rules. and they’re trying to tweak this back and they are losing some good people. And I’ve always been a fan of you can’t pay the right person enough money, but you can always pay the wrong person the right money.n
nSean
nThat’s great man. That is words of wisdom, guys, write that down. If you’re watching this. That’s phenomenal. Thank you for sharing that. Stewart. Now, while we’re on the topic of profit, and how it affects pay, and all that, you know, this is something we were talking about your market and kind of how you set yourself apart. You were talking about how to maximize profit and capture market share. A lot of dealers are using, you know, tricks and gimmicks regarding their pricing. And you don’t subscribe to that type of advertising. So how do you bring in business differently than your competitors? And what impact does it have on your success? Is it possible to be transparent and give honest pricing upfront and still capture market share? Or do dealers have to fall into that trap?n
nStuart
nYou know, you must be reading my emails. Because I was literally going back and forth with my agency this morning. And this is reality in the Phoenix market. There. The average used car addendum is north of $2,000. That’s a used car demo. I’ve seen some ATMs on new cars that were 20-30-40 grand. So my point is that everybody wants to trick the third party engines, auto traders cars.com CarGurus. Edmunds whenever Carfax to be good grade or whatever to give the customer that perception and then they come to the dealership. So you’re going to advertise that way, you’re going to bring 100 customers to the dealership, 50 of them are going to get ticked off and leave because they know you’re lying to him as soon as you give him a Foursquare and here you are paying all these fees.n
nAnd it’s like no, you didn’t say that. And the dealer says yes, I did. It’s in real tiny tiny asterix at the bottom of the ad, or whatever. So 25 of them will say and like the car. u201cLet’s go for a test driveu201d. Let’s work the deal and 25 who buy because there’s so ticked off from looking so to somebody who’s honest, ethical tries to do business the right way to price he sees the price you pay. That will play to a large segment of a market and where you tie that out to is reputation. So I always tell my staff as we train them to get around those objections I go look, look at our reviews. Look at what the people are saying these are real reviews from real people that can tell you that what you see is what you get pricey sees the price you pay plus the car that you get from us has gone through 100 plus point safety inspection and we’ll show you the work we did, we’ll show you that we have three master techs and five lifts and you know, all the technology and capability of a franchise dealership to make that car as new a car for you, as a used car can be.n
nSean
nAnd that’s huge, you know, just like your inventory standing tall, you’re kind of I love what you’re doing here, because you’re giving your employees the ability to stand tall and you know, deliver the message that like, hey, what we do is different here. And I think that that really is a unique value proposition. So what I’m hearing you say is, you know, it’s, it’s more about setting yourself apart, pointing that out to the consumer, and, and letting them like they were, they’ve already felt the pain of shopping elsewhere and, and using that to your advantage and I love how that’s impacting your reputation. And, you know, we speak to Stuart, we speak to dealers every day, all week long, literally, and their and their managers and their frontline staff and one thing, especially when we’re working in service departments, one thing that becomes clear is that there’s a lot of profit and money leaks through the service department, whether it’s lack of communication, you know, customer trust a multitude of other issues you mentioned, you know, parts shortages earlier. How are you currently handling the service business in your used car dealership to keep all your texts busy and your base full?n
nStuart
nI think the key to fixed operation, Sean is you know, you got to keep the techs doing tech work, okay, I try to not have them do a bunch of unproductive work. Measuring unapplied time is like the bane of my existence. So yeah, they try not to do a bunch of paperwork, they’re turning wrench, they’re turning time and they’re productive. So nothing wrecks tech efficiency, more than being stuck into tasks that isn’t getting the car ready to fix. Whether it’s, you know, dry driving, picking up parts or doing unnecessary paperwork. So what we try to do is have people that concentrate on all the tasks that need to get done in the fixed operations department or service department, that a tech in a smaller store would end up doing, you know, so if we need to chase parts, we have somebody else do that if we need to be writing up estimates, you know, we we have people to do that the techs are turning wrench all the time. And I very rarely have that unproductive time conversation, I maybe had a little bit during COVID. But at the end of the day, I guarantee them the man hours because we know how hard it is to hire decks, especially ones that are mastertech level. So those are all those are all concerns. And as far as bringing the business in besides internal, it’s important to optimize a Google My Business, have a separate parts page, have a separate service page. give discounts to prior customers, we have, you know, Arizona car sales rewards program where you know, depending on you know how deep the relationship is, they get 10 or 20% off service work, they get free loaner cars. They get 10% discounts on referrals, you know, for service work if they send somebody to do that. And we’re constantly as you could tell, we’re kind of maniacal about reputation. So we’re constantly sending surveys and making Thank you calls and making sure that the experience in the service department is as good as it is in the sales department.n
nSean
nAnd that’s huge and I totally subscribe to the saying you know sales sells the first car service sells the rest because of that and that with that level of follow up and customer experience. I’ve no doubt that helps you guys continue to maintain grip. And I love what you said there too about keeping the text turning wrenches you know, I see that so often when I first will go into a dealership it’s like you’ve got you know, $25 an hour employees doing $12 An hour employee work and you know, you’ve got to really dealers take a lesson from Stuart here is really defining what is profitable action and ensuring the right people are doing the right roles because it’s easy and I’ve seen it with GE Angels are dealers where they’re doing, you know, sales consultant type of behaviors, when, you know, you’re you’re worth much more to the business and then maybe correcting that credit app of that customer, right? It’s not to say you can’t get in, you shouldn’t get in the trenches every now and then. But everything is said there, man, I totally agree, I’m trying to find something I disagree with you on Stuart helped me out here. No, I’m still,-n
nStuart
nYou know, at the end of the day, like minded people think the right way. I’ve often said it, this is true. As a salesperson that’s watching or a manager or dealer. I hate to say this, but this is so true, you are who you hang around with. Okay, so that circle of influence that you have personally also applies professionally. So one of the things that I always try to despite being a relatively old man with gray hair, and all that other fun stuff, is to be a lifetime learner, there isn’t a day shot that I don’t go and try to learn something and I don’t get it right all the time. Nobody does. But if you get it right, more than get it wrong, you’re probably going to be successful. And in old mentor of mine, when I first took a corporate job at a dealership where I was managing six stores, he said to me, he says, Look, he says you make 1000s of decisions in a year, you know, you’re gonna make five or six really critical ones, it’s important to get those ones right. So that’s that’s the advice I can give to a dealer or manager or somebody that is looking to get to that next level it is you make 1000s of decisions in a year you make decisions what to eat, you make a decision, what time to bed, you make a decision, what everybody do you have a breakfast are not none of those really matter. What really matters are the, you know, the five or six critical decisions that you’re going to make any year, whether that’s to invest in personal training, or ongoing training for your staff, or, you know, subscribe to analytics, so you can be more efficient in terms of being financial about your business, because a lot of times, it’s Sean, a lot of people in the car business I’ve met, and I’m not going to stereotype regions or anything like that. But, you know, there are some dealers that are totally successful, despite themselves, they are great salespeople, and they just sell their way into profitability, but they manage your business like crap. I mean, that level of detail is terrible. The financials are terrible, they end up spending more time doing cleanup, and you know, it goes back to do what you’re good at. So in that particular situation, I’ve told dealers that are sales driven, I said, just make sure you’ve got great support staff, I mean, and just keep selling. And that’s really the best advice I could give. So, um, so again, certainly back to your point. I’m sure we disagree on some things, but you are who you hang around with. And that’s really true personally and professionally. Son
nSean
nwell, and I do want to circle back to two leadership because I know how important that is to you. But before I do want to talk about the biggest elephant in the room as it relates to the automotive market, which you know, is trying to get bottom line, it’s gas prices, right. And I remember back in 09, I was standing at the auction, a Manheim auction here in St. Louis there in a little I was so perplexed during my black book, because I was trying to figure out why are SUVs, the price of complex compacts and why are these compacts the prices of SUVs all of a sudden, and you know, so the gas prices back then had a massive impact on the market you curious? Where do you see this price ascension going and what uh, What effects do you expect it to have on inventory and pricing and things like that?n
nStuart
nSure. We’ve got the playbook. A playbook happened, you know, in March, March of Oh, eight. Okay. That was the first time that we spiked from $3 to like for something dollar gas. And yeah, during that time when you’re talking about at the auction in St. Louis, I, you know, literally we saw were Priuses were bringing 120-130% of book and the the banks are foreplay companies wouldn’t finance trucks or SUVs for any more than 50% of book or auction tickets. So it took six to nine months for that market to start correcting. And I’m not sure that it’s going to go that slow. But as we see, unfortunately or fortunately, I’ve had to get a lot more geopolitical. I was joking with my wife that I’m watching a lot more Sky News and Uh, you know, European, either business or news in general and certainly CNBC or Fox Business, to try to get an idea as far as like, what I’m a big fan of playing chess versus checkers, I’m checkers is move that’s right in front of you. Chess is like a move that’s like two or three moves in the future. And that’s really how we have to kind of run our business, if we’re going to be successful. So I’m looking at this and saying, we’ve already got the playbook we know what that’s going to be, I don’t think it’s going to be as steep drop from, you know, 450 gas like it is here in Phoenix to $2, like it was, you know, is six to nine months in Oh, eight. Gas prices, oil prices in general are driven by demand. And I joked with my general manager, and, you know, he was saying how great it was when there were $2 guests, I said, that’s not a good sign. That’s not a good sign at all. That means nobody’s buying gas, nobody’s spending money. That’s not healthy.n
nAbout the sweet spot is that 3- 3.50 that means that we have enough demand. People buy gas for the car when going on trips and stuff like that, but it’s not like the apex like it’s at right now. And we had that big spike. You know, it wasn’t quite the spike that everybody said because of the war that’s going on in Ukraine, but you know, certainly it’s spiked for a lot of people 7080 cents in the matter of a week or two. And they were still at the high high 3u2019s, which is significant because it showed that there was a lot of demand in the market.n
nSo as I see people spending less, and having to spend more and rent and say I’m gonna spend more on food, this is probably going to come down but the best analogy Sean is it’s going to be like, pitcher a balloon that’s full. And it’s not going to be like letting go of a balloon like it was in 08. It’s going to be like we’re going to be letting off the neck a little bit and it’s going to go from 4.50 to maybe for 3.99 Good old car math 3.99 then it may go to 3.75 3.50 is going to come down but it’s probably going to come down a little bit so here’s I was on the phone with a part of part of part of my life. I do some consulting for some people on Wall Street on the auto business and I was fortunate that one of the people that I spoke with let me in on a conversation like with how they thought this Ukraine conflict was going to last and the one thing that we see with that is that they’re like the top producer of neon, which is used in the semiconductor process, which coincidentally is the main problem with new cars at the moment not not being produced in a consistent manner.n
nSo the problem that we see is that as this conflict keeps going on, it’s going to disrupt the supply chain more just like Shanghai shutting down for COVID round four. And we don’t know how long that’s going to be. Hopefully, should be very short because I think everybody’s had their fill with COVID and lockdowns and masks and all that fun stuff. So right now the crystal ball Sean is that it feels like a nine to 12 month thing. And it’s going to come down gradually not like it did in 08 where just like the floor came out of the market because Lehman Brothers puked in when the financial markets froze up and let me tell you what, that was a super fun time. So dealers that weren’t a dealer in 08-09-10n
nLet me tell you why you’re gonna get an education. Because? Because when we were in business, every Yes, I’m sure as I know you were that’s why I’m sharing this story with you. Like literally I dreaded going to work. I love what I do. Let me make this clear. I love the car business. i It’s the same thing everyday. Okay, I don’t go to work and don’t expect to sell a car. I expect to sell a car. I expect to have fun selling car, I expect my customers to be happy. Let me tell you what, no, you don’t have intent. It was not fun. I go into work and I’m either coming to a fax and saying that a lender is going out of business or stop or cutting us off. Or we’re getting an email saying that you know that they’re severing relationships because of access to Financials. You know, you get a 700 type of customer and they’re trying to buy a car and you’re having a hard time getting that approved a 700 plus customer, and it wasn’t like they were asking for a second or third car like they do now. No, this is just I want to buy one car, it’s like, they need to put 20% down. Are you kidding me? This is an auto approval today. Yeah, it just let me tell you what you’re gonna find out what you’re made out of if you can do business during today for the first time? And what is it, go hard or go home? That’s what that is.nn
nSean
nYeah, back then it was like, things were steady for so long. And then there was the dip, right? And now things are up, you know, and now people are fearful about, they don’t want it to go back to normal. Right. And, you know, as we’re talking about a lot of the changes going on in the car business and how you and I are certainly kindred spirits, in the fact that we both placed a strong value in leadership. What, what traits, do you think the best leaders need to model success with everything going on now? And what’s to come in the near future?n
nStuart
nGood point. And I gotta tell you, I gotta tell you a funny story. Okay, so I’ll go, I’ll go in on a turn, husband or wife, boyfriend, girlfriend, whoever it is. didn’t agree up a pencil and I sit down with him and I go to the boyfriend or husband? And I’ll say, let me ask you a question. You know, what’s, what’s the key to your relationship? And he’ll say, oh, it’s trust, it’s fidelity and security. Whenever I go to the wife or girlfriend, I go, Well, what do you think it is? And we always come up with the same answer communication. So when in terms of communication, is it, how I manage customers, or how I work with our staff and how to be an effective leader, you have to seek first to understand that C can be understood.n
nSo, I hate email. I hate texts, I really do. Because you know what, they’re very one dimensional. So I can write an email. And the message is A person reading it in the message is B. And somebody independent may interpret it as a C. So I’m a big fan of verbal cues. I’m a big fan of, you know, body language, I don’t want to say it’s a fun top body language. But I’ve learned over the years to try to read body language pretty well. And I tried to teach my staff that so we can identify that. So here, look, I’m, I’m a seven habits guy. I love Franklin Covey’s program and taught it to our staff and managers. And I just subscribe to the theory, whether it’s employees or customers, vendor partners, treat people the way they want to be treated, not the way you think they want to be treated, not the way you want to be treated, treat them the way they want to be treated. And more often than not, you’re going to be successful.n
nSean
nMan, I love what you said there, it speaks directly to you know, my greatest passion, which is admission, which is to bring coaching to the car business, I always talk about the golden verse, the platinum rule, right? The golden rule is to do unto others the way you but the platinum rule is do unto them the way they want to be treated. And I love what you said there. And that’s where I think that’s where the leadership is, has got to evolve in our industry, and managers have got to learn the language of coaching. Because at the end of the day, you’re helping each person grow as an individual where they want it and need it most. Not that, you know, training training has its place, and everyone needs that basic foundation. But most of the automotive professionals that you know, that are out there are pretty darn good at selling and you know, making deals and dusting and closing. So how do you take an A player and let’s be real dealers, I think they’ve all learned like, you can operate a dealership with less employees, especially as a result of COVID. I think Todd is this, you can be extremely profitable with less employees on your staff. So you probably have retained most you’re a player’s. And ultimately, how do you make an A player and a plus player, right? That takes coaching and that takes individual engagement and listening to them?n
nStuart
nI’m gonna go even harder, please. Okay. All right. The key is how do you take a deep player and make them a C player? And how do you make a C player into a B player? And the point is that look. And I tell my managers this all the time, okay? You can’t manage people the way you are. Okay? Every time I go to a manager and try to manage them like they’re me. I’m disappointed. Always. Because you know what, Shawn? If they were me, they wouldn’t be here. They’d be a general manager somewhere they’d be at dealers somewhere they’d be a fortune 500 Exec is one of those guys on Wall Street with three letter title. And I love. I love stories when people go away and you know, move on to the next stage of their life. And I know it’s not me I know it’s I was just a step in their career I, I’m honored and blessed when people come up to me and say, I’m so glad I worked with you because I learned so much or I learned how to do this, or I learned how to do that. So I always kind of tell my managers, I said, Look, you can hold people accountable without being a jerk. You don’t need to be Makka Balian or heart iron fisted and style. But let’s temper our expectations to understand that the best case scenario that you’re going to get is somebody that has 60 or 70% of you.n
nAnd if you get that, then let’s just, it doesn’t mean don’t hold them accountable. It just means don’t don’t act like they’re you. And that’s the problem with a lot of people in our business is that they they manage people and they think they’re you die would you know, Charlotte is like if you go into a store, all your A players try to manage their staff like they’re a players know, we have a bunch of D and C and B players, okay, so you got to manage them like DMC and B players, it’s kind of like, okay, like, like a baseball with spring training that’s going on in Florida and out here in Arizona, okay? The idea is to get to 200 hitter hitting 250. The idea is to get the 250 hitter and, and and to add ideas to do at hitter hitting 320. Or better, you know, that given the pitcher instead of having a five era to a 40 or three era. So that’s no different from watching our numbers in our CRM, and, you know, watching you know, write up percentages and demo percentages and closing percentages and calls reach percentage, I mean, so it’s the same thing. It’s just a different application. So stop managing people like they’re you. And that’s always disappointing if you do.n
nSean
nAbsolutely. And if you think about it, if they’re able to adapt themselves to each individual on the team like that, then that that makes an adaptable Manager, which, you know, I think with all the rate at which changes are happening in our industry, like, we have to be able to adapt quicker than ever. And I heard this not too long ago that the species that have survived the longest on Earth are the ones that adapt the fastest. So maybe that’s the ultimate leadership trait right now like adaptability, right? Flexibility, being able to adapt to the team member you’ve got and the customer in the market situation. Like crazy for sale. That’sn
nStuart
nYeah, so I’m gonna give you a visual, okay. I subscribed to this, okay, see this pen, Shawn? Yes, it’s flexible. Not terribly flexible. But this is this is the same thing with management style. Okay, being flexible, but you’re not Gumby and you’re not gonna bend all the way through. Okay. So be flexible, be pliable, but validate true to who you are.n
nSean
nYeah, boundaries, right. You have to have boundaries and expectations. Right. That’s great, man. Great, great advice for all the leaders listening to Stewart here, man. He’s a wealth of knowledge and has filled his filled his brain with knowledge and skills over the years. And I love everything you’re sharing. We’re big fans,n
nStuart
nShawn, I tell my kids this all the time I get hit by a bus tomorrow, all my knowledge dies with me. Okay. So I’m happy to give advice to somebody shared the experience. I’m the tour guide. I know where to traps are, I know where the road of where the potholes are. It’s up to you to travel the road. It’s up to you to do the work. But, you know, I can tell you what to look out for. Because, you know, again, gray hair experience, wrinkles. I mean, I can tell you this, but at the end of the day, it’s it’s your journey. It’s your business, it’s your life, and you have to live your life and your journey, the way you feel the right way is I can just tell you, you know, my particular brand of heartburn, and what I’ve done to avoid it where possible.n
nSean
nWell, we appreciate you sharing your knowledge and I’m gonna cross my fingers. You don’t get hit by a bus. But I will say your knowledge that you’ve shared here will live on I’ll definitely impart it on the people. I’m lucky and blessed enough to coach each day. And, Stuart, I’m gonna hit you with one last question. It’s a big picture question. Where do you because you are a forward thinking innovator in the industry and you believe in mastery and excellence. So this is a great question as someone like you, where do you see the auto industry five years from now on? Big, Big changes are at hand, you know, and I’m sure you’ve given it some thought. So what does it look like five years from now?n
nStuart
nThat’s an interesting question because I get asked this from my friends on Wall Street a lot. And, and there’s a lot of, you know, m&a activity, a lot of mergers, a lot of buyouts a lot of by sells going on and, and the funny thing is and in new car land, you know, the and you kind of touched on this earlier RDS earnings real because traditionally it’s been, you know, race to the bottom get the UI O’s or units in operation and and chase the dealer cash well now, the New World Order at least is the I’m the European model where you know, people order cars and they wait for oh man, you know, there’s not a lot of vehicles in stock. So the best again, the best analogy for this is if we go back to history, oh 809 10 When General Motors and Chrysler went bankrupt, and obviously weren’t producing any cars. And everything was great until, you know, somebody woke up and says, Hey, we’re paying all these union workers basically pay or play contracts. And we got to just crank out a whole bunch of cars. So I would assume if I’m looking at it from a three to five year perspective, I think the OEM manufacturer is making more money than they’ve ever made, because they’re not paying out the incentives to customers and dealers, dealers are making more money because they don’t have to spend as much and they’ve managed, again, the personnel inventory and advertising component. Used Car dealers there, they’re hanging in there if they’re reasonably savvy, even though there’s, you know, higher prices and Andalite. I would tell you, the one question you didn’t ask me about was like EVs.n
nAnd I really, my answer to that would have been, you know, prior to this nice gas spike, everybody had I said EVs are pretty much a niche vehicle unless we have consistent $4 gas. Well, now here we are. So that the problem is that until the manufacturers build the kind of cars that people want, meaning, you know, I believe in number 65% of new car sales are SUVs, CU, v’s and trucks until they figure out how to make those vehicles affordably and get battery life to where you know, I’m in Phoenix. And I would be hard pressed to take it easy to Vegas, let alone Los Angeles.n
nSo until they figure out those components, I believe that business is going to be somewhat similar to what we have. My My question is going to be whether the OEMs have the courage to not load up dealers with a bunch of cars, and all indications I get from all the public information, I don’t have any private information, because I’m not like that in tune with, as opposed to some guys like, you know, Jim Ziegler, or some of the other people in the industry that maybe have a beeline to the CEO or level right below him. I think they’re going to try to hold the line here, Shawn and see if they can make that work because they’re obviously making more money to dealers or making more money. from an m&a standpoint. I think the skepticism about whether the earnings or continue for dealers has abated somewhat. And I think that they have an opportunity. I’ve noticed that you know, the typical blue sky component has gone up in the recent transactions I’ve looked at. So I will tell you that everything’s great until you know, we’re playing musical chairs and there’s no chair left. So absent some geopolitical event or financial crash, I think the business is going to look pretty similar, other than those components that I kind of touched on.n
nSean
nStuart Landsverk, amazing and amazing insights and I’m so grateful for you taking time out to join us on the car motivators podcast. So steward of Arizona car sales Best of luck moving forward, we at Carmel Raiders wish that you and your team have a banner year and continue please continue to bring that awesome leadership and positivity and knowledge to the car business. We promise me that.n
nStuart
nAbsolutely Sean it’s been my honor to spend time with you today.
nToday on the car motivators leadership podcast, we have Mr. Stewart Landsverk, the principal of Arizona car sales located in beautiful Mesa, Arizona. For nearly 16 years, he has sold used cars. But here’s the big difference. Stewart’s review scores are off the charts, not only for a used car dealer, but compared to new car dealers as well. But the excellence doesn’t stop there. Stewart has an auto finance company, sells auto insurance and owns a property company all to best serve the customer and quite frankly, not leave a dime on the table. He’s the epitome of efficiency, Stuart Landsverk. Thanks for jumping on with us and to provide some of your awesome auto industry insights. We are grateful to have you.n
nStuart Landsverk
nIt’s my pleasure Sean. And I’m glad I can spend some time with you and your other dealers.n
nSean Kelleyn
nIt’s an absolute honor. We’re really excited to have you. And I know that this is going to be a really insightful webcast. So for the car motivators, followers, guys, pay attention. This is a great learning opportunity. Stewart, you grew up in the auto industry and your family had a car dealership in the Midwest, correct?n
nStuart
nThey still do. It is funny that they’re one of the largest used car dealers in the Illinois area. So yeah, I literally grew up in the business that started, you know, washing cars, working in the office. And then when I was 16, I got the opportunity to start selling cars once I had a license. And it was quite the experience, especially when I’m working with guys, you know, three times my age. And I went to college and sold cars on weekends. The other other people that went to college, they’re delivering pizzas or doing something else and I’m driving home an hour and a half to go sell cars in Waukegan, Illinois. So yeah. was quite the experience and then went to get my degree. Figure, okay, well, I’ll just hang my hat here and figure it out until I get a management job. And because that’s what my degrees are in personnel and industrial relations management, but wow, the car business is something where you know that lifestyle is somewhat addictive in terms of, as I tell my kids this all the time, it’s the same thing every day only different. So I just stayed in it.nn
Sean
nHave you always wanted to be a dealer? Or is that something that evolved as you grew in the business?n
nStuart
nThat’s a good question. And working in a family business, there’s a lot of dynamics. I’ve had the privilege and honor to be in a family business and have the family dynamics to wear. Holidays or not, holidays, holidays are not fun. We’re always talking about business and things that didn’t go well usually carried over to that. And then I’ve had the privilege and honor of being an outsider in a family business, and seeing some of the dynamics that go back and forth with it and family members and just kind of had that standing to kind of pull off to the side there. So to circle you all the way back to your question, the answer is if I was ever going to control my own destiny, it wasn’t going to be in a family business with partners that were family members, it wasn’t going to be in another family’s business. Because unfortunately, as I learned, especially when I moved out here, the premise and promises of being a partner are only really a guarantee of a pay plan. Because if they end at the end of the day, if they want to let you go, they do. And so being a dealer was the only way that I really could control me and my family’s destiny. So that’s kind of where we were.n
nSean
nMan, that’s interesting. And you know, as an executive coach, I get to help a lot of dealer principals, owners, children kind of figure out, you know, where they’re place is in the dealership and the business. And it’s amazing how, you know, everyone thinks, oh, they’re the dealers, you know, son or daughter like they’ve got it easy, man, I would say that it’s actually there’s a lot of obstacles that people can’t even imagine.n
nStuart
nYou know, I have so many stories to tell you about owners’ children that I’ve had the pleasure and hilarity to meet. They have an expression Um, that what is it either Papa gave him a dealership FOK? And figure out what those initials stand for. I had to be the guy that was constantly grinding and pushing and learning and nothing I attribute this to, you know, my father God rest his soul, who passed away about 10 years ago. And he instilled that work ethic. He didn’t finish high school but as far as street smarts and business savvy, one of the more brilliant people that I ever encountered in my life. And so I tried to be as street savvy and book savvy and internet and podcast savvy as I possibly can, because I kind of equate life like an escalator, you’re either going up or going down and and if you’re not moving, you’re probably going down.n
nSo those are those are things that, if I to counsel an owner’s kid, and I whether I go to NADA, did Dealer Driving Sales at one of these conventions, and I do have the opportunity to meet an owner’s kid, I kind of pull them off to the side, and I kind of tell them, I go, look, I appreciate that you have the position, congratulations, you have the position. It’s kind of like you have the respect that you are the owner’s kid. But at the end of the day, you keep the respect and you get to a different level of respect by being able to do the job and God forbid, mentor other people into doing the job.n
nSean
nYeah, that’s so that’s such valuable advice. Because you know, it’s the three C’s of leadership, right? Character competence, and caring. And if you’ve got those, it doesn’t matter if you’re the owneru2019s son or some random manager, people will respect you and follow you. And I love that you pointed that out. And I want to shift gears a little and let’s talk a little bit about recent events in the car business, maybe over the past 12-18 months. Inventory sourcing has been a huge challenge for many dealerships during the pandemic. But I heard you folded up your sleeves and got busy, not only sourcing inventory for yourself, but others as well. Would you explain about that?n
nStuart
nYeah, I mean, we’ve seen this isn’t any great revelation, shoot we’ve seen with, you know, Carmax, and Carvana, and Vroom and all these other public companies they have, they’re all about buying cars directly from the customer. So fortunately, given the market constraints and everything that’s going on fortunately, we have directed a great amount of advertising and marketing, whether that’s social media groups, Google Pay Per Click whatever, into buying cars directly from customers, and we are able to buy a great percentage of cars directly. In addition to that, we’ve been able to work existing relationships with vendors that we had purchased cars directly from to bypass that auction channel where I’m not butting heads, with 20-30 people trying to pay too much for the car, pay two grand overbook and then have a two grand shop bill. So we’ve been reasonably successful with that, I think the market conditions as such, it’s harder to get price point cars. And I’m pretty picky on the kind of car we sell. As you can see from the reputation we have, every car has to go through 100 plus point safety inspection. brakes and tires aren’t optional. You know, we even replace wiper blades and the like. So if a car can’t pass that kind of test, without you know, spending two or $3,000 on it, we just re wholesale it. But yeah, we’ve amped a lot of our advertising directly to buying directly from customers. And then fortunately, we’ve been able to get some overflow inventory from, you know, existing partners bypassing two channels.n
nSean
nAnd I think that was a really smart tactic to adopt one of my coaching clients, a dealer in Nashville, we actually identified that buying cars was maybe for the first time ever, equally as important to selling them so the entire sales consultant team became vehicle acquisition and purchasing cars instead of, you know, just sales consultants, right, and that they adopted a dual job role and focused effort over the course of you know, 90 days, they were buying an extra 18, I think was on the low end to 25 vehicles a month, and they sold 80% of them within less than 30 days. So I mean, talk about, I think that was a really smart move. And I believe the dealerships that are doing that now are probably set up for additional revenue and success. I think that was really smart. And I see how important having the right vehicles is. I think a lot of dealers will, based on what you know, you’re talking about your choosy, you won’t just sell any piece of metal. And so you’re saying that’s had a big impact on your, I guess your reputation?n
nStuart
nWell, at the end of the day, it’s a new car to the person buying it, it may be a used car, but it’s still a new car to the party that’s buying it. So where I struggle, Sean is you know, I come from the Midwest where you sell cars as is and out here in Arizona, they have implied warranty, which is 15 days or 500 miles on, basically engine transmission. And yeah, I know I can ensure that reinsure that or whatever. But at the end of the day, if the car breaks down a week after they buy it, man, it just frost’s everybody’s cake. So I’ve always been a proponent that the money’s made when you buy the car, not when you sell the car. I mean, obviously, it’s when you sell the car that you paid for the car, but at the end of the day, you make a good buy when you buy the car, or, or you don’t make a good buy when you buy the car. We’ve all been guilty of overpaying. And we’ve been all guilty. When you buy 1000s of cars in a year, you’re bound to make a mistake, i.e. the last person that was perfect, unfortunately, they crucified. So you want to make sure that you follow your analytics and stocking whether it’s you know, be Auto Vin Que dealers like any of those programs there, you’ve got to have a process stay true to the process. It’s okay, if you vary a little bit depending on if it’s a car that’s super low miles, great history, great service history. Got eyeballs, but you know, for the most part, you got to stick to your knitting or otherwise you’re gonna get into trouble.n
nSean
nYeah, that’s a great point. And definitely, I think a focus on your used car operation right now is more key than ever, you know, ensuring that you are measuring the metrics and you’re in the auto or whatever tool you’re using to get your vehicles recon. I get to coach the coach of the I retired and founder a lot and his team and it’s it’s amazing how the dealers that really focus on getting their vehicles frontline ready quick and making sure their price, right, they have a good exit strategy, getting rid of the bronze vehicles, if you use the auto right trying to get the right value out of your platinum vehicles and golds. Totally agree with the analytics you had mentioned, in our call while preparing for this webcast, you kind of talked about how you really use analytics to drive behaviors and make changes. Any tips you’d like to share with the dealer community around that?n
nStuart
nWell, the here’s the thing Sean, especially like right now, time to line has always been critical, but it’s super critical now because it’s so hard to source parts, stupid little things like fuel filters and wiring harnesses and power window motors and God forbid, you know, yeah, body parts for vehicles. They’re harder to find, longer to source, more expensive to source. So it is absolutely critical. I’m a big fan of three controllables to the car business, personnel, inventory and advertising. So it’s important not to be overstaffed. And I think given the sales environment, I think most dealers have kind of got the right staffing. Inventory. Again, it’s important to stock what you sell, and replace what you sell, and don’t get too cute. And as far as advertising, when we talked about this, if the market is a hot market, you could pivot some of that toward sourcing and personnel hiring. There’s a bunch of different things you can do and conversely, you know, during the Great Recession, or depression as we had in 08t, nine and 10 those were absolutely critical. Stock is having that inventory level down. So if you floorplan you’re not getting killed an interest in curtailments, if you floor plan, that opportunity cost and you want to make the cash. And you certainly don’t want to put yourself in harm’s way by, you know, having high cost per lead cost per sale, and too much payroll.n
nSean
nThose are great tips and certainly something that needs to be focused on. And I mean, especially with the changing, you know, profit and with some pay plans that may have been perfect two years ago might be, you know, you might be way out of line now, one way or the other. And on the same token, you know, you might also be setting I feel like some dealers might be setting themselves up on their pay situation where they might be losing great employees, because, you know, maybe it was a volume based pay plan before, and I think adjusting as necessary and that’s, that’s a challenge a lot of dealers are facing.n
nStuart
nThat’s a great point, Shawn, and he literally just this morning, before our conversation today, revamped our pay plans, but I had a couple of longer term employees that were concerned about it and as a dealer, it’s all people. Itu2019s all people. So as a leader, you have to have great communication skills, you also have to understand that, okay, so if you’re managing by numbers and analytics, which I tried to do, and we try to have effective sales, competent, 20 ish percent range, if you have people who’ve been with you for a while, and they’re good people and are productive, people don’t get super caught up on percentages. And although it doesn’t quite fit, or a box or whatever, because they’re bringing in repeat customers, referral customers, they’re doing everything that you need to do, and it just speaks better for your organization, if you can hang those around. And I know, plenty of my dealer, colleagues community, you know, they’re super hung up, especially now where they have hate plans that were set up under the old rules. and they’re trying to tweak this back and they are losing some good people. And I’ve always been a fan of you can’t pay the right person enough money, but you can always pay the wrong person the right money.n
nSean
nThat’s great man. That is words of wisdom, guys, write that down. If you’re watching this. That’s phenomenal. Thank you for sharing that. Stewart. Now, while we’re on the topic of profit, and how it affects pay, and all that, you know, this is something we were talking about your market and kind of how you set yourself apart. You were talking about how to maximize profit and capture market share. A lot of dealers are using, you know, tricks and gimmicks regarding their pricing. And you don’t subscribe to that type of advertising. So how do you bring in business differently than your competitors? And what impact does it have on your success? Is it possible to be transparent and give honest pricing upfront and still capture market share? Or do dealers have to fall into that trap?n
nStuart
nYou know, you must be reading my emails. Because I was literally going back and forth with my agency this morning. And this is reality in the Phoenix market. There. The average used car addendum is north of $2,000. That’s a used car demo. I’ve seen some ATMs on new cars that were 20-30-40 grand. So my point is that everybody wants to trick the third party engines, auto traders cars.com CarGurus. Edmunds whenever Carfax to be good grade or whatever to give the customer that perception and then they come to the dealership. So you’re going to advertise that way, you’re going to bring 100 customers to the dealership, 50 of them are going to get ticked off and leave because they know you’re lying to him as soon as you give him a Foursquare and here you are paying all these fees.n
nAnd it’s like no, you didn’t say that. And the dealer says yes, I did. It’s in real tiny tiny asterix at the bottom of the ad, or whatever. So 25 of them will say and like the car. u201cLet’s go for a test driveu201d. Let’s work the deal and 25 who buy because there’s so ticked off from looking so to somebody who’s honest, ethical tries to do business the right way to price he sees the price you pay. That will play to a large segment of a market and where you tie that out to is reputation. So I always tell my staff as we train them to get around those objections I go look, look at our reviews. Look at what the people are saying these are real reviews from real people that can tell you that what you see is what you get pricey sees the price you pay plus the car that you get from us has gone through 100 plus point safety inspection and we’ll show you the work we did, we’ll show you that we have three master techs and five lifts and you know, all the technology and capability of a franchise dealership to make that car as new a car for you, as a used car can be.n
nSean
nAnd that’s huge, you know, just like your inventory standing tall, you’re kind of I love what you’re doing here, because you’re giving your employees the ability to stand tall and you know, deliver the message that like, hey, what we do is different here. And I think that that really is a unique value proposition. So what I’m hearing you say is, you know, it’s, it’s more about setting yourself apart, pointing that out to the consumer, and, and letting them like they were, they’ve already felt the pain of shopping elsewhere and, and using that to your advantage and I love how that’s impacting your reputation. And, you know, we speak to Stuart, we speak to dealers every day, all week long, literally, and their and their managers and their frontline staff and one thing, especially when we’re working in service departments, one thing that becomes clear is that there’s a lot of profit and money leaks through the service department, whether it’s lack of communication, you know, customer trust a multitude of other issues you mentioned, you know, parts shortages earlier. How are you currently handling the service business in your used car dealership to keep all your texts busy and your base full?n
nStuart
nI think the key to fixed operation, Sean is you know, you got to keep the techs doing tech work, okay, I try to not have them do a bunch of unproductive work. Measuring unapplied time is like the bane of my existence. So yeah, they try not to do a bunch of paperwork, they’re turning wrench, they’re turning time and they’re productive. So nothing wrecks tech efficiency, more than being stuck into tasks that isn’t getting the car ready to fix. Whether it’s, you know, dry driving, picking up parts or doing unnecessary paperwork. So what we try to do is have people that concentrate on all the tasks that need to get done in the fixed operations department or service department, that a tech in a smaller store would end up doing, you know, so if we need to chase parts, we have somebody else do that if we need to be writing up estimates, you know, we we have people to do that the techs are turning wrench all the time. And I very rarely have that unproductive time conversation, I maybe had a little bit during COVID. But at the end of the day, I guarantee them the man hours because we know how hard it is to hire decks, especially ones that are mastertech level. So those are all those are all concerns. And as far as bringing the business in besides internal, it’s important to optimize a Google My Business, have a separate parts page, have a separate service page. give discounts to prior customers, we have, you know, Arizona car sales rewards program where you know, depending on you know how deep the relationship is, they get 10 or 20% off service work, they get free loaner cars. They get 10% discounts on referrals, you know, for service work if they send somebody to do that. And we’re constantly as you could tell, we’re kind of maniacal about reputation. So we’re constantly sending surveys and making Thank you calls and making sure that the experience in the service department is as good as it is in the sales department.n
nSean
nAnd that’s huge and I totally subscribe to the saying you know sales sells the first car service sells the rest because of that and that with that level of follow up and customer experience. I’ve no doubt that helps you guys continue to maintain grip. And I love what you said there too about keeping the text turning wrenches you know, I see that so often when I first will go into a dealership it’s like you’ve got you know, $25 an hour employees doing $12 An hour employee work and you know, you’ve got to really dealers take a lesson from Stuart here is really defining what is profitable action and ensuring the right people are doing the right roles because it’s easy and I’ve seen it with GE Angels are dealers where they’re doing, you know, sales consultant type of behaviors, when, you know, you’re you’re worth much more to the business and then maybe correcting that credit app of that customer, right? It’s not to say you can’t get in, you shouldn’t get in the trenches every now and then. But everything is said there, man, I totally agree, I’m trying to find something I disagree with you on Stuart helped me out here. No, I’m still,-n
nStuart
nYou know, at the end of the day, like minded people think the right way. I’ve often said it, this is true. As a salesperson that’s watching or a manager or dealer. I hate to say this, but this is so true, you are who you hang around with. Okay, so that circle of influence that you have personally also applies professionally. So one of the things that I always try to despite being a relatively old man with gray hair, and all that other fun stuff, is to be a lifetime learner, there isn’t a day shot that I don’t go and try to learn something and I don’t get it right all the time. Nobody does. But if you get it right, more than get it wrong, you’re probably going to be successful. And in old mentor of mine, when I first took a corporate job at a dealership where I was managing six stores, he said to me, he says, Look, he says you make 1000s of decisions in a year, you know, you’re gonna make five or six really critical ones, it’s important to get those ones right. So that’s that’s the advice I can give to a dealer or manager or somebody that is looking to get to that next level it is you make 1000s of decisions in a year you make decisions what to eat, you make a decision, what time to bed, you make a decision, what everybody do you have a breakfast are not none of those really matter. What really matters are the, you know, the five or six critical decisions that you’re going to make any year, whether that’s to invest in personal training, or ongoing training for your staff, or, you know, subscribe to analytics, so you can be more efficient in terms of being financial about your business, because a lot of times, it’s Sean, a lot of people in the car business I’ve met, and I’m not going to stereotype regions or anything like that. But, you know, there are some dealers that are totally successful, despite themselves, they are great salespeople, and they just sell their way into profitability, but they manage your business like crap. I mean, that level of detail is terrible. The financials are terrible, they end up spending more time doing cleanup, and you know, it goes back to do what you’re good at. So in that particular situation, I’ve told dealers that are sales driven, I said, just make sure you’ve got great support staff, I mean, and just keep selling. And that’s really the best advice I could give. So, um, so again, certainly back to your point. I’m sure we disagree on some things, but you are who you hang around with. And that’s really true personally and professionally. Son
nSean
nwell, and I do want to circle back to two leadership because I know how important that is to you. But before I do want to talk about the biggest elephant in the room as it relates to the automotive market, which you know, is trying to get bottom line, it’s gas prices, right. And I remember back in 09, I was standing at the auction, a Manheim auction here in St. Louis there in a little I was so perplexed during my black book, because I was trying to figure out why are SUVs, the price of complex compacts and why are these compacts the prices of SUVs all of a sudden, and you know, so the gas prices back then had a massive impact on the market you curious? Where do you see this price ascension going and what uh, What effects do you expect it to have on inventory and pricing and things like that?n
nStuart
nSure. We’ve got the playbook. A playbook happened, you know, in March, March of Oh, eight. Okay. That was the first time that we spiked from $3 to like for something dollar gas. And yeah, during that time when you’re talking about at the auction in St. Louis, I, you know, literally we saw were Priuses were bringing 120-130% of book and the the banks are foreplay companies wouldn’t finance trucks or SUVs for any more than 50% of book or auction tickets. So it took six to nine months for that market to start correcting. And I’m not sure that it’s going to go that slow. But as we see, unfortunately or fortunately, I’ve had to get a lot more geopolitical. I was joking with my wife that I’m watching a lot more Sky News and Uh, you know, European, either business or news in general and certainly CNBC or Fox Business, to try to get an idea as far as like, what I’m a big fan of playing chess versus checkers, I’m checkers is move that’s right in front of you. Chess is like a move that’s like two or three moves in the future. And that’s really how we have to kind of run our business, if we’re going to be successful. So I’m looking at this and saying, we’ve already got the playbook we know what that’s going to be, I don’t think it’s going to be as steep drop from, you know, 450 gas like it is here in Phoenix to $2, like it was, you know, is six to nine months in Oh, eight. Gas prices, oil prices in general are driven by demand. And I joked with my general manager, and, you know, he was saying how great it was when there were $2 guests, I said, that’s not a good sign. That’s not a good sign at all. That means nobody’s buying gas, nobody’s spending money. That’s not healthy.n
nAbout the sweet spot is that 3- 3.50 that means that we have enough demand. People buy gas for the car when going on trips and stuff like that, but it’s not like the apex like it’s at right now. And we had that big spike. You know, it wasn’t quite the spike that everybody said because of the war that’s going on in Ukraine, but you know, certainly it’s spiked for a lot of people 7080 cents in the matter of a week or two. And they were still at the high high 3u2019s, which is significant because it showed that there was a lot of demand in the market.n
nSo as I see people spending less, and having to spend more and rent and say I’m gonna spend more on food, this is probably going to come down but the best analogy Sean is it’s going to be like, pitcher a balloon that’s full. And it’s not going to be like letting go of a balloon like it was in 08. It’s going to be like we’re going to be letting off the neck a little bit and it’s going to go from 4.50 to maybe for 3.99 Good old car math 3.99 then it may go to 3.75 3.50 is going to come down but it’s probably going to come down a little bit so here’s I was on the phone with a part of part of part of my life. I do some consulting for some people on Wall Street on the auto business and I was fortunate that one of the people that I spoke with let me in on a conversation like with how they thought this Ukraine conflict was going to last and the one thing that we see with that is that they’re like the top producer of neon, which is used in the semiconductor process, which coincidentally is the main problem with new cars at the moment not not being produced in a consistent manner.n
nSo the problem that we see is that as this conflict keeps going on, it’s going to disrupt the supply chain more just like Shanghai shutting down for COVID round four. And we don’t know how long that’s going to be. Hopefully, should be very short because I think everybody’s had their fill with COVID and lockdowns and masks and all that fun stuff. So right now the crystal ball Sean is that it feels like a nine to 12 month thing. And it’s going to come down gradually not like it did in 08 where just like the floor came out of the market because Lehman Brothers puked in when the financial markets froze up and let me tell you what, that was a super fun time. So dealers that weren’t a dealer in 08-09-10n
nLet me tell you why you’re gonna get an education. Because? Because when we were in business, every Yes, I’m sure as I know you were that’s why I’m sharing this story with you. Like literally I dreaded going to work. I love what I do. Let me make this clear. I love the car business. i It’s the same thing everyday. Okay, I don’t go to work and don’t expect to sell a car. I expect to sell a car. I expect to have fun selling car, I expect my customers to be happy. Let me tell you what, no, you don’t have intent. It was not fun. I go into work and I’m either coming to a fax and saying that a lender is going out of business or stop or cutting us off. Or we’re getting an email saying that you know that they’re severing relationships because of access to Financials. You know, you get a 700 type of customer and they’re trying to buy a car and you’re having a hard time getting that approved a 700 plus customer, and it wasn’t like they were asking for a second or third car like they do now. No, this is just I want to buy one car, it’s like, they need to put 20% down. Are you kidding me? This is an auto approval today. Yeah, it just let me tell you what you’re gonna find out what you’re made out of if you can do business during today for the first time? And what is it, go hard or go home? That’s what that is.nn
nSean
nYeah, back then it was like, things were steady for so long. And then there was the dip, right? And now things are up, you know, and now people are fearful about, they don’t want it to go back to normal. Right. And, you know, as we’re talking about a lot of the changes going on in the car business and how you and I are certainly kindred spirits, in the fact that we both placed a strong value in leadership. What, what traits, do you think the best leaders need to model success with everything going on now? And what’s to come in the near future?n
nStuart
nGood point. And I gotta tell you, I gotta tell you a funny story. Okay, so I’ll go, I’ll go in on a turn, husband or wife, boyfriend, girlfriend, whoever it is. didn’t agree up a pencil and I sit down with him and I go to the boyfriend or husband? And I’ll say, let me ask you a question. You know, what’s, what’s the key to your relationship? And he’ll say, oh, it’s trust, it’s fidelity and security. Whenever I go to the wife or girlfriend, I go, Well, what do you think it is? And we always come up with the same answer communication. So when in terms of communication, is it, how I manage customers, or how I work with our staff and how to be an effective leader, you have to seek first to understand that C can be understood.n
nSo, I hate email. I hate texts, I really do. Because you know what, they’re very one dimensional. So I can write an email. And the message is A person reading it in the message is B. And somebody independent may interpret it as a C. So I’m a big fan of verbal cues. I’m a big fan of, you know, body language, I don’t want to say it’s a fun top body language. But I’ve learned over the years to try to read body language pretty well. And I tried to teach my staff that so we can identify that. So here, look, I’m, I’m a seven habits guy. I love Franklin Covey’s program and taught it to our staff and managers. And I just subscribe to the theory, whether it’s employees or customers, vendor partners, treat people the way they want to be treated, not the way you think they want to be treated, not the way you want to be treated, treat them the way they want to be treated. And more often than not, you’re going to be successful.n
nSean
nMan, I love what you said there, it speaks directly to you know, my greatest passion, which is admission, which is to bring coaching to the car business, I always talk about the golden verse, the platinum rule, right? The golden rule is to do unto others the way you but the platinum rule is do unto them the way they want to be treated. And I love what you said there. And that’s where I think that’s where the leadership is, has got to evolve in our industry, and managers have got to learn the language of coaching. Because at the end of the day, you’re helping each person grow as an individual where they want it and need it most. Not that, you know, training training has its place, and everyone needs that basic foundation. But most of the automotive professionals that you know, that are out there are pretty darn good at selling and you know, making deals and dusting and closing. So how do you take an A player and let’s be real dealers, I think they’ve all learned like, you can operate a dealership with less employees, especially as a result of COVID. I think Todd is this, you can be extremely profitable with less employees on your staff. So you probably have retained most you’re a player’s. And ultimately, how do you make an A player and a plus player, right? That takes coaching and that takes individual engagement and listening to them?n
nStuart
nI’m gonna go even harder, please. Okay. All right. The key is how do you take a deep player and make them a C player? And how do you make a C player into a B player? And the point is that look. And I tell my managers this all the time, okay? You can’t manage people the way you are. Okay? Every time I go to a manager and try to manage them like they’re me. I’m disappointed. Always. Because you know what, Shawn? If they were me, they wouldn’t be here. They’d be a general manager somewhere they’d be at dealers somewhere they’d be a fortune 500 Exec is one of those guys on Wall Street with three letter title. And I love. I love stories when people go away and you know, move on to the next stage of their life. And I know it’s not me I know it’s I was just a step in their career I, I’m honored and blessed when people come up to me and say, I’m so glad I worked with you because I learned so much or I learned how to do this, or I learned how to do that. So I always kind of tell my managers, I said, Look, you can hold people accountable without being a jerk. You don’t need to be Makka Balian or heart iron fisted and style. But let’s temper our expectations to understand that the best case scenario that you’re going to get is somebody that has 60 or 70% of you.n
nAnd if you get that, then let’s just, it doesn’t mean don’t hold them accountable. It just means don’t don’t act like they’re you. And that’s the problem with a lot of people in our business is that they they manage people and they think they’re you die would you know, Charlotte is like if you go into a store, all your A players try to manage their staff like they’re a players know, we have a bunch of D and C and B players, okay, so you got to manage them like DMC and B players, it’s kind of like, okay, like, like a baseball with spring training that’s going on in Florida and out here in Arizona, okay? The idea is to get to 200 hitter hitting 250. The idea is to get the 250 hitter and, and and to add ideas to do at hitter hitting 320. Or better, you know, that given the pitcher instead of having a five era to a 40 or three era. So that’s no different from watching our numbers in our CRM, and, you know, watching you know, write up percentages and demo percentages and closing percentages and calls reach percentage, I mean, so it’s the same thing. It’s just a different application. So stop managing people like they’re you. And that’s always disappointing if you do.n
nSean
nAbsolutely. And if you think about it, if they’re able to adapt themselves to each individual on the team like that, then that that makes an adaptable Manager, which, you know, I think with all the rate at which changes are happening in our industry, like, we have to be able to adapt quicker than ever. And I heard this not too long ago that the species that have survived the longest on Earth are the ones that adapt the fastest. So maybe that’s the ultimate leadership trait right now like adaptability, right? Flexibility, being able to adapt to the team member you’ve got and the customer in the market situation. Like crazy for sale. That’sn
nStuart
nYeah, so I’m gonna give you a visual, okay. I subscribed to this, okay, see this pen, Shawn? Yes, it’s flexible. Not terribly flexible. But this is this is the same thing with management style. Okay, being flexible, but you’re not Gumby and you’re not gonna bend all the way through. Okay. So be flexible, be pliable, but validate true to who you are.n
nSean
nYeah, boundaries, right. You have to have boundaries and expectations. Right. That’s great, man. Great, great advice for all the leaders listening to Stewart here, man. He’s a wealth of knowledge and has filled his filled his brain with knowledge and skills over the years. And I love everything you’re sharing. We’re big fans,n
nStuart
nShawn, I tell my kids this all the time I get hit by a bus tomorrow, all my knowledge dies with me. Okay. So I’m happy to give advice to somebody shared the experience. I’m the tour guide. I know where to traps are, I know where the road of where the potholes are. It’s up to you to travel the road. It’s up to you to do the work. But, you know, I can tell you what to look out for. Because, you know, again, gray hair experience, wrinkles. I mean, I can tell you this, but at the end of the day, it’s it’s your journey. It’s your business, it’s your life, and you have to live your life and your journey, the way you feel the right way is I can just tell you, you know, my particular brand of heartburn, and what I’ve done to avoid it where possible.n
nSean
nWell, we appreciate you sharing your knowledge and I’m gonna cross my fingers. You don’t get hit by a bus. But I will say your knowledge that you’ve shared here will live on I’ll definitely impart it on the people. I’m lucky and blessed enough to coach each day. And, Stuart, I’m gonna hit you with one last question. It’s a big picture question. Where do you because you are a forward thinking innovator in the industry and you believe in mastery and excellence. So this is a great question as someone like you, where do you see the auto industry five years from now on? Big, Big changes are at hand, you know, and I’m sure you’ve given it some thought. So what does it look like five years from now?n
nStuart
nThat’s an interesting question because I get asked this from my friends on Wall Street a lot. And, and there’s a lot of, you know, m&a activity, a lot of mergers, a lot of buyouts a lot of by sells going on and, and the funny thing is and in new car land, you know, the and you kind of touched on this earlier RDS earnings real because traditionally it’s been, you know, race to the bottom get the UI O’s or units in operation and and chase the dealer cash well now, the New World Order at least is the I’m the European model where you know, people order cars and they wait for oh man, you know, there’s not a lot of vehicles in stock. So the best again, the best analogy for this is if we go back to history, oh 809 10 When General Motors and Chrysler went bankrupt, and obviously weren’t producing any cars. And everything was great until, you know, somebody woke up and says, Hey, we’re paying all these union workers basically pay or play contracts. And we got to just crank out a whole bunch of cars. So I would assume if I’m looking at it from a three to five year perspective, I think the OEM manufacturer is making more money than they’ve ever made, because they’re not paying out the incentives to customers and dealers, dealers are making more money because they don’t have to spend as much and they’ve managed, again, the personnel inventory and advertising component. Used Car dealers there, they’re hanging in there if they’re reasonably savvy, even though there’s, you know, higher prices and Andalite. I would tell you, the one question you didn’t ask me about was like EVs.n
nAnd I really, my answer to that would have been, you know, prior to this nice gas spike, everybody had I said EVs are pretty much a niche vehicle unless we have consistent $4 gas. Well, now here we are. So that the problem is that until the manufacturers build the kind of cars that people want, meaning, you know, I believe in number 65% of new car sales are SUVs, CU, v’s and trucks until they figure out how to make those vehicles affordably and get battery life to where you know, I’m in Phoenix. And I would be hard pressed to take it easy to Vegas, let alone Los Angeles.n
nSo until they figure out those components, I believe that business is going to be somewhat similar to what we have. My My question is going to be whether the OEMs have the courage to not load up dealers with a bunch of cars, and all indications I get from all the public information, I don’t have any private information, because I’m not like that in tune with, as opposed to some guys like, you know, Jim Ziegler, or some of the other people in the industry that maybe have a beeline to the CEO or level right below him. I think they’re going to try to hold the line here, Shawn and see if they can make that work because they’re obviously making more money to dealers or making more money. from an m&a standpoint. I think the skepticism about whether the earnings or continue for dealers has abated somewhat. And I think that they have an opportunity. I’ve noticed that you know, the typical blue sky component has gone up in the recent transactions I’ve looked at. So I will tell you that everything’s great until you know, we’re playing musical chairs and there’s no chair left. So absent some geopolitical event or financial crash, I think the business is going to look pretty similar, other than those components that I kind of touched on.n
nSean
nStuart Landsverk, amazing and amazing insights and I’m so grateful for you taking time out to join us on the car motivators podcast. So steward of Arizona car sales Best of luck moving forward, we at Carmel Raiders wish that you and your team have a banner year and continue please continue to bring that awesome leadership and positivity and knowledge to the car business. We promise me that.n
nStuart
nAbsolutely Sean it’s been my honor to spend time with you today.