The Middle Between Supply and Demand with Mike Darrow

right? Oh, they got you know, and I'm really excited about today's conversation, because I think what happens is when we, when we start to meet the guy from 105, you know, the guy from the apartment 105, that guy that never throws his trash out. And but when you meet Steve from 105, all of a sudden, Steve, and not just Steve, but like his apartment all become more

approachable. And I'm just excited to kind of hear and gain the insights of what TrueCar's doing what they're seeing in the industry, because they do have so much data they touched so, so many different places in the automotive in the retail automotive industry. And I think that, you know, getting them going to the guy from 105 is important, even from a guy that comes from the dealer side.

Yeah, the first, I guess this is the second TrueCar CEO, that I'm going to get to have a conversation with getting to know Chip Perry a little bit. Well, I'm sorry, I'm just racking them up. But I remember meeting Chip Perry for the first time. And Chip came into TrueCar when they were in a pretty tumultuous period. And Chip literally went on a road show all over the country, to sit and listen to dealers face to face eye to eye and say what are your thoughts? Why do you feel that

way? How can I help you in what you're trying to do in your community? Seems like Mike is carrying that torch really well. So I'm looking forward to seeing how that actually plays out?

there's a lot going on here. And so you know, that coming up a scale like that, all the way the CEO and president of a company like TrueCar, he's, he's seen some stuff. And I always I always love being able to sit and just listen to individuals like that, of course, we hope you enjoy this conversation with Mike Darrow, the CEO of TrueCar, right here on Auto Collabs.

just getting in the weeds. So take us back just a little bit just for the listeners on on when it started all out for you in the automotive industry.

work at my store. You know, I know they got to be hired, and maybe you want to talk to Chrysler. And I was I said, Sure. You know, I was practicing my interview skills and doing all those things. I said, Let's do it. Sent me in for an interview, got the job that day, and I've never looked back since then. So it's been nearly 40 years. And first 20 of it on the

wholesale side. I spent the first three with with Chrysler and then I jumped over to Nissan spent 17 years there, and then 15 years with Edmonds, and then over here to TrueCar after that, so you know, it's been an unbelievable run. I love this business. I've seen it from a lot of different sides. In the OEM roles, I got to call on dealers probably We've been in 1000s of dealerships in my life. You know, I did parts orders, I've signed warranty claims I've

shipped allocations. So I've seen it all across the board. And I love it. It's it's an exciting business and, and one that once you're in it, I think it's really hard to get out

They're crazy around us. But every time I get in conversations with the people that have been in the industry longer than eight to 10 years, there's a perspective that, that people like yourself, I feel like bring, and I'd love to kind of hear your perspective on how these challenges are maybe juxtaposed or in line with some of the things that you've seen throughout the industry, and throughout time, and how, like the approach of the way that you know, that that those things

have been approached over time might impact the way that we need to be approaching some of the changes that are coming in our industry.

cycles, you know, come through the industry, and they tend to be a bit of a roller coaster. You know, I've seen high interest rates and low interest rates and high inventory levels and low inventory levels and big incentives and no incentives. And it's just, you know, the the industry is amazingly responsive. And that's the thing I like about dealers are, they're such entrepreneurial people that they just adjust to what's going on in the

marketplace. But, you know, this chip shortage thing, I gotta tell you guys, and you probably talked to a lot of people about it. It's really a crazy thing I was reading. Not long ago, the the July report from Automotive News on sales. So Toyota sells 153,000 cars in July, which was down about 20% from the year

before. But they have 14,000 they had 14,000 cars in their dealer inventory, when the month it just, I can't even run that through my head to think they still now there's another 100,000 coming from the port and there's some, you know, that are on their way to dealers. But and you guys see it, I mean, you drive past a dealer lot these days, and they've got the used cars parked in the front, like kind of sideways to take up more space. tailgates are down, right? I mean, it's crazy what

they're doing. So you know, and that has its, its its ripple effect for us, because our traffic's unbelievably good right now. I mean, you know, people have realized, I think that the days of driving up to a dealership and walking the lot and seeing a couple 100 new cars, a couple of 100 used cars at doesn't exist anymore, you know, you got to do your research, you got to get online, you got to try to find what you can find, and then start your

shopping process. So, you know, I think it's a really interesting time in that this chip shortage hit on the front end of this conversion to EV. Right. And when we thought the chip shortage was going to be short term, you know, I thought it would cycle through and then we'd get back to this EV discussion. Now these things are starting to run together, right, you're starting to see these more and more electric vehicles come in. So I think it's going

to be really interesting. And I tell you guys, the honest to God's truth. I've got many friends still on the OEM side, and I still can't get an answer to where all the chips are, or when they're coming. And I don't know that if it's they don't know. Or if it just doesn't do anybody any good to tell anyone. You know, maybe that's the reason there's he can't get the information on it. But well, I think

are actually doing? You know, how you're seeing them in the process multiple times, whatever, what can you, you know, help us understand, you know, if if we're dealing, we're saying, what are consumers doing? How can we understand them more?

been this way, for a long time, that the actual process to buy a car at a dealership takes what, four or five hours on a weekend, maybe a couple of different days together, you got to spend the time. So what consumers are telling us is, they want to pull as much of that online as they can, right, let's pull some of this process online, give me tools, so that I can do more of my shopping and shorten that

process. So, you know, 65% of the people we talked to said they would be willing to do the majority of all the way up to the full purchase online. And you know, I'll come back to that we'll we'll spin back to transacting online because we're working on some things there that are going to be really interesting for dealers. But right now, what consumers want is they want the ability to find a car, understand the price, get a real cash value for their trade, understand Payment

Capabilities. Am I a lease buyer? Am I a payment buyer? You know, I've got the average consumer and one of the guys in our building has a great expression. There's no longer a five digit purchase. It's a three digit purchase, right? The car costing $37,000 is hard for people to understand what they know is I've got 2500 bucks, I can put down and I can pay 400 a month, right? So show me some cars that kind of meet those needs, that that, you know, fit my lifestyle, those sorts of

things. So that's what consumers tell us is give me more usable information online so that I can get as much of the deal done I can before going to the dealership? Do you find any Ohira expressions, the new hot button in the industry is omni channel, right? That's where you do part of the deal online, then you go into the store and fix finish it up. We've introduced a lot of tools that support the consumer on that. And then ultimately, we'd like to build, you know, the full process online.

pulled into the online? Or is there a different shopping behavior at the front or back of of the journey?

If you if every three years you lease a five series BMW, black on black and you know what you want, that customer is easy to help, right, it's easy to help them get where they need to get to the used car buyer, oftentimes a payment buyer and affordability buyer, and they do want to pull on some of the credit activities upfront, you know, they'll participate in the soft credit pull, they'll give you their data to see what they qualify for. So we do see on the used car side financing moving

upstream. The other thing that's moved upstream is the trade in. You know, there's so much talk about We'll buy your car, some of the vertically integrated used car players like Carvana and CarMax and Vroom they're out there buying used cars from folks and promoting that so people want to know what their used car's worth right now, and how that fits into their deal. The good news is used car values

are really high. So people who didn't have equity or were in a tough spot on their used car in the past are usually in a good spot to trade right now.

consumers are asking. And so if most consumers are wanting to move up, especially on used cars wanting to move upward, the finance aspect or the trade aspect, then even changing something as simple as like a call to action on a VDP to highlight or prioritize those might actually make sense if you guys hadn't made any moves and in the way that you ask people To to bring information like have you move trade up in the consideration phase in the vehicle even in like the way

that shoppers are interacting on TrueCar?

running pretty consistent over the past few years, about 50% of the folks we talked to, who are come to our site, have a trade in. So we get them on getting get them an understanding of their trade, our products are guaranteed cash value for their number, so we can go right into

a deal. We've built an electronic payoff tool, where if the consumer gives us a little bit of data, we can go and get their what their payoff is, and then give them a net value for their trade, which is critical, you know, if you're going to go from your trade to build a deal, you got to be able to make that, you know, correlation there. So we've brought all those tools up

front. The other thing we're working on is, and I think it'll really help the used car buyer, we've got, let's say a million units on our site for people to shop through if you wanted to look at them. But a lot of those units aren't affordable for folks. So if you could pull the financing upfront, you can actually tailor what you're showing them to cars that meet their budget, right? And you really eliminate that downstream frustration where you let them get on a car that they can't

afford. Yep, right. So nothing, when all of a sudden, they're in a credit app process, they're getting turned down, right, or they're getting heavy steps coming back at them is what needs to be done. So, you know, we think early on, if you can do it in a way that the consumer feels you're helping them if you can get that information from them and say, Hey, I understand your buying power. You know, let us help you understand the type of cars that fit into your

lifestyle and your budget. You know, we think that's going to be important. So those are two big trends. We've seen financing moving up and and people want to know what their used cars worth.

dealers that way either. So we really spend a lot of attention and looking at both sides of it. And when people get values for us from their for their trade, for example, takes a lot of pressure off the dealer. They don't feel they're getting lowballed, right, you know, it's a third party number, the guaranteed cash value we put on it, helping them through some of

the discovery process. People tell us it's easier to do that in the anonymity in the comfort of your home, rather than sitting with an F&I man, I'm not sure what I can afford and going through that process. And you know, those sorts of things. So yeah, we think with transparency, and that's the beauty of our platform, you know, what we're trying to do?

And we looked outside the automotive space for inspiration, right. But what's happened over the past? I don't know several years now is there's been these really cool modern day marketplaces that have popped up. Everywhere outside of our vertical there's, in you know, Expedia, Amazon, Grub Hub, they've revolutionized the way people are consuming products. And when we started to look at them, what they really are is a combination of demand supply and some really cool technology to bring those two

together. Right and, and that's what we want to build a TrueCar. And, you know, when you do this, we tell dealers, don't be afraid of the digital revolution. Let us bring you into it. Right, because we need you as part of this. We've got this demand every month. Let us bring your supply online, your pricing, your waterfall on credit, your insurance products, all those things and let let us make that connection with the consumer where they can do it right

online. And, you know, we think the current buyers, people who have bought a number of cars want to transition online, what what I've tried to spend some time on and I've got a son who's a senior at UCLA, these new buyers that are coming into the marketplace, they buy everything on their phone. I mean, everything. So I think the automotive industry has to think about how to participate in that. Right, I tell a story. I was at the mall, doing a brunch

with my family one Sunday. And afterwards, my wife and daughter went in one direction, my son and I went and another we walked past the Nike store. And he's one of those tennis shoe geeks, right? He's probably got 75 pairs of tennis shoes. He's got my whole life, right. So yeah, he loves tennis shoes. He's got a different set of tennis shoes for no matter what he's doing. So we walked past this Nike store. And man, the music's blast and the lights are flashing. The people are dressed

up. They built this store for his demographic, you could just tell. And I said, Hey, Nick, let's go in and look at tennis shoes. He said, Dad, why would I do that? I go, What do you mean, there's a big Look at him. They're all on the wall. He goes, Hey, I'll go home. I'll get my computer out. I'll find what I want. I ordered three pairs. I'll keep the ones I want and send the other ones back.

human. And I'm always intrigued when I hear companies still paying attention to the human element of like community building, giving back. It's something that dealers are so well known for, for the people that know them and like pay attention. Like if dealers were pulled out of communities everywhere, everyone would all of a sudden realize how much dealers actually sow into the

community. And you all at TrueCar you do quite a few things around veterans that I think are really notable and maybe you could talk a little bit on some of the things that initiatives that you have where you are investing in communities. There you go. Right, that's gonna have all teed up talking

And they are an amazing organization in supporting the military community, we powered an automotive buying channel for them and, and really got to get involved and experience that and, and we've built out what I believe to be a really authentic military channel, where we go to our OEM partners, all of them have special military incentives, we asked him to run some other incentives, particularly for the folks who are shopping the military

channel on our site. We have a driven to drive program, where we donate two vehicles a year to disabled Americans vets with the DAV and it's just an amazing thing. And it's, it's really at the core of what we've become. We try to be really authentic around this and you know, it's important. Transportation is freedom, right? When you think about it, what do you try to get out we get to get in our car we drive around, I mean, here in California badly I get to go to the beach, you know, all those

things. And, and what we heard from veterans were the loss of that freedom when they come back with a you know, a situation where they've been wounded. So, you know, we've got a real authentic driven to drive program. We've got programs with team RWB, I you know, we're we're doing some things with you guys around your 9/11 event. We're excited about and you know, all the all the things that congratulations for the things you do there, but you

know, it's amazing. This is one we have three or four are of our own, that people who run this channel for us, and this was one of my absolutes are former vets, we're in the military, you got to be authentic if you're going to do this, right, I mean, you got to stay core what you're really trying to do and take it, we've stayed very focused on

that. And, you know, we also are trying to drive some other things, you know, we're sponsors of women in automotive, we're responses of NAMAD and minority dealer programs going on, I think one of the challenges our industry is faced is, over time, we're getting more diverse, but we just haven't been a diverse, you know, industry from that perspective, particularly on the OEM side, and I know Mary Barra

is changing that a bit. But for my 20 years, in OEM, I'd go to the cocktail party, and it'd be, you know, 95%, you know, middle aged guys in gray suits. And I think that limits innovation, right, if you're gonna cater, if you're going to serve as a full community, you got to have people in your organization who understand that the core, those

communities. And you know, I remember not too long ago, and there's many situations I've been in that remind me of this, but I got a pitch on how to market to women by like, five dudes, right? They walked into my office, they're like, we're missing something here. Now, these guys were smart. They did their research, but it just didn't feel authentic, you know, you need to be real about this stuff. And I think our industry needs to lean more into that we

need to be more diverse. We need to bring more diverse thinking into the way we approach the business. And, you know, we're always trying to do that and making sure we're focused on

President, CEO of TrueCar. And Mike says something that we've all heard and probably have admitted to ourselves, I fell into the business. And you know, what I wrote down in my notes, falls into business. And then in all caps, I wrote opportunity question mark, because like, we're always wondering, can you make a career here? Dude fell into the business, he was

And it's like, if you ask them to the majority of people to get on a business podcast, and go through those three things in 22 minutes, they would shock them. But for automotive people, it's like, yeah, full news, product, community, let's go, you know, and it ends with this line. That was transportation is freedom. And I think that, as an industry, we sometimes we forget that and we just think transportation is transaction.

And so I think it's just an encouragement to me that the transportation is freedom, that we're giving people the capacity for freedom.

follow him, right? Somebody who can speak it just it feels very automotive to me, right? Because you think of how many billionaires, right? And if you're an automotive here, if you're listening to this, and you're not in automotive, this might come across as braggadocious. But if you're in automotive, you understand, I'm like, how many billionaires do the three of us know? Right?

Like a lot. And guess what? Most of them you would never know, because they're just regular guys and gals that are just at the Little League games and it's not like full button up. So I think there's something just quintessentially Auto about Mike and I think that's why I enjoyed that interview so much looking forward to meeting him in person in sometime soon but for now on behalf of Michael Cirillo Kyle Mountsier myself. Thank you so much for listening to Auto Collabs