¶ Business Differentiation in Mature Market
okay , everybody , we're back again with another episode of big talk about small business . I'm here , um , I don't have a co-host today , um , eric usually does that with me . We have our little fun ritual , but I do have a great guest . It's just going to be up to you and I mark it's it .
Man , I got matt lewis here , um , and matt is , uh , he's just one of my favorite business people out there . Um , I've , I've known him since he was in his probably mid 20s , early 20s . Yeah , um , gosh , I think it goes back to like 2006 , probably . So five , six right in there somewhere there .
Yeah , uh-huh , I I bought a new dodge magnum at the time , but , um , that would no , it was slightly used . I took it back . It was like nine months old , but anyway , um , that's how we first got acquainted .
But , um , but matt is a fourth generation owner , owner-manager of the Lewis Automotive Group , which is a major car dealership here in northwest Arkansas , and they're just a really special company . They are a family business . They employ what ? Over 300 people now , matt .
We're getting close . You know , as you and I spoke last time , we were getting to 300 . I think we're 251 or 252 . By the time we open up all the buildings on our new campus , we'll be well over 300 .
So they have a brand new dealership that has got to be the most exciting and innovative and advanced auto dealership in the state . I've got to believe that .
Now I've got to say so . I'm a little biased on that , but I've got to say so . You know I've talked about this and we won't go into great detail here . But my brothers and I there's three brothers that are in the business now We've visited over a hundred businesses , coast to coast .
Putting all these small little pieces together to make a great experience , first for our employees and then to result in a great customer experience .
Yeah , you're a big advocate of the internal customer , which I think makes so much sense that you've got to treat your people well if you expect them to treat your customers well , you really do , you really do , you really do .
You just can't fake it till you make it . You know people can see through that . And if I bring in all my employees to a meeting and it's not positive and I'm just threatening and I'm throwing things around and it's just kpis and boring and I love kpis but . But there's a way to make it interesting and engaging .
And once you understand how to teach people you know and how to get buy-in , and you do it internally first , then the externally the one paying your bills the customer really grabs a hold and they're they become not only a customer but a raving advocate for your business .
Yeah , you're so smart and I mean , let's face it , the car business has a bad reputation and sort of a dog eat dog environment in a lot of places . Sure , high turnover .
I mean I won't name any other of your competitive dealerships here , but I mean there's one of them that I've never seen the same person in there twice and you know I'm a car guy so I go to all of them but I mean they just have just constant turnover and I think that they last three or four months on the job .
It really is , and that's also a shift in our workforce environment now , and I know that . You know , I interview a bunch of people , just like you do , and you ask somebody what long-term means and now they think two to three years is long-term . Wow , that's crazy . Yeah , well , two to three years to the normal person .
They buy a vehicle every three to four years . Yeah , so they're missing out on the residuals , right , they're missing out . And in today's day , you know , it seems like people forget about putting in the time to build their book of business .
And that book of business is not only it starts with new customers , but the foundation is built upon repeats and referrals , of course , and by reducing turnover . Then we already have that relationship there with the customer and they come back in there Like , okay , so-and-so is still there , whether it's helping , service or buying a car .
Yeah , I mean you've had some people that retired from that place , that were there 30 and 40 years , which is really unusual . It really is Super unusual in this business . So one thing I really wanted to talk about today is how do you differentiate yourself as a business in a very mature market where you've got lots of competitors out there .
You've said it before everybody pays the same price for a new car when it comes to the dealers and obviously you sell more than new cars , though that's just one of the revenue generating areas of the business . But how do you differentiate yourself ? I mean right now , the car business . But how do you differentiate yourself ? I mean right now the car business .
At least my understanding is it's very competitive . Uh , it's not like it was two years ago , where , if you just get the vehicles they all sold , you know different game altogether . Um , and you've got a huge overhead over there . Um , you've got to sell a lot of vehicles , you got to service a lot of vehicles .
How do you do it , how do you build your business when you're competing against all these other people who , essentially , you have no cost advantage over them , you bet .
I think it is . It's very important that the listeners understand the context of our business and you started to go into it . There is , unlike some other businesses , where you can go and renegotiate your product cost or you can drive down your product cost , whether it's finding a new vendor or if it's buying in bulk . Our business is not that way .
So the person that's in a small town of 5,000 or the person that's in Dallas with millions of people , people whether they buy one f-150 or 300 for their inventory , they all pay the same amount . It's federally regulated that the incentives go by your zip code . So even if you travel to california , to dallas or to new york , you still get the same incentives .
So this , this theory out there is like you can get a better price dealership yeah , and that's . You know all all that's to be cut . There is the dealer margin , you know , which is razor thin on a vehicle anyways .
So when we look at this business we go , okay , this is a very mature business and I would argue the fact that we probably have the most transparent business there is out there . And let me prove that for just a second . You can go online and do a quick search and figure out closely what somebody would pay for a vehicle .
Sure , not what the manufacturer would produce it for , right , but what the manufacturer charges the dealer for . Yeah , you know . And then also A lot of info out there . When the vehicle comes in , it has a pre-printed window sticker on it . Sure , if you'll notice that that already has a set price .
So , unlike anywhere else you go , that they fluctuate the price up or down based upon commodities and supply and demand . In our business it's already printed there , yeah , you know , as a reference point . You know you can't walk into somewhere and buy two by fours and they'll show you the reference point for how much the two by four was last week , you know .
Or you can't . You know you can't walk into the grocery store and you buy a gallon of milk and it shows you , well , here's what the trending price of milk has . Been sure you know .
So I just wanted to pause there so people really understood what we're really talking about that this market in the automotive it is very mature and it is really fixed and only so many variables we can cover . Yeah , and you and I have spoke about this . But so we really have to focus on retention of employees first and the customer experience .
Yeah , and we have to have fair pricing . We're a profitable business . You know we're not in a race to the bottom . We have
¶ Long-Term Business Investment Strategy
to make money . Okay , and really , when you step back as a customer , you want the business , especially a business that is selling large products . We're more than likely the second largest purchase somebody will make in their lifetime . You want them to make money . Why ? Because if something happens down the road , they need to be in business to take care of you .
Right , you don't want to make excessive money , but you want them to make enough that they can continue to be there and continue to upgrade the business , to have the tools and equipment and other stuff it needs to do its job . Right , you really ?
do . And even if you look at the equipment and you know and service and this is at the top of my mind cause we just bought all of that stuff for the shop .
You know if we , if we weren't a profitable business , we couldn't buy the high-end tire balancers and the alignment machines and stop for a second on that , because the new I mean people don't all necessarily know this or even care about it , but the new alignment machines are so fantastic they are .
They tell you every single thing that's wrong or out of alignment and when you get that car perfect , that thing drives so much differently . I'm very sensitive to that . I know , and the same thing with the road force balancing it is . I brought cars to you . I had a Rolls Royce .
I took over there to get the wheels balanced properly because nobody else can seem to do it right . It takes that equipment it does .
I mean , those pieces of equipment are expensive . Let's go again . Let's give the listeners some context . Here is the machines . It requires two machines to mount and balance your tires , right , okay , we have the machine that actually does the mounting and then we do the balancing and the road force . Those two machines alone are almost seventy thousand dollars .
Wow , wow , that is crazy $70,000 . So I'll get somebody that comes in for a $49 or a $99 rotating balance and they're like , oh , that's crazy . Well , mathematically , do the math there . It's $70,000 plus the wheel weights to put on there , right , plus the employees , the labor .
The labor Right and the overhead of the building and everything right and all that . You're not making money on wheel balance .
I am not making money , oil changes and rotating tires , but as a business owner and this leads into a great point you're like well , matt , why do you do that ? Why do you spend $70,000 on all these machines to mountain balance tires ? Why do you change the oil ? Well , you've got to look a couple steps ahead in business .
Exactly , if I mountain balance the tires of wheels , what does that give me access to ? All of a sudden ? Now I get to see the all underneath of the vehicle . I get to actually measure the brakes , I get to look at the suspension , I get to look at , you know , all the joints , the tires . Yeah , right , you know , I get a better look under the hood .
And if you're going to a doctor's office , it's no different than talking to the doctor versus going and getting an x-ray or a CT scan or anything like that .
You've got the diagnostic to really know what's actually wrong , right , so you ?
have to look at the business , and what does this give me access to ? Instead of overall , does this single thing give me an ROI ?
Stop with that for a minute , because that is one of my great pet peeves about business today and what we teach people in graduate school . I hate to say , but you know , and truthfully you know , we're all beneficiaries of Walmart , right ? Oh for sure , they're fantastic .
They've done so much for our area , between the business and the family and the employment and the public investment . That said , though their culture is , if we don't make money on this one product that sits on this much square footage of our store shelves , pull it Okay .
So that's why when I go like last night I did the grocery shopping I can buy about 85% of what I need at Walmart neighborhood market , but I can't get everything there . Okay . So the danger in that is it takes your customer and sends them off to another place . The good point , okay . And so that's why you can't analyze every business and go up this .
We don't make money selling these cups , so we're getting out of the cup business , but we want to sell coffee , exactly . I mean , it's just I don't know why more it takes a macro view it does . You can't micro analyze every single thing a business does and say cut out everything that's not profitable .
That is such a great point , and as much as we all get stuck in our bubble and I feel like we have some of the best employees out there and the best experience , here's reality . There's other good people out there .
Sure , there's other good businesses out there , yeah , and if I can't get that customer in to fix the nail in their tire , they may go somewhere else where they meet somebody that takes great care of them Exactly , and then all of a sudden , when they need a transmission replaced , they've already established a relationship there .
Or when they're ready to buy their next vehicle . Again , like you said , you've got to look at the bigger picture there .
But see , you know what I think part of the problem is too , with businesses and you can take the car business as an example you know a lot of your competitors are these big multi-dealer operations where they're publicly traded in some cases , sure .
Dealer operations where they're publicly traded in some cases , Sure , they've got to have a quarter to quarter push for profitability and short term performance . They do that .
You guys , as a family business has been around a long time and is well capitalized , sure , can say you know what we don't need to make money on that right now because we're playing the long game , absolutely Absolutely .
To make money on that right now , because we're playing the long game Absolutely Absolutely I think that's a big , big deal is just the form of ownership and allowing you to take maybe a macro view and a longer game to say this is an investment . We don't make money on it right now , but overall it improves our business .
That takes a different mindset , though . I would agree with what you said , but that's much easier said than done , you know , especially when you're in the middle of it and you're cranking out hours after hours each week and you're like , well , why are we doing this ?
This is netting us a dollar or this is costing us $5 or a hundred or a thousand , whatever it may be , but you really have to . Sometimes you got to step back and you got to get out of the business , whether it's a little retreat or a meeting to go . Let's look at the big picture . Does that add value to the big picture ?
Does that ?
help us take more steps on where we're wanting to go , wanting to achieve , and that's what our business is built on .
Well , it's nice to have that luxury .
I mean , I'm not going to say I'm a CFO of a small manufacturing business where I'm like we make money every week , okay , we got to make money today , all right , I need to meet payroll this week and I push , push , push for short-term performance because I don't have any resources to fall back on , to take a longer rate than you , which , on the one hand , I
think that's also good for a business because it makes you just a tighter business all around , you know . But at the same time , it would be nice to be able to make some maybe other investments and things that are going to make the business better in the long haul .
And that's the way we always ran our other businesses , you know and I think we're long term .
We're blessed to be able to do that because of all the different streams of revenue that come into our business . Yep , like a lot of people think about the automotive business and they're like hey they , they sell new cars . You and I have spoken about this . If we only sold new cars , we wouldn't be a business .
You make the least money on it , you make any money on it . It blows people's minds and most people would think that I'm not telling them the truth if I told them how much I made on a hundred thousand dollar vehicle . Like , there's just no way of that , you know .
And if I was your financial investor ?
you're fired , I'm getting a new financial advisor , but when you start looking at all the different streams that we have established , it gives you the leverage to make those decisions for the long haul Right . So , for example that benefits the customer .
It does benefit the customer . That benefits the customer , as my contention .
When you build a business that has all those different streams and let me break those down real quick . In our business that's selling a new car , that's financing the new car , that's the products , like warranties on the car . That's acquiring the pre-owned vehicle to use the trade in Okay . So then it goes into the shop . The shop gets to work on it .
So we sell parts . We sell labor Okay , to work on it . So we sell parts , we sell labor okay . Then we have the service side of it that's doing all the maintenance that's in , you know , anywhere from oil change to engine replacement , right . Then we have the parts that sell into the shop . It's selling to all the wholesale and all the other local shops .
Then we're selling the used vehicles as well , right . And then you get financing on those vehicles . Then we have financing on those vehicles . And then we have the accessories and the spray and bed liners and then we start looking at the real estate part of it and the real estate of all of the businesses .
So you start taking all these different streams and it puts you in a position where you don't have to run a business scared . Yeah , exactly , you know you don't have to . You don't want to be scared selling .
It affects your ability to sell . If you're scared and you're feeling that pressure , doesn't it ?
Customers can see that . Of course they can see that . Your employees can see that . Yes , you know you need people to relax Everybody's on the edge . They do Nothing's wrong . We want to push .
Yeah .
You know we want to get better , yes , healthy manner . Yes , yes . Well , let's go back , though , to this differentiation idea . Okay , again , there's a zillion car dealerships out there . People can buy a new car , use car , get their car serviced , or whatever . How do you differentiate yourself over the other people ?
We've got a staff that we're paying attention to , so they're happy , and we got lower turnover , all right . That's one thing that I know is a cornerstone . It is .
What else ?
¶ Enhancing Customer Experience and Transparency
So the next step is a customer experience . So when they come in , our employees , it's not the point and shoot method , you know . If it's something simple like where's service , where's parts , where's the bathroom , it's not point and shoot . We're taking that extra step , we're walking them over .
Hey , let me show you where parts is , let me show you where service is . If you're in service , let me show you where the waiting room is . So it's those small things there . It's also the culture that you walk into and that goes from our music to our doors , to our employees , to the atmosphere .
So when you walk in , it feels like a business that is progressive and somewhere of good energy that you would want to be , yeah . So , and then the next part is really our transparency to make sure we have let's talk about on the sales side vehicles priced correctly . Okay , you know , and we reprice vehicles multiple times per week .
You know , it's kind of like the stock market if you were looking at our strengths . Yeah , I'm a bit of a philosopher of that .
So we want to make sure that vehicles are priced right from the get-go , and if they're not priced from the get-go , I don't get the inquiries on them , because customers spend an average of 20 hours on the internet researching vehicles before they'll click , call or come by .
Look , I was in the real estate business , as you know , and I mean it's like houses , it's the same way . Price it too high , they don't even look at it . Okay , you got to have the right and it , just then it gets the reputation for being something nobody wants it is .
I'm gonna tell you a downfall that I've heard some people say before , and there's some truth to this , but you got to be careful . Is is some people will talk about like well , you don't know if you don't ask , or you won't get it if you don't ask for it .
You got to be careful , though , because if you ask for too much , that's too far out , you never get the opportunity . Yeah , I'm an aggressive pricer .
I like to make the best I can get , but then if nobody clicks on it and then people can't see through the force because they're like no , we take care of every customer that gets here , but how about the customers that aren't getting here ? Yeah , yeah , so there's on the pricing side , on the vehicle .
We're selling the vehicle we're either trading or buying , and I'll get to our buying here in a minute , no-transcript . We make sure that we're on the money from the get-go and there's a lot of tools out there that people use , like their Carvanhas or the Trade Pending or Manha , nada , nada , which is always high , by the way .
Yeah , so they all have these resources . No , kelly's hired in the NADA Kelly Blue Book is , and take a look into the details . You know it's funny , kelly Blue Book .
There's four levels , you know very good , yeah that's like the top 2% , top 2% cars actually meet that .
But everybody thinks they have that car . Yeah , exactly . So when they come in , we've got to make sure we're on the mark from the get-go . We live behind the saying of whatever amount we show you for your vehicle let's say it's $32,000 . Yeah , we will buy your car for the $32,000 , whether you buy from us or not .
I love that . I mean , I have probably sold 20 or 30 vehicles to you guys . Yeah , you have , okay , and it's just so nice . I don't know . You know , and I've sold vehicles to other dealerships before or traded them in . I don't know that I've ever sold one to anybody . I have sold one to one other dealership .
Usually you got to fight to get your check , you do , okay , which drives me nuts With you guys . It's like you come in there , it is Boom , we'll write you the check now . See you later .
It's amazing . We try to take the pain points away . So you talk about how we win in a mature business . But it's a win-win . So you win and you have a better experience as a customer . Right , I love selling vehicles . We win because we get a local vehicle . Do we actually get to drive and ask the owner questions about it ?
If we go to the auction , I see that car for five seconds . I have no clue where it came from . No kidding .
I have no reason why the other dealer was trying to sell it , parking blocks with it and ruined everything under it .
You won't even know . You won't know and it looks like a great vehicle . But in the back of your mind you're like why is that other dealer selling it if it's such a great vehicle ? Yeah , and you and I have spoke about this . But at the auction there aren't any good deals at the auction . Auction you paid higher than anybody .
You were the last one with your hand raised . It's true . Yeah , I understand .
And I've been there . I'm not saying that I haven't done that . I get it . So that's a really good point , though , but I think car dealers play so many games with people on that , and it kills trust . It absolutely kills the trust , and then it's like ah , especially in today's society .
They've been on the internet , they have these resources . We're fortunate enough to be in a in a business where if you embrace e-commerce in the internet , it helps enhance your business , but we're not replaced by it . Yeah , like people still . They want it . No different than buying a house .
You know they're not clicking on buy it now and it's in the checkout card . They're researching .
They come close to it though they , they , but they got to go look at it , they got to see it . Yeah , that's . That's the thing they narrow down , though , with that research .
Well and that's a good point Like in our business . If we looked at the data from five to 10 years ago , the average person went between four and five dealerships in person before they purchase .
Now they go to less than two , but they spend all the time on the internet narrowing it down , which actually makes our job easier because the customer knows what they're talking about .
Right , they're going to be closer to buying . Logically , if they do that , they really are , and they will if they're going to four or five places .
So let's get back to the transparency on the pricing on your vehicle , whether I buy it or you trade it in . So it goes through an appraisal process that most people don't see behind the scenes Is the manager will get the keys , they'll drive your car . We take pictures , we run all the history , we see if you have an extra key .
But then I also have a dedicated buyer that works for us . All that information is uploaded in the system to them . So then they check all these different places . One is it a good fit at the lot they're trading it in Right or does it work on any of our other locations ? Yeah .
The other two in Fayetteville or out in Farmington , does it work up in Springdale , Like , do they have a missing hole in their inventory where we could bump a little bit ? Sure , If it's not a core make , let's take it was a BMW that I was buying from Right . Okay , you go to the BMW , Then I go to the BMW dealer .
We've been in business for 78 years here . That gives us leverage and we've played nice with everybody . We're competitive but we played nice . So we call see what they would give for it .
And then we call three outside markets and we've got great relationships over in Oklahoma City , Kansas City and down in Dallas , so we get all those figures behind the scenes I've seen that I know .
I've seen you guys go through that process before for vehicles . I was selling you .
You bet you bet , so then you get the highest amount .
Yeah , I love that . I think that's great .
The other thing this does and business owners out there , you can take this and adapt it to a different area in your business . Business is we're all human . We're going to have days we slice one or we mess up , so that's why we put it in place .
On going hey , if a manager misbid this one just because they don't like the car or they don't see a need for it , I then have my buyer behind the scenes .
It's like an honesty check right , it really is .
But what if the market's on fire in Dallas ? What if it brings $1,500 more in Dallas and I can ship it down there for $400 and we net make $1,100 more that I can give to the customer ? Sure , even if I just give $800 of it to the customer , customer got $800 .
Right , you're doing the work is basically what it comes down to , instead of being lazy , exactly right .
I'm not just looking at a book and going , well , yeah , that's the average amount , that's the way it used to be done . It is .
And the other thing I don't think people really understand too . It's just like you said well , I'm going to call the BMW dealer . Okay , I got this BMW because we don't sell BMW . Your person who calls their person over there has to have a relationship and trust . They do , okay , and that only comes from doing business over time .
That does , that does and that is a benefit to the person who's selling their BMW to you . It really is .
Because they're going to get an honest like if your guy says this is a really nice car that you guys aren't going to need to do anything to , and they're talking to the used car buyer at the BMW place and that guy knows , if I hear from Bob and Bob tells me that it's true , it's true , okay , then they're going to pay more for it .
There's tons of value in that and that does . That takes time . You have to build that relationship . You talked about KBB earlier . You know the majority of customers come in thinking their vehicle is excellent to very good . You know the majority of customers come in thinking their vehicle is excellent to very good .
Well , if you look in the fine print on KBB , it says less than 2% of vehicles meet this criteria .
Yeah , I know , and they aren't in that great of shape . You start looking at how the wheels are scraped , it's got door dings in it . They were smoking in it . Whatever , whatever , yeah .
¶ Market Correction in Auto Industry
I love the tire one . They're like no , we just put new tires on it . So I go out and look at it and it measures and they only have 60% left . They're like well , they're almost new . We bought them about 15,000 miles ago . Well , those aren't new tires , they aren't new at all .
But once you establish that relationship with those other dealers or my outside markets , then they're able to put it on there . Yeah , and we've had to go down that road where we've had a buyer that has not been transparent with one of our other areas . I've had to go back and repair that relationship . Yeah and go . Hey , you can't do that .
If it has hail damage , you've got to tell them it's got hail damage no-transcript .
I think that's great and I love your system , the way you do it . The car prices I was on your site the other night looking at new cars , okay , which I do frequently , as you know and I saw two Jeep Wranglers that were $95,000 less . And I saw two Jeep Wranglers that were $95,000 less and I said to my wife the car market has gone freaking insane .
I mean , I like Jeep Wranglers , I've had new ones , whatever , but I just can't believe it $95,000 for a Jeep . Matt , when do car prices get so high that people just can't buy them ? I mean , who buys those things ? You know ?
and even though that was a specialty one , and the one that's got 470 horse and , but but still it gets past a threshold . Yeah , we are seeing a correction in the market happen now , and I'm going to rewind the tape on you a little bit so we get context here .
Um , during , you know , when vehicles became scarce , it took about a year after COVID , so it didn't happen in 2020 . In 2021 , this started to happen because we had enough surplus that we had to sell through .
But then it's simple supply and demand , so the supply went down , the demand stayed there , so then prices started going up , we were having to go out buy vehicles from other dealerships , pay transportation . So then we were having up . Right , we were having to go out , buy vehicles from other dealerships , pay transportation .
So then we were having to ask over MSRP for it . We had to cover the cost and we had two options Either don't have an option for the customer or have options for the customer .
Right .
And I got to build the backstory here . So then , about 22 , 23 , really , all the manufacturers go . Well , the dealers are charging over msrp . We should start moving up our msrps .
What they didn't take in factor is the reason the dealers were charging over msrp is I went and bought it from another dealer at msrp , paid for transportation and I've got to have some problems . Higher it was higher but the supply was low enough . The demand was still there . No different than any other product , sure .
And that's why I started this off and saying is , if you had a reference point to go in and look at two buffers , or four by eight pieces of plywood back then , or pvc , then you said , well , that was more than it was last week . You'd never had that reference . Yeah , you know , unless you're buying it every day in our business .
You did , and then we got a bad rap because it was like oh , they're charging over msrp , it's right , this is market availability . We either go get it didn't have it or not . So the manufacturer looks at that . And they're very slow , unlike local entrepreneurs . We adjust all the time .
Yeah , hey , if we ask for two thousand dollars over but it doesn't sell in 30 or 35 days or 25 , we Take that off . We start taking that off . We adjust fast , we react . Yeah , it's no different than a stock . Megacorp doesn't , though they don't , they don't .
So they were so late to the ballgame , is that then in 23 , really , they started bumping up these prices and we saw $3,000 , $4,000 , $5,000 increases in prices on MSRP Now . $4,000 , $5,000 increases in prices on MSRP Now , let me give a disclaimer here $5,000 increase on the MSRP does not equal any more profit for Matt .
Yes , I understand , because they moved up the cost .
Yeah , no , I get it Totally .
That's maybe for the manufacturer . For the manufacturer it is . The margin on the $95,000 Jeep is the same as it was when it was 70 .
But it's just harder to sell now because it's got cost $95,000 .
Because it's $95,000 and we had the whole thing of the rates coming up too Right .
Then it gets to a public budget .
They're realizing that now .
Yeah .
So we're seeing a couple different things happen . I was on a call earlier this week where certain models were getting msrp reduction of two thousand twenty two hundred three thousand . So we're seeing a correction in the market .
I've seen it in the advertising , like you know , buying down the interest rates , the manufacturers or rebates or whatever , like dodge is doing on there or not . I should say ram , I'm sorry . Yeah , I still think it was dodge . Yeah , do it on their trucks , and all that where they've got some pretty big incentives for people .
They're doing that and I'll say , you know , on the Ford side , especially like on the Mach-E , on these electric vehicles , they have really realized that like there's a lot of interest in that but there's a lot of unknowns comfortable . So , uh , we left a meeting not not too long ago that they said , okay , here's what we're going to do .
We're going to put like a two-year lease together on one of these things . We're going to make it a really low lease . We're going to include a level two charger and installation at their house , so kind of like the whole package . Yeah , hey , try it for two years . Here's a , here's a low 5.99 a month payment or whatever .
Yeah , driving for a couple years to just try it on , we'll get the , we'll get the charger installed in your house , we'll take the range anxiety out of it exactly I , one of my friends um , recently bought a new f-150 a lightning the lightning , you guys and I know he got a really good price on it , um , but he is thrilled with that thing , he's absolutely
thrilled with it .
he had to show me the rear end on it because it's got independent rear suspension . Oh it does , yeah , and and anyway . But like you said , I mean he , you know now he had already crossed the electric threshold and got driven a Tesla before before he bought that . But you're right , I mean a lot of people are a little bit scared of electric .
I still sure you know , and I've got a tesla charger at my house , I think I can get an adapter now . Sure , for a ford , if I ever got one with that was electric , right you can't but yeah , you , it makes a lot of sense what you're saying .
I understand that so two things , I think , that are happening in the automotive market so we can try to give some people some insight here on why you brought me on the show . Besides , winning in a mature market is we're seeing some price corrections on the new side .
Use takes care of itself , right , because whether it's the auction prices or the book prices , we adjust those all the time . Sure , on the new side we're starting to see reduction in prices at an MSRP level . Now that's a good thing for the consumer , right
¶ Future Trends in Hybrid Vehicles
? A lot of times consumers want bigger rebates and bigger discounts . You need to remember , in the state of Arkansas you pay tax on those rebates .
Yeah , I know Arkansas is kind of and same reason why you can't lease here , that's right , because you pay a tax on the whole price of the vehicle and the property tax and all . Yeah , versus the portion of it that you use .
Like other states , only charge you that portion for that payment and we pay for the whole thing here . There you know , arkansas is probably at two to five percent lease . Yeah , when I was a school in michigan , we were 40 to 50 .
Yes , yes so , yeah , it's . This is not a lease market . We're not . Our laws , our tax laws don't encourage it . That's what it comes down to . They really don't .
So we're seeing that , you know , the reduction in msrp prices , which is good for consumers . The other thing we're seeing the reduction in MSRP prices , which is good for consumers . The other thing we're seeing is a shift in the manufacturers .
Is they're going to continue to produce EVs , but we're going to see advancement in hybrids , yes , which is really the stepping stone .
Yeah , we should have had more hybrids is the bottom line Before we went from internal combustion to electric . We really did Too fast and the charging infrastructure is a concern for the buyer on the electric side .
They're just not comfortable with it yet . But hybrids they are .
Yeah , hybrids gives you the best of both worlds .
And I'll take my wife's van , for example . It's a plug-in hybrid .
Is it ?
Yeah , so we plug it in every night . She can run the kids around , run the errands , but if we forget to plug it in at night , the hybrid motor takes over . Is this a trans or a chrysler ?
that's , that's a chrysler , pacifica okay , yeah , my ex-wife has one too that she bought from you guys . Good , she had a big transit and got rid of it and bought that pacifica .
Yeah , loves it that's a great vehicle . So then , if I forget to plug it in , right I guess right if I want to drive to dallas , just put the gas in . Yeah , yeah , and you want to save it . That that's really . We're trying to jump from iphone 1 to iphone 15 .
Yeah , I know , you're right , you know , and , and eventually more of it will get there , but they're backing up and going hey , we're going to refocus on how do we make the hybrids better well , you know ford .
My understanding is , and you , I'm sure , know better than me , but there have been like a war inside the manufacturer from electric versus internal combustion . Ford CEO has thrown money into electric , okay , and the internal combustion . People are like , hey , we're over here , we make all the money for this place . What are you guys doing to us ?
This is what I hear from my brother who knows at the highest level what's going on at Ford .
But they're seeing , at the end of the day , the government can put regulations or cafe standards out there . They can push the manufacturers to have to do it , the manufacturers can push the dealers , but if the customer doesn't buy and they don't react , like they're the ones that decide and it's starting to slow a little bit going .
Okay , hang on , this stuff's sitting on the lots . At the end of the day we can come out with all this stuff , but but the customer , if they're not buying it , and then the factories have to cut back so we have to lay people off . I mean , you know , there's this whole trickle and this domino effect of you got to listen to the customer .
I think too like a lot . There's probably a greater customer awareness that electric is not as green as people think and internal combustion is not as dirty as people think . I would agree Okay , not as dirty as people think , I would agree Okay .
Because you know they look at like what you have to do to mine the batteries and all that and what happens afterward and the lifetime . And then you look at modern internal combustion . You know the power generation for the electric could be coal . You know it's still the number one fuel source for electric power in the United States , if I'm not mistaken .
So then you look at the internal combustion and how clean they are now and you know it's sort of so they're not as dirty , the electric's not as clean . So even the people who are like super environmentalist , I think , are probably . You're right . The hybrid is the future . I mean it's hard to see .
The EVs are not going away . It wasn't a fad . I just think that the aggressiveness of wanting to get to 50% of EVs by 2030 , that's too fast for multiple different reasons . So that's a little bit of the inside of what's going on in our industry . But back to the how do you win in a competitive business ?
A competitive business it's hey , your people first , yep , and they have to buy , have the buy-in , because we need to build rapport . You and I've talked about this and I'll say this a hundred times and a hundred times more . But the consumer has to know somebody , they have to like them and they have to trust them before they'll do business with them .
And that's in any industry . Well , you can't get to know somebody if it's a new face every time you walk in there . Yeah , so if I keep the same people in place by a great place to work , right , okay , then the customer already knows them and likes them , right , and they build some trust as long as we did a good job , yeah .
Now , if we can answer yes to all three of those questions , whether it's in service or parts or sales or F&I , then the customer will also . They'll pay us a little bit more .
It doesn't have to be a massive amount more , but they know we have to be in business , right , that we have to make a profit , okay , and they know that if something happens , we're going to take care of them , because we did last time Right . So again we need to be competitive . Don't miss that .
I've got to be competitive , but I don't have to be the cheapest .
Yeah , I mean , I think I'm fairly tight with my money but honestly , if I could buy , a new Ford from another dealership around here , I just wouldn't even consider it . I'm just going to go to you guys because I know , like if I have a problem , you're going to take care of it , and I've had those problems we have , we , you know , I mean I .
So , yeah , I buy that . I think there's a lot of truth to that . But it does take a while to get that kind of a relationship with a customer . It does , you know , it doesn't happen overnight . And , as you said , if you got all this turnover and not everybody sees that or believes that , you know . So what else do you do ?
What else are you doing right now to be successful ?
We've got a great facility Focus on our employees . You know there's so much and I know you want me to move on from there but there's so much focus on our employees because they're the ones at the front line communicating with everybody . So our pricing we make sure that we're aggressively pricing but it's not in the red .
We know we have our loss leaders , like the oil changes , like the tire rotations , razor thin margins on the new vehicles to get that entire process started Right . But then we're making sure we take great care of them and the only way we take great care of a customer is by taking great care of employees .
Yeah , we have some way we take great care of a customer is by taking great care of employees . Yeah , we have some way out there thinking stuff , and you've been through our facilities , but you know we have flex spaces that we got from the Walmarts and the Yahoo's and the Google's and all that stuff .
We've got a full-blown gym we're opening up for employees All these ways to take care of our employees . We've got a studio you can do yoga and you can do cycling in . I love that and all these things .
Not that I do it , but I love it , but it's a good idea , right .
And you bring up a point there I have done it before Is we might have some people that aren't going to work out or they're not going to get on the treadmill , but they still know in the back of their mind they're like man , they provide these amenities . Yes , I get it Totally .
So then the third thing is so if we look at our employees , our pricing structure , okay , then the third thing is is to making sure that that revenue flows back into the community at a local level , because then you , the buyer that are local , go .
Hey , not only is this somebody I know , I like and I trust that I know is going to be around if something happens .
The Lewis family's got a long reputation of charitable contribution .
But it goes right back in at a local level .
There's no question about it . I mean , it just goes back , it does . It's in your history and culture .
We just finished our teacher classroom takeover and our classroom takeover we let teachers submit an Amazon wish list and we pick almost 200 teachers out . Wow , that's awesome 200 teachers that are in the local area . Now we'll get somebody that'll put in from Chicago or this or that , and it's local . Only that we ship the stuff directly to them .
That is so cool , so it doesn't have to go through any of the channels . Nobody else gets their cut , it goes right into the classroom . What the teachers need , that is really nice . You know that really is so .
So you're doing all these things to keep your employees happy and contributing to the community . You got a great facility . We're low turnover , total transparency in the valuation of trade-ins . Sure , talk a little bit about service , because I want to tell you something that happened to me recently . Okay , okay , and just see , like , what you think about this .
Okay , so I got a Mercedes and I normally take it to a guy to be worked on who's out in Hawgeye , slash Prairie Grove border . He's out in the middle of nowhere . The guy is a guru , though , on these cars Mercedes , bmw . He knows exactly what he's doing .
He's out of dirt road , off of dirt road , but you know , it's a pain in the butt to take cars to him and my car always gets trashed out when I take it there . So I hate that . So I take it to the local place to get an alignment . Uh-huh , um , that's five blocks from where I live , okay , or whatever . And I get it . You know they .
They give me this chart that shows everything that's out and they tell me that they've corrected it all , but the steering wheel is now off and they go . You got to take it to the dealer to get that reprogrammed . Yeah . So I call my buddy over there . He goes that's bull bs , because I can , I can fix that . He goes , bring it down here to me .
So I bring it down there to him . And he says you know what mark first off , the wheel bearings on my car were completely shot . I'll pick it up on a rack , and so obviously you can't align it right . And then he goes look at these bolts . They've never touched him , so they absolutely lied . Wow about that . So then that's one case , okay .
So then , unbeknownst to me , one of my wife's friends takes her car over to this place it's not running right . They come back and they go uh , you got um , a bad valve on this particular cylinder .
But you know , um , we we're going to pull the both heads and do a valve job on it and it's going to cost 3 , 800 or whatever the number was , to fix this thing properly and it's disassembled . They charge him for 100 bucks to diagnose , to first run a diagnostic , then 200 and something bucks to pull the valve cover to diagnose this . Okay .
So she tells my wife this . She's a single woman , you know she doesn't have a lot of money to blow on her car , sure ? So I said , okay , I , I know somebody that's a guy out there in Prairie Grove I was telling you about , so she takes it down there to him . He calls me up , he goes Mark , they never took the valve cover off this car .
Okay , he goes beyond that . You know what's really wrong with it . The catalytic converters are completely plugged up . It had a bad coil . They also said and they send all this electronic documentation we switched the plug wire on number three to a different coil . He said the car has one coil . Oh , wow , so they just lied about it . She takes it down there .
She gets the catalytic converters replaced . Car runs perfectly . Yeah . How do you avoid stuff like this ? Yeah , because honestly , I thought these people were a de-shutter place , for you know I'm not going to take anything major there , but if I need to have a flat fix in a hurry or something , I wouldn't hesitate to go .
Sure , I don't even want them to do that now , the last time oh , that's another thing the the last time I did that . I get my car back . It rides like it's on rocks . I check the tire pressure . I got 69 pounds of air in the tire they just fixed Sure , when it should be 30 .
¶ Business Legacy and Motivation for Success
What do you say to that ? So the first thing I would say is that Incompetence or criminality .
I would say it's a broken piece of checks and balances , because I would more than likely say that , whether it's the general manager or the owner of the business , if they knew about that , more than likely they'd say that's not how we do business and that's why we say that it's so important to take care of those employees and those managers with clear expectations
. Yeah , because I don't get to qc every vehicle that's in this . Sure , well , you're waiting to make sure that my service manager and then my foreman and that's no different than in manufacturing it's like hey , I see this issue . It's going out with too much air pressure . We're not properly diagnosing this . Yeah , so you've got to get some QCs in place there .
Yeah , so I would say that there's a broken piece .
So do you guys have somebody check everybody's work before it goes out the door ?
It all depends on what it is . So , there's different QCs for different areas .
One of the common things I'll tell you this was an issue in our business with oil changes is we had two major things that happened with oil changes we forgot to reset the light yeah , I couldn't believe that or we didn't get the sticker never had that from you , but I can believe it .
Well , we've messed up on it before so I said , hey , I'm tired of a customer calling me saying , hey , they didn't reset my light , because then in their mind it goes did they even change my oil ? Yeah , you know where they didn't change my sticker , did they even change my oil ? So that's a simple example .
But we said , okay , when it comes out I want a qc stamp on there . And I now have somebody over that's like a working person in the oil change area that two major things we check did we reset the light and did the new sticker get on ? Because those are the two telltales that a customer can look at to say did they actually change my oil ?
Sure , same thing in the shop . If we have a drivability concern , we now have somebody that goes out and drives the vehicle yeah , you know , before it goes out .
It's really sensitive to things . It's really sensitive yeah .
Because it might have reset .
The check engine light might not be on anymore , but it might take five , ten miles before it pops back on . Yeah , um , I mean , these cars are complex and I understand they are things . You can't always tell what's wrong with one .
You know , I , I get that , but but when you have a situation like that , like I would never at this point , I'm never going back there . And there have been a few other things I've heard of from people , and all the people that I'm gonna to tell don't go back there .
They're my family members who had their tires fixed or well changed at a place like that .
I think that's a really good point you make is that you know the power of influence that your customer has . I talked about the first part of this podcast is I want to turn people into raving customers of mine .
Right , I want to turn people into raving customers of mine Because it's more beneficial that that customer is out there tenfold from any radio ad or billboard or talking on this show or anything else . Is that you're out there talking about ? Like , let me tell you about the experience I had .
Yeah , because you know the ratio of people that hear that and actually take action is so much greater than you know a pay-per-click ad or anything else .
Do you worry , though , at the volume that ? You know a pay-per-click ad , it's so fundamental , do you ? Do you worry , though , at the volume that you're at now ?
I mean , you guys have like 1300 cars in stock or something crazy right so it's something we're definitely looking at is going okay , we've now gone to a new level yeah , can you sustain that level of quality , service and attention at the volume that you're at ? there's new checks and balances going in that we're learning every day on going .
Okay , here's how we have to relook at our business model . We were really good at the level we were . We know we wanted to grow to the next level , but then also , what new layers have to come in place there ?
That seems like that adds overhead though it does , it just keeps raising the threshold of the volume it does , it does .
It just keeps raising the threshold of the volume you got to do and there's some areas right now that don't compute , but we knew we needed those extra layers in there to keep the customer experience , you know , to keep the employee experience . You know different levels of managers , that we never even had that manager before .
I can remember writing the job description , the pay plan . I'm like I don't have anything to go off of here .
I know we need to accomplish it's a new role , but it's a new role , yeah , I get it , and so that stuff will continue to evolve and it'll be interesting to talk about a year from now going okay , those things you thought to put in place , how many of them did you keep ?
How many did you change to make sure you could sustain what your family had done for 78 years at a new level of volume ? What ?
motivates you . I mean , you were like I know you think about this stuff basically 24 hours a day , seven days a week . Okay , You're like super , super active and engaged . A lot of people like you wouldn't be , let's face it . You could go . Eh , I don't need to do that .
Sure , we got so much going on and there's so much you know momentum built up in this place . I could screw around for 20 years and still do . Okay , yeah , what motivates you .
So here's what motivates me is the ability we get to provide almost 300 people now a great place to make a living for their family , to make a living for their family and , in return , to be able to help the community and have a business model that should be in place but many don't have in place .
Where it is , customers spend money with us , we invest back into the community and our employees it's you know people .
so many people don't understand that one of the greatest aspects of business ownership is creating good jobs for people . It's so good and seeing what happens to them over time and their families .
And I need to be really honest with you here the ability that we could sell our business for a large amount . Yeah , you'd have to work again Every single day . Yes , I believe it . But I will tell you this , and you've known me for a large amount yeah , it happens to work again every single day . Yes , I believe it .
But I will tell you this , and you've known me for a while and and you're actually the one last time I was speaking in your class , you Googled it up real quick for the percentage , cause we were interested how many family businesses make it to the fourth generation . Pretty sure you found it was less than 5% .
Yeah , it's a low , low , low number .
So I'm also one of those individuals that says you know , no different than when I ran my first marathon , I was like less than 1% of America has ran a marathon . I was like I need to do that . Then yeah , but you're highly motivated . I'm like I'm failing businesses . You're a driven guy . It's like , okay , it could sell for millions and millions of dollars .
Or what is the percentage when it goes to fifth generation ? If it was 5% at four , what is that ? Sure , it's less again , right . And how can you build this legacy that not only continues your family business but continues a great place for people in Northwest Arkansas to work and then helps all those small schools and charities and stuff Some of those ?
It's game changers that we can help and invest back into .
How much of the and I believe that because I know you , but how much of your motivation comes from . I just like proving to other people that you can do things differently and succeed Right A lot yeah , it's at the core of it . You know A lot . I just want to prove to everybody that this approach actually works , absolutely , absolutely .
It comes a lot approach . Actually works , absolutely Absolutely . It comes a lot from there too , yeah .
I believe it . With a competitive guy like you , it does , for sure . Well , it's been fun . Yeah , man , I tell you it's always great talking with you , matt . I always learn something new and I love your approach to business .
I encourage everybody who's looking for a new or used vehicle , or you want to get one fixed right , you bet Go on over there to Lewis Automotive . You will be blown away by the new facility . It is so cool .
Yeah , come take a tour . We're Exit 65 in Fayetteville . Or if you're up in Springdale , we're right on 71 out in Farmington . We've got a little location there , our Collision Center in Fayetteville . But yeah , yeah , come by and check us out . We don't only just sell cars , we also buy . We talked about that . I buy about 70 off the road every month .
So great place to sell a car . Make it easy , don't be waiting around for people that say they're gonna come over and can't no I know , even if you got a payoff .
That's the thing that blows people's mind , yeah , is you might have a payoff and your car's worth five thousand dollars more in your payoff . We write you a check for the five grand . I take care of all the stuff behind the scenes of the bank . So much more and you move on . Yeah , nobody's knocking on your door , no showing , or hey , y'all buy .
But let's see what the bank says try selling a car yourself when you don't have the title in your hand and see how that goes right . Exactly , yeah , I mean it's , it really is true . But uh , yeah , if you don't want to buy a car , you shouldn't go over there because you'll want to buy one .
That's right .
I hope you go over there , it's like I need to buy something you know . Well , it's great having you on , Matt , and what's your website for Lewis Automotive Group ?
So it's Lewis Cars , that's Lewis C-A-R-S , so find us on there . And we're on all the socials , whether it's Facebook or Instagram . We're just now getting our TikTok going , so jump on any there , especially Facebook . If you ever want to join a sales meeting , hey , saturday morning , we run our sales meeting live on Facebook .
Wow , that's cool . It starts at 8 o'clock , so jump in there and see .
That would be fun . So it's pretty neat . You get to see all the guys doing the walkarounds and all of us talk and you know we're getting better and better at the AV part of it to join people in on what they're looking for .
But yeah , check it out , Very cool , All right . Well , thanks a lot , Matt . Thank you and until next week
¶ Small Business Engagement and Interaction
. This has been another episode of Big Talk About small business .
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