Different Automotive Industry Environments: Bi-Lingual Dealer Talk

You are currently viewing Different Automotive Industry Environments: Bi-Lingual Dealer Talk

Welcome to our first EVER bi-lingual DealerTalk episode. English starts at 7:00 minutes. If you want to follow along join us on YouTube.

Boris Lopez is an internationally experienced automotive professional with over 20 years of experience. His impressive resume illustrates his skills in negotiation, business planning, management, and marketing strategies. Boris is a graduate of the NADA Academy and the Harvard University Continuing Education Program. He was featured in the 2020 Automotive News 40 under 40.

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⏰Highlights:

00:00 Introduction

07:00 English Starts Here

27:50 Dealers Patting Themselves on the Back

34:30 Acquiring Inventory

46:30 Next Five Years

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Transcript:

Herbert Anderson (02:45.950)

What up. Welcome to another episode of the dealer talk podcast. This is your host Herb Anderson. Thank you so much for tuning in. Very, very excited. Today’s going to be our first Spanish, English, Spanglish podcast. So we have an amazing guests. Uh, Boris is from a dealership out, uh, I believe a Toyota dealership out in, in Florida and, um, he’s, uh, he is from Venezuela like me. So.

It should be exciting. So Boris, welcome to the show. Como esta todo?

Boris (03:20.457)

Thank you. Muy bien, muy bien. Thank you for the invitation.

Herbert Anderson (03:23.750)

SĂ­, gracias por estar aquĂ­.

Boris (03:32.357)

Soy venezolano, ya lo dijiste. Tengo 13 años en este país. Comencé en la industria cuando tenía como 20 años, o sea, yo tengo casi 21 años en la industria. Empecé por casualidad. Yo soy graduador en sistema, soy relacionado con las computadoras y así empecé. Me invitó

Boris (04:02.357)

en Cumana en ese momento. Y nada, ahí conocí al dueño del diner, tenían un problema enorme con el DMS, él tenía problemas con su computadora personal, así que ahí me invitó a que si no tenía trabajo, trabajara con ellos como asistente de informática. Así empecé. Después me ofrecieron si quería vender,

Herbert Anderson (04:12.170)

Ha ha ha.

Boris (04:32.357)

crecer mi interés obviamente por esta industria. Bien joven y he manejado todo el dealer, el director de operaciones cuando tenía 26 años. Y nada, después ahí por cosas del destino, que creo que fueron buenas, terminé en este país y bueno. Y ya después de 13 años aprendiendo otro lenguaje, otro idioma, otro negocio porque es completamente diferente a lo que sí en Venezuela porque es distinto el negocio completamente.

Herbert Anderson (04:51.971)

Okay.

Boris (05:02.357)

Y nada, bueno, empecé también aquí de cero aprendiendo todo de nuevo. Tuve la oportunidad de poder estar casi que observando al principio. En 2011 me ofrecieron la posición de General Sales Manager. En 2013 General Manager del dealer Toyota. En 2019 tuve la oportunidad de convertirme en parte dueño de una franquicia Kia y en 2022

un open point también de aquí, el segundo, así que nada, ahora trabajo en tres dealers.

Herbert Anderson (05:39.150)

Qué bueno, qué bueno, hermano, qué bueno. Coño, es interesante. Hay muchas cosas que dijiste que quiero expandir, pero lo primero que se me viene en mente es la gente que está en esta industria, no importa, parece que es mundial, pero no es algo que uno como que, como dijiste tú, como por accidente, a mí me pasó lo mismo, por accidente comencé yo a cambiar a aceite y ese tipo de cosas y comenzó mi carrera. No fue algo que yo dije, me entiendes, esto es lo que quiero hacer. Y con tu historia, como lo que me estás diciendo,

fue similar, Âżno? Como que comienzas por by mistake.

Boris (06:16.757)

Sí, en hecho hay un cuento que yo siempre decía que era temporal mi trabajo en el dealer, no temporal, temporal, temporal, temporal y igual han pasado 20 años en el temporal.

Herbert Anderson (06:24.450)

Exacto. 20 años después. ¿Cuál es la diferencia más grande que tú ves en vender en el lado de ventas acá en Estados Unidos y lo que experimentaste allá en Venezuela?

Boris (06:41.457)

Bueno, Venezuela también es atípico en comparación con Suramérica. En Venezuela no existen productos de financiamiento, por ejemplo, la relación es directamente del cliente con el banco, no existe esa intermediación de lo que nosotros hacemos aquí, de que nosotros somos aquí los que hablamos con el banco. Productos de financiamiento, no existe eso de garantías, protección, gap, eso nada, eso existe. Casi que la industria no se rige tanto como

Herbert Anderson (06:48.850)

Okay.

Herbert Anderson (07:03.812)

Wow.

Boris (07:11.457)

aquĂ­, que a nivel de… hay tanto volumen que te permite como que más o menos es demanda y oferta obviamente como toda industria, pero allá como que los precios son un tema diferente. No es tan fácil entender cuánto es el valor de un carro usado, no existe tanta tecnologĂ­a, obviamente aquĂ­ hay mucha tecnologĂ­a involucrada en que todo sea como más equilibrado. Eso ya no existe, ya es más o menos como… como viene y…

Herbert Anderson (07:39.250)

Sí, y es un fenómeno, no hay un carro usado te puede costar más que un carro nuevo a veces, ¿no?

Boris (07:45.557)

Bueno eso era antes, eso es particular lo que pasaba en ese momento justo cuando yo me vine, 2008-2009 está pasando aquí también, que de repente hay un carro usado que cuesta más que un carro nuevo entonces es irónico que como que vinieramos del futuro los que vivíamos en Venezuela porque estábamos acostumbrados a una inflación muy grande y a este tipo de cosas de escasez donde la

Herbert Anderson (07:57.902)

See ya.

Boris (08:15.557)

pero es más o menos similar a lo que está pasando hoy aquí.

Herbert Anderson (08:18.250)

muy cierto eso, verdad, que si no, ni siquiera lo puse en perspectiva, pero tienes mucha razĂłn.

Boris (08:24.478)

Mm-hmm.

Herbert Anderson (08:28.050)

Sí, le vamos mezclando ahí. ¿Lo de los carros usados cómo hacen ustedes allá?

Boris (08:28.157)

En español, lo hacemos en el podcast en inglés. ¿Dos Venezuela no hablan inglés?

Boris (08:42.557)

Era diferente, el tema de los trades no existían, era más que todo venta de carros nuevos, sobre todo en esa época que yo entré en la industria, que fue en 2008-2009. No existía eso de que alguien tenía un carro usado, déjame te lo recibo a un precio, entonces financias la diferencia, eso no existía, era más que todo aquí está el carro nuevo, lo quieres comprar, anda al banco, vente, este es mi precio, tú ve cómo lo consigues. Cuánto es el downpayment, cómo te entiendes cuál banco, cuántos son tus cuotas,

eso es otra cosa. Entonces eso, el carrusado como tal, yo nunca tuve experiencia en vender carrusado desde que empecé, empecé en un concesionario Toyota en Venezuela y cuando yo llegué a la industria, que fue en ese momento que no había tanto carrusado.

Herbert Anderson (09:36.090)

So just for the listeners who have been following along, we’re talking about some of the similarities and differences between the Venezuelan market and here. And in particular, now we’re talking about used cars. And it’s interesting because Venezuela’s been through an inflation period for so many years and kind of like the situation that we have here is mirroring. So people like us with that experience, we’re kind of used to this shortage, inflation, all those things.

Herbert Anderson (10:06.731)

It’s funny to see the similarities. Yeah. Yeah, it’s funny to see the similarities.

Boris (10:07.317)

Yeah, that’s a day to day. It’s kind of like a day to day scenario over there.

Boris (10:13.377)

For different reasons, for different reasons, but yeah, kind of the same thing. Right now, right now, it’s a similar market.

Herbert Anderson (10:21.550)

For sure. So kind of moving things along here. What do you think about, what are your, what’s your feel about 2023? What do you think? There’s a lot of things happening in the industry. New cars, used cars, Carvana potentially going out of business. Any predictions?

Boris (10:44.739)

That was funny. I was early in a part of the Google console. We were talking earlier. One of my question was what everybody thinks about Carvana. I think Carvana is failing for not the reason the media is putting out. It’s not because the business model is not the right one. I think Carvana is failing because the way they manage the business was the wrong way. They were using too much securities.

Herbert Anderson (11:07.755)

Yeah.

Boris (11:10.557)

things that is not the business. And I kind of, I’m obviously from this industry and I hate to see that model failing because I believe that’s the future. You know, what they were doing, they were doing a lot of right things. I think what will happen with Carbana is somebody’s gonna be ending buying then and kind of use all the technology that they were using to sell these cars. But I feel there’s a lot of uncertainty about 2023.

Boris (11:40.857)

like I obviously listen to a revenue calls from the bigger big expansion in the country and kind of listen to the manufacturers trying to understand what to expect but listen so far is how much change I think we’re gonna keep having issues with the supply on the new cars I see it in Toyota I see a little bit in

Boris (12:11.657)

even though they’re expecting to sell like I think it’s 15 millions this are so far. That’s a lot of cars. We sell 50 million cars. That’s a lot of cars. I think a used car is already being corrected. I see it already like the last quarter of last year was really impacted the used car market because all the cars

Herbert Anderson (12:18.255)

Yeah.

Boris (12:40.617)

number based on demand and supply obviously. Well, daily kind of like 1% every day. That was kind of like a scary scene especially because we’re taking what not anymore but we were taking a lot of deposits on cars that we didn’t have available and then we appraised the car we make the deal we put the numbers together and then what happened the cars arrived two weeks later and now we trying to do the same thing and okay the car drops

Herbert Anderson (12:43.136)

Yeah, drops every week.

Herbert Anderson (12:47.370)

Yeah, well, yeah, that’s true.

Boris (13:11.077)

$3,000. Okay, now we’re whatever we were doing three weeks ago now it’s not possible and that was a really hard conversation that we use that we need to have with the customer because how you explain that it’s not their fault it’s not our fault what you do with that but again it’s coming back to a normal thing a little bit scary all the news about people losing their jobs like all the big companies cutting and cutting and cutting jobs that’s the only thing that

Boris (13:40.577)

the Fed is getting the result of what they were expecting. Inflation is coming down. That’s healthy for everybody. Like we don’t want that stupid and crazy inflation. Again, I think this year is going to be stable. It’s not going to be 2022. It’s not going to be 2021. I think we already passed the best years in the industry in terms of profit. It’s going to be stable. And I

Boris (14:10.617)

things that I don’t like about the Venezuelan business was that it was not predictable. Like you need to be listening to the news every day, you need to be on top of whatever was happening because your business could change in one day. I like better when you plan, you say, okay, this is my plan, this is what the manufacturers is expecting to sell, this is the market that I want to conquest and this is my potential market share, this is how many units in operation I want, like it’s more predictable. I like it better like that.

like coming back to normal. I think every month we are like when is coming back to normal? When is coming back to normal? And it’s finally getting there.

Herbert Anderson (14:48.090)

Yeah, no, for sure. It’s been good, man. It’s been a good ride. We’ve made a lot of money and there’s been a lot of profits in there. But the problem is that I see, there’s two things that I see. On the new car side, I’m concerned because there is inventory for certain manufacturers that isn’t moving as quickly as I thought it was gonna move, right? Because you have a lot of people that supposedly waited. I think Cox Automotive had a statistic out there that was three to 5 million people. I think 5 million is a little bit high, but let’s take the 3 million number.

new car buyers that waited during the pandemic that didn’t pull the trigger and now inventory is available and you’re not seeing those customers come out and buy, right? And they’re not buying and they’re not, and you can’t even, you don’t even have alternatives. Maybe they’re brand loyal and they’re waiting for the Toyota or the Honda that they can’t get their hands on or whatever. But my concern is that we’re going to get into a situation where manufacturers are going to be forced to offer incentives again and if they do that then they will go back to the volume

play. And I think that when the volume play where OEMs are shoving inventory down people’s throats, it just messes up the market for everybody because everything becomes so cheap. And then dealers lose the ability to make profits. Yeah, I mean, they can still make it in the box and all that stuff. But it’s just, you know, on the per unit, you’re going to see those numbers come down and down and down. And that’s concerned me. I was really hoping that COVID would kind of

Herbert Anderson (16:18.050)

maybe correct a little bit the profitability side of the business for franchise dealers in particular. I don’t know.

Boris (16:26.357)

I think so. When the pandemic started, when we started seeing those crazy numbers and profit from everybody, I had different conversations with different people. I like to talk. I like to be aware of what is happening, what people think. It’s one comment that still resonates on my mind. A good friend that is part of the Southeast Toyota group, he mentioned to me, like, listen,

Boris (16:57.037)

The PBR is being 2500, 3200 for decades. Like this is 25, 40 years, 50 years, it’s in the same number. What make you think this is not going to come back to that? I think it’s how you plan that. I’m going to comment two things on what you were saying.

Boris (17:27.938)

And this is funny because this morning I was seeing numbers on customer research. That didn’t drop. That’s still the same. The search and the interest and the interest from customer about buying a potential buying a new car, it’s still the same that last year. That didn’t drop. Drop the amount of people buying cars because I think interest and the mainstream out.

Herbert Anderson (17:34.434)

Hmm.

Herbert Anderson (17:37.492)

It’s hot for sure.

Herbert Anderson (17:47.692)

Mm-hmm.

Boris (17:56.437)

like we’re coming to a recession, we’re coming to this, I think people have more fears now to pay what the normal payment is. And as you know, the payment has been, I think, 14% of the new car payment is over $1,000. And the average is already in 700 on new cars. That’s insane. I think that’s what is slowing down a little bit what we’re seeing in terms of sales.

Herbert Anderson (18:02.356)

Yeah, that’s true.

Herbert Anderson (18:19.750)

Hmm.

Boris (18:26.937)

Also, is the manufacturers and I don’t know is because of the parts. I don’t know if they call me and I don’t know if they don’t have it. But now the cars are the more expensive one, like in a specific twins, we’re getting the expensive ones, not not the regular one. And that is slowing down. That’s what I see in a specific models, especially from Toyota, I see a slowdown, for example, Highlander on the top, the top on the Highlander. I see that in a slow movement.

Herbert Anderson (18:41.334)

Right.

Boris (18:56.357)

now, but everything else is still in high demand. I don’t have one Corolla sitting on the lot right now. I don’t have Inkea one Ford sitting on the lot today. Still running below five day supplies in probably 80% of the models that we have from Toyota and from Kia. And I think it’s probably the same for, it’s probably the same on Chevy.

Boris (19:26.357)

inventory. I can have probably five, six Highlanders today. But I have zero Ratford, I have zero Corollas, I have zero Tundras, I have zero Tacomas 4×4. Like, it still is a potential there. And I still see the profit, not to what it was before, but it’s still healthy. Like healthy. Good.

Herbert Anderson (19:50.510)

hope and that’s my hope I hope it continues but I mean I mean numbers are numbers math doesn’t lie if we get into a situation where incentives need to come back and you know we have inventory sitting on the lot that’s gonna force manufacturers to incentivize these units to move then that’s gonna hit our that’s gonna impact our profitability and I just I rather a situation yeah I rather

Boris (20:13.070)

I see it already.

Herbert Anderson (20:20.350)

inventory and people have to wait because at least you’re gonna make more money per copy on the front end, which is guaranteed money. And then obviously you’re, you know, think about it this way. What, and we, I was having a meeting with it with a dealer group the other day. What has been fluctuating since COVID? PVR or back finance?

Boris (20:27.557)

Thanks for watching!

Boris (20:45.857)

Well, both. I think both increase. I see an increase on finance too. Like before COVID, I think the national average was $1,200. Now I see public companies going to the $2,000. Like that’s a like 40% increase. Yeah, you see steadying in line. Correct. Correct. Through the years. Correct. Yeah, correct. Yeah. Yeah. And it’s and it’s and it’s a term in more, as you say,

Herbert Anderson (20:59.890)

Right. But it’s been steady incline. It’s been like this. DVR has been like this. You know what I mean? So, so that’s my…

Boris (21:15.977)

manufacturing incentive that’s pretty much what it is like the front end the front-end profit is coming more from the manufacturing incentive that like per car like making profit in every transaction you’re right

Herbert Anderson (21:17.934)

Right.

Herbert Anderson (21:27.750)

Yeah. So I, I, I prefer, I prefer this environment. And then it, you know, what I like most about this environment also is the push on used cars, which has always been more profitable for dealers anyway. Well, not always, but you know, maybe the past, I don’t know, seven, 10 years or so. Um, and so I don’t know, man, I just, I just, I just hate that where the industry was before, where in some of these units, you’re, you’re, it’s a 20,

Herbert Anderson (21:57.650)

$400, $500 a copy. It’s like insanity. It’s so cheap. And then the customer, they come in and they ask you for your invoice price. It’s like, no, like, you don’t you don’t go to the grocery store and ask me how much I pay for this bread before I put it out for sale. You know what I’m saying? Like, it just, I hate that. I hate that we that we that the industry got to that place where we were making so little so little profit.

Boris (22:01.878)

Yeah.

Boris (22:24.257)

That’s us. I think we did it to ourselves. The volume game is coming because of us. We are the one putting that on the customer’s mindset. We are the one saying, we’re going to sell the car for invoice. We’re the one doing that. It’s coming back to what is the process you use in the store and how you make the customer feel about it. I see already manufacturers having some kind of incentive. And the main reason is because interest

Herbert Anderson (22:27.350)

Yeah.

Herbert Anderson (22:37.950)

You know what I’m saying?

Boris (22:54.257)

interest rate being so high, like somebody with 800 beacon, now is paying 6% interest rate on a new car. I see a lot of the credit unions getting into growing mode and they’re offering like 3.9%, 4%. And they’re conquesting a lot of the customer and starting manufacturers,

Boris (23:24.357)

from their captive lender. That needs to come from the manufacturer putting some kind of incentive to have a better lease program. I already see some special on leases. I already see some kind of reduction on interest rate based on manufacturer need to show the customer they are still competitive. Like I see again like 2.9%. I think Ford was advertising early this year like 0% again.

for 48 months, I think. Like that’s attractive. Customers, they don’t know where that money’s coming from. They like to see 0% when everything is going to 4 or 5%. Money’s coming from somewhere. They don’t know where, but I see that more and more.

Herbert Anderson (24:05.350)

Sure.

Herbert Anderson (24:08.015)

Ha ha.

Herbert Anderson (24:11.450)

Yeah, no, for sure. And that’s the other thing, that was my other thing that I wanted to mention that I see for this year is the interest rate situation, which to your point, it has, it’s doing what the government wants to do, but it creates consumer confidence issues. Now, that being said, it’s not that bad for our industry. It’s bad because the customers have the perception and it does, they are, I agree with you, the digital activity is still up and people are searching,

They’re looking for inventory. They’re doing the research, all that stuff, but they’re not necessarily transacting. But I think more than this, not more, but what’s worse than the consumer fear is the salesperson fear. And I see a lot of that in the stores that I consult with. It’s like the salespeople are concerned and they’re projecting that onto the customer. And you know, like if you’re buying a hundred plus thousand dollar car, yeah, it matters. But if you’re buying a 40, 32,000 is the average car.

Herbert Anderson (25:11.651)

increase in payment. So I mean it’s not you know what I’m saying?

Boris (25:16.757)

That’s a lot. That’s a lot. $100 in payment is a lot.

Herbert Anderson (25:18.850)

you

Herbert Anderson (25:21.730)

Well, but I mean, if you’re going to go from four to five.

Boris (25:22.838)

Like, it is like…

Boris (25:26.457)

right it’s a lot it’s 25 percent more but again like

Herbert Anderson (25:27.592)

You know?

Boris (25:34.377)

This is the craziest that like we’re talking about an increase on 25% on a payment for 400 to 500. I don’t think people receive a 25% increase in salary. Like the one that are making per hour, everything is expensive now. Rents are expensive, everything. Like it’s getting to a point, like I don’t think people are going to be able to pay for everything like going up. I understand your point and you’re coming from what is healthy for the industry and I agree with you 100%.

Herbert Anderson (25:51.271)

Sure.

Boris (26:04.437)

economic side of that, like that’s a smart way to see it. Um, I don’t think customers are ready yet. And talking about that fear from the salespeople, I think we, we need a shake. Um, I think the last three years were so good. We stole many people that I’m afraid of everybody that got into this industry after COVID, they don’t know what it is. They don’t, they don’t understand that. That’s the same thing happening in Venezuela.

Herbert Anderson (26:31.650)

That’s true.

Boris (26:34.357)

before 2007, 6A, the industry was completely different. You actually need to go and sell the car. In 2007, 8 and 9, you have a waiting list. Like the same thing you have today, like taking deposits on car and all that. I come from that, from Venezuela, that create a lot of laziness. Like I see the salespeople right now, they’re complaining when they’re not able to sell the car over MSRP. And I say like, okay,

Boris (27:04.577)

That’s not because you were doing a better job before, it’s because the market was driving the customer behavior like that. Now you need to get stronger and go back to training, go back to, I’m sure if you’re a console dealer, you see that needs to come back from management again, like, hey, we need to wake up. We need this wake up call. Then we need to go back to what we used to do, more training, create a better process, work on the customer experience.

Boris (27:35.058)

I don’t think dealers are ready for that. I think a lot of people are going to suffer because they’re not ready to come back to what it was before that I think was a great industry. That’s what I love about this industry.

Herbert Anderson (27:44.950)

Mm-hmm. Yeah, you’re hitting on a really good point. And I do see that a lot with the stores I consult with, is all the metrics for success are there, but the one thing, the big miss, is the salesmanship side of it. A lot of the stores, I’m talking about the ones that I’m working with, they hired a bunch of people during COVID, and the majority of that sales staff

Boris (27:46.782)

Thank you.

Herbert Anderson (28:14.950)

prior experience. And so they don’t know what it’s like. And on top of that, they weren’t provided any training during this whole thing, right? And so what happens is we forget, man, we forget that this wasn’t just two weeks. This was two and a half years. And that drives that behavior. It’s ingrained in your day to day. And it’s gonna be very hard to break that cycle, you know, that mindset. So.

Boris (28:32.904)

Mm-hmm.

Boris (28:43.717)

I agree. That’s what I love about that. Because I know it’s going to be hard for a lot of people to come back to normal. I think that will open a lot of opportunity for hungry people to acquire more stores. That’s my plan. Because it’s some people that they don’t sell, they sell the stores because the money that they offer from public companies and all of that.

Herbert Anderson (28:57.990)

Fortune. Yeah, there you go. Yeah, that’s the other.

Boris (29:13.717)

was making so much money that the numbers were so ridiculous. Like, okay, now we’re getting like 20 time earnings from dealers that used to be three, four. I think that’s gonna come back because when these people that they were ready for retire, that they make $10 million last year, when they start seeing everything coming back to what it was and struggling with that, I said like, no, fuck no, I’m going out of that. I think that’s when the opportunity is gonna be. Yeah,

Herbert Anderson (29:39.370)

Yeah. Ha ha ha.

Boris (29:43.837)

to come back for people that are hungry to grow. But yes, I agree with you. That would be interesting to see in the industry. That was funny. I was in meetings like when all this last year and I saw dealers like, oh, we’re doing a great job. So like…

Herbert Anderson (29:48.150)

for sure.

Herbert Anderson (30:00.510)

I know, really?

Boris (30:04.238)

Yeah, it’s like, it’s a market. So I know, you know, we are doing this. I feel like, okay, no.

Herbert Anderson (30:12.090)

Yeah, if you didn’t set records, man, like dude, like that’s how bad your, your store and process must’ve been. You know what I mean? If you didn’t like, if the, if the past couple of years weren’t great years for you guys, so, um, the other thing just, yeah, just to move things along, I, um, I wanted to talk about the acquisition side and get your take on that because that’s one that’s been prevalent for me the past, it’s been particular the past couple of weeks.

Boris (30:27.241)

That will be interesting.

Herbert Anderson (30:42.690)

A lot of decision makers are talking about, it’s very difficult for them to acquire inventory. Like people were trying, they’re still trying to buy their car, but they’re like 10, $15,000 back of what that car actually is worth. And the customer seems to always be on the last tail end of that. Like they’re always, you know, they’re still on the mindset that their used car is worth a bunch of money. And the reality is that the market’s, like you said, it’s auto correcting.

What’s your take on that? Any strategies that you can share? What’s your perspective on the acquisition side?

Boris (31:18.877)

I think the next four years are going to be interesting because obviously the reduce on the new car side we were selling 13 million last year and I think was 12 into 2021. The number that I see more is was not as much fleet like

Herbert Anderson (31:47.657)

Hmm.

Boris (31:48.417)

companies didn’t have many cars like usually the market for them they buy between one to two million cars a year and that’s a lot of that is what is coming back fresh for the used car side. In this particular case it’s not gonna be like that in the next two three years that’s gonna affect the used car. Answering your question about acquisition that’s a lot to do with that but I don’t have problems acquiring cars. I’ll share with you two

Herbert Anderson (31:49.771)

Yeah.

Boris (32:20.078)

My perfect scenario is getting as many trades as possible, but also my used car inventory is being built based on what the market wants. If I know my markets want certain type of pickups, like doesn’t matter if it’s not Toyota, it’s not Kia, they’re looking for F-150. That’s a hot car here in my market.

Boris (32:48.257)

three F-150s on my inventory to drive attention. Like that customer could be ending selling, buying other cars, but I need to have what they’re looking for. And that’s my point of conversation. Like for me, the healthy way to have inventory is get as many trades as possible and build my inventory based on customer needs. That’s not been easy lately because a lot of that

Boris (33:18.277)

You’re trying to go and acquire those inventories from customers that does the best way, or you get that supply from the auction that is being crazy lately. My, the last year and a half, my biggest strategy to have inventory is getting from trade. I’m really aggressive going against inventory from customer. I rather pay sometimes a little bit more for that customer car.

Herbert Anderson (33:27.057)

Right.

Boris (33:48.357)

being a little bit more aggressive there and trying to get that from the customer than trying to go and buy used cars outside either auctions or any other form of wholesale or whatever. For me, the secret lately is me buying from the customer. If I need to put a little bit more to make sure I acquire that inventory, I do it. Sometimes I buy cars even if the

doesn’t buy the car from me. I’m really aggressive against that. Again, I use CarMax as a bench for me, but sometimes I’m ending up putting a little bit more on CarMax. But yeah, for me, acquisition is from customers.

Herbert Anderson (34:21.913)

Yeah.

Herbert Anderson (34:37.710)

Yeah, no, for sure. And it has to be, it’s just harder right now because with the shortage of new cars, trades are become more, you know, it’s a lot more difficult to do that. And then we have to step up. And like I said, like a lot of these customers, their expectation is their cars worth way more than it actually is. And they’re still in those COVID. They still have COVID numbers. And, um, yeah, man, it’s, it’s, it’s becoming more of a challenge for a lot of dealers. But I agree with you. Like it.

Boris (35:05.357)

Well, I think like I like to use. You’re right. You know, the customer has a bigger expectation. Like sometimes that’s not what the car is worth. But this is the same business we were three years ago. How do you explain that to customer? Like you use the same tools like, hey, this is what is karma is car max is offering. You’re not use car max because I think they’re the perfect

Herbert Anderson (35:23.534)

Right.

Boris (35:36.918)

for customers. They trust the brand. They trust CarMax. When you see CarMax is giving you this, they believe in that more than when any dealer says, I’m gonna give you this. I say, I’m gonna match whatever CarMax. I’m even gonna put more than what CarMax is offering you. But even though you think it’s like, oh yeah, but five months ago, I get 3,000 more than what you’re offering me now.

Herbert Anderson (35:40.092)

Right.

Herbert Anderson (36:01.950)

Alright.

Boris (36:08.339)

is going back to what we were talking like I’m sure if every dealer go back to how many cars you actually lose because you didn’t offer enough to the customer they’re going to find 25 more cars every month and I can assure you that

Herbert Anderson (36:23.495)

Thank you. Yes.

Herbert Anderson (36:26.950)

Right. Or the worst, right? They’ll go in the biome at the auction for more money and you gotta wait for that car to arrive and all this stuff and you could have just had it there. You know what I mean? Just paid a little bit more then. That’s it.

Boris (36:40.457)

Yeah, if you go and audit any of the tools you were using for acquiring inventory, you will be surprised. Like sometimes you are willing to pay more in an auction than what you offer to a customer that was yesterday in your showroom. And that’s insane. That’s insane.

Herbert Anderson (36:54.350)

Right. But that’s our, that’s, what’s it called? That’s psychology, that’s human psychology. Like we’re trying to get that trade for, we’re just trying to rip it as much as we can so we can make more money on it when we sell it. But when we have the customer in front of us, we have that perception, but when we’re at the auction, we don’t have that perception. So our guard isn’t, our mind isn’t in that state and our guard is down. And so we’re willing to do it. It’s the same thing, like investing

Boris (37:03.757)

you

Herbert Anderson (37:24.570)

When there’s a market crash, everybody wants to pull their money out and that’s when they should be putting more money in. You know what I mean? So it’s just, sometimes our own psychology works against us.

Boris (37:32.618)

I agree.

Boris (37:35.557)

That’s the reason like for me, not from this, from COVID on you, I really forced the managers and the used car managers to have a meeting twice a week, because they need to know what is happening in the market. They need to know, like for example, yesterday we were, not yesterday, like a few days ago, we were appraising Chevy’s 2019 with 40,000 miles.

When you see the tool, they know you need to buy this car for $26,000. And to make the deal possible, we need $28,000. And I was watching what the manager was doing and they say, we cannot give them $28,000 because if not, we’re going to be underwater. And I get the manager to get outside the desk for a little bit. Think about it.

Boris (38:35.617)

in this, you know, when you see the car, the prestige, the car, how many do you have today sitting in your lot for less than $32,000?

Boris (38:46.897)

None. Why you’re not putting the 28? Why are you doubting to put 28 today if you don’t have nothing there? And how many customers you see that came this week wanting to have a car that if you have something between 30 to 33 thousand dollars, that’s the perfect car for that customer. You see it last week and then you was there and then you’re hesitating to put two thousand dollars more in this car to make the deal possible and make five thousand dollars in the car you’re selling.

Herbert Anderson (38:47.570)

None, zero probably.

Herbert Anderson (39:14.437)

Yes.

Boris (39:17.517)

But yeah, sometimes we need to get outside, see what it is, and that was the reason I forced him to talk. We need to have a meeting every week, and we have two actually. We have a meeting Tuesday and Fridays to see what has happened, how many cars were praised, what we lose, go back to this, what are we seeing on the auction, let’s see what it is, or how many customers. The same way we evaluate parts. When we have a loss sale, how many loss sales do we have every day on the car?

on the showroom because we didn’t have the right car. Who go back and go to that? Like they need to go back and say if I had a car like this and this and this and create their shopping list, that’s what we do. And then we every week say this is what we’re looking for. Okay, everybody needs to be on the same page. But that’s, I don’t know if that answer your question about acquisition, but that was…

Herbert Anderson (39:50.938)

Right.

Herbert Anderson (40:10.270)

No, no, it absolutely does, but it’s just crazy to me. Sometimes I see these things and I’m like, dude, I wonder if they really realize what they’re doing. And I know it’s not intentional. It’s just, again, it’s just the way that the human mind works sometimes. It works against you if you’re not paying attention. So.

Boris (40:32.579)

Well, I think that’s the reason you need to make sure everybody’s on the same page.

Herbert Anderson (40:36.910)

For sure. Yeah. So I wanna go back to Carvana here really quick and get your take. I know we talked about the whole bankruptcy thing and all that, but what is your take on it? Let’s say that we wake up tomorrow and there’s news that Carvana went bankrupt. What are your thoughts? How could that potentially impact the business? Would it be positive? Would it be negative? A little bit of both. What are your thoughts? Like what can dealers do if that were to happen? And what could we expect?

Herbert Anderson (41:07.397)

Or what would you do?

Boris (41:09.297)

To be honest, I think we’ll have zero impact on dealer operation. My concern is because I’m really, I love to innovate on what we’re doing. It’s not much to innovate, but I like to be always ahead of the curve. I really love what Carvana was doing. I really love the focus they have to show the customer that transparency about the car, my car has a den,

Boris (41:37.897)

they were using for the for to show use cars and kind of the model that we’re using even though they were against dealer and the biggest promotion they use is don’t go and buy from a dealer because they are yeah their teeth or whatever beside that I like what they were doing and I think if they fail this will create the wrong perception from dealers and they will some people

Boris (42:08.257)

they will think the customer don’t want that. And it’s not true. I think all the customer wants the transparency. I think we all needs to be better on that. But I think Carvana, if they fail, I think somebody will buy it because some big group is gonna buy their technology because I think it’s great. And if, you know, AutoNation, Group One, some of them they’re gonna buy it

Herbert Anderson (42:34.211)

Lethia.

Boris (42:37.857)

going to replicate that and they’re going to use whatever technology they were using for everything. I think that was really in terms of marketing, having those powers pretty much all over US. That was brilliant. I think that was brilliant. Somebody up.

Herbert Anderson (42:54.450)

Can you imagine if, yeah, can you imagine if AutoNation or Lithia buys that? Like the advertising alone of those things, it’s huge.

Boris (43:02.617)

Yeah, I think it’s getting to a point like they will be able to acquire them. I think we’ll be smart. Whatever they can use from them, that will be smart. But again, I don’t think the impact was already there. It’s not enough used cars to create an impact. CarMax is really strong. And that was a better comparison than Carbana because it really created a brand.

Boris (43:33.117)

that would create an impact on the industry. That would create an impact on dealers. But Carvana, they were not as solid to really create an impact on the market because they were not, yeah, they were, yeah, they were not a player. But again, what they were doing is an eye-opening for,

Herbert Anderson (43:47.210)

Yeah, they were only 10% of the business or something. Yeah, it’s a good point.

Boris (44:02.977)

manufacturers like in the future I’m not sure you will need as many dealer bodies as is today because you can serve customer from you know where they are know where you want them to come and I think that’s a good the good thing and the good learning about Carvana I think they put that on the market and they put that on the dealer mindset and I think that’s you know again there were

Boris (44:32.597)

hate for them to fail because I think they were competitive. I think it will create zero impact.

Herbert Anderson (44:45.050)

Cool. Yeah, I mean, my only take on that would be that inventory might be cheaper to acquire. So if you’re leaner right now, you may be able to buy some units at some cheaper prices. But dude, they just dumped $4 billion in debt yesterday. I think they’re gonna fight this thing all the way down to the end. So it’ll be…

Boris (45:10.817)

They should. I think they should. The business was not wrong. I think they will play the Wall Street game, creating the securities and the notes they have that really because of whatever happened with inflation and the interest went up, that worked in reverse for what they were

Boris (45:40.777)

every revenue call. But when you see how many cars are there selling, they’re actually selling more and they’re making money and they’re spending on the business, on the business, only business. They’re more efficient than us. They’re more efficient than dealers because they’re using less people to actually transact with the customer. If you isolate that and don’t see

Herbert Anderson (46:03.450)

to get it done, yeah.

Boris (46:10.897)

Peter Spence on technology, they’re profitable. They make money. It’s a business there. I think they should fight. They should fight. But I believe somebody’s going to come and buy. The same way I think somebody’s going to come and buy Peloton. The same way. I think those really strong companies now is not worth much, but I think somebody’s going to buy. The same thing. I think somebody’s going to come and buy Corvand.

Herbert Anderson (46:21.551)

Yeah, that makes or they’re gonna file.

Herbert Anderson (46:39.450)

Sí. ¡Ahora sí! ¡Muy bien, amigo! Gracias por hacer esto. Muchas gracias, hermano. Es un placer conocerte y conectarme por aquí contigo. Gracias por compartir con nosotros tus opiniones. Yo vivo en Las Vegas. Así que sí, tengo. Llegué a Michigan cuando me vine, cuando ganó Chávez. Me vine inmediatamente, fui a Michigan.

Boris (46:47.157)

No, un placer, un placer igual. Vamos a la orden.

Boris (46:53.557)

¿Dónde estás en California?

Boris (46:58.457)

a Las Vegas. NADA.

Boris (47:06.430)

Ooh.

Herbert Anderson (47:11.450)

Tengo tiempo aquí. Sí. Y tienes familia allá tú todavía, me imagino.

Boris (47:11.957)

Bien, buena decisiĂłn, buen timing. Buen timing. SĂ­.

Boris (47:21.957)

No me queda tanta, me quedan algunos tíos, no mucho, en verdad quedan como 5 más o menos, de toda mi familia, la mayoría está Argentina, aquí en Estados Unidos, Chile, Colombia, pero muy pocos, muy pocos en Venezuela. De hecho yo tengo 14 años que no hoy, así que ya ni me acuerdo mucho.

Herbert Anderson (47:43.351)

Oh wow, see.

Herbert Anderson (47:47.850)

2010 fue la Ăşltima vez que fui yo. Wow, cĂłmo pasa el tiempo. Pero en Navidad, las Navidades son las que me afectan a mĂ­ lo máximo. Eso sĂ­, siempre. Pero sĂ­, tengo toda mi familia esta año todavĂ­a. Yo… Mi novia es de Paraguay.

Boris (47:52.157)

Yo también, 2010. No, 2009 fue la última que fui.

Boris (47:58.257)

Pero sĂ­, bueno, igual sĂ­, volando.

Boris (48:07.457)

Tienes mucha familia.

Herbert Anderson (48:17.850)

ella y es bien similar. El es de un pueblito chiquito como yo también y tiene la misma vibra, me entienden?

Boris (48:18.239)

Hmm.

Boris (48:27.357)

buenĂ­simo. Pero bueno, estamos a la orden, igual lo que quieras. Gracias por la invitaciĂłn. Es siempre bueno hablar de la industria y compartir opiniones.

Herbert Anderson (48:29.971)

See?

Herbert Anderson (48:34.890)

Yes, of course. Exactly. There is one question though that we ask everybody and that question is where do you see the automotive industry headed in the next five years and why?

Boris (48:50.859)

I see the industry changing because they need to. I think we need to have a more transparent business and I see that moving that way. I see that coming.

Herbert Anderson (49:07.690) Right on. There you have it everybody. Boris, thank you so much for tuning in. Thanks for joining us. And that’s all the time that we have for today. And as usual, we’ll talk later