On today’s show, we welcome Brian Benstock Partner GM and VP at Paragon Honda. Brian is here to give us a dealer’s perspective on the first quarter sales results and trends in the industry.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: So here we are in the early part of April, and dealers are kinda shaking off the first quarter, and certainly March, talk to us about the way dealers should view the first quarter in the retail auto sector.
Brian Benstock: Fantastic. I think the news is great, don’t believe the hype. I think the economy’s awesome, and when you agree with what you think about is where you end up going. If you think everything’s gonna be bad you end up moving in that direction. I certainly think that your attitude reflects in your outcome.
And for us, we think that the economy’s great, we think that the stock market is at a very high point and continues to grow. I don’t know that it grows forever, but for right now it’s great. Unemployment is below 4%, that’s incredibly low unemployment. We have a record right now going 12 years of economic growth in the country, relative in peaceful times.
Jim Fitzpatrick: So what do you say to the dealer that’s listening to us right now, that says, “Well, I hear what you’re saying Brian, but car sales were down the last couple of months, is this a trend we’re gonna see in 2019?” It’s a little concerning.
Brian Benstock: Some people see the bad, and some people see the good, and I’m on the latter side, I tend to look at the good. I think that there are almost 17 million people that bought a new car last year, historically that’s super high. And there may have been a pullback in the very peak, but we can maintain a very solid level for a number of years. And if there is, in fact, a pullback, that can be used as an opportunity for the dealer to tighten the reins, get their expense control in order. So, I see whatever happens as an opportunity to make some positive changes in your store, at least that’s how we see it.
Jim Fitzpatrick: What are the things that you will focus on for this month, and the second quarter to really knock the cover off the ball? I mean obviously the economic indicators that you just pointed to are alive and well, the economy, and interest rates, and gas prices have stabilized, and what have you. So, it sounds like the field is set for just a perfect match, right?
Brian Benstock: Yeah, I think we need to have an eye on the future, and our feet firmly planted in today. I don’t think that this great economic set of conditions that we have can last forever, but that does not mean panic in advance. I think, make sure your inventory levels are where they need to be, not excessively high, but in control. Right now at the Honda store, we’re running a 38 day supply of cars on new car side, a 26 day supply on used car side. You really wanna keep an eye on that. I don’t think there’ll be a problem getting cars, although our Honda dealership has run into some shortages there.
I think you can get faked out by some of the news and stuff pulling back, and manifest your investing. If you’re gonna manifest investment, manifest one that’s in your intelligent self-interest, meaning that you’re gonna do good at business. And what you look for, and what you see tends to be what you get. And I think if you look for the good that’s in the economy, to look for the opportunities, you’ll find that there are plenty of them still out there.
Jim Fitzpatrick: Yeah, for sure. Let’s switch gears a little bit and talk about the recruitment of salespeople. Many now that it’s springtime, and as you just said, the business is definitely out there, I think a lot of dealers do come alive in April, May, June, July, and so on, because in large part because of the weather. There’s a lot more people on the lots these days, right? Having said that, how do you get good people to apply for these sales jobs that we have offered in the retail automotive industry? It just seems every dealer we talk to says, “I need more people, I need more people, I gotta get more people.”
Brian Benstock: If we’re talking about hiring for the spring, I’m sorry to say you’re too late, spring is already here. And I don’t wanna start my big process now, and hiring now, because by the time you get them up and running, it’s at least 90 days to get somebody really to be qualified to sell on our showroom floor today. So, that for us starts in January, February. I mean fine, January, February the economy is a little bit slower, so it’s easier to hire people. People are looking for work, and we can spend the time to train them, and believe it or not, those are the best times to train the salesperson, when it is a little bit slower.
That they’re learning not just to be order takers, but they’re learning how to prospect, they’re learning how to create a customer, learning where to look for a customer, how to hunt for a customer. We’re not farmers, right? We’re hunters, we gotta go out and get the food. And when the showroom traffic is really busy and you hire a salesperson, sometimes they don’t learn the fundamentals of how to hunt.
Jim Fitzpatrick: Looking down the road five years, if you had a crystal ball, what would say that the digital component looks like with regard to digital deliveries in the auto industry? Is it 50% of car sales, is it 90, is it 20?
Brian Benstock: Well, I don’t think it’s 50% quite yet. Five years out is really tough to project and predict. So many things are gonna happen. It’s easier to predict what’s happening now. I think we got it at one percent of our sales are online. That number is going to continue to accelerate, and double. I think we’re still three to five years out, still under 20%.
I think what you’re gonna see are hopefully franchise laws changing to allow dealers to have boutique showrooms in their own ASA, that enables you to better serve customers without the onerous expense of putting up a massive $70 million facility. And I do think that there will always be a need for a place where I can go see, touch, and feel the car that I’m buying beforehand. But also make it easy for customers, if they wanna see, touch, and drive the car, well we can bring it right to them, and we can do that right now.
Jim Fitzpatrick: Is the tariffs a concern? And the threat of Trump closing the border, and preventing auto parts to come in, and what have you. Do you think about that at all, or are you just so positive [crosstalk 00:06:27] that has nothing to do with me.
Brian Benstock: I think about it, but it’s a head fake. And I could spend all my time looking at what’s going on at the Mexican border, what’s happen in China, I can’t control a darn thing. I want to believe that the person that’s in charge, in this case it’s President Trump, I want to believe that he has America, and America’s best interest in mind. That being said, he’s a man like any other man, he’s gonna make some mistakes. President Obama was president, I believed the same thing, I think he tried his very best to do what was best for America.
And so I do think as a professional negotiator, Mr. Trump is playing hardball. And listen, it worked with NAFTA and Mexico, it worked with Canada. I mean, within a couple of days of signing agreement with Mexico, Canada signed on to an agreement immediately. And so I thought that was pretty shrewd negotiating on his part, and I believe he’s probably negotiating with some of our other countries, like China, and like Mexico, to get a better deal for America. And so I’m gonna support him in those efforts, because it’s in my intelligent self-interest to do so.
Jim Fitzpatrick: Brian Benstock, I wanna thank you so much. It’s always enjoyable to have you on our show, we get such great feedback from our subscribers and our viewers when you’re on the show, so hopefully we can have you back soon, and talk about more of these issues, and others that pop up.
Brian Benstock: Jim, it’s gonna be a good year. So it’s springtime, let’s get out there and start running, be optimistic. Get the advertising dollars spent, get some incentives for your salespeople out there, we’re gonna have a great 2019.
Jim Fitzpatrick: I agree.
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