Jim Fitzpatrick: Hi everyone. Jim Fitzpatrick on another edition of CBT News. Thanks so much for joining us today. We’re so happy to have back in the studio, Mr. Hugh Hathcock. I know that you know this face and this gentleman. He is the, now the new proud owner of ReconVelocity and also the founder of ReconVelocity, lighting the world on fire. And today he’s brought with him one of his dealer clients with him, Mr. Chris Slaydon, who’s with Vernon Auto Group who is also on fire in Texas. Man, you’re knocking the cover off the ball right?
Chris Slaydon: I appreciate it. Yes, we are.
Jim Fitzpatrick: Yeah. Welcome into CBT News. Kind of give us an update since you’ve been in last. I know you’ve been just criss-crossing the country and dealers have been, “Hey, tell me more.” This is a phenomenal program, so…
Hugh Hathcock: We’ve been very busy talking to a lot of dealers since we were here last. We’ve had driving sales, digital dealer and meeting with a lot of big groups and the response has been great.
Jim Fitzpatrick: Yeah, I bet. I bet. Well, the program is great. I mean, in-
Hugh Hathcock: It’s something all the dealers need.
Jim Fitzpatrick: There is no question about it. And I think we were talking before the cameras started rolling, it’s one of those deals that a dealer doesn’t even sometimes know they need it. Right? And that’s what we want to talk to you about. That’s that’s how we found you, right?
Chris Slaydon: Absolutely. Absolutely. It was one of those things that we thought we were doing well when we were doing these programs because we had spreadsheets and we had all this. We’re trying to figure out all this good stuff, how to do it. And we were looking at like, “Hey we’re doing good. We’re doing about five or six days.” But we were really just kind of measuring how much time it’s taking to actually fix a vehicle, not to do the detailing and the pictures and to get it actually frontline ready. And so Hugh came along with ReconVelocity and we got in there and he brought his team in there and we started training and get all the techs involved, get over all the users involved. And next thing you know, when we started to kind of shine that spotlight into actually the process, we’re like, “It was 12 or 13 days.” And it’s like, “Wow. What are we missing here?” So there was just completely disconnect from what we were… we were really tracking this stuff. I mean, we’ve got Google spreadsheets, we’re doing it, we’re having meetings daily about this.
Jim Fitzpatrick: But you were probably telling Hugh, “We don’t need you. We’re on this already.”
Chris Slaydon: Honestly, at the beginning it was that way. It was like, “Hey, okay, you’ve got a product. Hey, we’re doing good. We’ve got five or six days, I’m doing spreadsheets.”
Jim Fitzpatrick: Yeah. We can show you a thing or two.
Chris Slaydon: Why do we need to do this? And so, Hugh, with just everything they were about and how they’ve come around with [inaudible 00:02:22], it really sold me on getting people out and training our people because there’s always, you can always do better training your people and that’s something that we lack in the industry. So we started looking at this and it was just like, wow. It was a very big eye opener. So listening to his recon experts, working with his performance managers, we finally took that real 11, 12, 13 days that we first started with. And in about 90 days we cut it down to about seven, six-ish. And then now we run about three or four days.
Jim Fitzpatrick: Oh my gosh. That’s an incredible decrease in time. And reconning your store, for the people that are watching right now that aren’t as familiar with your store, it’s an incredible story. Tell me a little bit about the city and what kind of volume you’re doing.
Chris Slaydon: Well, we’re in the little town of Vernon, Texas, about 8,000 or 9,000 people. When I first moved there, I saw my first tumbleweed. So that just tells you how small it is.
Jim Fitzpatrick: Not your last either.
Chris Slaydon: Not my last either. And so that store started off just selling 18, 30 vehicles and it’s just a small town store, real good and-
Jim Fitzpatrick: It’s a country store.
Chris Slaydon: Country store. Very nice. Got a great population of town, great community. But we realized we wanted to do more and so we just kind of got on the internet back in 2010 and gradually started pushing it and pushing it and pushing it and to these days where we’re pumping 400 vehicles out of this little small town.
Jim Fitzpatrick: 400 vehicles. That’s incredible. Most stores out there that are in a metro aren’t doing 400 vehicles.
Chris Slaydon: That’s right. And it’s pretty insane considering we’ve got, our average customer comes about 350 miles out. So we’re, we’ve got fleets of drivers that are just dispatching all the time.
Jim Fitzpatrick: That is incredible. Wow.
Chris Slaydon: And if you walk into the show room, we don’t really have a showroom because people don’t walk in and buy vehicles in Vernon. And so instead it looks like this big war room command and control center with [inaudible 00:04:05]. It’s more like a boiler room and people are just doing it. So it’s pretty interesting.
Jim Fitzpatrick: Well, if you think about it, look at the job that a company like Carvana is doing, which, you take a page out of their book and say we don’t know what a Carvana showroom looks like either. Although they sold 176,000 vehicles last year, right? So it can be done and you’re doing it, which is kudos to you, which puts even more of an emphasis on the recon because in a turn like that you’re bringing vehic… where do you get your vehicles from? Auctions and such, trade-ins?
Chris Slaydon: Actually we’re doing a lot of trade-ins just because of the volume we do.
Jim Fitzpatrick: Okay. Yeah, I would imagine. But it’s imperative in a dealership like that and that size that that’s efficient as hell. 13 days isn’t going to cut it. And if you’re bringing that down to three, four days, that’s incredible.
Chris Slaydon: Yeah. It’s really important because the two biggest values that you have in your dealership are people and processes. The problem with those is those are the two hardest things to manage.
Jim Fitzpatrick: That’s right.
Chris Slaydon: And so really the technology is kind of the glue that binds all those together. And so when you do that, it kind of shines the light. It allows you to perform better. But the technology is the technology. What really was important because, again, we were using Google docs and some other things and we had what we thought were really good people and really good processes and some technology that’s cloud-based, but when we put in the new technology with ReconVelocity, but then lay it on top of that, the recon experts and the performance managers that come in afterwards, that’s what really separated it.
Chris Slaydon: In fact, I looked at other recon products before and they’re, it’s a very small market right now because this is kind of a new thing for dealers to kind of witness. When we started looking at it, there was no support. It was basically, “Hey, let’s do a WebEx, let’s get people on or we’ll do it.” It’s like we’re managing people and processes. We can’t do that over a WebEx or I wouldn’t have called you.
Jim Fitzpatrick: Right, right. Good point. Good point.
Hugh Hathcock: But our leading competitor trains everything WebEx, sells everything WebEx. They’re, it’s very difficult to get buy-in when you do an hour or two WebEx conference to train it.
Jim Fitzpatrick: Yeah, your approach and strategy has been boots on the ground. It even was with [inaudible 00:06:04].
Hugh Hathcock: That’s… we just modeled that.
Jim Fitzpatrick: That’s what separated you from the CRM companies out there. Right? Because you had other competitors in CRM, although you kind of went right to the top and I know that your philosophy was just that, boots on the ground, it builds better buy-in, it builds a better understanding and a better flow at the end. Right? So, and so talk to me a minute, Hugh, about is this, is Chris’ story commonplace that people that you walk into, or dealers that you walk into go, “Yeah, I don’t have as much of a recon. Well, what are you talking about?” And then they go, “Oh my gosh, this is incredible. Why is the car in recon for 13 days? I started paying on it on day one. The customers are looking at this thing on the internet, we’ve got got to sell it.”
Hugh Hathcock: Yeah. Most dealers don’t, aren’t aware of exactly how many days they’re in recon because they’re thinking… we just set up a large group in Texas in Dallas and they were just measuring days in mechanical and that three to four days, that’s what they thought.
Hugh Hathcock: Not detail, not inspection, not pictures. So we have to create the urgency and show them how this works and where all this fits and how easy it is to use and how it’s a process communication tool. And it’s… he’s different because he’s a technology-based dealer. He really understands technology. You can tell that by his sales model.
Jim Fitzpatrick: Okay. So he gets it. Yeah. There’s no question.
Hugh Hathcock: It’s more difficult with a traditional dealer that is relying on his used car manager, fix ups, and they’re just communicating to the GM, “Hey, we were doing this in six days. We got it. We like our seven year old spreadsheet system.” It’s more difficult with the average dealer because they have, you have to go in and really sit down and ask the questions. How do you monitor this? How do you keep up with these days? How do these people communicate?
Jim Fitzpatrick: And it frustrates the heck out of the sales department when they’ve got a customer for that vehicle and it’s still in recon. And then the customer calls back two days later and it’s still in recon. And the customer calls back and it’s… right? I mean…
Chris Slaydon: Well, that’s frustrating. But I think a more frustrating point is that you’re trying to sell a vehicle and you have no idea where it’s at.
Jim Fitzpatrick: Yeah, that’s crazy.
Chris Slaydon: And so you can think about an operation that might be selling 200, 300 vehicles, especially if it has multiple brands or multiple locations. We’re trying, as dealers, we’re trying to flip these vehicles as fast as we can get gross and turn at the same time. And so of course you’re going to have, you’re going to online display that vehicle as fast as possible and it’s going through the recon process. But you might have a salesperson who has a hot lead and got a deposit on a vehicle and wants to sell it right now. But then they go spend two or three hours looking for the vehicle. And that’s commonplace every time.
Jim Fitzpatrick: Oh, I know. I’ve been there. I’ve been there as a salesperson, as a manager, as a GM, as a dealer. There’s nothing more frustrating than having a customer on a car that’s ready to do business on it and you can’t find the damn thing and you know it’s on your inventory run and it hasn’t sold yet.
Chris Slaydon: It’s crazy because we know that time is the only thing we can’t get back. Right? And so when we’re looking at a salesperson’s time, just to be able to go find a vehicle to go on a test drive and you may be short that day because most dealerships are short on salespeople in the first place. It’s like they’re, you’re searching out stuff. It’s a needle in a needle stack.
Jim Fitzpatrick: Yeah. Yeah. A needle in a needle stack. So bottom line is that you took a look at the recon, you made the changes, you’re up and running now, you’re on the program and it saves you time and it puts a whole lot of money, I would imagine, in the bottom line because of the, just servicing the customer better, higher gross profits, less on interest rate, right, that you’re paying on that car, if in the event your flooring your used cars, which many dealers are, right. I mean, it’s a win all the way around.
Chris Slaydon: Absolutely. I mean, and most dealers don’t sit there and they don’t judge that and juggle that. We realized a long time ago that there’s a front end gross profit component, but there’s also a hidden cost component when we’re looking at foreign holding cost and depreciation cost. If we can just get better, if you’ve got a 200 vehicle inventory and you just get better one or two days, just one or two days, you can put half a million dollars in total cost and profit savings on there. And so you can imagine what it’s done for my gross profit at my store when we were able to go from a true accurate 11 to 13 days down to four days. I mean, it’s really insane because when we look at just a holding cost and depreciation figure, we’re talking about $80 to $90 per day per vehicle when you add those two together. So when you have those, inventory of 200 vehicles and now you’re flipping them an extra three or four times a year, it’s magic.
Jim Fitzpatrick: That’s right. And every dollar today in a dealership matters and…
Chris Slaydon: It’s hard. It’s hard today. I mean, compressing margin. So we’ve got to go save. And that’s why Hugh got into this, and I loved when we started talking about this because Hugh’s been around the dealer business so long talking to GMs and owners and he really knows what our problems have been. And so talking about how we are trying to struggle for every dollar we can get because it’s just more and more expensive to do business these days. The margins are compressing.
Jim Fitzpatrick: Oh, there’s no question about it. Yeah.
Chris Slaydon: It’s just, everything is hard, costs are up, grosses are down. So when he went and kind of had this idea of going to look in this part of the world and just doing the math on it, going this makes sense that we go into this ReconVelocity world and get vehicles retail ready a little bit faster, it can really-
Jim Fitzpatrick: What advice would you have for dealers that are listening right now that are kind of on the fence going, “I don’t know if I need this? Do I? Do I not? I’m listening to this guy doing huge volume.” What advice would you have for them?
Chris Slaydon: You have a problem. You just don’t know about it.
Jim Fitzpatrick: That’s exactly right. That’s what I’m hearing.
Chris Slaydon: You have a problem, you just don’t know about it. And I don’t care how good you think you are. If you’re not tracking the vehicle from the moment of acquisition to the moment of sale and everything in between, then you’re lying to yourself and it’s costing you money. If, this is one of those things that in this business, we all have huge egos. It’s the car business, it happens. And so we get it, we get real easy to pat ourselves on the back because we think we’re doing a good job. You’re not doing as good of job as you think you are because at the end of the day, none of it matters except the money in your pocket. So why wouldn’t you take advantage of something that can really help you put money in your pocket?
Jim Fitzpatrick: Amen to that. Amen to that. Chris Slaydon with Vernon Auto Group and Hugh Hathcock, man, you’re the man of the hour.
Hugh Hathcock: Thank you.
Jim Fitzpatrick: ReconVelocity. For dealers that are watching, you’re a click away. It’s reconvelocity.com. If you don’t go to that website and check this out, you probably have a screw loose. Sorry about that. This sounds too easy. So gentlemen, thank you so much for coming in. Appreciate it.
Hugh Hathcock: Thank you.
Chris Slaydon: Thank you.
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