The Dealer Playbook
The Dealer Playbook

Episode 515 · 3 months ago

Preparation Eliminates Fear

ABOUT THIS EPISODE

In this episode of the Dealer Playbook, Michael shares his thoughts about the next season of the retail automotive industry. The last two years have been unique. Dealers have been earning recording profits despite a chip shortage and inventory shortage. That begs to ask: what's next?

What will the next two years bring, especially as the reality of a recession looms? With reports that used car sales are beginning to soften and that consumers are slowing down their purchase decisions, are we headed for the survival of the fittest?

Michael encourages the industry to take inventory and assess what's within its control. The time to prepare for the next round of unforeseen circumstances is right now. Preparation mitigates fear.

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The car business is rapidly changing and modern car dealers are meeting the demand. I'm Michael Cirillo and together we're going to explore what it takes to create a thriving dealership and life in the retail automotive industry. Join me each week for inspiring conversations with subject matter experts that are designed to help you grow. This is the dealer playbook. Hey Gang, welcome to this episode of the dealer playbook podcast. I am so excited that you are here. I want to dig into Um something that I've been thinking a lot about lately, especially as we head into a little bit more uncertainty in the market. We're seeing the used car market starting to to tame, to soften a little bit. We're seeing, obviously, inflation out on all time high. We're seeing, you know, government's not willing to yet admit that we are in a recession, and I want to kind of poke and prod, if you will, a couple of those things and certainly some of the thoughts that have been on my mind as it pertains to being business people and moving into uncertain times. In Twenty nineteen, I um offered a keynote presentation at used car week in Toronto and the title of that presentation was basically like how to deal with disruption, Um. But it was a tale of a choose your own adventure and I know for those o g listeners of the PODCAST, you've heard about my meanderings in and out of those choose your adventure books. I don't know if you remember those, those choose your adventure books in in elementary school, where you basically read the book as the main character first person, and throughout the story you're faced with different choices to make. For example, it's like say you...

...venture into a cave and and there's a lot, you know, a lion in the cave or something, and it'll say you've encountered a lion in the cave. To try your hand at slaying the Dragon, turned to page fifteen. If you'd like to back slowly out of the cave and go around and find a different route, go to page sixty two or whatever, um. And I relayed to the audience at that time that those books were really when I learned that I can't make good decisions. I mean, granted I was a kid, but I always chose to follow my own vein ambition I'm like, oh, but I'll, I'll impress the heroine in the story, you know, and if I go and fight the lion or I go and try and slay the Dragon. What always ended up happening when I chose to follow my vein ambition, to puff myself up to, you know, peacock and to show Um, you know, insane amounts of bravado, is that I would almost inevitably get eaten by the monster, the Lion, the Dragon, on page sixty three. Right, go and slay the Dragon. Turned to page three, you were mauled to death. Oh cool, um. But it got me thinking during that presentation about especially at that time I had no clue that we were on the toes of a worldwide pandemic, that there would be shutdowns and lockdowns and multiple lockdowns if you were in Canada, too many to count, as it were. Um just I had no clue at that time when I offered that talk, what we were about to head into. But the crux of that talk was about making decisions based on what we can control and that, even in uncertain times, there's still so much that we can control. And I know that might sound cliche or too much like a linkedin post from a guru saying, ah, but you can still control your...

...mindset. But the reality of it is that when you realize that, even when it feels like everything has been taken away from you, if you can get so granular and understand what it is that you can still control, whether it's just your mindset, that opens the door to be able to change your circumstances. And the way I see it, especially in the retail automotive industry, we we kind of, you know, clenched up at the beginning of the pandemic, almost like we're about to fall off a bicycle. People were furloughed, you know, we we had to shut down our businesses, we had to get used to working from home. There's a lot of uncertainty. But then things I don't know if anybody could have really anticipated that we would then move on to making more money with less inventory, that, yes, we would be talking about chip shortages and inventory shortages and somehow still making record profits. That was weird. Nobody could have ever seen that coming. But now all of a sudden we're headed into a new season. Um, I think I read something recently. Let me see if I can look it up about how Um, the definition, I'm typing it while I podcast. The definition of recession changed nineteen times or something like that. Um, we're we're seeing a lot of updates to the definition recession. Of course, we all know a recession is too consecutive downturns or short you know, downturns in economic GDP, all that sort of a thing. But we're in a really interesting period because, while GDP might be down, which of course creates the definition of recession, G D I, gross domestic income, is up and spending...

...has been up. It's a really, really interesting period of time. But now I think everybody is starting to accept now we're we're we're in a flow full blown recession. In fact, I saw a report on Linkedin. This caught my eye. It was published at time of recording, published twenty three hours ago. I'm gonna bring it over here. Canadians halt big spending. This is what it says. Most Canadians have dialed back spending as high inflation takes a bite out of their wallet. A new survey from the Angus Read Institute found about eight of respondents have cut back spending, either by delaying a purchase, cutting back on discretionary spending or driving less. That was I thought that was interesting. Those in Atlantic Canada could be the most financially strained, as they were among the most likely to use a five thousand dollar gift to pay off debt, and we're among the most likely to cut back on spending. Um. All of this to say, like you guys know me, I'm not a doom and gloom guy. I'm okay. So now what do we do? Kind of a guy? Well, if we are starting to see the used car market slow a little bit, soften a little bit and we're we're getting reports that people like inflation is starting to catch up to people um and they're starting to maybe delay bigger purchases, the question then becomes, well, what do we do today? The problem we have as human beings, in my opinion, is that we wait too long. We wait too long, we wait till the very, very last minute to do anything, to take any action. And you know the problem with that is if you wait too long, you panic. You panic and then you know who else...

...panics? Your team panics, and you know what happens when your team panics, they leave. And so my encouragement really comes to paying attention to what's happening in the market and then moving very quickly onto if this, then that, and what I mean is sitting down and actually formulating a plan that says, well, if this happens, what will our approach be? If that happens, what will our approach be? It is a very wise move that one of my mentors taught me to be in a constant state of anticipation. Um. It reminds me of of, maybe you've seen it, maybe you haven't, the docuseries on Netflix about the Chicago Bulls, the last dance, and there is an episode in that docuseries Um, that that highlights Dennis Rodman, weird dude like it is what it is. He's a weird dude. Rodman was a weird dude, but in speaking about his training, his team members recounted that he would spend hours and hours and hours having someone throw balls up purposefully to rebound so that he could learn the rebound. He just spent hours practicing the rebound, hours and hours practicing the rebound to the to the point that when it came to play the game, he could anticipate, based on where the ball hit on the rim, where the rebound was going to go, and that's how he got so good. He was the king rebounds. He was in a constant state of preparation and anticipation, anticipating where the ball was going to go, and I kind of likened that to us in a business, US in the automotive industry. We're in for an interesting ride.

The rides not over right Um, and it's it's important, I think, really important, that we do our best to prepare and anticipate for whatever circumstances may arise. Now some might call that pessimism. I call it realism, and it's that realism that allows me to move quickly on to optimism. Um, there's too much pessimism in the auto industry. There's too much doom and gloom. There's too much talking about the problems not enough talking about potential solutions. Well, the solution that I want to present in this podcast today, in this episode, is two prepare. I'll admit, like when I was growing up, I was not a good scouter. Like I know I was like, what is this? I might pretending to be in the military, not knocking boy scouts of American and like, to each their own, but you know, I went through most of my life. Being like me, I didn't like scouts. It was it was lame. However, now that you know, I'm pushing forty and I look back and with some you know, perspective, I'm like, you know what, I got the one lesson, maybe the most critical lesson, out of scouting that I needed, which was be prepared. That is the one thing, despite all of the other experiences and trips and camping and all that kind of stuff and survival skills, the one thing that scouting taught me was be prepared at something that I think about constantly as I navigate my family, my business, my spirituality, whatever, the various facets of my life. Be Prepared. And in order to be prepared, you got to anticipate. Where's the market going? What's...

...happening? What happens if consumers delay their purchases too long? What are you gonna do? What's the game plan? Now is the time. Now is the time. Now is the time. It reminds me of a Bible passage and you don't have to believe in the Bible for the truth of this passage to to resonate. And it goes I'm paraphrasing, obviously but it goes something like this. If you are prepared, you will not fear. Fear and panic is the result of not being prepared. So the answer, the solution, the thing that I want to impress upon you, my beloved dpb gang, is be prepared, start to anticipate what's going to happen. Um. Something else that I want to bring up that I think is important as it pertains to the context of this converse station, is part of the reason that we've had those record profits is because supply and demand right, and I've seen a lot of conversations happening throughout the industry about the side effects, if you will, of supply and demand. I think about two words, should and could. Should and could. During this last couple of years, vehicle prices have gone through the roof. For example, my wife and I bought a two year old truck and paid a hundred dollars less for it with fifty five thousand miles than when it was brand new. So even with depreciation and all of those sorts of things and the new, you know, supply and demand cost, we only paid a hundred dollars less than it was when it was...

...brand new, with zero miles. And I find that really intriguing because I tend to think of the long term impact of such decisions. Of course we could do it. We could make sure that our private hey, everybody's doing it. It's supply and demand. There's a shortage, we could do it. The question I'm thinking about a lot lately is should we have done it? Should we have done it? What is the long term, far reaching impact of what customers might might inevitably, and some of them are seeing as a gouge, a blatant gouge. I'm not saying don't mark up the vehicles for supply demand, but as much as we did. Today's the time for us to prepare for our choices and the impact of such and what will that mean for lifetime value? What will that mean for loyalty? What will that mean for brand ambassadorship from our customers? What will that mean for return and repeat, could we do it? Yes, should we have done it? I don't know. Either way, today is the time to prepare and anticipate what the impact of such decisions will mean. And again, I'm not I'm not a doom and gloom guy. I just really think, I really believe that, based on the circumstances that we are headed into. It is very, very important for us to learn from our most recent experience of going through the pandemic and dealing with so many unknowns and the panic and the fear. I think it is incumbent upon us to look at that most recent experience and understand what we are potentially headed into. See once the government officially announces that...

...we're in a recession, what happens? Panic? Tighten up, no more spending, delayed spending. We know, we know, even though we're already in it. We're already in it. Once it's officially announced, that's when the panic sets in. That's when the behavior change will happen. It is imperative that we take the time today to start charting a path with anticipation so that, no matter what happens, good, bad, ugly, we will be able to maneuver with grace, hope and optimism. I hope that this message brings you a little bit of Um, hope and optimism. Of course we I'm so grateful that you're here. I'm so grateful that you stuck with me through the years. We've been through this before. We've been through the unknown before. We've been through crazy times before. We're gonna make it through this time, because this is all about enriching and empowering one another. Let's lift where we stand. We're not afraid to do hard things. Let's roll up our sleeves and take time today to do the things that we know we should have done but didn't do. Now is the time. Now is the time. Now is the time, my blood dpb gang, thanks so much for joining me on this episode of the dealer playbook. I hope it finds you well. I'm Michael Cirillo and you've been listening to the dealer playbook podcast. If you haven't yet, please click the subscribe button wherever you're listening right now, leave a rating or review and share it with a colleague. Thanks for listening.

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