In this transcribe of the Used Car Dealer Podcast, Zach interviews Keith and Chris McCrone of Dealer 101 at Used Car Week in San Diego, CA. They discuss training dealers just getting into the business, continuing education for dealerships, challenges as well as opportunities in 2023, and other timely content for used car dealers.

Zach Klempf: All right. Well, Zach here. We're live at Used Car Week in San Diego, California, and I have two awesome guests on the podcast yesterday, Chris and Keith from Dealer 101. Thanks for joining me today!

Chris McCrone: Thanks for having us.

Keith McCrone: Nice to be here.

Zach Klempf: So let's start out. Chris is an ice breaker. How do you get into the car business?

Chris McCrone: Kind of a long story short, when I was about 14 years old getting into high school, my mom got a job at a car auction and national Power Sport auctions, to be specific. And she said, hey, you gotta check this place out. So we went to this auction warehouse together where obviously she works, and it was the coolest thing we've ever seen, right? There were 1300 motorcycles in one room. So kind of skipping ahead, we both looked into well, he looked into getting a deal with a license so we could access this facility. And then it turned out you would know Mormon, he ended up getting the license. It was kind of a hard process. You had to mail everything in, and it was not an online experience. Pretty tough. So down the road, a lot of people were asking us to help them get their dealer license. It was right out of the gate. We were dealers, but we were kind of training people from the beginning. So that was kind of my first taste of the car industry. He taught me a lot. We used to buy a lot of cars at these auctions.

And then skipping forward about 15 years, we had this crazy idea of, hey, we keep saying every year this training is not very good. Maybe we will go and do our own training. So we kind of got into the online training world and kind of continue to do what we've always done there. When you say I mean, absolutely.

Keith McCrone: That was kind of interesting, too. Chris was actually a licensed retail dealer at the age of 14, so he's a licensed dealer before he's old enough to drive cars. So that's how long he's gone back.

Chris McCrone: And the interesting thing about the high school part, too, is I'd be driving a new car to school every day.

Zach Klempf: Oh, cool.

Chris McCrone: Yeah. So I was like, the guy going to school in, like, a really cool lifted truck, but then a really inexpensive small, little escort or whatever, right? So it was pretty neat in high school, having, I don't know, that variety of cars and becoming the car guy at school, just because not only do I have my first car, I had my 1st, second, and 200 car by the time I was, like 16 years old or 18 years old.

That's pretty cool. Good fun.

Keith McCrone: Good fun, for sure.

Zach Klempf: So you guys have trained hundreds of car dealers. What are your suggestions to dealer maybe just getting into the business? Like, what do they need to think about in terms of training?

Chris McCrone: In terms of training? I mean, would you want to take this one here?

Keith McCrone: Yeah, I could take this one, sure. We get asked that question quite a lot, and we always say, be a specialist, don't be a generalist. And what I mean by that is, don't try to be an expert on everything. I understand motorcycles and Harvey Davidsons and electric cars. Pick the niche that you like. So if you're a fan of BMW cars, specialize in BMW cars, that gives you a lot of advantages.

You'll know what's popular, what you can sell it for, what you should buy it for. And of course, the really desirable make and models in that marketplace. These specialists. Don't be a general. Yeah.

Chris McCrone: The best part about it is you don't have to. I guess if you know the make and model that you're into selling, I always say sell something. You enjoy driving because you're kind of excited being around these cars. And also, too, once you know how much these cars are worth, you could almost just buy that car on a whim. Right. A lot of people try to buy and sell everything, but you're making mistakes because you've never bought or sold that car before. So, for me, I got into Land Rovers for a long time because I knew the years, I knew the models, and people could ask me a question, and I had the answer. So they were very confident in purchasing a car from you. And also your results show you sold 50 land rows. So that's kind of the approach, I would say, to say, start small, focus on a niche, and then kind of go from there.

When I got onto that, too, we actually started hanging around auctions. That may sound silly, but even if we didn't plan on buying something, we'd go there. We talked to other dealers, we talked to listen to the auctioneers, and we were amazed, actually, how open many of your insurance companies are to new business, and they don't see you as necessary competitors, especially if you're from a different part of town. And they're very, very helpful with us.

Absolutely. If you're an extreme beginner, I tell people, hey, first step, just go to the auction. Like, enjoy watching the auction. Right.

Zach Klempf: So what else do you guys do on the continuing education front at dealer 101?

Chris McCrone: Yeah, that's a good question. So there's two things. The main continuing education would be, like, renewing your license, right. The thing you have to do every two years. So instead of just making it the thing you have to do, we kind of make it enjoyable. So a lot of dealers go through this training that they're not looking forward to, and then they finish it, leave a nice review going, wow, I actually learned something I actually enjoyed doing. The renewal. Can't wait to come back in two years, right? And then beyond that, other continuing education would be us more now getting into training existing dealers on how to do better at the auctions, maybe how to make less mistakes, how to sell the cars, how to post them on Craigslist offer up, what to do, what not to do, how to do better photos. So now that we've done so well at getting the license, we're getting better at kind of helping them through their career. Once you're licensed, it's been pretty exciting.

Zach Klempf: So, Chris, what are some interesting observations you've had in 2022 with the dealership trained, what you've seen in the market?

Chris McCrone: I would say a lot more people are nervous about the market, and they ask us a lot of questions like, hey, what do you think is happening in this market? I would say you've kind of give me a lot of advice on everything kind of changes together. So the wholesale prices change, then the retail prices change. Right. But I still think there's always a deal somewhere. Not every car is going to be a good buy, so you can always find a car for a good deal and sell a car for a good deal. But I don't think people should go out there and just bid on every single car that's at the auction. A lot of people go, hey, the prices are really high. But obviously, if you bid on 100 cars, you're going to get one, two, three, or four, no problem. But if you go into an auction trying to bid on one car, there's a good chance it goes five grand over. For some weird reason, someone wanted that car. But I don't think much has changed other than cars holding their value. So maybe if you had a car two years ago, it went up in value. But if you're buying a car now to sell a car now, I think you're fine.

Zach Klempf: So what are some of your biggest initiatives, Chris, at Dealer 101 going into next year, as it relates to training dealers? What's big on your plate next year?

Chris McCrone: Yeah, good question. I'd say a big focus is more on what can you do with the license. For so long, we focused on how to get the license right, getting better and better and better at making that process even easier and quicker. But I'd say now the focus is August. How to buy these vehicles, believe it or not, how to search for the vehicles. A lot of people open this dealer account and go, all right, here I go. Right. Maybe Manheim or Odessa Copart. And they don't even know how to locate a car on their website, right? So getting more into supporting them on the actual auctions, I think it's going to be the biggest 1 second would just be how to actually sell these cars, how to post them, photograph and stuff like that, but I see auctions becoming bigger and bigger every day.

Zach Klempf: Definitely. I definitely agree with that. And I have a futures question for you. So EV vehicles, they're taking mind Share, California, they're banning gasoline vehicles by 2035. What are your thoughts on EV vehicles and the impact on the traditional dealership model?

Chris McCrone: I'll let you take the second half, but I think the first part goes back to pick and choose your niche. So I wouldn't say if you don't know anything about those cars, I wouldn't say start selling EVs. Right. Because you're going to put yourself into the whole new world just because it's electric and there's a buyer, I wouldn't just jump into it. Right. Obviously, that's my biggest takeaway. But what would you say on top?

Keith McCrone: The big changes? That's your question: what's going to happen? So traditionally, as you know, it's pretty static in terms of who the manufacturers are for the motors and so on. The big shift we saw this morning, I was looking, there's literally twelve new manufacturers coming to market, brand new electric vehicles that didn't exist before. And by default, they used to always sell them through franchise dealers. So if you want to buy a Ford car, you have to go to a Ford franchise dealer. These electric vehicles manufacturers are trying to go direct to consumers. They don't want to go through the dealer network. That's for a couple of reasons. One is they don't need the maintenance they used to need. The second thing is, consumers don't like going to dealerships. Never have, never will. They far rather buy online directly, have it appeared. Rightly. So that's going to be, I think, a fundamental shift for sure. Now, following that, a few years from now, maybe three years, end of lease, these vehicles now come back on the market. What does that consumer do with that vehicle? How are they returned? And then who gets that vehicle to sell?

So it's going to be very disruptive. That's a big word and we hear. It happens all the time. I think that's truly going to happen. Like a big change, for sure.

Zach Klempf: So, speaking of disruption, I'll start with you first, Keith. What are some of your predictions for the used car marketplace in 2023 and what might happen next year?

Keith McCrone: Next year, I think we're going to see if I can call it a return to normalcy, where we used to see cars dropping with our 2% in value per month. We saw them going up 10% in value per month. And we're going to see a little bit of a return. And I think that's going to be driven because we're starting to see a balance of supply and demand where there's much more supply coming back into the market on your vehicles and the demand. The Craziness that we saw through COVID is starting to tail off now, so we're seeing more and more. I had a friend recently ask me for a pickup truck, one of the nice Ford F250 trucks I searched nationally. I think I found like four of them. And of course, they're asking crazy prices for normally there would have been 400 of them on the market. So we're seeing that type of return, right? Yeah.

Chris McCrone:We had a family member, actually, buy F250, waited about eight months to get it brand new. Showed up to the Ford dealership maybe six months ago or eight months ago. And Ford was like, I know you paid a premium. Can we pay you more to keep the truck? And he ended up going through with the offer. And then they sold that truck for even more.

Keith McCrone: So they literally said, don't take your truck. We'll give you $10,000.

Chris McCrone: Actually, even Crazier, he did take the truck. He did take it. And then as time goes by, he changed his mind. And they still gave them premium, top dollar, and now a used truck because they have a truck. So that's starting to go away a little bit, right? You can go to a dealership and buy a car at a fair price, right? Not be gouge. Yeah, fair meaning like, what it was before retail value. Exactly.

Zach Klempf: So I know you guys are starting to build some YouTube content, more video content, kind of tell the audience what you're working on for dealers, dealer training. Like what's coming down the pipeline from Dealer 101?

Chris McCrone: Yeah, a lot of it kind of comes from how we can help more people and for free. So we have had so many conversations with the customers over the years, and the biggest takeaway would be those phone calls that seem to help people the most are little 1 minute tips like, hey, don't forget to do this. Hey, look for that. Right. Often they have a question when they call, but if they don't, we typically give that advice. And the overwhelming response is, oh, my God, I see it differently. Oh, my God, I'm so excited to go buy a car. You guys have helped me so much. So a lot of the YouTube videos are just going to be just like that, to the point, very direct pieces of information that we've learned over the years. And of course, the dealers have shared with us over the years. So just kind of doing our best to provide more valuable, free information, more information being available without having to sign up for a course. It kind of helps people in the prestige and the post stage of getting their license.

Zach Klempf: Do you see more dealers getting into the market, getting dealers licenses? Like, what have you observed?

Chris McCrone: The biggest observation I know COVID kind of changed things a little bit. There were a lot of dealers getting their license, and then when Koba came and the push was kind of, hey, start your own business, then, I don't know, two thirds more, something like that, it just kind of exploded. So I would say there's a lot more dealers now than ever getting their license, for sure. A lot of wholesale and a lot of retail dealers. But that's probably the biggest thing, really, just how many more there are. COVID for sure made it kind of the norm with online bidding. Now you don't even have to go to the auction to buy a car. The car gets shipped to your house or ship to your retail location. So I see that being the biggest thing. A lot more at home car dealers, less big, lot dealers.

Zach Klempf: So to close things out, anything exciting you want to plug from Dealer 101? Anything I haven't mentioned that you want to discuss?

Chris McCrone: I would say the auction course. Our whole team has been working on this very unique auction course. I would say probably a couple of weeks. We'll have that live on the website, and it's essentially a walk through from start to finish, from the day you're signing up for the auction to searching for these cars, right down to paying for those cars and getting them home. So that will be very exciting. A lot of our customers, thousands actually have already subscribed waiting for that to come out. So I'd say stay tuned for the next two weeks.

Zach Klempf: Awesome. Well, I have Chris and Keith here. We're live in beautiful San Diego, California, at Used Car Week. Thank you so much for joining the podcast today!

Chris McCrone: Appreciate it. Pleasure.

Keith McCrone: Thank you for having us.