More Hype than Hope with Rick Ricart

Paul Daly: 0:00Oh we get to have a Is this our first repeat guest on the show? Yes Rick Ricart is our first repeat guest

‍

‍Unknown: 0:13

This is auto collabs

Michael Cirillo: 0:17

extremely insulting to whoever might be watching that we forgot about that could be so

Kyle Mountsier: 0:22

sorry if that's you we really are we promised that we didn't meet

Paul Daly: 0:26

is if it is we did beat it. I you know, Rick is one of those characters and he is a character if you follow him on social media, okay, that is just I've never like been in like a barbecue situation with him. But I feel like that's one of the things that needs to happen.Right?

Unknown: 0:43

He's the he's definitely the first guy to jump in the pool with all his clothes on. I'm telling you right now,every time for

Paul Daly: 0:48

the opposite, or the opposite, right?

Unknown: 0:52

Or the second half of that sentence gets a little dicey. Yeah, I get it. I get it.I get it.

Michael Cirillo: 0:57

I'm not gonna lie. Like I see his resume. I got him up on LinkedIn, all the things he's well outspoken. I just want to talk to him about motorcycles.

Paul Daly: 1:05

That's, that's kind of all well, because you have the same challenge that I do is that well, you don't anymore because you live in Texas. But when you lived in Canada, you know, motorcycle season was approximately two and a half weeks. That's right. Oh, well,he's definitely one of the

Kyle Mountsier: 1:25

ways. Now I want to see Michael Cirillo riding a motorcycle next to Rick Ricart because I've stood next to both of you. And the size difference is staggering. We're gonna put Rick on a small bike and

Paul Daly: 1:39

Cirillo on a huge bike.

Michael Cirillo: 1:40

We're gonna be like circus bears on a tricycle

Unknown: 1:46

way. We hope that you enjoy this conversation with Rick Ricart probably get a little bit crazy, but also insightful. Here's Rick.

Paul Daly: 1:57

Rick, thank you so much for taking some time out to spend a little time talking about all the important things in life. Cheese Fries, mullets and the car business a little bit too.

Rick Ricart: 2:07

You easy on that tapered mullets that can only be seen from behind do they actually exist?

Kyle Mountsier: 2:14

That's like the tree that fell in a forest.That's

Paul Daly: 2:18

right, exactly.Right. So you go by President dealer, but a really interesting title that you go by is Chief vision officer. Give white why the chief vision officer How do you like think through that and deployed on a regular basis.

Rick Ricart: 2:33

So we, three years ago, the summer of 2020, that,you know, first infamous summer of COVID, we had an opportunity to take a step back and relook at things. We had a lot of time on our hands. You know, business was closing early, there wasn't a whole lot to do on a day to day basis. And we've been in a succession kind of transition in our company for about the past seven, eight years. My uncle Rhett Riker was the chairman of the na da organization in 2020.So, you know, he has kind of removed himself and I have a cousin, Jared Riker, who's Rhett's Son. And we were named as the co-presidents and my uncle basically sat us down and said, Okay, well, I'm heading off to do all this in a DA stuff, and then I'm going to semi retire after that. So you guys run the company? We're like, okay, cool. Well, what,what does that mean? What is what does that mean? And it's,you know, there's not a playbook for this. There's not, you know,just just do it just do the job,right. So, kind of let us go.And we were, we were trying to figure out what roles that we should have and how that should look and what our what our responsibilities should be. And then my cousins in a peer group organization that gave a presentation on the EOS business model, or the Entrepreneurial Operating System, that the famous book traction by Gino Wickman is all about that EOS business model. And we met a implementer, who, who basically takes companies and helps them launch this EOS business model.It's the org chart, it's the meeting cadence. It's a lot of things to help us get organized and help us figure out the right path. And the two positions at the top are the visionary and the in the integrator. So the integrator position, which my cousin holds, is really the one responsible for day to day operations for profit and loss,for lead, manage accountability,kind of a COO type of role. His job is to make sure that the trains run on time. Yeah. My job is visionary is more to look at in the look out into the future be responsible for creativity,culture. Big big deals acquisitions, major external relationships. So that kind of fell into my wheelhouse, I am not a structured, I'm going to be in at this time leave at that time type of person. And my cousin is and he came up through the fixed ops side of things. So it's totally normal for him to be here at 7am 7:30am unlocking the gates, and I was always pushing to, you know, that's why our sales don't start till 10am Because I want to, I push them back for years, you know, nobody shows up. Right, you're gonna sleep in,

Kyle Mountsier: 5:32

we're gonna dreams to have while we sleep,come on,

Paul Daly: 5:36

you got a dream if you're not sleeping.

Rick Ricart: 5:39

And that's the thing, What are dreams, dreams or visions. So I got into a lot of sleeping, a lot of dreaming.And, and it really gives me the opportunity to take the time to build to work on the acquisitions and the growth of the company. So I look at it as my my main responsibility is to grow, expand and diversify. And if I was stuck in the weeds of day to day operation, we would only be focused on growing what we organically have. We want to expand, you know, three years ago, we got into the motorcycle world, we acquired America's oldest Harley dealer, with two with two locations. Now here in Columbus, and then the end of2021, we acquired a Chevy Buick GMC store, to keep growing our portfolio for our customers. And really, a lot of that has to go back to the fleet and commercial world. The business, the business side of the of the new cars has been growing for 1015years rather rapidly. So being able to offer a different variety of products to all of those business owners in Columbus has been a really good thing. So

Kyle Mountsier: 6:40

when, like,obviously, you're looking out over the horizon there, there's a lot, you know, probably coming for you as an organization. But there's still the necessity to kind of like, understand what's happening in the market and connect everything that you're doing from visionary culture standpoint, to what's happening for the consumer right now. What are you how are you taking,like, a forward vision, like,I'm wanting to innovate, I'm wanting to grow and draft that back into how your team, how your employees, how your, how your showrooms and service drives, look right now, for customers as they're dealing with the market the way it is.

Rick Ricart: 7:24

Yeah, so there's always a strategy and a process because we're never gonna get from zero to 100 on any of those things. Right. This is a aircraft carrier industry, as I call it, and it takes you know,24 hours to turn around an aircraft carrier, we make little changes that compound over time.There's no hotter two letters in our industry than Evie. Right.What is Evie? What does it mean?Where are we at today? What's that look like? You know, and I'm having to kind of build my crystal ball. And then at the same time, decide, okay, what actions are we taking today? And I could spend the entire time talking about that, because I sit through all the lectures,seminars, read articles,newsletters, talk to industry experts, and listen to our manufacturers, what they're telling us and then the same time keeping my pulse on consumer demand and connect connecting all those dots. And that's a very muddy water topic.I mean, it is so difficult to really decide what are we doing today, right, because just give an example, between are really three automotive locations. We have 37 chargers installed active right now. We will have50 chargers by the end of the summer, based on our manufacturer's requirements.We're investing a ton of money into these things. And we have like seven EVs in stock total across 11 brands right now.What? And it's not

Kyle Mountsier: 9:03

like this, this this kind of like balance thing.It's like, okay, I need 50 of these things. But I got seven,or the customers coming for what you know, where are we going with this? The OEM is almost like, I don't know if you have you, I don't know if you deal with this with your, with your OEM brands, right. You've got brands across a bunch of different brands, but like, I was talking to some OEM partners, they're they're struggling with this fact that on the ground at dealers right now is ice vehicles, right ice and hybrid vehicles. That's where the inventory lives. But the culture and marketing demand is all pushing on EVs, and there's this like, how do we match these two communication patterns in the market today?And it's like you're dealing with that with the even down to chargers, right?

Rick Ricart: 9:55

It's it is a it's a super regional thing also I mean that I'm going to say things that dealers in California are going to be like he's absolutely wrong. Because we are in two completely different worlds when it comes to EVs, California,Florida, Texas, like there are states that are where the hype is real. Yeah. Real your infrastructure they have, they have the climate, they have the weather, the manufacturers are pumping 80% of those vehicles to those states. But Ohio is required to follow the same dealer requirements as as other states. But there are literally models of brands that we sell,that I cannot even sell you I can't deal or trade and sell it to if I wanted to, they will not even let us have those vehicles.

Paul Daly: 10:45

What's What's one of those? Give me an example that

Rick Ricart: 10:49

some of the Hyundai iyonix You can't even get them.Some of the trim levels are only for California. And there's zero emission states. So there's, but it's not like we really want them because there's not the demand here yet. So when we talk about the marketing, I'm going to call it the hype. There's a lot more hype than hope right now. And you have the hype being built for Wall Street, the stock market, I mean, you know, these,these major automotive manufacturers think of Ford and GM, and how important stock value is to them. Well, Tesla came on the scene, absolutely lit up Wall Street, like, Oh,this is the greatest thing put your money into. Now, what are you big old traditionals doing?So they created a ton of hype around their ED products. And then the past six months,they've quietly just disappeared. They quietly quit building things like the maki unlimited production of the f150Lightning like they don't actually exist to the level that market. So there's a lot of hype around these things. So people put their money in the stock market. But the truth is at the ground level at a dealership in Columbus, Ohio,

Paul Daly: 12:00

they no hope that that's actually the future of your business and 20 It

Rick Ricart: 12:04

is not like we were so the building I'm sitting in right now we're building a brand new Hyundai showroom. It's beautiful. We're having a grand opening next month, you should come out two storey beautiful NHL room. We're in our former Mazda showroom that was empty that we converted to our offices while that's being built. That's where kind of our offices are.So we're moving out of here in like three weeks. And I kept looking at this space that I'm looking at outside my window here. And I thought why not build an Eevee Experience Center? Why don't we go get you know, every single model that we sell new, that's 100% Electric,put a couple of chargers out front, put a little coffee bar,have an hourly Evie champion, be able to go on test drives or let somebody rent one for the weekend and experience it. And we're going to invest in some of this. Evie stuff. And then we started really looking at the consumer demand and looking at inventory production, what allocation is going to look like? And I think we have two to three years before we even have to think about it. It's no, it's nowhere close. A lot of a lot of manufacturers, or OEMs are building plants right now.They're building these big battery plants, they're all doing their bidding battery plants are building new plants to make these EVs. Those plants won't be open until2025 2026 2027. They're all telling us that they think there'll be at you know 40%production or 35% production all EVs by 2030. So it's like, you know, all this hype that's happening. And I was following the hype and buying in on it,the more research and thinking that we've done, so I know we've got the chargers, we'll sell them out of the showrooms if we can get them if someone wants one. But for us to try to create and push that market is I don't quite have the the hope that it's going to have the impact for at least a couple years, at least in the market, that I'm in

Kyle Mountsier: 13:58

such a different understanding.

Michael Cirillo: 14:01

But you bring up a really good point here. And it's a distinction that I don't think a lot of people make,especially in this digital era,that tech companies by their nature must produce hype because they have nothing else to sell.Like, like you brought up the distinction about like Wall Street, Wall Street is all based on hype, everything that they buy into. I mean, that's that is the product that they sell. It's not actually the tech product,because we all know that doesn't work the way it's being pitched.It's all about the hype. This leads me to two questions. One has absolutely nothing to do with what we're talking about.And the other has maybe maybe there's a loose tie in. I'm gonna start with the one that has nothing to do with what we're talking about. And then swerve us back into in the lane here. You mentioned Harley Davidson, that you acquired the oldest Harley Davidson store in America. sin upon acquiring the that store does it infuriate you as much as it does me to see dudes riding bikes that are either too big or too small.

Paul Daly: 15:07

There you are going some motorcycle culture

Michael Cirillo: 15:13

you know what I'm saying? Like

Paul Daly: 15:19

customers of all types Michael

Michael Cirillo: 15:21

Dude rolls up to the stoplight and his knees are he's flat footed, but his knees are right up on underneath his helmet. You're like, bro.Yeah.

Rick Ricart: 15:30

So I'm guilty of that.

Kyle Mountsier: 15:36

He's like both sides. I have a tiny one. It's like this and a big one. That's like

Rick Ricart: 15:42

there's gonna be a lot of truth to that. So I do I write a 2019 Road Glide. It's CVO. And I've got the bigger bars and it's, it's a performance bagger. It's a touring bike. It kind of does it all. It's big. It's loud. It's150 horsepower. Big loud stereo does does all the things. I also have on order a live wire Del Mar

Paul Daly: 16:03

sees it's different.It's different. Because

Rick Ricart: 16:08

yeah, but but the size of it. So you know for years we've been taken and stuff on trading for years. And someone will trade in you know,a ninja 600 Or x. That's not really that's probably not cool enough to talk about maybe like a big a Ducati 916. And I'm pushing six three to 50 and it's probably not the thing that I when I run everything. Oh, I'll be on a I'll be on my 50 cc Honda ruckus cruising down the road on my scooter to go grab Gatorade

Paul Daly: 16:49

and the mullet extension with the flip flops going to get Gatorade on the fifth DC site now

Michael Cirillo: 16:54

we're shaky,but that Michael has it by happenstance that we did not plan this beforehand. But you kind of led right naturally into my second question about the Evie thing and market conditions and what customers are doing.How soon and if ever, ever does a market segment like a Harley buyer? Adopt an Eevee Harley?Right. Kind of a strange thing.We're because a lot of the narrative. I mean, you brought up the hype and this is what got me thinking about it. A lot of the narrative is we're going to phase out all of this petroleum products forget that we're going back to gravel roads people, no at no asphalt any more petroleum is gone. But now you've got the Harley segment, which is a big segment, who are like so what I turned this thing on, and it doesn't make any noise.

Kyle Mountsier: 17:52

Yeah. Or like Audi I mean, you don't have Audi stores? I don't think but like Audi same way. It's like, hey,we high performance car. All Evie. Here it comes, you know,and you know, whatever, whatever type of of model like how do you? How does a brand or even how does the dealership group start to, you know, work with those customers that have kind of leaned in on this high performance type brand and move them over as this starts to come down the line.

Rick Ricart: 18:22

So there's been cars that have come out for years that I think are deemed high performance that really take no skill to drive them.What's an obvious one, Nissan GTR, right, cool car, fast car,Godzilla engine, all those things. But it's an all wheel drive automatic with a computer system that's smarter than the driver to do anything, right?Well, lets you really do anything. I just came out of a150 Lightning, I had it since September, I put 8500 miles on it. That thing was as fast as a GTR. It's four wheel drive. It's automatic, all the powers to the accelerator, and whoa goes real fast. But it takes a lot of the thrill out of driving. And I cannot wait to get out of it.And to get into something I can actually shift gears. I like stick shifts. I like older cars.I like I like having to work and do a good job to make it go fast. You know, they just do it for you. It's really kind of lazy performance. And I think that's one area that the pure is kind of like the Harley riders.You know, they like that big loud engine. They want to downshift, they want to go through the gears. And there's just I think there's a lot of people that and I said this for the past few years, there's going to be a day that I wake up and a autonomous electric car pulls up in front of my house to take me to work and I'm reading a book in the backseat with no driver. But I'll be damned if on weekends I'm not banging gears in the Gt three. Graveyard believe me Are you there? Yeah.I mean, I think there's a place for both. I think that the world of multimodal transportation has been around since the first, you know, really Uber hit the ground or in some cities, you know,where taxis were more prevalent and stuff like that. And we work with what's called the smart,smart city here in Columbus that five years ago, they started with the NITSA grant to figure out electric vehicles and autonomous and all this adoption and even they have come to realize that there's, there's going to be a, there's going to be a vehicle someone owns with their house, could be hybrid could be ice, maybe electric.But then there's gonna be other public transportation is and other alternative transportation options. That to get from point A to point B may look a lot different in 10 years.

Paul Daly: 20:46

Let me ask you this.So we were kind of like going full circle. Now. It's only a few minutes left. We've went we've gone cheap vision officer,right? And then we've kind of gotten the whole cycle right EVs with the adoption, the hype versus the hope, the different mentalities around multimodal transportation. Let's get back into the showroom, because you have people coming in every day,you have salespeople and service people in a BDC. And people have a real sentiment, right and a real desire to do a certain thing, but like, you are going to be the best litmus test to that because you're on the front lines, your team is on the front lines, what are you seeing are the trends that are in the show right now?

Rick Ricart: 21:25

Okay. Number one is negative equity is just through the roof. We are seeing a lot of people that were having trouble get them out of their cars, get them out of the trucks,especially those that bought in the past two and a half years when the markets been super high. New cars going for well over MSRP late model used cars going for MSRP are close by now that the market is normalizing.It has been very difficult. So you see a lot of a lot of negative equity.

Paul Daly: 21:56

Do you see this as the the very beginning of that trend? Do you see this as continuing for a while?

Rick Ricart: 22:01

Yeah. And that's why I think you know, as I wrote down some notes here about what what I say to the fellow dealer,like, my focus is more on repair than replace right now. The service department. We just had a meeting this morning. How do we get back to seven days a week in service? How do we staff techs seven days a week, pickup and delivery has increased demand big time. We started pickup and delivery during the summer. So three years ago, we started it didn't really have the demand yet. We partnered with a local company with a driver network service. Now it's becoming something that people are now asking for and realizing they don't really want to bring their car in for service. So being able to really get big on offering pickup and delivery for service. Being able to get people into service quickly. A lot of dealerships you call them for a major repair, they're going to tell you they're four or five weeks out, you got to fix that problem, they're gonna go somewhere else, service is going to sell the next car because a lot of people are going to be forced to repair rather than replacing anytime soon. The other thing we're seeing is is leasing is really good at leasing. If there's a lease program back from a bar,you know, Kia and Hyundai and some of those brands have some really good lease programs that seem to be doing well for us.

Paul Daly: 23:14

What are the best ones right now? In your opinion,what's the best

Rick Ricart: 23:19

Hyundai's and Kias?I mean? Yeah, I mean, they're well, no, no, no, no. I mean,Alondra forte.

Kyle Mountsier: 23:26

You know, big deal, because when you think about the showroom, when you think about the showroom,that's, that's extremely important right now, because the last two years leases haven't been good. And so even just like new salesperson, understanding a lease, understanding how to, you know, talk about a lease, talk about residual talk about a money factor and educate the customer on a lease is like the first step in making sure that you can get someone to even see that lease payment. Right. So that's, that's, that's a whole training step that I think a lot of people people are talking about, like training the BDC training people from, like customer acquisition into the showroom. But training on that lease part in particular, is we haven't seen good lease rates over the last two years, because inventory has been shallow,meaning sub tenant leases haven't been there, but those are coming back before rebates or even coming back probably, is that right?

Rick Ricart: 24:15

Yeah, there is a there's an education that has to happen with every customer right now. And you just hit a major word to I was gonna bring up which is training, getting the sales staff back to training.We're watching our website visitors drop because as people go online now and they start doing their they start doing payment calculators and they start doing you know, equity analysis of their current vehicle. They're not even talking to us. They're not even coming to the website because they realize there's negative equity rates are high. Wow, look how high this payment is. Once if we when we get someone in the in the actual showroom, and we can sit them down. That's a whole conversation that has to happen. Because if you think back in 2019, the number one problem in our industry was affordability. cars were getting too expensive. The average transaction price of a domestic pickup truck was over $50,000luxury cars were 55,000. And people were not being able to afford them. All that's happened, three years of those prices have gone up and up and up. The manufacturers have followed the demand, oh, well,people are willing to pay 80 and$100,000 for a new pickup truck.Well, there was some economic things happening two years ago that allowed them to do that. So now they bought those vehicles they're coming in to trade them in. And even those that don't have to have that type of negative equity, we're having to sit them down and explain to them and show that formula to explain why it's an$800 $900 $1,000 car payment known. That's where That's where we're at, where, three, four years ago, it was, you know,404 50, it's kind of that sweet spot. And most people, most people would be comfortable.Now, it's easily 700 $100, on average. And that's including some of the late model you stuff. You know, interest rates are, you know, up. Right, but the subvented rates are one of the bright spots, one of the bright spots are manufacturers with 0%. With 1.9. That is working people are coming in,because they know that the rate is such a major factor. I think one of the most popular things right now, is this a blended rate of 5.99 for 84 months that people are coming in asking for and asked me for that,

Kyle Mountsier: 26:31

I think because of the inequity because of the high prices,

Rick Ricart: 26:34

because it all comes back to payment. Yeah, and it's obviously something that we don't push for, we've always pulled up on our average term is on a quarterly basis and discuss it with everyone and all the all the upper management. And when you know, national reports came out, I think maybe this is probably a year and a half ago,that the average term was like67 months. And we were at 62.Like we started like clapping about that, like we it's not a contest to see who can have the longest average term, right,that's tougher to get that trade cycle to get people out of their vehicles. The other thing we're fighting is the inventory mix.Sucks. Like there are a lot of ice vehicles, we've got a lot of stuff on the ground. But it's not a lot of desirable product.It's not a lot of the stuff that we really want to order and get.We've just been saying yes to anything we could possibly get our hands on for two and a half years. So interesting. Now we're sitting on a lot of inventory that we're like, Okay, we gotta blow some of this stuff out. And then now we'll start being selective as to what we're saying yes to, because no surprise, the OEMs are now over manufacturing. We knew that was gonna figure out how to balance that they're like we

Paul Daly: 27:43

don't want years ago,it's a tough business.

Rick Ricart: 27:48

1000 more weight,you know, base model.Something's like

Kyle Mountsier: 27:53

they're coming.They're coming. We're here,Rick, I'm telling you. What if there's not enough to think about there is like if someone's not thinking about something every single day, it's blowing my mind because it's clear,you're thinking about a lot of these things. So for Melissa,motorcycles. We've had a ton of ton of fun hanging out with you really appreciate you being on auto collabs and on behalf of all three of us, it's just been a super fun and insightful conversation.

Rick Ricart: 28:19

It always is. Thank you

Paul Daly: 28:24

all right. did not disappoint is my reading of that episode.

Michael Cirillo: 28:31

You know all I can think about I can't I can't remember motorcycles cycles yet,but the lines are blurred. I can't remember what we talked about pre show and during show anymore, but he did bring up the gentleman's mullet and I'm not kidding you here. No, he called it a tapered mullet taper and I wrote I wrote down tapered mullet could equal new word for hairy back.

Kyle Mountsier: 28:59

The scary part is you wrote it down, which means there's the opportunity for you to get to read that a year from now.

Paul Daly: 29:08

What were we talking?

Kyle Mountsier: 29:10

Yeah. Or someone else find that

Michael Cirillo: 29:12

change? Right?You know why Italian dudes wear gold chains so we know where to stop shaving.

Kyle Mountsier: 29:19

Ah, oh, the other thing the other thing that actually struck me about that conversation is

Paul Daly: 29:25

like we're doing Rick Reichert well by this outro here this outro if he listens to this episode's gonna be like yeah,that's the that's the better I knew I liked those guys.

Kyle Mountsier: 29:38

But at the end there when he was just like rattling off all of the things that the market and dealers and consumers are having to approach right now, it's like it's EVs.It's you know how to market ice vehicles among EVs. It's an inequity 84 months payments,whether I'm gonna go loaner least there is just the the the mass amount of education that a consumer and a dealer has to assume an ingest and then flow out from to be able to buy a car is staggering to me right now.So that speed of education just has to be so quick.

Paul Daly: 30:20

It is it's really one of the things that breaks down one of the one of the kind of like leanings that we always have and when we say dealers or retailers there aren't very many retail industries that are that complicated. Yeah, you know what I mean? Like it really is a complex

Kyle Mountsier: 30:37

like do I want the White Sox fly or the Black Sox right? That's really small,medium large.

Paul Daly: 30:47

Yeah, it is. All right, well, look, if you haven't know if you're gonna do it, do it. I was out the way we should go out. I was like, I really

Michael Cirillo: 30:57

love your conversation with each other but I'm gonna say we hope you enjoyed this episode of auto collabs. On behalf of myself.Michael Cirillo Kyle Mountsier Paul J Daly we will catch you on the next one.

Unknown: 31:10

Sign up for our free and fun to read daily email for free shot of relevant news and automotive, retail media and pop culture. You can get it now at a soul to.com That's ASO T u.com If you love this podcast, please leave us a review and share it with a friend. Thanks again for listening. We'll see you next time.Welcome to recording

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