Hello everybody. I’m Russell Hill, your host of WTF and that is what the fixed ops to all of you out there. And I’m joined today by. Hello everyone. I’m Charity Danny and today we have Leo Portalupi with T4 automotive. Leo, thanks for joining us today. Thank you for having me. Really appreciate it. Yeah. Why don’t you start us off, introduce yourself, tell us who you are and what you do. Yeah. So Leo Portalupi I, I, I’m the CEO and owner of P4 automotive. We’re based out of the Indianapolis area. So we’re operating with, uh, nine automotive dealerships. So recon center, a couple collision centers, uh, centralized management team, and we’re all around the Indianapolis and surrounding areas, and we are happy to be on the show. My background is fixed ops, so it’s a passion of passion of mine. Again, I’m happy to be on the show. Thanks. Well that’s great. I gotta tell you, I, you know, Cherry’s done a lot of background. I was watching you, uh, with Sam and Yoshi on, uh, car dealership guy and how you got started. And it’s most, as you probably know, most guy s et cetera. Grew up on the verbal side. They don’t really get the fixed side. And I was one of those as well because I’ve been in the business a long time. But to have somebody on the fixed side like you being the CEO of an automotive group is amazing. But that’s not how you got your start. You got your start at Honda. So tell us about that. Tell us where it all where the dream began. Leo. Well, uh, yeah, I appreciate it. That’s so my dad was a technician. We we immigrated from, uh, Argentina when I was very young, Um, and my dad didn’t know, didn’t know the language, didn’t know much. We were in the new Jersey area and he gets a job changing oil at a Honda dealership. And, you know, he came in with his little toolbox and he’s like, hey, I’m gonna figure this out. And he, uh, you know, he learned the language at the same time, but he’s a highly intelligent person. He, he, uh, the, the language was the only thing kind of holding him back. And he worked his way up to become a technician, a master technician. Um, and he was with Honda for over thirty five years as a technician. And then we moved to the Texas area. And then I was, I was not a great student. I was not a great student. Uh, we hear that a lot. Yeah. That’s part of our, I don’t know, part of our, uh, automotive DNA or something. I think I’m a really good student now, which is funny because I really like studying now. I really like learning now, but back then school was an inconvenience. So right out of high school, I, you know, told my dad, I and said, hey, uh, I want to be a technician. I mean, you’re, you’re, you can afford a family. I like to have a family one day. Let me, let me do that. So he gets me a job at the dealership, changing oil, running parts, cleaning the floors and all those things. And, you know, the one thing I didn’t know is that, um, my dad, his dream was for me to go to college in America. So he told the manager, hey, I want you to be really hard on my son so he can quit and go to college. I want him to feel like this is like the worst thing. So obviously he didn’t know that at the time. No, no, no, I was getting abused. I didn’t even know it. I was I was like, go look for muffler bearings in the parts department. I was like, okay, go, uh, clean the compressor room. That’s never been cleaned out in forty years. And I’m scrubbing oil. I mean, it was, it was brutal, but I don’t I didn’t know any better. So I hung in there. And then I eventually started doing like dyes and accessories and, uh, became a technician and, um, had a great, I mean, a great time being a technician. I really enjoyed it. And then I had this thought that I want to be a manager one day. And our current, our fixed ops manager at the time said, well, you can’t be a manager unless you’re going to be an advisor first. And of course, I was young and I was like, well, I know everything already. I don’t need to know anything else. But, uh, he, he, he put me on the service drive and I was an advisor for, for a while and, um, enjoyed that as well, which was kind of, uh, an awkward, different thing for me because I was actually making less money, but I was enjoying the job more, which didn’t click him at the time. I thought it was money motivated. And then I realized I’m not. But at the time I was, I was, you know, enjoying myself. And it was all about growth. I was feeling like I was growing. So, so that’s where I was enjoying myself. And then, uh, Penske Group, Roger Penske bought us out. And that’s where, um, I think I really became a good student at that time because Penske came in at that time, I was always transitioning into management and Penske, the dealership we were at, he was involved in. Um, Roger was involved in designing. So he was with us a lot. And for whatever reason, I don’t know if he took a liking to me, but I was a young service manager, twenty six years old, and when he would come in, he would say, hey, Leo, I think he called me Leon at the time, which I never corrected him. But hey Leon, come join me in the. Come join us in the budget review meetings. Come join me in the boardroom. And and I was like this. I had, um, you know, feeling of not belonging because everybody had these impressive backgrounds of all these impressive schools. Oh, I understand that one. And I was like, well, I changed. I hated the introduction. That was my worst. The worst part of the of the meeting is let’s go around the room and introduce yourselves. And everybody’s I have a business degree from Harvard, I have all. And then it came to me as I was changing oil a few years ago, I wasn’t, you know, I never felt like I belonged, but I, um, it made me hyper focus on the store and learn because I didn’t want to, uh, we call it Stump the Chump. I didn’t want to be the chump in the room. I wanted to know everything about the store. I didn’t want somebody to ask me a question I didn’t know. So I really started learning and studying and and and working through that. So, yeah, I could hear you saying, yeah, I’m I’m Leo. And let me tell you what. I’m coming after all your jobs, right? I know I didn’t think that I was like, I just hope they don’t, they don’t realize I shouldn’t be in here. That was my that was my feeling is, was that in Texas? That was in Texas. That was in the Houston area. Yeah. Um, I’m trying to think of which one because we, we have a lot, we have like fifty clients. And, you know, as a matter of fact, we’re doing, uh, business with Penske and, and Group one and Sonic, etc. so I’m curious which Honda store does they still own? It was at the time it was called Goodson Honda. Oh yeah. Yeah. Very familiar. Goodson. Yeah. Okay. I worked for Goodson Acura back in the nineties, uh, a long time ago. Yeah, that was my first the first store. My dad worked there forever. We we. I was a technician there and worked my way up to become the ops manager and wow. Yeah, it was just a fantastic experience. I love it, you know, I, I, um, didn’t didn’t understand it at the time, what he was doing for me, he was inviting me into these rooms that I shouldn’t have been in, but I was learning and I always had this regret that I never got to thank him. So a couple of years ago, you know, he bought the Indianapolis Speedway. Yes. And there’s a famous restaurant downtown called Saint Elmo’s. And we were happy to be at dinner one day and in Penske walks in and I said, I have to go thank him. I have to go thank him. So I went up to him and, uh, he act like he remembered me. I don’t know if he really did, but but I’ll bet he did. He. I mean, he’s such an impressive guy, but I got to thank him for, uh, just doing that for me. I mean, he was a mentor. Didn’t even know it. I mean, he was he was just being able to do that. And I was able to learn the other side of the. I’ve always been very curious. So when I was sitting in those meetings, I would write notes about things I didn’t understand. So then I would go to my general manager and say, hey, what’s what’s sits? What does that mean? What’s wholesale loss? What is why would we lose money selling, selling cars? Why, you know. And I would drive them crazy. It was like, well, you just go back there and, and run service and leave me alone. But I would just always wanted to learn. And and then I didn’t know I was preparing myself for the next step. I didn’t even realize that. I just didn’t want to be the chump in the room. So what do you what do you think, Leo? Do you think, Roger, at that time when he said, you know, hey, Leo, come into this meeting or whatever. Did did you sense anything back then? He must have sensed something in you. I mean, he didn’t he didn’t just do that with everybody else, did he? I think he just I think he’s I mean, that was, um. He recognized his talent. He he puts people first. And I think he saw a young guy, I think I was twenty five or twenty six years old and I was super aggressive and super motivated. I wasn’t, uh, shy. I mean, I would go and talk to people and, and he said, hey, maybe there’s something there. So he was like, just come join us. That’s a great story, man. You know, for him, it’s, you know, probably not a big deal. He probably does it all the time. But for me, it was like changing. Yeah, it was life changing. It’s amazing. Yeah. Yeah. Well tell us, Leah, what do you think? Someone who’s spent their entire career on the variable side. What do you think they misunderstand about the fixed side? Yeah, that’s a great question. And that I think that’s my strength is my, my, uh, when I, when I tell my gems all the time is a fix needs to be a little more variable. Variable needs to be a little more fixed on the variable side. They’re too loose. Sometimes they’re not structured. Sometimes. I mean, I’m just kidding. Go ahead. You know, no, you’re right. I mean, I know I used to say that when I was a manager, but the fixed side, I mean, let’s flip let’s flip it a little bit. And the fixed side, they’re a little too rigid sometimes. I mean, fixed fixed departments. You know, I, I put myself in. I was the same way. They’re trying to solve every problem. That hasn’t happened yet. And sometimes they’re not easy to do business with. Right. So a customer calls in and says, hey, I have a check engine light. Well, we want to give them worst case scenario of anything that can ever go wrong. Instead of being a little looser and saying, let’s figure it out together. Let me set an appointment. Let’s, let’s get you in on the sales side. If they were answering the phones, it would be like, it’s probably nothing. Just come in, you know? So that’s not right either. So no, it’s not. So what I try to do is have both sides see each other. I think, I think um, you know, to answer your question, the variable side needs more structure, more process oriented. They need to be, uh, they need to slow down a little bit. And on the fixed side to me, they need to loosen up a little bit. So we, I try to be the bridge between those two. Some of the best operations I’ve seen are people at GM’s or even dealer principals, the CEOs, etc., that grew up on the fixed side. Oh, I agree. I mean, they’re just they’re great at. I love what you said. Need to be a little bit more variable. Need to be a little bit more fixed combination of both because for so long they were siloed even when I grew up in the business, selling cars, etc. before I got into management, I always worked the service drive. I, I mean, three days a week, man. I was there getting coffee, listening to people and, uh, it and I sold a lot of cars from it too. I think that’s the, uh, a big advantage of being able to see. So, so when I was a technician, I fell into the trap. I would complain about my service advisor. So they don’t do anything. They’re just there. They make all these recommendations. They’re making all this money. Yeah. And then I remember one day I was on the service drive and I started complaining about technicians and I thought, wait a minute. So I was like, they don’t have to deal with these customers. And I was like, wait a minute, I was there. So it kind of like light bulb moment. I said, well, everybody has a side, right? Everybody has a good point here. And how do we get people to see each other’s sides? So one of the things I did when I was a service manager, I worked well. In fact, I just talked to one of my service managers about doing it. Uh, doing it for us is I would grab typically the grumpiest technician and I would pay him to work the service drive, and I would give him a list of things that he needed to find out. So how do we write a repair order? How do we handle special order parts? Um, answer the phone, set an appointment. I’ll give him a list. He would get paid for that day, but he would have to get those things done and then report back at the shop meeting. And it was eye opening. You would come back and he would go, that job is a lot harder than I thought. That’s amazing. I like that. And so it’s funny, I just talked to one of my service managers about doing that because we have a, a grumpy technician that we need to, uh, help him see the other side. But no, it’s, I mean, if we can get the, if we can get each other seeing other viewpoints, then then I think the, the dealership becomes stronger. I think so true. You really don’t know what someone else is going through until you walk in their shoes. And that’s, uh, that was, uh, that was that was great. Thank you for sharing that. Charity. What separates someone who is good at managing a dealership from someone who is capable of becoming an owner? Wow. Great question. That’s a great question. You got, uh, you’re trying to oh, there’s, there’s, there’s, there’s so many. Yeah, there’s so many of those kinds of questions they do. Okay. I feel like I gotta get my game together. Okay. So I think there’s, um, you know, not the best sales person or not the best manager, uh, service advisors make the best managers, right? Just because you sell a lot of cars doesn’t mean you should, you should, um, be in a management position. I agree, I think it’s the same thing with, uh, general managers. Just because you can run a store doesn’t mean you should be an owner or you’re going to be motivated by being an owner. An owner is very long term thinking. You’re getting involved in things like cash flow and you’re taking on debt and you’re taking on risk that maybe you wouldn’t as a general manager. And, and a lot of times, I mean, I have a, I’m on a dealer council for General Motors and we help, um, we help first time dealers. So we counsel them and we, we help them get into stores and stuff. It’s a, it’s a passion of mine because that’s how I got into my first opportunity. And there’s times I talked to general managers and they’re making really good money. And sometimes I say, hey, man, there’s stores that don’t make what you make. And they’re like, well, I don’t want to. I don’t want to be an owner. If I’m going to make less money, I go, you’re definitely going to make less money. Maybe long term you won’t, but short term you will. So I don’t think it’s you know, it’s about it’s the same. I think general manager and owners are it’s a different motivation. I don’t know if that answers your question, but no, I, I think so I, I remember one time me when, when I started moving into management, etc. that, uh, this thirty car a month salesperson wanted to be a manager, and he was very outspoken about it, but he was given the opportunity for that. And, and it was very eye opening because he ended up making less money. And, and he was actually just he was selfish, self-seeking, and self-centered. He didn’t get the whole picture. He wasn’t interested in the whole picture. He wasn’t interested on teamwork and what makes the dream work. And you know what I mean. He should have been a finance manager. Exactly. He he went back to the floor really quickly and learned his lesson. Uh, and then I’ve seen the opposite. I’ve seen somebody good with CSI above average on sales, but is always, you know, helping the team. And you, you could really see a big difference. And I’ve seen people like that excel tremendously. And money, it was important, but it’s a byproduct of what it is that you’re really after like, like you. Right. Exactly. So our, our measure is not that our measure is do the people around you get better. And that’s our that’s our step to, okay, this person has management and I joke about f and I, but f and I is I’m responsible for my own numbers. I’m, I’m responsible for my own success. And if that motivates you, that’s a great position. But if you’re motivated by the team succeeding, then maybe sales manager, general manager or other positions are, are, are what motivates you. And it’s not the person that sells the most cars or, or a service advisor that has the best numbers. Sometimes we promote people that that don’t have the best numbers and but people around them get better. Yeah, that’s what we want. We want to lift, lift the whole group. So I found in life more fulfilling, uh, when I was focused on helping other people, uh, than it all being about me. The money comes. Yeah. Money comes later. Eventually, yeah. Eventually. Right. Has it? Yeah. Eventually. Anyway. Go ahead. Gary. Well, correct me if I’m wrong, Leo, but you created a structured path that allows leaders to earn the opportunity to buy into the store. Why was ownership important to your leadership model? So we kind of did this in phases, right? Our first my first phase was obviously me doing it. And, and, and, you know, just grinding every day. And then how do I grow? So my next phase was putting together a management team. So we have a management team inside of P4, my marketing director, my CFO, you know, all the people that support all the stores or inside of E4. And now our next phase, which is fairly new in the last two years, is managing partners at the store. So we currently have two partners, Henry. That was at the store we purchased for twenty five years. And now he gets an opportunity to be a partner. Okay. And then we bought a Harley dealership, Harley Davidson dealership. And I didn’t know anything about Harley Davidson, so I recruited actually on LinkedIn, I found Angela. Angela has been with Harley for years. She’s a rock star, you know, and I, I don’t know, I did everything, begged her to come join. But the reason that I was able to attract her was because I offered ownership. I said, hey, if you come on with me, this store needs a turnaround. I want you to come on with me. And besides knowing everything about Harley, she’s great with the team. She’s a I mean, just she checks all the boxes. Yeah. And this was a small store. I probably wouldn’t have been able to attract her to this store if it was just a job. Right. So she was I said, let’s partner together. And she has an opportunity to own up to twenty percent of the store with some hurdles to cross. Sure. Oh, yeah. And she’s come in. It’s been over a year. She’s rocking it. She’s motivated. We’re good partners. And and so I think that to answer your question is I want to attract people that that maybe I couldn’t without it. And I believe, um, at the store level, having an owner operator at the store level that’s there. Every day is a big difference in customer experience and our team experience. Then some corporate office that we have outside. So that’s why I’m motivated by it, I think. Yeah, I think that’s great. My first experience with that was I worked for Van Tiel, Larry and Cecil Van Tol for for many years. They had ownership partnerships and, but I, I don’t hear too much about it. Are you familiar with Carter Myers and Lisa Borges? Carter Myers they have they have their, their, uh, employee owned as well. Uh, they, uh, not all, but, uh, they, they get a, a piece of the business when they hit a certain threshold. Yeah, exactly. So, uh, people want to be owners, uh, you know, they, they want to know, they, they count, they matter, they make a difference. They want to learn and grow too. And just another job is totally different than, hey, I got, I got a stake in this man. This is, this is amazing. And that’s, you know, when I left Penske, I left because I got an opportunity to be a partner in a small little Chrysler store in Kentucky, that was a minority, you know, small percentage. But to me, I was one hundred percent. Yeah, man. Every day I was grinding. I was like, to me, it was mine. And I’m gonna be successful. So you have to do that for other people. I think, you know, I’m just motivated by it. And I think it’s the right thing to do. I’d rather have, you know, eighty percent of a bunch of good stores than one hundred percent of a bunch of bad stores. Yeah. So, so that’s what I think the, the piece of the puzzle is, is I think that’s, I think that’s amazing. I’m glad you said that. And the people that are going to be listening to this and there’ll be a lot of them, uh, they may be calling you for a job. They’re interested. Well, we will, uh, Nathan will probably, he’s already making notes and focusing on that because we are all over LinkedIn. Good. Yeah. Um, well, and, you know, as you grow and you have multiple brands across multiple locations, what gets harder to protect as your organization grows? My pain point is I feel like if I had less stores or one big store or something, that that some of the pain points we have would get solved quicker. And sometimes you get stretched thin. So that’s, that’s one of the things that, you know, really gets to me sometimes because I’ll go visit a store and I’ll notice something and we’ll work through a problem and I’ll say, oh, you know, why did that? By the time I found out about it. Why did that take so long? So, um, it’s, you know, the scale and, and, and to make sure my team feels supported, like I hate sometimes I go to stores and like, hey, we haven’t seen you in a while. And that bothers me. I want to know everybody. So just being able to scale and still keep, you know, personal touch and feeling like they have a connection with me and feeling like we can solve problems together, you know? But what I’m doing is I brought in a really great CEO that’s supporting me now. Um, I have this P fourteen that’s amazing. That’s, that’s doing so we’re starting to build that out where it’s not me anymore, but I’ve been so hands on for so long that, you know, letting go is is it’s tough, isn’t it? You know, I’m learning to be the CEO. I’m learning to be this person. I’m not it’s not natural to me because I’ve just been doing everything for so long. So I’m learning. I’m learning. It is really I, I, I’ve been going through a lot of that myself recently. It’s hard to let go. Uh, when you were intimately involved in every aspect and then when you enjoy it too. Yeah. You’ve had some you’ve had some major growth too, right? Yeah. We, uh, we purchased, uh, three dealerships. Well, we purchased four dealerships in eighteen months. And a couple of them were, you know, needed a lot of hands on, but, uh, yeah, you’re exactly right. It’s it’s tough, but it’s not. It’s tough because I enjoy it, right? I enjoy getting in the weeds with the team. And it’s like you’re asking me not to do that. You know, I’m not supposed to do that anymore. So. But I like it. I know, but Leo, you look just like me. I’m learning right now. Yeah. And and I’ve I’ve been pretty good at it. You letting go if you’re able. You’re about growth and learning and moving forward. And the larger picture and this. This will allow you to do that. Right. But it’s still difficult. It’s like, man, it’s my baby. I know it’s the right. It’s the right thing to do. And that’s what I try to put. Um, as our North star is like when I’m making a decision, is it the right thing to do? Is it the right thing to do for the company? Sometimes I don’t like, you know, we name the new dealers, the dealerships going through a rebranding right now of Leo Auto Group. That’s not what I wanted. I didn’t want I didn’t want my name on it. I started the dealerships off with the names of the town Chevrolet of Columbus, Ford of Columbus. And then I was buying stores outside of Columbus. So I hired this branding company. I think I paid like fifty thousand dollars to do this. So they they did surveys. They surveyed our customers, they surveyed employees. I mean, they did this whole focus group. They came in, they go, I think you should call it Leo. And I said, I already have that. I already had that name, It cost me fifty thousand dollars for them to tell me my name. This is the way I felt. But but the but but really what happened is they convinced me why it was the right thing to do. And they showed me why. Um, they asked me what I want the company to be known for. And I said, I want to be the easiest place to do business with. That’s my. I want to be the easiest place to do business with service sales. Easy. And they said, well, what’s easier than Leo? And I said, yeah, that’s a good point. Okay, so so we went down that exercise. So I’m joking about the, the money was worth it because it, it got me to the place. So true. That’s a good example of something I didn’t, I felt uncomfortable doing. I really didn’t want to do it. But it’s the right thing to do for the company and, and we move forward with it. So good. Thank you for sharing that. When a store isn’t performing where you think it should, how do you determine whether you have a people problem, a process problem, a strategy problem? So good. Another good question. The. My rule of thumb is if it’s a if it’s a people problem, then it’s happening on one or two people. You know, if we’re not selling cars and I go in and I review a dealership and a few people are selling cars and a few people are not, then maybe it’s a people problem because the process is working. If nobody’s selling cars, then it’s a process problem. We need to change everything that’s happening in the store or go in and kind of rebuild. And we’re actually doing that right now with one of the stores. So we kind of look at them individually. I can’t tell you we have a blanket way of looking at that, but our P4 is our four P’s or four pillars. It’s people process, passion and product. And those in that order. Wow, I love it. So we always look and and Russell, I love what you said because we we say profit starts with the P but it’s not one of our P’s. It’s a byproduct of of those four pillars. So we always look at people first and then process. And then do they have the passion and do they believe in the product they’re selling? I love that, I love that P because it reminds me of the late eighties when, uh, Lee Iacocca, uh, he had a meeting and said, ladies and gentlemen, the end. You can sum all businesses up to three things. That’s people, products, and profits and most important of which are your people. But I love that fourth P that’s a really an awesome differentiator. Leo that’s great. And there is times we go in and everything is the same structure and we have good people as another store that’s successful. And we go in and it’s like, there’s a passion problem. Everything else is here, but they don’t believe in what they’re doing. They don’t like what they’re doing for whatever reason. Maybe the managers, you know, too tough on them, whatever that reason is. But there’s a passion product. So we kind of lead with our four. PS I love it and figure out what that is. That’s great. How do you fix a passion problem? How is that possible? So I mean, I’m coaching, but I would say a lot of times it’s the leadership. Yes. A lot of times the pack set by the leader. A lot of times it’s maybe somebody that’s managing, uh, you know, whatever you call it, old school, a little harder than, than, than we like not being a coach. We want them to be coaches and we’re going to coach them or we’re going to, you know, replace them. I mean, we’re we’re, we’re not this isn’t. Yeah. Um, I mean, we, we want everybody to stay with us. But I mean, the, the truth is sometimes it doesn’t work out. Sometimes they don’t fit our culture. It’s true. It’s hard sometimes in Leo to find that that p uh, and for me, well, of my, uh, a long career in this, but sixteen of those in stores, um, very few of them really took the time to make me feel like that, that I was part of something and, uh, and that I, I wanted to count and, and be a part of something bigger. I wanted to, I wanted to make a difference. And sometimes I, there was many times I didn’t even understand my why. And then some, you know, someone came along and just had a conversation with me and found out what I wanted, what was really important to me. And then they showed me how to get it. And the passion was just unbridled. That’s the I mean, we’re in such an incredible business. We all have these incredible stories of people. Uh, I mean, just that their lives have changed, including my own, that their lives have changed because somebody like took the took the initiative to just let them dream a little bigger or say, hey, you can do it. I mean, it’s such an incredible business and we can’t lose that. That’s that’s not, you know, we have to love it. How many people in your life would have said, hey, Leo, you can’t do that. I tried that, that won’t work. And they got interrupted by Leo, who just did. You know what I mean? Right? Yeah. I’ve had several people that say, no, what do you, uh. In fact, when I wanted to be a service manager, um, my service manager at the time, you know, he told me, hey, you’re not a people person that you should stay and just stay in the shop. And I, and I didn’t, I was young, I was like, okay, well, maybe I’m not a people person. Then somebody else came along going, no, I think you can do it. Wow. Okay. You know, so so if we can, it’s hard sometimes to understand we’re listening to the wrong people, especially when you’re young, you’re just like, exactly. This is somebody that’s successful. They must know what they’re talking about, you know? Yeah. They don’t. Now, um, this is an interesting question. I’ve never got to ask a question like this before. You began selling some vehicles with a very direct disclosure that essentially said, if you want reliable, this is not it. Why did you level why did that level of honesty work with customers? So where it started is we every dealership is going through acquisition challenges where we all feel like if we can acquire more used cars, we would sell more used cars, but we have to acquire the right ones. So we’re always we’re buying from the public, we’re, we’re working, trying to figure out how to buy from the service, drive all these things. We’re doing all these things. But then at the same time, I’m noticing that we’re wholesaling more cars. So cars are coming. We have a centralized recon center in our, um, Columbus area. So we have six dealerships in Columbus and we have centralized recon and great. They’re producing a great product. The cars are coming out and they’re in good shape. Everything’s done to them. We got maybe a little too strict, so a lot of cars were failing and going to the auction. So I wanted I want to say, well, this doesn’t make sense. And and they’re going to the auction and the dealer down the street is buying them. Yeah. And they’re selling them. I’m like, well, this, this has to stop. Right? So we created what we call an as traded program. So basically we’re selling the car as it was traded. And the only way that made sense for me is, well, I want to be in this business, but I don’t want to hide anything. So if you go on our website, you’ll see they’re tagged as traded. There’s separate disclosure forms when somebody buys that and the descriptions are almost like anti cell. And it’s funny, but and I encourage my team to be funny with it. But when they write a description on one of those cards it says, you know, the last one I looked at was a Honda Ridgeline and it said, if you’re looking for a good, dependable car, this is not it. I mean, that was that was a description. This car needs a transmission. This car is a mechanic special. Do you like working on cars? This car is for you. You know, the description is very, very full disclosure. That’s part of their disclosure form. Yeah. That’s tremendous transparency. It’s next level. And actually we’ve had people thank us for when we when we got into this, I was expecting a little heat. So what I told the managers, because we get we didn’t just roll this out. We had everybody come in. Of course, our fixed people were like, why are we selling. We’re going to sell this junk. And we explain to them why got buy in and everybody got on the same page and they understood. And again, they’re fixed just trying to solve every problem that hasn’t happened yet. So like these customers are going to come back in and then we’re going to be stuck with it. No no no. We’re going to sign a form. We’re going to still help people even though we’re telling them it’s as is. We’re still going to help people. But we’ve had people say thank you. I, I can’t work on a car myself or I don’t need a perfect car. I only need a car for a couple of years. So we were able to offer, we cap what they they, what they can price the car at. So it’s not it’s it’s almost like a wholesale to the public. So we don’t let them price it. Um, I mean there’s a big price difference between an as traded car and a non traded car. So there’s some rules behind it. But it’s worked really well. And, and I think people appreciate the full disclosure. Absolutely they do. Yeah. That’s something we’ve been we’ve been dealing with forever right. Transparency. And you know people have a preconceived notion of what they’re paying in in service to have, you know, I mean, we, we all know, recommend maintenance a whole lot cheaper than major repairs. And yet, you know, nada says for every franchised dealer, there’s sixteen independents that are, you know, salivating, jockeying, lying in wait because they know seven out of ten people are defecting. It’s two and a half to three years into it. And, uh, that’s a good way to that’s a good way to combat that. How are you combating it? Other than that? We’re, we’re, our conversations are a lot on retention. Retention is a big part of our yeah, our every manager meeting, uh, retention. So a couple things is we, we, uh, I mean, obviously having a good experience, but that, that, you know, but what’s the sticky stuff that’s going to get them to come back? So, you know, we, we, again, we try to be the easiest place to do business with. We want it to be easy to set an appointment with us. We want it to be easy to get an appointment when it comes in, everything’s ready. We that helps. We started a, uh, what’s called a Leo app. So everybody that buys a car gets their first maintenance and they get an app that, that they can look at their service history, they can look at their extended warranty products, all that in there that, that attaches people as they use that app we’re letting them use. So if they buy a Ford, Ford, or Chevy store. Then we want to drive them to our Ford store for their first service. So we’re trying to drive them wherever we can service them the best. Got it. So we’re we’re trying to do that. We’re trying to we’re in a lot of the marketing around, uh, keeping people reward points, things like that, that just kind of keep keeps people in the ecosystem. That’s, that’s, that’s a lot of our, that’s huge. It’s, it’s, it’s much easier doing that to retain them than to conquest and try to get them, you know? Sure. But you gotta do the basics. You gotta have a good experience first. I mean, we can give them all the points and all that we want, but if if it’s if it’s a if it’s brutal to come into the service department, then then, uh, then it’s not, you know, it’s not nothing’s going to work. Well, we’re really working on pick up and drop off service. We’re working on a lot of things. Everything’s around the, the theme of how do we keep people with us? How do we keep people with us? What more can we do to keep people in our in our system? There’s that fixed guy and you’re out there, you know. yeah. No no no. It drives a lot of my my decisions is, is I know that well, if we could do a great job in service, they’re going to I want to get to the point that people say, I don’t want to buy a car anywhere else because they have such a great service department. Yeah, that’s that’s the, you know, I don’t want to go buy a different brand because they take care of me. So. Well, I’m sure you know, that, that, uh, that those are prevalent conversations, even with the big automotive groups is I hate the term after sales, but it’s, hey, figuring out what we got to do to curb this retention problem and keep those people coming back. And of course, it’s not just one thing. It’s a multitude of things, but it’s a huge talking point. And the opportunity that dealers have is, you know, connected services. Uh, and some of the things that and EVs, uh, that the independents are gearing up for Leo. So it’s coming, they’re going to be there. Yeah, they’re not going to go out of business. I mean, they’re going to figure it out. Right. And, um, I mean, some of our best advisors we’ve hired away from independent shops and tire shops. I mean, they’re, they’re, uh, they’re they’re training is not bad. You know, we’re investing in training with our service advisors. We’re, we’re doing a lot of things on that front. Uh, we’re working all our service contracts are sold with the zero deductible, a disappearing deductible. Wow. Come back to us. So we, we try to you know, that’s another reason, uh, we’re doing some things with our collision center where you can you get a, a, a rebate back on your deductible if you get into collision, if you bring it back to us. So anything that like just keeps them back in the, in our system. I love it. That’s that, that’s, I don’t hear that a lot from, uh, people CEOs in your position because they’re not fixed people, but they’re getting counsel from somebody, but they’re being, you know, bombarded, you know, but, but sales are what they are right now and tariffs and all that. So there’s a huge focus on fixed operations. Sure. Leo, why do you think dealerships sometimes make inventory decisions emotionally instead of following the rules that they create. Wow. Um, parts inventory or any inventory. Inventory. I don’t, I don’t know. I mean, I, I’m a, it is probably is my fixed background. I’ve always been, you know, numbers person even before all the tools we have now. When I first started learning to buy cars, I was the weird guy with the spreadsheets and trying to figure out what did we sell last month and, and almost had like a ve auto going in my own spreadsheets. But I was always that. I don’t think everybody’s number driven. Some different personalities are driven by emotions and feelings. And I think, uh, I mean, that’s good too, but I think you need both. And with the tools we have now, I mean, the information is, is unbelievable. I mean, it, it there should be no reason that we’re making inventory mistakes or we don’t, you know, we don’t know right now. I think we could be too rigid. So my inventory team, I tell them we have a team of four. We have buyers for for used car inventory. We also have we’re buying from the public. And I always tell them it’s the eight tool rule for every eight things you do, right. You can make two mistakes because I want them, because I want them to take some chances. I want them to go out and buy some cars. And maybe we’ve never sold before, but all of a sudden we buy it and we sell it. And now, now the data didn’t tell us to buy, so I want them to take some chances. I don’t want to be so rigid. I like that taking risk. I mean, uh, I’m sure you didn’t. Everything you touched turned to be successful. Uh, you you failed way more than you probably succeeded. But you got you you took the risk. You went out there. You did it. You put it out there and knowing full well, but you learned from it, right? I have an acronym for fail First Attempt in Learning. That’s what it is. Oh, yeah. Yeah. That’s good. I want to steal it. Let me ask you this, Leo. You’ve worked both fixed and variable for a long time. Okay. Where do you see the biggest disconnect between those two sides of the dealership? Is there is there one big disconnect or is at multiple. It always comes down to communication. Understanding each other. I can say there’s a lot of pain points on the used car side recon, and I really believe it’s it’s because um, the interests aren’t aligned. So one thing, one thing we’ve done with our recon team, we have a centralized recon center in Columbus. And then our other stores have separate recon technicians and separate recon team. I see we remove flat rate from those technicians so they get paid hourly plus time to line bonuses. So they’re incentivized just like the used car managers incentivize. And all of a sudden the conversations of the of the because of the used car manager thinking, all they want to do is sell me the most everything, the car, you know, things, cars doesn’t need. All of a sudden, we can have that conversation with them and say, no, they’re aligned just like you. And that’s that’s eliminated a lot of the friction. So that’s a that’s an example. Yeah. But it’s somebody, it’s somebody connecting those dots. And a lot of stores don’t have that, right? Because like you said, the GM might be a variable person that tends to stay in the variable side and it is not trying to understand the other side. So with my general managers, I tried to we have those conversations. This is why this is happening in fixed. This is why it’s not that they’re just being difficult or they just want to give you a hard time. They just don’t want the car coming back a month later and needing something. And then you blame them for not finding it. It’s not that they’re trying to sell you everything. Right? So, uh, I think it’s I mean, really, to answer the question simply, it’s communication. How do we how do we understand each other’s perspectives? I love it makes sense and probably eases a lot of tension. I’ve heard a lot of complaints about the pay structure in that regard. I don’t know, flat rate to me needs to change. I, uh, I, I, I think it’s okay for a senior master technician. I don’t think it’s okay for somebody that’s getting in the business. I think it needs to be. We’ve created, and I’m not saying it’s perfect because I think it does a lot of work to do, but we created a career path for technicians and the career path is, um, pay scales are different based on the career path. So we have hourly hybrid pay, which is hourly plus flat rate. And we want to get them used to flat rate. So by the time they they’re set, you know, self, they can work their own hours and we don’t have to that they’re on flat rate. But it’s okay. So uh, traditional just somebody coming on and going, here you go sink or swim, you’re on flat rate. I just don’t, I think that’s old school and it’s time for that to change. So that’s a short rant. I have a lot more, but yeah, well, that makes sense. You ease them into that pay structure over time, because we hear a lot of complaints about flat rates. We hear it all. We hear it all. So many people, we lose so many great technicians to factories, and sometimes we lose them and they’re making less money. Sometimes we talk to people and they go, yeah, this is less money. You can. If you fly forty hours a week, you’ll make more with me than the factory. Yeah, but the factory is steady and I have the same paycheck. So the swings of flat rate, especially for a younger technician. Yeah. It’s it’s it’s not it’s not good. We need to change that. So yeah, not everybody’s wired that way, that’s for sure. Uh, before moving along, I, uh, and you don’t have to answer this. Uh, it’s kind of a personal thing, but are you is your dad still around? And what does he think of you now? Yeah. I mean, he’s. Yes, he’s, uh, retired and bored. He’s in Houston still. Uh, I think he’s, uh. I mean, he was a guy that worked. He was a technician that worked. So he ended up becoming a shop foreman. Actually, my dad ended up working for me at the Penske store, so he was my shop foreman. I was the fixed ops director. Um, it’s the way it worked out. But we had a great relationship. We never called each other dad and son. It was very professional. But, uh, after I left, he retired. Five or six years later, he’s at home. I think he’s taken down a fence and put it back up about four times already. Oh. No way. But you know what? His son, he’s watched his son achieve the American dream that he ultimately. And probably then some. I think that’s so great. He was at our ribbon cutting for our first store. I mean, it’s it’s it’s, you know, from where we started to, to to his son. So he, he doesn’t come in and sit here and say, Leo, I think you need to do this or I. No, I told him he can. I said, come drive the shuttle bus, come drive the shuttle van or something. But he lives in Houston. We’re in Indiana, so we don’t get to do that. Good thing he’s not nearby. Perhaps. Yeah. He’s good. I would hire. Well, we’re gonna do a couple more questions, then wrap up. Um, what’s something you believed about running dealerships ten years ago that you no longer believe? Uh, the good question. The, the biggest thing, I mean, personally, what I’ve learned is not everyone’s motivated the same way. I thought everybody was motivated by the way I was, which was growth. So I would try to motivate people that way, hey, you’re, you’re going to get to be a manager, you’re gonna do these things. And then I would have people look at me and not say it, but I’ll be thinking, I don’t want to be a manager. I’m happy being a technician. I’m happy being a service advisor. I’m happy. Why? Why do you why are you trying to make me a manager? So I think that that’s what I’ve learned in the last ten years is that everybody’s, you know, motivated differently. As far as the dealership, it’s funny, like we have all this technology. I’m gonna go on another rant here. We have all this technology. When I was a service advisor, I was expected to write seventeen rows a day. That was my number. I didn’t have any technology. I had an old route sheet that we had to fill out and highlight, and we had Reynolds and Reynolds. That was my technology. Now we have X time and all the tools, and we have to do all these efficiency tools. But now our advisors, right, twelve or thirteen hours a day. I go, what is the why is it more expensive and more complicated to do business? But our efficiency is less. Yeah, I, uh, that reminds me. So when I started selling cars in nineteen eighty five, Leo, the average sales, I was a verbal guy, right? The average salesperson sold ten. Here we are forty one years later with all this amazing technology and average salesperson sales. Nine point seven yeah. It’s like, what, what what’s going on? I don’t know, so much progress. Oh yeah. Right. I think it’s coming though. I think the, the technology and AI and all the things you’re probably hearing in the circles about data and clean data and communicating the right messaging at the right time with the right content for the consumers. And I think all that’s really important. But here’s what I find unnecessary. I just realized recently from because I read and listen and all kinds of thirty three percent of the population in the United States. Leo doesn’t even know a franchise dealer sells tires. I mean, that is ridiculous. It’s ridiculous. Thirty three percent of the population. They’re not. They’re not. It’s the single largest purchase they’re going to make during the warranty period. What a better way to grab hold of and retain that customer is. You can’t just say, oh, you need to set tires at sixteen hundred dollars. No. It has to be the relationship. You know, the do you do video or picture? Yeah. So those are all really, you know, I don’t know why I was starting down a rant and I can’t do that. We don’t have much time here. But that’s why. That’s why we reserve the right to have you back on though sometime. Yeah, I would love to. Yeah. I appreciate the invitation. Charity. Go ahead please. It’s been a great conversation. So I’ll ask you just two more questions before we have to end. Um, if you had to start over tomorrow with one dealership, limited capital and everything, you know, today, what would you do differently? She makes you think. Leo. She does that on purpose because I did, I did, yeah. This is like a, um. It reminds me of Penske meeting. I don’t want to be the chump. Uh, so I did start with one dealership and I didn’t I didn’t go into that one thinking I’m gonna grow a group. I was just happy to have the one and dive in. So sure. I would say if anybody’s like thinking about going down that path is, is to, um, franchise. I think there’s good and bad about every franchise. Sure. I mean, I can say good and bad things about every franchise. I’m partial to GM because they gave me my first start. So I’m you know, you should be. Yeah, absolutely. I’m always appreciative and, and, um, want to give back to them. But, uh, I would say if somebody wanted to get their own store. A smaller store is a great lesson that a lot of ways it’s harder to run, a lot of ways it’s harder to run than a bigger store, but it’s such a great education. I would just say hyper focus, dive in. I have dealers sometimes I talk to them by their their first store and they’re already talking about. But when I get my second store, it’s not time for all that. Like just go dive in and learn the business. They have a whole nother. There’s a lot of things that happen after net profit. And general managers don’t realize that. And you have to learn that. So just dive in a couple years, dive into the smaller store, learn it, and then you can think about, you know, the next step. Great advice. Well, are there any questions we didn’t ask you today that you wish we had? We covered a little bit of everything. We got we got a lot more we haven’t even covered, which is why we want to reserve the right to have some. Yeah. No, I think you guys did a good job. I’m, uh, looking forward to the episode and, and, um, I’ve been listening to some other ones. You guys have some great guests on, so thank you for thinking of me. Yeah. Well, listen, this is going to be everywhere, so when it comes out, it’s on thirteen or fourteen different, uh, podcasting channels. And then Nathan and he, it’s chopped up into many, many shorts over two or three week period. You’re going to be, I mean, you’re going to be everywhere. So all of you out there listening to Leo, uh, you know, like him, love him, asking questions, engage him if you want to. There’s a lot more that we wish we could have asked you and got involved with in the time, but, uh, we love all of you out there. Thank you. This is another, uh, very successful episode of WTF. And that’s what the fixed stops with Leo Portalupi, who is the owner and CEO of P4 automotive. And listen, if you have to ask what P4 is, you didn’t listen to the earlier part of the segment. So Leo, thank you very much. Thank you for having me on. Thank you. You’re Leo.