A New Perspective from THE Industry Innovator (Guest: Dale Pollak)


Last week we talked about process. This interview is the result of a long one. We’re (especially Paul) excited to release this exclusive interview with Dale Pollak, automotive visionary, Founder of vAuto, EVP at Cox Automotive, and all-around caring man.

Sitting in the game room of the vAuto headquarters in the Chicago area, Paul and Dale talk about automotive, working together and of course many of the topics in Dale’s recent book, Like I See It. The interview goes a little deeper as Dale talks about why he is still working and gives his prediction regarding what the next 12 months holds for the auto industry.

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Paul J Daly:  Welcome to Episode 25 of The Dealers Compressed Podcast. This is the week I've been waiting for, for a long time.  We are releasing the exclusive interview we had with Dale Pollak about two months ago, when we flew out to Chicago. We got a little deep with Dale, we didn't just ask the typical questions about velocity and the areas that we know he's an expert on. What I like to do is get parts of the conversation geared toward what drives the person that drives the business.

Paul J Daly:  So we talked about giving to the community and why Dale is still passionate about working, even when he doesn't have to, and why he still wants to contribute. So I think those are some of the most valuable parts of this interview, because again we're just a community of people working together, trying to provide for our families, to people we care about, and I think you're gonna see that's really true of Dale. So those of you that know Dale as just an industry visionary and someone who's obviously successfully built and sold and contributed, and helps dealers do better and provide, I think you're going to find that there's not a lot of passion and a lot of integrity that drives the man. And that gets me excited, that's something I try to employ personally as a business person, as a husband, as a father, as a friend.

Paul J Daly:  So I'm really excited to release this interview. It's about a 30 minute interview. Lots of great wisdom throughout, so I hope that you enjoy it, I hope that you share it, and I hope you find value in being part of the Dealers Compressed Community. Have a great week. 

Paul J Daly:  Dale, thank you again for taking time out of your schedule. I'm curious sometimes, like why did you agree to take some time out of your time to do this?

Dale Pollak:  Well Paul,  it's always great to be with you. I'm really curious about you, because you do so many different things, and you seem to be so passionate about the things you do, and quite frankly I'm still trying to figure you out, so I find that intriguing.

Paul J Daly:  Okay I'll take that, I'll take that, well thank you. You've achieved so much success in your life and in the automotive industry. Why are you still working and what is it that drives you to keep contributing?

Dale Pollak:  You know, I think the answer is that I'm passionate about the industry. I'm having fun. I love the people that I work with, both inside Cox Automotive and vAuto, and frankly I love being with dealers. So all of that combined for me is meaningful. And the older I've gotten, I've come to believe that happiness is that what you ought to be chasing, because happiness is elusive, it comes and it goes. But I think finding meaning, whether it be in the work professionally that you do, or in your family, or outside interests, I think meaning is the foundation of happiness, and it's something that you know works for me. So for me, there's just a lot of meaning at a lot of different levels of what I do.

Paul J Daly:  Have you always found meaning in the car business?  I know you're a generational dealer. So how has that progressed in the car business specifically, or is it outside the car business?

Dale Pollak:  Well I'm not so sure I was this philosophical or existential when I first started. The car business first started for me to be a way to make a living, and it's done a really nice job for me and on that front. But today it's meaningful, because I feel I can make a difference in people's lives. And I also feel like I have a certain perspective on the future of the industry, that is not yet well understood, that it's important to perpetuate and to propagate. I think getting people ready in this industry for the future, is something that to me has a lot of value and a lot of meaning.

Paul J Daly:  Yeah, that makes a lot of sense. So, we were kind of thinking, this is before I see it came out, and we were as an organization thinking, how can we contribute to the industry at large. And then I read Like I See It, and I said this is it. You said so many things in the book that were so much different than the feel and the vibe of the Velocity books. And I saw the Like I See It book as, like you said, it was like a call. It's for people to listen. Like listen to these things, they're important.

Paul J Daly:  Can you talk about what the difference was like, or was there a difference in writing Like I See It, than there was when you were writing the Velocity books?

Dale Pollak:  Yeah, for sure, it is a totally different book. I mean the first three books were really about the used car business, about the used car department, you know kind of like a how-to, to move from traditional management to Velocity management. And while there's a little bit of that in Like I See It, it's a fundamentally different book.  I mean Like I See It, speaks to things in the broader industry that I think are important, that in many cases are not well understood or not talked about, kind of like the elephants in the room that are there that people are not acknowledging. So yeah, it definitely was very different book than the first three.

Paul J Daly:  You said in the book, that there's a deafening silence in conversations with dealers. How do you bring those two pieces together.

Dale Pollak:  Well it's growing, it's growing.  I just came this morning from a speech that I delivered to the Chicago Auto Trade Association.  I told you that I think maybe I delivered the wrong message. I delivered this message, and you know-

Paul J Daly:  Why was it wrong then?

Dale Pollak:  Well maybe not wrong, but uncomfortable. Because it speaks to a very different world. And to be clear, it's not a world where there won't be car dealers, and it's not a world in my opinion, at least not in my lifetime, where cars won't be bought and sold conventionally, but the number of vehicles that we've bought and sold in the way that we know it today, I think will be dramatically reduced, because you have a lot of people accessing mobility through that one-to-many subscription model, so they'll be fewer dealerships. The ownership of those dealerships will be more highly consolidated. And that message is a lot of change, and change always breeds discomfort or uncertainty, fear or doubt. But yet I feel and Cox has supported this belief of mine, that it's important to have this discussion in the industry. Because we're an ecosystem, and we're all dependent on each other.

Dale Pollak:  We're gonna win or we're gonna lose together. And I believe that there's so much uncertainty about this, that the more people we can get thinking about it and talking about it, and solving for it, what it means for the retail distribution network, the better off we'll be. 

Paul J Daly:  I'm a big proponent of the message as well, and I wanted to talk for a second, because we are a reconditioning company as well, we have a knowledge of that. A couple chapters stood out a lot to me. One is the one that you're entitled The Taxing Problem that goes unaddressed in used cars. Where you kind of go deep on packs and retail conditioning rates. 

Dale Pollak:  Chapter 11.

Paul J Daly:  Chapter 11, yes. What do you see is like the root problem, like why are dealers romantic about high packs and reconditioning rates?

Dale Pollak:  Well high packs and retail reconditioning rates are essentially one and the same. The definition of a tax, if you looked up a tax in a dictionary, it's anytime you add an amount to an item that it's not offset by equal or greater value. It's a tax. To the extent that dealers put packs on cars that are not offset by equal or greater value and things like extended warranties or exchange policies, and to the extent that they charge retail which means that they likely are charging above the fair market value for a comparable parts and labor that they apply to the vehicle in the reconditioning process. To the extent that they do that, they're taxing the car. 

Dale Pollak:  In the old used car business, the service department could tax the car to the sales department, the owner could tax the car at the point of the sales department, and those taxes were passed along to shoppers, customers, because they didn't know any better, and it worked well.

Dale Pollak:  People in the service department or in the executive suite, put those tax dollars in their pocket and it was all good, when the customer paid those taxes. But today the customers are too smart, they shy away from buying cars that have those taxes baked into the asking price, and consequently the pipes clog up, the turn slows, and the profit goes down.

Dale Pollak:  So they worked so well for so long in the past, that it's, you know, I get it, it's hard to give up something that works well for a really long time, but if you understand the realities of the way the industry works, the way the market works today, you have to know what I know, and that is that dealers that apply high packs and retail reconditioning rates or taxes to their cars, turn the less. The cost of turning inventory slower today, is a million times greater than it ever used to be. Because in a certain respect, the used car has always been like a block of ice, it dissipates over time. But today, a used car is like a block of ice sitting on a hot plate, it dissipates in value like fast, like in 30 to 45 days. If you'd bought it right, it's out of profit opportunity.

Paul J Daly:  In 30 to 45 days, even if you bought it right your profit is already gone.

Dale Pollak:  Even if you bought it right. That's right. I tell dealers, every day you wake up and go to work, there is another dealer, another manager down the street, that is also coming to work that day, increasingly with the recognition that they need to price their vehicles more competitively today, in order to see shoppers. So the spread between what you want them for and what they likely can retail for, always has compressed over time, but the rate at which it compresses today, is frighteningly fast.

Paul J Daly:  Way fast.

Dale Pollak:  And the only answer to it, is that you have to sell more cars more quickly. 

Paul J Daly:  Which goes back to your premise, of Velocity based management. What would you say the average holding cost is per day, in lost opportunity? Do you have a number that you kind of benchmark and go by? There's got to be a range.

Dale Pollak:  If there is, I really don't know what it is. Does it really matter? 

Paul J Daly:  Right, 30 to 45 days.

Dale Pollak:  Does it really matter? Sometimes I think we make this business more complicated, and we over think it. I mean, the only thing that you know you need to do, is you need to buy 'em right, you need to get them ready for sale quickly, and you need to put a price on every car every day that makes it most likely to transact.

Dale Pollak:  I was having that conversation with a dealer the other day, and he said, "You know, I take these cars and over time, you know, I put prices on them, that I think I get the most I can for them." And I said, you know, I'm sympathetic to that process and that strategy, but I really don't think that that is what it takes today. I think what you have to do is put a price on every car every day, that it makes it most likely to transact. And if that doesn't give your gross profit, that you're satisfied with, so be it. Look at what you paid for the vehicle, look at what you spent to recondition the vehicle.  

Dale Pollak:  Just put a price on a car every day that's most likely to make it transact. And I think if you work with that premise, you're gonna do as well as you can do.

Paul J Daly:  Right, because every day you have an at bat, see it that way every day, every day your best at bat. Very interesting.

Paul J Daly:  Yeah, I've never heard that, I've never heard you say that before, but that makes sense. Every day your best effort, on every car, without fail.

Paul J Daly:  That kind of leads into in house reconditioning. So there's like a lot of conversation and I see a lot of our dealers and groups, talking about it a lot. What do you think the allure of in house reconditioning is? Why do some dealers win at it and some dealers lose?

Dale Pollak:  Well it's obvious that dealers would like to do the work mechanically, and sell the parts associated with the reconditioning, because that's a source of ... that's a profit pull for them. So it makes sense, you'd like to recondition cars internally, but here's why I think it breaks down.  I think that dealer sometimes gets so committed to doing all the reconditioning internally, that they do it at an expense. Meaning that if they can't move those cars through the process fast enough, they'll let them move slower, because they'll keep the work internally. So I say to dealers listen, you should have very aggressive expectations about how long it takes a car to get to the front line. I think the front line should be understood.

Dale Pollak:  It's two things, it's the physical front line, and the virtual front line. They're two different front lines, but nevertheless you should have an aggressive clock ticking on each of those. And guess what, if you can get it through that process internally, great. If you can't get it through that process to meet that time expectation, then you're tripping over dollars to save nickels. You should be outsourcing that, get it to the front line. The primary objective to make money at a dealership today has to be number one, to keep used cars turning quickly, and if you can do that by reconditioning them internally, fine, to the extent you can't do it, you shouldn't fear subletting that work out.

Paul J Daly:  I've seen both, I've seen dealers win and do it well, and then I've seen a lot of dealers put a lot of time, energy and money into it, even on the cosmetic side, and then 12 months later realize that it's totally broken down and they end up outsourcing anyway, except now they have this internal process that wrestles with this process, whether we're going to do it internally or outsource it. So it has been something I've seen a ton of times.

Dale Pollak:  And I actually think to the extent that it's practical, dealers should take the reconditioning out of their traditional customer mechanical repair environment. Because they compete, and to an extent you can separate them, you'll do a better job on each of them. And when you pull the reconditioning out of the customer environment, it puts the pressure on the service manager to pay the rent with customers, which is really what they ought to be doing anyhow.

Paul J Daly:  I've seen that a lot in the northeast, a lot of dealerships have body shops, and we see that a lot with cosmetic, you know paint work and things like that, where they'll say well I want to feed my body shop, but the second there's a storm or there's something like that, the first thing to get pushed to the end, is the used car. Like you said, they're not managing for each individual service, so your suggestion in mechanical especially, is to separate it from the retail environment. 

Paul J Daly:  A couple other things, you know, I want to talk a little bit about branding and marketing, and then a little bit about employment. In the branding space, I saw you in a recent interview with Jim Fitzpatrick, at the NADA convention, and you made a comment, and I haven't heard you talk very much about this, and maybe you do and I just haven't heard it, but you're saying how you're so surprised at, you know, we're 10 years in to this internet age, 20 years into the internet age, and you're seeing dealers spend an incredible disproportionate amount on traditional media, rather than digital.

Paul J Daly:  I heard that, and I was like, I've never really heard you talk about that. So if maybe you could talk about your thoughts on where the ad spend is going, and why you think it might-

Dale Pollak:  Yeah, and clearly this is not my area of expertise.

Paul J Daly:  Well I didn't know that, but you made a comment, so okay, well even your opinion on it.

Dale Pollak:  So the context in which you heard me speak about that, is in the broader context of margin compression. So if you allow me to address that question a bit more broadly.

Dale Pollak:  So we just talked about the future of mobility changing, and I think that that is an intermediate to long term challenge to our industry. But today right now, the biggest challenge to our industry is margin compression. 

Dale Pollak:  I saw something recently I never thought I would see, and that is the 2017 NADA dealer financial health report. For the first time showed that used car departments went negative net profit per used vehicle sold. I never thought I would see that. I saw that happen with new cars a while ago. Did we ever think we'd see used car department net sales per retail unit go negative? Never. 

Dale Pollak:  That by the way is front and back profit. So that's a wake up call. Another wake up call, is NADA reports to us that since 2009, every year a dealer has had to invest ever more in a used car to yield an ever smaller font-end gross profit. That's a classic ROI return analysis. So every year the ROI on a sale of a used car, has gone down. Higher investment, lower yield. 

Dale Pollak:  So here's sort of the big takeaway, and I'm getting to the answer of your question. 

Paul J Daly:  No that's fine. 

Dale Pollak:  It is no longer rational to believe, that just selling enough used car, total, new and used cars, will yield enough profit to make the business worthwhile, given the investment, the investment, the effort, and the risk. Just selling used cars and new cars one time days ago equated to making money, it no longer does. What you have to do, is you have to sell a lot of cars, but you have to do it more efficiently. And it's gonna take a combination of more efficient operations and volume, in order to yield the type of return commensurate with the investment, the risk and the effort. 

Dale Pollak:  So okay, then once you say, or come to that important recognition, that it takes more than just selling cars, you have to sell them more efficiently, then where are the areas of efficiency opportunity.  I think broadly speaking, I speak about four areas. Number one, better utilization of human capital. I mean, the fact that our dealerships still today turn over two-thirds of their sales employees every year, and better than 40% of their total points, that comes at a huge cost. Unfortunately that costs just doesn't land neatly on an expense line item. If it did, dealers would be much more concerned about it, but it has every bit the effect on bottom line performance.

Dale Pollak:  Another area of inefficiency is process. If you stop and think about it in the course of a day, there must be tens of thousands of individual transactions that occur in every department. And to the extent that those transactions are not performed, they're not performed on a timely basis, they're not performed on a quality basis, once again in aggregate collectively, they add up to outcomes or effects on the bottom line, every bit as much as expenses do. But like human capital, they don't neatly fall into line on an expense statement.

Paul J Daly:  Right, clearly.

Dale Pollak:  And then the third area, the one that you asked about, is promotional efficiency. So 90 plus percent of people today are researching and ever more buying cars online, and yet we still spend two-thirds as an industry, of our advertising and marketing promotional dollars in traditional media, and that's very inefficiently spent. So I think there's a lot of opportunity there.

Paul J Daly:  So one of the points you mentioned, is human capital management. You quoted Adam Robinson, founder and CEO of Hireology in your book, and we'll talk about the broader problem, you mentioned just the turnover rate.

Dale Pollak:  Because it doesn't neatly land on and expense line item in a financial statement, dealers are generally not aware of the cost of being bad at human capital management. So human capital management is the cost that dealers incur in constantly having to use job boards, and recruiting candidates. It's the cost of not doing effective consistent background checks, and it's the cost of dealers not doing effective interviews. 

Dale Pollak:  It astounds me how predictable outcomes are with people, if you just check a few boxes. Often people equate, and rightfully so, vAuto and Velocity management to Money Ball, which it was inspired when I read Money Ball back in 2003 or so. But the same concept of Money Ball, Michael Lewis' book and movie, applies to human capital, because you can test, you can absolutely test managers in terms of their style, and you can test perspective employees, and you can tell with a high degree of accuracy, whether that's going to be a good match or a bad match.

Dale Pollak:  And it's not that it's 100% reliable, because it's not. But I could tell you, if you could reduce the mistakes of hiring, and the right person might be the right person, but paired up with a certain manager it could be toxic. And you can predict that stuff, and if you can just improve or reduce errors by 10, 20, 30, 40%, which you can easily.

Paul J Daly:  Yeah that's a big line item.

Dale Pollak:  If you do it systematically. That translates into huge cost savings and productivity gains.

Paul J Daly:  Especially when you're wrestling over at this point, pennies on a used car profit. The amount of ground you can gain by keeping one manager for another year, substantial.

Dale Pollak:  I'm tell you that the problem of turnover and low productivity of people in dealerships is hugely solvable, hugely solvable. Like the same sort of solvability that I knew was present in used car operations. Speaking of Hireology in particular, they are really the only company out there that's addressing this problem in the automobile business.

Paul J Daly:  Yeah absolutely.

Dale Pollak:  Which amazes me.

Paul J Daly:  Adam said I think a few months ago, Adam said, he's excited to see a competitor on the floor, because that means the message is ringing true.

Dale Pollak:  We speak at our board meetings that some competitors, would not be bad, it would be good. 

Paul J Daly:  My father was, back then it was Bell Atlantic, a line installer in Philadelphia when I was growing up, and he told me a story. His first job out of high school was, directory assistant. So he sat in a room with 100 people with a big phone book, he took phone calls and he'd flip through and you'd find the number and you'd give it back. Can you imagine the labor it took to get a phone number.

Paul J Daly:  And he said, that the Bell, I can't remember, the Yellow Pages, and he said, and then the Donnelly Directory came out, and half the people started freaking out. He said, "I'll never forget what the director told us, he said this is good for, because now the pie is going to get so much bigger.", because their sales staff is out there pushing the value of advertising in these books, and that's what happened. Their revenue went through the roof, because they had a competitor. So I always remember that story when I face a competitor, this good, competition is good. 

Paul J Daly:  I told you I'm wearing my Because Amazon shirt.

Dale Pollak:  It's a great shirt.

Paul J Daly:  Thank you. I made it myself, literally. It kind of explains for me, I made it and I wear it, because it shapes a lot of our mindset, like our purchasing habits, and the level of trust we have at an organization, and there are people on both sides of the coin that say, well no one's going to buy a car from Amazon, and people that say, yes they will, you just watch. My position on it is, Amazon's built a lot of trust with me, because I bought a thousand $20 items, and they didn't earn it all at once, but when I see that car on Amazon, I'm going to believe that's the price, I'm going to trust the five star or four star ratings, the seller rating I'm going to trust, and the vehicle rating I'm going to trust. 

Paul J Daly:  What is your perception on what Amazon is doing in the car business. Do you see dealers reacting to it in a certain way, do you think there's too much hyperbole going on, what's your take on the Amazon effect?

Dale Pollak:  Well before you even get to the fact of Amazon in the car business, you have to acknowledge that Amazon is an incredibly efficient and rational way to procure goods and services, at multiple levels. I think Amazon is one of the leading, if not the leading contenders to be the provider of transportation subscriptions.

Paul J Daly:  And why do you say that? They don't have any products in the market right now, but what makes you say that, is just the reach and the scale, or the operational efficiency of the company?

Dale Pollak:  So the future of the industry is going to be reshaped fundamentally by the confluence of rideshare services and autonomous vehicles. Today and historically, transportation has been on a one to one basis, in other words, one person, one car. Whether they paid cash, they financed it, they leased it, it's one person, one car. That's an incredibly economically inefficient model.

Dale Pollak:  So there's no question in my mind that when ride sharing autonomous vehicles converge, and they are and they will continue, the cost of traveling a mile will be substantially reduced. And it will move from a one to one model, to one to many, meaning that one person will use many cars, perhaps in the course of a day, and one vehicle will be used by many people in the course of a day. That is the way to take a highly depreciable asset and a high fixed asset cost, and amortize it over more people and more miles, which reduces the cost per mile per person.

Dale Pollak:  So once you understand that basic premise, then you have to ask, well okay, who's going to be the big winners in terms of monetizing that future one to many subscription mobility? And I think that there potentially are two leading contenders for its major monetization. One might be the entity that built or operates that autonomous vehicle, and it will be a commercial entity, and I think the competing horse in that race, are the people that aggregate demand for those services. And if you want to know who those people are, I would say take out your smartphone, and look at page one on your smartphone, and all those icons there, I would say are the leading demand aggregators, and among all those icons that might be on your page one, I think Amazon is at least at this moment, the lead horse.

Dale Pollak:  So I think ultimately where the big profit pool's gonna be, not the only, but perhaps the biggest and deepest in my opinion, is going to be he or she that is most effective in aggregating demand for mobility, and to me that looks like page one of your smartphone.

Paul J Daly:  How about that, yeah I wasn't expecting you to go there. You're full of surprises.

Dale Pollak:  So I think that two things that I see occurring, which are pretty intelligent and rational to me. Number one, is the move to online sales. So let me just speak to that for a moment.

Dale Pollak:  I think the first phase of the internet in the retail automobile business, was to educate shoppers, and it has done that. People used to have to go from showroom, to showroom, to showroom to learn about models, availability and features, and specs and pricing. And now they can get all that much more efficiently online, such that the average person visits barely more than one dealership before they buy a car, because they've done that online. I think that was essentially the first phase of the internet in the industry.

Dale Pollak:  I think the next phase of the internet which we're now in, I think we're in the early phase, early innings of this second phase, is that shoppers are definitely now ready to begin to ... I'm not saying do the whole transaction online, some people might be doing that or wanting to do it, but what they'd like to do before they get to the showroom, is to get sort of the uncomfortable part of the process out of the way.

Dale Pollak:  They'd like to get to the price of the car, they'd like to get a trade, they'd like to know what their payment is. And now technology providers, at NADA 2018, we saw a lot of them in Las Vegas, they're coming to market with those sort of solutions that dealers can use. That is now a differentiated experience, it won't be forever, maybe not even for long, but presently it's a differentiated experience, and it's one that's really rational. Because if you can get that shopper to the showroom, largely having worked out the deal, where now they can do the part that really is enjoyable for everybody, look at the car, drive the car, learn about the car, take delivery of the car, you can do that faster, you can do that with less people, and obviously therefore with less cost. So I think that's one thing.

Dale Pollak:  And then the other thing which is not quite so easy to effect in the near term, is to do it on lower cost real estate with less facilities.

Paul J Daly:  Smaller space.

Dale Pollak:  So today, I get asked the question frequently, what do you think of Carvana, what do you think of that vending machine approach. And my answer to that is, well I don't know enough about Carvana to know whether they're going to do well or make it, or not make it. Maybe they will, maybe they won't, I just don't know. But here's what I do know, I know their model is right, because when you can combine an online experience with the physical experience, that doesn't have to occupy the most expensive commercial real estate in town, it could be off of the retail strip, on lower cost property, and you could do it in something that looks like a parking garage, that doesn't have to have beautiful interiors and heat, light and air conditioning.

Paul J Daly:  Less expense.

Dale Pollak:  And all of that sort of stuff. You do it at a lower cost. And that's obviously also a differentiated experience, and one that honestly I don't know that a lot of consumers are up for it today, but over time I think they'll warm to it, that's a differentiated experience. And when you combine that digital online experience with that lower cost much more efficient physical experience, now I think you've gone really to the heart of much of the problem in the industry, of the cost of selling and delivering a car.

Paul J Daly:  One of the things that we talk a lot about internally, with dealers in creating individual experience is brand, and not manufacturer brand, but what it is Dealer A about. If you've seen one dealer talking into a camera selling a car you've seen them all. And the data shows-

Dale Pollak:  Nobody sells for less.

Paul J Daly:  Nobody does, until the next infomercial, and then somebody after him.

Dale Pollak:  Huge selection.

Paul J Daly:  Yes, absolutely.

Dale Pollak:  Everybody drives. It's all the same.

Paul J Daly:  Let's make a deal, no one want to make a deal with a guy in a suit on TV. And the data as a marketer, and a creative, like the data shows us that there's not a more expensive way to be vanilla, then pay money or production's fee, well yeah, and so do you see more dealership brands elevating like identifying themselves separately from the manufacturers and being about something?

Dale Pollak:  The smart dealers definitely are. But I would say that, it's a small minority of dealers that really get that.  It raises the question, how do you differentiate yourself. In a fairly undifferentiated commoditized product environment. How do you do it? And once again, you're an expert on branding, I'm not, but just from my limited understanding or perspective about marketing and branding, I think you do it, at least the way that I would think about doing it, is my dealership would be very committed to social causes, social causes that mean something to my community, to my constituents, my customers.

Dale Pollak:  I think a guy who is really smart on this issue, is Adam Arens of Patriot Subaru. Adam's mission statement that everyone in his dealership understands is written on the wall in his showroom, and it comes down two words, and the two words are "To Serve." And if you really stop and think about it, that can me and does mean a lot of different things. To serve the customer in a traditional nondifferentiated sense, yes. But it's to serve our employees, to make their lives better, to serve our community, to serve in a lot of different ways. To me that's a really intelligent example of how you take a simple concept, reduce it down to two words, and apply it at multiple levels, and in totality, it creates a brand.

Paul J Daly:  It's funny, but the last thing I want to talk about, it's a prefect segue into it, unlike you I'm not a car guy by pedigree, but I think similarly to you, I like people. When I read through the story of you meeting with the Pope, it's probably my favorite part of the book, because I like people, and you're walkaway from that, you wrote: The best, biggest and brightest success will go to those among us who recognize and embrace that each customer engagement and interaction is an opportunity to make a positive impact and create a bond, or it's a catalyst for the competition.

Paul J Daly:  And you said you felt this applies to dealers especially. Why dealers especially?

Dale Pollak:  Well, why dealers especially? Because they sell probably the second highest ticket item that anyone will ever buy in their lifetime. It's an emotional decision, it's an important financial decision, and it's one that has a legacy of relationship attached to it, with service.  Whenever you deal with people at any level, I think trust and transparency and honesty, is critical. But as the stakes of the transaction between two people rise, I think so too does the importance and the criticality of the trust and the transparency and the honesty rises. 

Paul J Daly:  Absolutely.

Dale Pollak:  It's really simple.

Paul J Daly:  A car, let's face it, a lot of people name their car. I don't buy many things that I name, but I notice people name their cars. So I feel like even as a branding person, as a marketer, and as a creative, you can connect a car to anything. It's not like I have to work and go well okay, you made this product, and that product goes through here, and that person is eventually ... no, a car is what you use for life and drive your kids around and drive away from your wedding in, and it's just connected to everything.

Dale Pollak:  Yeah, it's connected to your identity. 

Paul J Daly:  It is, absolutely. So I really love that part, because I do, I think there are so many touch points in the automotive industry, that is just intimately involved with people's lives, and I think that dealerships do, this kind of goes back a little to the employment branding side, how would you like to work for a family owned business, that's been a staple of this community, and has probably given more to the community than the next ten businesses, and will continue to do so. So I do think there's just a great opportunity in the automotive industry to just make an impact.

Dale Pollak:  Yeah, let me just share my personal experience with that, in employment. I work for Cox, and I'm fortunate enough that I don't need to work, but I feel great about the company I work for. Because the company that I work for, is a family company. I get to see and interact with many of the family members on a fairly regular basis. I know extended members of the family that live in different places, even outside the country, and I get to see them. They know who I am, and they care, but most importantly what I really appreciate about going to work every day for this family and for this company, are their values. 

Dale Pollak:  So what do I mean? They're extremely committed to the environment. They're extremely committed to social justice. They're extremely committed to causes and values that I identify with. So I feel good that they're making money. I feel good that I sacrifice personally and my family sacrifices personally, but I know that I'm contributing in some ways to a family that's more than a business, it's a cause, and it's a cause that I identify with. And that's pretty special.

Paul J Daly:  Yeah it is. It's special and not common. One last thing, what do you think dealers are going to be talking about a year from now? You're kind of right on the front edge of the wave, so when I ask you that question, it carries some weight. What do you think people are going to be talking about next year?

Dale Pollak:  Well I think as margin compression continues, I think they're going to be talking about profitability or the lack thereof unfortunately. And I also think they're going to be talking about acquisitions, sales, buy-sales, and consolidation. Because I see acquisitions, consolidation being necessarily to achieve the type of economic scale necessarily to address margin depression. So I think that we're moving into an area where profitability will be challenged, and I think that we'll see an increase rapid acceleration of consolidation of ownership.

Paul J Daly:  Okay, well we'll be watching out for that.

Dale Pollak:  Thank you.

Paul J Daly:  Thank you so much.

Dale Pollak:  It's absolutely my pleasure, thank you.

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