Building the Dealership of the Future

Welcome to another episode of the Car Dealership Guy Podcast.

Today, CDG is joined by Jeremy Beaver, CEO of Del Grande Dealer Group (DGDG), one of the largest family-owned automotive groups in the Bay Area. But the group is definitely more than a bunch of dealerships... It's 100% a tech company that just happens to sell cars.

In our conversation, we discuss selling 30,000 vehicles annually, why AI isn’t working today, the future of Carvana, and much more.

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Episode Topics:

(00:00:00) - Intro

(00:03:31) - Jeremy’s background and career

(00:08:31) - What is it like running a dealership in SF?

(00:12:15) - What are you doing differently to meet the modern demands of the consumer?

(00:18:52) - What does your tech stack look like?

(00:20:56) - What are you seeing in consumer demand right now?

(00:25:02) - How are you getting feedback from customers?

(00:27:54) - How does your profitability compare to other dealers?

(00:29:59) - How are you working with Upstart’s AI?

(00:32:10) - What’s the state of AI in auto today?

(00:37:26) - Where does Carvana fit in the marketplace?

(00:38:42) - Why did you choose a third party for your website?

(00:41:50) - EVs

(00:45:07) - How are you approaching service?

(00:46:02) - How are you thinking about the next few years for the industry?

1. Jeremy Beaver’s journey from high school grad to CEO.

Beaver's story isn't your typical CEO journey. Straight out of high school, he started as the low man on the totem pole, making cold calls at a Dodge dealership BDC before working his way up the ladder. He then leveraged his experience into strategic roles at tech startups, like Jumpstart Automotive, which powers much of the online behavior for Car and Driver, Road and Track, and more. Beaver then joined DGDG in 2008 and the group has undergone a major transition since.

2. DGDG uses culture and tech to continue scaling.

Under Beaver's leadership, the dealership group went from just three stores to a whopping seventeen. Annual car sales skyrocketed from 3,000 to a range of 25,000 to 30,000 units (roughly $1.3 billion in sales). To manage the growing group, DGDG adopted a Silicon Valley-inspired tech focus to expand its footprint, guide over 1,000 employees, and cut costs. Beaver says it's exciting to challenge himself to modernize what has historically been an “older school business” and to modernize it “as fast as possible.”

3. Tailoring the dealership experience to the market.

DGDG goes beyond the traditional car-selling model. They prioritize a culture-driven approach catered to the tech-savvy consumers of Silicon Valley who crave efficient, streamlined services. The challenge here is that car buyers in the market now expect the buying process at DGDG to be as simple and efficient as everything else in their lives. Beaver notes that the Bay Area is also an expensive place to do business (think real estate and labor).

4. A closer look at the Silicon Valley car buyer.

Beaver recognizes how the local economy, like the performance of tech stocks, impacts DGDG's clientele. Stock market fluctuations can significantly influence disposable income, affecting how many and what kind of luxury cars consumers buy. These tech-forward buyers are often very educated, have high FICO scores, and have a lot of cash on hand, says Beaver. This means dealers have to be “very versatile” and “nimble” in the business.

5. Making way for tech-savvy car buyers.

Today's consumers, especially in and around Silicon Valley, expect a high-tech experience. DGDG’s overarching strategy when it comes to technology is to make car buying and long-term ownership as simple as placing a Starbucks order, for example. The group achieves this by optimizing efficiency through utilizing its own technology.

6. Innovating everyday tasks to maximize operations.

What consumers don’t see is the tremendous amounts of data utilized by the dealerships. Beaver champions leveraging data analytics to build DGDG’s own custom tech solutions. The group created its own consumer data platform in Salesforce to gain insights into market dynamics and customer behavior. These tools allow them to change pricing strategies and optimize inventory based on real-time data, in a very agile way.

7. Digital sales are opening up new possibilities.

The shift towards digital car sales is undeniable, but there is still a lot of work to be done in the industry overall to accomplish seamless online car sales. For one, the tools are not quite perfect and not fully ready to transact, says Beaver. Additional hurdles include complying with complex state regulations, seamlessly blending digital operations with traditional sales practices, and bridging the gap between online pricing and in-store negotiations. At the end of the day, not many consumers are completing the car buying process online from start to finish.

8. Learning from Carvana.

Beaver acknowledges the disruptive influence of Carvana on traditional dealerships like DGDG, forcing them to adapt and enhance their digital retailing efforts. He sees Carvana's growth as a catalyst for industry innovation, pushing dealerships to improve online platforms and cater to changing consumer expectations. When all is said and done, Carvana is attempting to do the same things DGDG is: making car buying easier and more fun.

9. Harnessing the power of AI.

Through a partnership with AI auto lending solution Upstart, DGDG can offer consumers real-time loan comparisons from hundreds of lenders. Behind captive financing, the Upstart platform is the number one secondary tier lender because consumers love the process. This not only speeds up transactions but also enhances customer satisfaction by providing transparent and competitive options. From a broad perspective, AI is fragmented according to Beaver. There is a big push to integrate AI technology at the dealership level, but most car dealers don’t have the proper resources or tools to utilize it in the right way. They don’t have the systems to aggregate the data and turn it into actionable insights.

10. What the future of car sales looks like at DGDG.

Moving forward, Beaver expects significant strategy shifts to both the car buying and car servicing processes. The industry has changed faster over the past five years than it did the previous five years before, says Beaver. What’s most exciting for Beaver is getting to come to work every day and try new things to move to needle.