Honda dealer walks CDG Founder Yossi J. Levi through one shop's million-dollar turnaround

Esparza: "I have not been the complete control for 18 years. I was one of the... centrical managers, I guess you could say, as a GSM and sales manager for 18 years at this particular store. We're in Tracy, which is the entry to the Central Valley or the breadbasket of the United States... a lot of farmland here in the Central Valley and a lot of fruits and vegetables grown in this particular area. Came over from our sister store where I did a decade as a salesman. I also got promoted over there and then got demoted back to a sales manager, but that's another story. Stuck with the business for quite some time and I'm here now, and I took the helm as general manager about 18 months ago. January 1 of 2025 was when I took the helm as the GM."

Esparza: "One of the three P's, obviously, is people, process, and pay plans. Those are the things that drive the sales people and then what goes on in between the walls of the store."

Esparza: "We did change pay plans. We had minimum standards, but we were not enforcing minimum standards... it's mandatory, not optional, and you enforce the pay plan and you enforce minimum standards. You got to sell 10 cars. If you don't sell 10, you can't stick around. We like everybody. We want them—promote the family atmosphere, because we spend more time here in the dealership walls than we do with our own families. So you want to promote that type of camaraderie and relationship with your employees. But the reality is that we're a production-based business and you have to produce. Otherwise, unfortunately, we got to part friends."

Esparza: "I think the market is ever changing, and I think 10 cars per month, when you average it over 90 days—a better scope—30 cars in that time frame is a reasonable amount. Once you get everybody to buy into 10, then you move it to 11, you move it to 12. So your minimum standards have to increase. We're currently at 12. We've increased it by two in the last 18 months."

Esparza: "Talent level. It's way easier said than done. Being a retail automotive sales professional is not easy. It's not for the faint of heart. I tell people all the time... 'Oh, you sell Hondas, that must be so easy.' And I say, 'Well, if it was that easy, everybody'd be doing it.' The reality is we get 40 no's before we get a yes. And being able to get by those no's and not taking it personally is really easier said than done... The reality is that CRMs are only as good as what you put in them. If you take copious notes and use that as your personal secretary, then you're going to get the results that you want. Are you sending out the birthday cards, the one-year follow-up, the 'your lease is ending in 6 months'? You have to tell the machine that you want to do that... personalization makes a difference in our industry."

Esparza: "I would say both. So much so that my owner saw fit to go out and hire a professional trainer for his dealer group... a gentleman previously known as the Trade Doctor, Shawn Evans. He hired him specifically to be our corporate trainer for all nine of his rooftops. I've always trained from the desk. I think that's invaluable training at point of sale because... iron sharpens iron. And when you're in the moment and you're facing the customer and they're telling you no and you got to get them to say yes, you have to be skilled enough to go out there, present it in a fashion that's going to be acceptable to the consumer and get them into the next step... I'm a real proponent of training from within and growing from within. We'd rather hire and train internally than bring somebody from the outside and train them on our process and procedure."

Esparza: "Yeah, the marketing company that we decided to go with, I actually got from one of the other dealers in our 20 group. It's called Prophecy Digital... When I talked to the vice president of sales, he said, 'We spelled it that way specifically because we believe that you deserve profit on every car you sell.' Last year in November, we started with them, and we were in such a good spot last year in November, I was actually able to enjoy Thanksgiving instead of being on pins and needles... because we were already up year-over-year, and we've continued that cycle throughout this last 18 months. They performed exceptionally well for us, and I would say that's one of the key components to our success level and the amount of growth that we've been able to produce."

Esparza: "We've tried multiple companies... Our COO, Ken Harvey, said, 'Hey, one of my other dealerships wants to use another company, and you want to use these guys.' So I said, 'Well, why don't we do an A/B test?' It was very apparent very quickly that my company was doing far better than the other company... What we found out very quickly is we're spending a certain amount of budget on marketing that we really can't attribute to a sale. We found that out by looking at our G4 analytics and our UTM tags with our digital guru from Man80A. So we changed from what we were doing... and moved that budget to a lower funnel and got more centric on car shoppers that were showing buying signs, as opposed to the higher-funnel customer. And we got customers that were definitely looking to buy a car, but they had also been brain damaged by five other dealerships and already got quotes and pricing... for much less profit and no trade-ins. So we quickly reversed that trend and called the marketing company and said, 'Hey, we want to go back to what we were doing before that was working'... We did that at the end of June, and we saw an uptick in our business... What they do in the higher funnel — I've coined it 'chumming the waters.' They're sprinkling that budget throughout the different layers of social media and video... and in turn, by chumming those waters, we're getting customers that weren't necessarily in the market to buy a car. It peaks their interest, and then they start moving down the funnel, and we're catching a higher quality customer higher in the funnel that hasn't been to five other dealerships."

Esparza: "We're having a lot more early management intervention. So we're bringing the sales manager out earlier in the process, introducing himself... letting the customer know that we're here to help in any way, shape, or form. If for any reason the salesperson can't answer a question, we're going to get the answer for you — just that soft introduction to the sales manager so he's not just the guy behind the glass. I think that's a key component. And then we are not afraid to take off the seat belt. My sales managers are up, they're engaged, they're taking off the seat belt, they're talking to the customer, they're going out and closing deals."

Esparza: "Our partnership with Upstart has been really, really beneficial for us. They're a full-spectrum lender... You have your A paper, your B paper, your C paper, your D paper, that run the gamut from the big guys, Chase and Cap One, all the way down to the Westlakes and Santander. I'll be honest, I was not a fan up front... the guy was like, 'Look, we want you to use our system, our desking system, 100% of the looks, 100% of the time.' I was put off by it. And then when we had a second guy come out, his name was Dave, and he's our rep currently, he was like, 'Look, I've sat in a dealership. I know this is a different deal. You don't need to take it word for word.' Now we use their desking tool on almost everything, but initially I was concerned about that. In turn, over time, what we've learned is that by sending everything to them, we're getting things done that we wouldn't normally think we could get done at a traditional lending institution. I'll give you for instance—gentleman comes in here, he's got 4 months on the job at Amazon making $4,400 a month. He's got one credit card, $500 high. He's on a $42,000 Accord Sport model with all the accessories. He's got three grand down. He doesn't have depth, he doesn't have a long enough job, he doesn't have three lines of credit, so he doesn't meet their algorithm. But we send him to Upstart, and he gets done at a single-digit rate for a full call. That's not something that would get done at the traditional lending institutions."

Esparza: "I think Honda has their finger on the pulse of what's really going on. Honda's said to us that they're going to expand the hybrid line. We currently have four models—they're talking that we should have an additional 15 worldwide by 2030, so over the next 36 months they're planning to come out with multiple hybrid variants. For my market specifically, in the Central Valley, we do a lot of commuting—a lot of our customers commute 45 minutes to an hour into the Bay Area for work. So for us, the EV market is there, but it's more around us. I think there's some definite wisdom in them hybridizing a lot of our vehicles, such as the Pilot, the Passport, the Odyssey. The Passport, for all intents and purposes, is a home run—they sold more Passports in the last year and a half than in the previous three."

Esparza: "Obviously, you got to hold your people accountable. That's the first thing. You have to inspect what you expect. My owner's big on that. And then, in order of importance, I think that if you have good people, process, and you're set up internally— and I believe that we do—the biggest component would be our marketing. Moving to Prophecy from our old marketing company, I really think that's given us the opportunity to catch people higher in the funnel and given us a better opportunity to create gross. And then going down the funnel, obviously changing the website, making the user experience better—our time on site, when we tracked it last month, was over five minutes, which is a lot for industry standards. I think a lot of that is that we're catching customers higher in the funnel, and in turn they want to learn more."