Inside Automotive with Jim Fitzpatrick, powered by CBT News

Claremont Toyota's Recipe for 12,000+ Annual Sales

• Jim Fitzpatrick • Season 1 • Episode 18

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Brad Pringle, General Manager of Claremont Toyota, shares how his dealership will sell 12,600 vehicles generating $570 million in revenue this year despite market challenges in Southern California.

• Business is moving in the right direction with projected 10-11% year-over-year growth
• Southern California market experienced disruption from tariff concerns and ICE raids affecting Hispanic customers
• Operating with incredibly low 8.3-day supply of inventory, compared to regional average of 10.5 days
• Toyota's hybrid strategy proving successful while other manufacturers recalibrate EV plans
• Leasing penetration approaching pre-COVID levels at 27-29%, reaching 40% on affordable models
• Digital retailing hasn't eliminated dealership visits but completely transformed the customer research process
• Customer experience philosophy centers on "how easy is it to do business with us?"
• Successful dealerships focus on setting customers up for financial success rather than one-time transactions
• Amazon and other third parties entering auto retail creates both challenges and opportunities


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Announcer:

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Hey everyone, Jim Fitzpatrick, welcome into another edition of Inside Automotive. Right here at CBT Automotive Network We've got Brad Pringle, who is the General Manager of Claremont Toyota in California. Brad, thank you so much for joining us on the show today.

Brad Pringle:

Absolutely. Yeah, thank you for having me. I appreciate it.

Jim Fitzpatrick:

Sure. So before we jump into some of these other issues, first and foremost, how is business at Claremont Toyota today?

Brad Pringle:

Today good and it's moving in the right direction. June was a little bit icy. Obviously there was a lot of disruptions that came into the market, especially here in Southern California. Tariffs were obviously a big top of mind, but the ice raids had a big impact for sure on business and, I think, made people really skittish in doing business. Here in Southern California. 44% of Toyota's market share is Hispanic. Obviously there's a lot of family members, there's a lot of news, there's a lot of scary statistics and all kinds of different things that come into play with, and we definitely felt it in the market. We're probably going to sell right under twelve thousand five hundred. Maybe twelve thousand six hundred seven hundred is kind of what our goal is for the year. We'll be up about 10, 11 percent year over year.

Jim Fitzpatrick:

Wow, that's new and used. Or year, wow, that's new and used. Or or new, that's new and used, that's new and used. Yeah, yeah, wow, that's so.

Jim Fitzpatrick:

That's, that's some nice volume

Brad Pringle:

Yeah, uh and uh, we do about 500. Uh, we did 550 million in sales last year. We're probably going to come in around 560 570 million in sales this year. We do about 115, 120,000 repair orders a year.

Jim Fitzpatrick:

Wow, that is incredible. You just rattled off the numbers of dealer groups stores that have got 5, 6, 7, 8, 9, 10 franchises in the lineup. So, wow, you're knocking the cover off the ball, Congratulations.

Brad Pringle:

It would be nice if we just came in and turned the light on. As you know from what you've done for 25-plus years, it's a lot of infrastructure, a lot of managing, a lot of leading that takes place. It's all a team.

Jim Fitzpatrick:

How big is the team today?

Brad Pringle:

275 employees

Jim Fitzpatrick:

Wow.

Jim Fitzpatrick:

That'll get you out of bed in the morning. Okay, all right, that's fantastic. Before we got recording, I asked you how far away you are from the giant Longo Toyota and you said maybe about 12 miles away.

Brad Pringle:

Yeah, world's largest is about 12, 14 miles away.

Jim Fitzpatrick:

Yeah.

Brad Pringle:

Doug and Aaron and Paul. They do a phenomenal job. Sure, sure, we're lucky to be on the same corridor as them.

Jim Fitzpatrick:

Right, right. So you got people that are constantly going between the stores, right?

Brad Pringle:

We do. Yeah, we're basically bookends on the I-10. They're a little bit closer to LA. I'm a little bit closer to the IE. We have a pension between us. We basically run the I-10 up and down, from coming in from Palm Springs all the way into Los Angeles. We're literally booked in that, like holding the Golden Gate Bridge up.

Jim Fitzpatrick:

Yeah, wow.

Brad Pringle:

The two corners.

Jim Fitzpatrick:

So, on that kind of volume, toyota keeps, you know, the, as you know, the Toyota keeps the daily supply really low in within, you know, with respect to the balance of the, the industry. What is that? What are you typically running at, on a, on a, on on a daily supply at any given time?

Brad Pringle:

Yesterday was lock allocation lock here in Southern California LA region's at 10.5 day supply. This morning Claremont Toyota's at like an 8.3 day supply. I'm at a zero day supply on six, seven different models which are challenging. They're extremely popular. In Tacoma we have an enormous amount of Tacoma. So basically, on my lot today is RAV4 Tacoma. Anticipation of the 2026 RAV4 coming into play was a little hairy there during the summertime with the EV rules coming into play. So it was interesting to see nationwide how this allocation model might have to be split up because of you know how one state wants to decide. You know what consumers should drive.

Jim Fitzpatrick:

Yeah, that's right, that's right. So let's talk a little bit about EVs. Obviously, you're a high volume store in California and California has got enjoys a pretty nice penetration of EV drivers out there and owners. How will this repealing the tax credit? How will that affect your business?

Brad Pringle:

You know here at Claremont Toyota, I don't know how much we're effectively going to be affected. High impact the BZ is not a massive market mover. It's not a massive volume piece for Toyota. It could have been. Obviously it could have shifted a lot of different things. You know Toyota sells cars all over the world, all over the 50 states. You know, here in the United States and the allocation model more or less would have kind of not kind of it would have changed overnight. For me at the Toyota level I haven't seen a big impact.

Brad Pringle:

I think with Toyota, going with hybrids was a very big risk for them to take. Initially when they were coming up with that talk point. They took a lot of heat on that and now a lot of manufacturers who were going by the buzzword of EV and battery and everything are now starting to rethink that same deal. So Tesla has taken a huge hit and obviously we saw when you have no competition and you're not familiar with the car business, all of a sudden they go through crazy price swings and there was no stabilization. They lost market share like crazy. So we're seeing in total registrations I actually just looked at through May it's still Tesla down like crazy. Long ago, Claremont Toyota and then Rivian, only at like 5,400 this year, which I think for me personally, I think is great.

Jim Fitzpatrick:

And then, of course, on the used car side, do you have a good supply of used cars? What are you sitting at in terms of daily supply on used cars? Because they're almost equally as tough to get.

Brad Pringle:

They are. So we've had a decent acquisition. We have a couple different acquisition streams that we live by and that we use and we do really well at acquiring vehicles and we do a really good job of intercompany, making sure that we communicate on used vehicles, what works best at which store. So we've done a really good job of that. We have seen used cars come down and obviously used car wholesale prices have, I mean, it's been a wild swing and even on the Toyota the Toyota is still a very hard vehicle to acquire and that wholesale price has stayed high and in a lot of situations it's actually been easier or cheaper sometimes to get a new vehicle, especially on a lease.

Brad Pringle:

I mean affordability is a massive factor, obviously in Southern California, like it is everywhere in the United States. But you know, in Southern California where you may not actually own a home, especially in my area, there's a lot of multi-generational and a lot of people who actually still live at home and the nicest thing they're going to own is going to be their vehicle. So an opportunity and it can be a new car as opposed to, you know, the pre-owned car, the affordability and being able to lease that vehicle or being able to take care of, take advantage of an APR special is a big deal.

Jim Fitzpatrick:

Yeah, yeah, there's no question Are has leasing come back in a big way? I know that California typically enjoys a pretty decent lease penetration before COVID. Then we saw it obviously dip pretty low during COVID. Is it back to pre COVID levels?

Brad Pringle:

It's not a hundred percent back but it's getting really close. Obviously, leasing is one of the number one retention tools that a manufacturer can never live and stand behind. We've seen a lot of manufacturers live because they did leasing, obviously through some tough times. Obviously you've gone through some of those downturns. So the leasing that we've seen we're at like 27% to 29% kind of depending on the type of vehicles that I have. Obviously the hotter vehicles that Toyota's released right now don't necessarily have attractive leases. But on affordability and on the affordable vehicles, for sure we're leasing in the 40% range, but at an average about 27, 29. We like to lease around 33 to 35 percent, which is high for us on our retail stores.

Jim Fitzpatrick:

You would think, with the high cost of new cars, that the OEMs and their captives would jump into leasing in a big way to roll more iron right.

Brad Pringle:

I agree. I've actually had this discussion with the TFS and explained to them. You know you guys are pushing these prepaid maintenance contracts and a lot of these retention tools to get the people to come back. But your number one retention tool- is lease.

Brad Pringle:

First and foremost, selling the car definitely trumps selling the prepaid maintenance contract, that's right or selling some of these retention tools and the retention tool is excellent, but if they're not driving a Toyota, it's useless, that's right. So getting you know these manufacturers understanding that that leasing is a massive, massive part of this, and you can see why EVs sell. I was just reading an article today on one of your newsletters, obviously with the, you know the Mercedes, the EQBs. I mean you're, you're buying a $50,000 car for $300 a month, a Mercedes, right, right, yeah, it's amazing. And so that lease is the introduction and for years, manufacturers use that as the introduction to their brand.

Jim Fitzpatrick:

Yeah, there's no question, and I don't know why. What does TMS tell you when you bring that up?

Brad Pringle:

I mean, without going too deep into it. It's borrowed money and then you know you have TM&A who's going to get involved, you have TFS who's going to get involved, and then in reality you have an extremely low day supply. But that doesn't change the fact of they're going to be coming back in three, four, five years. That's right so that's a big deal.

Jim Fitzpatrick:

Yeah, so it's good to be on top with that low daily supply. And why do we really have to do anything or stretch? Because we're selling every Toyota we can get our hands on right.

Brad Pringle:

The manufacturer's got to buyer for every single car: me. Right, that's right. It's the dealer and we sell them a vehicle. They can come in with $0, you know, $5 or $10, whatever they decide to put down, but truly they can come in and leave in a $50,000 car, make their payments, and then they have to actually come back and see me again, right, continue to make the car actually work and function correctly, and then I just have to be nice to them.

Jim Fitzpatrick:

That's right.

Brad Pringle:

And treat them correctly and then they'll come back and do business with us forever. But the more that I can get them to have everything affordable and have a great experience and come back, it's a big deal.

Jim Fitzpatrick:

So that's right. And all the studies show that the people that lease cars typically have the vehicle serviced at the dealership that they leased it from, and so it even helps in fixed ops and warranty business. And what have you Right?

Brad Pringle:

Yeah, it's massive, it's a big deal.

Jim Fitzpatrick:

Yeah, yeah. It seems as though the discussion of tariffs has subsided somewhat in showrooms from the dealers and managers that I talk to, Obviously very hot in March and April, for obvious reasons, but not so much today. Have you found that to be the case? Are consumers talking about tariffs or is that a driving force for them to come in and say I want to beat the tariffs, or even what are the tariffs on this particular vehicle that I'm looking at?

Brad Pringle:

It's not as top of mind as it was. Obviously you know when the liberation day came and you know we saw a big run up in May. Obviously for sure.

Jim Fitzpatrick:

Yeah.

Brad Pringle:

You know, with everybody racing to try to purchase vehicles because no one understood the impact or what was going to be the impact. The dealer didn't understand what's going to be the impact to us. Where's the squeeze going to come? You know what's the price increase is going to be. This car is seventy thousand dollars. What's my MSRP going to be? You know, on some of these vehicles there's a lot of uncertainty.

Brad Pringle:

I think the public in general has continued on with life as usual, right? Public in general has continued on with life as usual, right? Groceries are more expensive, gas is more expensive, cars everything yourself and myself, we're consumers as well. Anything we purchase is more expensive. And then we budget and then we're used to it and life goes on and it's not as top of mind. As far as, should I get this car Absolutely today, because I think this price increase is going to price me out of affordability. That talk did take place, obviously, months ago, but I think now, for the most part, and obviously you know, customers are a lot more technologically savvy and they understand how to actually research a lot of this. What was the price, what is the price, what was the impact? And they can understand it.

Jim Fitzpatrick:

Yeah, for sure, for sure. During COVID covid, we saw a lot of people you know, dealers that said, hey, we got to get into digital retailing. People are going to want to buy cars online and deliver them to the house the way Carvana does, and at the time, vroom or what have you didn't seem to really catch a lot of fire. Um, people still wanted to go into dealerships then, and even now we're not really seeing digital retailing taking off. However, that being said, everybody has gone to the website of the dealership or purchased or done more of the process online than ever before, you know, right down to getting their vehicle trade or their trade appraised and their approval on their financing, and getting payments and interest rates and everything else prior to actually coming in to the dealership. I'm sure you find that as well, right?

Brad Pringle:

Oh, absolutely A hundred percent. Yeah, there's no such thing as a fresh up anymore, my personal opinion.

Jim Fitzpatrick:

That's right. That's exactly right and they have all the information that they need. It's really they're kind of using the dealership for affirmation and confirmation of the product that they're looking to buy, right.

Brad Pringle:

Yep, I remember when I first started selling cars in 1998. I started in 1995. I started selling cars in 1998. And I remember some of the guys that I would stand next to on the Point, when people stood on the Point, were telling me that the. Internet was going to ruin the car business because people would be able to see what we own our cars for. These are multi-billion dollar businesses that take place and the interaction now from the consumer with it are so different.

Brad Pringle:

My personal opinion on this digital retailing is, you're probably familiar. I've seen that Amazon is coming into selling used cars and less and we spoke with them. You know we're a big retailer and I know they've spoke with a lot of different, really good dealer groups here here in the city. So you have these third party lead providers, like Auto Trader you know, you have Kelly Blue Books. You have Cars. com, Car Guru. Now you have Amazon. None of them own inventory, none of them own brick and mortar. They're all fighting for the customer and being a middleman into obviously selling my inventory right, getting me to be a subscriber or whatever the process takes place. It's going to become incredibly confusing to consumers. So I think right now this is a this is a massive time purchasing cars online will take place. It's going to happen. It's going to be a really scary deal for the next five years in the car business for a lot of dealers and it's going to be a really cool, great opportunity for a lot of innovative, forward-thinking dealers.

Jim Fitzpatrick:

I agree. Yeah, it is going to be interesting. I agree with you. It's going to be a question of who gets to the customer first. Are we meeting the customer today where they want to be met, whether it be online or in the store, and how is that experience going?

Jim Fitzpatrick:

I still think there's some challenges that we as an industry have to step up to and change, and, of course, I'm not talking about Claremont Toyota, but shopping for a car for my daughter recently and I'm saying to myself, my God, I'm walking to these dealerships and for the dealerships that knew me and say, oh, you know, I see you and I watch your videos, but the others that didn't know me, they're treating me, they're treating us the same way we did back in the 90s. You know they're taking out the four square and what's it going to take to close you today? And you know working addendum stickers off of cars that you know there's a plentiful supply of and you're scratching your head going it's 2025, guys, what are you doing? You know this is we've got to change the business.

Brad Pringle:

It drives me. It's, yes, it drives me, it drives me, it drives me crazy. A huge deal to me and with my team and we express this with our team all the time is how easy is it to do business with us, yep, and not just come in and purchase a car, but how easy is it to call the dealership and schedule an appointment? How easy is it to go to a dealership and get information? How easy is it to actually submit a lead and actually get a real, correct response? And then, when you come into the dealership, how easy is it to actually do business with us, whether it's in service or parts, or to actually purchase a car? And then another massive part of that is how easy is it for your employees to do business with those customers? That's right, right.

Brad Pringle:

It's a big deal still doing things really, really old school, and the bigger dealers that have these processes worked out, these smaller dealers, are going to have a really, really challenging time. And then you know they'll use comments like go back to basics and this, and which make no sense because they're gone. Those fundamentals don't exist anymore. It's completely different fundamentals and there's a different buyer in this market now, yes, I have a lot of younger buyers who grew up with cell phones in their hands.

Jim Fitzpatrick:

This to them is the way they're going to buy.

Brad Pringle:

Correct. They spend an enormous amount of time in that and they're okay with low human interaction. And a lot of people associate negotiation with conflict and they look at it as an uncomfortable process. So the easier that you can make it to where they can come in, they can find what they want, they can get the answers, they can purchase a car and they can leave. Like you said earlier, you know it's not going to work for absolutely everybody, yeah, but there's a new buyer that's coming into market for sure.

Jim Fitzpatrick:

Yeah, no question about it. I'd be remiss if I didn't ask this question, because I ask it of all of my guests. How do you feel about the balance of the year? Do you think we'll close strong, and is there anything out there that keeps you awake at night about either the industry, your market or the product that you're selling?

Brad Pringle:

The only thing. Well, I mean I can list off like 100 things. You know, Anybody that knows me will tell you that I stress like 20 percent higher than anybody normally does. I guess the biggest thing that kind of keeps me up is the anticipation of what's the next news that's really to disrupt and change some things. Inventory is always top of mind as a Toyota dealer, interest rates, affordability for our consumers, whether it's in the service department, whether it's in the actual affordability of payments that's a massive top of mind for me, because we always want to make sure we set our customer rooms up for success. It's a big deal, right, especially the first time they're getting a car from you, or the second time they're getting a car from you.

Brad Pringle:

If you're, if you're one at a timing, your customers and you're not thinking about the future with them and actually getting them set up for success to where they can afford this car. It's not a strain on them. They can come do business with you. They enjoy doing business with you. Their family's going to come do business with you. Obviously, we're a large volume dealership. It's in our DNA, it's in our DNA, it's in our dealer group's DNA. This is how we live, so we try to set all of our, all of our customers up for success.

Jim Fitzpatrick:

Yeah, yeah, that's. That's the attitude to have Brad Pringle, general manager at Claremont Toyota in California. Thank you so much for giving us so much time here today at CBT News. I know that our dealer, viewers and managers will get so much out of your visit with us.

Jim Fitzpatrick:

So thanks so much Love to do a follow-up with you to see how things are moving along.

Brad Pringle:

Yeah, absolutely Thank you. I appreciate it.

Jim Fitzpatrick:

Great Best of luck to you.

Announcer:

Thanks for watching Inside Automotive with Jim Fitzpatrick.