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Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.

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Speaker 1: I'm your host, Lee Klaskw, Senior Freight transportational Logistics Analysts

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Speaker 1: at Bloomberg Intelligence, Bloomberg's in house research arm of almost

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Speaker 1: five hundred analysts and strategists. Before diving in a little

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Speaker 1: public service announcement, your support is instrumental to keep bringing

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Speaker 1: great guests onto the podcast like the one we have today.

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Speaker 1: If you haven't already, please do take a moment to follow,

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Speaker 1: rate and share the Talking Transports Podcast. We appreciate your support.

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Speaker 1: Today you'll be joining me on a channel check. One

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Speaker 1: of the great things about my job is I get

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Speaker 1: to talk to a lot of interesting people that help

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Speaker 1: shape my research. And today I'm very excited to have

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Speaker 1: Brian Feida from FIDA Inc. Brian currently serves as VP

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Speaker 1: of Development for FIDA, a group of commercial truck dealerships

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Speaker 1: and an equipment finance company headquartered in Columbus, Ohio. Brian

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Speaker 1: manages acquisition, new store developments, and banking relationships, amongst other responsibilities.

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Speaker 1: Welcome to the podcast, Brian, How you doing.

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Speaker 2: Hey Lee, I'm doing well. Thank you for having me.

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Speaker 1: So outside of Columbus, Ohio and the Ohio area. You know,

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Speaker 1: Fighter might not be a household name. Can you tell

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Speaker 1: the folks that are listening in who and what is

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Speaker 1: fight at? Yeah?

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Speaker 2: So, finan Ink is our holding company. Our main business

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Speaker 2: is a group of commercial truck dealerships. So we're headquartered

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Speaker 2: here in Columbus, Ohio, and we actually have ten locations,

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Speaker 2: eight of those full service dealerships, then a central warehouse

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Speaker 2: and a separate parts brand across Kentucky, Ohio and Pennsylvania.

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Speaker 2: Now we also have an associated equipment finance company called

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Speaker 2: Highway Commercial Services that really focuses on financing trucks for

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Speaker 2: our customers and others, and then looking at some other

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Speaker 2: equipment that we don't sell, beind construction equipment and trailers

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Speaker 2: and things like that. So we've been in business since

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Speaker 2: nineteen fifty four. It's family owned business. My grandpa actually

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Speaker 2: started it in Youngstown, Ohio back in the day. So

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Speaker 2: seventy year anniversary this year, which is kind of cool.

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Speaker 2: But he started it with six employees running a small shop,

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Speaker 2: and he actually subleased two thirds of that shop kind

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Speaker 2: of on a shoestring budget, And today we are about

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Speaker 2: six hundred employees across those ten locations that I mentioned.

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Speaker 1: We well, happy birthday to fight and I didn't think

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Speaker 1: it was a coincidence that your last name is the

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Speaker 1: same as the company's name. So your third generation, that's fantastic.

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Speaker 1: Are there a lot of other family members still involved

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Speaker 1: in the business.

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Speaker 2: Yeah, so my dad is president and CEO, so he

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Speaker 2: is still fully active in the business. And then in

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Speaker 2: third generation, I have two brothers and a cousin, so

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Speaker 2: the four of us are coming up through the ranks

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Speaker 2: right now and got big shoes to fill in coming

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Speaker 2: into the family business. So it's a very cool thing

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Speaker 2: to be a part of.

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Speaker 1: What's it like working for your dad? I couldn't work

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Speaker 1: with my dad.

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Speaker 2: Yeah.

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Speaker 1: Yeah.

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Speaker 2: I always tell people there's there's pros and cons for sure,

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Speaker 2: and the pros far out weigh the cons. So I

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Speaker 2: feel lucky. I had a I had a career in

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Speaker 2: finance prior to coming into the business, and so the

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Speaker 2: business side of things, I kind of got a good

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Speaker 2: base before coming into the business. But the trucking industry specifically,

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Speaker 2: you know, he has seen it all in his time

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Speaker 2: in the business, the ups and downs in a cyclical industry,

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Speaker 2: So being able to cross over with him and work

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Speaker 2: with him and learn from what he has seen. Has

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Speaker 2: been a huge help to me and my brothers and cousin.

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Speaker 2: So we you know, it's funny. We all get along

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Speaker 2: and we enjoy spending time outside of work together, which

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Speaker 2: is good. I think that makes it a little easier.

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Speaker 2: So get out on the golf course every.

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Speaker 1: Now and then. Well that's good. I hope you hit

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Speaker 1: him long and straight. So, you know, I wanted to

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Speaker 1: have you on because you know, you're kind of on

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Speaker 1: the front lines of trucking demand, if you will, Because

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Speaker 1: if trucking companies are buying trucks, they're or expanding their fleet,

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Speaker 1: that means that that's a good thing. If they're not

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Speaker 1: that that could be a bad thing. A couple of

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Speaker 1: weeks ago on the podcast, we had a Laura Parada,

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Speaker 1: she's the president of the American Truck Dealers Association. I

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Speaker 1: thought that was an interesting conversation, and I wanted to

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Speaker 1: spend some time talking to actually owners of these truck

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Speaker 1: dealerships like FIDA, just to hear your perspective, you know,

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Speaker 1: from a from a regional standpoint. Can you talk about

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Speaker 1: you know, the I guess the state of the commercial

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Speaker 1: truck market is right now.

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Speaker 2: Yeah, So you know, it's kind of the tale of

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Speaker 2: two markets right now this year, specifically being the vocational

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Speaker 2: market and the on highway market. The on highway carriers

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Speaker 2: have been struggling for the last couple of years. You're

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Speaker 2: very familiar with the freight recession that we've been in.

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Speaker 2: So the economics for the on highway carriers is tough

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Speaker 2: that you know, equipment costs have gone up, interest rates

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Speaker 2: have gone up, and then the rates they're getting for

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Speaker 2: their loads have gone down, and so all of that

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Speaker 2: whole equation is certainly a challenge for the on highway

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Speaker 2: carriers and specifically for the smaller players in the market,

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Speaker 2: whereas the bigger players are more well funded and can

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Speaker 2: kind of get through these times, I think a little

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Speaker 2: bit easier. On the other side of things, the vocational

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Speaker 2: market remained strong. You know, coming out of COVID there

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Speaker 2: was record demand and every dealer, every OEM was on

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Speaker 2: an allocation and so what happened is a lot of

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Speaker 2: over the road trucks were produced and fleets built up

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Speaker 2: what they could, and I think some of the vocational trucks,

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Speaker 2: some of the vocational slots of the factory anyway, were

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Speaker 2: kind of shifted over to on highway because that's what

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Speaker 2: was hot. And so now those vocational fleets still have

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Speaker 2: replacement demand and so they continue to buy. Their business

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Speaker 2: is strong right now. So it's interesting and within within

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Speaker 2: our market, we service both of those sides of the business.

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Speaker 2: So it's kind of nice when one's down the other is.

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Speaker 1: Up, and just it just so our listeners know, because

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Speaker 1: you know, not everyone knows the jargon. When you're talking

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Speaker 1: about occasional vehicle, what are you talking about?

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Speaker 2: Yeah, the simplest way is think of a dump truck

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Speaker 2: versus an eighteen wheeler over the road. So vocational is

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Speaker 2: going to be anything that's not hauling across the highway.

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Speaker 2: So it's gonna be dump trucks, trash trucks, you know,

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Speaker 2: electric bucket trucks for for the utilities things like that.

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Speaker 1: And so for the for the on highway demand that

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Speaker 1: you guys service. Are you dealing with large fleets like

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Speaker 1: the Werner's JB Hunts of the world. Are you dealing

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Speaker 1: with like the one off owner operators, or are you

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Speaker 1: dealing with the market in between or are you dealing

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Speaker 1: with all those markets?

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Speaker 2: Yeah, So in our area specifically here in the Midwest.

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Speaker 2: We don't have any of those mega fleets that you're

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Speaker 2: thinking of with the Warners and JB Hunts of the world.

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Speaker 2: So the really our brend Butter is kind of the

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Speaker 2: smaller owner operators, kind of small to mid sized fleets, uh,

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Speaker 2: And we find that we played well in that market

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Speaker 2: because a lot of those companies are less sophisticated or

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Speaker 2: have less resources, so we're able to be a consultant

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Speaker 2: for them and helping them grow their business in an

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Speaker 2: intelligent and measured way. So that's kind of you know,

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Speaker 2: we don't have any of those accounts where we're selling

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Speaker 2: a couple of thousand trucks a year, but the smaller

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Speaker 2: kind of owner op family owned businesses is really where

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Speaker 2: we play.

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Speaker 1: Not yet, Brian, not yet maybe, Yeah.

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Speaker 2: We're of our customers are are growing that direction.

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Speaker 1: You never know. So I might be listening to this

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Speaker 1: podcast and was like, I got to give Brian some

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Speaker 1: business here, So can you can you talk about you know,

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Speaker 1: maybe do you guys participate in the used market or

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Speaker 1: you just buy you just selling new equipment.

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Speaker 2: Yeah, so we do participate in the used market, So

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Speaker 2: there's kind of two sides of the market as well.

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Speaker 2: So we are are constantly looking for used equipment to

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Speaker 2: buy and then ultimately to sell. And then the other

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Speaker 2: side of it is taking in trades. When you when

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Speaker 2: you sell a package of new trucks, oftentimes that fleet

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Speaker 2: will want to trade in they're used, and so you've

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Speaker 2: got to take in trade packages in order to win

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Speaker 2: that deal and then you sell them off your lot.

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Speaker 2: So typically taking taking trades is a very thin margin

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Speaker 2: business or potentially you're going to take losses on those.

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Speaker 2: The other side of it where we're actively going out

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Speaker 2: and trying to find good deals on used trucks, that's

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Speaker 2: where you can try to make a little bit of money.

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Speaker 2: But you kind of have to play in both sides,

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Speaker 2: the new and the used to be effective. In a

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Speaker 2: lot of cases, look for both.

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Speaker 1: Right when you're buying used trucks, are you going out

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Speaker 1: to the Ritchie Brothers those kind of like large auctions.

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Speaker 1: Are you going to the large fleets that are selling

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Speaker 1: off their trucks after three years? Who are you buying

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Speaker 1: them from? Mostly?

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Speaker 2: Yeah, So both fleet fleets typically are where we get

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Speaker 2: a lot of our business, where we find a lot

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Speaker 2: of our use trucks. We do do the go to

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Speaker 2: the auctions as well. That's where you can kind of

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Speaker 2: get some some big packages and trying to get a

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Speaker 2: good deal on them. But yeah, it's I mean, our

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Speaker 2: use truck managers are scouring the country daily. That's their

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Speaker 2: whole job is going and finding equipment for the used

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Speaker 2: truck salesman to be able to sell.

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Speaker 1: And how would you characterize the demand prospects or the

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Speaker 1: demand for used trucks versus new trucks on the on

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Speaker 1: highways side of things.

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Speaker 2: Yeah, so it's I would say it's soft as well.

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Speaker 2: You know, the used market has been a challenge the

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Speaker 2: last year or so, with used values dropping pretty consistently

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Speaker 2: for the last probably eighteen to twenty four months, and

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Speaker 2: so you try to not get caught with a bunch

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Speaker 2: of inventory on your lot that you can't move because

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Speaker 2: you know in two three months from now the values

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Speaker 2: can be quite a bit lower. So you're losing money

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Speaker 2: every day on a used truck. So we really look

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Speaker 2: to buy packages that we know there's demand for that

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Speaker 2: we can hopefully move quickly.

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Speaker 1: Gotcha. You mentioned inventory where it is inventory stand right

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Speaker 1: now at fiight and and how does that compare to

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Speaker 1: you know, your normal inventory levels are kind of like

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Speaker 1: where you're comfortable being in this part of the freight cycle.

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Speaker 2: Yeah, our inventory is probably a little bit elevated right now.

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Speaker 2: The couple of years during COVID, like I said, when

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Speaker 2: the market was very hot, trucks were hitting a lot

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Speaker 2: and going to customers immediately. They needed them as soon

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Speaker 2: as they could could get their hands on them. Nowadays,

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Speaker 2: deliveries are a little bit slower. You have a cancelation

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Speaker 2: here or there, and so we have some stock trucks

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Speaker 2: that are starting to pile up on our lots and

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Speaker 2: so definitely have a big focus on getting those moved.

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Speaker 2: As a truck dealer, our number one risk is getting

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Speaker 2: caught with too much inventory. It's very capital intensive business,

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Speaker 2: and especially with where interest rates are right now, don't

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Speaker 2: want all that inventory sitting their growing interest. So inventory

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Speaker 2: is definitely a little bit elevated. But there's another side

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Speaker 2: of that too, with the expected pre byte coming up

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Speaker 2: before the EPA twenty seven rules go in place. The

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Speaker 2: way allocation works with the manufacturers is they'll give you

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Speaker 2: an allocation based on your previous buying history, and so

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Speaker 2: any truck slot that we have this year that we

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Speaker 2: don't use, we may lose that allocation in upcoming years,

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Speaker 2: and so it's kind of a balance between trying to

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Speaker 2: take all the slots we're given so that we can

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Speaker 2: have a trucks versus not stacking up inventory.

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Speaker 1: Right, I do want to get to those new EPA

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Speaker 1: emission standards that are coming up. But just before we continue,

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Speaker 1: because do you guys represent like one or two brands?

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Speaker 1: One brand? Like who are the OEMs that you guys

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Speaker 1: are selling the equipment for on the news side.

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Speaker 2: Yeah, so we have a handful of brands. So Freightliner

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Speaker 2: and Western Star are both Dimond Truck North America brands,

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Speaker 2: and that that is the majority of our business. As

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Speaker 2: you know, we operate under the name Fight of freight Liners,

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Speaker 2: so that's kind of the meat of our business. But

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Speaker 2: they really are in the class six through eight markets,

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Speaker 2: and so as a truck dealer, we want to kind

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Speaker 2: of service all the markets and a lot of our

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Speaker 2: customers play within the lower and medium and heavy duty markets.

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Speaker 2: So we also have a Suzu which is kind of

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Speaker 2: like class three through seven. We have Kalmar Ottawa, which

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Speaker 2: is yard trucks, and then Battle Motors, which is very

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Speaker 2: specialized vocational units of trash trucks kind of where you

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Speaker 2: see them a lot.

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Speaker 1: Gotcha. Now, you were mentioning, you know, the kind of

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Speaker 1: the pre buy ahead of the new EPA standards, what like?

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Speaker 1: Do you are your customers talking about that? Now? Are

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Speaker 1: they saying, you know, I'm going to need to buy

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Speaker 1: some trucks ahead of this because you know, from what

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Speaker 1: we understand, these new trucks could be up to thirty

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Speaker 1: thousand dollars more expensive, and that's a lot for you know,

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Speaker 1: companies that make a very thin margin on that operate truck.

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Speaker 1: So what are you hearing from your customers about the

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Speaker 1: pre buy and the EPA new mandates.

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Speaker 2: Yeah, you know, it's interesting. That's we are working to

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Speaker 2: educate our customers on that. We want to put it

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Speaker 2: on all of their radars so that they don't get

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Speaker 2: caught in a situation where they're not able to get

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Speaker 2: as many trucks as they need over the next couple

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Speaker 2: of years. So it's a little bit of a tough

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Speaker 2: conversation given where the market is right now. Things are soft,

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Speaker 2: and we as a dealer are coming to our customers

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Speaker 2: and saying, hey, you don't want to get caught without

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Speaker 2: the allocation. So probably makes sense to start up sizing

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Speaker 2: your purchases ahead of time. Well, they're looking at it.

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Speaker 2: Their business is a little soft right now, and we're

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Speaker 2: having them try to plan out two years ahead of

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Speaker 2: these new rules. So it's definitely on customer's radar. We've

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Speaker 2: not seen any effect of the pre buy start yet.

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Speaker 2: I don't think they're ready to pull the trigger there,

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Speaker 2: So I would expect that'll start next year sometime, and

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Speaker 2: it's going to be similar to during COVID when everybody

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Speaker 2: got allocated down there was a race to try to

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Speaker 2: get orders on the board, and so my sense is

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Speaker 2: that once it starts and customers start to hear, hey

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Speaker 2: I wanted fifty trucks, I can only get forty on.

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Speaker 2: Once those conversations start, I think it's going to be

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Speaker 2: a race for everybody trying to get on the order board.

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Speaker 1: Right. You know our analyst that covers the the OEMs,

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Speaker 1: Chris Cheley, you know, I think he's looking for a

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Speaker 1: second half twenty twenty five is when when the pre

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Speaker 1: buy might start. Is that kind of in line with

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Speaker 1: what you're thinking.

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Speaker 2: Yeah, I would think so. I would have thought first

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Speaker 2: half of twenty five, but just given where the market

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Speaker 2: is right now, and and the fact that we haven't

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Speaker 2: really seen orders come in on that yet. Yeah, probably

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Speaker 2: later into twenty five we'll see it significantly pick up.

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Speaker 1: And you know what, what do you think the biggest

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Speaker 1: risks to expectations are in the pre buy because we

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Speaker 1: all think that they're one's going to happen, So everyone

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Speaker 1: is operating at least some more sophisticated players. And like

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Speaker 1: you know, you mentioned you're not giving up slots today

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Speaker 1: even though the demand's not there, because you know, you know,

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Speaker 1: in a year if there's going to be a lot

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Speaker 1: hopefully more demand. Where can people get get it wrong?

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Speaker 1: Where are the risks involved with the pre buy? Yeah?

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Speaker 2: Well, i'd say on the dealer side is kind of

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Speaker 2: what you just touched on. Is if dealers are taking

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Speaker 2: more trucks now in anticipation of getting those slots during

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Speaker 2: the pre buy, if the pre buy doesn't come through

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Speaker 2: like it's been predicted, or if something changes with the

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Speaker 2: EPA rules, maybe they get pushed back or or edited

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Speaker 2: in some way, dealers could end up stuck with more

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Speaker 2: inventory than they would need from the From the customers standpoint,

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Speaker 2: I really think it just comes down to once those

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Speaker 2: orders come in and everybody's race to get them. It's

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Speaker 2: more about being too late at that point and not

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Speaker 2: being able to get all the equipment that you need

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Speaker 2: before the new pricing goes into place.

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Speaker 1: You mentioned that, you know, inventory levels are maybe a

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Speaker 1: little higher than you'd like, and the fact that you

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Speaker 1: don't want to give up slots inventory levels unless demand

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Speaker 1: picks up. You know, could could rise from here. You know,

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Speaker 1: higher inventory levels can sometimes lead to irrational pricing behavior.

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Speaker 1: Are you seeing that at all with you know, the

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Speaker 1: dealers that you compete.

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Speaker 2: With, No, we're really not at this point. You know,

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Speaker 2: I don't know that it's that big of a of

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Speaker 2: an inventory issue just yet. Dealers have been kind of

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Speaker 2: used to running with little or no inventory the last

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Speaker 2: couple of years, just because of how hot the market was.

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Speaker 2: And if you look back pre COVID, it was normal

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Speaker 2: to have stock trucks on the lot and we just

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Speaker 2: haven't had that for a number of years now. So

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Speaker 2: having inventory is not not really the end of the world.

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Speaker 2: And so I think it's in some ways it's dealers

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Speaker 2: getting back to normal, and you know, the sales guys

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Speaker 2: like it because they've got a truck on the lot

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Speaker 2: that can go show a customer and actually walk around

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Speaker 2: and kick the tires and sell something rather than it's

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Speaker 2: been a lot of over in the last couple of

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Speaker 2: years selling over the phone and without a physical truck there.

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Speaker 1: So are your customers in the driver's seat, no pun intended.

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Speaker 1: I guess when it comes to negotiating on price because

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Speaker 1: of the things that you mentioned that demand's not great

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Speaker 1: on the highways side and inventories are creeping up.

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Speaker 2: Yeah, I'd say they definitely have some more buying power

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Speaker 2: at this point because of that. But as we talked

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Speaker 2: about the pre by coming next year, we'll kind of

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Speaker 2: see how the market reacts over the next six to

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Speaker 2: twelve months.

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Speaker 1: You know, inflation's been top of mind for a lot

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Speaker 1: of people, no matter what business you're in. Are you

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Speaker 1: able to pass on some of the inflationary costs that

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Speaker 1: you're dealing with to your customers? And also, you know,

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Speaker 1: can you just talk about, you know, the price of

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Speaker 1: a typical truck today versus pre pandemic, Like how much

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Speaker 1: more expensive our trucks because of the inflationary pressures?

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Speaker 2: Yeah? Quite a bit more expensive. And we saw a

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Speaker 2: lot of that happen the first couple of years of COVID,

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Speaker 2: and it has certainly leveled off since then, but kind

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Speaker 2: of just ballparking numbers of an over the road tractor

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Speaker 2: pre COVID was maybe one hundred and fifty to one

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Speaker 2: hundred and sixty thousand, and a lot of that depends

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Speaker 2: on the spec These are very custom trucks, so it

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Speaker 2: depends on how the customer spects it. But call out

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Speaker 2: one hundred and fifty hundred and sixty thousand, and that's

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Speaker 2: more like one hundred and eighty five to one hundred

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Speaker 2: and ninety five thousand at this point. So yeah, the

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Speaker 2: inflation pressure has definitely hit our industry. It's more than

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Speaker 2: just the truck side, the part side as well. Costs

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Speaker 2: one across the board for a number of reasons that

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Speaker 2: we've all been talking about for for the last few years.

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Speaker 2: Like I said, pricing has gotten more competitive in the industry.

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Speaker 2: We're we're able to negotiate with our suppliers a little

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Speaker 2: bit more now than I mean, the supply demand curve

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Speaker 2: was just way out of balance there for a while

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Speaker 2: and nobody had any buying power. So things are kind

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Speaker 2: of getting back to normal where we can we can

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Speaker 2: try to go work deals buying and book thinking about

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Speaker 2: the parts side of the business to get better pricing

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Speaker 2: and then ultimately pass that through to our customers.

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Speaker 1: Right, So I'm just curious do you have, like, is

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Speaker 1: there something that the trucking industry has come out with

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Speaker 1: the OEMs, whether it's a technology or just something of

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Speaker 1: comfort that over the last couple of years, you've just

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Speaker 1: been like, Wow, that's pretty cool.

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Speaker 2: Uh yeah, I mean a lot of the driver assists

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Speaker 2: technology that has come out I think is pretty cool.

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Speaker 2: They're they're getting very close to self driving trucks, and

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Speaker 2: you hear about that in the consumer auto world, but

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Speaker 2: the truck manufacturers are investing a lot of money in

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Speaker 2: that as well. Also just making drivers lives easier, making

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Speaker 2: their jobs easier and safer, I think is is pretty big.

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Speaker 1: Yeah, I mean that's for us, that's the biggest thing

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Speaker 1: with all these autonomous technologies. You know, we're we're not

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Speaker 1: in the camp where we think trucks are going to

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Speaker 1: be roaming the roads without drivers. We just think that

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Speaker 1: drivers will be much more safer, you know, given these

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Speaker 1: these these technology advances, at least, like you know, over

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Speaker 1: the next ten years. But sure that that's pretty pretty

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Speaker 1: interesting stuff. Do you have a favorite color truck?

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Speaker 2: The the white cascade is what we sell the most of,

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Speaker 2: so I've got to say that's my favorite.

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Speaker 1: Right, all right, I'd go for a blue, but that's

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Speaker 1: just me. Are you seeing any buyer behavior changes that

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Speaker 1: that are driven by an election year? You know, does

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Speaker 1: that does that impact people's purchasing behaviors?

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Speaker 2: You know, anecdotally you hear from a customer here or

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Speaker 2: there that that it does affect that they have kind

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Speaker 2: of slowed down or pulled back on some of their purchases.

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Speaker 2: I'm not sure that it's meaningful really. I think, like

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Speaker 2: a lot of industries, where people can be emotional about

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Speaker 2: an election year, and at the end of the day,

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Speaker 2: whichever party is in office, the show must go on

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Speaker 2: and the economy continues, continues on, and there's a need

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Speaker 2: for trucking. So at the end of the day, I

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Speaker 2: don't think it affects things as much as people may

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Speaker 2: think it would. Now this year is interesting, specifically as

404
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Speaker 2: it relates to tax law because of the twenty seventeen

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Speaker 2: tax law with bonus depreciation has now started to sunset,

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Speaker 2: and so that bonus appreciation was big for a lot

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Speaker 2: of our customers. And gave them the ability to make

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Speaker 2: bigger investments into equipment because they get that tax benefit

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Speaker 2: on the back end. And so depending on how this

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Speaker 2: election goes, there could be some more optimism about purchasing equipment.

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Speaker 1: Yeah, so you know, obviously, you know, the first Trump administration,

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Speaker 1: they started a bunch of tariffs, specifically on China. The

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Speaker 1: Biden administration kind of continued most of those tariffs. Expectations

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Speaker 1: are Harris administration would do that too, and then you know,

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Speaker 1: also expectations are if Trump were to win put the

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Speaker 1: presidency again, you could see an increase in tariffs even

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Speaker 1: from where we have today, especially focused on China. I know,

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Speaker 1: like parts are a big part of your business or

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Speaker 1: a lot of those. Where are those parts come from?

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Speaker 1: Are they coming from China? Are they coming from Mexico

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Speaker 1: or are they coming from Ohio? Where are these parts

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Speaker 1: coming from?

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Speaker 2: Yeah? They ultimately they come from all over. A lot

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Speaker 2: of our suppliers do try to source as much domestic

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Speaker 2: product as they can. At the end of the day,

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Speaker 2: they are coming from all over.

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Speaker 1: Though.

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Speaker 2: You see a lot of in the parts business, a

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Speaker 2: lot of cheap parts coming from China, and there tend

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Speaker 2: to be quality issues there, just their factories don't have

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Speaker 2: the same standards as they're producing parts and coming over

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Speaker 2: and so we're trying to caution customers against that because

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Speaker 2: there's gonna be a you know, a shiny price that

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Speaker 2: they can get a real low cost part replacement, and

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Speaker 2: ultimately it may be a safety hazard. So we really

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Speaker 2: try to avoid parts coming from anywhere in the world

437
00:23:17,720 --> 00:23:20,560
Speaker 2: that just doesn't have the same quality standards as we're

438
00:23:20,640 --> 00:23:21,960
Speaker 2: used to with our main suppliers.

439
00:23:22,560 --> 00:23:26,919
Speaker 1: So from your perspective in talking with your customers, you know,

440
00:23:28,280 --> 00:23:32,320
Speaker 1: is there any appetite to adopt zero emission vehicles? And

441
00:23:32,400 --> 00:23:34,960
Speaker 1: kind of what's been the feedback thus far? When when

442
00:23:35,000 --> 00:23:38,920
Speaker 1: when you're talking to customers about, you know, whether it's

443
00:23:38,920 --> 00:23:41,480
Speaker 1: a EVS or alternative fuels.

444
00:23:41,880 --> 00:23:44,399
Speaker 2: Yeah, I suspect you may get a different answer if

445
00:23:44,440 --> 00:23:46,840
Speaker 2: you ask somebody from from one of the coasts versus

446
00:23:46,920 --> 00:23:50,040
Speaker 2: what we're seeing here in the Midwest. But there's really

447
00:23:50,080 --> 00:23:55,320
Speaker 2: not much demand for EVS at this point. I think

448
00:23:55,359 --> 00:23:58,159
Speaker 2: all the demand I'm seeing is being driven by regulation

449
00:23:58,560 --> 00:24:03,719
Speaker 2: or secondarily buy boardrooms wanting to market that they a

450
00:24:03,760 --> 00:24:06,720
Speaker 2: certain ESG score or that they are being a green company.

451
00:24:06,760 --> 00:24:10,359
Speaker 2: And so right now, the cost of an EV maybe

452
00:24:10,560 --> 00:24:13,720
Speaker 2: three to four times what its diesel counterpart would be.

453
00:24:14,480 --> 00:24:17,640
Speaker 2: And so you mentioned earlier, these trucking companies are operating

454
00:24:17,640 --> 00:24:20,399
Speaker 2: on pre thin margins, so if you now triple the

455
00:24:20,440 --> 00:24:23,400
Speaker 2: cost of their equipment, the economics of it just don't

456
00:24:23,440 --> 00:24:27,199
Speaker 2: pencil out. Really. And there's a story I like to

457
00:24:27,200 --> 00:24:29,080
Speaker 2: tell it kind of shows some of the craze of

458
00:24:29,359 --> 00:24:32,639
Speaker 2: the EV world going. We had a customer that in

459
00:24:32,720 --> 00:24:35,719
Speaker 2: order to win a contract, they had to have electric

460
00:24:35,840 --> 00:24:40,280
Speaker 2: vehicles in their fleet. So our suppliers didn't have an

461
00:24:40,320 --> 00:24:42,359
Speaker 2: EV available at the time. This a couple of years ago,

462
00:24:42,800 --> 00:24:47,040
Speaker 2: so they bought four Chinese electric trucks, they parked them

463
00:24:47,040 --> 00:24:49,960
Speaker 2: on the lot, ran the entire contract with diesel trucks,

464
00:24:50,640 --> 00:24:52,000
Speaker 2: and then came to us at the end of the

465
00:24:52,040 --> 00:24:53,840
Speaker 2: contract and said, hey, can you help us sell these

466
00:24:53,880 --> 00:24:56,479
Speaker 2: paper weights. They didn't put a single mile on for

467
00:24:56,480 --> 00:24:59,280
Speaker 2: a two year contract. But then that customer was able

468
00:24:59,280 --> 00:25:02,359
Speaker 2: to go out to their you know, shareholders and everybody

469
00:25:02,359 --> 00:25:06,560
Speaker 2: and say, hey, we're making all of our suppliers go green. Right,

470
00:25:06,760 --> 00:25:09,080
Speaker 2: it wasn't happening in reality, and so there's a lot

471
00:25:09,119 --> 00:25:11,359
Speaker 2: of kind of wonky things like that happening right now.

472
00:25:11,760 --> 00:25:14,760
Speaker 2: I've heard stories of people using a diesel generator to

473
00:25:14,880 --> 00:25:19,119
Speaker 2: charge up an electric vehicle, and so I think a

474
00:25:19,119 --> 00:25:22,240
Speaker 2: lot of things that technology is coming along and it's

475
00:25:22,240 --> 00:25:28,040
Speaker 2: improving quickly, but until the cost makes sense and the

476
00:25:28,080 --> 00:25:30,960
Speaker 2: infrastructures in place, it's really gonna be a challenge I

477
00:25:30,960 --> 00:25:32,959
Speaker 2: think for that to be a significant part of the market.

478
00:25:33,240 --> 00:25:35,800
Speaker 1: Yeah, I would agree. It seems like there's certain applications

479
00:25:35,840 --> 00:25:38,760
Speaker 1: where it works, but many applications where it doesn't, and

480
00:25:38,880 --> 00:25:42,639
Speaker 1: it should be a slow evolution as opposed to, you know,

481
00:25:43,000 --> 00:25:47,080
Speaker 1: a quick revolution. But you know, that's just one person's opinion.

482
00:25:49,560 --> 00:25:53,600
Speaker 1: So a couple of months ago, there was a cyber

483
00:25:53,640 --> 00:25:58,280
Speaker 1: attack the CDK, you know, which a lot of car

484
00:25:58,400 --> 00:26:01,479
Speaker 1: dealerships and truck dealers ships were kind of on that

485
00:26:01,520 --> 00:26:05,880
Speaker 1: system and impacted. Was was fight of freight LNERs impacted

486
00:26:05,920 --> 00:26:06,800
Speaker 1: at all from that?

487
00:26:07,200 --> 00:26:10,040
Speaker 2: Yeah, Luckily we were not. We're not on CDK, and

488
00:26:10,080 --> 00:26:14,439
Speaker 2: so we we were made up through that whole the

489
00:26:14,480 --> 00:26:17,199
Speaker 2: backle I guess you'd call it. I have talked to

490
00:26:17,240 --> 00:26:19,280
Speaker 2: some of my other dealer friends who were on CDK

491
00:26:19,400 --> 00:26:23,240
Speaker 2: and it was quite the challenge operated through that. Their

492
00:26:23,480 --> 00:26:27,120
Speaker 2: entire accounting system is down, so they had to kind

493
00:26:27,119 --> 00:26:31,480
Speaker 2: of revert to doing everything on paper invoices and whatnot,

494
00:26:31,520 --> 00:26:34,600
Speaker 2: and so on the parts and service side, I think

495
00:26:34,600 --> 00:26:37,159
Speaker 2: that was a real challenge because of the velocity of

496
00:26:37,200 --> 00:26:41,000
Speaker 2: those transactions. But yeah, we're we're very fortunate that we

497
00:26:41,000 --> 00:26:41,760
Speaker 2: were not hit by.

498
00:26:41,720 --> 00:26:43,960
Speaker 1: That, So it was it was in that positive for

499
00:26:44,000 --> 00:26:45,800
Speaker 1: you guys. I guess you guys maybe might have got

500
00:26:45,880 --> 00:26:49,720
Speaker 1: some market share with some of your competitors being down

501
00:26:49,800 --> 00:26:50,240
Speaker 1: or slow.

502
00:26:51,040 --> 00:26:53,960
Speaker 2: Yeah, we definitely did see a bump specifically on the

503
00:26:54,000 --> 00:26:56,359
Speaker 2: part side, and we had, you know, we had dealers

504
00:26:56,400 --> 00:26:58,560
Speaker 2: that were on CDK and were down, they weren't able

505
00:26:58,560 --> 00:27:01,160
Speaker 2: to order parts. They were calling us to buy parts

506
00:27:01,160 --> 00:27:05,000
Speaker 2: from us and then ultimately sell to their customers. So yeah,

507
00:27:05,000 --> 00:27:07,520
Speaker 2: it was definitely a stressful time for for those dealers

508
00:27:07,520 --> 00:27:10,720
Speaker 2: that got hit by it. And that's something we are

509
00:27:10,880 --> 00:27:13,440
Speaker 2: now working in the background to make sure that if

510
00:27:13,440 --> 00:27:16,320
Speaker 2: that were to happen with our system, just having a

511
00:27:16,359 --> 00:27:19,680
Speaker 2: readiness plan for for how we would react if that happens.

512
00:27:20,160 --> 00:27:23,320
Speaker 1: And so for for commercial truck dealership, you know you

513
00:27:23,359 --> 00:27:26,360
Speaker 1: mentioned you know, you sell new trucks, you sell use trucks,

514
00:27:27,040 --> 00:27:30,639
Speaker 1: you provide parts, you have a financing arm. I'm assuming

515
00:27:30,680 --> 00:27:34,520
Speaker 1: you do service as well in addition to parts. Yep, roughly,

516
00:27:34,680 --> 00:27:36,679
Speaker 1: And you know, I don't know if it's roughly for

517
00:27:36,760 --> 00:27:40,280
Speaker 1: fighter or for the industry. For a dealership, what is

518
00:27:40,320 --> 00:27:44,159
Speaker 1: the breakout of revenue between you know, new vehicles versus parts,

519
00:27:44,240 --> 00:27:47,119
Speaker 1: versus us versus other like, is there is there a

520
00:27:47,200 --> 00:27:49,720
Speaker 1: typical kind of breakout?

521
00:27:50,400 --> 00:27:52,760
Speaker 2: Yeah, so I can let you know what ours is,

522
00:27:52,880 --> 00:27:56,640
Speaker 2: and I, you know, I've got to think we're we're generally,

523
00:27:57,160 --> 00:28:00,280
Speaker 2: I think a good view of what the market to be.

524
00:28:00,920 --> 00:28:03,399
Speaker 2: I talked about some of those megafleet deals earlier, and

525
00:28:03,400 --> 00:28:06,159
Speaker 2: if a dealer, as an example, sells two thousand and

526
00:28:06,160 --> 00:28:08,800
Speaker 2: three thousand trucks to a certain account each year, that's

527
00:28:08,840 --> 00:28:11,480
Speaker 2: going to throw off their percentage of revenue. But we

528
00:28:11,560 --> 00:28:15,040
Speaker 2: get pretty good benchmarking analysis from our banks, and based

529
00:28:15,080 --> 00:28:17,399
Speaker 2: on that, I think we're a pretty good view of

530
00:28:17,440 --> 00:28:20,400
Speaker 2: what the market would be. So as far as truck sales,

531
00:28:20,680 --> 00:28:24,360
Speaker 2: it's about sixty five percent of our revenue, Parts would

532
00:28:24,400 --> 00:28:27,800
Speaker 2: be about twenty five and service and body shop combined

533
00:28:27,800 --> 00:28:28,959
Speaker 2: would be about ten percent.

534
00:28:29,320 --> 00:28:32,080
Speaker 1: Gotcha, that's good stuff. And then you know, for the

535
00:28:32,600 --> 00:28:37,040
Speaker 1: I'm assuming from a from a profitability standpoint, the parts

536
00:28:37,080 --> 00:28:40,280
Speaker 1: in the service are probably have higher margins than the

537
00:28:40,360 --> 00:28:42,720
Speaker 1: vehicles from a percentage standpoint.

538
00:28:42,840 --> 00:28:46,200
Speaker 2: Yeah, higher margins. So truck sales is very very thin,

539
00:28:46,320 --> 00:28:50,720
Speaker 2: single digit margins, and then service and parts are higher

540
00:28:50,760 --> 00:28:51,080
Speaker 2: than that.

541
00:28:51,440 --> 00:28:54,400
Speaker 1: How does a deal like a family owned dealership grow

542
00:28:55,400 --> 00:28:58,440
Speaker 1: is it? Are you looking to expand geographically? And is

543
00:28:58,480 --> 00:29:03,080
Speaker 1: that expansion through M and A or organically when when

544
00:29:03,400 --> 00:29:06,280
Speaker 1: you know affirm your size is looking to expand.

545
00:29:06,880 --> 00:29:09,440
Speaker 2: Yeah, so a little bit of both. So we can.

546
00:29:09,920 --> 00:29:14,320
Speaker 2: We are somewhat geographically limited by our dealer agreements with

547
00:29:14,400 --> 00:29:16,800
Speaker 2: our OEMs. So the lad that works is we are

548
00:29:16,840 --> 00:29:19,440
Speaker 2: given basically a set of counties that we are able

549
00:29:19,480 --> 00:29:23,400
Speaker 2: to operate within based on those dealer agreements. So within

550
00:29:23,400 --> 00:29:25,960
Speaker 2: those counties we can grow organically, and we have done

551
00:29:26,000 --> 00:29:28,280
Speaker 2: that over the years by building a new dealership or

552
00:29:28,280 --> 00:29:31,680
Speaker 2: a part store within our existing territory, which then helps

553
00:29:31,720 --> 00:29:34,200
Speaker 2: us serve that market better. But really to have a

554
00:29:34,240 --> 00:29:36,960
Speaker 2: step change in growth, you have to look at M

555
00:29:37,040 --> 00:29:40,560
Speaker 2: and A and go acquire another dealer group along with

556
00:29:40,600 --> 00:29:44,959
Speaker 2: their territory to help. And so we certainly are inquisitive

557
00:29:45,000 --> 00:29:49,000
Speaker 2: and always are looking for opportunities and they don't come

558
00:29:49,360 --> 00:29:52,880
Speaker 2: available very often, so you kind of always have to

559
00:29:52,920 --> 00:29:55,080
Speaker 2: be out there in the market looking for what the

560
00:29:55,120 --> 00:29:55,920
Speaker 2: next deal would be.

561
00:29:57,200 --> 00:30:00,240
Speaker 1: Right, I'm assuming a lot of them are family builusiness

562
00:30:00,400 --> 00:30:03,440
Speaker 1: is like like FIDA historically.

563
00:30:03,520 --> 00:30:06,400
Speaker 2: Yes, the last five to ten years, though, there has

564
00:30:06,440 --> 00:30:09,080
Speaker 2: been some more institutional money that's come into the market,

565
00:30:09,520 --> 00:30:12,240
Speaker 2: which is interesting. I before coming into the business, I

566
00:30:12,280 --> 00:30:15,560
Speaker 2: spent some time in the private equity world, and one

567
00:30:15,600 --> 00:30:18,840
Speaker 2: thing we always hated was a low margin cyclical business

568
00:30:18,960 --> 00:30:22,000
Speaker 2: and that's exactly what the truck the world is. And

569
00:30:22,840 --> 00:30:26,560
Speaker 2: for some reason private equity has taken an interest, and

570
00:30:26,640 --> 00:30:29,920
Speaker 2: so you see some of these big groups growing very quickly,

571
00:30:30,000 --> 00:30:34,000
Speaker 2: and they've got a different, different view on the market

572
00:30:34,040 --> 00:30:37,880
Speaker 2: and risk appetite maybe than some of the historically owned

573
00:30:38,280 --> 00:30:42,920
Speaker 2: family owned businesses. So it's kind of it's been a

574
00:30:42,960 --> 00:30:45,680
Speaker 2: lot of consolidation over the last handful of years and

575
00:30:45,840 --> 00:30:48,360
Speaker 2: kind of being led by some of those big groups.

576
00:30:48,760 --> 00:30:50,640
Speaker 1: Right, do you have a CDL?

577
00:30:51,160 --> 00:30:53,640
Speaker 2: I do not? All right? Should? My dad gets on

578
00:30:53,680 --> 00:30:54,520
Speaker 2: me about it all the time.

579
00:30:54,560 --> 00:30:58,800
Speaker 1: I've oh my biggest source subject. Sorry to bring that out.

580
00:30:59,480 --> 00:31:01,560
Speaker 1: I'm just kidd When you were, like, you know, a

581
00:31:01,640 --> 00:31:03,880
Speaker 1: kid going in high school in college, did you think

582
00:31:03,920 --> 00:31:07,800
Speaker 1: you'd be working in the family business or you kind

583
00:31:07,800 --> 00:31:10,000
Speaker 1: of surprised that you were attracted to it.

584
00:31:10,400 --> 00:31:12,760
Speaker 2: Yeah, So growing up, I would always work at the

585
00:31:12,800 --> 00:31:16,960
Speaker 2: dealership in the summers, you know, sweeping the warehouse, cleaning

586
00:31:17,040 --> 00:31:19,800
Speaker 2: up the lot, weed whacking, things like that, just kind

587
00:31:19,800 --> 00:31:23,320
Speaker 2: of you know, working around the dealership. My dad always

588
00:31:23,360 --> 00:31:25,440
Speaker 2: kind of wanted us to be here, but also to

589
00:31:25,440 --> 00:31:27,400
Speaker 2: be rolling up our sleeves and doing some of the

590
00:31:27,440 --> 00:31:30,040
Speaker 2: dirty work. So did that kind of as just like

591
00:31:30,080 --> 00:31:32,000
Speaker 2: summer jobs for a little bit of spending money. But

592
00:31:32,400 --> 00:31:35,360
Speaker 2: never growing up, did not have an interest in coming

593
00:31:35,360 --> 00:31:38,240
Speaker 2: into the business. Really, I wanted to go do something else.

594
00:31:38,320 --> 00:31:40,560
Speaker 2: And it really was kind of towards the end of

595
00:31:40,600 --> 00:31:43,760
Speaker 2: my college career and getting into my banking career where

596
00:31:44,480 --> 00:31:47,880
Speaker 2: I learned a lot more about the business and really

597
00:31:48,000 --> 00:31:50,200
Speaker 2: took a lot of pride in it. Like I said,

598
00:31:50,320 --> 00:31:52,680
Speaker 2: my grandpa starting it back in nineteen fifty four, and

599
00:31:52,680 --> 00:31:55,680
Speaker 2: then my dad and uncle took the home from there,

600
00:31:55,720 --> 00:31:58,160
Speaker 2: and now the third generation in it, got a lot

601
00:31:58,200 --> 00:32:00,200
Speaker 2: of pride in trying to continue that life. I can

602
00:32:00,240 --> 00:32:02,840
Speaker 2: see that that my grandpa started, and so kind of

603
00:32:02,880 --> 00:32:05,840
Speaker 2: as I got older, definitely the idea of coming into

604
00:32:05,880 --> 00:32:09,160
Speaker 2: the business started to grow in my mind. And it's

605
00:32:09,160 --> 00:32:11,960
Speaker 2: been a very fun thing to be a part of

606
00:32:12,920 --> 00:32:13,560
Speaker 2: good stuff.

607
00:32:14,000 --> 00:32:17,000
Speaker 1: And uh, what's what's the one thing you like most

608
00:32:17,000 --> 00:32:18,480
Speaker 1: about your job?

609
00:32:18,840 --> 00:32:21,800
Speaker 2: I'd say the people. You know, it's a This industry

610
00:32:21,880 --> 00:32:24,320
Speaker 2: is a very small world, and so you see a

611
00:32:24,360 --> 00:32:28,400
Speaker 2: lot of familiar faces at different you know, conferences you

612
00:32:28,440 --> 00:32:31,880
Speaker 2: may go to or different meetings, and our our customers

613
00:32:31,920 --> 00:32:35,960
Speaker 2: and our employees and our other dealer counterparts across the

614
00:32:36,000 --> 00:32:40,240
Speaker 2: country are just good people, good hardworking, interesting, fun people,

615
00:32:40,280 --> 00:32:43,320
Speaker 2: and so I really just enjoy that aspect of it.

616
00:32:43,960 --> 00:32:47,160
Speaker 1: You mentioned conferences. Are there any must attend conferences for

617
00:32:47,240 --> 00:32:50,840
Speaker 1: your industry? You mentioned Laura Parata earlier, and she does

618
00:32:50,840 --> 00:32:52,880
Speaker 1: a great job at at D, and there are great

619
00:32:52,920 --> 00:32:56,400
Speaker 1: advocates for for the dealers. They've they've got a conference

620
00:32:56,440 --> 00:32:59,640
Speaker 1: every year. That at D conference is definitely a must

621
00:32:59,640 --> 00:33:03,080
Speaker 1: at ten for especially younger dealers coming up. They've got

622
00:33:03,360 --> 00:33:06,400
Speaker 1: a next gen piece of that which I'm part of.

623
00:33:06,440 --> 00:33:09,640
Speaker 1: And it's just great networking to get to meet dealers

624
00:33:09,640 --> 00:33:13,520
Speaker 1: from across the country. Gotcha, I gotta I've never been

625
00:33:13,560 --> 00:33:16,280
Speaker 1: to an ATD event. I told Laura that I'd love

626
00:33:16,320 --> 00:33:18,920
Speaker 1: to attend the next one, So maybe maybe I'll see

627
00:33:18,920 --> 00:33:22,960
Speaker 1: you at the next event, right, and just you know,

628
00:33:23,200 --> 00:33:25,160
Speaker 1: I think we're running out of time here. And just

629
00:33:25,240 --> 00:33:28,120
Speaker 1: one more thing. You know you mentioned playing golf with

630
00:33:28,160 --> 00:33:31,200
Speaker 1: your family members. Are you the one who wins the

631
00:33:31,240 --> 00:33:32,560
Speaker 1: money or loses the money?

632
00:33:33,280 --> 00:33:37,000
Speaker 2: Oh? Unfortunately, my dad takes all my money. You normally

633
00:33:37,080 --> 00:33:39,040
Speaker 2: wait wait till we get home. It makes me pay

634
00:33:39,120 --> 00:33:40,800
Speaker 2: him in front of my mom to give me a hard.

635
00:33:40,680 --> 00:33:43,800
Speaker 1: Time about it. So what's your handicap?

636
00:33:44,680 --> 00:33:46,440
Speaker 2: I am a thirteen right now, so I play a

637
00:33:46,440 --> 00:33:47,240
Speaker 2: lot of bad golf.

638
00:33:47,960 --> 00:33:50,240
Speaker 1: Oh please, I'm a twenty one and I actually this

639
00:33:50,640 --> 00:33:52,520
Speaker 1: year improved by like four strokes.

640
00:33:52,520 --> 00:33:54,720
Speaker 2: So yeah, well, I guess it's good. It shows we're

641
00:33:54,720 --> 00:33:55,240
Speaker 2: both working.

642
00:33:55,800 --> 00:33:59,480
Speaker 1: Yes, that is true. Well, Ryan, I really want to

643
00:33:59,480 --> 00:34:01,760
Speaker 1: thank you for your time. Today was a really interesting conversation.

644
00:34:02,160 --> 00:34:04,680
Speaker 1: UH learned a lot about your business and your customers,

645
00:34:04,720 --> 00:34:05,800
Speaker 1: So thank you so much for that.

646
00:34:06,360 --> 00:34:09,280
Speaker 2: Yep, we thank you for having me. I really appreciate it.

647
00:34:09,840 --> 00:34:11,960
Speaker 1: Great, and I also want to thank you for tuning in.

648
00:34:12,000 --> 00:34:14,920
Speaker 1: If you'd liked the episode, please subscribe and leave a review.

649
00:34:15,320 --> 00:34:18,320
Speaker 1: We've lined up a number of great guests for the podcast.

650
00:34:18,680 --> 00:34:23,400
Speaker 1: Check back to hear conversations with C suite executives. Shippers, regulators,

651
00:34:23,440 --> 00:34:26,719
Speaker 1: and decision makers within the freight markets. Also, if you

652
00:34:26,719 --> 00:34:29,439
Speaker 1: have an idea for a future episode or just want

653
00:34:29,440 --> 00:34:32,400
Speaker 1: to talk transports, please hit me up on the Bloomberg terminal,

654
00:34:32,719 --> 00:34:36,520
Speaker 1: on LinkedIn or on Twitter at logistics Late. Take care

655
00:34:36,640 --> 00:34:38,399
Speaker 1: and be well everyone. Thanks so much,