Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. Good morning. Hi, everyone. We are still in Oklahoma and probably will be for a little while. So, yeah. Hi from Oklahoma. It's been like a hundred and four degrees outside most days. We can see photos of grandkids in the background. We're in the spare bedroom. We broadcast from here before, but happy to have you with us. It's a White Hat Wednesday and we've got some really important things to talk about. You all know that we had the... my Jim's mom's funeral was Saturday. And so we've had a lot of family and a lot of friends and, and just, I've been working on thank you notes and, and all that funness. And I appreciate all the well wishes from folks across the industry. We're grateful for that. I would say we're, Yeah, I'm back in the workflow and obviously some adjustments in life, but we're back at the thing and back to podcasting and happy to have you here. Yeah. So our topic this morning is going to be around software and it's around a request that White Hat Way is making of the entire industry. And this is something that we've done before. In June of twenty twenty four, we made a request of all DMS providers to create what we call the White Hat Way portfolio summary report. This is the next step of White Hat Way stepping forward on behalf of dealers to you know, give us a chance to have better information for better decisioning. And so we're making another request to all providers and we do it in the spirit of transparency as we preach all the time at White Hat Way. We are openly sending that email to all providers, making the request of everybody simultaneously. and so that is what our conversation is about today how about we bring in our guests we've got standing by uh chris machika from pastime who pastime is a founding sponsor of white highway and chris we continue to be uh grateful for the support you guys provide and as uh advisors and uh and somebody who's contributing to this mission to create more uh ethical education solutions and all kinds of solutions for dealers welcome Yeah, thank you for having me. And again, my thoughts and prayers are with you and your family, Jim and Michelle, for sure. Thanks for having me today. Of course. And we have also on the screen, you can see there, Alyssa Schultz from DCS. So, Alyssa, before we bring you in, just explain that you're or as I introduce you, I should say that you're your company dcs just uh entered into a one-year sponsorship agreement of white hat way and that uh is includes a lot of things like cross-marketing and obviously support of uh the mission that is white hat way and and part of the understanding there is a degree of collaboration so this is part of why we wanted to have you be part of today's conversation and and um alyssa is she attended our white hatway certification in vegas and so she is white hat certified as well it'd be nice to put a nice white seal right there by her by her uh file but welcome yeah welcome and we're glad to have you in vegas and glad to have you here yeah thank you for having us Yeah, so this is fun, Chris. This is, you know, as we continue kind of what we did last June, we have drafted an email to all the providers. It'll go out just right after the broadcast. We wanted to be able to link the broadcast itself and be able to share our conversation with those who will receive the email. And so the purpose here is to have an opportunity to collect better data around charge offs. We have some other things queued up as well, and we chose to just start with this one around capturing at the point of charge off better information about what contributed to the actual the primary reason that we experienced the charge off. And obviously, we think DMS providers probably have that or maybe dealers add that a little bit of reason and by text. But to have it be a field that is searchable and something that can be analyzed, we just recognize an opportunity to do more work to create some degree of standardization so that whether dealers are sitting in a V eight dealer group, which we host or they're in their dealer, twenty group going forward, we would like for them to be able to have and obviously for their own analysis and their own study to have better information about what contributed to that charge off. And for somebody who's in the GPS business, I'm sure, Chris, you would have some perspective on that. Yeah, certainly. It's obviously important, especially in today's environment. I'm imagining you're seeing charge offs being more closely scrutinized and looked at. So it's certainly something that we want to create visibility around. Good. Yeah. And Alyssa, anything to add on that? No, I think it's definitely something that you need to analyze. I think everybody should have that information and be able to analyze it and figure out where your shortfalls are. Sure. And it's not that people aren't analyzing it now in some way. It's just what we're striving to do here is to create a higher degree of standardization so that everybody's kind of speaking the same language across the industry and that we'll have a chance then to have more meaningful analysis and something that should you know, help tie things together. One of the conversation we had last night, Chris, in our, our V eight meeting was this idea that, you know, I share with a group I've been in this business since ninety seven. I've been in this segment, I should say. And so to be that many years in the industry and still unable to really effectively help dealers connect the dots between inventory, sales and deal structure, underwriting, right on through to collections and portfolio performance. What I've said to them is I expect that the remainder of my career is going to be focused on helping to connect more of those dots and have more front to back sort of analysis on the business. We just kind of have analysis in buckets, but we don't have the ability currently to to tie those things together as well as we like or well as we see an opportunity to do. And so this is a step in that direction. By analyzing the results in some detail and with some consistency, then I think certainly on the underwriting side, people have a chance to begin to make better judgments on the front end based on that information that's coming back. So Chris, thoughts on that? yeah no I I think you're absolutely right you have to be able to understand the output of the results um especially in underwriting right if you don't understand what could potentially happen or what the the numbers are telling you you're going to continue to make the same mistakes um so having that result or that output um up front and and available and aware of you so you can make better underwriting decisions, right? That's what it's all about. It's getting the right customer and the right vehicle and underwriting it properly so that you have that success. So very important for sure. Right. Very good. So I'll get to the list. I think, Michelle, if you'll help me out on this, it's going to be a little clunky because I'm in a different browser. So let me get that document ready to show and then we'll have a chance to get that going. Okay. Wrong one. Right there. There we go. Okay. All right. So, so now we need to share it from this. You need to share your screen. Stand by. We're going to get this piece figured out. Okay. It's just going to probably be a little messy when we switch screens here. While Jim is pulling that up, you know, we, we speak frequently and we, to dealers about tracking information because so much, so many important decisions are made on this is what I think, or this is, you know, this is, this is my gut feeling or whatever. And as we've as we've talked to dealers about this more and more of them are saying it wasn't what I thought it was when they actually are looking at numbers and as as we are able to start to to work through this list you know not just an underwriting but um and I'd like to maybe add a a thing or two on this um it is somehow as we are developing relationships and keeping contact with people, I would love to see how these amounts of charge-offs change. But it's not just about underwriting that creates a charge-off. And these are a lot of those pieces right there, but it's also about if the dealership has any kind of relationship with their customer, then the chance of them being able to save that is massive. So we're looking forward to finding ways of actually capturing that as well and somehow layering that into it so that dealers all across the industry can look at you know, not just the reasons why, so they can sharpen up all of the things that are internal, but also how having a relationship is affecting other dealers just in aggregate and how their charge-offs might be different. And so just those kind of big numbers as we as we start to to look at this those are the kind of things that dealers at a conference or whatever will go oh that's probably something that I should do where when they can see the power behind those things too so yeah and I think that was another thing that came up in our our conversation last night with our va group was this idea that you know you you it's hard to know the balance between the writing collections. And so this is a small step in that direction. There's a lot more to do as Michelle alluded to, but I think what we recognize is that we have to be able to get good data to be able to make good decisions around some of these things. And so what Michelle is kind of alluding to is how much of what happened as a result of collections failure, how much of it was an underwriting breakdown, but we need the data to begin to answer those questions. And so you can see on the screen that the layout that we've proposed is first have the user make a selection between voluntary and involuntary. and then selection two gets into the categories the type of the primary reason and we look we recognize I'm a former dealer myself and so I know that we don't always know all the reasons or the information we have may point to the fact that there's multiple contributing factors but we're asking to choose the primary reason that we lost the account and so those reasons that we've uh we've included which by the way we've initially shared this on social media in the bhp success group we've also socialized it in our va groups uh before bringing this to the the dms providers and this is the list we settled on so um so a radio button or drop down as long as it just gives us the ability to select from these options so that the options include Non-payment, for those not seeing the screen, non-payment, no contact, or lost job or income situation. The next one would be life events. You know, they moved out of the area or had a divorce or what have you. Mechanical problem. And we put in some subcategories on that. So we lost the customer due to a mechanical problem, but what were the circumstances at the time? Did we have a reinsured warranty that was active? Did we have reinsured warranty that was expired? And so on. You can see the list. Did we have a vehicle service contract? Was it as is? Was it third party BSE? We're just trying to learn what was our status at the time that that... What kind of support did the customer have? That's right. What was available to support them so we can better know what happened there. Then the next category would be an accident or a wreck. So did we have full coverage that was active, full coverage that was lapsed, CPI active or lapsed, and then other party responsible are the categories that we chose here. And then bankruptcy chapter seven or thirteen. And then we just left one category for other where people would write in. But we're trying, obviously, with our list, to limit the amount of charge-offs that end up in that other category. There can be some, but we think between these non-payment, no-contact, probably those first three are going to encapsulate a lot of them. Obviously, mechanical can be a thing and accident can be a thing. Those are a little easier to quantify, but we hope that by putting in those kind of subsections that we'll be able to get additional information that will be useful to dealers going forward. So Chris, I'll check in with you first, your thoughts on what you've seen there. Yeah, great. I think if you're able to capture all of this, it's going to give you so much more detail on why that customer is going away. It could shed insight onto the vehicles and get back to that underwriting process from the beginning. Is this the right vehicle that I'm purchasing? Am I having extended mechanical problems? Or am I just picking the wrong customers? Customers that do not have steady income, do not have steady job, do not have the things that they need to complete the contract. So certainly I think you're hitting on the key things that would be important for a dealer, lender to know about their customer base and their charge-offs for sure. Right, good. Yeah, I would add health around life events too, because you see that an awful lot. But yeah, this is... Really does take you deep. George Spat, though, posted a comment. He says, the best reverse underwriting the consumer can do is to select a White Hat Way dealer. Amen to that. There you go. Yeah. So we're starting to certify folks and get more dealers out there. And that's, you know, the way we talk about that now, Chris, is we say that, you know, White Hat Way is working to help consumers know who they can trust. And to help or, you know, buyers know who they can trust and to let sellers show that they're trustworthy. So this is part of what White Hat Way does, you know, and kind of both ends of that. So I think sorry, just just adding to that, too. Right. I think as we touched on this type of stuff as part of the White Hat program. will help dealers be better for their customers, right? They will get them better cars and things that will last through the term alone and help that consumer get all the way through. So I think that's part of the mission, right, is making sure that you're doing the right things and analyzing this data will help you be better for the consumer. Yeah, it's all part of reducing friction, Alyssa. This is about the way we talk about it. That's a word that Michelle and I use quite a bit. There's friction between buyers and sellers in a lot of industries, and it's kind of exacerbated in our subprime auto segment. There's just a lot of kind of divide, if you will, between a dealer and a consumer, and there can be a lot of friction. So as Chris alluded to, you know, when we get better data, then we can make better decisions that support success of the customer. And that's, that's ultimately what we're trying to do. We want to make a good decision on the front end, and we want to make sure we have the necessary support to help them be successful long term. Yeah. Any thoughts on that, Alyssa? No, I think that Chris said it perfectly. I mean, learning all of those reasons why there is the charge off and having the opportunity to, you know, kind of analyze that and see, you know, is it the wrong car? Are you just picking the wrong customer? No, I think that's great information that, you know, dealers are able to track. Yeah. I would love to see the day come where inside a customer's file is their PTI at time of purchase. Because when you can layer in their PTI with this information, I think it's going to actually add a really rich layer of understanding about underwriting. Yeah. And I think you can expect to see us go there next in terms of the type of buyer. We'll probably move back over to the sales side next. Who's the type of buyer? What's the category of the type of transaction that's happening when the customer purchases? And then additional detail. To Michelle's point, we're working with a dealer now who switched to a uh an underwriting software a couple years ago and they were able to source because they've been in business eighteen years they were able to source a lot of historical data however that dealer had not been um entering the the customer's income into the dms at the point of sale and so all that history of pti was lost they have the payment amount of course what the payment was decided with the customer, but without having that income information, you just, there's a limit to what can be analyzed there. And it's a shame you got good software and you got years of business and you don't have that kind of data. So the, you know, the analyst in me is frustrated about such things. And we, we know that, you know, we just take a one bite at a time here and let's solve what we can solve. And this is a, this is way to tackle. I believe that we're going to start to get traction and, and that they're just, I, and also knowing that, I've worked in software and it doesn't happen overnight. You've got a development team and so it has to go on a roadmap and it doesn't happen overnight. But as we start to develop traction, then the kind of things become something that is a higher priority on all the different DMSs of the things that they can do to help improve. um the experience of a dealer and the insight into their business yeah so we hope alyssa you'll be able to go back to the development team at dcs and say guys do we really need lunch can we not skip a few lunches and get this thing I'm kidding of course we have a very dedicated team who is just you know we're we're all about what's going to work best for the dealers we want you know obviously our software we use it ourselves and we want it to be the best for us and we also want it to be the best for our dealers yeah I think what you'll find is we we have um certainly we're going to be able to contribute based on our perspective of working with dealers where we see the the frustrations and kind of limitations for them and a tremendous opportunity you guys are stepping forward into a segment where you know you've got and I'll just stop and pause it just explain that dcs is formerly dealer controlled leasing and they are both a they're a browser-based system that does both uh leasing And buy here, pay here. And so the browser base element is significant. One of the things that we're hearing, Alyssa, when dealers talk about their software, many of them are painfully aware of the frustrations around having a desktop kind of connection or limited sort of siloed connections. And so the idea of being able to go browser-based is a big deal for you guys. And as people who are dealers, I'll share with you what I said before we started the podcast. One of the things that you came up was you know that that dcs is really your group of primarily uh your dealership group right I mean the company comes from the dealership world you're active in the franchise and dealership world now and that means that you're working with people in dcs who are dealers first and developing a software, you know, through the lens of a dealer as opposed to, you know, sometimes we have people who are our software people who are trying to serve a dealer world, but they've never actually sat in a chair, you know, and worked in a dealership environment. And so I think this is something that, you know, favors you guys as a company. And I think you'll you'll have an opportunity to create some really great solutions. And we look forward to the collaboration with you guys and to be able to bring some of the suggestions that we know are important to dealers. And again, as a former dealer myself, we just know that there are going to be elements that are going to be of high value to many of these users. So there are other opportunities all related to that. I think for today we can focus on this request. And I can also read the email, Michelle. I've got that email teed up to be able to share. So let me get that over here. And then if we can share the screen. Okay. Let me do it from my side. Bear with us, folks. This is the part that's always a little fun. And Jim and Michelle, just in support of that too, I could say as part of a vendor who works with DCS, I've been very impressed with their team and the quickness in which they work. And I think that comes from being a dealer and understanding how important it is to be agile and to do things quickly. So they have done a phenomenal job in advancing that software to where it is today. And I know that they will continue to do that. So I absolutely am a huge supporter of that. I think your comment around being a dealer and being in that chair certainly helps them for sure. And it's not dealers creating the software, it's people that know software creating the software at the direction of dealers. Correct. And that's that's a big difference. Yeah, we have a cool software team and we have a development team that are working tirelessly to, you know, all the requests of our current clients, obviously requests from from Jim and Michelle that, you know, for these reports, again, we want to support our dealers. You know, if there are functions and features that we can build to accommodate them, we're a hundred percent on board to do it. And I think being dealers is actually beneficial to the clients coming on that we do have those backgrounds. We know what it's like being on the floors and we've been in their shoes. So I think it's beneficial for the clients coming on board with DCS. that's that's that's I think so rich and um you know there's I I don't know of any other well the um yeah there's there's not very many in the industry that actually have dealers attached to it Um, so yeah, it's, that's a, that's a big deal. I would, I would, I, and just about everything. It's like, I would want someone who wears shoes to design my shoe. It's like someone who's never wore a tennis shoe in their entire life. I'd hate to have them to design my tennis shoes or running shoes or whatever. Are you able to share that now? Let's, let's go through this email. I can't because you don't have the right thing. I don't have the right thing. Sure. Okay, still have that document. Sure. Okay, one moment. Let's get back to it. I can read it if we need to without showing it. But stop screen and share this one instead. Yes, that one right there. I'm not sure that is it. We'll find out. No, that's not it. Okay, so let's go a different way. I mean, you know, it's just us and we're the joys of live broadcasting, the joys of live broadcasting. So, yeah, we'll just read it. Let me just read it. So it's a hello everyone. And by the way, let me stop and say that the, the DMS systems that I have represented on this email list, some of which are just going to like, you know, help at their, their domain because we don't have a person of contact, you know, at the, at the company. So anyone listening that doesn't hear the person or has a person of contact, please reach out to us so we can get it to someone who, um, is more of a decision maker when they say the Eagles or the turkeys, we want to get these in the hands of Eagles as much as possible. And so we definitely want to make sure that we've got the folks who have a, um, the connection to programming, right? So that would be the decision makers there. So we've got Auto Masters, AMS Systems out of Houston. We've got, of course, DCS. We've got Dealer Center, Frazier, Auto Manager, I'm sorry, Auto Action. Yeah, Automatrix, DealPack, and Reeves, Wayne Reeves Software. So there may be others. If we've left out your DMS, please let us know. If you have a personal contact at each of these companies that you think ought to receive this email, we can do that. But we've directed it to the folks that we know, principals and otherwise that we're familiar with. at each of those companies so we just want to make sure in this first initial mail that we reach as many as possible and so let me just read it if you'll indulge me just a minute it says hello everyone first please forgive the open copy on this important email since we talked so much about transparency at white hat way the open email is simply our way of practicing what we preach to that end notice that I've also cc'd the founding sponsors of white hat way lhph capital pastime and dealery just to keep them apprised of our efforts our white highway coaches are copied as well I'm reaching out to all of you simultaneously on behalf of all bhph and lhph dealers to make a request this time in support of charge off data standardization Specifically, I'm requesting that a required radio button or drop-down list be added to the point of posting a charge-off within your system. The document linked here includes the proposed list of charge-off reasons developed with input dealers across multiple DMS systems. In short, we wish for dealers and their lenders to benefit with more meaningful and comparable charge-off analysis as a result of this standardization across providers. I certainly recognize that some of you have similar lists available in your system today. However, those lists are often optional and or inconsistently used, making true analysis nearly impossible. Certainly comparative analysis by adopting a shared industry wide format and making a required input. we can dramatically improve the integrity of our portfolio data across the board. Here's the YouTube link to the corresponding White Hat Wednesday episode, where Michelle and I discuss how inconsistent charge-off tracking creates real friction, not just for dealers, but for lenders, analysts, and investors who rely on accurate data to support capital decisions in BHPH and LHPH. As we did with the White Hat Way portfolio summary report, you'd be honored to feature each of you as a guest on a future episode of White Hat Wednesday once your system includes the updated charge-off categorization field and your users can confirm that the data is both reportable and reliable across your existing tools. So please find my calendar link, et cetera, et cetera. So that's what we're asking of everyone simultaneously. And again, it's just an effort to disseminate the word as quickly as possible. And we would be thrilled to bring any of the providers back. And again, Alyssa, I look forward to working with DCS to have a chance to get this thing implemented and bring you back uh to celebrate that once it's happened and then there will be other opportunities you know as we go down that track for sure so uh chris I'll come back to you any any thoughts from you before we start to wind down no no I think yeah The more data, the better again, right? And the more consistent, the better value you can get out of it. So having it be there, having it be easy for the dealers to utilize would be phenomenal. I would say even prior to the DMS's getting this available, it would be a great practice for dealers to do on their own if they can and manage it on their own. Certainly, again, as we talked about from the beginning, you've got to be analyzing this data in order to be better, not only for you and running your business, but for your consumer and your customer to make sure you're providing the right terms and the right vehicle for them to be successful in the loan. Right. Very good. Alyssa, thoughts before we wrap up? I agree. Having all the information there, making it required. The information is only as good as what we put in there to analyze. I think that DCS is definitely committed to working with you guys and making that information required and available in our software. wonderful wonderful we uh we know how software can go and we uh we certainly know that there can be uh unexpected uh wrinkles but we hope that it comes together quickly and uh we appreciate your uh your pledge to get involved in this way and so we uh we'll let you guys get back to your your work we appreciate you making time to talk today and look forward to uh you'll see that email within the next hour Sounds good. Wonderful. Thank you guys so much. Thank you. If you guys will just stick around for a second, we're going to close off and then we will give you a proper goodbye after we're done broadcasting. Thanks. All right. Okay. Yeah. Technical. Yeah. So all that will be going out this afternoon and ready, set, go. Yeah. Yeah. It's just the next step. And like I said, there will be more, but this is part of what you can expect White Hat Way to continue to do on behalf of dealers is just to ask the questions. And, and if we rally enough support, then I think you'll see these things begin to happen. All right. We really, really appreciate everyone paying attention and, and listening to the, you know, what, what it is that we're, that we're driving and that we're working towards helping dealers have better information and better training and. And dealers, be sure to speak up, speak up. Good morning, Bob. All right, let me, it's, you know, it's always just a little bit of a struggle when we're not at our home office. uh you know we both when we first started we were always on the same side um and then moved to opposite side to the table and now we're back on the same side again it's kind of nice because I get to to nuzzle my honey All right, everybody. Have a great Wednesday. Thanks again for reaching out to us. If you wanted to be able to read through that list, please go to our YouTube channel and you'll be able to see the video for this production. So, all right, everybody. Have a great day. And we hope you guys have a really successful week. See you Friday. All right. Thanks, guys.
