Home Business DealerChats: Ep. 4 – Behdad Karimimanesh

DealerChats: Ep. 4 – Behdad Karimimanesh

by DealerXT

Chatting with Behdad about his music career, life in Sacramento, advice to other dealers, and his growing independent car dealership, Lending Group Auto.

Watch the Full DealerChat Episode Below:

  • I’m here with Behdad Karimimanesh from Lending Group Auto up in Sacramento. We talk to each other a lot, we haven’t actually been able to meet face-to-face. So I was saying earlier it’s like a blind date, so I’m excited.
  • [Behdad] How did you find this picture?
  • I was stalking you.
  • [Behdad] This is a good one, actually. I don’t know where I posted it but I like it. I started music when I was six years old and I was raised in a family that always played music. My dad, my grandpa, my uncle. That’s how I become a musician. And in 2012, I released my first music with video here. After the third year that I moved from Iran to US. I wrote the lyric and the music myself.
  • [Ali] You said you came here in 2009, you immigrated here, did you get here straight from Iran?
  • [Behdad] Yes.
  • [Ali] And did you come straight to Sacramento?
  • [Behdad] Straight to Sacramento because I have a lot, actually half of my family have been in Sacramento for about 40 years. This has not been my favorite place, it was not, but now it’s becoming my favorite place. Now that I’ve been here for about 11 years now, I am getting a little used to it. I am from Tehran, which is the capital of Iran, a big city, a lot of population, over 50 million people, I think even more now, live there. So I’m from there. So being in Sacramento, just imagine 10, 11 years ago which was just less population. I used to go to LA, Orange County, like once a month and I was gonna move down there but because of other part of my family moved here in 2010, then I had to stay with my mom and sister.
  • How did you get into the car business?
  • Car business, actually, it was one of the businesses that I was not thinking to be part of it. So I decided to go with real estate at the beginning. I’d been going to auctions with my cousin every week. Because I was student for three or four years here, got my master’s of business here through University of Phoenix, so I’ve been thinking to just do something in business. The car business, actually, as I said, I’ve been in it, not officially in it, but my cousin and friends related all together, been in the business for years before I get here, and I’ve been just hanging out with these guys every week. And one of my best friends, one of the DealerXT members, actually he was a car guy. And I used to hang out with him and decided to start from somewhere and let’s get in the fun. And I borrowed some money from my uncle. And I said, let me get into this business slowly and that’s how I became a car guy. With your business you can be a car guy or you can be, I don’t know, sell something else. As long as you’re business mind is always there, and working properly for you, I think it doesn’t matter. As long as you’re making money. So yes, Carfax, that now everyone nowadays asks for it, our customers, and they are relying on that source too much, I believe. So yeah, let’s go over that. 2018, I think it was in May 2018, I purchased a 2014 Honda Accord with only 40, 50,000 miles on it. I checked the Carfax, was clean, nothing on the car, no accident, no damage reported, nothing. When I was coming from auction, oh wow, what a good deal. I purchased the car in May, I sold it two or three months after in June, July to a customer and a few months after, I think a few months after, I get a call from this customer saying this car is a damaged car. And high level of confidence, I told him, no, the Carfax is clean, you signed the Carfax, I have the purchase order or purchase invoice from the auction that I purchased it from. There is no announcement at all. He said, no, I took it to a mechanic– I said, oh, I’m sorry, man, but it’s been already over three months you purchased the car and I have no record of the car being claimed damaged or even been in an accident. Oh, okay. So I had to buy that car back. But this is what it is, this is the story of the businesses.
  • How do you think the car business is gonna change? What does the future of the car business look like to you?
  • So within the last few weeks, out of 15 customers, I’ve had over 10 prime customers. A prime customer means a customer with good credit. So just in one day, when my last Saturday I think, I had two customers with 800 and above credit score.
  • Wow.
  • So they’re usually gonna go buy whatever they want, with good income, over $8,000 income. Mostly it’s single type of customers in a used car lot unless you have very super high line cars. But in my car lot, the maximum, the most expensive car that I have is $25,600. And it starts from like 10,000, the cheapest one. My price range is about 15, 16,000. So now that I am seeing more prime customers come in towards used car businesses, and then I talk to the franchiser, a new car dealer store, they are not as busy as before. So that’s what I think. Maybe because of the business is not stable that much so people are trying to minimize at least their cost of living to see what happens in the future. And I’m not saying that it’s gonna be like that forever, maybe for the next six months, one year, maximum two years, but eventually used car business is gonna be in a big change. Because that’s what I thought maybe the electrical, electrical makers that are coming to the market, probably gonna get replaced with the used car maybe over next five, six years.
  • [Ali] Are you seeing a lot of electric vehicles coming into the auction?
  • [Behdad] No, no.
  • [Ali] Are you seeing a lot of customers that are interested in looking for electric vehicles?
  • No, but when you read the news, the articles, you see that everything is changing toward the electrical cycle basically. So people are trying to not spend that much of, what is it, not using gas anymore too much, so I get a lot of customers who are looking for hybrid cars. So that is part of electrical, you know? So hybrid, still not 100% fully electrical but there are a lot of people out there. So that’s the only thing, bad part, of the future that I’m painting. Because if it goes that way, a lot of options go out. Recently as far as the pollution, air pollution and those type of regulations that they are passing nowadays, maybe it forces the factories to do something and change their manufacturer to do something better than what is manufactured right now.
  • It’s really interesting that you’re looking at the different types of cars and the way that customers are gonna be looking for your changes in the cars themselves. ‘Cause that’s a really important point.
  • What I see in my stretch, Fulton Avenue, we have more than 40 dealerships. Some of them are really old, old dealerships, but they are going out of business. They’ve been doing okay in our tag season, that the COVID arrived and again made some changes to the business. So far that I’m talking to you in this street, four businesses are out, completely out. And they’re not even small ones. More than 70, 80, 100 cars in their lot, sitting in their lot. So they’ve been good and big, selling minimum 35 to 40 cars a month at least. So with this situation, we gotta see what happens. We gotta be very smart, very careful.
  • And reading the news and keeping yourself informed, I think that’s really important too.
  • Exactly, that’s how it is. Keep yourself updated.
  • So you’re a very busy guy. You’re running a car dealership, you are a musician, you have a lot of different things going on. If there was one thing that you could eliminate from things that you do every single day, what would that be?
  • So all the car guys know probably about funding so let me tell you this. Before most of the prime banks used to punch in 24, maximum 48 hours for good credit people. So now it takes sometimes over seven days. So for example, I’m talking to those two 800 credit score customers that I sold them cars last week. Saturday, last Saturday. Today is, what, Thursday. And I haven’t got ’em funded yet on those too because they have to verify the employment, people in HR department are not there so they have to wait for them to email them back, so yes, that is getting harder as far as funding. So on the subprime customers, so you always have that issue. So it takes minimum seven days. But sometimes, sometimes one in 10 out of 10 deal, you get ’em funded in one day. But funding is the worst part of my job. So you have to be on it and just imagine you have this stack of deals sitting here and you have 100 other jobs to be done but have to just keep calling your customers, keep calling your banks, ask for the updates on your deal. That’s the part that I’m gonna probably have someone else do for me maybe in the future. I don’t trust anyone because if I did myself, it takes seven days. If I just let someone else do it, it probably takes 10 days.
  • [Ali] If there was some way we could make that automated that would be great.
  • It is almost automated a little bit because you have to just scan it. Send it in. But still, there’s another person sitting behind the other computer to look at it, so. They are not even changing the contracts to e-signatures yet. They’re just making it a little bit automated.
  • I mean, that’s not a good situation! You’re sitting there, your car is out there, the customer has the car, and you just have to wait and see what happens. Especially now with all the paycheck stub fraud going on.
  • Oh yeah. I see ’em a lot, not a lot, but at least once a week. And one of ’em was super real that I couldn’t realize and I sent it to the bank and again it was after hours. The business website, everything was there, but I didn’t check the license, business license. But the bank did and there was no business license or so. Then they turned the deal back. I mean, a lot of people are on unemployment so banks do not finance them so you cannot just release the car. Maybe they have 5,000 down payment because they’re getting good money from unemployment and they get excited, release the car, and then later on we have to just look for your $20,000 car and let it go for five K. Most of the salespersons or the finance guys, if you are not the owner of your business and let others handle your business, that’s what happens. One of the dealerships that we were talking about had the same situation at his finance and one of the other salespeople together just rolling, rolling, selling two or three cars a day. But how many of them are going to be funded? Now they got like 15, 20 cars just for last two or three months. He got 20 cars out that are not funded and they cannot find them.
  • Oh god.
  • So imagine how bad for that business. So if you let others handle your business, at least you gotta be on top of them to see what’s going on. Not just let ’em sell the car, oh wow, they got 5,000, here we go. $50,000 down payment in my safe, go ahead. The owner take into account what happens to the other 200,000 which is on hold? Funding, as I mentioned earlier, these days are asking for every single thing. So doesn’t matter, prime or subprime nowadays, taking the same basically time-wise, I’m talking about time-wise, taking the same time, good credit or bad credit, to get funded. But why? As I said, the credit union has to do even a job verification on a national guard customer being employed for 12 years, 866 credit score. So why? He got a mortgage that’s almost paid off, makes sure his property’s paid off, he got minimum five more car loans that have been paid off within the last few years. And the other bad part of it, we are using some of those credit unions. So I got a phone call from one of our good credit unions that I used to work with them a lot. They call them all the independent dealerships. Okay, hey, what’s up, credit union? Not much but unfortunately we have to drop you. Why? Have we ever had an issue with you? Have we ever had any title issue or what other– Just tell us something about the previous history that we’ve had with you guys. No, you’ve been one of our greatest, greatest dealerships but unfortunately because of the situation we have to drop off all our independent dealerships but we’re keeping our franchise dealerships. So what’s wrong? Are you discriminating or you have some independent dealerships that are not providing their titles on time or are behind or something? Just drop ’em off. Not us, we’ve been giving you business and probably the franchise dealership, and I was not the only one that basically drop us. I have two more that I got phone calls from then as well maybe not even 10 days ago. And all of ’em are saying that this is temporary. Yes, in this temporary situation that we all are in, we can’t change, it’s a bad business, we have to support, we have to support the small businesses.
  • You know, if they came out and said, you have done this in the past, you haven’t done what you were supposed to do, you broke your dealer agreement with us in the past and because of those things, or maybe you didn’t give us very many deals, so because of those reasons right now we’re going to stop doing business with you for a few months, for whatever it is, until we figure this thing out. But to come out and say just because you’re an independent dealerships we’re not gonna do business with you anymore, there’s something really wrong with that. So I’d really like to ask any dealers that are out there, if you have experienced this, please reach out to us because I really wanna hear your stories about this. And I know other dealers will wanna hear that too.
  • ALG is your new law firm that I signed up with which is really helpful because, as I said, whenever we feel we’re needing you guys, you’re always there. It just takes one text or email. So I get my response and I know that for sure I have some type of answer for the customer or whoever is trying to hurt me. But yes, the tablet, as I said, was one of the best decisions that I made because honestly I didn’t know what it is and at the beginning, I thought it’s just one of the other advertisement people who are just come to your dealership to sell you something. But Ben, or Benny, who has now became a good friend of mine, every time that he comes to Sacramento we have to see each other and talk about life or business. For you guys, it’s good to have a dependable lawyer that I can always rely on, but now right after we signed up on this tablet they actually came in and the new guys came as our lawyers and right after the other law firm got involved and I signed up with that so I know that right now I’m in a circle of lawyers, circle of lawyers that no one at least can hurt me that easy anymore.
  • I’m gonna ask you a couple more questions. One thing I was really curious about, for you being in the business for a pretty long time and also being a young guy yourself. One piece of advice for the new generation of dealers.
  • So for your young guys who think that it is a simple and easy business, as I thought, because I used to work with my good friend selling that much, wow, just imagine. If you’re making 5,000, just imagine if you go out and open our dealership, we’re gonna probably make 50,000 a month. That was not true because we didn’t have any overhead at that time. We did not have any type of liability and our investment was only, let’s say $15,000. But if you open up a dealership, you gotta be really careful that how much of your money is yours. You cannot use other people’s money. Sometimes it’s good to use others’ investment or money, but the right way. So you cannot have $50,000 and go open up a dealership with the capacity of 50 cars. You have to go rent a place that you can sell 10 cars or you can fit 10 cars and sell five cars or three cars. So be really careful on that part, it’s not only me, I have seen a lot of people, a lot of people, new generation just jump into the business because they think, oh yeah, there are credit lines for whatever you need for everyone– Yeah, they will, and they are. They give you 50, 100,000, 150, but it’s like a credit card. You just go spend it all and after three, four months you have to pay it back. If you don’t pay it back, credit card just keep charging you. These can come take your car out of your lots and then if you get to that point you’re officially out of business. So just make sure to spend as much as you have in your pockets. And if you wanna use the credit card or a line of credit, which is the same exact as credit card, make sure to just pay it off on time. Don’t let them take advantage of you. You have to take an advantage of your credit card or your credit line. Do not pay them too much interest. Just use it for 30 days, for example, like as I said just comparing that with a credit card because the new generation maybe they do not have any idea about the line of credit. They think that they can just get as much as they want and oh yeah, that’s easy, let’s do it. No, that’s not. You have to pay that off paying back. And it’s a lot of interest. And if you won’t then you have to use your principle, which is your original money, paying just all interest to your lender, not lender but the credit line company, and after two years your principle is gone. You’re officially out of business. That’s the most, most important advice that I have for the new generation.
  • For somebody coming into the business, I’ve seen way too many people fall into that trap, so that’s great advice, man.
  • I did not have anyone to give me that advice ’til I experienced it myself and of course I lost a little bit of my money, but then when I just looked around at myself and I saw myself being in that situation and losing this principle, that was the worst thing that happened to me the first few years and I’d been just losing my money, my investment that I had just because of paying too much interest to these banks. And I decided to just minimize my inventory, just use my money, make a little bit more, add a little on top of my investments and my capital and then if I’m using the credit line, or line of credit, or floor limit, too many names for it, so I’ll at least be able to pay it off in 30 days. I’m not gonna use that money if I don’t have it. But I’m gonna take an advantage of it, I’m gonna add to my inventory, I’m gonna sell some cars that I have onsite which is paid off, and then I’m gonna pay off these ones within 30 days so I’m not gonna invest too much. I’m not gonna be just into big debt. Be careful about that and then I think you’re good. If you’re coming to this business, more than welcome, but be careful.
  • You’ve always been somebody who was a big believer of dealers working together. That’s something that always sticks with me when it comes to having conversations with you. Why do think that it’s so important for dealers to work together in some ways?
  • If you are dealing with a legal issue, and no one here is a dealer here, as Carfax did not, but if I have some other dealers, same situation, to bring into the team, to be there and the voice is gonna be louder then of course someone hears you. And then your law firm, your lawyers, can just spend a little bit of time for it because now they know that, okay, there is a case going on. It’s not only one dealership. You have four same cases or similar cases going on, so the lawyer says let’s do it. We can save these guys on one side and make some money and of course we’re the first one who can just get into this case and be the first law group that can hopefully solve the issue. Being together is always helpful. Something like this that gets created recently which is great, we can share our ideas together, hear each other, and find a similar cases. And you guys as lawyers work on those cases. Okay, this Carfax case or this lender problem that these guys have at credit union. So now it’s even good for you guys because you can now basically organize the cases, we have three dealers who are facing this issue, 10 dealers who are facing the lender issue. Okay, let’s start from this and then we can go for the next issue that the other three dealerships are dealing with. Another advantage of the dealerships closer to each other at least for some cases, they can help each other. Not always beat each other. In some cases we can help each other as well for sure.
  • I just had a chance to look at my clock and I got so into this conversation I completely forgot. We’re 45 minutes over.
  • Yes! At least not seeing you for two years we somehow talked about whatever we haven’t had before. So the next time you come here we’re gonna have really good times.
  • And we gotta go get some Persian food. I remember a very good place in Sacramento. Famous Kabob.
  • Famous, yes, one of the great ones.
  • We’ll set that up for next time I come up to Sacramento. Thank you so much for taking the time, I really appreciate it, I know you’re very busy.
  • Of course.
  • And I appreciate you being on the line with us and giving us so much information, so much are advice coming from you up in Sacramento. A younger dealer, a good guy, I always enjoy talking to you and now we’ve officially met, so I think we had a good first blind date.
  • Yeah! For sure, for sure, so hopefully next meeting will be face-to-face.
  • Of course.
  • With six feet of distance.
  • Of course, six feet of course. I’ll wear my mask too.

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