Service Launch

Dec 2, 2020

Morning. I'm David Hult, President and CEO of Asbury Automotive. We're excited to show you the very first industry end to end solution for a complete online purchase. Miran will walk you through the video that will actually show you some very first industry features that don't exist today in the marketplace. Dan will review some highlights from the video. P. J. Will walk you through our 5 year plan. And then, Muran will come back and show you some enhancements that we're already working on to further develop the platform. And then finally, I'll close out the presentation before we take Q and A. State of the automotive industry. I look at this as 2 simple things really. It's a fragmented industry and an opportunity for us to really grow and scale our company. And the second piece is innovation. You'll see today that we are very focused on innovation and we're very focused on the guest experience, putting them in the driver's seat and aligning our business behind them. Evolution of online car buying experience. This is simply a 2 year decade look back at what's transpired over the last 20 years. You'll see today we have the solution for moving forward into the future with Clicklane, and we're very excited to show you that. I'm now going to hand it over to Moran, and he'll walk you through the video. Good morning, everybody. My name is Moran Merrick, as David pointed out, and I'm the VP and CMO here at Asbury. One of the interesting things that we've been working on for several years has been the online process for purchasing vehicles, online scheduling, etcetera. What we're going to present to you today is going to be one of the crown jewels of our work that we've really aspired to build. And that product is called ClickLane. So you might be asking yourself what ClickLane is. And ultimately, at the end of the day, it's a true online retail tool that's built around the entire immersive online purchase experience for the consumer from end to end, 100 percent online, inclusive of all documentation, loan origination, and everything in between. What I'm going to show you today will be a pre recorded demonstration of an actual purchase going 100% of the way through. And what you'll see here is, is many, many industry firsts, as David mentioned, and I'll be quick to point those out to you. So with that being said, let us begin. You're on a dealership website, you choose that beautiful Kia Stinger you've been wanting, and now all of a sudden though you get into the trade piece. The reason we ask for the trade upfront is you cannot accurately give a payment without getting the trade value first. What you're seeing up on the screen is we're asking the consumer multiple items. Is it a license plate? Is it a make model? Is it the VIN? Chances are the consumer will have one of those handy with them. And all they'll do is in this situation, the consumer put in their license plate and they put their state. What this did was it pinged an API that we have in the back end, VIN decoded the vehicle, found that ultimate VIN, and now the consumer doesn't have to put in an extreme amount of inputs in here. They popped in their mileage, any conditional questions that we have for the vehicle, accidents, mechanical issues. And now to the fun part, are you still making payments on the vehicle? Most consumers are still making payments on their vehicle, whether positive or negative equity, and we want to find out about it. We have a payoff API with thousands of lenders that we have here. Now what the trick is going to be is, as we go to this next screen, the consumer chose Capital One as their lender. That's who they have their loan with. What that just did was within a fraction of a couple milliseconds, it pinged the payoff API that we have and it gave us a 12 day payoff of that vehicle. I'll repeat, it gave us a 12 day exact payoff inclusive of per diem for that vehicle. Now, many of you might be wondering though, why is that really important? At the end of the day, for us to consummate an entire online deal from end to end, not an estimate, but a true online transaction, you need the correct payoff down to the penny. Otherwise, you're not going to have a real transaction. And that's ultimately the goal of all what we're trying to do here. So if we could advance please. So what you're seeing here is ultimately we have the value up there, we have how much the payoff is and then any equity applied to the deal, the consumer chose to apply there. Now, we're asking consumer ahead of time to let us know what you want to do with your down payment. This is supposed to be an immersive back and forth between us and the customer. And ultimately, the system is flexible enough though to really give the consumer what they want. So the consumer popped in $100 We asked for their credit score. Now, they're going to self select the credit score. Be weary though, because ultimately we will do a hard pull on the credit later down the road. So just to make sure that that happens. Now zip code. Zip code is very, very important though, because not only for incentives, but taxes as well. Tax at the local and county level. Multiple cities, multiple zip codes fall into different areas, and you'll see that here in a little bit. And then of course, halfway through, we ask for a little bit of information on the consumer. Should they get lost throughout? Should they defect? Want to make sure though that we have a good experience for them though as we're trying to really walk them through that process later on. Now they'll pop their items in here and then we'll hit show my payments. Now what you're going to see up on the screen is we popped in a specific ZIP code, but there's multiple cities that fall within there though. So we asked the consumer to clarify for us. That'll be a big deal there. Now many of our OEM partners that are out there have specific compliance that's intact on the websites. What you just saw right there keeps that intact on a new car transaction, while making sure the consumer gets their ultimate savings. Now what you see on the screen here is multiple options. You have the finance, you have the lease, right, you've got the discounts, you have $2,000 discounts, 72 months, you have subvented rates, right, you have cash, you have lease. We're giving the consumer multiple options to really transact with us as we're going through there. Rebates. Now, there's applicable rebates. So if you go through Kia Finance and you choose some of those items, you'll notice in the included section, we have consumer cash, retail financing, all of those elements there. Now, moving further on, right before we just give a random set of F and I products that some of these websites have out there, we chose to go the complete opposite way. We wanted a customized design flow for the consumer, not only based off their driving patterns, but also the VIN of that specific vehicle. So what you're seeing up on the screen here is is a live vehicle service contract that pertains to this 2021 Kia Stinger, that VIN number. We have a nice little video for them that they can walk them through. It's a little bit less than a minute and it shows them the benefits of what this vehicle service contract does. We have a little bit of verbiage down there that gives them what's included in this. Of course, the monthly payment that's gonna be inclusive of that and then, of course, the total price. We have a brochure down there as well if they want to educate themselves further, compare the products with potentially, you know, what it includes and some of the items that it has. The customer just popped in a different coverage option and they've added that said item and now will advance throughout the deal. Now you notice car care maintenance plan, road and hazard, right? You've got many, many different items. Of course, you've got GAP, inclusive their appearance package. Anything that's applicable to that vehicle based off the VIN and what the consumer just denoted to us though are in here. Now, let's get to the really, really fun part. So a couple years ago though, we came out with the industry's first loan marketplace, which included 20 to 30 plus different lenders that were in there based off of near prime, subprime and then of course prime itself. Now what you're seeing here up on the screen is really the advancement of that. Now the consumer is going through popping in any of their applicable information, right? So date of birth, Social Security number, phone number. Now the key here is as the consumer is going through it, because this once again, this is the live footage of the consumer doing it and we just happen to have it here for you all as a pre recording. And any of the inputs that the customer puts in there, should they choose to put anything wrong, the system will inherently let them know. That way, there's no issues with any of the captives, no issues with any of the lenders there. Now, if you're asking yourself from a security perspective though, so we've worked quite a bit extensively on the security aspect of this though. So as the consumer has been going through this entire process, we're keeping track of many, many different, what we call kind of algorithmic pings, right, that are tied back to any security, any fraud, anything that's related to that, and it's letting us know in real time. So we're putting an employer phone number here. It's gonna ask for the start date, annual gross income. If you have a co applicant, it's also going to ask the same thing. This particular consumer does not have a co applicant though, right? But you'll see as we further advance what that means. Now, let's get to the legalese, for example. So we all know this is a very important facet of the online world. So rather than just having the consumer click a nonsensical box just to say, Yes, I've read it, we actually want them to read these things. So what happens is the consumer is going to click on the light box, it will pop up, and we are asking them to scroll to the bottom, accept it to ensure that they've read 100%. Now, here we go. Now we take get my approval and woah, what happened there? So what happened was at the very bottom, and this is a key point, it showed that the consumer popped in apartment number, the verbiage, rather than just putting in their apartment number. Now the reason that I'm pointing this out to you is because ultimately this is going to happen to our consumers in real time. And we need to be able to navigate and help them throughout that process, and it tells them specifically where they may have made a mistake. Now, we're in the loan marketplace aspect of it right now. We're in the final stages. What this means is, and what's happening here, there's a bidirectional API between this particular store, their captive, and also multiple lenders in the space based off of their credit score, their LTV, and anything pertaining to this deal structure. This is in real time. Every single piece is in real time. We're preparing documentation based off their inputs. We're sending all of these items directly through a secure network through this bidirectional API. And what it's doing right now is it's calculating what we're getting approved for. And ultimately, you'll see here on the screen in a few seconds, who comes back, at what term, and what really happens there. This is not only has it been an industry first for us, though, we like to think though, this is the most complete loan marketplace in the industry. Now we're going to pause it here for a second. And what you're looking at up on the screen here is the consumer is approved. This isn't an estimate. This isn't, Hey, come into the dealership for an appointment. This isn't anything other than this is a real approval from a captive and from a lender with real rates, real down payment, real term. I'll repeat. This is real. Right? And I realize if you're watching this video, though, you might be thinking to yourself, though, this should probably be very, very, you know, you know, it's a very astute observation. And the reality is, in our industry, these kind of estimates do not exist, right? They're they're truly they they come through as estimates. This is a real loan approval from 2 banks. Now, if we'll continue here for a second. What we have is we've got the offers there from both Kia and from Ally. You'll notice at the very bottom it says decision pending, U. S. Bank TD Auto Finance. Right? That just means though that there's either more to be done there, there's conditional offers there, there's stipulations, whatever the case might be as these are the 2 approvals. You see the term, you see the APR at a subvented rate, that's the one the consumer chooses. Now, we've got to prepare for the delivery. We don't want to just be a one trick pony, right, and we want to really take it to the next level though and really do 100% of the deal online. What we have in the system though for many reasons, number 1, we need a driver's license, right? We need the front and back of the driver's license. In this case, though, because we're using multiple fraud detection elsewhere in the system, we're only asking the consumer for the front part of the driver's license. Now insurance, we're also requesting the consumer to give us insurance. The reason is, is that you'll see throughout the flow, especially in the DocuSign, which will come a few steps later, we need that for some of the insurance documentation, so we can then ultimately electronically staple that to that particular form. Now, you know, you can do whatever you want in there. If you have your vehicle registration, you're more than welcome to put it in there. Right? At the end of the day, we're going to be doing many things to check to make sure that the customer owns that vehicle, right, that they have proper insurance, and ultimately we take it to the next step. Here's the kicker, right. So ultimately, in our space, we now ask the consumer though if they want to sign online or in store. The majority of the customers would like to sign at their own discretion and they can do it from their mobile device or their desktop. The beauty of the system is it's pliable enough to the point though where it can give you both. The consumer chose to sign online like you would when you fill out a when you do anything DocuSign Sign related on a mortgage or anything that you've done as a bigger purchase, no different here. You adopt your signature, you pop it in there whether you want it to be a draw it, whether you want to select the style, ultimately, that's your choice, though, and you do what you please there. What you are seeing here on the screen is the consumer is going through a full deal jacket, inclusive of the specific state, the specific brand, and the specific OEM for that piece, though. So you're seeing DMV documentation, you're seeing Lemon Law documentation, you're seeing the HOPE scholarship. This was a transaction in Florida, which that's required on all the deals. You're seeing the UO and the WEO statements though, you're seeing the bank contracts. You are seeing every single piece that we would require a customer to sign in store, you're seeing it online. It's not just 5 or 6 documents, though, just to make it seem like it's a online transaction. It is truly multiple, multiple documents and in certain cases, 15, 20 to 25 of these. Authorization for lease payoff, right? You've got the estimated payoff there as well too. You get the per diem and ultimately the customer hits finish and it took them roughly about 20 to 30 seconds to do that entire piece. If a customer needs to take longer, they certainly have the right to do that though and they can do it at their own discretion. Now what's happening in the background is it's now putting the envelope together. It's emailed that to the particular customer. And now let's get to the fun part. How do you want to pick up your vehicle? Now it actually worked that this customer chose a delivery of this vehicle though, which is key. The time slots and the date is all things that the dealership had as availability. We don't want to over promise to our consumers and let them know we're going to deliver the car next week or in a day or in 48 hours and not come through with that. So they requested the delivery there. Now reviewing the order, this is going to be a big piece though because the customer selected $100 as their due at signing rate. They came back, we ran their credit, the lenders both acquiesced and stated they would allow a $100 due at signing. And the reason I've really paused it here for you all is in our industry, this piece does not exist. We have reservations for vehicles. We have different nuances there. But what you just saw is that entire transaction from the very beginning, all of the inputs, the approval, and now all of a sudden we're coming to checking out whether you're paying for the vehicle. If it was $1,000 $15,000 you name it, right? You can do the entire transaction here and we've partnered with a company called Stripe. And Stripe gives us the ability in a safe and particular manner, and if we can move forward here a bit, and it gives us the ability to really then pop in credit cards. If you use Apple Pay or Google Pay, you have the ability to do that as well. Or should you choose to do PayPal? Many consumers have different ways of transacting and buying things online. We don't want to limit that to them. So ultimately, at the end of the day, we give them the ability to do that in a safe manner. All the while, the system is calculating and tabulating any items that are tied to fraud detection. It gives us a score out of 100 to ensure that this consumer is doing it in a very, very effective manner. Now, as you'll notice, so the consumer popped in the wrong ZIP code. It noticed that it didn't let them advance. They fixed it. It told them specific elements of what's wrong with that transaction. And ultimately, they're checking their items and they hit pay. It's now processing their entire transaction. And bada bing, what you just saw here was a true 100% online transaction. Not an estimate, not something that you would complete a lead and then come back to it at a later time. It is a real 100% online transaction. This is an industry first that you're seeing here from a new car purchase. We have the do it signing. We have the payment. We've got the loan originated. And now we're moving on to the next step, which is ultimately figuring out a way, right, to really put the ecosystem together. Now, the consumer is going to receive an email. That email will go to whatever email address they used, and it's going to ask them to set up their ClickLane account. Now, the interesting thing is they're not going to have to input a lot of their vehicle items. They're not going to have to put in a lot of the information because the system is already inputting that for them. It's set up a portion of their system. And you notice here that our consumer, John, has his entire account set up for him. Now, the cool part is, is what you're seeing here is this is a proprietary piece that we have built, where ultimately he can now put on his profile picture, any documentation, any folks in his network, inclusive of multiple vehicles in his garage. And then you'll notice though, you can add an update, service scheduling, he can find tires, right? These are all things that we have put in here though to really put an entire full end to end ecosystem for the consumer. Now what's going to happen here is he's adding an extra vehicle though, because his partner has a Volkswagen that he wanted to input there. So we have a license plate. It has the state of Georgia in there as well. It's going to put the year, make, model as well in there for the consumer. That way, he knows multiple vehicles in his garage composition. And that'll give him the ability to know about when we have recall alerts, when he wants to buy tires, when he wants to set up any respective items for the maintenance of this vehicle. Adding the vehicle on there, it's a 2019 VW. And now you could see specifics when we've added it, any applicable items to scheduling the service. Now, in this case, they want to really explore tires. The cool part about this is we've taken that vehicle's make, model and trim level, and we have an API with a partner of ours that gives us the ability to give applicable tires to that specific vehicle. This does not exist in an ecosystem like this in our industry. And we like to think though that this is a really helpful benefit to the consumer. Should you need tires more in a reactive manner or proactive manner, you have the ability to do both at the same time if we could move forward here. And you've got different companies here, you got from Pirelli, from Michelin, Bridgestone, etcetera. The point is, these are all applicable to that vehicle's make, model and trim level. Moving on to the documents and paperwork. We have a return policy there. Any additional documentation that would be there would be set in there as well. If they're looking to set up an appointment for whether it's an oil change, whether it's alignment, you name it, we have the ability to not only choose from just one location, we have multiple locations. If you buy the car in Tampa, but you happen to live in Atlanta, we have we really have a solution for you there. The time slots you can choose, they're based off availability at the store based off shop availability. Now, should you get in an unfortunate accident or should you want to really work on any minor dents and dings, any paint jobs, we have the ability with an online photo estimator where you choose the nearest collision center to your body shop and you have that particular piece where you can send them photos and they will give you back an online appraisal instantly. Now, if the consumer wants to sell one of their vehicles, which is a very common thing, as you all know in our industry, we give them the ability to just put in their license plate, put in their state once again. And this is done in an algorithmic manner, though. When they hit find my car, it automatically VIN decodes that vehicle you'll see at the top. They put in their zip code because ultimately at the end of the day, zip code does matter in those valuations because it's real transactional data, current mileage, and it spits out a market transaction price for them of what we would like to purchase that vehicle. They can choose to accept or not now. But the point is, this is our first delivery. And what you just saw up on the screen right there is, is that ultimately a gentleman that purchased his car 100%, Kia Stinger happened in real time, true transaction, which currently in our industry is an industry first. Now, to be redundant, right, I want to make sure I'm very abundantly clear with this point. You just saw a 100% complete online purchase. And I'm going to hit that point home hard because this is an industry first in the new car segment. And from searching to ownership, in about 15 minutes, the consumer went end to end, inclusive of our ecosystem, to really put that entire car deal together. In our eyes, this is not only an industry first though, but we feel that this is an excellent piece and really ecosystem to bring to the marketplace That's going to be a massive benefit to our consumers. With that being said, I'm going to hand it over to Dan Clara. Good morning, everyone. I'm Dan Clara. And today, I will be walking through a quick summary of what Miran just showed us a little bit earlier today of the buying experience. Today, we introduced Clicklane, a tool that allows our guests the freedom to buy a car their way with full transparency, where taxes and pay off are accurate. F and I products that are VIN specific tailored to our guests' driving habits. And finally, a place where you get real time offers and approvals from banks you know. As Miraj showed us earlier today, these are examples of how we personalize the guest experience. Taxes and rebates specific to the guest ZIP code to ensure the guest receives an accurate quote. In addition to that, we all know that no quote can be accurate without a correct payoff amount. We are proud to bring to market the very first tool that has real time payoff to the penny with accessibility to over 3,000 lenders to choose from for guests' payoffs. F and I products that are VIN specific and tailored to the guests' driving habits and expected length of ownership. As I stated before, Clicklane is the very first tool that has real time payoff to the penny. The only automotive loan marketplace with over 30 lenders providing real time financing options and approvals. And once the purchase of the vehicle is complete, you have your personalized portal for all your automotive needs, including the ability to schedule an appointment with 1 of our 25 collision centers. In the unfortunate event that you're involved in an accident, you also have the ability to upload photos of any damages for a very fast and efficient quote. Last but not least, your personalized portal allows you to reserve tires that are VIN specific to your car and coming very, very soon, the ability to order accessories for your car. Since 2016, we have been working on digital innovation to drive performance and enhance the guest experience. We have seen a 400% increase in online service appointments, which tells us our guests have gotten comfortable using the tool and last year alone, it created €20,000,000 in additional annualized revenue. Now I'd like to introduce our Senior VP and CFO, PJ. Thanks, Dan. Good morning, everyone. I'm PJ. Thanks for tuning in. I recently celebrated my 6 month anniversary with the company and it has been a really active time. We recently made the largest acquisition in our history with Park Place and now we are unveiling a game changing digital tool with ClickPlane that will serve as a key growth driver for us going forward. And we are far from done and plan to keep our foot on the proverbial gas pedal despite this challenging period of high volatility and uncertainty. So let's look at where we plan to go from here and how we plan to get there. As we aim to set realistic yet still ambitious goals for the future, a helpful indicator is always past financial performance. And our story is a good one. Over time, through several economic cycles that included some really major shocks, we've consistently delivered strong double digit shareholder returns. We've been able to maintain strong new and used margins. And when there was pressure, we grew our F and I and parts and service business and gained efficiencies to preserve and even enhance our operating margins. In the last 5 years, we delivered close to 15% EPS growth. And year to date, our performance has been record setting during a time when the U. S. Economy has nearly been shut down. Year to date, we have seen our gross profit per unit on both new and used up well above last year, and we're actually generating more EBITDA than we did last year as well. The past 2 years, we've also been active in acquiring $2,600,000,000 in revenues, including the most recent Park Place acquisition. All along the way, we've actively managed our capital structure to keep our balance sheet strong with a target of 3 times debt to EBITDA or lower. The key point here is that we've been able to outperform despite the environment. This is not just testament to the dealer model but also our ability to manage our business, to innovate and to stay proactive and take advantage of market opportunities. Now looking forward, we are better equipped than ever with the talent, the infrastructure, the balance sheet to deliver even higher returns for our shareholders. We are excited about the growth opportunities ahead and have formulated our strategy based on 3 main priorities. Firstly, we plan to grow our same store revenue and profitability by investing in training to create a consistent car buying and servicing experience across the company. There is still a large amount of white space between what car buyers expect and what auto retailers are able to deliver, and we want to occupy that space. We will continue to build on a growing and profitable parts and service business and focus on our F and I offering, which continues to improve our gross profit per vehicle. We also plan to be a more data driven company, putting more business intelligence tools in place to track and drive productivity. Secondly, we'll continue to build out our digital platform to drive incremental growth, while harvesting efficiencies that will take pressure off the stores and help lift overall performance. We believe the ClickLine tool will be a great alternative for guests that will bring in traffic we may not otherwise see and convert sales we would not otherwise generate. We also believe it will be key in creating a unique and a sticky experience for guests that will lift our F and I and our parts and service business as well. And lastly, we will grow through acquisitions. Our industry remains highly fragmented, and we have an opportunity over the coming years to continue using our strong balance sheet to acquire profitable growth. This does continue a pivot from years past, and Park Place is a perfect example of how we want to grow by acquiring attractive assets in markets we want to be, where we can drive synergies and high returns. I should note here that growth the growth we model keeps our leverage at or inside 3 times debt to EBITDA. So we plan to retain a strong balance sheet with high liquidity. Over time, with consistent acquisitions, we can create a flywheel effect where we're buying EBITDA to fuel the next acquisition, while at the same time keeping our balance sheet healthy and flexible. So when we model out our growth drivers, we feel confident in delivering over 20% top line growth annually. And this would put us at $20,000,000,000 of revenue by 2025, more than doubling the size of the company. Given the interplay across these three strategic buckets that will feed off one another, we are confident we can expand our operating margins to deliver EPS growth that outpaces top line growth. I would emphasize that these are CAGRs and targets. So some years, we may be above, some below, but the key is to look back in 5 years having more than doubled the size of the company. Drilling into our 3 growth drivers a bit shows where the revenue will come from to deliver $12,000,000,000 of top line over the next 5 years. If you need a catchy name, we can refer to this as the $20,000,000,000 by 2025 plan. I would highlight that we modeled this using 2020 as our base year and we've included a full year of Park Place revenue and adjusted for recent divestitures. So our pro form a jumping off point for 2020 is around $8,000,000,000 Moving forward, we see $2,000,000,000 coming from our same store same store base, inclusive of Park Place. We see our ClickLane tool adding an incremental $5,000,000,000 of revenue over the next 5 years. And then we plan to add an additional $5,000,000,000 of revenue through acquisitions and the incremental growth that comes with them. So adding it all up, we plan to add $12,000,000,000 of revenue over the next 5 years, translating into a 20% compound annual growth rate. As far as what happens next, we plan to complete the ClickLending pilot, which has shown great results so far, and then have the platform rolled out across our markets during the Q1. And from there, it's all about driving traffic and conversion and scaling the platform to its full potential. I'll now turn it back to Miran. Thank you, PJ. So as PJ had alluded to, you know, our strategic vision and what I'm going to go through here is, is going to be some enhancements to the product. Some are going to be coming in the next 3 to 6 months. Some will be a little bit more in advance. So but either way, let's get into some of those. So what you're seeing here is and we kind of call it the ideation light bulb, if you will, at the very top, we see video conferencing. We know our consumers, whether it's through FaceTime, whether it's through Zoom or all of these different video conferencing softwares that are out there, they like to interact with others. And if you are one of those consumers that simply put needs a little bit bit of help throughout that process, we're going to give you the ability to essentially speak with 1 of our folks, not via phone, not via text, but ultimately in a visual medium there. That's coming very soon. We're going to have a consumer facing accessories builder that Daniel went through a little bit earlier, where you'll be able to accessorize your vehicle in a visual manner, give yourself the ability to see what a winch looks like on a Rubicon, what any additional wheels might look like, what the color might look like, etcetera. You can have all of those different aspects to it. We mentioned co browsing and guided checkout. This is a key portion for us, right? Giving us the ability though to really have a guided checkout approach for consumers that don't want to go just 100% of the way by themselves that need a little bit of help in a more guided checkout, whether that's through video conferencing, whether it's through text, whether it's through a phone call, whether it's just through co browsing with them on their screen to ensure that what they're doing or any questions that they might have really, really get answered throughout a very seamless approach. Rentals. Now rentals in our industry, as we know, whether it's, you know, when you're scheduling a service appointment and you're trying to make sure that you have a rental there or you get into a car accident, God forbid, right, we have the ability to have real time rental integration into the system that will give you the ability to really then hone in on what you're after there. And lastly, household garage data. In our industry, not only is it fragmented, but there's a lot of bad information that's out there through across multiple different systems, a DMS, a CRM, both for sales and for service. Some get updated, some don't. This will give us the ability from a household garage data perspective to get the household composition ready to go and then give us the flexibility to really, really key in on some real key consumer aspects that we like there. And without further ado, I'd like to toss it over to Mr. David Holt. Thanks, Moran. You just saw the very first end to end solution for purchasing a car online, a complete platform solution from buying all the way through the ownership experience. This only happened because we have a passionate and driven team that has been focused on our omnichannel approach. 1 of the levers in our omnichannel approach is flexibility and partnership to innovate with different software companies. In this case, we partnered with Gubagoo, a well respected and passionate group of developers. And working together, we developed the very first industry online complete buying experience. We are not done yet. We will continue to innovate and enhance our tools, differentiating us from our peers. Today was about showing you a couple of things: our ability to innovate and what we've been working on and our 5 year strategic plan and where we're going as an organization. In any organization, people make the difference. This is why we continue to lead the industry with best margins, innovation and disciplined approach around capital allocation. Our vision is to be the most guest centric automotive retailer. Today, we gave you some insight to see how we're doing towards that vision. We are now excited to take your questions. Matt, let's begin the questions. Thanks, David. Our first question comes from Rajat Gupta with JPMorgan. Rajat, please go ahead with your question. Hey, thanks so much and thanks so much for the really impressive demonstration here. Really good to see everything. Just keeping my questions quickly, could you give us a sense of what the economics are going to look like for the ClickLean platform specifically? Any color you could give us on what the GPU metrics might look like and what the incremental SG and A dollars would be? Also within GPU, like what the retail versus financing portion looks like? And then I'm assuming like you don't have to invest more on brick and mortar to launch Quick Link. So likely, the incremental SG and A comes from advertising and personnel related to delivery and management transaction. So just curious as to the puts and takes there just so we can get comfortable with the margins on that. And I have a follow-up. Thanks. A lot of questions there. I hope I get them all. If not, please jump back in. This is an evolution for us from Push Start to Clicklane. So we have a lot of data on what our online transactions have been. Clearly, this is a tool that takes it much further and is the industry first, as you just saw. We've had this out there in a few stores for a while, so we actually see the data. The conversion rates are significantly higher than what it was on Push Start. The gross profits are very similar to what they were on Push Start as well and the consumers are buying F and I products as well. So we look at this as a game changer for us where we really increase our conversion rates, which is really going to give us incremental sales that we were missing before. So very excited about that. The whole concept or our path has been all along with the omni channel approach is you don't need brick and mortar. And clearly, you can see with this tool, we certainly do not need brick and mortar, nor do we need to be looking at every piece of the country. We can really be strategic in certain markets that we want to attack and do business in, and we have plans to certainly do that going forward. So we're very excited about what it can do. Regardless of what happens in the future as it relates to margin pressures, we see this as an avenue and a tool to help us with SG and A expense and actually make us more competitive within the in the market space while creating greater returns for our shareholders. The push start GPU is similar to the brick and mortar business? Correct. Okay. And got it. And in terms of the advertising, like how should we think about the advertising strategy here for Clickly? And I mean, you said that you wouldn't target certain markets only. Like what how should we think about like just the brand building exercise versus targeted regional advertising, just the approach there? I don't want to quote competitors, but like, have you heard like the other brick and mortar players who are launching their little platforms, they're spending heavily on advertising just for that piece on a per card basis? I'm curious as to how you're going to be approaching that and you're going forward in order to just grow Clicklane over and above. Sure. You're already going to grow the legacy business. Well, absolutely. And as you could tell for years, we've had the lowest advertising cost per car in the industry. We're very efficient with our advertising spend. We don't really like the shotgun approach, it's more of a rifle approach. And I think we're very disciplined on anything that we execute and launch. So this is really, it's about rolling out the stores in the next couple of months with so everyone has a tool. Within each market, the brand names really hold court in those markets and have recognition. And we'll continue to market through the names within those markets that we do business in. The next phase beyond that will really be to enter into different markets where we don't currently have brick and mortar stores from a used car perspective and be more targeted and that will have a much different marketing approach to it. We're blessed to have what I think is the industry best marketing team and this is why we're able to deliver such efficient rates and numbers. Our traffic continues to grow as we get more efficient. And as we've already seen from this ClickLane tool over the last 30 30 5, 40 days of putting it out there and actually seeing data behind it, the conversions are significantly higher and the customer feedback is fantastic as far as ease, transparency and speed. So we think it's a game changer. While others are spending more on brick and mortar and more in advertising, they don't have the solution that we just showed you. And that is a complete end to end solution and that's a game changer. To have a transparent experience like that in less than 15 minutes, penny perfect payoff, I can't stress that enough, that does not exist out there, is really relevant because starting a transaction online, guessing with a payoff, the payoff is always wrong, the consumer never knows it to the penny. So now the experience isn't great because everything has to change. So once you sign those documents online, it is done. There is nothing to be redone at that point. Right, right. Makes sense. I'll get back in queue and pass it on with my 2 questions. Thank you. Thank you. Our next question goes to Stephanie Benjamin with Truist. Stephanie, please go ahead with your question. I have a question specifically on just the QuickLane process and more as you go through the entire transaction online. And what happens if particularly from that trade in and that you get that very detailed loan payoff quote that's obviously highly differentiated for you guys. What does the consumer provide? I guess the trade in quality is lower than indicated. Maybe that's just one thought that I had just given this is such an online process. Maybe you can provide a little bit color of what you found at your pilot stores, anything else that may have surprised you as you were piloting this platform and particularly with that trade in option? Yes. Very good. Good morning and this is Miran. So part of what we ended up doing in the system was we wanted to take market transaction data for the specific zip codes. And that's across thousands of different vehicles that we have in that data set. We asked some qualifying questions to the consumers. Do they have any mechanical issues? Have their airbags been deployed? Because that gives them the ability though to self assess the vehicle. And what we find is that throughout the transaction path, when a consumer is going through there, they have a high likelihood of really giving us the upfront information. And then what happens is, so for example, if an airbag is deployed, we, our algorithm is able to react to that in an algorithmic manner. And then we go to the next level though, when we ask any maintenance costs, is the vehicle drivable, things like that. And then we're able to use market data based off that. At the end of the day, right, if the customer misrepresents the vehicle to that far degree, we of course could take a second look at that deal though and you know pull back where we need to appropriately and adjust where we need to. We also have that guided checkout process as well that allows us to say if the customer made a mistake somewhere down the road, we have the ability to push them another value where they can essentially go from that starting point and then move on further with the deal with the good information. I'll also add something that happened in a real transaction. There was a consumer on and then put their trade in information to pay off and then it came back and they exited the system. We hadn't really discussed it and shown you, but this is this was built by Gubagoo, which their core is a chat company. So we have the feature to communicate and see in real time where the consumer is and what they're doing. Then when we engage through chat with the consumer while they exited out, they wanted a few $100 more for their trade. So in real time, we're able to give them the few $100 more for the trade. She went back online and completed the transaction. So the power of this tool and what it can do from an engagement standpoint and conversion standpoint is really impressive. Wow. I really appreciate the additional color. And then second question, just looking at your growth target and the revenue contribution, Exacta from just QuickLane kind of on top of the standard same store sales growth. Would love for you to dig in a little bit more, a $5,000,000,000 in 5 years on QuickLane is a pretty strong target. Maybe you could kind of bucket that a little bit on where you expect? Is that how much of that is from growth in existing markets as well as entering new markets, new versus used? Anything there would be helpful as we just look to kind of wrap our heads around that target. Thanks. Yes. Hey, Stephanie. Thanks for the question. So as we model Clicklane, the way we look at it just to simplify it is, we assume that today there is some level of penetration with our push start tool, call it 10%. And we layered in what incremental penetration we could get with the ClickLane tool. And it's not hard to see the tool getting to 35%, 40% penetration over 5 years. And as we grow the company, we grow our total units sold, you could see it gets to a pretty attractive number early on. And as far as the contribution, it is going to provide lift to the stores, but it also it allows us to enter new markets, especially as a used strategy. So there is some cannibalization where the stores will absolutely benefit and see lift, but there's also incremental lift above and beyond that due to the tool itself and the experience and its ability to drive additional traffic and conversion as well. So it's a little bit of a mixed bag. But again, when you look at the numbers simplistically, it's not hard to get to a point where we're selling up to 150,000 units through the ClickLane tool. And I'll add to that. The average dealership in the United States, for every 100 leads that come in through the Internet, their closing ratio is between 8% 10%. So if you think about that as a concept traffic now, you're only converting, call it, 8% to 10% of the people that come through traffic wise via the net. What we've seen with this tool already is significantly higher conversion rates. So it's simply taking that incremental number there in conversion and extrapolating that out. So we're very confident in that number and like everything that we do, I would say it's conservative. Thank you so much for the questions and answers. Our next question comes from John Murphy with Bank of America. John, please go ahead with your question. Hey, guys. This is Yarden on for John. So if we rewind a couple of years ago when you were trying to roll out your Q Auto initiative, one of the challenges that you went into was the investments necessary to build out a Carmex like brand and cannibalization that you sold your own used vehicle business. So if you think about what you're trying to do with Clicklane in so much creating a Carvana like model with the new vehicle business, what are some of the potential obstacle in doing so, like necessary investment to build out the brand and protecting against cannibalization and ensuring that the new consumers are actually incremental? Thanks for the question. I'll answer it this way. When we started Q Auto, we got it profitable. But when we looked at it and Carvana coming into the space and becoming a digital world, the brick and mortar didn't make sense to us. The engagement point was online and our ability to offer a transparent experience and a full end to end solution was going to be the differentiator that we believed. The rest of it as far as facilitating the sale or the delivery of the vehicle is just supply chain issues. It's transportation. And we have a pretty big footprint in the country, but certainly we have partners from a transportation standpoint that can go anywhere. But I wouldn't look at this as we're not aspiring to hit every single small town within the United States. I would say it's more of a rifle approach and looking at where the highest conversions are, where it makes sense for us to be most efficient and create those incremental sales. So again, years ago, we decided Q Auto was profitable. There's a large expense in doing this. What's the benefit of the brick and mortar expense when this is going to be an online transaction? You pointed out, Carvana, already you can see their sales with no brick and mortar really other than those vending machines and the number of people transacting online. And the unfortunately of this year with the pandemic, that has really kind of sped it ahead as far as how many people are willing to transact online. So while we've been working on this for a while, while this had nothing to do with the pandemic and while it's horrible that the pandemic happened, we've actually benefited and we're going to receive a tailwind because we're perfectly aligned and ready to deliver on that online experience as you already saw in the video. Okay, great. Thank you. And my second question is, can you maybe talk about the relationship between Push Start and Clicklane? I mean, are these 2 going to be ultimately integrated into 1 digital platform? Or are they going to operate separately? Just wanted to put these 2 together. Sure, absolutely. We've always had the mindset that software is a competitive space and our core competency is selling and servicing cars. And we like flexibility and have an easy out with our software vendors because we want the adaptability to work with different partners because things change over time. We partnered 4.5 years ago with the company behind Pushstart and we launched something at the time that was a little bit ahead of our peers and we reaped the benefits of it. About a year ago, we were focused on getting to where we are today and we realized that we needed a different partner. We called in the ownership and management team of Gubagoo. We sat in our conference room almost a year ago and said, this is our vision, this is where we want to go. Are you willing to partner with us to get us there? And to their credit, they certainly did that. And as you saw, they delivered a fantastic, simplistic and very transparent tool to use. So I would say you're going to see Push Start get sunsetted and Clicklane take over. And as you can see, we also are launching that ecosystem behind it for a one stop shop for a family to have one eco center to manage their fleet of cars that they may have in their family. Great. Thank you so much. Thank you. Our next question comes from David Winston with Morningstar. David, please go ahead with your question. Thanks. Good morning. I guess first on the outside of Cliff Lane for a moment. The M and A growth you announced today, is that will you focus on existing regions and brands there? Or do you want to go into new regions? It sounds like you don't want to go all over the country given a comment a few minutes ago. Yes. David, I would say, yes, there are certain markets that we don't have interest in going into. But again, it is a very fragmented industry. And just as a point of reference, in 2019 and in 2020, and we're close to completing 2020, we've looked at a little bit over $15,000,000,000 worth of M and A activity from a revenue standpoint. And in that $15,000,000,000 is certainly the Park Place acquisition. So there's plenty in the market space this year alone. It's approaching 7,000,000,000 dollars So there's a lot of activity out there. There's going to be a lot more activity out there. I would say we're very disciplined. We're not just we don't want to buy revenue for the sake of buying revenue. We really want to buy great assets and build a very strong portfolio for the future and be strategic where we want to be. We're looking it's more of a strategic approach and really making sure that when the downturns come, because they always do come in the future, we're well prepared and have a very stable platform. Okay. And then on Clicklane, is this is really impressive capabilities, but long term or at least over the next few years, your competitors obviously have time and money to work with too. Is there anything in today's offering that cannot be replicated by someone else? Yes. So This is Miran. So a couple of things. So the back end proprietary platform that we built, right, we look at the video, the first portion is the checkout piece, and that's we partnered very closely with our friends at Gubagoo there. And a lot of the inputs and APIs and some of the algorithmic setups that we have for the trade valuation and things like that, though, those belong to us though, and we've partnered with them on that piece. So we're able to do that. As far as the back end tool, as far as what you saw for the ownership cycle, that was built in house by our development team. So there are some layers in there though that whether it's from a data endpoint connection or it's from the ownership cycle though. But to your point though, we see that the good data and then ultimately good processes that put that whole ecosystem together. And to follow-up on that, it aligns with our thought process. I mean it's all about our people and our innovation. It's the level of service that we offer. So we're very focused on that. And I would say you can easily invest the capital, you can buy software and you can plug it in. If you're not passionate, if it's not part of your DNA and you're not thinking about the full end to end solution, not just software, but delivery and as far as the engagement with people, it isn't quite the I think to just plugging it in and playing with it. So if your relationship with Gubu I'm sorry, I can't say the name. If your relationship ended with that vendor, nothing changes capability wise? That's all your IP is safe? Yes. I would say what Moran talked about, the pieces that we built are ours. If something happened with Gubagoo, that would cause us to pivot in a different direction. I would look at this more as and this is it depends how you think about this term. I would say this is the first 5 minute mile and there'll be other people that now attain the 5 minute mile, but we actually think that's good for the franchise system in our space. And it makes it it makes our franchise model far more attractive than others. And I can't stress this enough. The transaction online and getting to this point and doing it is going to have a material effect, which is fantastic. But parts and service, when you look at the margins and the opportunity in parts and service and the level of engagement and where we could go with that tool, I think it's very powerful. And that's what we think makes it. Our OEM partnerships, the brands that we offer, the warranty ability, factory trained technicians, They're locally to service the vehicles, not just sell you the vehicle when something comes about. This is our core DNA of who we are and what we do. Okay. And just a very quick easy one hopefully here. In the middle of let's say if I'm doing my 15 minutes to buy a car, in the middle of it I have to walk away for an hour or half hour, does the system time me out and kick me out and I have to start over? So good question. So what ends up happening is the system remembers inherently where you're at and where you leave off. So think almost cart abandonment type of marketing approaches. Should you leave the website completely, right, you will make sure that you will get whether it's an email, a display ad, Facebook ad, you name it saying, Hey, you know, you left off on, you know, the credit application. Here's a direct link and deep links to the spot that they left off. The system intuitively and inherently knows where you left off in the system, remembers any pertinent information you've input into the system, and it allows you to come back to the deal. Even more so, right, think about that next level though too, and I talked about the guided checkout as an example, where you have the ability to then say, okay, if I only give you $15,000 for your trade, but yet you as a consumer are looking for $16,000 We have the ability now to go into the back end with that co browsing piece, give the customers some back and forth to say whether it's video conferencing, text or chat, and then we can give them either bump their trade or do what we need to to structure the deal a little bit differently to make it work though. Not every US consumer wants to buy a car fully online. Some like the guided approach, some like the full deal, some don't like it at all. The point is the system is pliable enough to ascertain everybody's goals. Okay, very helpful. Thank you. Thank you. Our next question comes from Ryan Signow with Craig Hallum. And reiterate what others have already said, but thanks for the presentation and really going through the detail here, helpful. Curious on so Quick Link, will that be a nationwide brand and platform Or is it planning to be a service under existing dealer sites with only local inventory? So Brandon Kia in Florida, Park Place in Texas, etcetera, or will this really be a nationwide offering? So that's the direction we're heading in. 1st and foremost is servicing our platform with stores in the markets that we do business in. We have part of our 5 year strategic plan. We've already identified markets where we want to go and our approach and how we'll enter the market and our expectation of what conversions will be in the marketplace. So when you say nationwide, we'll certainly be in a lot of markets where we don't currently have brick and mortar franchise stores, but I don't know that we'll be in every square inch of the U. S. Got you. And then a good segue. So with dealer franchise laws and geographic limits, any challenges to selling new cars? It sounds like you're going to go into every square foot, but can you get to that nationwide presence or close to it, I should say? Yes, we can with pre owned. And from a on this particular tool, and it's just because the consumer was searching for a certain vehicle, they happened to be 500 miles away from the location And they completed the purchase online and did everything and we shipped the car to them. So people have access to do business with us. We just simply can't market outside of our PMA as it relates to new vehicles, but used vehicles is certainly an open space. Good. One last quick one for me, then I'll turn it over. Is the quick lane experience offered today in the single beta dealership in Florida, is that what's going to be rolled out to all the dealerships in Q1 or are there iterations, enhancements, etcetera? Because to sum it up, I went through the experience there, it was slightly different than kind of what you guys just walked through, similar, but just curious if there's kind of iterations to that beta test or if that's what's rolling out? Thanks. So the iteration that you see on Brandon Kia is the actual integration that you saw in the video though. The only difference is we added the ownership experience piece where you get the email and the whole setup though. So it's however you did in the back end. The also the other important thing to remember is it's pliable enough to the point though if you do a cash deal, if you do a lease deal or if you do a finance deal, what zip codes you put in, right? Those are all going to make your experience customized and different. Go back to the F and I piece where we ask the consumer questions there. If you go 15 years versus 1 year, you're going to drive the car 40,000 miles versus 10,000 miles, it's going to give you a different experience there and it's going to give you a different experience based off your cash consumer versus anything else though, right? And that's what most people see when they're testing the tool. I'd encourage everybody on here, go on there, go buy a car. Actually, it is. So if you're looking for a Kia, that'd be a perfect spot to go. We have 5 different brands on ClickLane right now. We're really dealing with the logistics right now, building all the forms and documents for each individual store within each individual state, county. And that's why the rollout is going to take us a couple of months to get there. We want to make sure it's perfect when we launch it. We don't want to launch a piece of it. So in the next 45 to 60 days, you're going to see PUSHSTART and you're going to see ClickLane pop up more and PUSHSTART still be out there. We'll leave PUSHSTART up and running until we convert the store over to Clicklane. But that'll all speed up pretty quick in the next 60 to 75 days for sure. Great. Thanks, guys. Thank you. Thank you. At this time, there are no other questions. So I'll turn the call back over to our CEO, David Holt. David? Thanks, Matt. We really appreciate your time today. We're so excited to show you the tool and what it can do. We've only spent a little bit of time, so please feel to reach out to us and ask any questions you might have. But thank you for spending the last hour or so with us. Have a great day.