Executive Profile with Jim Fitzpatrick, Powered by CBT News

The Pohanka Legacy: A Century of Automotive Excellence

• CBT News • Season 1 • Episode 12

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Geoffrey Pohanka shares the remarkable story of Pohanka Automotive Group, founded by his grandfather in 1919 and now spanning 22 dealerships across three states. He reveals how the company's focus on service excellence helped them survive the Great Depression and World War II when many dealerships failed.

• Third-generation dealer whose grandfather was a jockey before starting the business in 1919
• Promotes from within - including a former switchboard operator who will become NADA chair
• Believes customer convenience drives service department success with extended hours
• Owns multiple EVs personally but advocates for consumer choice rather than mandates
• Working to address technician shortages by funding community college automotive programs
• Maintains collaborative relationships with manufacturers while representing dealer interests
• Foundation donates millions annually to community initiatives and financial literacy education
• Family legacy continues with two of his three children working in the business
• Started all three children as mechanics to learn the business from the ground up

The Pohanka philosophy remains consistent after 106 years: "The customer can fire all of us. I've got to take care of the customer and so do you, because they'll fire us if we don't."

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Announcer:

This is the Executive Profile, exclusively on CBT News. Today's episode has been sponsored by the Presidio Group.

Jim Fitzpatrick:

Hi everyone, Jim Fitzpatrick. Welcome into another edition of the Executive Profile, exclusively right here at cbtnews.com. Today we feature a leader whose story is woven into the very fabric of America's automotive history. Geoffrey Pohanka is the chairman of the Pohanka Automotive Group, headquartered in Maryland, a company founded over 100 years ago by his grandfather and now recognized as one of the nation's oldest and most well-respected dealership groups. For generations, the Pohanka family has witnessed witnessed the evolution of the automobile from the early days of motoring to today's era of electrification and digital retailing. Geoff continues the legacy guiding the organization into its second century with the same principles of innovation, service, and resilience that built the brand in the first place. On today's edition of the Executive Profile, we'll explore his journey, the challenges and opportunities facing modern automotive retail, and what it takes to carry forward a century of excellence. Geoff Pohanka, thank you so much for allowing us to come in here and spend some time with you to learn more about the Pohanka story, which is a fascinating one. All of the research that we have done, I can't wait for today's interview. So thank you so much for allowing us.

Geoffrey Pohanka:

Thanks, Jim. Thanks for coming.

Jim Fitzpatrick:

Absolutely. So let's kind of start in the beginning here. You're a third generation dealer. What was it like growing up in a car family?

Geoffrey Pohanka:

Well, my grandfather started the business back in 1919, and so we had that kind of heritage. My dad loved the car business. At the time, growing up, we had one dealership in downtown Washington. But he was a futurist. He was an observer. He was active in the business. He joined the third 20 group in the United States. He became a president of NADA, and he founded ASE. So he was a mover and shaker.

Jim Fitzpatrick:

He really was. And your grandfather was a jockey, right? Talk to us about that.

Geoffrey Pohanka:

Yeah, we have a long history. We're a 106-year-old company. And my grandfather, Frank Pohanka, ran away from home in eighth grade. I think he was a late grower. He wanted to become a car jockey. He got a job in Long Island at a famous stable. He was a stable boy. Yeah. He became a jockey. He was very successful. He raced for a number of years all over the United States. Made a lot of money, but he eventually outgrew the business and became a car mechanic and then a dealer in 1919.

Jim Fitzpatrick:

That is incredible. I think you are the first dealer that we have featured on the Executive Profile that is a 106-year-old company.

Geoffrey Pohanka:

Yeah, and we have a fourth and fifth generation of the dealerships, too.

Jim Fitzpatrick:

Did you know you'd be going into the auto industry at a young age?

Geoffrey Pohanka:

I started at 13 in the parts department. It was un-air-conditioned. Third floor was like 110 degrees. I don't think anyone knew I was a Pohanka's son for two years. And I'd worked summers all the way through college. And I knew the opportunities. If I wanted to, I could. My plan was to go to business school after I graduated from college, typical liberal arts education. My dad said, come work in the dealership for two years, then go to business school. Although I did take some night classes at that period. Work in service for a year, work in sales for a year, and then see where you want to go. And I almost got out of business at that point because I was so frustrated. I saw all the problems, had none of the fixes, but I ended up fixing the problems I had.

Jim Fitzpatrick:

Yeah. And then you took over a store, right? Talk to us about that.

Geoffrey Pohanka:

Yeah, I became a, I started working full-time in 1980. I became a dealer in 1987. Okay. And a dealership.

Jim Fitzpatrick:

And what kind of store was that?

Geoffrey Pohanka:

It was actually a Buick dealership. And we were a big Oldsmobile dealer. Okay. I guess if we figured that, you know, GM products would be good, but here's where we're going from domestics to imports. And that was a tough story to run. We acquired Isuzu, it was an open opportunity to import. And then we moved into other areas that are more lucrative and ended up selling that dealership.

Jim Fitzpatrick:

Yeah, for sure. And so tell us about your college years.

Geoffrey Pohanka:

Liberal arts education, you know, studied a number of things. I do have an interest in railroads, believe it or not. I worked for Amtrak in summers.

Jim Fitzpatrick:

No kidding. Okay.

Geoffrey Pohanka:

And I eventually became a director of a railroad, but that was just like a hobby. Okay. I used to ride with freight train crews, and they'd let me drive the train periodically. Very cool. It was kind of fun. Yeah. So I got that out of my system.

Jim Fitzpatrick:

That's pretty cool. I mean, who got to drive a train, right?

Geoffrey Pohanka:

Yeah, 10,000-ton train. Pretty interesting experience.

Jim Fitzpatrick:

That's right. How many stores are in the group today?

Geoffrey Pohanka:

We have 22 stores.

Jim Fitzpatrick:

22 stores. A

Geoffrey Pohanka:

Alot of them are clustered. Okay. We're in three states.

Jim Fitzpatrick:

And in terms of acquisitions, future growth, have you got plans for acquiring more stores?

Geoffrey Pohanka:

We've been very generic in our growth, very methodical. We've bought some. Some of the stores we ended up buying were from dealers that wanted to sell to us because we knew it take care of their employees. But a lot of our growth is through new brands came, Hyundai, Acura, Lexus. We have a Honda dealership outside Houston, which is a new point. It's a very successful Honda Tomball. And we're building a Honda dealership in a new location in San Antonio right now.

Jim Fitzpatrick:

So there's really, you're not trying to keep them all in the DC market or Maryland?

Geoffrey Pohanka:

We don't have to. It's easy flight. You can connect with them and the people running the store. A lot of them worked in our stores here.

Jim Fitzpatrick:

Okay, okay. So you'll take maybe a GSM or a GM and bring them over to those stores. Build around that person, yes. Talk to us about the importance of building a good culture. I know obviously every dealer that's watching is challenged in that area to bring together these people, build a good team. What's got to go into that?

Geoffrey Pohanka:

Well, values are really important. Obviously, we have a long history, and a lot of our management has grown from within. I'll give you three examples. Sandy Angelo is a partner. She runs nine of our dealerships. They're all clustered in one spot. She started as our part-time switchboard operator. No kidding. And she will be NADA chairman in two years.

Jim Fitzpatrick:

Unbelievable. Wow. From switchboard operator to NADA chairman.

Geoffrey Pohanka:

John Goings started as a mechanic at our Acura dealership. He's now the service director for Polanka, and he's a partner. And Lenny Gonzales runs our store in Houston, I mentioned. He started as a lot attendant. So these people grew up, and there are a lot of others. I'm very proud of them, grown up with the business. So promoting from within is very important to give people opportunity. So they're going to know how you do business, and you work around those people. I'm very proud of them and what they've accomplished. So I tell people, be careful who you hire for your switchboard operator. They might be your future partner.

Jim Fitzpatrick:

Or an NADA chairman, right? That is fantastic. Wow, what a huge success story. And I'm sure that's very inspiring for all of the other associates within the company to see that.

Geoffrey Pohanka:

Yeah, it's true. And we do a lot of training. We do a lot of CTE training. We've done hundreds of these. It's three days of training, interdepartmental people, so they learn about each other's jobs. It is like a team building, but it's also about culture training, what we're trying to do, that type of thing. And at those, I tell people, I said, who's your boss? Jeff, you're our boss. Who's my boss? When my dad was living, your dad's your boss. So now who's the boss of all of us? I said, the customer, the customer can fire me. I got to take care of the customer, so do you, because they'll fire us if they don't. So it tries to put things in perspective, how important the customer is.

Jim Fitzpatrick:

Speaking of customers and how they buy, we saw through COVID that there might be a lot more sales that are termed digital sales or digital retailing, where people will buy cars online and maybe have them delivered right to their front door. That didn't seem to pan out the way that a lot of people thought it might. What is your take on people doing, or consumers doing more online than ever before?

Geoffrey Pohanka:

Look, it's a convenience being online, whether your phone or laptop or PC. A customer's online. Now, is it any different from before? They were calling you before, probably. We don't have the walk-ins like we used to have. And it's all digital, but it's still a form of communication. We're not necessarily, not people, they're not pushing the buy now button. They thought they would do that. I'll push the buy now button, deliver it to my house. And some organizations there's lots of ways to sell cars and some work like that, but ours don't work that way.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

Look, I wouldn't buy now to buy a house or buy jewelry. That's right. You know, I would want to see it. Right. You know, some people buy houses. I remember a person during COVID, they wanted to be on the beach in Florida. Well, they didn't realize the beach was all rocks. Okay. So he probably should have looked first. Yes. So I think the customers, 35% change when they come to the dealership, they change color equipment and the model. So, Really, they've got to come in and see the car. That's very important, I think.

Jim Fitzpatrick:

Yeah, and the consumers, whenever we do a focus group on consumers, they'll say that they want to do more online before they get to the store so that when they get to the store, they can save time.

Geoffrey Pohanka:

Oh, absolutely. It's convenience. I'm buying stuff online. I'd rather buy online as a guy than go to the store. But I don't always know what I want. You can do shopping. The advantage as a The consumer knows a lot more about the car. That's right. And if you survey customers, they think we make $5,000 or $6,000 margin on a car. We make a fraction of that. So if they actually do some research, they might actually come back to reality-

Jim Fitzpatrick:

That we didn't have a lot of margin.

Geoffrey Pohanka:

And they probably know more about the car than the salesperson, because salesman's got to know 20 models. That customer for weeks has been looking at that one model or two. They probably know more than we do. They say, well, yeah, that's a good thing, I think, in a lot of ways.

Jim Fitzpatrick:

That's right. Talk to me about service. Fixed Ops plays such a big role today. I think we kind of learned that as well through whenever the industry dips into some challenging times, as we saw in 2008, 2009 with the SAAR coming way, way down, dealers turned to Fixed Ops and said, we got to make money. We got to, you know, the dealerships got to make money. More people kept their vehicles so they were servicing them. We saw it again with COVID. And then of course, COVID, new car sales took off. But talk to us about your philosophy on used cars, I mean, on fixed ops, rather.

Geoffrey Pohanka:

Well, service is really important. The reason we're here today, from a company standpoint, is largely because of service, because our company survived the Depression in World War II, which a lot of dealers went out of business because of the service side of the business. My grandfather, who was running the dealership during those periods of time, was mechanically oriented. And there's actually a picture I gave you. Maybe you'll show it. He's the one with overalls.

Jim Fitzpatrick:

Yeah, it's a great shot.

Geoffrey Pohanka:

So the service side is a stabilizing factor. And look, cars are built a lot better now. When I got in the business, it was all warranty work because there was all kinds of new things. Can we do command control, overdrive transmissions? Even the factory didn't know how to fix those things because they were chasing the regulations at the time. You know, the Arab oil embargo, fuel economy, all those things. But now the cars are built better. They last longer, which is an advantage because now we've moved into maybe a service-oriented business, maintenance service, less repair, which is really an advantage so we can compete in those areas. And we really have dealers about 35% market share of service. We've got to grow that to 50%. Used cars, same way. We're maybe half of used car sales. Those are areas we really can grow in. The key is to make it convenient for the customer. Now, a lot of manufacturers push appointments, and we're no appointment necessary to drive in. You can then assess true customer demand. Now, years ago, I compared one of our dealerships with typical seven to seven to our at the Lexus store, which is like 5 a.m. to 11 p.m. You know, when do customers come in? Now, at the store that was seven, whatever, they all came in the morning. The customers crushed in. They said, I want to be first one in. Well, not everybody can be first one in. That's right. And you're over, I mean, you can't handle everybody at once. That's right. Okay? And at the Lexus, they came in around 10 o'clock. Fewer people came in at seven, eight o'clock. Although, overall, they had many more customers at Lexus than this one dealership. You know, we had many more. So, the interesting is you've got to have longer service hours, and let the customer decide when to come in. Then we can staff the true consumer demand.

Jim Fitzpatrick:

It does sound challenging.

Geoffrey Pohanka:

And we like waits.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

We like people to wait for the car.

Jim Fitzpatrick:

Okay.

Geoffrey Pohanka:

You don't have to give them a loaner. Yeah. It means you've got to get them and get them out. You have to have staff to do that.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

And then, look, they don't have to arrange a ride away and come back. You don't have to give them a loaner.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

If they're there, you've got to talk to them, show them something on their car, they're there. We love waits. We have great waiting rooms. You know, we have massage chairs in our waiting rooms.

Jim Fitzpatrick:

Okay. Okay. So you kind of have a Jiffy Lube mentality back there. Get them in, get them out.

Geoffrey Pohanka:

Well, that's the challenge, too. You have express and non-express, and it's always a challenge to have the right balance. The difference is, because we're in a maintenance business, now we have entry-level jobs that can become productive. Back when it was all warranty work, you didn't have to be a real knowledgeable technician to even start in the business. At least we have entry-level opportunities that can grow into becoming master technicians, from just being an oil changer, quick maintenance service person. It's always the formula. How do you get that right? We want to really be convenient. The more convenient you are, the business you'll grow. You'll get more than your fair share of the market.

Jim Fitzpatrick:

The industry, as we were talking before we got recording, has always had a shortage of technicians, for sure. At any given time, it's like 70,000 that the industry needs to be at capacity. And you came up with a solution, or at least working on a solution for that, right? Talk to us about it.

Geoffrey Pohanka:

Dealers who are doing this, they have to kind of grow their own techs. Obviously, we have an opportunity. We have to have a recruiting process. And a lot of it is, you know, in education, we're very involved with education, support education. Used to be a lot of people, you have to go to college to be successful. Now it's not like that, the trades. You can become an auto mechanic, a welder, an HVAC, and make a lot of money, and probably for a lot of years, maybe your whole life, and have guaranteed jobs. But a lot of people, shoo, shoo, don't do that job. And those are really needed jobs. So we're working here at this particular store with a community college that has an automotive program, and we have hired a lot of their- but they're very deficient in their facility. In fact, they have equipment they can't even use. We said through our foundation, we'll build you a new building for your automotive technology. And it's going through the process now through our foundation because that will be a good way. They're going to double the size of the staff, double the size of the students. We'll probably get first dibs on them, hopefully, and we probably do now. But that's what we have to do. We have to grow our techs. And by giving them the facility they need to give them the proper education and the proper foundation to come in here, they'll be more productive. And we do have internships during the summer from their technical school, things like that. But this will give them a better foundation, will help fill our dealership up here with those types of folks who hopefully grow up and become master technicians. That's right. That's right. Look at your grandfather. I mean, he didn't go to school or didn't go to college, I should say, and didn't finish high school for that matter, right? Eighth grade education. Now, my father went to Princeton and his brother went to MIT. So obviously my grandfather, even though he had an eighth grade education, he was a smart guy.

Jim Fitzpatrick:

He was a big believer. My sons are going to go.

Geoffrey Pohanka:

He understood the value of education. Yeah,

Jim Fitzpatrick:

Yeah, exactly, exactly. Let's talk about market conditions right now. We hear so much about tariffs and the impact that it's going to have in the auto industry and so many other industries. What's your take on that?

Geoffrey Pohanka:

I think that there's a lot of fear out there. I think Trump knows what he's doing. Some people say, is he a clown or is he a genius? Maybe somewhere between the two. Depending on your perspective. Sure, sure. I think he knows what he's doing. He had tariffs in his first term and didn't cause inflation. I heard something actually today. They said, inflation comes from money supply. Tariffs aren't changing the money supply. So they're probably not going to be inflationary. Besides, air imports are only a small percentage of our total economy. He's a disruptor. He's changing the whole map. We actually, historically, are behind the eight ball since World War II in tariffs. They've not been reciprocal. It's been a barrier for our exports. And we let them in. We had 2% on European cars. They have 10% on ours, five times more. And he's breaking down the trade barriers where we don't have any tariffs. I think this is going to turbocharge our economy. I think we'll get through this. He's got to negotiate Canada and Mexico, which are really important because a lot of car production is there. I think we'll be in the right place. And then there are offsets. There has to be some higher cost for manufacturers. The offsets are cafes going away, the CO2 requirements going away. They can build the cars people want to buy, which is really good. And they'll be more profitable for the manufacturer. That's right. So you put the whole thing together. It's good for the car business. It's good for the economy. Yeah. I think we're going to roll. Yeah. I hope we roll and we should.

Jim Fitzpatrick:

That's right. That's right. Now, this next I know is very near and dear to your heart because you've been outspoken about this and kind of one of the leaders out there, one of the thought leaders on the topic I'm thinking of here is EVs. Here we are now. You know, Trump went in and said, let's get this out of here. What are we chasing? You know, this number of, you know, by 2035, 100%. of EVs and you have all these carb states trying to adjust and what have you, and that's gone now. So kudos to you and your colleagues.

Geoffrey Pohanka:

It's gone here, but it's not gone in Europe or Asia. So the manufacturers are global. So they're still involved. China's an important market and they're losing market share because of competitive EVs. Yeah, good point. Well, look, I studied it. I'm a kind of student of business. Maybe I grew up with that. And this is one of the big issues of our time, the EV. So I've been on it. I've really helped shape NADA's position on any EVs. It's a great article people should read by Mark Mills. It's called Electric Cars for Everyone, The Impossible Dream. You can Google it. It's the best article, single article on minerals, energy structure, environmental. No one really knows if EVs are good for the environment or not because you've got to mine 500,000 pounds of mineral to make one battery and all the energy. The carbon footprint is bigger on an EV than a gas car for many years. And then you've got to charge it. I bought four EVs. I've owned them. I've driven about 100,000 miles in EVs. I bought Tesla. I can tell you my Tesla experience. Tesla this, Tesla that. Right. Now, Elon's a genius. He's a Thomas Edison of my age. Sure. And I really now appreciate him. I don't see him as a threat so much. Yeah. But you really got to dive into it. I've written articles that have been published to really dive in. We're doing the right thing in this country. Let the customer decide. Right. Because these minerals, they won't allow mining here. But you need mining to build the batteries. For sure. So it just helps China. So how does this make any sense? Right. And the first EV I had, and then someone the other day said, you probably shouldn't have that tag. I said, coal, it's the energy of the future. That's a Virginia tag. They said, why do you have a tag in your car? It said, my car runs on coal, does yours? You know, because coal is a part of the electric grid. You know, but I did take that off.

Jim Fitzpatrick:

So what made you buy a Tesla?

Geoffrey Pohanka:

Well, they keep saying Tesla this, Tesla that. Manufacturers, consultants. So I said, let me experience it. You know, I'm worth and buy one. So I ordered one. The only free color is white. It's all a la carte. And the app was really easy. I knew what I wanted. I wanted a Y, which is the most popular. So I get a text message, your car's come in on a Tuesday. And the delivery location is pretty close to my house. So come in Wednesday, Thursday, Friday, this week to take delivery. I can't. I'm on Capitol Hill. I'm in committee meetings. The last window is like 5 o'clock in the afternoon. So I can't come in this week to pick it up because if you don't come in the three days, we'll sell it to somebody else. And they did. I lost I lost my deposit. I said, okay, that's why I'm buying one. That is unbelievable. Wow. And then I said, I'm going to order another one. Same car, I'm not going to get 20-inch wheels. Customer always wins. I'll save $2,000. Then the price went down $3,000 for competitive reasons. Okay, I'm $5,000 ahead. I'm a consumer. I'm winning. Again, notice on a Tuesday, your car has come in. Take delivery Wednesday, Thursday, Friday. I'm in Italy at the Italian Auto Dealer Convention with NADA. I said, I can't come in. I'm in Europe. I can't come in until Monday. They said, You must come between 12 p.m. and 12:15 p.m. on Monday. A 15-minute window. Wow.

Jim Fitzpatrick:

Can you imagine if we ever treated our customers this way?

Geoffrey Pohanka:

No. I'm like, okay, this is why I bought one. So no consultant can t ell me Tesla this, Tesla that. So I go take delivery. I bring my videographer with me, and they have a showroom there, and there's like a warehouse. I'm walking by. There's a sign that says take delivery down this way.

Jim Fitzpatrick:

We're showing it right now on the screen.

Geoffrey Pohanka:

I'm walking by old tires, old cars. and I come to a loading dock with a faded red door, and it says, Tesla delivery area. I'm like, okay, this is good. And I walk in, and the cars are all lined up, they're clean, the people are really nice, they're very thorough. You have my name on the dash, and I like that. But there's plywood on the walls, and it's an unfinished warehouse. I'm like, I mean, they say, I guess I need to put plywood in my delivery area. Does that make me successful, right? Because I need to copy Tesla. But the car is great, the technology is great, the over-the-air updates is great. I have a VW ID4, which I like to ride better. It doesn't have quite the range. I've learned a lot, and I think this helped shape our NADA policy because of that experience.

Jim Fitzpatrick:

Do you think that hybrids, EV hybrids, will be kind of the bridge?

Geoffrey Pohanka:

A hybrid makes a lot of sense. The government will give no credit to the manufacturers for selling a hybrid, which is a battery electric car. It's not full BEV. It's a you know, a hybrid. And that's what customers want. It's affordable. You can get the payback. And it makes a lot of sense, the hybrid. You get great fuel mileage, and you'll get payback on return on investment.

Jim Fitzpatrick:

Sure, sure. And Toyota, I think, got it right early on.

Geoffrey Pohanka:

Toyota is a fantastic company. They're so smart. They took such flack. They've got such heat. And Honda, too, by being slow walkers, the chairman had to resign because of the heat. But they were right. You know, sometimes you you take some heat for being right.

Jim Fitzpatrick:

That's right.

Geoffrey Pohanka:

But stick with it. Yeah. And do the right thing. In the long run, it'll work out, but it could be rough for a while.

Jim Fitzpatrick:

Yeah, yeah, no question about it. We talk a lot about, in the industry, we've spoken a lot about AI and the role that it's playing in the dealership operation. It seems to be they've got solutions almost in every area, whether it be variable ops or fixed ops or collision centers, you name it, AI is is all the buzz right now. It's all the rage. Yeah. Do you use it in your stores? And talk to me about your take on AI.

Geoffrey Pohanka:

We have some. There's some risks. There's some security risks if your data gets out. You know, we have to really protect our data. Sure. You almost have to have a private AI. I know we're using it in some marketing and other ways. I would like to know, you know, it's the 80-20 rule of 20% of your customers or 80% of your profits. Yeah. Who are those 20%? I don't know. You know, maybe AI can help.

Jim Fitzpatrick:

Right, AI can help you.

Geoffrey Pohanka:

But look, this could be somewhat like the dot-com boom. AI everything, and it's not going to be everything. Probably some things will help us, sometimes things not. A great organization that NADA has is the Dealer Academy. Yeah, that's for sure. And my son Kevin's going through it right now. He came back, Dad, with internet leads, everyone's going AI with that. We're very successful, a lot of our dealerships, very successful using people with internet leads. But it seems like a lot of dealers said, I can't treat- teach the people. So I'm just going to farm it out. Well, I'm not sure how well it's going to work for them because sometimes people do it better, but it's a challenge training them and having the right process. So start there, but some things we have to farm out clearly.

Jim Fitzpatrick:

Let's talk a little bit about F&I. Through COVID, we saw that F&I income actually went up and it looks like it's staying pretty level. It makes up such a big portion of a dealer's bottom line. How are you guys doing in F&I today?

Geoffrey Pohanka:

We do really well. I think it's important to be trained. You don't want to take advantage of customers. That's going to kill you. But we offer tremendous convenience to the consumer because if we have 14 different financial arrangements, we can fit the customer to what meets their needs. If I just have one bank and I don't meet their portfolio, they're not going to finance me. I think it's a great convenience for the consumers. And obviously, Dealers probably wouldn't be profitable without finance, and certainly without service and parts. So we have to have all the different departments working together to really get that return on investment.

Jim Fitzpatrick:

I spoke to a dealer the other day, and they've got a setup, I guess through one of their F&I providers, where when somebody comes in, if it's too busy, they can actually jump on to a Zoom setup of sorts, where an F&I manager at another location can get that person in and out. That's right. Have you heard of that?

Geoffrey Pohanka:

We've done some of that at times.

Jim Fitzpatrick:

Have you? Okay. Does that work?

Geoffrey Pohanka:

We prefer to do it in the store, but yes, it works if you have to.

Jim Fitzpatrick:

Because 3 o'clock on a Saturday when everybody's trying to get their deliveries out can be kind of hectic, right?

Geoffrey Pohanka:

Yeah. I mean, we've done it where you have to do it, but there's some things you can centralize. You have to figure out where that is and where it doesn't work. Sure, sure.

Jim Fitzpatrick:

It's going to be a different business when your son comes in and runs it, right?

Geoffrey Pohanka:

It's still a car with four wheels and it's still a customer, so whether it's electric or gas or whatever, I mean, it's changed, but it's still the same in a lot of ways. Yeah. But think about it, with the side of the car business, you're never an expert in it. There's always something new. And we've got to, you know, my partner has been with us a long time, said that, you know, if you work for a big company, you think, at the end of your workday, where are you going to go? What are you going to do? Yeah. The dealer wakes up, I've got to get something done today. So I wake up, I've got to get something done today.

Jim Fitzpatrick:

Right, right. It seems as though Volkswagen wishes to take Scout directly to the consumers, much the way Tesla does. Let's talk about that for a minute- As an owner of two VW stores, that's got to get you a little bit angry.

Geoffrey Pohanka:

Well, I have to think that if VW could do it all over again, they probably wouldn't do Scout. They're going to an environment where they won't have incentives. And they're electric trucks. The problem with an electric truck is that it needs a really big battery. So that vehicle is very expensive. And if you haul it tow something, your range is diminished. It's winter time even more. Trucks are expensive anyway, but I think the Scout product might follow the Rivian model and it's going to be very costly to them. Maybe they sublet to Audi to produce cars in that plant. They need more domestic production. That might help them in that situation. But it's wrong for car manufacturers, in fact illegal in 36 states, to actually create a competitor to your own dealers. And dealers associations are going to fight it tooth and nail. I know, I know. And look, they sent out a letter about a month ago. They really should have sent it. They said dealers add $7,000 to $10,000 in cost.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

We don't do that. I don't even know where they get that number from. At NADA, as chairman, we want to know, we think the franchise is the best way to sell cars. A lot of people say, well, direct sellers, they save a lot of money. No, they have all the costs. We need facilities, we need people, we need advertising, we need a floor plan. They have all the costs. The advantage to The dealers, they don't have to pay any of that. We pay them. When that car comes out the factory door, they get paid. How many products do you get paid the second you make it? Not too many. So it's an advantage to them.

Jim Fitzpatrick:

Why do you suppose an OEM like Volkswagen decides to to make a move like this, to get their dealer body upset, and to start a whole other line that's dealing directly with this?

Geoffrey Pohanka:

It's not all their fault. It's the government's fault. See, in Europe, they're going 100% EV by 2035. And so are we. We were headed in that direction, at least California and the states that follow California. Now, the CO2, the endangerment finding is going to be done away with, the CO2 endangerment finding, EPA. And that, basically, the CO2 is a pollutant that needs to be controlled That policy would drive us to at least 55% EVs. And so the government is really responsible. If you're a manufacturer, you're looking at what the government says you should do. If you want to be in business, you need to be heavy into EVs. And you look at success Tesla had. Well, I just followed Tesla, and I'm going to be successful too. Usually the first one doing it has the success. Second, third, fourth, fifth, probably not the same success. That's right. And, you know, Tesla is I mean, the bloom is a little bit off the rose right now for Tesla anyway. Yeah. So, you know, I think that it's not all their fault. I think I hold the government at fault for a lot of it.

Jim Fitzpatrick:

Yeah, yeah. With the tax benefits going away, the tax credits going away on EVs, what kind of an impact do you think that will have in the current sales rate of EVs?

Geoffrey Pohanka:

Well, EVs are about 8% of the market right now, and Tesla might be half of that. So the incentives, look, the average EV buyer is making $180,000 a year. They're affluent. It's not their only car. They have other cars in the stable. And so I think, look, there's going to be a market for EVs. Look, they've got great tech, great performance. They're kind of fun. It may not be your only car. It might go from 8% to 5%. There's still going to be a market in some markets, like Washington, DC, affluent, environmentally conscious, if you think it's better for the environment. Kind of cool to drive around DC. California, look, they're going to have a higher penetration. Nebraska, probably near zero. Because distances and population density, things like that. So yeah, we want to be in the market. We want to sell what people want to buy. They want to buy EV. I'm going to sell them EV. I'm not going to try to change their mind. A lot of people said, we're against EVs. No, we're not. It's on my lot. I don't see any 68s out there. I'm going to sell everything I got. And I think we're going to have two good months of EV sales. We're selling the hell out of them right now. Really? Because it's going away. Yeah, but then it's going to soften up. And you've got to clear out your lot. The next two months, you've got to clear out your lot by the end of September Right. And we'll be all right. Yeah. And then, look, EVs are being subsidized by the gas cars. The only reason gas car prices are up, they're subsidizing EVs because I've got $20,000 off the subsidy, subvention, on my EV to sell it. And they're still not selling it. $15,000, $20,000 in subvention. So let the free market decide where it should be.

Jim Fitzpatrick:

Right. Speaking of franchise laws, there seems to be some issues with Nissan and Stellantis. I know you've got those stores. Let's start with Nissan. What's your feeling about the future of Nissan?

Geoffrey Pohanka:

Look, what I've heard, and my dad would say this, is that the seeds for success are sown when times are bad. The seeds for failure are when times are good. I think Nissan, when they went for 10% penetration, that was a bad strategy. I think they're suffering from that now. But I think they're really working diligently to fix that. And you can fix things. Things go bad, fix it in the dealership. Fix them. Talk to dealers. They're simplifying. They're doing a lot of the right things. Keep doing the right things. Simplify the process. Listen to your dealers. The dealers know how to do things.

Jim Fitzpatrick:

That's a very good point. So how about Stellantis? How are you feeling about that?

Geoffrey Pohanka:

They have a lot of brands. They changed leadership. They're in the wilderness right now. There's value there. But they're going to have to... clean up shop.

Jim Fitzpatrick:

Okay. What do you think they have to do?

Geoffrey Pohanka:

It's, they have too many brands, I think. Okay. They got to sell some brands, simplify the process. Okay. And find out what works for them. You know, they have, there's some value in there.

Jim Fitzpatrick:

Some iconic brands though. I mean, Jeep and Ram.

Geoffrey Pohanka:

I think they made a mistake raising prices and not adjusting to a new market during COVID. They held those COVID prices. Right. And they just became too expensive. Yeah. And look, it's a very competitive market. You can't, you can't be above the market. That's right. And Ram and There's a lot of value there, but work with your value and talk to your dealers.

Jim Fitzpatrick:

You kind of touched on it there with the price of vehicles, but affordability continues to be a major issue. OEM executives I speak with, dealers that I speak with, association, consumers. This is an issue. You've got the average price of a car at almost $50,000.

Geoffrey Pohanka:

25% of people can afford a new car, something like that. And look, I think reducing the regulations Trump's doing will reduce to reduce the costs. Not having gas cars subsidized EVs. It'll right size and hopefully get interest rates down to an extent. It probably will happen because I think Trump's policies are pretty good. I think he'll rev things up but not to the point where there's inflation. And I think the rates will come down at some point. And it will help somewhat. But I think cars are way too expensive. A lot of the manufacturers, sell cars that make a lot of money, and those are big cars, expensive cars, but there's a limit to it. But 16's still pretty, millions of pretty healthy SAAR.

Jim Fitzpatrick:

Yeah, yeah, I know, that's for sure. We have Michael Dunn on the show all the time. He's one of the foremost authorities on all things Chinese vehicles, and he says we're on an island here in North America, specifically in Canada and America with regard to not having Chinese vehicles on our roadway because the rest of the world, they're eating everybody's lunch. It looks as though they're making huge inroads and building a great car. BYD is a phenomenal car. What's your take on the Chinese?

Geoffrey Pohanka:

Well, I was in China two years ago, and I spoke at the Chinese Auto Dealer Association Convention, and I visited BYD's headquarters. And China's a really interesting country, and they're the experts in EVs, and they're heavily subsidized, heavily subsidized. So it's really unfair competition. They've got to rev up their export engine. Now, someone told me this. China only fears one thing. They fear the people. They have to keep people happy. And they do that by keep growing the economy. They've got to have solid GDP growth every year. But since it's not a consumer economy, they've got to do with exports. And cars create a lot of jobs. Cars are 2% or 3% of our GDP. It's 10% of the GDP. So by exporting cars that are subsidized, well-made, great cars, great technology, they change their cars like every two years. They're really fantastic. And the world has taught them how to make cars. Now they've told all the manufacturers in China, thank you very much. You can leave now. We'll take over from here. And now the OEMs are losing market share in China because of that. The dealers are losing money, hemorrhaging money. And so are the manufacturers in China. It's just cut through competition. But they make a great car, but they shouldn't allow them in because it's unfair competition. And until it becomes fair, we shouldn't allow them in.

Jim Fitzpatrick:

So Michael Dunn also added that Vietnam, the Vietnamese, are building cars and building great cars. And we saw VinFast come in, and I guess there's some dealers still. But But they learned some lessons, reorganized some things, and are now going at a very, very fast pace. And we'll see more Vietnamese vehicles all over the world.

Geoffrey Pohanka:

I think VinFast, it's a conglomerate. He's selling most of Eagles to himself, I heard, one of his own subsidiaries. So we'll see how that goes. But competition's a good thing. It's a global economy. There's global trade. And Trump's doing some things to bring manufacturing back into the country.

Jim Fitzpatrick:

And there's so many manufacturers we're sitting in in the Honda showroom. Many of these cars were built and assembled here in the U.S.

Geoffrey Pohanka:

Honda's really high domestic content.

Jim Fitzpatrick:

You've got Hyundai and Kia and Nissan and Toyota and so many others that build their vehicles here. Subaru as well, right?

Geoffrey Pohanka:

Yeah. And it's a global economy and we're learning how to compete. It's all right. We can compete if we have a level playing field and we're getting one.

Jim Fitzpatrick:

That's the key, for sure. Hey, let's talk a little bit about your philanthropic efforts. I mean, you guys really do an amazing job in giving back and talk to us about that. You've got a dental care of Mona Community Center and then the John J. Pohanka Family Foundation that you're doing some great work with and some others. Talk to us about the importance of that and what that's all about.

Geoffrey Pohanka:

Dealers are really philanthropic. They do a lot for their community throughout the country. Just look at the award at NADA every year.

Jim Fitzpatrick:

Time Dealer of the year.

Geoffrey Pohanka:

Time Dealer quality. It's amazing what dealers do. We're one of the We created a foundation 30 years ago, John J. Pohanka Family Foundation, which we would then grow. We invest the money. We give several million dollars every year to nonprofits. It could be through the arts, education, healthcare. We give several million dollars every year. We've really grown the foundation. We do a lot with supporting financial literacy because kids probably are interested in that now. There's a lot more tools, apps. They can teach you how things work. What is a credit rating? Why should you keep it? Junior Achievement is over 100 years old. They're very involved with financial literacy. I said, you probably should change your motto. It should be, protect your credit so you can buy more and pay less. And as a positive affirmation, here in Prince George's County, which is a majority minority county, it's one of the biggest public school systems in the country, I worked with them, and now they have a semester of financial literacy requirement in high school. There's only eight of 26 counties in Maryland that have that requirement. So they are committed. This will give kids the opportunity to learn how the system works. And we're gonna have people that can buy more cars, to buy the car they want and pay less for it because their credit rating's better. And it doesn't matter if you're young or old, everyone's interested in this. And we just as a country have to do better with it. That would help in that. But it's kind of exciting. What we're doing, these dealerships right here, these three dealerships started doing it first of the year. When someone buys a new or used car, we give $100 to charity out of the foundation. It doesn't cost a dealership. Oh, wow. And they can pick the charity they want to give it to. Nice. Or we have a basket of food bank. We've adopted a couple lower schools here. And the Boys and Girls Club, and they can pick one of those. Oh, it's great. Or the Mona Center, where they give free dental care and legal advice to people. Wow, that's fantastic. So it's really a wonderful thing to do. I went to a small high school, St. James. It was a really good school for me because I had some learning disabilities early on. And we built the Pohanka Fine Arts Center, and we have a new athletic center in which we help finance, which is really exciting to give the kids there the opportunity that I didn't have when I went to school there. So there's a lot we can do. We work hard, but a foundation's really good because you can invest the money, it can grow. Like they said, Besset said this, if you put the money in the S&P 500, $1,000 when you're young, you're gonna have $160,000 when you retire, just leaving it in there. So it's-

Jim Fitzpatrick:

And Trump's plan includes that, the Big Beautiful bill has got that in it.

Geoffrey Pohanka:

We've got like a foundation. It's a good way of tax deduction Right. But that's not why we do it. Yeah. But it really feels good. Sure. Because we can afford to do it, and we can do a lot of good in the community. And it's a lot of fun, actually.

Jim Fitzpatrick:

Yeah, that's great. That really is good. You've spoken openly about being diagnosed early on with dyslexia. That had to be tough. Does that shape you?

Geoffrey Pohanka:

Everybody has some element of it, I think. Yeah. Dyslexia, it was discovered early. They tried to make me left-handed. I went through a lot of tutoring. And the disadvantage is bad speller, you're slow to learn how to read. But there are actually a lot of advantages too. You have a lot of radar. You can see things people can't see. You can really drill into a subject that people may not have the discipline to do that. Interesting. I didn't know that. There's positives and negatives. And one area I've been really involved with for a lot of years is the culmination of eliminating the CO2 requirement I've been very involved in that whole process. I've supported scientists, agencies, politicians, have been fighting that battle, that this is really, these regulations are more harmful than good. And this is the culmination of it. So I think I've been involved in a big topic for a lot of years, very involved, and now it has to pay off. And that's, a lot of people wouldn't have the discipline to do that. And does that take up time? Yeah, a little bit of time, but it's rewarding. Also, you know, we talked about NADA, and we were in a super dealer group. We meet twice a year with really large dealers, many of whom you've interviewed. And we had Jim Farley come speak and Steve Hill speak. Then I'm on a committee, and Honda gave us their 10-year plan. I saw these three things that said, you know, we've got to get ahead of the issues, like over-the-air updates, data. So I went back to NADA staff. I said, look, these are the big issues. We've got to evaluate the cost of the franchise, or Are we a margin shrinker? Like Morgan Stanley supposedly said, we're a margin shrinker. And get ahead of these. And we did. We came up with NADA guiding principles for on-motor retail.

Jim Fitzpatrick:

I remember. We talked about it on the show.

Geoffrey Pohanka:

I'm the one that, I'm the genesis of that. I know. We did the Oliver Wyman study. The franchise system is the best way to sell cars. We need to protect our data. We have a dealer vault at NADA. We can help protect our data. And, you know, over the year updates, the manufacturer's definitely afraid we would block them. Over the year updates are really important. You don't take your phone or your laptop to this Apple store to be updated. It's updated for you. So drivability, there's two parts to this. There's one subscription sales and there's drivability and warranty issues to make my car run better. They should have updates to make it run better and operate better as they learn. But if they have subscription sales, like they're buying features, we should get a part of that revenues stream. That would be $6 billion a year, which I think was overstated. Wow. Subscription sales.

Jim Fitzpatrick:

Yeah.

Geoffrey Pohanka:

Through over-the-air updates, you can add features to your car. Sure, sure. We should be part of that revenue stream. Why is that? Well, if they buy something from the manufacturer and it doesn't work, they come to the dealer, can you fix this? I said, call the 800 number. I'm not supposed to. Right, right. We should be part of that revenue stream. That's right. We can separate the two. Don't block the OTAs, but be part of subscription sales. That makes the whole system work, and that was one of the guiding principles in that process. So I think that was a pretty important thing to do. There's no question about it. We also had two meetings with the car manufacturers, and the third is scheduled. All the car manufacturers, over a 24-hour period, it's a half-day, half-day, talk about common issues. And one of the heads of one of the car manufacturers twice attributed those meetings to me by creating an environment where we can look- I think car manufacturers and dealers want the same thing. Let's sell a lot of cars and take care of our customers. We don't always think the same way. I can't make a car. I'd be horrible at making a car. They're brilliant at it. They're not really knowledgeable how to sell a car. So let's try to work together for common good versus fighting. The manufacturers that have the most profitable dealers, the manufacturers that make the most money, have a collaborative relationship with their dealers. The manufacturers that struggle don't have that collaborative relationship. So what's the formula, have a collaborative relationship, and the manufacturer and the dealer both will prosper.

Jim Fitzpatrick:

Yeah, totally agree.

Geoffrey Pohanka:

So maybe the ADD, the dyslexia, might help me to accomplish these things. That's right.

Jim Fitzpatrick:

What was it like being chairman of NADA?

Geoffrey Pohanka:

Well, again, my dad was president, so I kind of grew up with it. Look, their headquarters here in Northern Virginia, nine miles from my house, so maybe it was easier for me. But I've always been involved in Capitol Hill, a kind of grew up with, you should be involved in the industry, try to help the industry for the good of the industry. Everyone is involved with it, the consumer, the country. So it was a natural progression and very rewarding. And I'm still a director. And my dad kept an oar in the water his whole life. Did he? So I'll keep an oar in the water because we're so close. And we think NADA is a great organization. We have a great staff, represent dealers really well. We do three things, dealer training, dealer relations, manufacturer relations and government relations, and we're really good at all those.

Jim Fitzpatrick:

Yeah, yeah. I know, I know. Unbelievable. Next Gen, we can talk about that for just a second. You have two kids currently involved in the business. Two of my three are in dealership, yes. Okay. Your hope is that they move on and take your spot one day?

Geoffrey Pohanka:

Hopefully. And Kevin, I have three children. One works for a country in Asheville. He likes it. They went to college in North Carolina. They all started as mechanics, believe it or not.

Jim Fitzpatrick:

Really? Interesting.

Geoffrey Pohanka:

Even my daughter. No kidding. My daughter, Laura, she's in marketing right now here, but she went to Culinary Student of America, became a chef, worked in the wine area in San Francisco, came to Washington, worked in very high-line restaurants. She said, one day, Dad, I want to come work. And she worked summers. She worked actually NADA intern for a little while in college. She said, I want to come work in dealerships. I said, what do you want to do? I'm going to become an auto mechanic. Well, how are you going to do that? So I'm going to go to vocational school. And she went to Nova. That's incredible. And she came in, and she's You know, she's a girl. Sure. And she likes working on things. And she came in as an express tech, and she grew into a regular tech. Okay. And they promoted her to service advisor. I didn't promote her. They did it. Yeah. And then they promoted her to Volkswagen service manager. She did a great job there. That's great. And now she's in marketing, but she's, you know.

Jim Fitzpatrick:

She's bcoming right up.

Geoffrey Pohanka:

And they've gone through the NADA Academy, which is a great organization. Yeah, absolutely. And really learned all about the dealership. No question about it. But you're never an expert in the car business. There's always something new. Look, if they want to do it, That's good. And I've got cousins in the business. My father's uncle's side of the family. Several cousins in the business. And, you know, it's a team effort. A lot of adopted family, long-term staff who do a great job. We have an extended family in the dealerships.

Jim Fitzpatrick:

What do you think if your grandfather would say about all of the family's success in the Pohanka name in the automotive industry and having his son and then his grandson go on to lead the NAD?

Geoffrey Pohanka:

I think he'd be very proud of that. But I think he gives us the inspiration. Now, I didn't know him. He passed. He had a heart attack when I was two. But he gives us the inspiration. You can accomplish something if you want to. Put your mind to it. And I think that's part of our foundational roots in our culture. A nd I'm sure he'd be very thrilled. And he's got that competitiveness being a jockey, right? It's in your DNA. His first race was at Saratoga and someone asked him how he did it. He said, I wasn't first and I wasn't last.

Jim Fitzpatrick:

That's a good place to be, right?  That's the- That's fantastic. So what do you want to leave the dealer community with that are watching right now? There's a lot of, you know, concerns out there, some headwinds out there that dealers have. But here you are running, you know, so many dealerships and doing a great job at it. It's a family-run store, a family-run organization, as many dealer groups are. Any final thoughts that you'd like to share with them?

Geoffrey Pohanka:

There's more than one way to skin a cat. There's more than one way to sell cars. We're true entrepreneurs. And it's a fascinating business because there's so many different businesses under one roof. You think, what else would you do? I mean, you think about it. And if I go someplace on vacation, I like coming back because it's in your blood. But everybody needs to take the time off. Look, we get along as a family. A lot of people don't. I think that goes back to the foundations of the organization, how it's set up. And look, we're in a great business. It's a demanding business. It's a hard business. because we're a rewarding business too. And there's nothing else like it. So if you like it, good. If you don't, fine. There's always something you can make it better. And I think we're very important. You know, we're an essential servicer in COVID. Keep people rolling. We're really important to the country, to the economy. And sometimes, you know, I can't tell you how other people think. This is a really incredible business. And we have to, we've all accomplished a lot. We're going to have challenges, but they say that It doesn't kill you, it makes you stronger. I think that's miss said. It means you survived. Maybe that was a good thing. You were strong enough to survive. We're going to have other challenges, but I think next few years could be really good for us. I think taking the regulatory burdens off, manufacturers will have benefits. I think the economy is going to roll. I think the next couple of years could be really fun.

Jim Fitzpatrick:

Yeah, I would agree. I would agree. Geoffrey Pohanka, thank you so much. Really appreciate it. Thanks for coming. This was fantastic. Glad to have you. Thank you for all of your hospitality and your stories So inspiring. So thanks so much for s haring.

Geoffrey Pohanka:

Thank you. It's a pleasure having you.

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