John North: It’s a nuanced question, and it’s an interesting point to call out. I think if I take a step back, we’re a lot more interested in selling more units than making more gross because of the knock-on effects. Every unit that we sell has an F&I opportunity, obviously. But importantly, many of them come with trades and all of them become then potential customers in our service department down the road. And so this is a unique retail business in that there aren’t many retailers that sell stuff and then fix them too down the road. And that all creates a flywheel effect, where you can improve the velocity of the business and maintain the customer, and the life cycle value of the customer is much more significant than just the transaction where you shake hands and have a deal.
So I think overall, I think we would like to see more volume as opposed to more gross profit. I don’t think that means that the gross per unit on the new and used side has to change a lot. I just think we’re prioritizing hopefully making more customer relationships as opposed to trying to make more off of each customer relationship. And I would be remiss if I didn’t point out that I think we have opportunity in our F&I and in our service department to really drive improvement beyond kind of what the market is going to give us. And when I step back, I don’t think that there’s huge opportunity to sell more units that we’re missing. But I do think there’s a lot of opportunity to try to attach more value to consumers in the F&I department, and then importantly, to try to maintain and improve our ability to service vehicles downstream.
And that’s going to be much more meaningful to our overall gross margin than trying to hold a little bit more profit when we sell a newer used unit.
Daniel Moore: That’s great color. Obviously consistent but certainly helpful. Lastly, just in terms of liquidity, I appreciate the color, Kelly as well. You bought back a decent amount of stock over the last few quarters. Just talk about your capacity and appetite either for further buybacks given kind of current liquidity versus your expansion plans in the current demand environment. Thanks again.
Kelly Porter: Hi Dan, this is Kelly. Thanks for the question, and good to hear from you again today. From a liquidity standpoint, I would say we would want to reiterate our focus on really a couple of different areas. All things being equal, we’d like to deploy capital first to real estate buybacks and then to continue expansion through acquisitions. With all that said, depending on where the market goes and where our stock goes at any – at some price, we will buy back stock. It just depends on kind of where things go and what the market looks like for acquisition appetite versus where our stock price goes. Would prefer to allocate towards real estate and acquisitions. But again, if something happened and our stock price dropped, we would look to allocate towards buybacks again.
Daniel Moore: Very good. Appreciate the color. Best of luck in the coming quarter. Talk to you soon.
Kelly Porter: Thank you.
Operator: Thank you. Next question is coming from Mike Swartz from Truist Securities. Your line is now live.
Mike Swartz: Good morning, guys. More of a housekeeping question to start. When I look at the ASPs for the new vehicle business, they were actually up year-over-year, and I think that’s a material change from the down year-over-year in the first calendar – or first calendar quarter. So is that some kind of accounting nuance? Is there mix playing into that? I guess, what’s driving that?
