How dealer alliances are reshaping automotive retail strategy

Founder and CEO David Mondragon discusses how AutoTrust Dealer Alliance is helping independent dealers compete through collective scale, cost reduction, and operational flexibility. He explains how the platform enables dealerships to strengthen purchasing power across finance and insurance, lending, and general operations—without sacrificing autonomy or requiring structural changes.

As consolidation accelerates across the retail automotive landscape, Mondragon outlines how aggregating dealer demand can unlock efficiencies typically reserved for large public groups. From optimizing lending relationships to reducing everyday expenses through bulk purchasing, AutoTrust’s model is designed to improve profitability while preserving independence. He also shares insights on rapid platform growth, vendor interest, and the long-term vision to reach 1,000 rooftops.

•  How collective scale helps independent dealers compete with large groups 
•  Strategies for optimizing lending and improving F&I performance 
•  Consolidated purchasing to reduce operational costs 
•  Maintaining dealership autonomy within a shared network 
•  Growth trajectory and future expansion goals for AutoTrust

Driving Solutions is the go-to podcast for dealership professionals who want to stay sharp, informed, and ahead of the curve. Hosted by Jim Fitzpatrick and powered by CBT News, each episode brings you real strategies, smart tools, and expert insights to help you run a more profitable operation.

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Transcript

SPEAKER_00 0:04

This is Driving Solutions exclusively on cbtnews.com. Hey everyone, Jim Fitzpatrick. Welcome to another edition of Driving Solutions right here at cbtnews.com. As a dealer, how do you grow without giving up control of your business? That's where today's conversation comes in. Since the last time we spoke, Auto Trust has been gaining traction with dealers looking for a different kind of an approach. So joining us now to break down what's driving that momentum is David Mondragon, who's the founder and CEO of Auto Trust, the Dealer Alliance, a company designed to help dealers level the playing field through collective purchasing power and shared advantages. Thank you so much, David, for joy joining me once again on the show.

SPEAKER_01 0:47

Great to be here, Jim. It's uh it feels like a long time since NADA, but it's actually been a short journey since then.

Auto Trust Growth Since NADA

SPEAKER_00 0:53

That's exactly right. It does feel like a long time. But then I've uh you know, there's other days where I feel like it just was like last week, you know? So it's great. Time time just goes so quickly. So and by the way, you guys have been extremely busy there at uh at Autotrust. Uh, you know, it I mean it's been your your blow, your growth has been explosive. I've heard back from dealers that have since joined since the last time we spoke.

SPEAKER_01 1:16

Yeah, it's incredible the growth. And you know, I've been in the industry for 40 years. Uh the asset that we've made in the marketplace truly validates the strength of our offering and our company for the dealers. Yeah, uh, very few companies have been able to grow this fast just since NAD. We went into NAD with 10 dealer rooftops on board. Wow. Uh we've since got grown to 125 uh committed rooftops on our platform. And in addition to that, we have 300 dealers uh that we've already presented to uh that are in consideration phase. And we we actually onboard over 50% of the dealers that are in that consideration phase. Wow. And notice that we don't use the word close because we don't close the door, we open the door for the dealers that chew out.

What Membership Costs And Why

SPEAKER_00 2:00

I love that. I love that. And your program, you know, I put my my dealer hat on, as you know, I was in the business 25 years running high-volume dealerships, and uh, I've said it before, I'll say it again on air, but it this truly is this opportunity is really a no-brainer for a dealer. I mean, it's it's it there it's got so much upside and no downside. It's so inexpensive to join that for dealers out there, and I know I've been maybe too enthusiastic about this for you, but uh, but it's true. I mean, it's just been incredible. Why are dealers joining right now? What do you do back?

SPEAKER_01 2:32

I love the enthusiasm. Don't stop. Uh so look, it there's no real hurdle for a dealer to join. Um, we'll get into the pillars. We have multiple pillars, multiple areas that the dealers can save and make more money with our business. Uh, it costs less to become a member of Auto Trust. It costs$100 to be a uh member. It costs less to join Auto Trust than it does to join as an executive member at Costco. Uh and it's incredible.$100 for life, right? And it gets you a share in the company, it lets you generate income, generate revenue, but more importantly, become an owner in this business, a partner in this business with many other dealers that are joining. And we don't go in and rip up what a dealer does. We're here to advise, to consult, to counsel. We work for the dealers. It's a very unique position. I I have a little memory rock here, and it says on the bottom, and this is what I learned from Alan Malley after 32 years at Ford. Uh he he always said it's an honor to serve. Yeah. Uh and I remind myself every day that it's an honor to serve dealers, and that's what this business gives us an opportunity to do. It's dealer-owned, it's dealer-run, uh, and we're it's an honor for us to serve those dealers.

What Changes In Month One

SPEAKER_00 3:40

Yeah, that's a that's a great philosophy. Alan Malale, boy, he was the he's one of the best. What, right? I mean, he was just just incredible. What a car. Incredible. He became a car guy, you know, after his stint at Boeing, and everyone's like, well, what's this guy know about the car business? But that's a whole nother show. He just was a just a great leader. Um What he knew is he knew people. He knew people. That's right. Yeah, that's right. So let's say that I'm a dealer who joins auto trust. What are the changes in my dealer group in the first month? And then what about the first quarter?

SPEAKER_01 4:09

Yeah. So it's a great question. Uh we don't change anything in terms of an operational change for the dealership. Okay. So if they join auto trust, uh basically what we do is we remove the middleman uh and they deal directly with us. Uh, and we do everything um from supporting their finance and insurance business, supporting their lender business and their their banking relationships to general purchasing. But as far as the operational part of the business, uh, we're not here to change the way a dealer operates. We do look for opportunities. So we're gonna be in there peeling back the onion. We're gonna find if there's underperformance in certain areas, consult with the dealers to grow those areas and give them the support that they need to grow in those areas. But we don't dictate change. The dealers decide what they want to do. Our business, our three platforms, the dealers decide where they want to participate as well. It's their choice. They want to participate in F and I, we're happy to have them do that. They want to participate in our lender program, they can do that. They want to get into our general purchasing, they can do that. But nobody forces anything upon a dealer. They make the decision.

Lender Platform And OEM Friendly Rules

SPEAKER_00 5:12

Yeah, that and that's the beauty of it. So let's start. You mentioned lending. Let's start there. Walk us through a specific department, let's say lending. How does an auto trust member's operation differ from a non-member in the first month and or or even the first year?

SPEAKER_01 5:27

Well, let me just start by saying I had 32 years at Ford Motor Company. Uh, and one of the things that we pride ourselves on is being OEM friendly. We um we support every OEM in the industry. If a dealer has a brand and they're hanging their shingle outside, we want them to send as many contracts through the lender department through the OEM. They're Sabine, the leasing programs, they need to go through the OEM. What we're looking for is the dealers uh that are sending contracts to non-OEMs. Where are those going to? What lenders are those going to? And how can we consolidate those lenders and a select group that can give the dealer a higher return, better attention, better focus, better terms and conditions, better advanced policies. That's what we negotiate for the dealers. So there's really no change to uh their in the lender department for the dealerships, there's no change to their operation. We just ask them to focus their attention in a handful of banks that are partners for us. They're partners for the dealers. And again, the dealers own the business. So these banks become partners with our dealers. But again, I always emphasize the fact in everything that we do, we're very OEM centric and very OEM friendly.

SPEAKER_00 6:38

Okay. Okay. So it doesn't hinder on any of those relationships with OEMs that a dealer might say, Oh, this could get me in trouble, right?

SPEAKER_01 6:46

Yeah, you can't do that because the uh, you know, dealerships get kickbacks from the OEMs, they get incentives for their wholesale lines of credit. Right. They get other incentives, and there's volume and there's relationships that they have to have established. So but the OEMs don't expect and don't really want all of their business. We we really focus a lot on the lender side and the new side or the non-savine paper that they might send to an outside bank rather than to send those to 20 banks, send it to a handful of banks where we know we can incentivize you in a greater way. Yeah, sure.

Customer Service Culture And Savings

SPEAKER_00 7:16

You mentioned that autotrust is built on exceptional dealer and end uh customer satisfaction. How does that philosophy show up in a customer's car buying experience?

SPEAKER_01 7:26

Well, it's a great question. And it starts with us. I just mentioned it's an honor to serve. So these are these are owners in the business that we work with. They're not customers. We're not trying to sell them something. We're trying to tell them things and consult with them. Yeah. Uh we don't force anything upon our dealers. We have tier one partnerships that are very unique, though. So um, and we have um advisors and investors that are very unique. In our general purchasing department, these partners are from Home Depot, they're from Costco, they're from Ulta Cosmetics, they're from Borders Books. They ran those companies. And they know that two things. Number one, there's huge value in economies of scale and efficiencies, and they can bring lower prices, and they're bringing that to our dealers and our partnerships, but the customers will benefit from those lower prices as well. More importantly, they know how to focus on customers, as do we. Yeah, every customer is always priority number one. Uh, and so we focus with the customers, the dealers focus with the customers, and all of our partners are very customer-centric.

General Purchasing And Scale Insights

SPEAKER_00 8:30

Yeah, yeah, that's great. Beyond the margin improvement, what other benefits can dealers expect to see on a day-to-day basis?

SPEAKER_01 8:37

Well, again, let's get into things like general purchasing. You know, this is a tricky part of the business as we look at it. Uh, there's so many tentacles into it, and things are moving so fast today, Jim. Technology, the economy, industry trends. So our partners are going to be able to bring to these uh to our dealers, our owners, uh really different insights. They'll bring their economists in, they'll bring their strategists in. We'll have strategy meetings with our dealers. We'll talk about the direction of the industry and where do we want to ebb and flow? Where do we want to lean into to give the biggest benefits for the dealers? General purchasing touches all of these aspects of the business. We'll be buying things from mocks, the coffee filters, uh, to lifts to parts, to uh to computers, technology, software, and lead providers. Anything that a dealer buys on their own today can be bought at a cheaper price when we have hundreds of dealers that are buying the same, the same items uh on our platform. And that's what we'll leverage. And we're leveraging technology to bring that to bear for our dealers.

Helping Small Dealers Compete

SPEAKER_00 9:38

You know, when I speak to many of the MA uh companies out there, and I do every month here on CVT News, the question always comes up what is the uh can can the mom and pop dealers, and I say that affectionately, maybe they have one or two stores, not a hundred, can they survive in the future? And many of them will say, well it really comes down to economics because they don't necessarily have the purchasing power that an Auto Nation or you know a uh a Lithia has. So it makes it tougher for those people to compete. Um this is an answer to that, right? I mean, this is this is a a perfect solution to those companies, to those deal, those smaller dealer groups out there that say, hey man, we got to compete with these guys. How do you do that when you have the purchasing power of a couple of stores versus a couple of hundred stores, right?

SPEAKER_01 10:26

Yeah, Jim, it's a great question. Uh, and that leverage is exactly what Autotrust is meant to bear. It's meant to give the dealer with five stores, ten stores. We have uh dealer groups that have 30 stores. We have dealer groups that have three stores. Uh and every dealer in that continuum benefits from our platform because we leverage savings for the dealers across the uh company. I will say though that um one of the things that I learned in the industry a long time ago, and I think one of the things that the dealers know as well, is to always look for your blind spots. Yeah. Look, we can't know everything. We don't know everything about the economy, everything about the trends, everything about technology. AI is moving so fast, and how do you leverage that in your business? That's one of the things that we want to avail for the dealers. We want to help them fill these blind spots with knowledge and with educated people that can give them advice. We're gonna have strategists come in. Our dealers will have a strategy committee uh on the company, and we'll be looking for those opportunities as we go forward. Sure, sure. But always focused on how do we leverage the playing field for the average dealer? Because you said it, there is gonna be a continuous uh growth and expansion for public dealer groups. They're gonna continue to buy the individual stores. Our company is not about fighting that trend, but giving the dealers uh weapons and support so that they can compete against those companies on a level playing field. Sure.

Independence With Collective Power

SPEAKER_00 11:51

Yeah, many dealers you know fear losing their independence uh, you know, to any type of network or group out there. How do autotrust members maintain their entrepreneurial freedom while benefiting from collective power?

SPEAKER_01 12:04

Yeah, it's the it's the thrust behind our company. It's all about scale. How do we leverage scale in the marketplace for lower prices? And how do we do that productively for each dealer? And how do we leverage that in every area of their business? That's why we have three platforms. So um now at the same time, we're not in there dictating what a dealer does. We're not telling them how to change uh their business. I would say most of the things that they uh that they do in terms of the products they serve in finance and insurance and the lender programs are fairly ubiquitous. So it might be a different brand, but the products are somewhat similar. The processes are similar. Now it's just a matter of if you can take out the middleman and you can reduce the cost, the fees that the dealers pay, and it goes back to a dealer's pocket, you make them more competitive. Right. And our goal, our vision is to have a thousand dealers on our platform. When we have a thousand dealers on our platform, Jim, we're gonna be larger than the majority of these public dealer groups. That's right. Trust me, when we speak, we will be heard, and our dealers will have leverage in the marketplace that they can't have today with five stores or ten stores. Yeah. When we have that amass of dealers, it'll give them an incredible amount of credibility and leverage in the marketplace. And that's what we want to bring to the individual dealer.

SPEAKER_00 13:17

A thousand stores would would would equate to bringing Autotation, Lithia, and and maybe Sonic together in what in one room to say, okay, we want to negotiate, you know, uh an insurance or finance or whatever the case might be. Power that you know it just isn't heard of today in automotive, right? Right.

SPEAKER_01 13:37

Uh it it's not heard of, and we're not looking to duplicate their business. What we are is a company that works for dealers, and our goal is to give our dealers a fighting chance. Yeah. Our dealers to leverage, our deal is to leverage their volume and scale, to give them better opportunities for sustainability, to pass that dealership on to the next generation, to not have to sell out to these big box retailers. Right. To be able to afford and compete competitively in the marketplace. That's our number one goal. And we will be able to accomplish that. And the more dealers that join, the better the economies of scale are for all of the dealers that are members. And again, there's no risk. It's$100 to join. You join our company, and we are generating hundreds of thousands of dollars of profitability for our dealers. And it's just because of the scale and the leverage that we have in the marketplace and the relationships that we have in the marketplace.

Partner Demand And Select Vendor Lists

SPEAKER_00 14:31

I haven't even we haven't even spoken on maybe maybe the next show about the number of companies that have to be lining up to you know to say, uh, David, get you know, get give us an hour. Give let me let me break a meeting. You know, we want to present our product or services to your group. You know, we can sharpen our pencil, you know, especially with that kind of buying power, right? You're 100% right.

SPEAKER_01 14:54

We have insurers trying to talk to us about uh group like garage liability and garage keepers insurance, and we're getting into that for the dealers. We have uh part suppliers that are coming to us and say, buy our parts, we'll give you great discounts, we want to pass these on these savings on to your dealers. Virtually every major lender in the industry has come to us and said, we want to participate in this. Software providers have come to us. We've met with DMS providers at NADA, they're interested in it as well. So you know, as we move forward, uh again, we'll have leverage, we'll have an opportunity to represent the dealers, but we're only taking a select few partners in each category. We don't want 100 partners or 20 different CRM providers. We want two or three CRM providers to be able to support our dealers. We want two or three lead providers to be able to support our dealers. So we will narrow that list down, and we won't do it arbitrarily, we will do it with the support of the dealers. Again, dealer chairmen, dealer committees, they'll help us direct where they want us to go.

Economic Outlook And Dealer Call To Act

SPEAKER_00 15:55

Yeah, that's fantastic. Looking ahead, what can we expect from Auto Trust to help dealers thrive in these economic times?

SPEAKER_01 16:02

Well, it's a challenging time. Uh look, the industry, if you look at the industry, it's gonna be flat year over year. Uh profitability is gonna be down 12% this year versus last year. The first quarter in the books and challenging quarter. So, and we know what's happening on EVs and some of the other technologies. The economy is you know questionable what's gonna happen in the second half of the year versus the first. So there's a lot of challenges the dealers face. Our goal is to give the dealers a competitive uh edge in the marketplace. Yeah, so we can only deal with the realities that that are in front of us, and we deal with those realities every day. And a lot of those are just the normal business that the dealer conducts. We know the customers are gonna continue to be challenged on a buying front. We know there's very few vehicles in the marketplace that are affordable for the average consumer. So we're trying to give the dealers knowledge uh and competitive uh footing in the marketplace. And again, as we leverage our scale, we leverage the thoughts and our partnerships, and we bring strategic strategic ideas to the dealers, we'll be able to help their business grow immensely in the future. And we've already had great success.

SPEAKER_00 17:06

That man, that that is fantastic. If I were buying a dealership tomorrow, which I'm not, but if I were, I'd think he'd be at the I think you'd be at the top of the list of phone calls that I would make. I would be, I'd have my uh, you know, Benjamin right in my hand and go, sign me up. This is absolutely a no-brainer. I could only benefit from it as a dealer. I invite many of you dealers that are watching right now to look into this. This is the dealers that have already signed up. I've spoken to a number of them. They love what they see. This is a long-term play, and uh it's gonna save a lot of money for dealers out there. And as you know, uh, as David just went over, this is a time to really tighten the screws on expenses because as we know, you know, it's now it's a race to the bottom again. We saw that before COVID. It's right back to where we were. Uh so new car sales now over$50,000. Consumers are saying, hey, hey, wait a minute, you know, we we got to take a second look here. It's all about how much you can save in running your dealership. And uh, and this is a great way to start. So, David Mondragon, founder and CEO of Auto Trust Dealer Alliance. We're showing all the information on the screen right here. We can't make it any easier, folks, out there, for you to uh be bringing you these solutions, and uh, this is a great one. So, thank you so much for joining me on Driving Solutions. Really appreciate it.

SPEAKER_01 18:20

Thank you, Jim. Appreciate your time. Look forward to speaking to you again.

SPEAKER_00 18:23

Absolutely.

SPEAKER_01 18:25

Thanks for watching Driving Solutions.