Michael Welch: So we’re comfortable, at three times if, if we had the right deal out there, but something that kind of 2.5 times is probably our ideal place in this margin environment.
David Hult: And I would say, John, we we’re not aggressively trying to acquire things. 80% of the things that are put in front of us we don’t even look at. We are really very disciplined upon looking at acquisitions that are accretive for us. So we’re not going to feel the force of having to acquire things to hit a certain target, it’s more important that we add value assets to the portfolio that certainly benefit our shareholders.
Operator: Our next questions come from the line of Ryan Sigdahl with Graig-Hallum Capital.
Ryan Sigdahl: I want to focus in on used vehicles, so pricing seems to be somewhat stabilizing here in January. One, do you think that’s sustainable and then two, what do you think kind of trends are as you look out over the next several months this year?
Dan Clara: We are seeing the use car valuation and pricing stabilizing. We also go to keep in mind we are approaching our selling season for a lack of a better term, and also what comes with the tax credit. So we feel that the big valuations that we saw Q3 into Q4 will definitely stabilize. And now there’s still going to be pressure from an availability standpoint. But we believe that the market has stabilized in some capacity, but still some depreciation still coming along.
Ryan Sigdahl: And then for my follow-up, just curious on interest rates, if that’s having any impact either favorable or not on attach rates in for the financing?
Dan Clara: We have not seen a major impact. Obviously, there is always concern when you look at the average payment to own a car across the nation. And when you try to add whether it is whatever you want to protect the asset with from an F&I product, it does put pressure on a monthly payment. But we have not seen any negative impact that is of concern at the store level. One of the things that I mentioned on the call was we have our loan marketplace. We not only deal with our captive lenders but we also deal with local lenders, institutions and credit unions. So that gives us flexibility to be able to provide the best rate out there for our consumer.
Operator: Our next question is from the line of Adam Jonas with Morgan Stanley.
Daniela Haigian: This is Daniela Haigian on for Adam Jonas. So Tesla came out with a 20% or so price cut, and while that doesn’t necessarily compete with all the name plates you’re selling, in some of the stores you might have some comparable products. So we’re curious to see whether you saw any real time impact on prices, demand or showroom traffic whatsoever after those cuts?
Dan Clara: The first thing when we saw that announcement was take a real quick assessment of what kind of inventory do we have from a Tesla standpoint across the stores. The good news it was below 60. And in most cases they were fresh rates, we were able to adjust. We did adjust the pricing of the cars to make sure that it was brought down to the current market condition, and paying a close emphasis on retailing those cars. As far as impact on EVs that we sell, respectfully, I believe that that just speaks to the strength of the franchise system and the integrity that we have within the system selling EVs, and being a good distributor for the end consumer.
David Hult: We haven’t seen any material impact on EVs sales with any of our brands, because of the repricing of Tesla. Not to say it won’t come at some point in time, but we also anticipate incentives to come out throughout the year as well.
Operator: The next question is from the line of Rajat Gupta with JPMorgan.
