GM Projections Up, Dealer Values Remain Strong, Wegmans Hot Meals

Unknown: 0:27

Car you know what today is? Episode 600

‍Paul J Daly: 0:32

of the automotive troublemaker. We've done this six times we got to make it count. So we're talking about GM and valuations and Wegmans gotta

Kyle Mountsier: 0:41

make an account, make an account

Paul J Daly: 0:44

with 600 episodes, that is a lot of podcasts

Kyle Mountsier: 0:48

and my friend it is so I can't even wrap my head around that. I mean, we've just been doing it what faithfully for two years now, I remember back when Glen Lundy, this 1,000th episode, and I was like, how do you ever do that? I'm

Paul J Daly: 1:01

on our way.

Kyle Mountsier: 1:03

We just do this another year. got

Paul J Daly: 1:05

a ways to go. That's it. With us? I mean, I guess, a year I wonder how many podcasts we've done, because 600 episodes of this show. But then there's obviously Auto Collabs, a soda con sessions. And there's another one in there. What is it in the dirt there? I mean, we do some podcasts. So I don't know we're making making our way making our way to 10,000 hours, we'll be experts someday, just in time these days to retire. But hey, we're so thankful if you've spent any time at all with us, if you're a new listener, or if you've been a listener for a long time. It doesn't ever, ever, ever go unnoticed that you would show up and listen to these two idiots every time.

Kyle Mountsier: 1:43

It's a big deal. Like I don't if you are just one person just hanging out in your car at work or watching this on LinkedIn, I can tell you are like it's important to us. And valuable that you just check in and, and and share this time with us. So thank

Paul J Daly: 1:59

you so much for the congratulations on the Livestream. If you didn't know we live stream, a video version of this audio podcast every single day. And also, if you didn't know, we have audio podcast, this live stream every single day. So if you don't have the audio version, actually head over to Apple Music or Spotify and subscribe to the podcast, rate it review it let us know what you think little comment helps always and we just want to make this community of people paying attention to the industry and to one another just a little bit bigger every day. One of the things we're doing to do that is actually offering a lot of free education through the asoto ecosystem. We're doing that right now through very short burst webinars. So 20 to 30 minute format, so much fun. We try to give you something to talk about something to learn, then get on with your day. Our next one is December 13, with our friends at upstart transforming car buying the power of connected auto retailing. So we're going to learn a little bit about what it is to have all the things connected how we can implement that practically operationally. And I always have a little bit of fun. And we take questions too. We do take questions, real time questions. What's better than that? It's a two way conversation. Oh, okay. So let's get us to news because that's what we do. I'm trying to think of a segue into the story, but there really isn't one. So it's like, but this is this is like, you know, okay, we're just getting started. We're gonna give commentary after historic General Motors emerges from a very costly six week UAW strike projecting strong profits for 2023. Despite the increased labor costs as GM strategic planning and stock big time stock buyback indicate a robust financial future. So basically, GM has said that they suffered a$1.1 billion hit due to the strike, however, still forecasts roughly nine to $9.7 billion dollar net income a good 23. As a result, they're going to be buying back $10 billion worth of stock and giving a 33% increase in dividends for shareholders, obviously, reflecting big kind of financial health, new contracts with UAW and the raises are going to cost about 1.5 billion by 2024. They've built that in apparently and their stock price jumped almost 9% in premarket trading, signaling Of course, investor option, optimism Mary Barra said I'm confident in our ability to continue generating significant free cash flow as we make the Evie transition.

Kyle Mountsier: 4:30

That statement right there is at the crux of every investor question right? Yeah, is legacy OEMs. And so the confidence to be able to say that and then be able to make these these moves on stock buybacks and dividend increases alongside of the UAW negotiations like That's why they're up almost 9% in pre market trading because those type of words that type of confidence coming in from General Motors, motors, big deal, I'm in Should we just see what like the next few months from them look like? Because if I had to guess there's more coming down the pipe that they're about to they're about to lean on because you don't just start this train rolling and not keep it going.

Paul J Daly: 5:11

There's some other indicators that I mean, you think of like what leads to projected big profits. They're obviously scaling back Evie production and getting much more thoughtful about it. Also, kind of like a parallel story like lithium prices are down like 80% Whoa, 80% I like I saw it this morning. I was like, I wouldn't have room in the show for it. But yeah, and you watch the lithium price increase curve, it goes way up over the last couple years, way down almost to where it started. So I mean, like, obviously, that's a major factor in manufacturing, and GM. I wonder how Shawn fain feels about this? Because like now they gotta be really happy. I feel like this. I mean, I don't think we could have predicted a better outcome Right? Like all the workers big raise GM very strong. I think that's good for everybody. It's

Kyle Mountsier: 6:00

good for auto. It's just good for auto Sure is.

Paul J Daly: 6:02

That's good news. Speaking you good news. Segue. Oh, okay, despite a dip in dealership values and 2023. So they went down a little bit, the market remains robust with dealership by cell activity significantly higher still, than pre pandemic levels, as reported by our friends over at Hegge partners. So basically, they say blue sky values have decreased 12% 12% Since 2022, but are still over double what they were in pre pandemic. And on track to be the third most active year in dealership transactions I believe. Last year was the most the busiest year and the year before that was the second most I think, so far 385 transactions through the end of q3. So high demand persists for dealers in fast growing regions with they call pro business climate. So do you think so Florida, publicly traded dealer groups saw a 92% drop in dealership acquisition, acquisition spending but overall spending remains high. The brand with the most people interested is Kyle, you can guess this one. Founder of fake partner says we are past the UAW strike, which did not have a terrible effect on dealers. Inflation is declining GDP is growing faster than expected. Employment is rising steadily and a significant recession, which was predicted by many, if not most economists seems less likely each month. We are confident dealers can expect strong values for 2023 and 2024. That also sounds like good news. That's

Kyle Mountsier: 7:36

great news. This is what's interesting to me because like there's there's this like mix of news right now. You know, the the dealer sentiment is that leads are down sales are down. Yeah, market is turning? Well, we're seeing the market turning down in housing, yet. We're still seeing strong valuations. We're seeing this track of like, hey, inflation is declining, it seems like we're gonna still be growing, there's still opportunity with inventory now being on ground. And they're still sideline buyers, if we can right side, the interest rate issue, that affordability gets a lot cleaner. I'm really interested to see what over the next 90 days and I think this will be a heavy topic when we roll into NADA, what is actually happening because the next 60 is going to mean a lot to what 21 or more looks like. And so I think NADA is going to be like, nobody's going to be looking over the last six months at NADA, everybody is going to be looking at the right now. And there may be a turn in actually increased transactions because we might see slightly lower valuations with higher projections into later 20s even more. So I'm interested to see what what the play there is, but it is still good news coming from the old Hague friends over there.

Paul J Daly: 8:53

It was I was on I was actually on the ground at a dealership group yesterday. And right before like the very beginning of 2020 Whenever the pandemic was just starting to lay and they actually bought six stores. And they had this perception like hey, when everybody leans out, we're gonna lean in and they bought three Hyundai stores and three Kia stores. And just think of how happy they're sitting right now. They know they're really happy with the way valuations are going now. But they also were talking about heading into this season where everyone is tightening their belts and kind of getting a little pensive. They were like we're leaning in, we're increasing our savings. And we're increasing our allocations because they understand that market share is what you have to win at the end of the next 12 to 24 months where a lot of people are getting nervous.

Kyle Mountsier: 9:42

This this will be it won't be exactly the same but very similar to early pandemic timelines where everybody pulled back on marketing pulled back on spend pulled back on inventory, because they they out of fear, and there will be a subset of dealers that say we're gonna go capture the market share both in ADS spend and in vehicles sold and buy everything cheaper for that.

Paul J Daly: 10:06

That's right. Oh, speaking of buying things cheaper segue.

Kyle Mountsier: 10:13

Right, so we got Wegmans, which a lot of the country doesn't know what Wegmans is.

Paul J Daly: 10:18

Let me just explain why. Wegmans is from upstate New York and it is basically the best grocery store you'll ever go to. I know the Publix people will probably dispute that. But it's pretty amazing and little little fun. Don't fact, I'll tell the fun known fact that the guy all

Kyle Mountsier: 10:33

right, they've opened now in Manhattan, a novel hybrid supermarket and Foodhall, signifying a shift in the grocery industry toward multifunctional community oriented spaces. The new astore play store in New York City features a unique blend of grocery and food hall concepts, offering some diverse food options such as sushi bar, bakery, fish market, and they're sourcing selections directly from Japan, and they've even got a premade salad area. Their goal is to shift because of consumer preferences wanting to eat out mainly on days where they do grocery shopping so they can have some ready to eat options as they get home. Seeing that shift has has led to this change, according to a tool suit Chief Business Officer at kitchen united. So and look just anecdotally, nine times out of 10. When we go grocery shopping, we grab one of those rotisserie chickens say that right? That's a real slap that down and it's like this little premade thing that's easy to go on that day. So

Paul J Daly: 11:41

Wegmans. I don't know if this is still the case. But as of several years ago, every single brick at every single store is self funded. They don't borrow any money to do expansion, which is crazy. But if you think about the reality of like, I was thinking about this car, because when we visited Nashville last year, we went to the big food hall there downtown. What's it called? Yes. Food called hot. There's a lot of call on Broadway. Yes, right. Okay. So he went down there. And I was thinking about it. When I was reading this article. I'm like, man, what if there was like, a grocery element to that, for all the people who live downtown, you can go there to eat, and you can bring things home, especially a lot of downtown stuff. You don't have big kitchens to prepare food. It just makes a lot of sense for things like this Wegmans has a history of doing pre prepared food very, very well. And let me just little hint, it is not cheap. Like if my family goes and like sure if we decide not to do the rotisserie chicken, but instead we're like, oh, I want the you know, the the Asian food or I want the type of you go home and you're like that was$70?

Kyle Mountsier: 12:42

Well, it's interesting because this it's actually like, if you go look at it, it's a little bit of an expansion from like, if you're used to a whole foods, whole foods, what does have some like hot foods and salad bar and things like that. So there are options to buy food in the grocery store. But this is a little bit more expanded of a scenery. So I'm interested to see how deep they can go into this multi communal space. I will say we've got this this amazing carniceria Little Hispanic grocery store here locally, and there's a taco shop in the back and it is barber shop in the area. And it is always packed. So it's not the first time it's been done. But what what happens as Wegman does it? Oh, absolutely.

Paul J Daly: 13:30

It's, it's let's tie this back for a second. This is really an indicator of a company paying attention to the needs of the consumer and the shifting landscape of what consumers want while they're in a certain mindset. And I think as as dealers, we can be paying attention to the mindset people are in either when they're in the store or when they're at this a certain part of the day, right? Whether it's the morning dropping off cars, picking up cars, etc. And also be paying attention to other spaces like this to look for opportunities to like, be yourself and be present. Yep, yeah, absolutely. So whatever it is, it's been 600 episodes. Thank you for being here with us. We're gonna do 600 more we have anything to say about it. So get out there. Pay attention to people pay attention to one another and we will see you here for six or one tomorrow.

‍