Guest Host Todd Caputo, Ford Slashes Mach-E Prices, Standalone Used

Paul J Daly: 0:14

All right, it's Wednesday. We're coming in hot today we have special guest Todd Caputo coming to us live from the admirals lounge. In the Charlotte airport, we're going to talk about Ford cutting prices on the Maki. And the difference between standalone use cars, and digital only use car sales. It's an interesting topic. And one that I think is coming up for a lot of people. And it's great to have Todd here talking about Todd, how're you doing today? Good morning. Hey, different, Paul, good to see you are running like all over the country all the time. Now. I like it can tell your smile, stay busy. You're relaxed than you were when you were like in the stores every day you got this little guy was? No. You're still having fun, though,

‍Todd Caputo: 0:56

I guess, every day. And every day puts a smile on my face. Likewise,

Paul J Daly: 1:01

likewise, well, I'm speaking to be around dealers just want to let everybody know we have a few great things happening right now. Today, at 1pm, we have our next asoto edge webinar is with our friends at upstart auto retail, they're going to give us the results of a 100 dealers survey that they did. So speaking up about being around dealers, and what they're thinking we're going to be answering a lot of questions and providing a lot of insights, I'm going to be with my friend Keyshawn bats. He's going to be walking us through the survey, very quick webinar, very fast, 25 minutes you're in, you're out, it's a lot of fun, you can go to ASOTU.com, it's right there when you when you land on the page, just scroll up a tiny little bit, you can register for free. I hope you join us today at one o'clock, it's going to be worth it because every dealer wants to know what other dealers are thinking. That's just how it works. I'm also a soda con is only at three days away. Now, we are updating the speaker page on a regular basis. Now it's going to be in May 15 14th through 17th main days 15th 16th. We have a lot of great announcements of dealer groups who are actually doing their invent events in conjunction with a soda con. So it's going to be full of dealers is going to be full of industry partners, very innovative ones, really we're starting to talk about like the most innovative ideas in auto are born at ASOTU CON, we can often track conversations that happen that has sort of gone through actual like product development and implementation. So still early bird tickets right now that's going to change probably in just a few days here. And we're gonna have a lot of a lot of great panels go to the Speaker's page, you can start to see, I don't know, we probably have 20 or so up there. But we're gonna have over 50 amazing speakers. And if you go look at the speaker's page right now, you're gonna be like, oh, like, this isn't like, you know, some new guy. This is very experienced industry expertise people on the forefront. So check it out. Todd's gonna be there. You were there last year? Of course,

Todd Caputo: 2:47

I'm gonna be there. I can't wait. What was your favorite conference of the year?

Paul J Daly: 2:51

How would you explain the kind of like overall vibe of the people in the conversation? Is that a soda con.

Todd Caputo: 2:58

I mean, it's not a typical trade show by any means. The kind of people that show up at ASOTU CON are very forward thinking car dealers and also very forward thinking vendors and other people that are in the industry. And you have intimate conversations that you're not going to probably have in NADA, not quite as you don't have the hustle and bustle of NADA. And I've just made a lot of great contacts, you know, come you know, at ASOTU CON. And I know that the people that have attended that I've met had been really really grateful that they've been able to attend and made some really good partnerships and friendships there. I just, I think it's it's cutting edge, which I am as you know, and I can't wait I think you know, she's the third one right now. Isn't the third one. Number

Paul J Daly: 3:41

three number 3/3 time's the charm. Last

Todd Caputo: 3:43

year was amazing. Right. And I think that this year is going to be even better with between all the people that you've got speaking I've already seen a list of the a lot of the attendees I think it's going to be an amazing conference and I can't wait and easy to get to right you find a BWI? I think it's 15 minutes away. The peace cake. Yeah. It's awesome. Try to

Paul J Daly: 4:02

do that because no one likes an hour drive in traffic after you land. That's the worst. Some of the speakers you know some of these names Steve Greenfield, Mike Stanton, president of NADA Daniel go there. David Spees Zack Ed Roberts, Erica Tiffany welds my cabin off from Lithia entry to fayo and the welcher. Ashley Cavazos. Dan Bannister, I could go on we have four, four auto Dealers Association presidents who are going to be in attendance. So, you know, we just have a lot of representation of dealers in the dealer body there. And so we just want to make sure that you get there too. We're going to we're likely going to sell out this year. The venue can't hold everybody. So hope you can get some tickets and be there as well. All right, let's talk about a little bit of news. I want to get to the last story, but it's appropriate. I think, Todd that we have you as a guest today, because now you live in Charlotte, you're Charlotte. Charlotte based and today in 1948 was when NASCAR was founded by Bill France Sr. He was a race is loving mechanic who was tired of going to races where the promoters would run off with the prize money actually, which is why he actually started NASCAR to standardize the ruling and enforce fair competition and serve as its first president. And obviously NASCAR has become a major American spectator sport created a multibillion dollar industry and Todd you kind of live in like

Todd Caputo: 5:22

a NASCAR. I'm in Mooresville, like that's NASCAR heaven. You can use all my place, right? Like, absolutely everywhere. I love it. Yes.

Paul J Daly: 5:30

So if you don't if you don't understand this people, you know, in most normal places in the world, there's like a house with a garage well in, in Mooresville in the area, if they have these neighborhoods, that is basically a garage with a living quarters, right? They have these in there you can fit like 20 cars in these garages and they have like apartments attached to him. It's a really special cool thing. condominiums. What are they called?

Todd Caputo: 5:53

Garage iminium. So Roger mediums everybody in here just loves loves cars. I mean, he talks about everybody loves cars, I think they might love cars, actually more than people I know.

Paul J Daly: 6:04

That's why we got to get more of the shirts walking around so we get heckled a little bit. Let's talk about some news afford a little bit. So Ford has significantly reduced the prices of their 2023 Mk II slashing costs by 33,000 to like $8,000 across different models to enhance the competitiveness against Tesla primarily. So the price reduction is also coming with some very attractive finance offers like 0% for 72 months, plus, you know, a three to$8,000 cash incentive on leased vehicles. So they're really trying to move these now it's it's really close to the pricing of the model why they start now in the low 40s. Maki it's worth mentioning is second to the model Y and Evie sales in the segment in the US, and they don't currently even qualify for the $7,500 tax credit. Ford CEO Jim Farley emphasized to need the need to get more affordable EVs out there and Ford spokesperson Marty Ginsburg said, we're adjusting pricing to keep up with like, what the strategy and the demand is. So is this any surprise to you, Todd?

Todd Caputo: 7:14

No. We both did we really need to talk about EVs this morning. Right? Like I think I think just like people cannot people cannot afford them. There's just not enough infrastructure, period. Sunday, right, like EVs. They're great, I love them. But you gotta be able to charge them. People can have range anxiety, you can't charge them in 20 minutes or half hour longer, they're gonna be able to charge in five minutes or less just like a pump your gas. And you got to be able to do it everywhere. So it's gonna be a while. I think the cars are great. But

Paul J Daly: 7:45

yeah, you're an Eevee driver. You own an Eevee?

Todd Caputo: 7:48

I do. And I like it a lot. But I don't trust it when I take it on long distances, which is part of the problem. So in the government or fortunately tried to force these things down consumers throats and dealers, throats and robbers backpedaling, which is smart, right. Sometimes you got to try things and even learn, but it's been very expensive to do it. And unfortunately, you know, the government is giving incentives and the incentives are money, right? Like when things are subsidized by the government. That's our tax money doing it. So I'd like to see some more sameness when it comes to this, which hopefully we'll start to see now because the market at the end of the day, the markets obviously showing what they want and people do not want these cars unless you can afford them. Yeah,

Paul J Daly: 8:29

I mean, Steve Greenfield was the the co host his guest hosts yesterday. And you know, we were talking about all this conversation you can't go anywhere without talking about EVs. Even in the major news publications, not in the automotive section. We're hearing about, you know, BYD Chinese EVs coming to the US market and all these things. And you know, Steve was saying, you know, what happens when we get a sub 20,000. Evie, does that change the game a lot. And my, my, my follow up question to that is like, like that is going to make the charging availability situation, way worse. If all of a sudden, we get more people buying EVs without the infrastructure to support it, which in turn makes the Evie owning experience worse, which may even stunt the growth of the it's like this very cyclical thing. And I think you nailed it, right? Like when we're trying to incentivize demand. It creates false demand. It's not even demand. It just creates mandates, right? Like you have to make this many cars. Try to get people to buy them. And, you know, we'll see what happens.

Todd Caputo: 9:29

If China has some$20,000 EVs coming into the United States, it's gonna be a real problem for the industry or period doesn't matter if you saw an EVs or ice vehicles, it's going to be a huge, huge problem. There you go. I mean, across the board here, it might, it might put some of them out of business to be quite honest with you. Right,

Paul J Daly: 9:45

right. That's a good point I rented. I made a post about this, I think it was last week, and I posted my review of a mock E because I was going to rent a vehicle from well, while I was in Orlando, the cheapest vehicle of rent was actually an Eevee segments. So I paid $45 to rent a model a Tesla Model three for a day they ended up putting me in a Ford maki which I was excited to drive and I wrote a pretty a pretty lengthy review of my experience I love the driving experience it's amazing far superior to a nice vehicle the driving experience in my opinion of an Eevee that size but some other challenges I talked about him in the review you can go find they're great cars about absolutely cars it's just fun to drive. You

Todd Caputo: 10:23

got to be able to charge them

Paul J Daly: 10:25

I just have to charge my daughter's I made sure I didn't have to charge my I'm gonna have to

Todd Caputo: 10:29

get can't be where it's cold, like where you are in upstate New York because if you do, it crushes the battery life fast.

Paul J Daly: 10:34

I saw I saw an article about it was from some it was a rivian article or article bussen rivian drivers, and they were in Chicago and they were at the car rental and there was some like backup at the rental counter and they were waiting on cars and so it was just really long line. And they asked if they said we have five EVs Do we have anybody that wants to rent an Eevee you can come right to the front of the line and get it two people went up to get the Evie and the rivian drivers were like I would never rent an Eevee in this climate. I don't trust it. And they were experienced Evie owners right and they still were like no not gonna do it.

Todd Caputo: 11:10

It's Sunday, just not today. Maybe it's I'm only 24

Paul J Daly: 11:15

Yeah, exactly. All right, let's get on to the main the main topic and story wanted to talk about today you actually sent me this article. It's an auto remarketing article, written by Joe Overby, who strangely enough is going to be a guest at a soda con Joe Overby from super amazing, so excited he's get to get to participate this year. But basically, despite the turbulent markets, some standalone used car stores like Sonic automotive Echo Park, have actually been able to navigate through this market volatility with strategic strategic adjustments, while companies like room remember, shift car lots are no longer even around which for digital only used car outlets. Now Echo Park is obviously a physical location based use car outlet. And there have been a lot of shifting back and forth. And you know, you have a lot of firsthand experience with Sonic understanding how the Echo Park system works. What is your you know, why did you send me this article? And what's your perception of like, what's going on and why they're able to adjust and still make this work? Well,

Todd Caputo: 12:17

I think, you know, not just talking about Echo Park, but just the standalone use car dealer. himself right or herself. They are really, really struggling. So

Paul J Daly: 12:27

it was high to No, no like, no new car sales only just used cars

Todd Caputo: 12:32

are struggling I mean, look at when you go travel, right, or even if you're local, look at how many little car lots are closed down, or even some of the bigger ones I was in Reno a few weeks ago to client, there are some big use car dealers on on the auto strip there. They're closed, right? It's very, very difficult for an independent used car dealer to compete and be profitable in this environment. Whether or not they're omni channel or completely online, like room or shift, it's extremely difficult because of the prices they use cars are just too expensive. supply issues, the pricing of the cars, the financing, I mean, if you look at the price of a brand new car with 0% financing for 60 or 72 months, or even 2.9 versus a comparable comparable car that's almost brand new, maybe one or two years old, with low miles, the payment is the same or lower on a brand new car, and people are gonna buy, they're gonna buy the new one, right, and they're gonna lease it. So, you know, the independent used car dealer is gonna get squeezed. Also, banks have tightened up quite a bit on loaning money on used cars, because I think they're nervous about the value of some of these used cars. So use car after COVID Hit pricey used cars went up 40%. And, you know, we were at an average, know what I own my stores, the average cost of my used cars, you know, pre COVID was 19 grand, right? And those are late model low mileage cars. Yeah, it shot up during COVID, the average cost was like 32, or 33 grand went into the upper 20s. Now it's down to like 2425 grand, and the prices have gone down. But interest rates also went up. So even if the price went down, rates going up didn't make the payment any lower for people. So it's extremely, extremely competitive for these use car dealers to go out and buy cars at the auction or buy cars from consumers. And they're not trading for the kind of cars that they can retail when they have these used car lots. Typically people that trade in a car for for a used car, typically trading cars that get wholesaled. So they're getting squeezed straight up, you know, you know, as far as Echo Park and Sonic goes, I mean, extremely well managed. And I think the decisions that they made, although they were probably painful, it was a wise move, right? If they couldn't supply enough cars to all their stores, because of supply issues, and then did the right things and I don't think they shut them down permanently. I think the wording that they use in a lot of the press releases is that they were just going to they were going to close them temporarily. And they may open some of them back up and I don't want to speak for them but I think That's what they said in their press release. When they spoke about the subject, you know, Sonic is extremely well run, very well managed. I know that people that manage the Echo Park platform, they're sharp guys, right and sharp girls, and they know what they're doing. I think that they're probably going to be one of the ones that weather the storm. Penske did the same thing. Penske closed a couple of our car shop locations. And I think they paused on opening up any more of them than us because yeah, being smart about it, right? It did just use cars or not, the price is not there yet. Just like we talked about with EVs, the price of used cars needs to come down, just like Eevee to have in order for people to be able to afford them again, if not, they're gonna buy brand new cars, new car supply is coming up. Incentives are there now. And if a consumer has a choice between the two, I think they're probably going to pick a new car, because most people are payment driven. Got it?

Paul J Daly: 15:48

You know, there's also something to be said, I think for the diversification of a new car franchise, and the you were the used car operation is a department in the overall business, you have new car department used car department of service department of parts department, right. And so you have all of these lanes, it seems like you're insulated a little bit more from our lot. And so you had an interesting setup where you had a Chevy store. Right? And that was your only new car franchise, but then you had multiple use car outlets, how did you leverage the new car store to feed to feed the lots because it was a smaller Chevy store. But it was like pretty several sizable used car operations.

Todd Caputo: 16:28

So So two things number one, right, you got to have fixed operations in order to cover a good percentage of your overhead, right, you got to have absorption in your dealerships. And that's something that a lot of us car dealers lack. That's why I'm having made it you know, the fixed operations can cover the majority of in some cases, some really great dealers or covers all of it. So whatever you sell is pure profit. But in my situation, my used car departments or use my used car operations was standalone dealerships, I had I customer pay service in those stores, right, I had them in two of the three use car locations that I had. And that allowed me to have that part of that overhead covered, so I was still profitable and doing it. And a lot of us car dealers just don't have that. They're only just a sales lot set up. And they're not set up for customer pay or for warranty work on the extended warranties that they sell. So it makes it more difficult. And that's why I think a lot of you know, haven't made it

Paul J Daly: 17:22

the central park have fixed ups or customer pay fix ups. No, they

Todd Caputo: 17:26

don't. No, we don't most of us don't. Yeah,

Paul J Daly: 17:29

I mean, I will say, having been like pretty closely tied tied in with it. You had developed a really nice service experience. You know, where you would drive into a nice area, you're greeted by like professional service advisors, they were walk around your facilities were beautiful, and go into a new car store. It was It felt just like going to a new car store. Except that it felt actually a little more, I don't know, a little more creative and customer friendly, because you had the flexibility to design it however you wanted. And you did a great job. Yeah, true. Yeah, the fixed upside is good. Well, Todd, have safe travels, wherever you're heading today. Thanks for being with us today. Always appreciate. Thanks for having me. And hey, everybody else, make sure you sign up for that webinar today. One o'clock, we're gonna let you know what 100 dealers think about digital retail and you know, go grab them a soda con ticket while you're at it, because you don't want to miss it.

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