Amazon Doctors, Return Of The Rebate, Request To Ditch the Steering Wheel

SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:22

Happy Friday, troublemakers. It's July 22. But feeling good, it's been a really productive week so far. Today we're talking about Amazon DRS, the return to the rebate and ditching steering wheel on the brake pedal and the gas pedal to

Kyle Mountsier  00:37

the people really don't need those things don't need all that. Those things anymore. You know what shocks me about this today's episode, if you're a show notes reader, which like apparently about 1% of all podcast listeners are so we thank you to the 1%. Maybe we

Paul Daly  00:56

can get that to 2%. Check out the show notes today, we actually put time and energy into them. You can read them

Kyle Mountsier  01:01

exactly because they are dynamic. They're filled with information. There's no way we're going to be able to read 100% of the things that we put in the show notes. And not just that, but in the second story that I can't wait to get to. It's like, it's like rusty West, you'll learn who rusty was he just like he had like eight grenades in his pocket right here. And it was like he's

Paul Daly  01:22

been saving them for somebody. I asked him the question.

Kyle Mountsier  01:26

He was like, kink. kink.

Paul Daly  01:29

And just it's like, it's like when you ask somebody that quit the question and then just like it all comes out. Right? You're like, you're like, Oh, you

Kyle Mountsier  01:37

saving that I said,

Paul Daly  01:39

that's been in there for a minute. Oh man, we have a few things to talk about. First, before we get into the news, our new podcast with Michael Cirilo auto collabs is live episode 00. It's a full length episode, you can search your favorite podcast platform, auto collabs co ll abs, and we had an insane time during episode 00. And we have dozens of interviews coming your way. With perspectives. You haven't heard some insightful thoughts and just some amazing, amazing guests in this industry. So check that out. If you haven't subscribed, we're gonna start releasing episodes. Think next week, and there's gonna be a lot. So it's gonna be something for everybody. Yes. Hey, do we want to talk about some some soda con speakers? We haven't talked about how we read a list. If we don't have a list ready. But we have 7070 plus, let's just put it that way. I don't know if we talked about here's when we could talk about how we don't have a picture. Who here knows the name Jason Stein? Oh, that's good. You know the name Jason. So if you've been in the industry for a minute, you know that Jason Stein was the publisher of automotive news went off. Now he's leading motor minds has his own amazing podcast. And he's going to be at a soda con. He's going to be hosting some panels. He's going to be there to talk. And just one of the man one of the smartest people in the industry, I had the opportunity to meet him at an auto news conference when he was in charge. And I pulled him aside, he graciously gave me a few minutes before he knew who even I was. And it was awesome. And I asked him, I said, What do you think is the biggest opportunity for the automotive industry to advance and and this was like five years ago, he has to be seen as a technology industry. There is we got to Speaker slide up, that's well done there, you probably recognize the face and the baby blues. And he said, people need to see automotive as a technology industry. And that was like five years ago, and he was right on the dang money.

Kyle Mountsier  03:29

You know what's crazy, I had a call just a little 20 minute call with a VC firm out of California on Wednesday, they randomly reached out because of profile and all this type of stuff. And they were like, you know, what we've really realized over the past 24 months is that the technology landscape in automotive is extremely attractive. They've never invested in automotive before but they are seeing like their she says what he would said five years ago, these VC companies and precede companies are really looking at auto going. Yep, the technology landscape, there is where we want to be. So

Paul Daly  04:09

we're gonna try to dig up that clip. That clip is somewhere on social media somewhere years ago, we're going to try to find that,

Kyle Mountsier  04:15

hey, I'm gonna give you another one. I'm gonna give you another one. So for a lot of people, especially on LinkedIn, Facebook, even they've been watching the rise of this guy named Duran cage and Duran has over the past year and a half become a close friend of mine. And he is one that is always ready and willing to not just like say the hard things but speak his mind. But he does it with like an intelligence and empathy and care, you know, for especially across like the sales process and the way that we engage customers. And so I'm excited to have him in one of our fireside chats. Yeah, he's gonna be coming. I'm sure his wife will be there, which from if you know, Duran, everyone's like, Yo, I love you, but I'm gonna A chat with your wife Hey, just

Paul Daly  05:01

the sizzle, man. You get paged me like I see why actually everybody comes in this direction because she's awesome. And Duran cage I've labeled him the den Zelle of the automotive injury and when we flashed his picture you see this post later on social media you'll understand exactly why Look Get your tickets to a solo concert you can meet all these amazing people in person. That's the cool thing about auto collabs is every one we're interviewing is actually also going to be at a show new con. So you're going to fall in love with them there you can come hang out with them at asoto con we still have tickets get them at a so to con.com and you'll see a list of a portion of the speakers but we have a lot to go right after this livestream. We are heading into David Long's all things use car room all things used cars room powered by Soto and we have DJ smokey smoke aka most of you know him as Jonathan smoke chief economist at Cox automotive he visits us about once a month and he's going to talk about his the recent economic report and man that that man just spills insights when he shows up and they're gonna be like 150 other dealers and people without a rep. Yeah. So check that out

Kyle Mountsier  06:08

super excited for that conversation. So if you listen to this after you should finish this broadcast, and then we're all straight to listen to that on clubhouse, we link it in our emails and all that stuff. So make sure you find those insights. And if you're

Paul Daly  06:21

hearing this later, you can check the replay to and listen at 1.5 speed. Alright, let's talk about some news who is ready to go to an Amazon owned doctor? You know, they're one step closer. With this move. Amazon is getting deeper into medical care and announcing their merger with one medical, which is a subscription based medical, like primary care physician service, $3.9 billion, their largest deal ever. And all I can think about is how this moves Amazon one step closer to being BNL from the Disney movie, Wally.

Kyle Mountsier  06:55

I'm not even gonna get a word in everything. Right?

Paul Daly  07:03

Imagine everybody sitting in these chairs in the future, right? And Amazon just taking care of us like feeding the smoothie smoothies, and

Kyle Mountsier  07:10

we're like Beep, beep, beep and we order something and it gets there in 2.2 minutes instead of 2.2 days. And yeah, it's just gonna be unbelievable. Here's what's interesting. Because, you know, obviously, Amazon has gotten into a ton of different verticals, which is something actually a lot of the public doesn't even know when you when you actually look into what Amazon is doing behind the scenes and a lot of like b2b relationships that b2c relationships don't even understand are happening on the back end. This is a this is a big b2c relationships. So business, the customer that they're that they're exploring, and I think that the stat was something like this is a $4 trillion industry that accounts for 20% of the of the GDP of the US. Right. And it's unbelievable how much this type of announcement like broadens the scope of their ability, ability for profit. So I think that there's only one reason why they did it.

Paul Daly  08:22

Oh, man, so one medical, I went looked at the site this morning in researching Asana, and I was like, Man, this place sounds amazing, like they really did do seem to have addressed or at least understand the pain points in medical care. And you're talking about, like a digital first experience with the ability to book same and next day appointments on site labs, like it seems you pay 199 a year, which seems way too cheap for something like this, but maybe it's like a Costco model. So they have they operate currently in 19 markets 100 Plus physical locations across the country. Now Amazon had healthcare initiatives with actually Berkshire Hathaway and JP Morgan Chase. They did some kind of collab in 2018. They disbanded it in 2021. I guess they couldn't get it to work. But Amazon already offers health care to 1.1 million people called Amazon employees, something called Amazon care. So they bought like they bought I can't remember I don't have the shownotes they bought like an online pharmacy. And then they like probably this so I think if you work for Amazon, you like they take care of your health two.

Kyle Mountsier  09:31

Yeah. Yeah. They're not just like provide you a health plan. They actually take care of your health. They are the health. They are the health plan, which is smart. It's it's literally like I mean, reinsurance. You know, what's interesting is a lot of companies are moving to this like self insurance, you know, policy just because it saves costs and is typically a little bit more efficient from an approval perspective. And so, you know, you think about large company He's at this scale being able to do that. But I do think, you know, recognizing that, that that's an opportunity for, for not just profit, but Customer Care. And here's, here's the thing I know I played that must be the money thing. And I you know, Amazon approaches customers with a certain level of care. But think about the data that is associated with that's the

Paul Daly  10:27

question, right? That's, that's why the alarm bells are going off. A lot of one medical customers taking their grievances to Twitter, I'll read a couple here's one Amazon has spent the last five years methodically squandering the earn trust needed for customers to embrace an acquisition like this is disappointing on many axes, my cancellation request has been submitted to one medical, here's another one, I'm going to need an explainer an explicit contract around what data Amazon will or will not have access to, from one medical this feels like be a big Yikes. from a privacy standpoint, loved one medical, but I'm probably out. A this is a whole different layer of data. It's like your most private information. And to think and believe, you know, I doubt Amazon is going to use any of this information to drive commerce, or build my profile out or suggest me anything like, I don't know if there's anybody that believes that. But the bottom line, if we didn't learn anything about the consumer is like it's this constant trade off of privacy for convenience. And pretty much convenience usually wins that one.

Kyle Mountsier  11:32

That's exactly right. And we start to learn how quickly how, how little privacy, we actually have

Paul Daly  11:38

no doubt, no doubt, no Ferguson, bring us into the rebate story, Kyle, I know what you're saying. I'm like, Kyle, I don't want them to have access to my phonebook. Because like they already do, because everyone else gave them access. So they can reverse engineer it.

Kyle Mountsier  11:51

BINGO, BINGO, exactly. Well, this next story is I think, like, for one, the person that was interviewed here, and that leaves the story, while we talked about the grenades thrown. But when you think about the access to the level of data, that market scanner company, so if you don't know the company market scan, they provide the majority of rebates, incentive, even, even like rates and terms, they provide the majority of that to the premier desking and digital retailing solutions in the country. It's essentially a race between them and AI s. So that's the CDK version of, you know, for rebar sorry, not CDK, the Cox version to like to get rebates and incentives and rates and programs into the software. So when you think about the access to data that they have, not just current, but historical data on how rebates and all of those things flow from the OEM to the dealer to the consumer, they know what's going on. So rusty West, kind of threw out the these some of these ideas around the potential and most likely return of not just the rebate, that's kind of the headline of this, but it's also the rebate, it's the inventory. That's it's the way that that manufacturers will press into wholesaling vehicles, to dealers. And, gosh, we're gonna have to read a couple of these quotes, because I can't even explain how

Paul Daly  13:29

you can summarize. So I like the way you just set up the validity of the opinion, right? Because a lot of people will pop off and say this is going to happen, and this is going to happen. And this is going to happen. Rusty has access to incredible amounts of data. He's been a 35 year auto veteran, he's he's talks about things happening in seven year cycles. And every seven years something crazy happens in automotive, and then he's like, I've seen five of these, right? I think you said like they process like everyone's like billions of transactions a day like rates and delivery. All right, so set it up that way. Go ahead, Carl, let you read some of these because I'm gonna sip on this. So So here's

Kyle Mountsier  14:05

the troublemaker thing like so here's like the lead that we put in here. And the reason being is because it sets up everything else. It says right now there's scant inventory, which we all know, dealers are making more money than they know what to do with and manufacturers are stoked because they don't have to offer rebates without it out. And he ends that with but that will change and I think that's been a question on on a lot of like dealers and industry partners mind are we going to continue this like low day supply right agency model is on everyone's day on everyone's mind. You know, low day supply, high inventory turn low access to any sort of rebates or incentives high high lease incentive, high leasing, leasing, money factors, and probably not. And so here's here's like the next thing first manufacturers are sitting on millions of you because they can't deploy, referring to these partially built vehicles, that that can't get out there. When their Microsoft chip shortage ends, predictions on what that might occur may vary. And those vehicles are fully built. What will automakers do next is the question. It says they don't have a choice because and this is a this is one thing that I didn't think about is they're paying unions to build these vehicles, which these unions are saying we need our people in operation more often. So it's more complex than just what they want to do. There's multiple always that are coming at how quickly we're going to get these vehicles put out into the inventory ecosystem. And just the fact that they're sitting on ground inventory right now that they just can't deliver it to the dealer, because of chip shortages, is mind boggling.

Paul Daly  15:46

I think we need to start a new a new segment called eloquent quotes from auto folks, right, eloquent quotes from auto folks. And here's his response to the music. But he says, I think they'll take a giant ramrod and shove them down dealers throats.

Kyle Mountsier  16:06

That's cold blooded.

Paul Daly  16:08

That's eloquent quotes from automotive folks. Right, there. He is. He's like, look, cow, you and I are calls with dealers all day long. And how many dealers have we talked to where we brought up? Yeah, I know what we you know, this is like a noose, a new era of properly manage inventory supply. And everyone kind of looks at us and goes, come on, you don't really believe like, got to

Kyle Mountsier  16:31

be kidding me. The minute these automakers because automakers make money on wholesaling vehicles, right. They don't make money on the retail and that's why they're missing out on. That's why they feel like they're missing out on so much of the retail profit right now. But the only way to get back profitably quickly, without concern completely shifting their model is to drive more wholesaling, not more retailing. And so then they depend on the dealer for the retailing side. And so the only way to drive up profitability is to wholesale more cars to the dealer. What are they gonna do

Paul Daly  17:03

you can go read the show notes is a great words auto article, the interview is fantastic. He says most of the OEMs are not building vehicles at the volume they need to find efficiencies at their facilities. But if you proceed on the assumption that eventually auto manufacturing will normalize, and the industry gets everything it needs to build as many vehicles as it wants to build, then you have a free market environment again. So we want to know what you think about this. We know there are no shortage of opinions, you can go to Crewe CR, e w at a so to.com Let us know your thoughts. And I think we'll probably get a few and we'll publish some of them give you some credibility, give you a little microphone and see if you can come up with your own eloquent quote from automotive folks.

Kyle Mountsier  17:44

Well, hey, look, Paul, speaking of shortages of items, segway GM and Ford are actually asking litigation to be passed to literally no legislations that you would expect. Using cars anyways, for two years, we're just gonna rip out the gas pedal the brake the steering wheel, too, and just, you know, be done with those supply chain issues.

Paul Daly  18:18

They're going to be on subscription now. No, no. So these three companies, they want to release about 2500 vehicles for ride sharing and delivery services, using their self branded, you know, autonomous technology. Ford wants to deploy self driving, ride hailing and package delivery, basically, and they say having active controls, right gas pedal brake pedal steering wheel, having active controls, would introduce an unacceptable risk to safety. Right? So they're like, hey, it's got no driver in there. So if there's no driver that we put in there, we don't think anybody should have the availability to move that car. It just feels so weird, man. And it feels so weird.

Kyle Mountsier  19:01

But I get it. That's because because now you have to fault the manufacturer or the operator of the vehicle if there's any issues that happen without all being driven. There's no I just cannot see a way these manufacturers have the level of insurance necessary to handle the amount of issues that might come into play when it comes to these vehicles 2500 vehicles coming across the line that are completely autonomous with no ability for intervention from a human

Paul Daly  19:35

it's it's right like is there a kill switch like that but even that's but even that's like you think about a kill switch and a vehicle like that, like on the little red button underneath. But you're like even that, it's like, I don't know. They're smart people trying to figure out what company delivers pizzas is a Domino's. They have that little pizza car they have the little cart thing Yeah. And that that mean it's a lot it's smaller than a car but i don't know I mean like I feel like it Disney World and like the Atlanta airport like they're things you drive, I mean, inland airports on a track, let's be honest. And there's no cross traffic. No,

Kyle Mountsier  20:07

not at all. No.

Paul Daly  20:08

So I mean, look, this is fun to talk about. I think it'll eventually come to pass. But you know, we can't even we can't get if you ever been in a Tesla and like you get to a lane change or emerge, it gets a little dicey. If just if you ask me, it gets a little dicey. So I don't know no steering wheel, no brake pedal, we'll see what happens. But hey, it's just the news. We just report the news. We don't make it. So all that being said, we're about to happen and all things use car clubhouse for and we've had an amazing time with you this week. We're gonna be on the internet, follow us on LinkedIn. We got a lot of stuff going down there and always send us emails interact with us because we're always listening and watching and we might just post your stuff

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