An EV Flagship, FTC Drops A Big Fine on a Dealer Group, 1B Hospitality

October 19, 2022
Welcome to Wednesday as we talk about Cadillac’s return to the ultralux state. We also cover a major fine levied by the FTC on a Maryland Auto Group, as well as a $1B investment in hospitality for an upcoming F1 event in Vegas.
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In a long awaited reveal on Monday, Cadillac unveiled their new flagship EV, the MSRP will be north of $300k ultra-luxury Celestiq which will begin production in late 2023

  • 600 hp , 640 ft/lb of torque, and 300 mi of range
  • “Celestiq is the purest expression of Cadillac, acknowledging our incredible history and driving us to a bolder and brighter future,” said Cadillac global vice president Rory Harvey in a press release. “It is a completely bespoke work of automotive art, built around the most advanced and innovative technology that we have ever engineered into an automobile.”
  • Hand built with no more than 6 being made at a time
  • Concierge design process where approved Dealers advise buyers as they and designers work together to craft a unique vehicle where “Each client will experience a personalized journey to make their vehicle exactly the way they desire.”
  • Features include standard rear-wheel steering and all-wheel drive, multi zone auto dimming sunroof and a 55” wide hi res display spanning the entirety of the dash
  • Tili: Is this an EV dev or a brand flex? Yes.

Passport Automotive Group which holds brands, BMW, Infiniti, Mini, Nissan, Mazda, and Toyota has been fined $3.38 M by the FTC in a discrimination suit involving charging illegal fees and engaging in lending discrimination

  • From AN “FTC alleged Passport advertised certified, reconditioned or inspected cars at specific prices but added extra certification, reconditioning or inspection fees it falsely claimed consumers were required to pay. For example, the FTC cited one case in which a vehicle advertised for $24,050 sold for $26,440 because of illegal add-on fees. “
  • “...also alleged Passport charged Black and Latino consumers about $291 and $235 more, respectively, in interest than white consumers
  • The fine will be paid by a combination of the group, as well as its president Everett Hellmuth and vice president Jay Klein

Passport says it disagrees with the allegations in the strongest possible terms but noted that fighting the ruling "...ultimately would have distracted us from the important work we do. "That time, energy and money can be better utilized by continuing to invest in our communities," the dealership group said. "For that reason, we agreed to the settlement announced today."

  • This is the second run in w the FTC for Passport. In 2018 they sent out 20k+ fake “Urgent recall” notices to drive dealership visits.
  • The stratospheric growth of F1 in america is prompting a $1B renovation of the iconic Venetian hotel in LasVegas in preparation for the F1 race in Las Vegas in Nov

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SUMMARY KEYWORDS

ftc, cadillac, automotive, vehicle, passport, people, customers, dealer, vegas, group, flagship, brand, drive, venetian, big, perception, culture, organization, dollar renovation, vice president

SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:24

Welcome to Wednesday. Welcome to Wednesday, every day we're talking about a really crazy Evie flagship FTC dropping a big fine on a dealer and a $1 billion hospitality renovation. Coup. De they stopped and stay with me. I don't know, it's just me. Are you gonna be like me? 13


Kyle Mountsier  00:43

months long? That's it.


Paul Daly  00:46

No, I can't even get like you imagine


Kyle Mountsier  00:48

spending million dollars in 13 months.


Paul Daly  00:53

That'd be hard. I think I think I'm up for the challenge. Yeah, right.


Kyle Mountsier  00:56

They like if someone needs me to, though,


Paul Daly  00:58

I'm willing to try. But I have one question. How do you get the contractors to show up? I'm trying to do like the smallest little project in my house and it is impossible to find a good like, I look.


Kyle Mountsier  01:10

There's $1 billion 1 billion, 3 billion


Paul Daly  01:13

reasons why a contractor would show up. I don't know if it's just me. But I feel like the word billion is just thrown around so much now. Like 10 years ago wasn't like that. Like it was I watched an NBA thing. And it was like three $5 billion NBA teams. Yep. Five bill. And so I don't know. It's just the day and age we live it. It's inflation. Kyle used to be millions. Now it's billions. There's something wrong with my math, but we'll just call it that. Oh, today, we have an awesome episode launching on a solo con sessions by effective it's one of our podcasts, you can just search a so to con sessions on your podcast platform, we have Andrew defender for better known as diff, who no matter what you're talking about, in my opinion, is one of the most like well rounded thinkers in automotive like he's he hangs around, you know, he just thinks broadly about the industry. Yes, he's good at what he does, but he thinks broadly. And he's always a great measured conversation. So yeah,


Kyle Mountsier  02:07

and like, always good for a little bit of nerdery. And a little bit of fun. Absolutely. Is absolutely having their own heart. You know what I'm saying? Right?


Paul Daly  02:15

A little bit of nerdery, right? It's got one of those vans that you can drive anywhere and you sleep in the Sprinter van and all that. So he's that kind of, he's kind of like, kind of like a nouveau bro. You know, at heart. Please don't ever refer to me as that. Okay, sounds you're not a nouveau, bro. I will never refer to you. No, I'm just telling you like, some reason I ever got to that level. Just don't refer like if you let me know that you if you kind of like follow his Instagram account, you'll hear what I just said and be like, yeah, that shoe fits. I don't know. I just just caught it. It just came out. Just came out. Speaking about segway into the first story Speaking of things just coming out. Segway


Kyle Mountsier  02:59

we've waited a day or two to talk about this time I've ever heard you pre announce a segue that was a that was great. That was like a segue into a


Paul Daly  03:07

segue we haven't talked about this but it's actually a Monday along the way to reveal Cadillac unveiled their new flagship Evie the let's pronounce it correctly because we had to look it up. The Celeste stick


Kyle Mountsier  03:22

the night we have let's see Panossian pronunciation How should looking word How should it be pronounced Celeste Deke, like you got a little bit of thing in that in my a little


Paul Daly  03:34

bit of exotic pronunciation because it should be for a car that is north of $300,000 Starting price. They are moving back in. That is the truth. That is the truth. Production will begin in late 2023 600 horsepower 640 foot pounds of torque 300 miles of range. In my opinion, the thing is absolutely gorgeous. I've never seen a car look like that before but it is freaking gorgeous.


Kyle Mountsier  04:01

I will say I like the cat of the Cadillac brand. For me. It's like the Escalade always looks on point but kind of the other vehicles like I always import kind of what I feel of like 1998 Cadillac into like, yeah, I feel I feel that all together departure from that environment. And I think that it is it is setting that brand apart because like when when that's the trajectory of the of the flagship vehicle, everything else probably starts to fall in line. So I the way that this is going to play, it's going to reestablish what flagship looks like for Cadillac, and I think it's going to be a really deep blant brand play that actually spreads a lot further


Paul Daly  04:48

so so here's here's a couple of quotes from the launch. Celestica is the purest expression of Cadillac acknowledging our incredible history and driving us to a bolder and brighter future says Cadillac global Vice President Ron Harvey and a press Release is a completely bespoke work of automotive art built around the most advanced and innovative technology we've ever engineered. In an automobile, this is cool. So like they can only make six at a time, and only six are going to be in production at any one time. handbuilt. Again, the dealers that are allowed to sell it, they're going to have to obviously go through a whole process because they're promising, like a very concierge design process in general. So like, you can customize this vehicle, if you buy one of the dealers kind of advise the buyers as they work directly with the designers who can suggest designs, you know, they they're gonna really depends on the person do you want us to suggest things or you want to tell us, so everyone is going to be a one off, you know, a standard rear wheel steering, which is pretty dope, if you've ever driven a car with one of those, I mean, it's a pretty long vehicle if you saw the picture. So the rear steering is definitely gonna come in handy. multizone auto dimming is a cool feature. So it's gonna have the big glass roof. So you know, people in the back might want it a little dimmer. People want it Yeah, it's pretty good, a 55 inch wide screen across the front dash,


Kyle Mountsier  06:05

that and that's going to be something that that you start to see in a lot of vehicles all the way through just because of like this multi infotainment system type thing. What I love that, like, think about, we've been talking about pop culture meeting, automotive, right. And when someone in a press release, a global vice president says words like a bespoke work of automotive art, like you know that the lines are just they're being blurred at this point. And I think that that's a good thing. Even if you're not selling or working with $300,000 vehicles. Now the expectation is from a global perspective, that hey, my car purchase can be unique and customized to me so thinking about that as any auto salesperson or dealer like how do I create that level of experience for the person buying the $20,000 vehicle right because that's the game changer when someone when someone walks in and buys a $23,000 Mazda three Toyota you know what Jaros or whatever and, and and walks out going holy cow that felt like the brand building a six you know a six figure six time six at a time handmade vehicle and if you can do that if you can go okay, I see that that's happening in in the buying persona and what there are some people that are after because like you think about the the trend of everything going from luxury to commodity right? I need to I want to order food from wherever right at first it was pizza, only luxury could get to order food from anywhere now we all have that capacity it's a now a commodity it's now just something that anybody can do through Uber Eats or DoorDash and so if you can move the luxury buyer them luxury retail experience to to the more commodity retail experience


Paul Daly  08:03

you're gonna win think it's for me the bigger impact is just the status of the brand Cadillac used to mean so much when it came to overall status and again like to your point kind of that span depending on which one you had right there was a big price difference between the biggest baddest Cadillacs and the entry level ones you know all I could think about when I started seeing this vehicle though, are are what Alex Flores is going to look like in his I know he sees this they he tried to get to be number one on the pre order list because the a flow silastic is gonna be dope. You're gonna get qualified to sell him just so he could buy what I hope you're listening, Mr. Flow. Speaking of people that are now listening, big way. Boy, so the passport automotive group out of Maryland holds brands BMW Infiniti, mini Nissan, Mazda and Toyota has been fined $3.38 million by the FTC and a discrimination suit involving charging illegal fees and engaging in lending discrimination. Allegedly, this from an automotive news article, the FTC alleged passport advertised certified reconditioned or inspected cars at specified prices, but added extra certifications, reconditioning or inspection fees. It falsely claimed consumers were required to pay for example, the FTC cited one case in which a vehicle is advertised at $24,050 and sold for $26,440 because of legal illegal add on fees, and also alleged they charged black and Latino customers, roughly 291 and $235 more respectively, in interest than their white counterparts. That's pretty serious, like level set from


Kyle Mountsier  09:56

I like I'm just saying, you know, I look I don't know what happened in in the passport group? You know, I have known people there. And I know that there are really good upstanding people in that group. So like nothing that a group does like this just just set level set is like, that's not the experience that everybody gets. That's not the right, it's everyone gives, right. But what this is pointing to, to me is like, if this is happening right now from the FTC, and we've seen other examples of this over the last two years, and we're coming up on December 7, when all these new guidelines, like, just they're poking around, they're watching for these experiences and these types of, you know, practices. And so, like, I appreciate what, you know, Pat, the passport representative said, we'll go through that quote in a minute, but just like, heads up, it's not like the gun. Right?


Paul Daly  10:51

No, no, no, no, that's what this is. And I think you've nailed it, right. So in a written reply pass passport to reply to automotive news passport said it doesn't tolerate behavior that violates customer trust, and that the company took swift action upon learning that some customers were charged redundant fees and internal investigation determined violations were largely isolated to a group of three employees. And those employees are no longer part of the organization. They disagree with the allegations. And they said, you know, but it would have distracted us too much to try to fight this. Too much money, too much time from I would distract us from the important work we do. And that time, energy, money can be better utilized to service invest in the community. So they've agreed to just settle but but three people, right, three people in the audience, they didn't say who it is. But they did say that the


Kyle Mountsier  11:38

that's the thing. That's all it takes, like, doesn't take internal audit process, the internal, like structure, process, written processes, understanding exactly what the compliance officer and, and, and the general managers and everybody is doing from top to bottom every single day is going to like, that's the problem here is because, you know, and I think that this is where when you look at these FTC guidelines that are coming down the pipe, is everybody has to be aware, you better make every single person aware in your organization, that they are part of being on the hook for your organization in the way that they handle customer experience. Because when three people can impact a dealer's bottom line like this, from for practices there that are outside that groups expectation, that's a dangerous kind of line to walk. So


Paul Daly  12:28

it seems like it's the fact that several people can make a decision that in fact, affects the group this much because you think of all the people that work there, like you said, there's just lots of decent history in the past for a lot of good people a lot of good work. And then this this, like, look, the practices are wrong. You're right, that will get if the allegations are true, right. The practices are wrong, right. And we've talked about this at length, right? No longer can you get away with the stuff that we've gotten away with. In the past, the fine is actually going to be paid by a combination of the Auto Group, the president Everett Hellmouth, and vice president J. Klein, collectively, you're going to pay this fine, I don't fully understand what that means. But this is the second run with the FTC for passport in 2018. They sent out 20 plus 1000, fake urgent recall notices, intended to drive traffic to dealer visits. Now, I think that's also another example. Here's how that could have that. Here's how that could have played out. Yeah, big group, all the stores, all these groups, somebody gets a call, right? A general manager, a sales manager, a marketing manager, right? Like, hey, got a way to drive traffic got this thing, right, we're gonna, we're gonna you're gonna give us 10 grand, and we have this email list, or we're gonna take this, we're gonna send it out. We have proof that it works. And it's going to, and one person makes that decision. We're like, Yeah, let's try that. Right. And all of a sudden, 20,000 notices go out. And you're a big flip in trouble. Right? Because it's so deceptive. And it's so backwards. And it's easy to get, get caught in this, this stream of tactics. Right? And let me just say this, if it seems like a hustle, right, if it seems like, just get away from it, we don't want to be


Kyle Mountsier  14:07

the dealer yesterday that it was like you kind of were Hey, someone, someone called me and said, Robert, bye, bye. And they could do that. And we were just like, just kind of like sniffing the air. Like


Paul Daly  14:23

I know the rules were this way, but they found a way around. If there's a way around it, like just, you know, I think that's actually one of the really great things going to come from like the FTC regulations, which are definitely you know, as nada say sloppily drafted and hasty. We totally agree with that. But what it is going to do is help us get away from some of these and actually limit the bad actors and the things that really are deceptive and the things that truly are, like ripping people off. Because we can we can together fix that practice. I think the FTC is going to force that hand and a lot of cases, but this is just a very cogent warning to all of us. So like like Kyle said, everybody in your organization needs to know that like, this stuff's got to stop. Like, we can't even close the play in a way.


Kyle Mountsier  15:08

This is the thing when, when you look at any, and I know like, we were going a little long on this episode, so hang with us, because I got it, I got a thing to say, right? CISM when you look at any vertical, any industry that has some level of history, a broad culture, disrespect or misunderstanding of the way that that that the internal part of the vertical actually works, right. So when you think about it, like just think of the things that people list of the things that are like the bad actors in society, right? It's not, it's not indicative of everyone. But it is a cultural perception. When that's the case, everybody in that vertical in order to shift that cultural perception, not just has to get to center like industries that don't have that cultural perception, they have to go to the other over index fleet, you have to over index on the way that you treat customers on the way that you treat employees, you have to over index and that's where we're at as an industry. And we just have to recognize that it's not getting back to center. And just like being like other industries, we have to over index and be the leader in the way that we care for customers and employees, or the culture will not shift the perception, it just won't happen.


Paul Daly  16:23

We have a comment from a live viewer Jim Elliot says Are you sure it's just three individuals or a low standard of conduct allowed by the group? That is a great question. Because when you we don't know. But what we will say is when you have an a culture of elevated attention on integrity, doing the right thing, treating the customers, right, it does tend to suffocate actors and push out the folks that they just can't have any space in the organization. So keen observation don't know the answer to the question. But definitely merits asking the speaking of making space


Kyle Mountsier  16:55

segue. The Venetian is about to do a whole bunch of space up in Vegas. f1, if you don't know is coming back to Vegas, for the first time in a few years, headed to Las Vegas for an f1 race in November of 2023. And the Venetian has started a $1 billion dollar renovation of their hotel, their grounds, internal stuff, they've got a new beach thing though casino floors going on new restaurants, the whole nine yards. And like we said at the front of the episode, they're doing it in 13 months like this is not this is not November 2025. They're not doing a billion dollar renovation in two and a half years. They're doing it in 11 months. They're also working on a current project of the Madison Square Garden sphere, which is a 20,000 seat indoor arena that's costing 1.8 5 billion and will be the largest of its kind finished and next time in about the same timeline. So gosh, all the contractors converging on Venetian properties. Interestingly enough, the Venetian property actually exchanged hands February of this year so I'm sure that new investor is looking to get a whole lot of love out of what they're doing out there in Vegas for this race and like the convergence of culture on on Vegas.


Paul Daly  18:24

So I mean, I guess when this timeline it will be ready by the time nada is back in Vegas 2024 We'll get to go we'll get get get to go check it out in person. You know, this this whole thing, right? Like, what do you do? Because the attention is there, right? It started because f1 Let's, let's back this up FYC it's on the downward trend. Netflix series comes out featuring the stories of the humans and the drama within the sport that really helps propel it to massive adoption in the US massive event in Miami. It's coming to Las Vegas, MGM actually purchased $25 million of tickets, which is feel like is that like most of them? Isn't it it's a lot of them. It's and they're going to be coupling the tickets with a stay and these packages that are up to $100,000 for these experiences just showing you like we talked about yesterday about even Gen Z pursuing these luxury items and luxury experiences that have the perception of like, Hey, I'm out there I'm doing things you should be watching what I'm doing. And this is just kind of like a very forward and advanced version of this breaking and Danny goes


Kyle Mountsier  19:32

where the attention flows. Let's go. All right.


Paul Daly  19:37

I don't think we're gonna be able to top that we have to end the show with that one. No doubt, no doubt. Thanks for spending some time with us today. Listen, build the culture of your store. Make sure people know the customer is first. The customer is first the customer is burst