Automotive History and Making History, Free Car For Blood, The Future of Just In Time

SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:33

Yeah, we didn't everybody, we made it to march. It's one of the celebrated days of the year. If you live in upstate New York, we have so much to get through in the email today are in the show. I don't even know where to start. But we got to start somewhere. So start with the

Paul Daly  00:49

Id they stopped. I think before we start anything, if you're on the podcast, you're just gonna miss out on this one if you're not live streaming, but we have the official automotive State of the Union, packing tape. water activated this is we learned something. I'm just gonna pretend that it was on purpose. I'm still very known. roll of tape. If you're on the podcast, it's got all kinds of Ill hand illustrated items on it. It's a lot of fun, get some swag, because you want some of this tape. Go ahead and Kyle talk about our mistake.

Kyle Mountsier  01:22

We we it was a mistake. But also like we're stepping up in the world, right? You know that when you order tape and it comes and it needs to be water activate, activated in order to seal properly on the box. You know you have it's like, alright, so you look at the Amazon packing tape and what we now realize after a little bit of research is actually water activate that stuff. It's got all the ribs stuff to make sure that that's supported. It's it can be a box. It's the whole nine yards, right? So we're stepping up in the game. So really, honestly, this is what I love. I love packing you know, we've talked about this all the time. We love packaging, we love that like little brand experience that's just a little bit above like just getting the the item. And we hope that if you order some swag, you get a little bit of excitement around just looking around the the packing tape and have your pocket. Ready. Do you

Paul Daly  02:14

have your pocket? We should actually tape a pocket knife to the outside of the nuts not do that. Oh, we have a lot of stuff going on today. A few things to talk about. We just noticed this morning, Danielle sent us a text message at like, you know 6:30am Hey, the NHD app is populated. I was like did you have an alert for that? It's populated. It's up not a ton of information yet. But if you're going to na da download the app, and you can start tapping around and we'll be on there soon enough you can be on their swag orders are going out. Right speaking of swag, we got a couple of notes. If you have won some rewards if you ordered some swag, we apologize. It's taken so long. Let's just blame COVID and supply chain delays like everyone else. But it is taking us a little longer. One of the things actually that held us up is the foam that goes under the stitching on the puff embroidery hats. It's black foam, it's because it's black on black. So like if we put white foam you might see some of the white come through. That's why it's the Puffin bridge. So like, there you go, at least we can substantiate our claim. So we have a few things to talk about today. newswise. But first, let's talk about some positive things in the world and in the auto industry because there's enough challenge going on. Let's talk about some positive. Yeah, I absolutely

Kyle Mountsier  03:28

love it. We got an email. And if you don't know we've got a landing page on our website. It's a cio.com forward slash positivity. So if you know of anything going on in the industry that's like this is really good dealership is doing something for the community. We want to hear about it. And we're gonna highlight it just like this. So yesterday, Eric Hall of classic Chevrolet in Texas, right, let us know. And yeah, sorry grapevine. Let us know about some cool stuff that they are doing with a local blood drive supplier. So Carter blood care. And they are they're actually giving away a Chevy Spark based on blood donation. So just a really cool thing that they're doing given back to the community, which what I really love is it wasn't just like a handout, right? It was like, Hey, we're going to draw the community and ask them to get back through a blood drive. We're going to reward that and supply the blood drive center with the the capacity to give something away. So it was just like this whole wrapping the arms around the community thing that happened there. So

Paul Daly  04:30

they actually delivered the news at a high school pep rally, which is pretty cool. Ah, that's a high school pep rally. I was it. I have to read it again. What's it for high school students? Like a blah. That'd be it seems like that would make sense. That would make sense on why they happen. But imagine you're in high school, right? And you donate some blood, that nice healthy young blood. You donate you donate some blood and like they call your name and you run down You get like that is like the highschooler dream. It's amazing. Yeah, I drove by funny Claire was came from classic today. I drove by classic Chevrolet. Last Oh yeah, you're

Kyle Mountsier  05:10

right there. Like I drove by and I was like that is a big Chevy store. Actually, you know what just another story there right is last week when there were people really close to great find like yourself a bunch of dealers, there was a big ice storm. And everybody was having trouble finding rides or getting on planes and all this type of stuff. And the team at Classic just kind of came around those people that it wasn't a customer. It wasn't someone that's gonna spend money with them. It was just other dealers helping other dealers and they were like, getting rides for people sending people in loners getting getting people to airports or across the state across the state of Texas. So really cool to just see like dealers helping other dealers with no agenda, right. Really, really, really neat. You know, they came over there.

Paul Daly  05:54

Let's just pile on the accolades on classic Chevy right now because when dealers I was in that ice storm, and it was different, you know, everybody's driving really slow. It was different. There was Texas, Texas weather and dealer some dealers need to get around for the event I was at and when you know it the two Suburbans with dealer plates showed up to help move the dealers around so they were serving dealers. None of their dealers were even there. It just says good on classic today. Oh our boy Patrick Abad says we should give him always thinking, most impactful dealer community story at the end of the year. I love that idea. I love that idea. We should make that happen. And they should get some shout outs on some kind of troublemaker I was thinking this year. Maybe like we did this troublemaker deck of cards. Right? If you Vegas event you can see it we had a deck of troublemakers. And Brian Kramer with a sunglasses on. So good. There you go. Maybe we should do like a whole deck of cards this year. Like a year. 52. Like so you like playing cards?

Kyle Mountsier  06:53

Yes. All right. What else you just throw like whole dealerships in there like sketch up the dealership, that'd be really fun

Paul Daly  06:59

challenge set it alright, the ideas are just flowing this morning, let's get into some news. It is our our desire to draw a big circle around everyone in the industry, not just the executives who are important, not just the high level people, but we want to get everybody from the lat Porter all the way up through the dealership owner thinking and talking about the same things, we're going to make a concerted effort to educate the industry on certain things about the industry. And this is probably going to be one of the first times we intentionally do it, there was an article or a blog that this morning from our friend, Earl Stewart, down in Palm Beach, Florida. And he was talking about, you know, dealers charging certain amounts, and like the dealer perception, or customer perception on the dealers. And that's how Earl rolls, we linked it up in the show notes if you want to check it out. But he did a great summary of why the auto industry is the way it is. And I read it and I was like, I bet 70% of the people in this industry don't even know how the industry came about. And so like the

Kyle Mountsier  07:55

whole franchise story and you know how franchise came to exist, how it was protecting the not just the dealer, but the consumer. And actually the franchise model was set up in order to give communities like more of the capacity that the dealer does, that we talked about a lot, right? Access to vehicles, you know, community impacts from jobs created all of that type of stuff. It was set up for that that was its purpose. Its original purpose was to do everything that we're talking about it that it can do. But this is what's crazy. At the end of the article, this was this girl's prediction, right? And I'm gonna read it word for word because it's not my words. He says I'm predicting that the current unconscious and conscious animal out of control pricing of new cars precipitated by the pandemic induced high demand low supply will be the straw that breaks the back of the antiquated car dealer franchises system, immunity from the regulation by laws and their manufacturers. That's a bold statement.

Paul Daly  08:57

Yes. And we'll title Wall Street Journal, we have teed up here as well to kind of tie into that, if you didn't know, like manufacturers, Ford was the first major manufacturer, they found out how to make cars and mass, they needed people to sell them. So they had contracts with local franchise dealers, but they were only like a year or two long, they could cancel them for any reason. Like even if like you didn't sell as many as we wanted you to sell, you're cancelled. And meanwhile, they needed to leverage entrepreneurs, small businesses to actually build the network to distribute the vehicles. So that's when the dealers began to organize. Right and now if we have an idea, we have other organizations to say, hey, like that's we can't operate in these conditions. And the actually for was really surprised to see the amount of leverage that dealers had in their local communities. Yeah, right. And that and that's like the principles like That's why if you're living in and working in a dealership like classic Chevrolet, you realize you have a disproportionate amount of poll in your local community. And that works in the manual. Extra favor, right? Because they can't have that. So when we talk about like, here's something Carvana can never do. Right? Yeah, they can never be in all the places where they can never know the people and know the lives and know the stories and your they can write checks and donate money, but to where, and to how. So Jim Farley already gave a warning sign. It's true. It's true. So yeah, so if you didn't know, that's where this industry came from the franchise model that you're a part of today is because Ford made vehicles, they needed somebody to distribute them. They enlisted entrepreneurs and business people to build a network to sell them. And then things got dicey dealers banded together and said, Hey, we need some rational and reasonable agreements, right, so that we can continue to do this. And now the pendulum swung all the way. Here we are in 2022. And now OEMs are like, Hey, you really need to do things a different way, or the consumers are on to it. And you know, it's affecting us. It's affecting you. It's affecting them, right, everything now, because the technology right is interconnected. It's very efficient market, very efficient market. So there's a little lesson in where we came from. And a little reminder, if you already knew that, we are just on the, you know, over 100 year legacy of something that started way back then it's an amazing thing. And we're still doing amazing thing. So

Kyle Mountsier  11:14

and here's here's the thing, like, we are convinced myself, Paul, so many of the troublemakers some of the people that are maybe listening to this, we are convinced that the franchise dealer system is still the absolute best system to deliver vehicles supports the community, we're convinced of that fact. But it takes a lot of overcoming a misguided perception that our industry for the last 20 to 30 years have led customers to believe. And do not do not forget the fact that that's the perception that that everybody approaches our industry with. And not everybody but a massive majority of the public, including national news. And the like the the frame the lenses at which they see everything are tinted by that. And so don't think that people aren't paying attention to rising prices, prices, high over MSRP loan, loan acquisition, all of those types of things don't think that they aren't paying attention. And even if it looks like sunshine and rainbows on the front end, that it might not be that way on the back end.

Paul Daly  12:22

Well, speaking of thinking it's sunshine and rainbows on the front. Segway. All right, we're talking about the same topic. But just to put another exclamation point at the end of Kyle statement this morning at 6:54am. Wall Street Journal drops an article entitled car dealerships don't want your cash, they want to give you a loan. Why do you think that is? Well, we all know why that isn't? Well, maybe not. If you're in the industry, your store makes money when you get a vehicle financed through a bank. So the bank say Hey, Mr. Dealer, we want to offer loans to your customers. And if you sell our product to your customer, we'll give you a certain percentage of the loan back as revenue. That is what makes back end revenue and an auto deal,

Kyle Mountsier  13:02

right? It's not a bad thing. This is not like it's not a bad thing for people in the industry or customers to know about. Everybody's making money on wholesale to retail prices. It doesn't matter what industry you're in. And what if you are selling something or money. That's how money is made? So it's not a bad thing?

Paul Daly  13:20

Yeah, well, at all it's part of business continue. But But here's here's where it can become a bad thing really quickly, and you might not even know it. The article highlights Lexus dealer that pushed the customer into financing the customer wanted to pay cash. And they said, well, it's $2,000 more if you pay cash, right, which is basically probably what they were making on the loan. Well, fast forward this story a little bit. Obviously, the customer is inconvenienced think, well, maybe I'll just take the loan, pay it off later, right. You're you're making them do all the work first of all, and second of all, the customer dealers like when Wall Street Journal approach the dealer, the customer or the customer, or the dealer with the customer's complaint, the dealer said Well, look here the customer gave us a five star review that was like oh my gosh, what are you gonna do with that the customer is giving you a five star review and then talking to Wall Street Journal about how upset they are that you made them finance a car or else pay more money. And the next part of the story is there's a Texas situation that's very, very similar where Texas is like, we're going to investigate this because in Texas is actually illegal to charge a different price based on method of payment. This is spiraling very quickly.

Kyle Mountsier  14:35

But it's just it's layers on layers and like we whatever side of the coin you're on whatever whatever feeling you have about marking up or not marking up or pushing the loan or not or you know trade value wherever you're at single price you know one price you know negotiating price. I don't care where you're at, on any of that. Perception is reality and the price of the car business right now on a franchise side is still one on mass that is not positive. And so it is going to take a lot of work from a lot of different people shifting that perception, right? And if you're if you if you're just saying it's not the reality, then like, put your eyes out just a little bit help come with us and like just watch just a little bit right. Rob?

Paul Daly  15:26

Can I pay with Bitcoin for no dealer fees? That's the two sides. You can pay with Bitcoin, actually, we have a partner, we're doing some stuff with them, you are going to be able to pay with Bitcoin, yes, soon, soon. But you still got to pay the dealer fees, if they have dealer fees, and the fact that you know, their dealer fees, it's kind of case in point out running out of time, let's, let's hit a couple more points. You know, we have an article linked up in the show notes, we can never get to everything we

Kyle Mountsier  15:54

want to get to me we just talked about, we can do six podcasts a day and still be running

Paul Daly  16:00

a promise, you know, we're not going to get through all this. Toyota's you know, think of just in time processing, or just in time manufacturing the Japanese manufacturers, we're, you know, we're definitely pioneered this. And if you don't know if part of the education just in times means you don't stockpile parts, that means you want the part delivered to your manufacturing facility exactly the moment you need to put it in the cart just in time, right. And you save money on parts, warehousing, and obsolete parts, we're seeing a lot of the vulnerabilities of that right now. And you want to hit another one, one of their suppliers had a cyber attack that didn't allow them to ship parts. All of a sudden, you realize there's another vulnerability for just in time manufacturing, that slows things down. And it's just this world we live in. So understand that when you don't want to have inventory at your store. It's a complicated thing. Absolutely. It's not just chips, right? It's not just chips, right. So world we live in. We have some other articles in the notes. I hate to do this, but it's so much good stuff to drop down to

Kyle Mountsier  16:57

him. Watch out for target with raising minimum wages. Be be aware of what your people are seeing in the news right now and what that means for your need to keep them and the culture that it requires to make sure your employees are happy growing and succeeding

Paul Daly  17:10

and paid enough because it's tough to say 1250 is the right starting point for a lot Porter, when you can go down the street make $18 at Amazon or $22 at Target. Just Yep, not gonna put up with it. So, oh, gosh. I'm already exhausted from all that moment. Another sign up for the email, soda calm. We'll put a lot of these articles in the email every day with some more commentary. A lot more announcements to come. We'll see you tomorrow.

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