Big Trucks Eject the Battery, Auto Stocks Take One On The Chin, Creepy Tracking Survey

October 3, 2022
Welcome to the first full week of making trouble in Q4. Today we talk about why big truck ICE engines aren’t going anywhere. We also discuss last week's big stock hit to automakers and sellers, as well as a survey that goes deep on sentiment toward ad tracking.
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Big news for big trucks…they aren’t going anywhere. As EV mania continues to envelop the retail automotive industry, heavy duty trucks are the only segment whose gas and diesel  powered engine investment continues by Detroit’s big three.

  • This is a hugely profitable segment. According to Automotive News, “Ford Motor Co. says it gets more revenue from Super Duty sales alone than Southwest Airlines, Marriott International and many other Fortune 500 companies generate.”
  • Ford, Chevy, and Dodge all have new technology rolling out in their biggest baddest trucks over the next year with everything from more powerful engines,  built-in 5G for over the air updates, and back up cameras that work with the tailgate down
  • These are the true “work trucks” which are used in construction, mining, emergency and utility work and there isn’t much interest in EV technology due to demanding conditions and reliability for such heavy use
  • During a media reveal of their new Super Duty line at Churchill Downs, Ford CEO Jim Farley said, "If you're pulling 10,000 pounds, an electric truck is not the right solution. And 95 percent of our customers tow more than 10,000 pounds… This is a really important segment for our country and it will probably go hydrogen fuel cell before it goes pure electric."


Auto stocks took a formative blow late last week with Carmax leading the way with a 25% drop in its share price due to a big miss on earnings forecasts and a turbulent outlook for the used car market.

  • Revenue of $8.1 billion was up 2% over YoY but below the analyst estimate of $8.5 billion. Earnings per share were $0.79, down from $1.72 a year ago.
  • CarMax shares down 49% year to date
  • CEO William Nash said, "Macro factors, including vehicle affordability that stem from persistent and broad inflation, climbing interest rates, and low consumer confidence, all led to a marketwide decline in used auto sales."
  • "Obviously, consumers are having to make decisions ... I just think they are prioritizing their spend a little differently," Chief Executive Officer William Nash told analysts
  • Carmax has gained market share over competitors such as Carvana
  • Shares of GM and Ford were down about 5% in morning trade, while AutoNation Inc , Lithia & Driveway and Group 1 Automotive fell between 7% and 10%.


A new Cheetah Digital survey across  5,404 consumers across Australia, France, Japan, Spain, U.K., Ireland and the U.S. ”finds targeted ads and personalized emails make consumers feel “creepy,” but more so with Boomers than younger generations. In comparison to a 2021 survey, more members of younger generations also found such marketing techniques to be “cool.” as reported by Retail Wire.

  • Included are: Ads that follow you across devices, ads from unknown companies based on location data, ads related to something you talked about near a smart device, and social media ads based on recent shopping
  • Trends reveal boomers are most creeped out, followed by Gen X, with Millennials most accepting. Gen Z data shows their level of ‘creeped out’  is higher than that of Millennials
  • Consequently, the percentage of

SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:21

is the first full week of q4 2023. Everyone's fired up. We're talking about big trucks pumping the batteries out we don't need those batteries auto stocks took one on the chin last week and creepy tracking creepy tracking it's Halloween time I use the word creepy more creepy tracking could be tracking survey people it's tracking you did you know I didn't even know that. People track me. People track me digitally.


Kyle Mountsier  00:49

This is random story random story number one ready so last night national soccer game they like give you this I don't know if you've ever been to a game they give you a little wrist no and and then they do a little LED show. Yeah, hockey inside the brain like a wristband where you hold it up and if you hold it up, and then they've got it programmed so that it like goes off, right? That's a soccer games. I


Paul Daly  01:09

thought that was at like, Coldplay concerts,


Kyle Mountsier  01:11

all of them. You can do them anywhere. It's beautiful. Yeah, so they did it last night. But I'm like, I'm walking away. I'm like, did they know where I am? Now? You know, they're like, everyone adds to this.


Paul Daly  01:24

You just always got to ask. You just always got to ask. Oh, yes, they do. They probably do. Good morning, everybody. Thanks for saying hi in the live stream and joining us it's always great to have the Live Crew rockin and rollin with us knowing that you are pushing for like we're pushing forward. Like a lot of stuff coming up this week. We're gonna make announcements quick con, we're like we gotta get done with the announcements and getting into the news stories more. We're gonna be in Miami Wednesday, Thursday, Friday at the de med convention. If you're going to be there, make sure you come and say hi. We also are doing something at Brian passions modern retail conference, you can check out what we're doing at a so two.com forward slash Mr. C. And we also have two podcasts that are releasing new episodes. In addition to this one everyday one is called Auto collabs search it up. The other one is called Auto solo con sessions, which are recorded live at asoto. I haven't even heard them all yet because other people were interviewing.


Kyle Mountsier  02:17

So today's is Dr. Nicole Lipkin and if you remember her auto collabs Episode You're gonna want to check out her so do concessions that people love. So so do concessions. Presented by effective? Let's get rolling. Come on.


Paul Daly  02:32

Rolling. Start with a suspect that one I know sometimes surprise you on a Monday. Big news for big trucks ready? They aren't going anywhere. Really Evie mania continues to envelop the retail automotive industry heavy duty trucks, the ones that have the little HD that all my farmer neighbors have are the only segment whose gas and diesel powered engine investments continue by Detroit's big three. So get this I almost fell out of my chair. This is a hugely profitable segment. Right? It's a small segment. But the profits are high. The margins are great. According to automotive news. Ford Motor Company says it gets more revenue from superduty Truck Sales alone, more revenue and Southwest Airlines more revenue than Marriott International and many other Fortune 500 companies. Paul,


Kyle Mountsier  03:29

so you're telling me that Ford from its Super Duty sales alone just them guys, the big trucks core revenue within Southwest Airlines that is on believable.


Paul Daly  03:45

I could not believe it when I read it but but it makes sense. Like everything about those trucks is expensive. You know, it's funny because people will look at somebody that has like a Lexus, and even like all their fancy they have a Lexus and that Lexus can cost like $42,000 Right? Meanwhile, you know, my brother 100 The farmer next to me for duty, you know, six figures super duty truck, I mean, but everything again, everything's expensive even like brakes and shock everything. Those things are just made


Kyle Mountsier  04:16

work and you look in some of those and they are built for they're not like a work truck with the vinyl floor. These things are built for like luxury. It is impressive and yeah, you got you just said it you know if you can, if you can afford things like the new brakes or the new tires or the new whatever that truck needs, like it's a business that's a work truck.


Paul Daly  04:41

That's the difference. I mean, that's the difference right? You need that thing. That thing is actually a lot of cases is a producer So Ford, Chevy and dodge. M they all have new technologies rolling out in the new models of these vehicles. Everything from to your point of them being both cushy and work mind to 5g Hot spots, you know, built in for over the air updates and obviously so we can, you know, surf the internet, play video games, keep the kids happy, all that stuff. Some other stuff too like things like backup cameras that work when the tailgates down and some Driver Assist features when you're towing. So they're true work trucks, right construction, mining, emergency utility work, and Evie technology and those things just don't get along.


Kyle Mountsier  05:25

You just think about that we're gonna have the person in that truck and they're like, just no one getting it. So I'm just


Paul Daly  05:34

calling it like that. No, they're not. But strangely enough, they are some of the people that are most in tune in a lot of cases with,


Kyle Mountsier  05:40

with nature in the air with nature, exactly. Like they care for our economy there. It's really an interesting dichotomy. Yeah.


Paul Daly  05:47

So during a media reveal the new Super Duty line at Churchill Downs, the horse racing track, Ford CEO Jim Farley said, if you're pulling 10,000 pounds, and electric truck is not the right solution and 95% of our customers tow more than 10,000 pounds. Wow. How about that? It's pretty wild. I know. Yeah.


Kyle Mountsier  06:05

I mean, look, I've said there's so much in industry that is going to continue to require me, you know, I saw some articles about you know, electric flying, right, like, like electric propulsion for flying, the weight of those things battery, it's just like you're looking at, like that, like large large machinery, trucks and things that work on compounds and, and trucks like this. I mean, there's the what needs to happen is there needs to be a renewed focus to how that energy or maybe hydrogen fuel cell technology can be better for those right, because moving to evey, like it's just not a practical solution, even by the year 2035 2035.


Paul Daly  06:51

Yeah, you got to add a little number to that. I didn't, I didn't think about this too. Even with aviation. All you ever thought to think when you're flying a plane, the plane actually gets lighter than long you fly? Yes. Right. So from an if well, from an offense? Well, from an efficiency standpoint, think of what that has to do to range. Yep, yep. Right. It's just getting lighter and lighter with heavy to hold a battery. That's that's suckered just like flying a brick around?


Kyle Mountsier  07:16

What is What are California, New York? And is it just, I didn't read this? Is it just like small vehicle sales? Or


Paul Daly  07:23

are they made it? They made an exception? Okay. Okay. They made an exception for heavy duty trucks. Yeah, they don't talk about that. And then it was released. But I did see that in this article that they made an exception because look, when there's something like a hurricane or something like that, you don't want to hear well, we got to wait till the fleet charged up. They've been out. All right. I don't think anybody wants to hear that. Oh, and by the way, there's no power and it's really hard to truck in power. Yes. Just there's a whole bunch of things, you don't want your emergency vehicles, you know, hung up on that speaking of getting hung up. Segway. We didn't talk about this last Friday, because we had other things to talk about. But it's worth circling back around auto stocks took a formative blow last week, with Carmax leading away with almost 25% Drop in its share price, doing to a big miss on earnings forecasts and a turbulent look for the used car market. So Carmax revenue was up year over year, but way below the kind of consistent consensus analyst estimates and drop their shares. I mean, now that combination was like at $120 at the beginning of the year, so it's down, it's down by half, right?


Kyle Mountsier  08:34

It just, it still kind of blows my mind, because many, you almost went Irish on me blows my mind. Because many of the retailers that you and I know are having wild successes way exceeding any sort of expectation that they would have had for this year. But these, you know, these larger conglomerates that are much more swung by things like interest rate changes, or dynamics in the market or ability to acquire inventory, which is getting tougher and tougher, because like the retailers we know are getting better at re acquiring the inventory that Carmax would have historically. So, you know, I think that there's a lot of factors that are playing into this, some of which are the public factors, which is what most of the articles that I've read are pointing to, but some of them are on kind of the privatized side that maybe not a lot of people are looking at that is really this balance between like the smaller dealers and these larger conglomerates.


Paul Daly  09:31

It's funny that you mentioned that one of the articles that I almost included in today's show has to do with you know what's happening in the auctions, big automotive news story, what's happening in the auctions and you look at the auction volume, and like I think the auction volume, the most recent one, I think it was like 380,000 was the number at its high like when we came out of the pandemic. It was like I think it was like 800,000 but I had to go all the way back to like 2016 2015 to see when 380,000 was kind of a normal thing. So way back down to what we were like five, six years ago. And you know, the people have cited in the article we're just talking about dealership just gotten a lot better at like every entrepreneur right something changes, what do you do you figure it out how to get it done another way and that shifts the whole market dynamic of what used to be the way of doing business. And a big part of that is acquiring inventory. From unconventional sources, primarily buying cars off the curb. We talked about it every week.


Kyle Mountsier  10:27

If you go to a clubhouse room convention or LinkedIn post and you don't see something about buying vehicles off the street, then you're just missing the thing. And so yeah, I think that shoot car Max is probably the car Max. Man.


Paul Daly  10:42

They're like we sucker nailed it. Yeah, that is it. Really, they did have it figured out way in advance. And it was too much work for dealers to figure it out, too. Right. That wasn't the need wasn't great enough. dealers were making enough money was easy enough to go to the auction and scoop up truckloads of inventory. Not anymore. And so yeah, not look at I'm saying not looking so great. But again, great companies have never counted out Carmex knows how to manage a business. Right? And when you look their share price to earnings, right, the weighing machine to their share price is actually low. Right. So a lot of people would say its value right now, based on their, their actual fundamentals, their financials, their ability to manage through crisis, they've managed through a whole lot of things, you know, over the over the last decade, so don't count him out. But some other shares, GM Ford, they were down at about 5% While AutoNation Lithia driveway group one, they fell off fell between seven and 10%. So a little little correction action goes there's


Kyle Mountsier  11:35

still some of these big groups now I do have to say it was very interesting because what I'm gonna call the CEO quote of the year, meaning we're gonna see out 800 CEOs in the next for the next three months is obviously consumers are having to make decisions. I just think they're probably or prioritizing their spend a little differently. Like yeah, put that in up put that in a quote board, slap any CEOs name on it. But that was said by CEO William Nash.


Paul Daly  12:02

Yeah, you guys the car backs. That's so good. Right? It was unprecedented times was lag times yeah, this year, as consumers have to make what is it unprecedented


Kyle Mountsier  12:12

times you're on mute? Consumers have to make decisions. That's two years in a row right there.


Paul Daly  12:18

That's perfect. Perfect. Speaking about making decisions for consumers. Seemingly. I'm feeling good three segways in a show. Let's go. It's actually might have been the fourth


Kyle Mountsier  12:31

Monday of a five Saturday month, Paul. So we have to be here.


Paul Daly  12:35

Right? We had a Friday close. A new cheated digital survey across 5400 consumers. This is global to this isn't just like a US bucket. It's Australia, France, Japan, Spain, the UK, Ireland and the US. Those survey fine that targeted ads and personalized emails make consumers feel creepy in quotes. But more boomers than younger generations. Well, big surprise there. Wow. Right. So comparison, in comparison to a 2021 survey though, more members of younger generations also found such marketing techniques to be quote unquote, cool, as reported by retail wire. So basically, what they did was they surveyed people to say like, hey, does this seem creepy or not? And this is includes segments like ads that follow you across devices, ads from unknown companies, based on your location data. ads related to something you've talked about your smart device, that's always a good topic of conversation, and social media ads based on retail shopping. So it's obvious who do you think was most creeped out? Kyle? Boomers. Yes. And then next, it just goes right down the timeline. Gen X millennial millennials, however we now know, however, however, Gen Z is more creeped out the Millennials


Kyle Mountsier  13:54

see that surprised by that? Yeah. It's just weird to me. Like, I mean, maybe that's because their parents are Gen Xers is that?


Paul Daly  14:04

I think it's actually because Millennials are doing most of the targeting is my guess. That's my like, anecdotal, like, I pretty strong guess I like I think there are more millennials kind of already heard on the dials and switching, right? You think you think who's actually doing all that? And you're like, oh, yeah, bottom and get paid to do that. So


Kyle Mountsier  14:25

they like this. That's, that's, that's me, right? I'm like, turn on all the cross app track.


Paul Daly  14:29

But it's not just you just think of think of entrepreneurs, small business owners, right? Like people that have a side hustle, right? All those are like Facebook ads, right? Yes, they needed to work. And so that makes sense that they're to me. Maybe one of the reasons maybe it's not, it's just my as my guest just my thought. So Ken, Ken Weicker, so I got this from a site called retail wire that you and I look at and reference often. And they have a cool way they do the comments. The way they do the comments is like they have something called a brain trust, and they kind of vet comment And they give you a little commentary. So Ken Weicker, President circular logic said, using third party data from other sources, here's he's like, basically here are the two options on how we can either make this creepy or not creepy. We can either a use third party data from other sources to target the customer creep factor would be high, or use first party data to provide first party data that the customer provides to us to actually serve the customer creep factor low, I thought was pretty insightful.


Kyle Mountsier  15:30

Yeah, I mean, to me, they're about the same thing. But, you know, I like the first party data serving the customer. That is definitely it's going to be a lot closer, you've probably done business or at least engaged with that type of brand already. But, you know, I don't know. I like I don't


Paul Daly  15:50

know, the high and low. I think maybe higher and lower would be the right word. Yes. Right. Because if if, if my dealerships sending me information, saying it's time for an oil change, right. I'm good with that.


Kyle Mountsier  16:02

Yeah. And I'm good with that on Instagram, Facebook, wherever I'm at. I'm good with that. If you email me or throw it to me on an ad, I'm good with it. Because it's placed in the right timeline. I understand why you're communicating me. You're just doing it one in the medium that I've found in most likely at that moment. So you know, that? I don't know. I tell him it will turn the cross app tracking on Don't worry about like, you're already they've got so much data on you losing a little bit of it right now. Not a huge deal. And yes, they are listening. And


Paul Daly  16:37

yes, they are listening. And no, there isn't anything you can do about it. Oh, thank you for a few minutes with us here this Monday morning. We hope that you're little fired up a little energized, ready to get out there. Serve some people make some difference, buy some new cars, and all that other stuff.