Carmax v Carvana Tesla Strategy, New Vehicle Inventory Flex, Is Nepotism So Bad?

SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:30

Yo, what's going on Tuesday and coming in hot? Oh my gosh, room, Baltimore today. So, today Carmax sell intestines today and yesterday, and maybe tomorrow, maybe? I don't know. Buying them, I'll tell you that much.

Kyle Mountsier  00:48

They just they're just throwing them out the boat. They're like, take it water. Take it.

Paul Daly  00:54

It's like what I saw, you know, we both follow the car dealership guy on Twitter. And he had a picture and it had a picture. It just said thoughts and prayers going out. And then had a picture of some some like Tesla only dealer somewhere with the full lot.

Kyle Mountsier  01:09

Yes. Yeah, like all in the front thoughts and prayers.

Paul Daly  01:15

Oh, man, I'll tell you what, Monday was a thing around the halls of asoto. Because as as it's difficult, I'll text me text me right, brushing my teeth ready to go to bed on Sunday night. He's like, I have this thought on what we're planning on doing. But maybe we should do it maybe this way. And then I'm like, great. Now I'm supposed to sleep. And then the really it all revolves around us doing things in a way that you the listener, the viewer participant in the retail automotive industry are actually excited about doing not rinsing and repeating, not building a better mousetrap. But building something that you are excited to participate in be part of the community feel like we see you. And we'll we can't talk about all that yet.

Kyle Mountsier  01:59

We know you know what I mean, but we can say that we just did you know, it was kind of typical Monday for a soda world. Everybody was like, Oh, really caught pollen, cow tossing wrenches. And

Paul Daly  02:10

I could see, I could see that everybody's gonna be like Kyle calls a teammate. Here we go. Here's the here's the thing, though. But what we're gonna be doing today is walking the venue for Soto con 2023, which we're definitely throwing down this year. I don't know if it's gonna be 800 people, I don't know if it's gonna be 1500 people. But I think both

Kyle Mountsier  02:29

come, I don't think 5003

Paul Daly  02:30

or 5000.

Kyle Mountsier  02:32

I think it's like 1800, we

Paul Daly  02:34

could wait to see the harvest is going to be in but basically it's going to be a Baltimore walk in the venue will bring you some content from it. You know, I don't know what we're going to do today. But we'll shoot something and we'll record something. Want you to be a part of it, please. And if you're not, check us out on Instagram. Check us out on LinkedIn, big community, a lot of conversation going on there. And let's talk about all the craziness that's going on in the US car market,

Kyle Mountsier  02:56

though wild used car market? Well, if you don't remember last week, Tesla said, Tesla said we're just gonna take all these prices. And we're gonna just

Paul Daly  03:05

just reduce them off the new ones, the new ones, so no one's

Kyle Mountsier  03:10

we're gonna just drop all the prices, which over the weekend, we've seen a lot of companies and used car sellers, retailers start to look at their used car inventory of Tesla's and go, What are we going to do with this? How are we going to incentivize purchasers to come and buy from us when you've got these like, up to 20% discounts on on new Tesla's now coming out, and Tesla really pressing into the market? Well, car Max has dropped their prices on their Tesla's by 20% as well. And has sold a majority of their Tesla inventory in the last 36 hours. Maybe over 60% on believable and you

Paul Daly  03:57

know, like there's we've linked an article up about this in the show notes also getting a shout out to our boy car dealership guy for always throw in the fire and following what's going on around the industry. So if you think about it, what here's the big, that's a big part of the story, right? We never have really seen a car Max, like liquidate a brand or a model like this, that I mean, we were paying attention to I'm pretty sure would have come up if that's happened. Right. But what are you doing? You're sitting on inventory, and somebody over there is just like, yo, let's just fire sale these suckers. Like we don't know what's going to happen with the price is there like the price correction on a used Tesla, we're not even going to know what that is for a while. Like it's going to take a few weeks to figure out what is a rational price for a used Tesla Model. Why are models so like level set? Yeah, right now it's still like you buy one to 30,000 miles on it. And it's still about the same price of a new one, except you can get it right now versus however many weeks it's taking, but that's going to change quickly. But the contrast of the story like the second layer to it is the fact that you look at what Carvanha is doing what they're used Tesla's and it's like nothing ever happened.

Kyle Mountsier  04:59

Which is it even more wild because like I'm having I'm listening to overhearing a conversation on the weekend at church and and the guy is like oh no no hold off on buying a car because probably in a month Carvanha is gonna go bankrupt so this is a retail this is your that's just a pop culture commentary this is just pop culture commentary someone in like it at church probably 20 feet away from me is commenting on how he believes that Carvanha is about to liquidate their inventory but they're not doing it with Tesla's so like, just recognize that pop culture is paying attention to the volatility in the market and especially when a brand like Tesla changes their new car prices everybody's paying attention in the used cars. I mean, everybody was obviously paying attention to car Max going hey, look, they've got to do something boom prices dropped inventory goes right so what what's that communication look like to your employees, the customers around you? What are you doing with your your your use Tesla's if you are a Tesla retailer and hold those in inventory? Like there's a lot to be thought about and communicated around this?

Paul Daly  06:01

No, I wonder if I wonder if the Carvana thing has something to do with the fact like once you sell the loss, you realize it you know what I mean? Like I wonder I wonder if there's like there's some level of like kind of corporate handcuffs they're like until you really sell it the loss isn't realized. And they're trying to like manage it. Either way, not an easy job to have right now. Used inventory manager carbon wall, I guess they don't have used inventory. But inventory manager carbine, especially if you're paying attention to Tesla's we'll see where this one shakes out. But I think it's just a fascinating, fascinating story. In this level of you have governmental regulation and you have Tesla, and you have car Max and Carvana and all the shifting sands and then like you brought a texture to the story. I didn't wasn't expecting the pop culture narrative that like yeah, Carvanha is in trouble. You just pay attention. Like they're going to be getting rid of some inventory really soon. Don't you worry. Like, I don't know. I don't know. We'll see if that happens. But speaking of inventory,

Kyle Mountsier  06:57

segue this I was gonna say art jobs to have and I was like, I was gonna shade on all elantas new car dealer. Inventory managers. new vehicle inventory has broken the 1.8 million mark, not dollar mark. But volume mark in December, which is the first time it was that high. Since May of 2021. Cox

Paul Daly  07:24

put hold on right there young remember may 2021? No, not at all serious. You don't remember it? It was like, Well, I'm I'm generalizing the height

Kyle Mountsier  07:33

of Oh, that was that was when the the chip thing happened with the fire. Right?

Paul Daly  07:39

Or whatever what show, right. But then the warehouse, right? It's it's hard to remember it. But like through 2020, at the beginning of 2021. Inventory shortage wasn't even a part of our conversation. Now, is that weird? Like you think of like, 2021? You're like, yeah, inventory. No, it wasn't about till about that point when everyone was like, Oh, wait, we're not going to happen. Would that be like, right? So we're back up to that point, I just wanted to level set.

Kyle Mountsier  08:06

Wow. So what it is, is it's a 58 day supply of new cars, which I don't know if anyone remembers from. Right, actually, all of that is a, like a 500,000. So half a million unit increase in September, said Charlie Chesbro. Good friend of ours, he was at a soda candle, which was only three months ago. And that accounts for a 37% increase in just three months. That's wild.

Paul Daly  08:40

What's gonna happen? Well, I mean, you think? Well, I mean, obviously, it's not unique. I mean, it's not it's not, you know, uniform across all makes and models, right, like Toyota dealers, right? Still struggling to keep units on the ground. But like you said, it's the landless dealers. They're like, Oh, that incentive word keeps coming up. And so I, I don't know what's going to happen. None of us know what's going to happen. But again, the landscape is shifting. And it's like, the wave. The slush of inventory might be coming back faster, we think, which brings me to remember or brings to my mind, the conversations we were having where I was like, Hey, do you think incentives will ever come back? I'm like, No,

Kyle Mountsier  09:21

I don't think so. I think we learned our lesson. They're gonna keep it this way.

Paul Daly  09:25

No. You know why towards human nature? Boom, guys. So also balance sheet. Wholesale. Oh, that's one word. Yeah. You're breaking the two. It's what they call that. What does that word I gotta go back to my elementary. compound word. Yeah. It's okay. We're home. We are homeschooling family. Being a big words and families. All right. Nepotism, do you know what it means? I mean, you do but like I'm asking the general Audience the general public typically not. It sounds like you just like for

Kyle Mountsier  10:05

nepotism going on

Paul Daly  10:06

over there what you just said here Well, kinda is a bunch of nepotism in the auto industry of nepotism is basically getting a position or getting a work position a job because your parents are the bosses or there's a family generational business. We pay attention to the retail industry a lot and a both a Bloomberg article. And a retail wire piece asks the question is nepotism all that bad? And I'm going to quote this from from the piece. So I didn't know this the phrase or hashtag Nippo baby, which is a nepotism baby steadily is trending on social media. It calls out and often shames the children of famous actors, sports figures, musicians, and other artists who careers have benefited from their parents contacts. In many cases, their talent is questions questioned amid suspicions that their stature is not due to merit, but due to nepotism.

Kyle Mountsier  11:01

Hmm, see, here's the thing. Here's the thing. If you are a parent, and you are raising your child, and you're like, Nah, I'm just not going to help them get anywhere. John, your kid, you're on your own. Yeah, I'm not gonna leverage any of my relationships, any of my skill, any of my capacity to teach you what I've learned, right? I don't think that's good. So I understand like, there's a lot of the shame of hey, are they really good? Was it would they have made it on their own? The good that the chance is not? Actually, I can't remember who it was in the article was like, oh, no, like, it takes a fair amount of luck to make it in almost anything. And sometimes. Yeah, Tom Hanks. Some of that luck is just like the family that you were born into. And I think that that's just a reality. Like, we've seen apprenticeship happen in families for years and years. I mean, goodness, the retail auto industry is full of it. And yes, are there situations where that's not good for either an industry or even a specific company if that if that family legacy can't carry it on? Yeah. But by and large, like, that's a that's a nature of the way that we interact in life. So,

Paul Daly  12:13

I mean, there's pros and cons. Let's talk about pros and cons, right? Pros and Cons go for it. I wasn't gods, I think a pro is I was gonna put it perfectly. Okay. Pros of family business nepotism, right? Experience, I want a multi generation person to service my needs, because I would assume not always the case. But I assume that dad, and grandpa and grandma and great grandma, great grandpa, that they learned a thing or two about the nuances of the business and got really good at it. And I think that when you look at most of history, that's why people have a last name. Because they did what the last name said they did, because they made shoes or comp. I don't know what mountain seer is did. I don't know where that one came

Kyle Mountsier  13:00

from. We didn't do that. Don't worry about it. It's a long story.

Paul Daly  13:04

Don't later, okay, so I think that's a big pro, you can do a pro or con now it's your turn

Kyle Mountsier  13:08

a con would be that there's some level of like laziness or attention to detail or, or pursuit, and that there's not an intention. That is that is like deeply rooted in passion or desire or accountability. And that it just you just kind of like, and I think that's what maybe a lot of people especially in like this entertainment or sports is that, well, maybe maybe the son or the daughter is not like passionate or really engaged with with what they're doing. So I get it. But I think, like, we're not going to do all the pros and cons. But I would say that the pros probably outweigh that.

Paul Daly  13:45

I think so I think in the best case scenario. In the best case scenario, you have some amazing family owned businesses that passed down. They involve a lot of people, they understand what it is to raise healthy children and to lead and serve, right, the parents or grandparents, they teach their kids how to serve other people and like great example like the siopa family, right? And you watch how that plays out. 1000s of people benefit. Worst case scenario, Jr. is a total jerk, and they suck. And guess what the mark Board of Directors gets rid of him anyway. And the board of directors or in a much lower case, guess what? It's too competitive out there. These days, the retail customer will blow you up and then you're out of business anyway. But you know, that article came out we thought it'd be great to talk about because there's a lot of family business in automotive and may there be many more family businesses and automotive from my standpoint and in automotive media.

Kyle Mountsier  14:35

Exactly how I bring my kids right along.

Paul Daly  14:37

Let's absolutely next generation. Oh, we hope we got enough crazy into your head on a Tuesday morning. We're gonna be run around Baltimore today. More Content to come about a soda come 2023 last week of September, but until then there's a lot more to do so

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