Catalytic converters being stolen at record rates from across the country due to the value of the rare earth metals contained in them.
More Q1 growth reports from the ‘publics’. Sonic Automotive reports $97.3 million in net income, an 80% YoY increase
Amazon’s First Quarterly Loss since 2015: $3.8B vs $8.1B profit a year ago
Kyle Mountsier, Paul JDaly
Paul Daly 01:12
Yo, it's Friday Friday Friday consumers gonna do what consumers gonna do. Thanks for flashing that sticker Kyle talking about catalytic car theft today. Some new elements of sales and why the top of funnel is important.
Kyle Mountsier 01:26
look everyone I talked to it's like it's the end of the month let's go it's the end of the month get it done. Like it's the end of the month can't answer this email do it next week. Right? And I think that's always the energy around a Saturday close it's just like let's go everybody
Paul Daly 01:53
and the thing is about it I feel maybe it's just me, but I feel like this this is kind of feeling like a nostalgic energy for an end of month close like I feel like this level of energy hasn't been around in like last day of the month closed for quite a while like pre pandemic I don't know there's something about getting back to normal and restrictions being lifted and all that that makes me feel like like we're back in the game
Kyle Mountsier 02:18
You know whats interesting even I've got like this text thread with some people that are all on the vendor partner side and even there it was like the first time I moved we've been on this like tech side there's like 15 of us that have been on it for eight or nine months and it's a really rant but this month in particular like two days ago there was this whole thread about closing strong interesting it's on both sides right it's like everybody's like close strong go get it you know get that last deal go go go serve the customer serve the dealer whatever it is so I think there's there's that I think you're right that energies I'm feeling
Paul Daly 02:53
it I'm feeling it today you're flashing the consumer is going to do consumers gonna do sticker at the beginning. I have my early mornings are for troublemakers mug in my hand We're wearing our ASOTU hats do you have an ASOTU shirt on today? I don't I went I went full black, full black, black. I have a little no crisis can win actually going on over here. But the point of all that to say is if you'd like this swag and you see it we're wearing it all the time because we love it. It's comfortable. It's says something about us and about the industry. If you love the swag, you can actually get some by coming to the party on May 9 We're having a big event may 9 in Tampa after the first evening of digital dealer. It's going to be a thing. The ASOTU Family Reunion Remix.
Kyle Mountsier 03:34
I thought about this last night I have not traveled this is crazy since like late January, because it's really wild because the baby like we hit late January I suppose I think we're supposed to go somewhere in February and add some add COVID and then March was NADA so didn't get out then and then it's just been like with baby. And I'm just excited to be with people in the automotive industry, again, dealers, industry partners, all that type of stuff. So I'm really starting to get just just
Paul Daly 04:03
the energy starting so if you haven't gotten tickets yet go to ASOTU.com banner at the top of the page, just click on it. We definitely have tickets left. If you are a dealer you get in for free thanks to our friends at Auto Fi and also want to introduce or just announced a cool little collab we have going on just came up yesterday with our friends at Women In Automotive, they're hosting a mixer at the same event and I think they have like 30 or 40 spaces left. If you're in a when a member of Women In Automotive look out for an email from them because we have a nice little thing if you go to their mixer, you also get to go to our party. And I'll bring all that when you walk into the party you're getting 50 ASOTU bucks and wait till you see what the design of the ASOTU bucks is. It's pretty awesome. And you get to spend that money at the pop up retail store setting up so you can get like swag.
Kyle Mountsier 04:49
It's so I love it because then you get to choose what you get. Oh yeah, you get to do a little shop venture little therapy. Instead of getting the bag that everybody doesn't want. You get to Get the bag of stuff that you want
Paul Daly 05:01
with no squishy balls, no pens. No bottle openers, no hard chargers. They're all cool. Oh, cool. But we'll let you get all those on the show floor. You're just getting like real high quality swag at our show. We have a lot of special guests coming, come and meet and rub elbows with some of the smartest people in the industry. We really just as you can tell, we just want to see you there. You just want to hang out come meet us in person if you haven't yet. And like Let's hang out and jam a little bit. Yeah, that's kind of that. We also have all things use cars on clubhouse coming up if you're on the live stream, and just 15 minutes from now 9am. Eastern, where I mean, last year, we had what kind of like 140 150 people in the room at one time?
Kyle Mountsier 05:41
Yeah, I there's no reason why at some point this year, we shouldn't see 1000 people, students, the industry in that thing, because there's so much value learning insights, actionable stuff that comes out of that. We'll talk so bring friends text, everyone, if you're on this live stream, if you're listening to the show, make sure and listen back to it if you can't, if you can't, you know if it's the end of the month, because I guarantee you the insights that are in there are unbelievable. And talking about the consumer intent right now. And I think CARS.com did a study today. And so there's that that there that we're going to be looking at. And there's there's just so much good in there. So
Paul Daly 06:20
yeah, we're close to David Long for putting that again, no doubt, I wish we could quantify the amount of revenue and dollars generated from people that have made changes and tweaks as a result of listening to that room. It's gotta be staggering. Today's topic, are you prepared for a changing market, if you haven't realized that things are in the middle of a shift. And we're not talking like the big upside upheaval shift of the last two years, we're talking about the way we've been doing it for like the last three months or so, Mark, the market shifting and the market is changing. We're going to talk about a few of those topics on the show this morning as we see them coming. But really the big idea, Kyle that we're talking about today is this idea of how big is the top of the funnel, you know, specifically speaking a lot of focus on the bottom of the funnel, when there was tons of inventory everywhere bottom of the funnel, it was just a grind day in and day out trying to snipe the little bottom of the funnel, you know, leads as they fell out of the funnel. And everybody I would just say just shooting at them from both sides. See if you can hit one. Now it's different bottom of the funnel kind of takes care of itself. I won't say that fully, you know with an asterix, but it's a great time to focus on the top of the funnel, because that is where you get all the future opportunities. And so that's kind of the context by which we're going to be presenting a few of the stories from today. The first story is definitely a little bit of took me a little bit by surprise, but it was like you know what, this is interesting. And I tried to i Little I gotta admit, I clickbait the title just a little bit. Cat theft on the rise, but a cat isn't close. When I say i That was the first time I felt a little guilty. I was like this is a little click Baity. But it's kind of fun. So we'll do it because some people are like, yes, let's steal those cats. And some people were like, Oh my gosh, not the cats, right? These are catalytic converters. If you don't know what it is, it is a little device that is in line with your exhaust. And forgive me if you think that this is like too low of an education. But our goal is to like, Hey, if you just came into the industry, absolutely didn't want a catalytic converters. And that was when I came in the industry. Me neither. So basically, it's in front of your muffler. It's in your exhaust pipe in line. And the the gases pass through the converter. They interact with some rare earth metals that are in there. And it actually reduces the carbon output. So it really is an EPA thing. It's an environmental thing. It's an efficiency thing. Well, these things are packed, or not packed, but they have a few grams of rare earth metals in them, like palladium platinum, one I never heard of called rhodium. rhodium. But but a lot of these two are materials that are going in evey batteries. So extremely, we're creating our own problem here. rhodium for instance, rhodium $1,600 an ounce. What $1,600 Now, so yeah, I was like platinum was only $990 An ounce catalytic converters,
Kyle Mountsier 09:00
like 19 bucks or some nods a little bit more than that. But
Paul Daly 09:05
here's the deal. People were just cutting, like, you know, criminals are cutting these off from underneath the vehicle. So you got to start your car in the morning. And it sounds like like, you know, a Hellcat with straight pipes, you know? Yeah. And so people are stealing these left and right. In 2018 there was only 1200 reported tests in 2020 there was 14,000 good and yes 2021 numbers aren't available yet but I mean we're talking 1,000% increase.
Kyle Mountsier 09:35
Holy cow this is interesting because then I was telling you this earlier but we had a gentleman on pitch tank on clubhouse last year that was talking about this like the the reality of the theft increase and they have a they have like an underbody cover that fits the majority of vehicles that's hard to get off increases time to get that catalytic converter because I guess like it lengthens the time from like eight minutes for really skilled theft to like an hour and a half. And so yeah, that's reducing the intensity, right. And so and so yeah. So everybody in the room was kind of like, not that big of a deal, right? And now probably Auto Nation who had 66 vehicles waiting on catalytic converters would be like, check, please,
Paul Daly 10:20
no doubt, but he'd say so.
Interestingly enough, back to your top of funnel, that gentleman was filling the top of funnel. And so what he was now to think about what the top of funnel is for you, if you're thinking if you're talking to customers about this reality, and how you're involving them in the stories that they're reading, and presenting yourself as an expert on the brand of understanding vehicle
Paul Daly 10:43
ownership. One day is from an automotive news article one day in April in Houston Auto Nation, Toyota Gulf freeway had 66 vehicles waiting to have their catalytic converters replaced after thieves stole them, do you think that they should have this product in stock, potentially. Because here's the deal, one of the most instead, one of the most popular vehicles to steal from a Toyota at some Toyota is at Toyota Tundra just because they have for catalytic converters under them. For Lee, and basically someone at the high ground clearance, right? So you slip under there with a battery powered saza cut those things off, and within 10 minutes, you have like $1,000 worth of black market value. So goodness. So yeah, they're saying 100 was down for 167 days. And I don't know if you notice, but the parts train is a little bit slower than it used to
Kyle Mountsier 11:29
be that first train the inventory train just a wee bit slower.
Paul Daly 11:34
So obviously, they're trying to move to legislation to like help verification, like eliminate the black market by not giving thieves a place to sell these. But like Kyle was saying, in the interim, we included this article we're talking about today. Because there are always opportunities to say like, how can we build the top of funnel? How can we serve customers? How can we inform them? How can we, you know, support them in this? And, you know, we haven't talked a lot about, you know, fixed ops and parts. And I think we need to more, right. It's kind of like the lifeblood of the dealership every day in day out if you didn't know that already. Exactly. So yeah, so a little bit of a sideway story. No one's stealing Feedlines. Right. catalytic converter, so calm down.
Kyle Mountsier 12:12
Exactly. All right. Next, we want to talk about like a pair of two, like a tale of two stories, right? Because we're getting all of these q1 reports. And interestingly enough, you've got one one of the growth reports from the automotive sector, especially sound like automotive reported a $97.3 million net income increase year over year, that's 80%. Year over year, increase in couple of bucks, just a wee couple of bucks. And then, right next to that,
Paul Daly 12:43
you've got Amazon recording their first quarterly loss since 2015. Right? Yeah. Remember, remember that first profitable quarter? Everyone's like, we told you so.
Right. Exactly. Yeah. So really interesting, I think to see like, what Automotive is doing in relationship to the rest of the world, especially, I mean, we're seeing a lot of, you know, of services that that came really heavy in the pandemic, which are things like Netflix, or all of the bike sales services, like the in home bikes, peloton, and things like that, that are seeing losses now for the first time, in a very long time. And Automotive is still accelerating. And, you know, it's interesting, because typically, automotive is kind of the leading indicator for whatever's happening next in the economy, but Automotive is still leading out in profitability, where others are seeing a downturn. So it's a very, very interesting dynamic that economies of scale are seeing right now.
Paul Daly 13:44
Without a doubt, you know, Amazon, one of the things that actually strangely enough is dragging their their profits down, is there 18% stake in Rivian, which I mean, Rivian lost 65% of its value so far this year, if you remember, Amazon made a big investment in Rivian. And you know, they have delivery vehicles, and they're, you know, trying to get in the game. So they all have automotive and
Kyle Mountsier 14:08
then something fell automotive, something something franchise, something like that is
Paul Daly 14:13
about franchise retail, automotive, this just has this little thing that just seems to be more resilient.
Kyle Mountsier 14:20
We're gonna call it I don't know if you've heard us say this before, or maybe people just don't recognize that we talked about this a lot. But we call it the human element, right?
Paul Daly 14:29
Something about that.
We just keep coming back to it. But it's so real that I think a lot of people are starting to understand that, especially coming out of the pandemic, you know, we've got, we're losing a lot of all of the restrictions and mass restrictions and restrictions to be in places with people together, almost everything's gone. And I'm in the States right now. And what I think is interesting about that is people are leaning into places where they can create relationships, actually, you saw a Wall Street Journal article that's that people are spending more money on eating out more money on entertainment. And people are spending what we're seeing more money on doing business with car dealers where they can actually be with people, managing relationships for purchasing, not just doing purchasing in a stale environment. Oh, true. And I think that that's really important when we talk top of funnel, we talked about this yesterday, but emphasizing your brand more as your people not as the things that you give them as as freebies. Right. And that's managing your top of funnel and continuing to see automotive, enhance the conversation, especially franchise retail, automotive, and drive those those those customers the human element into the retail automotive like overall brand, not just for your
Paul Daly 15:45
store. Without a doubt. I mean, going in this is great going into the last day of the month. That is a Saturday, right and all the energy there. It's the human element automotive Listen up, whether your sales service parts, the human element is your top of funnel, it is your top of funnel. It's not a piece of software, like process and software should serve people not the other way around. So don't get confused. They're both so important. But the human element is our edge. Right? It's on it's it. It's it. We're talking about people going out to eat and entertainment guests who is in the same restaurants guests who is in the same theater halls with them. Hundreds and 1000s of franchise retail automotive employees
Kyle Mountsier 16:28
Come on in all the spaces everybody's out there. Yeah, I I can't. I'm just now I'm really. Let's go. Let's go knock down some of Matt Lasher somewheres ears are burning, and he's like standing on a table clapping. This is what he preaches as well, who's a good friend of both of ours. So good. So good. That's the wrong one. All right, here
Paul Daly 16:56
we go. All right. So all that being said, we hope that you remember the human element going into this weekend. It is your top of funnel it is the reason this industry is so resilient. We might just drop a special podcast episode on Saturday. So watch out for that.