Dale Pollak Moving On From Cox, F&I Gross Dips, OpenAI Browser

Paul J Daly  0:00  
Good morning. Thursday, November 20. It's actually Friday, November 22 we can laugh because we didn't update the show notes today, we're talking we're saying goodbye to an old friend, talking about F and I gross dipping and a new AI browser. The

Kyle Mountsier  0:14  
people really want to buy.

Paul J Daly  0:15  
Our friends at open AI, oh,

Kyle Mountsier  0:16  
our friends, the Google. There's some implications on that. I'll tell you what. I can't wait to get that. There's so many implications.

Paul J Daly  0:24  
Friends, friends, frenemies. I don't know what we talk about these days. Yeah, I don't know that I'm I don't know that I'm friends with any AI tool at this point, we just have a very aware relationship. I think, yes, that's true. Try trying that. It's Friday, man, what it feels Friday? We've lived two weeks in the last one weekend. I'm not sure

Kyle Mountsier  0:42  
if it's next Monday or last Monday. Yeah, yeah,

Paul J Daly  0:45  
you're real messed up because you headed out to Mr. Saturday, yeah, and then you went from MRC to the more than car shoot, and got home late Wednesday night. So I

Kyle Mountsier  0:55  
went MRC to MTC. Yes, you did. Yes,

Paul J Daly  0:59  
yeah, you know me, but it's got some good energy. This Friday, we're excited. We have a webinar today at 2pm which always is a lot of fun. We're gonna our friends, with our friends at car cutter, Daniel Abel, with car cutter and Brian free, former VP of Digital Marketing at auto nation. We're gonna be together talking about access, essential techniques for digital merchandising success. These are quick shot webinars, 20 to 30 minutes. We'll take questions if you got them, but really just usually natural conversation with a lot of good insights. We want you to walk away with one thing that you can be like, I'm going to look into that right now, or I'm going to make that change right now, which is the goal of all of our all of the webinars we do. You can sign up@asotu.com if you can't be there with us, live at 2pm Eastern, which we really hope you can, but most people can't, you'll get the recording. You can still be a part of it. So go do that. Check it out right now. We have to talk about the fact that, like, we got a bajillion sign ups for the ASOTU, ASOTU con.com, website, bajillion,

Kyle Mountsier  1:57  
I'm telling you what, it seems like everybody's going to be coming, and they're all going to get their low price tickets, lowest price of the entire year. Big, big, big discounts on Black Friday through Cyber Monday. It's going to be four days only. That's all you can get, and you only get the deal if you're on the list. Gotta be on the earliest on the list.

Paul J Daly  2:20  
It's the nice list. We'll call it. It's too early for Christmas, but it's the nice list. Go to ASOTU con.com, very simple form. Click on it. Hey, if you're an industry partner and you want to be a part of sponsoring, we have some openings. They are actually filling up way faster than ever. I mean, gosh, we're sick, we're more than six months away, and it's like, oh boy, it's going to be a close one. So if you're thinking about that, you're budgeting, you can also go to asotuck, ASOTU con.com and click on the link to make sure you get the prospectus. But sign up for the list because the email is gonna drop and you're gonna get the cheapest tickets and you have bragging rights forever. Yeah, no, and it's in May. All right, let's talk about some news. Oh my goodness. So yesterday, we got the news a little bit early because we're a media company, so we got some embargoed news that we couldn't talk about when we got the news. But Cox automotive announced that Dale Pollack, founder of V Auto, and obviously a pioneer in inventory management, changed the industry forever. He's going to be leaving Cox auto at the end of 2025 after nearly get this 50 years of shaping the industry, he's going to spend next year transitioning the key relationships and continuing his influential NAD teaching a January show. He's going to release his new book, invested to seventh book, actually his his book, like I see it literally changed. I can say it changed my life. Jen, it changed how you see it. You know what I really did. It really did. I'll tell that story later. But since founding V auto, 20 years ago, he drew he's innovation success, not just for Cox automotive, but for the entire industry. He was a dealer. His family was dealerships. He built the first like real time inventory pricing tool. It was called M power. The letter M power then chance transition into V, auto. I remember him telling me stories, thinking like, like, he leveraged his house to build it. He was like, Oh. He was like, he told a story. I podcasted with him once, and he literally told the story. He said the low point was he and his wife finally we're able to shop at a place where the ground beef didn't have like a green tint to it. Wow. So, like, it's easy to look nada, like, must be nice. My man, nice. The man leveraged everything. Yeah,

Kyle Mountsier  4:33  
it's, it's like, the upswing, you never see the the dirty part. Like, it's all, oh, Dale Pollock, the auto creator, yeah, yeah, he did it. But like you go through blood, sweat and tears to get there.

Paul J Daly  4:42  
I mean, talk about somebody who has just given it, given his life to this is very kind. A lot of you may or may not know Dale is also blind, and so if you've ever been a room with Dale, Deanna are one of our account execs here at congruent. She used to work for Todd Caputo, and Dale came to visit. Is it because Daly and Todd are good friends. So Dale comes, and he's speaking to a room of, like, the GMs and the sales managers and Todd's dad, you know, Joe Caputo. So Mr. Caputo, old school, is there? Dale talking about market based pricing and all this. And he is whipping through these screens, like, of data, like somebody's steering the computer, but he, like, literally has them memorized. And he's like, what's this number? That heightened sentence, census thing? Oh, it's unbelievable. And I remember very distinctly Joe Caputo, old school car guy, right? And he, you know, Daly's talking about market based pricing, and how you should know how to price, and how you should not be romantic about it in this and. And Joe, very typical old school thing, is like, Yeah, but, but you really need to touch the car and see how it looks. And, you know, like, have a gut feel about the car. And I was like, how's this gonna go? Because Joe is, like, pretty, you know, pretty motivated guy. And Dale, just like, like a jiu jitsu master, used the momentum. It's like, Mr. Caputo, you've built such an amazing business over this. And here's why you're wrong, right? And by the idea Joe Caputo, like, that makes sense. So Daly is just a master,

Kyle Mountsier  6:03  
yeah. Dale's like, you need to see the car really. You need to see it. Daly's

Paul J Daly  6:08  
like, I bet my price is better than your

Kyle Mountsier  6:12  
That's wild. You know the I'll just say a couple things about this. One is the V auto thesis has continually shaped a ton of like, even the net new products that are out there. V Auto has shaped the way even those consider inventory. So like, you think about the impact not just on the V auto product and dealers that use the auto, but all the newer products that are coming out. But also, like, if you don't know if you were a client of Dale's, especially very early on, there's a client list. And every single year, and I still think it happens to this day, you get a case of Chicago Root Beer delivered to you around Christmas. And it is. It's amazing. Like, I don't know how you get on that list, or whether you were, like, a super early adopter, or whether it's now just everybody. But I've heard that, like, some people don't get that. And I know that the dealer that I was with was on via auto since like, year two, um, new Dale back in the day, and still got that every single year. And everybody looked forward to everyone's like, don't let make sure I get one of those.

Paul J Daly  7:19  
You know what? I've never gotten the root beer, but I will say that every year since Dale and I, like met in person, I get and it's Dale showed they're gonna show up here. I know it right. What's it? November 21 and the next two or three weeks, we are going to get three months worth of really nice, fancy their pears. There's some crazy fruit pears, yeah, wrapped in foil, and always from Dale Susan, his assistant's gonna call and she's gonna verify that my address hasn't changed. It's literally, like, part of Christmas. We just call him Dale's pears. Dale's pears are here.

Kyle Mountsier  7:53  
It's amazing. Pears and Dale's root beer. Yeah, I think it depends on, like, the type of relationship.

Paul J Daly  7:58  
If you get the root beer, let me know, and we'll trade root beer and pairs, and we'll get a little bit of the mixed experience. Nathan, did you put the picture up already? Throw the picture up. That's a two nada ago with John and Tim Bergstrom, I'm gonna post. I'm gonna make a LinkedIn post first time. I'll just tell the story later. We don't have time in the show. Oh, the story. But boy, this, this one is like a bitter,

Kyle Mountsier  8:21  
obliterated six minutes,

Paul J Daly  8:22  
I know, but it's worth it. Talk about this. The man is an icon. Yeah, he changed the way you're doing it today is because Dale, that's right, guaranteed. Guaranteed. It's fun to see the new innovators popping up off, like Dale's thesis and like taking it the next, you know, later, Fin Q, like standing on the shoulders of giants, right? That's how that's how the world works. All right, let's talk about how the world's working for the public trading company. You know, speaking of giants, it feels too much. Five of the top six public groups experienced slight declines in F and I gross profits per vehicle in q3, 2024, group one automotive was the exception, posting a modest 1% gain year over year, aided by stronger penetration rates for service contracts and new vehicle financing. Auto nation saw the sharpest decline, with F and I products falling 6% to 2589 per vehicle. Lithia 2.8% decline, doing the lower sales of contracts. However, its captive Finance unit, driveway financial saw a profitability rise. They finance 12% of lithias vehicle sales. Wow. Asbury, same store, F and I is down 4.9% Sonic is 3% down. And Jeff flick of Stevens noted that F and I remain resilient overall, contrasting with the sharper spikes in new vehicle gross profits seen during the inventory shortages. So, yeah, yeah. I mean, the anecdotes

Kyle Mountsier  9:43  
on this are, you know, as you watch used vehicle prices decline and new vehicle prices decline, this makes a ton of sense, right? A fair portion of f and I profits are due to interest rates, right? And and the. The cut back on wholesale to the dealer. It's interesting that group one like noted that service contract penetration was higher, and you have to not just, you know, come back to it, but overcome the profitability stance that interest rate declines and pricing declines have on it, but the others, like 6% 5% kind of match the decline in pricing at this point, so I don't think too terrible. The other anecdote on this one is driveway financial profitability rise, and driveway has a bit of a deeper lending profile, and so you see that, you know, continuing to look at like mid and sub prime, you know, and even like near prime as opportunities to find the right banks and the right relationships and the right vehicles to put those people in those cars, because that financing is an opportunity to kind of find a net new audience for vehicle Sales right now, man.

Paul J Daly  11:00  
So again, the ups, the downs, it'll be really interesting to see where quarter q4 lands. I know because three was a little bit of a little above interest rate drops hit late in the quarter. The election is over. People are anticipating, you know, like buyer behaviors, shifting and changing. So I don't know, we'll see q4 though. We're, we're halfway through it actually, by the way, if you didn't

Kyle Mountsier  11:22  
speaking of behaviors segue, what a disruption. All right, open. AI is reportedly exploring a chat GPT, totally integrated browser and AI driven search tools, challenging areas historically dominated by Google. Obviously, last month they or earlier this month, they dropped their GPT Google Chrome extension, where you can essentially take over the search and go straight into GPT. But obviously it would fully integrate with GPT, with the with the new with chat GPT, sorry, with the new open AI browser, they're also developing NL web, a tool allowing conversational interactions on travel, retail and real estate sites. Open AI has hired former Google Chrome developers, signaling serious exploration of the competitive space. Google holds 65% of the browser market and 82% of the search market. They're obviously already ramping up AI in their platform, if you haven't seen those results already starting with a lot of mobile changes. The Google monopoly, though, is always facing security, and this could kind of like quell some of that as it goes, but definitely going to be a disrupter in things like zero click search and where people get their information without

Paul J Daly  12:45  
a doubt, who has who controls the data, right? How about that? I mean, you think of marketing budgets right now and how they're so oriented toward search and display and all these programmatic elements, this is going to disrupt all of that especially, or even more so, like I was thinking about the travel one as you were talking, I'm like, oh, it'd be pretty nice to be like, hey, I need to, I need to take this trip. Give me itinerary options. I'm willing to fly different airlines. I'm willing to do this. It knows all your preferences. It knows what seats, it knows your lay over time preferences, and it's going to really help you figure out what you want. And then I was like, Oh my gosh. Actually, the next thing is, like, how do you think, how I'm gonna buy a car that conversational conversation is gonna go, it's like, it's gonna we are in for a ride,

Kyle Mountsier  13:27  
folks. Well, and this is what's crazy, is AI search has already proven to increase zero click search results, right? So people are getting the information and not even moving on past Google. Google is becoming a web page. And so how do actually, I talked to a dealer last weekend, and I said, Hey, did you know that that perplexity opened up paid search? They were like, Where can I go buy that right now? Yep. And the reality is, is that if you're paying attention as a dealer, and you look at these new media opportunities, because you know, if someone opens up search, they're gonna open up paid search at some point. And so you can always buy cheaper if you're the earlier in so watch out for that. But also watch out for how your site is structured, how it's able to be crawled, whether or not these services are crawling it. And you know you're gonna wanna watch like your crawl behavior of behavior on on your sites, because that's going to be a real like trigger to see. Am I ever even showing up good weather?

Paul J Daly  14:29  
That's a real good one. Gary Vaynerchuk tells a story about when Google search, paid search, just came out, and silly, he bought the word Merlot nationwide for 10 cents a click, and it didn't get bit up for an entire year.

Kyle Mountsier  14:44  
Yeah. Same thing. Yeah,

Paul J Daly  14:46  
same thing. Well, listen, if I don't know if we encouraged you or if we made you scared on Friday, but the truth is this, you're rolling with the right people. The ASOTU community, are the ones that are thinking about these things, and if you're thinking about. You can do something. If you do something, you're gonna win you.

Transcribed by https://otter.ai

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