GM Backpedals Subscription Plan, Used Cars EDU, Chat GPT Looking At Pics

March 15, 2023
Welcome to Wednesday as we talk about GM reversing course on a subscription and their CMO taking Barra’s buyout. We also talk about the major wholesale/retail used car gap, as well as the new version of Chat GPT that can tell you what a meme means.
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A reversal in a subscription sales decision after less than a year and a departing CMO have GM is in the news today.

  • Last summer GM began adding a $1500 line item to every new Buick and GMC vehicle for a mandatory On Star subscription
  • Now, they are reversing course for the 2024 year and only including it on premium Denali and Avenir models and making it part of the purchase price
  • The service includes crash detection, remote features, and unlimited data streaming
  • All other models will receive OnStar Remote Access Features for free
  • After GM’s announcement of voluntary retirement via a buyout incentive, one of the highest profile exits will be from General Motors Global Chief Marketing Officer Deborah Wahl who started with the company as Cadillac CMO in 2018 and was promoted to Global CMO in 2019
  • Wahl was an auto industry outsider coming from McDonald’s North America and was one of Automotive News’ 100 Leading Women in the North American Auto Industry list in 2000, 2005 and 2020
  • Our friend Dean Evans, EVP at and former CMO at Hyundai and Subaru encouraged replacement from outside auto: “while we've been sitting here in an archaic industry that needs to move forward, why would we put a retread into that?”

EDUCATIONAL MOMENT: Wholesale Used car prices are crazy. We’ve personally seen evidence of this in several vAuto accounts and there are experts across the industry talking about it.

  • Wholesale valuations going up and retail values (book value) not keeping up meaning Dealers are buying used cars for thousands more than they can sell them for meaning a front end loss

Just as you were getting used to the idea (or maybe not) of the Chat GPT AI language model doing your kids homework and writing your next job cover letter, Open AI has announced the new version, GPT-4 which is more advanced and nuanced…and it can look at pictures.

  • The company claims the model is “more creative and collaborative than ever before” and “can solve difficult problems with greater accuracy.” It can parse both text and image input, though it can only respond via text.
  • One way improvements are benchmarked based on the systems performance on standardized tests such as the Uniform Bar Exam, LSAT, SAT Math, and SAT Evidence-Based Reading & Writing exams on which it scored in the 88th percentile

Paul Daly  00:33

It's good to be back home. You know you're traveling, it's just gonna be in the studio with all the things today we're talking about GM backpedaling on a subscription thing from a while ago a new cmo use cars GPT for maybe I should have checked TPP. Right, my headline intros so that I can get them done fast enough. Yeah, okay, we're gonna talk about GPT. But I'll tell you what it tried,

Kyle Mountsier  00:57

that was not cool enough yet. I've never

Paul Daly  01:00

looked at social media posts with more suspicion than I do now. Because a lot of them are just a little too good for the person. Right? A little too

Kyle Mountsier  01:07

good. Paragraph Style, the capitalization is organized. Yeah,

Paul Daly  01:16

not not trying to use chat GPT to write my stuff. You know, maybe a thought partner will talk about that a little bit, but get a lot of things going on. Super excited to announce a big one. Let's go finally. X A Soto X, the live tonight show tickets are available, the site is live, go to a so two And you can check out what we're up to, you can get a ticket to come to either just the evening event or the workshop and the evening event. It's only 99 bucks for the workshop and the evening event. The evening event is 49 bucks. And it's going to be all the value and all the fun and all the industry expertise and all the shoulder rubbing with all the people in Arlington on April 5.

Kyle Mountsier  02:00

Yep. Yep, yep. Yeah, it's I think it's going to be a super fun event. It's just packed into a few hours, you're gonna get a lot of great insights, have some fun, see some games, rock to a live band, we were talking the band yesterday is going to is going to give a little get a little love before and after the live show for the in person audience you know if so, if you're not there, you ain't gonna get the fire band set. So and we're also

Paul Daly  02:25

going to have some new guests, some guests that we haven't had ever before on any sort of content. One of those guests is Mike Terry, who is an amazing dealer. And he's he's I don't know how far he is from Arlington. I think he's driving. Yeah, I think he's driving but we want to bring you some new people new faces. But the point is, again, to be together to learn about the industry to have some things that open our mind. And to have a lot of fun. It is just live studio audience is going to be amazing Michael Cirilo is going to be there hosting is thing we're doing the game show again. And you know, the value to aside from being a part of the live taping, having FaceTime with all of these like industry leaders, and your peers in the auto industry. And if you're in the Dallas, Greater Dallas, Arlington, Fort Worth area, right can actually be together with the local industry, or you could fly to Dallas, it's so easy, just coming down. It's

Kyle Mountsier  03:14

easy to and not just that, but we're doing everything. Nothing even actually starts until five o'clock. So the workshop starts at five and then the last show starts at 630. So if you're in a store and can't get out through the day and struggle to get to auto events, because you got to get the time off approved. It's super easy. Try to let everybody get there. Come on,

Paul Daly  03:34

let's go. That's Hey, what that's what I was just gonna say we say the soda that's why the O in the logo, go check out the logo, go to a soda and just check out the tonight show logo that made but the O is elongated the O and A soda con is elongated as a symbolic gesture to say we are trying to draw a big circle around everyone who works in retail auto not just managers, but also everyone on the frontlines day in day out. We're doing everything we can to include you for the first time in some of these industry events. So come on, let's go.

Kyle Mountsier  04:06

Doing something for the first time. Oh, wrong button.

Paul Daly  04:11

My trigger pad game is up. Yeah, we talked about this story back in the summer. And we were like, this is a bad idea. I wish we had time to pull the clips up. We're like, I don't know that this is the right approach. Well, we're gonna talk about GM when you're talking about Ford a lot. We're gonna hit GM two stories in the news today. First is a reversal in the subscription sales decision to include subscriptions with vehicle sales. The second one is the departing cmo who took a call them Borras bucks. Mary Barra offered early buyouts to people who wanted to you know, retire early or take a buyout as they reduce staff and we're gonna talk about the CMO actually took took her up on the offer. So first ones first. Last summer, GM began adding a $1,500 line item to every new Buick and GMC and Cadillac catalog. Buick and GMC. And the line item was for a mandatory OnStar subscription. It was, it was basically three months worth of an OnStar. And they were like, you will subscribe to this. It's an extra add on line out into the vehicle, you can't take it off, you can't discount it. And, you know, then, you know, we were like, well, what they're probably doing is trying to bolster subscription sales to show shareholder value. It's your man, it's like volunteer bartering somebody, right? volunteered to do this, you're volunteered, you have more options. So basically, they're reversing course for like the 2024 year model number. And here's what they're doing, they're splitting it, they're still including the subscription with the premium models like like cat Escalades Denalis, Avenir years. So it's all going to still the features are going to be included. And that's like, you know, crash detection and communication actually has unlimited data streaming, which I didn't know what you like, that's a good feature to have in your car like that. So it's adding all those but it's becoming now a part of the purchase price, and listed as a standard option instead of an add on. And then all of the other vehicles are going to get GMs What did they call it again? What do they call OnStar remote features, so you can lock and unlock your doors, you can kind of see where it is. So some basic features. And they're going to be included with that. One dealer, Howard Drake, principal of Casa Automotive Group, who sells Buick, GMC, and Cadillac vehicles in California. He said the move was quote, really wise, especially as pricing pressure remains heavy on consumers. So GM back down on that one.

Kyle Mountsier  06:39

Here's the interesting thing is the people that are purchasing these Denali and Avenir. Metal models don't really have like, pricing pressure assigned to them. But perception of brand is a massive piece for those buyers, those buyers all want to nobody feels he perceived. Yeah, you just don't feel but

Paul Daly  07:01

he feels good about being forced to buy a subscription of theirs. It doesn't matter how much money you have, or how little pricing pressure you feel Zack, just as just doesn't feel just, you know, feeling like Man, they're really on my side. And then obviously, for every everybody else, and all the things out there, like smart move, smart move, I don't know, maybe the CFO had,

Kyle Mountsier  07:22

like we had a hunch, ya know, Paul,

Paul Daly  07:24

just gotta go find that that episode, like roll that back. But up, hey, maybe the CMO did have something to do with that decision. Speaking of GMs CMO, we're just gonna do half ones after GMOs announcement of the voluntary retirement buyout incentive. One of the highest profile exits will be from the their chief global chief marketing officer, Deborah wall, who started with the company as the Cadillac cmo in 2018. And then promoted to the global cmo in 2019. I think the coolest part about Deborah was that she came from outside the automotive industry. And she did a lot of great things for the Cadillac brand. She came from McDonald's, North America, right? Not automotive, but obviously very in touch with culture, very in touch with how people are operating in the retail marketplace. She was one of automotive news, top 100 leading women in the industry in 2000 2005, and 2020. And, you know, I didn't she didn't say where she's going to go. But she's self March 31. She's on her way out. Our buddy Dean Evans, executive vice, who has a right to be around, by the way. So much fun to be around. But he was the CMO at Hyundai and Subaru, and, you know, his weighing in on this very relevant comment. He loves the idea of replacing people with people from outside the automotive industry. He said, you know, quote, while we've been sitting here in an archaic industry that needs to move forward, why would we put a retread into that I love the way he just uses like the automotive analogy like a retread auto, auto.

Kyle Mountsier  08:59

I mean, I love your dean, I love your dean, but like you've been in auto for a long time moving around as CMOs and EVPs at different companies in auto. So I like I completely agree with that. And I think a lot of these public companies and dealer groups should be looking to hire executives and not have to require them to come from inside auto. Now, the path to that is tougher, because there is some education that has to happen. That's, that's different than any other vertical plus, it's complex. But I think that the narrative remains that like if we go after those those things, it makes a lot of you know, those types of qualities, they can acquire the knowledge quickly. And, and coming outside of coming from outside of auto like we should look toward those as as opportunities for us to grow. So I appreciate that he made some comments about hey, outsiders have a hard time understanding that you've got to be a dealer advocate of the advocate of the brand CFO Right, and not have to and not have to relearn all that stuff. And there has to be some treading lightly. So it is a different mindset to take when you come from outside of auto. But I think some savvy people can do it. Yeah, they have to

Paul Daly  10:13

be a real savvy like people person, because you just think of the there's just a dynamic negotiation that really doesn't exist in any other industry, where you have like a franchise model with such a high level ownership on the dealer on the actual franchisee side. And I don't know, it's worked once I think it can work.

Kyle Mountsier  10:32

Again, again. Speaking of things that are happening again, oh, man, his segway a

Paul Daly  10:41

little more of an educational moment, which is why we're including this because it's a story. But it's more like it's more of a trend than a story guy, you want to take it.

Kyle Mountsier  10:51

Yeah, so if you haven't noticed, or if you're not in the auction lane, or looking at vehicle valued right now, wholesale, used car prices are going crazy. Personally, we've actually had the opportunity to see this in some some inventory management accounts across the country. But basically, what's happening is, is that wholesale values are accelerating so quickly, because the need to acquire cars is so high, that kind of the used car market has dried up. But retail prices are a trailing indicator on that. And wholesale prices are accelerating quicker than retail. Which means that dealers are taking losses in order to sell these cars. You know, our friend on Twitter car dealership, guys, like I'm seeing many people buy cars outside or at the auction that are higher than the retail price that would be acceptable in any retail market for 1000s more than they selling, meaning dealers are taking front end losses. And I mean, that's it's not a great move, you know, for the industry. And it's not great for the consumer either, because it allows the dealer to do less for the consumer. So I mean, it'll catch up to the retail values are gonna catch up. But there's this like, three to four week period that we were seeing that wholesale higher than retail, it's really interesting. So let's break this down for you. If if you're just kind of New Dealers are at an auction and say the what they pay for the car is $14,000. The book value like Kelley Blue Book, black book, whatever you're going to look at, is going to say, well, actually a customer is only going to pay you like 11,000 for that vehicle.

Paul Daly  12:27

So when you buy it, it already is down $3,000 it's actually happening. And that's reality. So if there's a little bit of stress or anxiety around the used car department. Now you kind of know why which is, you know, we were talking we talked about this basically to anyone we consult with, we talked about it on Fridays in the All Things used car showroom. Why any dealer wouldn't focus, attention and energy on buying cars from consumers directly from the service lane, or directly off the curb. makes zero sense.

Kyle Mountsier  12:59

It has to be like that is the that is the proficiency that is necessary in every dealership across the country. Finding the people and the process that allow you to purchase from the service lane and purchase from local sellers is going to be the bread and butter for the foreseeable future for auto because auction prices are not coming down quickly. Dealers are trying to offload aged inventory, which is their highest price inventory. And that's just not going to be the place of high benefit. You might have to supplement or pad some of it. But the benefit definitely comes in acquiring vehicles in your local market.

Paul Daly  13:36

Kyle, when do you make money on a used car?

Kyle Mountsier  13:40

The money's made in the buy. Maybe it's made when you bought it not in a major

Paul Daly  13:45

loss. That's right. That's right. Oh, some fancy word play speaking a fancy word play segue, the fun cars gonna kick out any moment now, any moment now. But just as you were getting used to the idea, or maybe not that the chat GPT AI language model is doing your kids homework and writing your social media posts or your next job cover letter, open AI the company, the product creator announced a new version and launched it GPT four, which is more advanced and nuanced. And this time, it can look at pictures. It's

Kyle Mountsier  14:19

unbelievable pictures, it can create video it can. It can do a ton it can write code way better than than it could the last time it's almost a year updated and total learning. But the number of events are like in the trillions as opposed to in the millions and so it's an IBC if it knows who you are yet it didn't know doesn't know who I am and who I am. If your company is known then there's the potential like I haven't asked it like who are the founders of of a soda. You may know that from like CrunchBase or something like that. Or LinkedIn just because that's that's the that's a larger Your aggregation, but it doesn't know my name, but just just a few of the things is, it's trained up to what it looks like September 2021. So it's a year advanced almost a year advanced of the GPT 3.5 model. And that's quickly going to move forward. But it just has a lot more events involved, obviously has a lot more understanding of, of the narrative culture, it, it has the ability to make inferences based on your questioning. So for instance, I was utilizing it to write a little bit of code yesterday. And I asked it to write the code and then it also spit out the process to implement the code without me ask it, right. So it was doing further work based on previous things that it's learned winnowing, so it right now you have to pay the $20 to get access to $20 a month to get access to the GPT four model, you do have to select it every time you go to a new chat because it prioritizes 3.5. Because right now, they're only allowing 100 requests every four hours. So if you if you just just fly in on that thing, then then you got some work to do. But the crazy thing is is like right now, it has, they've given it a bar exam and GPT 3.5 got about a 10% on a bar exam for gets a 90%.

Paul Daly  16:23

They actually smart. In this article we linked up they actually gave it a bunch of standardized tests, they gave it the LSAT, the LSAT and the bar exam, it scored an average of 88. And so the whole thing of being able to take pictures, this is the father things, the meme blew my mind as I put the main backup. And if you're just listening, basically what you're looking at is a frying pan full of chicken that kind of looks like a map of the world. And the the prompt was, can you explain this meme and they just uploaded the picture of the meme and the text on the meme says sometimes I just look at pictures of the Earth from space and marvel at how beautiful it is. And here's what it says the meme is a joke that combines two unrelated things, pictures of the Earth from space and chicken nuggets. The text of the meme suggests the image below is a beautiful picture of the Earth. However, the images actually have chicken nuggets arranged to vaguely resemble a map of the world. The humor in this meme comes from the unexpected juxtaposition of the text and the image like now the memes that my kids show me that I don't get I'm gonna drop them and just

Kyle Mountsier  17:25

drop them in there and be like, oh, yeah, I got it.

Paul Daly  17:29

But once you have to explain it, it's not funny. Funny. Oh, man. Well, we hope you all have an amazing Wednesday. Lots of work to do this week. Lots of leaning into do lots of shifting landscape, which is why we need each other. Come visit us at Soto X April 5 asoto Let's go

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