GM Raises Salaries, Which OEMs Do Dealers Trust Most, Audi ♥s Subscriptions

November 6, 2023
Today’s show features that new car smell as we enter the first full week of November. Today we’re talking about GM’s voluntary salary increases, a new Dealer survey revealing their level of trust in OEM’s, as well as another take on on-demand features built into cars.
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Show Notes with links:

General Motors (GM) has announced a pay raise and improved benefits for its 43,500 U.S. salaried employees, following a tentative agreement with the United Auto Workers (UAW) union.

  • GM's salaried employees will receive an average base pay increase of 3.5% in March 2024.
  • The company will enhance its 401(k) match from 4% to 6% and improve certain medical and vision benefits.
  • These changes follow a tentative agreement with the UAW, which covers about 46,000 employees and includes significant raises and richer benefits.
  • "GM provides competitive compensation and benefits for salaried employees, benchmarked across industries," stated GM spokesperson Kevin Kelly. "Next year, GM will increase base pay and company matching for 401(k) plans, as well as offer enhanced health care benefits."

A Dealer survey by Kerrigan Advisors reveals their trust levels of various OEMs. The annual dealer survey shows a shift in dealers' sentiment towards various car brands, with some expecting an increase and others a decline in franchise values.

  • Ford perceived as the least trustworthy brand by nearly half of the dealers, with concerns over its EV/future retailing strategy.
  • Toyota emerges as the most trustworthy brand, with 72% of dealers expressing high trust, attributed to its thoughtful EV strategy.
  • A majority of dealers remain optimistic about their dealership values, with 52% expecting valuations to remain the same.
  • Changes in automaker strategies, particularly regarding over-the-air updates and agency models, have dealers divided on future profitability impacts.
  • Erin Kerrigan, Managing Director of Kerrigan Advisors, stated, 'Dealers' trust in their manufacturer partners is crucial, especially when evaluating dealership value. Our survey reflects a dynamic shift in the industry, underscored by the strategic realignments towards evolving consumer demands and electric vehicle strategies.'

Despite skepticism, Audi has announced plans to offer more 'on-demand' features in future models, according to a report by Autocar, insisting that the move is customer-driven rather than profit-oriented.

  • Audi to introduce an array of 'on-demand' features, controllable via the Audi phone app, in response to purported customer demand.
  • Tech lead Oliver Hoffmann emphasizes that the motive is not purely profit-based, but to cater to customer desires for new functionalities.
  • Current electronic models already include advanced lighting options and a parking assistant, with undisclosed additional features planned.
  • Hoffmann acknowledges the challenges faced by BMW in similar endeavors but predicts such features will become 'quite normal in the future'.
  • In the Jalopnik article, a subscriber poll was featured which asked which features (if any) people would be willing to pay an ongoing subscription fee for included the following responses: faster internet, heated steering wheel…nevermind, none: unless they make the car cheaper, only features that continually cost the automaker money, anything that is not tied to the vehicle, not a single one

Paul Daly: 0:27

Y'all it's Monday feels like new car smell first full week of November coming in hot on us car week. There's just a lot of good stuff going on. And we got a little news and it doesn't involve a strike. Kind of.

Kyle Mountsier: 0:42

Most times it does. Yeah. And then kind of out

Paul Daly: 0:47

in the derivative effects of a UAW strike for a little bit anyway. Yes. I think by the end of the year that will be will be, it'll be done. And we'll be talking about it won't be thinking about it. Shawn fain will be, you know, sporting the farmer's tan in the Bahamas somewhere. Although champagne

Kyle Mountsier: 1:03

that like the new stuff is no he's not sporting the tan. He's like, so I was thinking there's this brand is this OEM called Toyota? You guys ever heard of it? Yeah, kinda. Yeah. Well, we'll we'll

Paul Daly: 1:13

talk about that the second to kind of ties into stuff that we're doing. But a big week, US car Week kicks off tomorrow. In Phoenix, Arizona, there's gonna always a lie. I thought it was the seventh. No,

Kyle Mountsier: 1:26

I think the

Paul Daly: 1:28

date right on the screen on the graphic get kicks off today. We won't be there today. But we will be there this week. So if you're on the ground, please come say hi, if you see us, we would love to talk to you meet you in person. Talk about some stuff cause is going to be guest judging the never con cup on Thursday. So that should be very interesting. He's excited about that. I can tell us right in the end. Yeah. So if you're gonna be there, and then we're kind of like tagging right off of that. We're gonna have a day or two off, and then we're off to Palm Beach for the modern retail conference. So we'll be there. If you're there. And you see us please say hi. It's a lot smaller of events. So if we're there, we'll see each other.

Kyle Mountsier: 2:04

We'll see. Yeah, we'll see. Yeah, yeah, that's it. That's a great event. And always just a lot of quality content around marketing and operations. So

Paul Daly: 2:14

for sure, we had a fun conversation on Friday with Steve Greenfield, who said, y'all use car week is different than any other week. And the further you go down kind of the pecking order of the used car business from like, you know, finance all the way down to repo, there is a constantly growing amount of tattoos and piercings. I was like, oh, so Kyle, and I might be the clean cut, guys.

Kyle Mountsier: 2:34

Yeah, we're the were the shape that

Paul Daly: 2:38

I was watching on Auto Collabs. Today, we have a podcast called Auto Collabs. If you didn't know about it, just search it on Spotify or Apple or Samsung free Auto Collabs of soda. And we have a little longer form conversations on that. Today we're talking with our friend wil McGinnis, a full throttle was an awesome conversation. Talking about the most effective sales tactic will will is he's buttoned up man, he's super cool. You can tell because he does a lot outside of auto two.

Kyle Mountsier: 3:05

Here's the thing. I love these because it's like we think about everybody like in whether in dealer side of the industry, or the industry partner side of the industry that like the lines don't cross. But this podcast is one of those where it's like oh no, the lines very much cross in how the strategy on leading teams are leading sales teams. And so that's like, that was the exciting thing for me on this podcast. So if you're if you're leading sales teams in any capacity, listening to well, McGinnis in full throttle is going to be worth your time worth your time for sure. Hey,

Paul Daly: 3:41

that's some people already gonna be there. Shelley, what's up, she's gonna be a used car week. He says, see? So we'll be there. There's one. There's one person we're gonna see. I know a lot, a lot more. I know. That's just the one that's watching right now and made a comment. So I love it. Thanks.

Kyle Mountsier: 3:55

Alright, let's get

Paul Daly: 3:56

into some news. Okay, so this is not directly strike related, but indirectly strike related. GM has announced the pay raise and improved benefits for its 43,500 us salaried employees following a tentative agreement with the UAW. GM salary employees are just going to receive an average base pay increase of 3.5% in March 2024. That's nice. The company is also going to enhance his 401 K match from four to 6% and improve certain medical and vision benefits. These are following obviously, the tentative agreement with UAW which court covers 46,000 employees, a lot of those hourly, you know, includes pay raises and benefits and all that. So GM is like, Hey, we're keeping everybody close. Here's a quote from the spokesperson Kevin Kelly, GM provides competitive compensation and benefits for salaried employees benchmarked across all industries next year, GM will increase the base salary and 401k plans and healthcare so pretty pretty like I don't know just pretty normal. announced. You know, I think it's notable news

Kyle Mountsier: 4:59

only big cuz it's coming off the heels of the UAW stuff, I mean, moving to a 6% 401 K match getting the getting the pay bump, which you see like a three and a half percent raise, you know, to combat inflation not massive, but at the same time, like, it is notable, because the pressure on all of these OEMs to stay competitive in the job market right now is extremely high, especially when you look at the UAW being able to demand so much out of its unionized workers and so the salary workers getting some sort of love is important. And then when you when you just look you're like, Okay, so these people now have options, they got other other OEMs other manufacturers to try to take advantage of a limited job market and gotta stay ahead. So kudos to GM for staying ahead getting out of front of it and that low 43,000 people making making making sure that they've got the wages to match their efforts. Yeah,

Paul Daly: 5:57

and you know, we saw Toyota last week as well voluntarily say, here's here's a little bit more or a lot more depending on how you look at it. Because like you said, it is a it is a out in the open workforce at this point. Right. So

Kyle Mountsier: 6:10

there's that's the thing it's, it's out in the open so you better be out in the open speaking of being out in the open. So this is like Diaz caught in the crosshairs. Yes,

Paul Daly: 6:22

feisty. This one. A dealer survey caught by karagin advisors reveals the trust levels that dealers have of their various OEMs. The annual survey shows a shift in dealer sentiment towards a few different car brands, with some expecting an increase, and others expecting a decline in their overall franchise value. So in the survey, Ford was perceived as the least trustworthy brand by nearly half of the dealer surveyed with concerns. That's a lot. That's more than that's a lot. That's more than 50%. If you're an accountant. If you're a math kind of person, for perceived, I'm sorry. So for is perceived as least a lot to do with their Eevee or future retailing strategy. That is not surprising Toyota, on the contrary, has emerged as the most trustworthy

Unknown: 7:13

brand. Yeah, don't say I didn't see that

Paul Daly: 7:17

coming with 72% of dealers expressing high trust, attributing its attributed to its very thoughtful and measured Evie strategy. So that's one element of the survey. Another one says that a majority of dealers remain optimistic about their dealership values, with 52% Expecting valuations to remain the same. So obviously changes in automaker strategies over the air updates, agency models, definitely have dealers. Putting the thing in the trust Aaron Aaron Kerrigan, managing director stated dealers trust in their manufacturer partners is crucial, especially when evaluating dealership Value Survey reflects a dynamic shift in the industry underscored by the strategic realignment toward evolving customer demands and electric vehicle strategies. There's a lot in here,

Kyle Mountsier: 8:07

there's a lot in here, I think the big thing that we have to look at is one that everybody is kind of hedging their bets on the Eevee strategy of the manufacturer they're going is that the best way forward, for me as a retailer for an end user retailer, and are my end users, the clients that are coming in the door every day responsive to the OEMs plans. And if those two are aligning, there's a higher level of trust, because if the OEM is recognizing the cultural demand or the consumer demand that's in the showroom, then the dealers are going to trust their ability to retail to wholesale vehicles to them at a higher rate. Here's the other piece. It's no surprise that everybody's like, yep, valuations are going to be strong, you wouldn't be seeing the consolidation, or the buy sale rate that you're seeing still, after three years of record highs of buy sell roads, you wouldn't see that if dealers didn't think that things are still gonna look good in 357 years. So I think that there's a lot of just like, good to be gained out of this. But it's also like, hey, look OEMs match your retailing strategies, and your manufacturing strategies and dealer trust will go up, profitability will go up on both sides, like that's the lane to best practice.

Paul Daly: 9:20

It's a great tie together. Because if you don't believe that customers want what you're making, guess what, you don't think what you're selling is going to be worth a lot. It's a really, actually clear tie. I expect we're going to see a pretty big shift now that the EV rhetoric has changed and turned a dynamic, like big time in the last 60 days. I expect for the last like 20 days. Really? Yeah, true. Oh, right. Right, since like the strike resolution and things like that it is actually the last 20 days. And so I think we'll continue to see the residuals of that play out all the way down through the dealer chain because when you know all the big money you're spending on EVs customers don't want them guess what you have to rely on to move some inventory that Some of the dealer who's speaking of speaking, I'm messing with that relationship even further. There's another texture to the same conversation actually

Kyle Mountsier: 10:12

a little bit we're just bringing in texture context is you know around all of the things despite skepticism, Audi has announced plans to offer more on demand features and future models. According to a report by Autocar insisting that the move is customer driven, rather than profit oriented. Audi is planning to introduce an array of on demand features controllable via their phone app and response to what they're alleging is customer demand. Tech Lead all of our Hoffman emphasizes that the motive is not purely profit based, but is to cater to customer desires for new functionalities. Their current electric models already include advanced lighting options, and a parking assistant with undisclosed additional features planned in the future. They even they did acknowledge that despite the challenges faced by BMW and a little press, they still expect that this type of feature will become quote, quite normal in the future.

Paul Daly: 11:12

So yeah, no, I think the the first line in the Jalopnik article was funny, because they had says the headline and it says, Whatever you say, outtie, whatever you say, right. And so look, I do think like when they did their subscriber poll, they had some really like good insights and how people approach this topic in general. Great. And granted, it's kind of like an unofficial official poll, but it does kind of measure sentiment, well, people saying, hey, here are things like, Would you pay more for subscription? You know, like, on demand service in the car? If so, why? You know, and just give us your feedback. People said they would pay for faster internet very understandable. Here's some other comments. Here's Siri will nevermind. None, I wouldn't pay for any features, unless they make the car cheaper. So there's obviously a gap there between people thinking like, does this actually make the car cheaper? Or is this just an opportunity for you to get more out of it? One person said only features that continually cost the automaker money. So they're like, hey, if there's like internet service, right, if there's a tie to the expense, I don't mind paying it. Someone else said, I'm not willing to pay for anything that is not anything that is tied to the vehicle, like anything that's already installed, everything that I have the physical buttons for some one person said, not a single one, I think this is it's a new product, it's a new way to pay for things. I think that subscription subscription services have ramped up. And we do pay for things we have not paid for before that are software based, that are turned on toggle on Toggle off. But I think there is a big hump to cross when we're talking about things like features and equipment that are installed in the vehicle. There's just a mental barrier to like, wait a minute, it's right there. What do you mean? Like if I feel it,

Kyle Mountsier: 12:58

here's, here's the thing on it doesn't work is like, Okay, I'm trying to I'm trying to relate this because everybody, you know, you start to relate to vehicles technology to a computer or phone, right? Because that's basically what they are. They are like massive phone on wheels at this point. How many things do you like? I imagine, you know, you go into the GarageBand app, and pay for premium feature, right? But like otherwise, the things that you pay to add on to what's on the iPhone is other in other apps, like native things are native. And so I just I don't see this replicated. The only place you see this replicated is by Tesla literally the only other place, but they set the precedent of it. And they've always operated that way. But these legacy OEMs like I don't see a precedent for charging for already installed things outside of Tesla, which is going to be hard to combat because they came to market like that. I just don't see a way that they're going to be able to go yep, it's on the car, but you can't have it. And the funniest comments in the article and in the poll was like, hey, got Yeah, go ahead and make him subscription. I'll just wait for the hackers to get the ghost mode. Figured out. Yeah, right.

Paul Daly: 14:18

Yeah, I don't think that's ever gonna happen. That'd be a lot harder to have. But I agree with you. We'll see what happens. I mean, everyone's going to try to squeeze out everything they can and consumers will buy or not buy and that'll change the behavior. It's called business. Whatever's happening today. Go out there, do some good business, take care of some people love people more than love cars. We'll see you tomorrow.

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