GM’s Revenue Ride, Walmart Cutting Prices, TikTok Pink Sauce

SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:22

Yo, it's Tuesday. My hat was just backwards already because we were jamming on clubhouse for like the last 30 minutes. We're all fired up talking about GMs revenue ride Walmart cutting prices and tick tock think sauce thinks the people who is in who IV they stopped about that, but it's disgusting, terrible.

Kyle Mountsier  00:45

just ridiculously wrong in so many ways that I don't even know how to describe it. It's It's unfortunate.

Paul Daly  00:53

It's I don't know if it's unfortunate, but I don't know what my expectations were, we'll get to that. We'll save it. And

Kyle Mountsier  00:58

let's just say this, anything goes on the internet these days, right? It's like, it's like Seattle in 1993. So if you were in if you ever went to Seattle in the 90s, you know exactly what I mean. So that's

Paul Daly  01:15

about Seattle. I never was in Seattle in 93. But I sure was a teenager. 93 so I know exactly what you mean. Oh, man, we have a bunch of fun stuff to talk about today. We are. Man. We have so many things going right now. The auto collabs interviews are happening, and we're so excited to share them with you very very soon. Yesterday was Damon Lester and Matt Lasher. We have a ton more teed up for the rest of this week and next week, so if you haven't already, check out auto collabs A U T O C O L L A B S . c o m with a space auto space collabs on your favorite podcast platform, we'll give it to you here but if you do it subscribe episode zero zeros there with our great friend and really just co Patriot Michael Cirillo,

Kyle Mountsier  02:00

who is voice in podcasting. I'm gonna voice I'm telling you my it is my life's mission to like put him on a billboard somewhere with the silkiest voice in podcasting. And then it'll be a thing right he'll, he'll trademark it the whole nine yards. And he needs

Paul Daly  02:17

to be wearing a white suit for sure. We were just jamming in clubhouse the modern day car sales room with Brian benstock Alex Flores Damon Lester talking a little bit about a solo con and what's to come energy is building around the event, people are going to start buying more tickets now. And you might not get one if you don't get yours. Now. we priced it at 399 for dealers. So it's super affordable, easy and easy out Philly, September 11 through 13th. Get your tickets now because it'd be really sad if you went to buy one because you thought you could wait until you know three weeks before the event and it just said sold out and the fire marshals involved. So we really are limited.

Kyle Mountsier  02:52

Yeah, one of the questions in clubhouse that I think you know, for our audience I'd like to clarify is that we're not going to run down, you know, obviously, Paul and I come up very from a very heavy marketing background. And I from like a dealership operations background. But we're not going to run just in a single lane, or even just a couple lanes across the retail automotive spectrum. So we're going to look outside of retail automotive for a lot of influence, we're gonna look at the retail side of the business, the fixed ops side of the business, the marketing and technology sides of the business, even leadership and culture. And so we literally there's, there's something for everyone actually, I had a conversation from, you know, a young lady, or with a young lady, that her role is to manage the customer experience within the whole customer lifecycle. She said, will there be places where the content makes sense for me to come? Because I need to ask that of my own operators. Absolutely. Like really? I don't know of anyone in the dealership that wouldn't be served by the content absolutely not across the board. And then great you know it and we've said this but you know if you're if if you're anywhere near Philly in a few hours or even if you've got you know, some airline points and want to come out for the Monday night party. That's that's a place where we want to serve even more across the dealership, and that's free for

Paul Daly  04:18

anyone that works at a dealership free Zach or anyone that work if you work at a dealership, you can come to that whole night's programming for free.

Kyle Mountsier  04:25

When we say we want to draw a big circle around the entire industry, we actually mean it.

Paul Daly  04:33

So right, we actually mean what we say yeah, so we really hope to see you there. Go to asotu con.com Thanks to cars.com for being our presenting sponsor and so many other people are going to be there activating like Tic TOCs gotta be in the house with a special activation our friends at ABC sinker gonna set up this like virtual, not virtual like real world show. Like we're trying to make it so that if you want to experience something, not just looking at an iPad Let's see a demo. Asotu con is the place to be September 11, through 13th De Soto con.com. All right, let's talk about GM for a second, their earnings report just dropped literally this morning, their press release dropped, and their q2 net revenue is down 40% year over year, however, their total revenue is up almost 5%. Year over year. How about that. So net revenue earnings down a total revenue up, you're gonna see a little bit of a trend here in a moment. But look, if you have never looked through annual report like or the slide decks or anything, it is so much fun. It's riveting. We linked it up, we linked it up in the show notes. So you can look at it you're like, oh, they actually do this every quarter? Yes, they do.

Kyle Mountsier  05:44

They absolutely do. And honestly, like I would, I would just say to anyone that's in business, it's smart to kind of understand how major businesses publicly traded companies kind of communicate their business. Because if that's what they're communicating to their shareholders, I don't think there's any reason why we can't communicate our businesses, to our employees, or to our local, you know, governments and things like that in this polish dialed in way. And so just kind of like business savvy heads up.

Paul Daly  06:16

Yeah, that's a great point. So let me read a couple of excerpts from the report from Mary Barra herself, our outlook for the second half is strong in the reaffirming their full year earnings guidance that includes, you know, their earnings numbers, the confidence comes from our expectation that GM global production and wholesale deliveries will be leanin will be up sharply in the second half.

Kyle Mountsier  06:38

Why does that doesn't did? Did she say wholesale deliveries? Because we've kind of been talking about how, you know, at some point, these OEMs might want to wholesale some cars to dealers. It's an inventory back in stock, not because they just want ground inventory, but because you know, revenue is over here, closely tied to wholesale deliveries to dealers. So it might might

Paul Daly  07:13

be something, something to that. And so like I the level of confidence that came from that opening statement was like, they know something, I don't think that they're like, I don't think they'd be that emphatic on the terminology up sharply, right. They could have just said up, they said said, you know, moderately up, they said sharply up, which is saying like, you know, a lot of the vehicles that they built that are waiting on ships sitting in those parking lots are gonna start. Right shipping them out. I think it's how they do it, too. I think that's how the chips got to look. Make sure they don't stick. They also had an interesting comment on EVs. They said they've done something unique in the industry to secure their future Evie production, they have binding agreement securing all battery raw material to support their plan for 1 million units of annual Evie capacity in North America in 2025. So they talked about some strategic partnerships. And they said, we've secured it, we've got the lithium, we've got the cathode material, we got it all and enough to make 1 million EVs in 2025. So that's not 2030. It's just a year and a half from now.

Kyle Mountsier  08:25

So I'm telling you supply chain management is the like that is game. That's the game if you manage the supply chain, right. That's what Tesla did during the pandemic and during this chip shortage. And so, so that's a great point. For me, that's like that statement, right there alone is is the opportunity to take back market share. Right? So wow, without a doubt, I'm quite impressed. Honestly, she

Paul Daly  08:55

she also said, go ahead.

Kyle Mountsier  08:57

This is probably the most shocking thing that I've seen out to GM recently, um, just that the battery materials, the battery materials and the like, hey, sharp, sharp adjustment up in inventory levels, like very clear, not like I might get around to it. So

Paul Daly  09:14

we've been hearing, we've been hearing some underpinnings of that across other manufacturers or just from from back channel conversations we've been having. GM came out and said it. You know, she also said that they're going to be executing like spending and hiring discipline, they're still trying to control costs. And they're going to continue executing from a position of strength. So that sounded like a general customer rallying the troops around some really good news. And even though you know, the earnings and stuff, I think everyone has kind of takes us quarterly year over year with a more than a grain of salt, like a few grains of salt these days. Right, because the volatility and what's happening, and yeah, so that's that's kind of the news from GM that has us kind of cautiously optimistic, I think for good Reason,

Kyle Mountsier  10:01

between Jonathan smoke GM and some other reports, including one that we're about to look at. I'm very, very optimistic about the second half of this year.

Paul Daly  10:11

Man, we need more people paying attention to automotive in this world. And that's what we're doing. That's what we're trying to we're trying to do. We're trying to do. Alright, next story about automotive. He talks about it this way too, because we have some incurable optimists, but like data driven optimist, co tagging right off of that, right? Automotive is retail we talk about like that. So let's talk about retail. Walmart is reporting price cuts as profits decline, but same store sales increased by 6%. Does that sound familiar? Right profits, net earnings going down, but overall earnings going up. And they say the largest cuts in prices are clothing and other general merchandise merchandise that they have a little bit of an Overstock, and those happen to be their most profitable items. So they're trying to cut back the prices on those. Because high food prices, high fuel prices are actually pressuring consumers, especially in the middle income layer. So CEO Doug McMillon, expects the trend to continue through the holiday season and says, I don't know I was sad when I heard this. He's like, but back to school sales are strong. I was like, Are

Kyle Mountsier  11:18

we already there? Are you already there? Oh, my, my poor kids. Apparently were like, distraught over the fact that school was almost back in the back in session. So

Paul Daly  11:28

well, in Nashville. What do you got? What do you all go back to school? It's like, tomorrow's

Kyle Mountsier  11:32

two weeks. We're good. We're good. Well, here's the here's the thing. This is interesting, because, you know, we talked about probably a little over a month ago where companies like Best Buy and Target and Walmart, we're looking at an overstock of general merchandise. And so there's a couple things that are driving down these, these price cuts are driving these price cuts, which is overstock and merchandise because of lower consumer demand for for general goods, right general merchandise, not food products, right? Because food products are a whole nother lane for them. But also that they that they were stocking a higher priced item, because people were purchasing, especially earlier in the year, were purchasing a lot of travel goods and merchandise that they hadn't done the last couple of years. And so there's kind of two pieces playing in this. It's not just inflation in the squeeze in the tightness on consumers in middle income, middle and lower income levels. It's also a merchandise overstocking in these general merchandise goods. So between that, and then inflation and interest rates, driving these these prices to a more, you know, a more dialed in state, I don't think it's a bad thing. And yet, we're still seeing a high level of consumer demand for purchasing. I mean, just as note that back to school sales, when you think back to school scales, that's not just you know, binders and paper, you're talking clothes, and, you know, a range of other things across general merchandise. So, you know, I think that this price correction is of benefit to the overall economy. And with demand still being up. I think his note that a strong second half is is is really relevant.

Paul Daly  13:15

Yeah, without a doubt, you know, so there's a trend. There's a trend here, right. And we're talking like, dealership empathy to your consumer for a moment, this trend is very identifiable. And it's that the middle income bracket is getting squeezed by fuel and price increases, right, you're starting to see consumer good prices, maybe regulate, maybe even go down a little bit. But everyone's feeling the pinch, that doesn't mean people can buy more, they can actually buy less, and food and fuel, food and fuel. So we're just saying, if you understand your consumer, why don't you target some of your messaging and some incentives, and promotions, even in service around food, and fuel, right? Every culture and the internet is a river moving in a direction, don't try to go against the direction, don't try to drop a rock in the middle of it, make everybody go around, just build a little boat and go on top of it. So

Kyle Mountsier  14:13

I even think like to the used car manager or the used car inventory team is thinking about how you can emphasize affordability with you know, higher gas mileage vehicles, or, you know, we saw a, you know, average used car prices really go from like the high teens to the mid 20s. And recognizing you know that that sweet spot right around the 20s might be a place where you want to start to look at bolstering your inventory, especially if you can find, you know, vehicles with high fuel economy, you're just gonna have an easier way to kind of, you know, from a marketing perspective to just say, these are the types of vehicles that we have as an offering in a general sense, would be a really great just kind of move in this kind of season. So

Paul Daly  14:58

that's good. That's good. Well, I'm trying to think of a segue. I can't

Kyle Mountsier  15:03

segue is well I'm

Paul Daly  15:11

thinking of well, or it

Kyle Mountsier  15:12

could be well, yum, yum

Paul Daly  15:17

yum. That's up to you. Look, we try to keep you abreast of what is going on with the kids these days and pink sauce. That means a dipping sauce for your condiments. That is pink you can see it on the screen if you're watching have

Kyle Mountsier  15:30

a queasy stomach don't look at Oh look

Paul Daly  15:33

it's all the rage on Tik Tok but what the heck is it social media celebrity chef pie P i is catching praise and shade for her creation of a new dipping sauce. Pink sauce her first post with this garden 80 million views the product has gone viral and now you can actually buy it for $20 A bottle there are some safety concerns being thrown out like literally it's like half of the audience loves it half of the audience thinks you're gonna die if you eat it. You know she is based out of Florida where their cottage food laws allow for like an licensed kitchens to produce low A foods that have a low risk of you know foodborne illness and sell them. Dude, this is this is next level. It's like fuchsia. So if you think of like Chick fil A sauce, you're gonna know but like pink slime on its Gosh, that makes it so much worse. That makes it so much worse. What else is rebranded

Kyle Mountsier  16:29

picked up Pepto Bismol with the same exact price point.

Paul Daly  16:34

Okay. Price point per ounce. No Pepto Bismol is probably cheaper. Probably. What was that? What's that? What's that medicine that you get as a kid? Like if you have an ear infection? It's pink. amoxicillin. What is it? Right? It looks like it's got the viscosity of like Pepto Bismol. And it looks like and you're just seeing like dipping like chicken tenders in there. So. So this celebrity chef says, this is like the Beyonce of sauces. And I don't know, we just thought you should know what your kids are doing on tick tock right now. And if they asked you to buy some pink sauce, you might want to think about it twice. But look, we like to talk about this stuff as well. It's a lot of fun. And you feel it.

Kyle Mountsier  17:19

If you have a Brian Ortega or a Nate, Greg click or anyone like that in your social media department. And you're not running to go buy some pink sauce and challenge a sales manager to eat it on a chicken nugget. You are doing it wrong. I know that. I get any ideas up in here.

Paul Daly  17:38

I'm not eating any pink sauce. I'm just saying it. It's not happening. I'm not eating it. But look, this is just kind of the fun stuff that goes around in the internet. We feel like we need to bring a little balance to the Force, right we're Brian Ortega is on the thread today. Pink Panthers blood he says in a comment. So now that he said I have a feeling we're going to see a sales manager eating some pink sauce in the very near future. Make sure you don't tell him that we told you to do it. Because we didn't. Look we hope you have an amazing Tuesday. We're fired up to go out there and serve the industry. We hope you're fired up to go out there and serve the people that you're going to come in contact with today because we know you're going to because that is the essence of the car business.

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