Guest Host Damon Lester, Total Recall by Rivian, Tesla’s Takes the Casino Playbook, Toyoda’s Happy Dance.

October 10, 2022
Welcome to the second full week of October during a five Saturday month as we talk about a near-total recall of every Rivian vehicle produced this year. We also talk about Tesla’s latest strategy to skirt state franchise laws, as well as a “happy dance” little moment for Toyota President Akio Toyoda
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Rivian recalls just about every vehicle they’ve made this year, and unlike Tesla’s last recall, this can’t be fixed over the air. According to a notice filed with the National Highway Traffic Safety Administration (NHTSA), the fastener connecting the front upper control arm and steering knuckle may not have been “sufficiently torqued.”

  • If left unchecked the loosening of the fastener could “cause a loss of vehicle control and increasing the risk of a crash.”
  • Symptoms included, vibrations, noise, and harshness in the front suspension, and changes in steering
  • This affects 12k of the 14k vehicles produced and spans every model from the RT1 Pickup to the electric delivery vans the company is building for Amazon
  • “It’s important not to minimize the potential risks involved and why we are volunteering to conduct this recall,” Rivian CEO RJ Scaringe wrote in an email to customers viewed by CNBC. “In rare circumstances, the nut could loosen fully. I want to reiterate that this is extremely rare, but it does reinforce why we are acting with such urgency and caution.”
  • You can view Rivans recall page here


Tesla is throttling down on its plans to build its sales and service centers on tribal land in New Mexico to exploit a gap in the state’s automotive franchise laws.

  • After the company lost a proposal in 2019 to gain an exception to the laws in the legislature they began seeking alternate means and were able to open their first center inside an old casino on tribal land north of Santa Fe as the partnered with the First Nation of Nambé Pueblo
  • Tesla is now opening a second to offer service coverage to Albuquerque thanks to a new partnership with the Santa Ana Pueblo.
  • There will also be a sales center and EV chargers
  • Some state legislators such as Cabinet Secretary,  Ricky Serna, made an appearance at the event to express his sentiment, “This project will yield economic growth, healthy career pathways and contribute to Governor Lujan Grisham's aggressive carbon reduction goals


When Toyota broke GMs 9 decade sales winning streak by selling more vehicles in 2021, Toyota President Akio Toyoda did a little “happy dance” in his office according to his own comments at the annual Toyota Dealer meeting where he performed a slight variation of the dance

  • The win was a result of supply constraints and Toyota leadership does not expect it to continue as the situation has regulated substantially in the past year
  • Toyota is set to have its worst year since the last supply disruption in 2011 as volume is down 15% this year so far.


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SPEAKERS

Paul Daly, Damon Lester


Paul Daly  00:23

Good morning. Welcome to the second full week of October. It is a five Saturday month we're talking about a recall by rivian Tesla taking the casino handbook and we have a very, very special guest host today. I'll tell you in a second. The people really want to know who is and who Ibiza Kyle is taking a day. Right? Sometimes everybody needs to take a day and Kyle's home with family. I think he's, I think he might I don't know if it's his parents, or his wife's parents. So he might be managing in laws or managing parents. But either way, typically, if you have family come over, especially parents, everybody knows you love them, you accept them. But there's always a little bit of managing. That's gotta go on. So that's going on today, I'm gonna announce to you our very special guest host, David lessor. Good morning, we always get a guest host to try to fill in when we can. And this is I feel like it's like the reversed fresh shiny new Damon Lester, because you didn't step into a new role. Well, you kind of did. But you stepped out of a big role. This past week, Damon pass the torch of the presidency of naming to our good friend Eugene. We'll get him on the show soon enough. But um, David now you are the vice chair of an amen.


Damon Lester  01:38

Right, Vice Chair of the Board have named Matt. So they


Paul Daly  01:42

are actually passed, right? Yes, well,


Damon Lester  01:45

Eugene starts at the end of this month. So I still have to winding it down. But as you can see the bags under my eyes and still trying to recover from last week. So


Paul Daly  01:56

let's talk about name add for a second the name at annual meeting. Um, it's called an annual meeting. But it's actually should be called like an annual throwdown. Because it is three days of non stop nonstop meetings and content and dinners, and handshakes and daps and all kinds of stuff. Tell us how the name annual meeting with this year?


Damon Lester  02:17

I think the meeting went extremely well. The attendance was awesome. We set a record for attendance this year. Total of over 700 people. Wow. And yeah, and so I think it just shows the growth in our activity. A lot of new members were attendance. We had the women of wilcon Come and have the meeting within our meeting. And so it's just been awesome. Also Wait, but yeah, we worked hard. We partied hard and got a lot of things done.


Paul Daly  02:47

Yeah, I would say that as usual. I mean, last year was my first my first name add conference, but this year, I can say the energy definitely leveled up. And let me say, I've never seen people dressed so well. In one place, that I did a med conference. It was like, it was an staking believable, I couldn't believe it. Alright, so here's what we're gonna do today. I'll actually tell me a little bit about Eugene, I know we talked about a little bit, but this is a big deal. Like you've been president of nomad for pretty much the memorable history of the organization. How old was the organization when you took over 20 years? You've been you've been doing it for 20 years.


Damon Lester  03:28

And the association's only was formed in 1980. So when I was, you know, half half of its lifecycle. And over, I'm the longest reigning president of the association.


Paul Daly  03:43

Yeah, so it was an it was a major, like the last 20 years has seen a major metamorphosis not only in the industry, but just in the rise of minority minority dealers through the ranks a lot of that, due to the work that NEMA has done. And you know, right, and you're like, kind of eating your own cooking here, right over the last year, you became a dealer, and you're like, Finally, like I'm getting in that game. And it's gonna be interesting and exciting to see how you can continue to be effective from a dealer seat. Right without being the name Ed president.


Damon Lester  04:12

Yeah, I'm looking forward to it to this role again, uh, but uh, you know, purchase the store last year and and we're doing well but now now that I will be able to put all of my focus into the to the store I got a lot of ideas that we can tweak and change and implement and try to move this needle forward and then also grow and but I need to get worse right as right as we can possibly get in here, but I'm doing well.


Paul Daly  04:39

All right, so here's we're gonna do you've seen the show before. We got three stories to talk about. I'm gonna present the story and then we're gonna jam on it if you don't have no idea what the stories are. So this is gonna be like Damon Damon unfiltered coming at you on a Monday morning, which is the best way to go. Okay, here we go. rivian has recalled just about every vehicle they've made this year and unlike Like Tesla's last recall, this cannot be fixed over the air. According to a notice filed with the National Highway Traffic and Safety Administration, the fastener connecting the front upper control arm and steering knuckle may not have been, as they say, sufficiently torqued. So if left unchecked, this could cause a loss of vehicle control, which, according to their recall says that increases the risk of a crash. Yes, if you lose control of your steering, your risk of a crash definitely increases. You know, obviously, this is not happening at large, but they've tried to get in front of it. Um, you know, they say symptoms could include vibration harshness, in the front suspension, changes in steering, this affects 12,000 of the 14,000 vehicles they produce this year from the R T one pickup all the way through the electric vans that they're making from Amazon, and CEO, RJ SC carnage wrote in an email, he said, in rare circumstances, you know, the NEC could fully loosen. So they're having people come back in Damon, this is this is like a serious recall that every vehicle has to be touched. Now, where


Damon Lester  06:02

are they going? Where are they going? Where are they going? Right? That's the question. There's no service land that they're going to pull into. And if it's not an OTA, then what we're Where are we going, mister?


Paul Daly  06:16

You know, I missed this, Mr. rivian. I think that's his name. I did actually, and it's linked up in the show notes, I linked up reviens recall page, and hold on, I'm gonna pull it up here, I can't get it up. And so they have actually three recalls on this recall page. One is from May of 2000 of May of this year, it's an improperly calibrated front passenger seat in which a child if they're in the front seat, the airbag can still deploy. In order to do that, when it says you have to show up. And your your car will be down for 15 hours while they replace the front seat. The second one is an improperly secured seat belt anchor. So it seems like a torque issue again, they got to just get that torque wrench calibrated up in there. So steering knuckle control arm. So it says what will rivian do rivian will offer mobile service appointments, no appointment necessary. But here's what was interesting to me. So they can like check it out and fix it. It says, Hold on rivian is building a fleet of service vehicles. So that doesn't really communicate the Vivian has a fleet of vehicles. I have no idea.


Damon Lester  07:22

Fleet Service vehicles have to have the recall, then what we did oh, this is


Paul Daly  07:26

like a, like one of those infinite staircase loops, right? Where you just keep going around it. I think this is just indicative of the surface conversation that has been going on around a lot of these Evie startups and a lot of the direct consumer models, right? If service and things happen. I mean, Tesla had their little window actuator recall, right? Easy enough, it's very, very savvy, actually just be able to upload over the air update and have the car you know, kind of fix itself and be compliant. But again, dealer, a dealer network being valuable, because when consumers need it when service comes up, when there's a problem with the vehicle, which their vehicles, right, they have moving parts are going going to be a problem. I think this just highlights. It kind of brings all the fanfare down the earth, you know, like,


Damon Lester  08:09

the dealers matter. dealerships matter.


Paul Daly  08:13

That's bottom line,


Damon Lester  08:14

I need to talk call and touch and somebody can do your torque wrench right there when you pull up.


Paul Daly  08:19

Yep. And not only that, like, you know, you feel better when you know Right? Where to go. Right? Because think about it like, Oh, now it's like, I have to make an appointment now. Like, who's actually going to take care of this? How is it going to work? If they couldn't get it right at the factory? Can they get it right in my driveway? You know what I'm saying? I think this this just does launch into a whole lot of questions and things that people have been talking about. But now obviously, you see things like this come up now. rivian has only made 14,000 vehicles this year. Right. So everyone's been a lot of celebration and things but it's only a total of 14,000 vehicles. But that's a lot of that's a lot of homes to go to. Obviously, 14, everyone has


Damon Lester  08:55

a home. All right, everyone doesn't have a home, everyone doesn't have a home that you can pull in the driveway and pull up and lift up and do whatever you need to do. So that's under the assumption that everyone has a single family home to pull into.


Paul Daly  09:12

What about that? You don't you don't live in an apartment complex somewhere, right? Where your car is parked in the city and a lot that's also three


Damon Lester  09:19

in the city somewhere in your Carson street. What do you do? They're not going to block traffic on the Upper East Side and what and Manhattan.


Paul Daly  09:30

know if you ever tried to stop your car for more than like 12 seconds in Manhattan, it's like full on right. Everybody's honking everybody's yelling. You got to keep it moving. Yes. So I don't know. I guess you would have to like leave. Leave this city to an extent. And then what do you do sit around


Damon Lester  09:46

like, drive to the Walmart or Target or McDonald's and say, Hey, meet me over here. Parking lot. Three.


Paul Daly  09:53

Sounds like a luxury experience to me. Yeah. Speaking of luxury experiences segway I think that's the first time Dave has ever seen MC Hammer Paul's death in the Segway. Tesla is throttling down, its or throttling up its plans to build Sales and Service Centers on tribal land in New Mexico to exploit a gap in the state's franchise laws. So after Tesla lost a proposal and 2019, again an exception to the laws in the legislature, they began seeking alternate means were able to open their first center inside an old casino on tribal land in the Santa Fe area, partnered with the first nation of Nan Bay Pueblo, Tesla's now opening a second service, service station service and sales actually, to cover the Albuquerque market thanks to a partnership with the Santa Ana pueblo. There will also be sales center service center and Evie chargers. And some legislators such as Cabinet Secretary Rick Cerna made an appearance at the event to express his sentiment to which he says the project will yield economic growth, health healthy career pathways and contribute to Governor Lujan Grisham aggressive carbon reduction goals. So, Damon, this is an example of Tesla taking a page out of the casino playbook. Have you heard about anything like this before?


Damon Lester  11:14

No, it's smart, though. But it's kind of gangster.


Paul Daly  11:20

Super gangster,


Damon Lester  11:21

he is so doubled down that he's not going to have a franchise model. And he said, You know what, I'm just going to go over here where all the casinos are. And I'm just going to, you know, kind of deal with him directly in. Yeah, that's,


Paul Daly  11:34

that's something I know. It's like this. I read this this morning. I was like, I never thought of that. Right. Like, that's how I remember it. You think about the historical, historical leverage that, you know, sovereign nations have have used to build industry on their land. casinos have been one right and now but you're starting to see adoption and permitting of casinos outside sovereign land, right, like the states have kind of like caught up with that. Also, you know, things like tobacco sales, fuel taxes, and all the things that have kind of happened, I never thought that selling and servicing vehicles, I mean, I don't know if there is going to be certain, you know, like regulations that are going to come into play when it comes to like registering cars, right? Because selling a car is a pretty, you know, legally complex thing.


Damon Lester  12:18

Yeah, honestly, I that won't stop me very smart. But he is definitely not in for the dealership model. And he's just saying, I'm gonna figure out any way that I can pierce that veil and keep it moving. But that's the interesting thing. All of those types of casinos are always out there far out.


Paul Daly  12:36

Yeah, they're not ever in convenient locations. That doesn't seem that will probably


Damon Lester  12:40

be a challenge for them. And he definitely is going to need some charging stations along the way. So it may be, you know, maybe a part of his master plan. But yeah, they're never gonna close proximity to metro area.


Paul Daly  12:52

I mean, I guess, I guess in those areas, like in New Mexico, it might make a little bit more sense, right. Everything is kind of kind of like you have groups of people that are kind of like huddled together where their civilization right. And then there's just big swaths of desert? I don't know, do you? Do you all have casinos in your area of Virginia?


Damon Lester  13:09

We have a couple in Maryland, but they're not. They're not owned by any land there. They're MGM and we have casino live similar to Philly live we have. So yeah, we have a couple. You know,


Paul Daly  13:22

one of the things that that kind of I've been talking about is that these sales and service centers are looking awfully similar to dealerships. Have you seen any of the new models like people go out, they test drive vehicles, they look at vehicles, there are service bays where they can pull in it, it honestly just looks like a dealership.


Damon Lester  13:41

And we call them? Let's see, Lexus calls them customer convenience outlets. Okay, thanks for your calls on rural opportunity markets where they're not an open point. They don't have enough volume to sell, but they are there just to be the buffer between the local dealer as well. So


Paul Daly  14:01

you're saying that I didn't know that. So you're saying what Lexus now? Yeah. I didn't realize that where there's like the closest one to you that you know, if


Damon Lester  14:11

we don't have I mean, close to meet the but there's something on the west coast.


Paul Daly  14:16

It's because you have enough points, right? Like there's just a consolidation of points.


Damon Lester  14:19

Yeah, in the rural area, you'll have them spread apart just to be that buffer for service. So who runs it not sales, it's owned by the same dealer. But you're not supposed to sell or your your, your planning volume is under the threshold to deem it as an open point. So what happens is you can still bring your car in for service, instead of driving all the way to the local dealer. And in the meantime, they'll have a couple of vehicles there to show and you can possibly transact at the main store.


Paul Daly  14:54

I mean, they gotta be leveraging those


Damon Lester  14:56

yet so he has quite a few of them. I want to say there's a couple other import brands that have them, but they're calling rural opportunity markets.


Paul Daly  15:06

Well, I had never ever heard of that before. I mean, you think of just the leverage of that model, we can do like, you know, buying cars off the curb. Right, and just getting people in the ecosystem. I didn't know that. Okay. So, you know, this is that, just trying to like process all the things that go around that now. Amid coming back to Tesla, there is an element of like you said, you said, piercing the veil, which I think is a great is a great term for it. You know, in a lot of states, they've gotten these levels of exemptions. You know, that obviously, estate franchise groups are, are definitely working hard to kind of like, slow down, right, slow down this rapid adoption. How do you view? How do you view like, what legislation can actually do? What do you think it will actually be able to accomplish over the next 36 months? Do you think it's going to be able to, like, build a little bit of wall and give us some time? Or do you think like, it's inevitable that at some point, right? It's going to be just accepted?


Damon Lester  16:01

I think our best dealers have to show the value of our grassroots advocacy. We're not doing that. As a as a united group. I think once we do that, legislation, we'll be forced to slow things down. We're not telling the story correctly. We're How


Paul Daly  16:20

do we do that? How do we do that?


Damon Lester  16:22

You know, we have to get to the times and not do anything in writing, everything has to be in video.


Paul Daly  16:29

Oh, right. Like no more formal letters on letterhead used to be


Damon Lester  16:33

push, we got to hit hardcore, IG type videos, YouTube videos in splurt, in 30 seconds to a minute spurts, just to show all of the value value added propositions that we bring, and we're not doing that we're doing our traditional model is we write a letter, we send it over, somebody reads it, and it stays there, the public doesn't know.


Paul Daly  16:58

And it's got, I think, one of the, you know, you've sent a few videos, actually, I'm coming to mind you sent a few videos over the last few months of people on the other side of the argument, just lighting up the dealer network on YouTube videos and 32nd spots. Here's one of the main differentiators that I see too. They have like personality and a human connection in them, right? They're telling an actual story, they're empathizing with the viewer. Meanwhile, what they do often is they show the letter that was sent, right? And the letter comes off, as just I don't know how it's the same, it just comes off as the man, right, trying to suppress the people, you know, because there's no personality you and I know, like, look, we were just naming there's a whole lot of personality and advocacy, and you like, literally human triumph in the automotive industry, and no one thinks of it that way. They think of it as this big group of powerful money hungry people trying to protect their interests. And you're right, when that's just on a letter with a logo and the letterhead and a very properly worded, you know, properly worded almost legally worded, you know,


Damon Lester  18:03

we over we over index on the wording, instead of just keeping it simple. Write a language that everyone can understand. It doesn't have to be legal jargon and quoting these types of things. Here's what's the problem. Here's what, here's what the fix is. And here's why we add value 123 Who, what, when, where and how. And, and once we start to do that, then you can still show the big letter, for sure. But we're explaining it, why and then maybe jump broken down in in little chunks, based on the sections of the argument. But we need to start telling a story. And that's the best way to do it right now.


Paul Daly  18:42

Without a doubt you think about it, like legislators make laws. They're voted in by people and people are swayed by popular opinion, right by their feelings and emotions, right? It all goes in one direction or it all goes in the other direction. So we need to shift the momentum. This last story we just have about a minute left is a lot of fun. So when Toyota broke the news that General Motors nine decade sales winning streak, by selling more vehicles in the US was broken in 2022. When Toyota took it, it just came out the president accused Toyota said he did a little quote happy dance in his office according to his own comments at Toyota's annual dealer meeting where he performed a slight variation of the dance and said it's a good thing no one saw me. The win was a result of supply constraints really that GM had in 2021. And Toyota just did a better job of getting the vehicles out. SR Fisher's at Toyota were a little more reserved, and we're like, well, oh, we're not expecting this to continue. It was just a little moment. We had a large Toyota representation at the name ed conference. Just what is your perspective on Toyota and how they're paying attention to what's going on in the future.


Damon Lester  19:45

So it does a great job with having a crystal ball. Unbelievable. They have a crystal ball and their culture. Their culture exudes being crystal ball holders, and an end As leadership changes, they have been the most consistent with leadership. So they all kind of know the play. And they're all every leader tends to just adapt, overcome and create a new play. But they all have that basic foundational, here's the play, ie the pick and roll all is always the pick and roll. And you can so no matter how hard you may stop, it's still the pick and roll. So I think they do a great job with making making their focus on dealers. Probably better than any other OEM out there. There's some others that are coming more and more more dealer friendly dealer focus, but from consistent standpoint, they've always been the most consistent dealer, dealer focused brand, and the leadership is involved with the dealers. That's true.


Paul Daly  20:52

And what and what they say is consistency over time, equals momentum. That's the theorem and they're playing that hard, Damon Lester, you're in the seat. You're running your dealership. It's good to see you there. Thanks for spending time with us today.


Damon Lester  21:04

Thank you for the opportunity.


21:05

Going