Show Notes with links:
Thanks to Automotive News, we now can see how the UAW strike is impacting different areas of the US and what plants and supplies are being impacted with both striking workers and layoffs.
Lithia Motors Inc. has raised its offer to acquire Pendragon's dealership and fleet businesses to $482 million, amid a competitive bidding environment involving multiple auto retailers.
AI may be making it into large creative company operations in an unwanted fashion as the jury is still out on whether Disney crossed the line with generative AI to create a ‘Loki’ poster.
Kyle Mountsier: 0:00Good morning. It is Tuesday, October 10. And I get the privilege of welcoming. Ben had the over here to the pod. We're talking about a heat map for the UAW. Lithia raising the ante and Disney going. The people really want to know who it is and who it they stopped to stay when they see. I don't know where I got Disney going crazy. But that's all I could come up with. Crazy dude. It is it's, I've seen more Disney news across like, multiple different things that they're doing in the last week than I probably care to see from a Disney perspective. So
Ben Hadley: 0:37
it's yeah, that was good. We can go into the politics, but maybe we should.
Kyle Mountsier: 0:42
Maybe we should. Maybe a maybe we'll get more downloads, more clicks, you know.
Ben Hadley: 0:47
Kyle Mountsier: 0:48
You go. All right. Well, I'm glad you're here with us this morning. If you're listening. We were releasing content, like crazy. I can't even keep up with it all been we've got a soda concessions going live on the YouTube in the app. We've got auto collabs episodes with Steve rustler. And Jimmy Douglas. Actually, the Jimmy Douglas episode is absolutely dope. If you don't know Jimmy, who was the ex us car director for Tesla and is now created plug you got to get to meet him is 20 minutes. He's the best. It's he's he's really, and he's just a cool dude. You know, like, super smart, but super cool, dude. And he's got a history that you wouldn't believe from, you know, a guy that you just think, Oh, that's a Tesla guy. You know? So you gotta check that out. I'll check it out. Also, I don't know if you know this, we're premiering episode two of more than cars on this October
Ben Hadley: 1:46
the LinkedIn event invite last night they
Kyle Mountsier: 1:52
Yeah, it's gonna it's so good. Like, we learned so much from the first one. And then I got my hands dirty a little bit may or may not have changed some oil. May or may not have this. Paul again, and a little competition, you know, so,
Ben Hadley: 2:07
dude, I I've been waiting for it. That that is like, I'm pumped. I'm pumped for that's gonna
Kyle Mountsier: 2:14
be good. And then and then you don't know this. But or maybe you do. Matt, you're just following up? You like fanboy sometimes. But West her your boy Matt last year had us out. And that episode will be coming like early November. So they're coming in. And I know. It's real good. And Scott, I know that was gonna be good. He'd scapulars just so good. He's man, you like you described the owner of Westar. He's just resolute. And he doesn't need to be anything for anyone. He just knows who he is cares for his people. And you know, they throw they throw a party bigger than most state fairs just for their employees. So that's how it goes. So dope. All right. Speaking of, you know, state parties. Hey, if you don't know this, the Automotive News has done us a massive favor in creating just a wealth of information on a single page about what's going on in the UAW strike. So you don't have to guess anymore. The link is in the show notes. But one of the things that they've done is given us a map of exactly where and what plants in the US are being affected by the strike. What we looked at was actually only a few plants have over 1000 workers striking the majority of the plants have less than 100 workers striking. And the strikes are spread out across the US. So when we've talked about on the podcast, these like targeted strikes at specific plants, not wholesale changes, not wiping out everything. You know, the UAW has been extremely strategic, and they haven't advanced those strikes as of last month, or of last week. So we're seeing we're seeing like we are, you're actually able to see that it's not this just massive wholesale thing. A few of the other things that you can see in there is this, this gap between the UA W demands in the OEM proposals, but it also includes some things that they haven't been talking about, like some updates to PTO, and some holiday inclusions like Juneteenth. The the one that that the graph that got me and this will get you, Ben, is the difference between the hourly labor costs current and of the big three and Tesla, which right now the current OEM, the three OEMs range between 63 and $67 an hour where Tesla is between 45 and $50 an hour, and some of these updates will bring the UAW workers into the average of over$100 An hour average for labor costs.
Ben Hadley: 4:57
I mean, if you didn't want to get into auto First one part 100 bucks hour. Let's go like let's go to is what a discrepancy though between like you we get all these little vignettes right of like the new world of auto, which you put like Tesla and all the other guys in, and then the old world of auto. And you get to see these different slices between the supply chain between this UAW strike, but like that number is a wild difference.
Kyle Mountsier: 5:29
Yeah, pay. It is it's a massive difference. And then when you think about the volume of workers, they're one of the other graphs showed like back in the early 2000s, there were over 700,000 workers in the UAW. Now there's 350,000. And we're going to probably see that go down as the Evie plants require less people. And then the last graph, this was the most interesting one to me, is, as you see these pay rate increases over the last 10 years, you start to see market share also dwindling. Now I don't think it's a direct correlation. But I do think that this is where, like, Jim Farley and Mary Barra and still antas are really looking at Wait a second, our market share has been declining over the past 10 years due to, you know, new manufacturers coming in, or other manufacturers from outside of the US having a bigger part to play in the US, you know, just buying ecosystem in the market share. And so I'm seeing market share decline, yet costs increase. And Evie manufacturers coming with significantly less costs. I can't imagine being the OEM right now and looking at these demands and going yeah, this makes a ton of sense for business continuity over the next five years.
Ben Hadley: 6:43
Yeah, boy. The other piece I would add to that is that like if you look at Tesla's resilience during the COVID, supply chain freakout, because they own their own supply chain, it, you know, you start looking at the nimbleness and agile illness. So what what you're watching is okay, yeah, sure, maybe they get a higher pay rate. But if the employee numbers dwindle, that's only because they're outsourcing that supply chain further away, but they near source it, maybe not less, like, maybe there's not as much shock to the system in the next crazy event that happens in our world. But if they way outsource it, right to recover those the discrepancy a cost, that means like, Oh, someone sneezed in China again, you know, pause the world, and then that gives your competitor wicked advantage, right, when you're, when you're in your whole supply chain, and, and all of its really close. So it's a really wild. Well, that's,
Kyle Mountsier: 7:41
that's, I think that's the dynamic that a lot of times we just don't see in just, you know, like, Oh, more pay, of course, which is like, I think generally good for the workers and the families, right. But there's a whole other business business economics that has to be at play and has to be considered here. Well, speaking of Business Economics, said segway. These are some serious economics. And just so you know, Ben, you're getting like the Ben love fest in the comments on LinkedIn. But let's Lithia motors Incorporated has raised his offer to acquire pen dragons dealership and fleet business pin dragon operated out of Europe, to $482 million amid a competitive bidding environment involving multiple auto retailers, notably auto nation. Initially, the Lithia motors offer was at a $350 million dollar offer, while auto nation has already come in with a $544 million acquisition proposal. Now, here's here's the interesting stuff here. And I think this is why this still isn't settled. And Penn dragon hasn't, you know, you know, signed on the dotted line somewhere, because I mean, that's a massive gap and dollar amounts. But as a part of the deal, pen dragons, DMS Pinewood would morph into Pinewood technologies. And Lithia would still only own about a sixth of that. So they wouldn't actually take a majority ownership share in the technology side of stuff. But the rd has 40 dealerships in the UK, and is going to roll out the pinewood DMS to the other major retailers that they have in the UK and most likely start to bring that into the US. So there's a big, you know, like attraction there when you're talking about the largest in volume of rooftops across the US and Europe that could be utilizing the technology. David Woodson, an analyst with Morningstar noted there could be a lot more value long term for pin dragon shareholders by going with the Lithia deal, versus the immediate cash payout to selling to AutoNation really interesting stats there.
Ben Hadley: 9:47
Yeah, I wonder how much of this is about the data infrastructure that is is sort of part of that dealership because as I understand it, it's actually harder and harder to own it. To be a landowner in Europe. So, you know, like that, if your leverage and a normal dealership is both the real estate and the inventory and the revenue? I wonder, I don't know the details, but I'd imagine that there's less than leverage on the real estate side. But right, one word. One place, I think that would be interesting to explore it is, is on the data side from, like, we were talking about this yesterday, Kyle, it's like, if, if you have first party data, and you're enhancing it and adding Collins to it, right? Then your your relationship with that data is better than anybody else's in the world. So I wonder how much they've explored that angle?
Kyle Mountsier: 10:45
Yeah. Like, what's the crossover of the data between the pin dragon stores and the 40 stores that they already have? And can both get additive first party data to enhance their ability to gain market share or retain market share that they currently Yeah,
Ben Hadley: 11:02
I don't, I don't mean like, I don't think it's, you know, they're not going to care about me going to buy a car in Europe. That's right, right. Unlikely, but I think it's like, you're not just going to stop at Pendragon, you're going to break into Europe. So to understand the European consumer better than anybody else that's also going to break into Europe, and start making moves there. It's like, let me get the most enriched level of data first, I'll absolutely stand with the next strategic chess moves that I'm going to make once I'm over there. That would pay a premium just to be to get that.
Kyle Mountsier: 11:34
Yep. Yeah. Yeah, I think I think the interesting thing to me is that Penn dragon hasn't just snapped up the $544 million proposal from auto nation. That's, that's what I want to understand. Like, what about the lithium makes it such a long term play? Is it? Is it solely based on the technology, the value the value of the technology potentially expanding quicker? Is there a bigger data play? Is there a bigger brand play? You know, just lots of questions there. Lots of questions. Yeah. All right. Well, speaking of some questions, segue. All the users on X formerly Twitter have lots of questions for Disney. Because AI maybe make marking its way into larger creative comprehend company operations in an unwanted fashion. As it looks like the jury may still be out on whether or not Disney crossed the line with generative AI to create a Loki poster characteristics like randomly placed squiggly lines and awkward human shapes have led people to believe that this poster has. And you can see a little if you're if you're watching it, you can see just a part of it. And if you look in between the Roman Numeral six and number seven, if you've ever done any, like generative AI, you can start to see this little characteristic of a squiggly line. Essentially, what they're looking at there is that background image could be a part of a Shutterstock library, that's not being noted as AI. And it may actually be someone in the Disney ecosystem that's uploading these these images to Shutterstock. They're not sure. And then the other part of it that's really interesting is the little human images that going around the main character's head, kind of have some of those like aI generated notes like little tiny arms or like misplaced portions of the face and things like that, where it which is what you typically get in AI generated images. If you look close enough, you start to see as that's not exactly it. So I don't know if this is like a great this is like huge grand play kudos from something like Loki, which is already just like a mess of a show. And understanding the time space continuum that they have. Or whether it's or maybe it's a misstep in in how they are deeming creative, get to it's also
Ben Hadley: 13:57
it's wild. Like what I also think we're seeing is okay, like fast Rewind a few years and people would have been like, was that what was that movie? Avatar? Right? Not AI, but insane amounts of CGI full CGI, right? And everybody's like, Oh my God, look what computers can do today. Now you're starting to see this like, just like you saw with COVID where everybody kind of thought ecommerce was gonna have a boom, right? Nobody's ever gonna buy a car in a store again. And then it turned out Oh, no, we all want to see people and we all want to shake hands. And we all I guess want to go to Taylor Swift concerts to see those people, right. Yep. I think AI has a similar pattern happening where, you know, we go from oh my god, it's so cool. what computers can do to that's not human. Wait a second. That doesn't feel to see humans. Yeah, yeah, exactly. So we're almost getting the reversion of the mean, back to really wanting humans again. You know, it's
Kyle Mountsier: 14:58
funny, I see that Even in the written word, like, I'm starting to even just be able to sniff it out. Like no way a human wrote that, you know what I mean? Like, I don't even need an AI question.
Ben Hadley: 15:09
Chat. Remember yesterday, I was like, go chat with my AI bot and he was like, Dude, that doesn't sound like you. It's not
Kyle Mountsier: 15:15
even at all. Right, right. So AI is clearly getting it wrong. But I do that, like, I wonder if there's a place for some parts of creative to go. No, we intentionally used a like, if I was Disney, I would come out with that marketing spin on this thing and be like, no, because it's Loki. And because we're talking about time or space travel, and it's already ambiguous, we intentionally used AI in a really unique way to prove that all of the show is ambiguous. You know? That's the market spin on this. That's a
Ben Hadley: 15:49
good spin. Hey, if you're listening Disney bass, it hit us. That's it right there. That
Kyle Mountsier: 15:55
was us. That was us. Well, hey, that's all we got time for today. Maybe you can throw a marketing spin on the fact that you use chat GPT and you're super innovative. But if not like people want to be human. People want to see humans care for humans and learn from humans. So be human.