Interest Hikes, Carvana Suspension, Cadillac Kids

Paul Daly  0:22  

Yo, yo, yo, I'd like to start next week, it's Wednesday, May 18, cars rubbing his hands together because he's so excited to talk about the Fed interest rate strategy.

17 economics books by his bedside.

Kyle Mountsier  0:43  

Let me get my nerd glasses, hopefully.

So ladies and gentlemen, the good news is we've got the interest rates coming up really soon. I'm saying the bad news is it's not coming down.

Oh, man that was sideways that we got a little if you weren't watching the video, I had the glasses on, we're ready to go, that's gonna find its way to Tik Tok, that's got to find its way to tic toc. Look, Melvin coming in not a we are a little excited this morning. Wednesday morning, there's a lot. And we just keep saying this. There's just a lot to talk about the movement in the economy, in business and all of that type of stuff. It seems like every single day, there's something new actually, one of the things that's not in the show, and you know, got a few things and notes. But like yesterday, stock market up three 4% in different in different indexes. So you know, you've got this long time down, and then all of a sudden, the market just corrects itself a little bit in in a really interesting way. And so there's just there's a ton of volatility, a ton of question marks in the market. And yeah, being aware of all that, I think is super important,

Paul Daly  1:52  

without a doubt. So we're gonna talk about the Fed interest rates a little bit today what their strategy is, because it's relevant to automotive, it's relevant to consumer mindset and consumer behavior. For sure. I was going to talk about Carvana license getting suspended in Illinois, it's not the first time that we're going to talk about Cadillacs push into some uncharted territory when it comes to markets. But first, we're gonna talk about something we're not talking about still,

Kyle Mountsier  2:19  

everyone lean in lean in just a little bit. Because we're really excited about this. And we kind of were at Digital dealer, and we'd have little side conversations, we said things like, just imagine a world where there's a conference put on by us. So do what if, what if that? What if this world existed? And how would you feel about it? And do you think like, what would you do? And then every single answer was like, Oh, I don't really know what I do. But I'm guessing whatever you're going to do, is a little bit crazy, a little bit strange and a lot a bit different than what we've experienced. Yes, yes, yes, I think that's a great way of putting it.

Paul Daly  3:00  

Oh, boy, that's a lot of not talking about it. Okay, we're going to talk about it a little bit in September, we want you to mark your calendars for September 11, through the 13th. Also mark your calendars that the Philadelphia area might be a good place to be. It may be there may be this little thing called a CIO to con that we've been cooking up in the kitchen for a little while. And we're probably about to pull the trigger on a lot of things, and let you know about a lot of things. Look, we believe that the automotive conference thing, the circuit, the mentality, the movement of it, it's time to be reborn. And so we are going to put on what we are going to call the rebirth of the automotive conference. Not

Kyle Mountsier  3:48  

I hesitate to even call it a conference because yeah, I just I want people to get out of that feeling we want this is we want it to be a whole new feeling. And there might be some similar things to what you've experienced in conference world, or, you know, like, you know, workshopping stuff. But the but the reality is, is that we want you to, like if we're going to put something on, we want people leaving, feeling refreshed, energized and encouraged, excited about the industry,

Paul Daly  4:17  

because you know, if you're a dealer, you leave, feeling exhausted. And then by the time you get home, you are so exhausted, you can't implement anything. And if you're a vendor, you feel twice as exhaustible the deal. Early, you stay late, and you just pounded the pavement all day. So we are in it to change that feeling at the end. And we believe if we do it, right, it will change that feeling at the end, it will change what happens most importantly, after you go home, because if you spend your time and your money and your energy going to something, you go home, you don't change anything. Everybody wasted their time. All they had was a fun time at the asoto family reunion. That's all that's left. Bingo, and this. So we're working on changing those things. We're Bringing the show into dealerships. So the experience is going to involve dealership interaction like feet on the ground inside the dealership, it's going to involve no long sessions, right? There's a lot of good things that come from workshops, but we're looking more like TED Talk, talk style, 2025 minutes interaction, we won't have any attendees, we're only going to have participants. And on top of that, there might be a little bit of like a SXSW feel, we're going to leave that right there. So if you are a dealer, and you're interested in going if your marketing director, if your salesperson, if your service writer and you saying like, hey, I want to be part of this, go to a soda con as OTU ce o n.com. And there's just a little bar, there's no real information on that site at all. There's just like, hey, I'm interested. So you can be first to know. And if you're a sponsor, or you want to be a partner at the event, we are building custom things out, we're thinking in an activation mindset, right? No more, get your name on a banner on a logo and pay a lot of money for that we're done with that, we're saying we're going to develop something that's a meaningful activation for your company and your brand, that is in the nature of how you are, how it connects to the nature of how everyone wants to be talked to. So we got our little brand marketing minds on right? When we're not doing a soda, right, we run an agency and we weren't like we think activation. So we're gonna bring some of that energy into your offering. So if you want to be a part of that, and the event, send us information, if you're not sending us stuff, we are making phone calls and starting to have conversations had our first great one yesterday, and a lot more to follow. So that's probably enough about a shoulder con that we're not talking about.

Kyle Mountsier  6:34  

This is like, we don't talk about Bruno, but we do

Paul Daly  6:37  

we thanks a lot. Thanks.

Kyle Mountsier  6:41  

It's in your heads, everyone has it in there, the rest of the day, Eric

Paul Daly  6:45  

Cole is on board of events. Eric Hall is the kind of person that is going to be at this event. And if you're a vendor, you're paying attention, you know, Eric Hall is the kind of person you want, because he's going to make you sharper, as he makes his store better. Alright, let's talk about some news. That's less exciting than so. Stories are things that are less exciting than a show to con. Okay. First, Fed Chair Jerome Powell says the Fed will not hesitate to keep raising rates look at that face in that picture. He's like, I'm not hesitant.

Kyle Mountsier  7:15  

That's a man that has some determination in his in his mind that yes, if

Paul Daly  7:20  

you do it, I'm gonna do it. So he said he's gonna back interest rate increases until prices start falling backwards. Right, he said, If that involves moving past broadly understood levels of the Fed being neutral, we won't hesitate to do that. He told that to the Wall Street Journal in an interview. So he's saying like, look, we're pretty confident that even if we move interest rates up a few ticks, I don't know if that's quarter point ticks, half point ticks, full point ticks, that the labor market is so strong that they don't think that's going to cause any major disruption. But he basically does say like, there is going to be some pain that's felt to curb inflation. And if you're not, like you're not a student of economics are just some of the basics are as inflation increases, right? They try the Fed tries to rise and raise interest rates to slow down the spending, because the spending is what drives the supply, lower supply levels, higher prices, and on and on and on. So that's kind of how that how that check and balance operates. So

Kyle Mountsier  8:23  

yeah, and I think a lot of people are hearing this right, if you're paying attention to any sort of news, you're you recognize that the conversation between inflation, interest rates, and employment numbers are all kind of synonymous at this point. And, you know, I think that there's, for me, there's kind of two pieces of what what dealers what industry partners need to be paying attention to here. One is just the knowledge one is the understanding that customers are coming in to our stores right now with this kind of like exterior, you know, conversation happening and it's starting to influence whether or not it influences whether or not they buy but it is influencing on how they buy how that conversation happens. And so having your people educated enough to carry that conversation and and engage in that conversation with buyers that are really wondering like, okay, low inventory, high pricing, yet I want to buy at the lowest interest rate possible because interest rates may rise right? Or should I wait a little bit to get the inventory that's coming in with the fear of interest rates kind of rising right. So I think just understanding that that's that's a narrative that people are trying to battle in their head when when considering a purchase process is something that if you're equipping your employees equipping your frontline, you know, customer interactive employees, whether it be in service or sales, that's the equipping that that our people need to be able to handle that conversation. Well,

Paul Daly  9:53  

if you're thinking you know, thinking about this from a need buyer versus one buyer mentality, though the need by There's no need to get a car, right, which means they're probably more likely to go us because of availability, right? But for the interest rate conversation, right, there's not going to be a better time in the near future to buy a vehicle than right now, because interest rates, right, they're telling us they're going to go up. So interest rates are right now is the time to buy. And from a pricing volatility standpoint, new car is the way to go. Because if you buy a used car, right, it could lose a lot of value, because we know that the used car prices are going to level off and probably start to drop the valuation. So I mean, it sounds to me like pretty putting some time and attention into pre ordering marketing, right getting people to preorder with the Senate, if there are a want buyer, right, like I know, I'm gonna need something I don't, I don't really need it right now, get the message out, like, Hey, if you preorder, you're gonna get the best interest rate. And you're not going to be fighting the volatility. So like getting that ball moving sooner than later. Like, that's some actionable thing you can do today, to train your front people to get your marketing and messaging aligned with what's going on in the world. And they do little education, right, consumers love to be educated on why see what they're probably hearing a lot of things from a lot of directions, and they're probably a little confused. Speaking of being a little confused.

no, it's nothing more confusing than buying a car from a seemingly very reputable nationwide company and not getting your paperwork. Right. So Carvana just had their distiller license suspended in Illinois. Here's a statement, Illinois Secretary of State temporarily blocked Carvanha dealer license on May 10, because of the company failed to properly transfer titles for vehicles that had sold and misused issuing out of state temporary registration permits, says Henry hopped in Illinois Secretary of State spokesperson so basically that means we sell the car, we don't have the title to transfer to you. And we're going to issue you a temporary registration from another state. That seems a little bit like I'm gonna move this over here, trade this for that segment.

Kyle Mountsier  11:10  

Here's the thing. Here's the thing, when you move faster, make mistakes. Absolutely. So like, there's some level of forgiveness, right? Extreme acceleration in moving fast over over the pandemic, from a like new startup company, that is learning something that has been done for years and years and years training, like frontline entry level employees to do things that title clerks around the country have been doing for years and years trained on this, right. And they're trying to acquire this knowledge without having all of the history, right. So there's, there's the first thing like we recognize mistakes are going to be made. But the really interesting thing here is to me, is an I saw a couple of different, you know, interactions and interviews that happen, but it's like, okay, stock price plummets, meaning we've got to remove employees so that you can we become profitable. The the issue there is now they're actually saying, Well, you know, we don't we don't have the number of employees necessary to take care of the titles because of the volume of sales, right? They didn't just buy a DESA. Yeah. And so I think, like, there's just a lot of question marks for me around the validity of this market movement. And it's really showing I think this is what it's showing the general public, we kind of had this conversation yesterday, it's showing how complex being an auto dealers,

Paul Daly  13:36  

yes, that's a great point. Like if Carvanha is having trouble doing it with all their resources, and all the intention and all the tech savviness. If they're having problem with it, like all of a sudden, there should be a new appreciation for the mechanism that's in place. And this is

Kyle Mountsier  13:50  

what's even more intense tomorrow, right? They've built their tech stack. So it's already a complex problem that dealers have to deal with. Plus living on legacy tech stacks. And still based on

Paul Daly  14:05  

last week, where he said like, it's actually a vulnerability to have such a myopic texture from the ground up, because it's in that you're like, well, it would be because it's such a highly regulated industry, it would be easy to come in with from another industry and be like, oh, we'll just do this. We'll just do that. You're like, You got to have this. Each state is different. Right? Like there's, there's no, there's no consistency throughout. Now, I don't think there's any doubt that Carvanha is going to make it right and do the right thing, right. Like I don't think anybody thinks you're gonna be taken for a ride. But the state regulators are like, hey, there are rules and regulations in place for a reason and you just can't get around them. There's no information on when Carvanha is licensed is going to be reinstated in Illinois. And so Carvana statement on this is this Carvana has come compliantly operated as a licensed dealer and good corporate citizen in the state of Illinois for several years. We strongly disagree with this state's characterization of both the facts and the law, leading to this action. And we're actively working with the state to resolve the issue. And they agreed that we will continue delivering already purchased vehicles, we look forward to resolving the issue in the future. So Carvana is like, look, we disagree. We've been a good corporate citizen for several years. You know, we're gonna get this right. And we're gonna, we're committed to doing it right and doing it together. You know, if someone already purchased the car, Illinois is gonna say you're fine to deliver that car. But granted, I mean, this isn't the first time this has happened with Carvana. They did lose their license, if you remember for 180 days in North Carolina, for something very similar. And I didn't know this, but they were very close to losing their license in Florida, as well.

Kyle Mountsier  15:39  

Yes, exactly. Yeah. And okay, so here's, here's my thing is like Carvana. If anyone from Carvana is listening, it might just make sense to ask the dealers what they do.

Paul Daly  15:52  

Oh, man, well, you know what you can come to a show to con, there it is,

Kyle Mountsier  15:57  

you will be sitting with the best dealers in the country that are executing this an extremely high level with less resources and legacy tech.

Paul Daly  16:05  

Yo, there's something about the auto industry, when I saw I met Ernie for the first time and he Garcia, the CEO, he was at the Automotive News retail forum. And there was a great exchange of ideas. And every savvy dealer I knew in that room wanted to talk with him. At the time. It was kind enough to come on look like. So there's a lot to learn Carvana look, if just just come to a certain con, you're invited, you're invited. You're gonna be surprised at how warmly You're welcome. And you might actually be like, You know what, Steelers aren't so bad. You know that already. But you know that already, he was just

Kyle Mountsier  16:38  

that already. That's right. The salespeople, they aren't so bad. As we said yesterday, a lot of people actually want and desire to interact with salespeople and the best salespeople, and there are some really incredible ones out there in this industry.

Paul Daly  16:52  

Yes. And speaking of people realizing something about a dealer brand for the first time segway segues.

Kyle Mountsier  17:00  

Come on

Paul Daly  17:01  

the new Cadillac IR lyric Evie is the data is coming out and it's pretty much grabbing up a totally new market share, which is

Kyle Mountsier  17:10  

not this is not your 1987 Grandma's boat ride.

Paul Daly  17:15  

Not your Mary Kay pink Cadillac anymore. Not

Kyle Mountsier  17:19  

even close. Right? So 70% of purchasers of the Cadillac, lyric Evie are new to the brand, meaning they are gaining markets their quest. Whoa, right. 68% of them are Gen X or Gen Y meaning new money into the market are going after the

Paul Daly  17:42  

percent of the 70%. That's wild. Right? So so half of the lyric buyers that are coming in, totally are Gen X and Gen Y have never owned a Cadillac or even considered a Cadillac before nuts company has 250,000 people interested in like hand raisers we would call them well, they'll begin deliveries to later in the summer. But here's the deal, talking about product market fit, right and not only building something that is exciting. We talk about this a lot. It's this topic of convergence, right? The convergence of Evie technology, right? This new even I'll even bring in like a blockchain world. Right? There's a young attention on automotive, and Cadillac just dropped the bomb in the lyric. They were like, Hey, we think this is what you want. And they've talked about it right? They've had a good marketing strategy around it. And now they're starting to see the fruit of that in this data. Now we'll see what happens when it comes to getting the car the delivery experience, the consumer experience after that, because, you know, they tried to they've done it somewhat with Matthew McConaughey. Right, but like, he's, he's the guy that like my age. I won't even say our age, but he's just cool, right? Everyone's like, Oh, he's cool. He has a cow. Great. Oh, wait a minute. I messed up. That's Lincoln.

Kyle Mountsier  19:02  

That's yeah, that's Lincoln. Wait a second. So Cadillac. Their approach I think is altogether different to last

Paul Daly  19:08  

Cadillac marketing campaign, you remember? person?

Kyle Mountsier  19:14  

I don't remember. I'm lost on it. I'm lost on it. So okay, so So but I think that this is what's interesting is the reason why we're not seeing the campaign is they're entering they're going after a different market than when typically see a Matthew McConaughey Lincoln campaign. Right. And so they're they're going into this this Gen X Gen Y. And if I had to guess they're they're grabbing market share from from communication platforms that are not typically use the high other OEMs and they have to be like, maybe we need to do a little bit of research on this. But when I think about this, I think this is just a prime opportunity for if your brand at your dealership group is entering any level of Eevee or hybrid market To share and pushing into that, over the next couple years, you have a unique opportunity in your local region to be the authority on that conversation in and amongst the places. So like getting your people on Reddit, getting your people on Discord channels, getting your people in those places where the conversations around EV and hybrid are happening the most is actually like the ground level roots level marketing strategy that, like these people are never paying attention to the Sunday night news. Yeah, right.

Paul Daly  20:34  

Now and so it's not just getting your people ready. It's also learning how to speak the language, not the language of the EV you need that I mean, that's that's table stakes. You need to do that to be the authority. speak the language of the culture. Yes, right. That is the essence of empathy and marketing, right? How is the other person perceiving the world? And how can I link up with the way they're already perceiving the world? Well, we are thankful that you're perceiving the world a little bit through the lens of a so do in this show, share it up. If you haven't ever shared the show, share it out tests, you might like this,

Kyle Mountsier  21:04  

like do the comment thing. Yeah, all that all that

Transcribed by https://otter.ai

‍