Lending Leading the Way, Amazon is Primed, JetBlue is Golden

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Paul Daly  00:00

Hello Friday Friday, Friday Friday Friday. Boy we have a lot going on right now. We're gonna talk about ally and lending leading the way to the recovery Amazon being Prime to JetBlue goes golden

Music  00:34

the people really want to know who isn't who and goals to actually go and gold work together. They do want to work together to make sure that Yeah, I know

Kyle Mountsier  00:49

 I was like, Is everything on Fridays coming in hot, we're starting early. I'm hitting the video and all that type of stuff. I got my hat backwards. Still, I don't know I

Paul Daly  00:58

woke up, I woke up with my hat backwards. Oh, man. 

Kyle Mountsier  01:02

I'm getting a shirt that says I woke up with my hat was born with my hat backwards.

Paul Daly  01:06

That's probably even a little bit better. If you don't know it like that. That is a visual indicator that Kyle and I have that like, when we like really get into it. The hats you just flipped backwards. And so if one of us drops into the street with the hat backwards, we're like, oh, it's like that. We we know we're in it. Hey, we have a little celebration this morning. Yesterday, we crossed 20,000 downloads for the automotive trouble podcast, which is a really feel good moment for the whole team here at a soda that works really hard to bring the show to you every single day. If you don't listen to the podcast version. If you're a live streamer, or if you watch this on YouTube or something, check out the audio podcast or just something to the audio. You can listen to me hit

Kyle Mountsier  01:50

us, hit us a comment in there, subscribe to it, you know get that little give us some reviews on there. Give us a review because that's that kind of pushes it up for maybe those that that can't find it not naturally organically. We just want to bring that into the light. And yeah, if you're a faithful listener, help us out with that. iTunes, Spotify, anything takes a community

Paul Daly  02:11

it takes a community. We're also super excited to say the new podcast auto collabs, which is longer form deeper conversations with Kyle myself and the one and only Michael Cirillo hosting. The first Episode Episode One is live. We recorded that this week with New York Times best seller and Chairman of the St. Louis Federal Reserve. Apparently, Jim McKelvey authored the innovation stack. So go check it out auto collabs co ll ABS also a podcast for your listening pleasure. What else we got talking about man, we got a lot of speaker and session announcements coming for a soda, soda con. And that that is just ramping up like to a fever, pitch sponsorships and all those collab opportunities are just about closed. We're just feel so blessed the community of innovation in the industry partners around us just like came from like a like a rushing wave next to us and said we want to make this happen. And we know it was like outside their budgets and that we came to the party late in the year but this is really shaping up to be an incredibly, incredibly special time. If you haven't yet get your tickets at a sotu.com ticket sales are going to ramp really quickly and we want to make sure that you get one because you're listening to this which means you are one of our people what else we we booked something yesterday Kyle 

Kyle Mountsier  03:28

we were we got like five emails and I don't know they did whatever na da decided to do by like putting the urgency on us booking our tickets had Roblox Dallas they got they nailed it for us, right? Yeah, they did. And we got right on it. Yeah, so we booked our we booked our our hotel the primary room block I think was already sold out so they weren't lying. We're like point six miles away from center point three. Well, yeah, that's 

Paul Daly  03:57

the the Omni Hotel was like the one that's like the closest closest that was booked and paid for are troublemakers out there. We're going to be at the Hyatt Regency. So if you want to be with your fellow troublemakers book, the Hyatt Regency let's make Let's fill that that hotel up with all the troublemakers so that we can run into each other in the lobby and spend a little time jamming and you can crash whatever content we happen to be making at the moment. 

Kyle Mountsier  04:18

You'll find that maybe we'll like throw a party there something we haven't really dialed that in. But we'll have some fun one of one way or the other. 

Paul Daly  04:25

Yeah, we will. Yeah, we will. But we have a little news to talk about today. And then we got to bounce because we have podcasts on podcasts on podcasts today, whether being on someone else's or recording our own lot of work going on. So let's get into a little bit of news. First up, Ally financial. We've never done an f&i story. I don't think so a bank story, Ally, Ally financial, they released a report it's linked up in the show notes where they're saying hey, like we expect demand to hold based on the indicators that we're seeing even through the increased interest rate hikes. CEO Jeffrey Brown says despite the VA volatility, the narrative that we've been seeing remains strong, meaning that there's a lot of demand. There's a lot of pent up demand. And even though, you know, some buyers may be pulling back because interest rates are going up or affordability issues. He's like there are four to 5 million buyers that we, we predict our sidelines right now that they stepped out of the market. And they could easily just step right back in and pick up the slack. It's pretty good news.

Kyle Mountsier  05:26

It's really good news, because and we've been talking about this a little bit that that, I think, as as production comes back in multiple verticals, especially in auto, we're gonna see this another surge since we've seen this, over the last two years, we've seen these like three or four, like high level surges, you know, we get, we get kind of a leveling off of a high point, and then we see another surge and I see I think, when that four to 5 million has the capacity to purchase because available inventory, boom, you're gonna see another another hit. And so you know, the CFO Jennifer LeClaire said that they still expect interest rates to rise, which means that monthly payments are still going to be 15 to $20, higher on on similar, you know, price cars just because of interest rates. But that and to her quotes, savings account levels have started to normalize, she said, but they remain robust, even above pre pandemic levels at all income levels.

Paul Daly  06:27

So that's surprising to me that all income levels are still holding high levels of savings accounts. You know, 30 day delinquencies rose in the second quarter on auto loans, but remain still below 2019 levels. Right. We didn't we hear like nuts. We heard there was like, you know, I think we even covered it for a minute. They were talking about repose. And they were talking about this increase in there were some alarm bells going off. I had read another several other things that actually debunked that a little bit and saying, Well, yeah, they rose. But then when you zoom out a little bit, and you look at pre pandemic, and it really ties into what Jennifer's saying on this where she's just like, actually still below 2019 levels. So and, and things like job report came out. And we're still the at some of the best all time. Unemployment rates. So from unemployment rates to savings accounts to delinquency rates, we're just seeing a lot of opportunities still in the market. So I think the encouragement here is, you know,

Kyle Mountsier  07:36

pay attention to the news. But don't just believe the hype, do some research and dig in. Because when you start to look at the way these companies are operating, and the way that their profits and revenue are, are being driven, it totally changes your perspective. And so speaking of large companies whose profits are being driven segway good one, one of the biggest companies in the world, Amazon, has recently said that inflation is not infecting sales for them, like some of their larger online competitors. So just know they're just their largest competitor largest competitors, right, aka Walmart. We're just talking about Walmart. But Walmart, we, I mean, we talked about Yes. The other day, Walmart's like leaning in so

Paul Daly  08:28

well, you know, well, it's an interesting dichotomy that this came out today because yesterday, we talked about Walmart saying, sales are up still, however, they've had to reduce a lot of their, their inventory that is not around like essentials like food. So like a lot of clothes and housewares are being reduced because consumers are focusing their purchasing power on on the essentials. So Amazon is kind of like a little bit of a country statement or a little country spot. And we think they explain why they're saying sales were down a little bit, but they're predicting sales are gonna go up about 13 to 17%. In q3, they say there's no sign of wavering in their 200 million prime subscribers. That's because people are in those shows. I'll tell you what, Amazon Prime TV like that's just a brilliant play. They're like, well, you might cancel prime, but you're gonna lose the TV. Either way. And so analysts as they look at the difference between what's happening in Walmart and Amazon, they're saying, well, a lot of this has to do with income level separation. So the lower income level tends to tends to be Walmart's primary shopper while Amazon tends to hold more of the middle and upper income segments, which really just pushes down the thing we're seeing affordability issues are affecting everybody separately. But when you're looking at the lower income segment, it's getting harder and harder, they're gonna be impacted more and more. And this Amazon dichotomy with Amazon and Walmart just highlights that so this brings Kyle and I always, always always thinking about okay, which part of your customer base is being affected most? And what can you Do to start to

Kyle Mountsier  10:00

ease that pain a little bit? What is my customer base? Are they being affected? And how do I communicate or ease the pain with the inventory or the marketing practices that I do because you have to understand who your market is. And your market isn't going to shift just because, you know, you want it to shift. And so recognizing, like, how does that market interact with with purchasing right now is really important to the way that you're communicating to them about your value propositions, the opportunities to purchase or service or anything like that. Yeah, just recognizing that your community, your audience is an important factor in the way that you go to market.

Paul Daly  10:39

That's great. I wish I could think of a segue right now for this JetBlue story, but I can't, so I'm not gonna Oh, this story is one that has been kind of kind of your like, you're really not gonna push the button. I was I was I was ready for it. Anyway. Anyway, time. Speaking of segways. Brian, all right. So this, this next story has been really cooking a little bit like a Jerry Springer show, in publicly traded companies in the last few months, JetBlue. And spirit announced the closing on a $3.8 billion acquisition where JetBlue was going to acquire Spirit Airlines. Now it's been full of drama because frontier, the other discount airline and spirit had been in a relationship. And JetBlue stepped in and said, like you sure you want to go with him? I mean, I got me a job. In middle school, it was, it was, it was such a different dichotomy. And they were like, no, no, we've been doing this forever. And JetBlue was like, I understand you've been together, but I'll give you 400 million.

Kyle Mountsier  11:43

Like these right here. I was just like, l

Paul Daly  11:43

et me give you 400 million reasons why you should go with me. And so, you know, initially, frontier was arguing the antitrust regulators would never let JetBlue and spirit merge, because it would be too big. JetBlue had the opposite argument and said, You know what, they're gonna do that anyway, it's about the same thing. So they ended up JetBlue ended up paying shareholders $400 million as a breakup fee, it's gonna make you feel better. Imagine that you have someone breaking up with you. But they're like, hey, it's not you. It's me. But here's your life, save, here's a stack on a stack. Exactly. And they also committed $70 million, saying that if for some reason, that gets broken up by the FTC, that aren't allowed to go through JetBlue, still on the hook for 70 million, our primary goals would be to really advance expansion of a discount airline, meaning that all those yellow Spirit Airlines are going to become blue airplanes. JetBlue is going to basically retrofit the spirit of fleet and a big part of this acquisition and really value and we can get on this for a second people peep the pilots and the staff.

Kyle Mountsier  12:48

There it is. Yeah, because that's the struggle with all airlines and so many other industries right now is finding the people to do the work. And, I mean, I literally dealt with an issue in people. Last week, when I was flying where American Airlines literally, they just could not feel the pilot seat for that plane because of time. And so JetBlue recognizes that that's that's been the primary reason for cancellations is pilot and steward seats, just not being able to be filled. So you expand that expand your fleet, as well as expand your your employees. Like you've got a much greater opportunity of succeeding in, especially the like, the close to now market anytime in the next six to 12 months. Yeah, anybody who's flying hope is I think hopeful that this will help ease some of the pain like the more the increased efficiency and increase the options by a larger and what I mean, it literally is almost going to double the size of JetBlue. Fleet. Yeah.

Paul Daly  13:47

Have you ever had on JetBlue? I was gonna say, Have you ever flown spirit? That literally was my question. I finally said it

Kyle Mountsier  13:53

one time, and I see like spirit frontier and Allegiant pop up a lot. And maybe it's just because of Nashville, but I don't see Jet Blue pop up as an option. So it's kind of interesting. Maybe I might see now Jet Blue because of spirit. You know, you

Paul Daly  14:08

sure will veterans with that. Definitely will. And I've flown JetBlue Have you ever flown JetBlue? No, no, I've had mixed experiences on JetBlue. And when they first came out, it was Rockstar mode. It was awesome. I was like, I can't believe that this is how air travel should be. And then it kind of like kind of waned over time. And now it's kind of mixed. Jeff loose hub jet blues hub is in New York. So that's the New York base, which is why you don't see a lot. And so New York from Syracuse, you can get to New York from JetBlue and a couple other places. But they're, you know what I'm excited about. There's a spirit flight to Nashville that is now gonna become a JetBlue flight to Nashville. Which means you and I are one step closer to hanging out for the day is JetBlue like a little bit more of an elevated experience than a sport than a spirit. Oh, yeah, that's like so and they were they were in tight like so spirits cabins are, you know, very cramped and condensed. They're taking all the seats out and they're going to reformat them like JetBlue JetBlue is is much, much more similar to like an American Airlines experience, their award system like they have like mint, I think is what they call it. Yeah, I've seen that. But yeah, I think they were kind of like, in the beginning, I don't know if it's still this way. But in the beginning, they were kind of like the kinder, friendlier airline, so they probably, like stole some of that Southwest Mojo. And then, yep, I definitely see that I think everybody's ready for a little positive movement in the airline industry without notice, especially in the auto industry, where a lot of people travel, right, you're going to 20 groups and manufacturer meetings, like there's just a lot of air travel in automotive. So I know any opportunity for increased flight patterns and non missed non misconnections is a good thing without a doubt. So sorry, Frontier, keep doing your thing. Maybe you'll be wrapped up in the next one.

Kyle Mountsier  15:51

There's always there's always Allegiant always? Well, I mean, I pull this back down. The reality is, is that finding talent, finding people to do the job and inventory to do it's like inventory and talent. Right now, it doesn't matter what industry you're in. If you have inventory and talent, you're ahead of the game. And so sourcing inventory. For us, that's really pre owned vehicles right now. Because new cars are just kind of whatever the manufacturer has, and finding the right people and making sure that they're cared for and feel great at work, and feel edified and lifted up and encouraged and trained, and, you know, and held accountable, all of those type of things. That is the winning the winning formula to success in every industry right now.

Paul Daly  16:37

Now, it's always been that way. But this is a crucial time for that. Because those are the two primary struggles that you see across industries,

Paul  16:44

you know, this is this is we'd have like another minute or two. This is making me think of all the acquisitions that are happening in automotive. And I've seen so many good experiences where a dealer group or a dealer spends time and energy really cultivating their company culture, and being doing the work to actually be able to communicate that well like through through brand development and internal brand development. And when the acquisition happens, they actually get the store being acquired excited about being part of this new family, right, because they do a good job of communicating it. And in this time, when talent is so hard to get, like, how great is it that if you can acquire another store another group, and then get those people excited about feeling like this is more opportunity for them? That's the winning formula for kind of this consolidating market that we're in so

Paul Daly  17:34

there you go, good, so good. Well, there you go. That's Friday episode. Again. If you don't have the podcast, download the podcast from iTunes or Spotify. We're heading into the all things use card room and clubhouse we're gonna have another amazing discussion. Follow us there. All things use cars on clubhouse. We'll see you next week.

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