Lithia Records a Record, A Rural Dealer Group is 1st in GM EV Charger Program Rollout, Zoom Calls On Airplanes

October 21, 2022
We’re closing out the week of regular programming as we talk about Lithia’s record Q3 numbers with a twist. We also talk about a Wisconsin Dealer Group who is the first to execute on a widespread GM EV Charger program, as well as the new Starlink internet service on commercial airplanes coming soon.
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Lithia Motors hit a Q3 record as their net income increased by 6.9% to just over $330m and total revenue jumped 18% to $7.3B as reported in their quarterly earnings call

  • Both new and used sales were up 4.3 and 6.4% respectively
  • They continued to buy and sell throughout the quarter, returning to the Wisconsin market in july
  • Purchased 5 Airstream dealerships in the Pacific Northwest in October
  • Avg new car sale $47,416 w $5789 gross (up 11%)
  • Avg used sale $30,361 w $2478 gross (down 19%)
  • Same store sales total units down 6.4%
  • CEO Brian DeBoer said "Our teams are focused on improving operating leverage as fundamentals normalize across our industry,"

GM’s Dealer Community Charging Program which was announced last year has installed their first 2, level 2 EV chargers  

  • Wheelers Family Auto Group in Marshfield, Wisconsin, are the first to install the 2 chargers  
  • Owner Mary Jo Wheeler-Schueller said “This is the first one in North America. To offer this will put Marshfield on the map. This is a great stop for people commuting from other areas to stop and check out our community and what Marshfield has to offer.
  • Co-owner, Daniel Wheeler, added that “there are not a lot of chargers” in Central Wisconsin and there are “ton of people” commuting north.
  • The Dealer Group has purchased 5 chargers total through the program for $4,447 each, or $22,245 total.
  • The GM program plans to install up to 40,000 Level 2 chargers across North America as GM notes that 90% of Americans live within 10 miles of a GM Dealer

Starlink, Elon Musks’ satellite internet service provider announced that the high speed service is coming to commercial aviation starting in 2023 offering service as fast as 350mbps per plane

  • From the starlink site: Starlink can deliver up to 350 Mbps to each plane, enabling all passengers to access streaming-capable internet at the same time. With latency as low as 20 ms, passengers can engage in activities previously not functional in flight, including video calls, online gaming, virtual private networks and other high data rate activities.
  • Currently, the very best speeds on planes top out at 100mbps
  • Other features from the site include a low profile design, easy installation, and a full hardware warranty as long as there is a monthly subscription
  • One time hardware cost of $150k, monthly subscription from 12,500-25k / mo
  • You can reserve right on the site

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Kyle Mountsier, Paul Daly

Paul Daly  00:21

Yo, I've been waiting for Friday all week long. Not really. It's just Friday though we're talking about listening, recording a record of world gear and group launching its first EP and a GM program and zoom calls on airplanes. I go to the people that sounds really annoying. When I read a lot of be on a zoom call on an airplane, I don't want to see anyone else on the Zoom call on an airplane.

Kyle Mountsier  00:43

Now if you are making a zoom call next to me on an airplane, it would be my great honor to make that a terrible call for everybody else.

Paul Daly  00:55

I'm gonna ask for the pretzels. And I'm just gonna be like, reach right

Kyle Mountsier  00:59

over right in the middle of the gamma. Yeah. What are you doing? Yeah.

Paul Daly  01:07

Guys, like wait, everybody else on the go. We'll talk about that in the second cause all messed up because he gets this everybody lean in. Kyle had a layover yesterday. His next all messed up. So Kyle lives in Nashville. So he's always like, oh, there's no direct flights because Nashville is direct flights. And by the way, he's always like, Oh, I don't know if I want to go to the second best coffee shop in Nashville or the third best coffee shop in Nashville and walk through the airplane. So he had a layover when he complains about a layover. The rest of the world tries to keep their middle fingers down.

Kyle Mountsier  01:38

Literally, the Pacific Northwest Seattle and the Great Northeast like Syracuse. Burlington, like those. That's That's it. That's the only places I can't get direct. It's unbelievable.

Paul Daly  01:50

I think you just said it right? It's the Great Northeast. Boy here. Hey, I'm excited because I'm going to be going to Nashville. For the second time ever. I've only been to Nashville actually, once it was for Donald Miller thing. And it was like this pandemic.

Kyle Mountsier  02:05

We're gonna we're gonna say this is like the I mean, I kind of made the unofficial official analysis. Sorry. It'll be

Paul Daly  02:11

my third time in Nashville. I'm sorry. Oh, that's the official unofficial announcement.

Kyle Mountsier  02:15

This is the official unofficial I kind of made the unofficial official announcement in the lead in the email the other day, but today, we can officially officially announced that we are doing the extra urine extravaganza that we are hosting it in Nashville, that it is going to be something like you've never seen before. Probably something that we've never done before. Even if for sure an extravaganza last year, you're gonna be like, What are these guys doing? And we're really excited to I'm excited. My wife's excited to host everyone Nashville. She's like, look at all these cool things we can do. There's actually this really neat and not a lot of people know about it like antique car museum in Nashville. So if you're coming around Nashville in December, you might you might go want to go see the little car museum.

Paul Daly  02:58

A nice little it's going to be on the 20th. So it's Tuesday, December 20. We already have a date, we have a location. And we're gonna have a live studio audience this year. Yeah. So we're gonna

Kyle Mountsier  03:07

know someone who knows someone to get yeah, that's all I'm saying. And that'll probably be a mix

Paul Daly  03:12

of dealer guests. Some of our sponsors I'm sure will want to go. But we're doing the whole thing live band, it's gonna be a thing. So okay, I didn't plan on announcing it. But we just announced it great and more details to come. Now we got to put a post out or something laying

Kyle Mountsier  03:27

out all those things that come in, they're coming, but it's

Paul Daly  03:30

Friday. It's fall time. Everybody seems to be in a pretty good mood. Lately and speaking of people in a pretty good mood, segue. Lithia motors hit a cue three record all time record, as their net income increased by 6.9%. To just over 330 million in total revenue jumped 18% to 7.3 billion as reported in their quarterly earnings call. both new and new sales were up both 4.3% on new 6.4% on used they continued to buy sell like buy and sell their dealerships throughout this this is a cool one. So they did return to the Wisconsin market. But they purchased five Airstream dealers in October so I know October's not q3 but they found they wanted to announce it on the call. They now own five Airstream dealers

Kyle Mountsier  04:23

and and naturally they they're in the Pacific Northwest Absolutely. They also interestingly enough also purchased three Birkenstock stores now that's a that's a lot that's not true.

Paul Daly  04:35

Opened a mini mall that has a Patagonia right kind of never know what was it Jim? Gaffigan you never know everyone's dressed like a random hike might just break out. Just break out. Yes. So yeah, the airstream dealers are interesting, and I'm sure we'll hear more about that. Some interesting data too from them on average car prices average new car sold $47,000 average used car 30 1000s So the use car, the new car number actually went up 11% already super high, up 11% more. But as we all know, the used car market is a change in use car sale, down 19% on their average gross. How about that,

Kyle Mountsier  05:16

which is interesting because included in the used car sale opportunities is driveway, which pushes much more on the used car side. So, you know, you just wonder is like inventory acquisition or the right. I mean worry or what's what's got to

Paul Daly  05:31

be what it is. I mean, you think of any company being aggressive, and they're used car strategy, they're going to have to be aggressive on the buy side. First. Yeah, and if you're going to be aggressive on the buy side, when prices are high you do you are like, you know, disproportionately exposed to when the dip happens. Like you're gonna be holding the bag a little bit, you just have to, you know, be be sure that you're ready to handle it CEO Brian de Bourgh said on the call, our teams are focused on improving operating leverage, and fundamentals as fundamentals normalized across the industry. So everybody's starting to say sing that tune of operational efficiency,

Kyle Mountsier  06:04

operational efficiency, because here's the thing. When's the last time that you've seen used car total gross average is 50% of new car total gross averages, which is what they're actually less than 50% which is what Lithia is, is crazy right now. So what that means is if for some reason, new car grosses go back to or close to what they were before, you have to dial in efficiency in your operational processes in your expense structures and all of that. Yeah, it's, it's definitely it's a telling tale. And I think, you know, just in the dealers that we communicate with on a regular basis, this is something that everyone is looking at. People are looking at aged inventory that they didn't really care about, at some point, you know, David Long thanks for mentioning that there's an age issue and inventory recycling is happening. You know, operators are going hey, look, let's get let's if we haven't been on a tight turn let's keep on that tight turn. And so that's why you see grossest start to go down that's why you start to start to see him you know, inventory shrinking to manage expectations and so then you see sales volume going down. It's all just this trickle down effect.

Paul Daly  07:16

That's truth. Trickle down we go speaking of trickle segue we're gonna tie them all together. Together you know what a trickle chargers Right? Exactly. Okay, okay, well,

Kyle Mountsier  07:31

they need hours to get your car charged your car or like a motor so no battery, the trickle charger. The trickle charger for a car takes like 23 hours.

Paul Daly  07:42

The battery it's healthiest for the battery. Well, GM GM is dealer community charging program, which was announced actually last year. They finally installed their first to level two Evie chargers. The wheelers family Auto Group in Marsh is Marshfield, Wisconsin, are the first to install the two chargers. Owner Mary Jo Wheeler says this is the first one in North America to offer this will put Marshfield on the map. This is a great step for people commuting from other areas to stop and check out our community and see all Marshfield has to offer I love that making it like hey, this is kind of a drive thru community but not anymore. If you're in an Eevee

Kyle Mountsier  08:18

I wouldn't even call it like a drive thru community just as in just I haven't.

Paul Daly  08:23

I didn't open it. I didn't open the map. I didn't look at open maps.

Kyle Mountsier  08:27

I've got it pulled up. Maybe Maybe Isaac deal producer. Maybe he can get it pulled up. But Madison and Milwaukee are kind of like your big Wisconsin cities. And then you got Wausau, which is kinda close and this is like, in the middle. Yeah, Green Bay. This is at least a couple hours from Green Bay, maybe like three hours it looks like we're just completely West and so like, oh, there's just there's nothing happening out there. I mean, I'm proud of them for expecting like super proud visit a bunch of visit Marshfield tourist. You know, attraction anxious. Maybe Marshfield is really cool.

Paul Daly  09:05

Hey, whatever you made it on the show this morning that

Kyle Mountsier  09:09

that they're leaning in, you know that they're and I think like if a rural Deere dealership in Wisconsin where you know questions on Evie charging with the cold weather are already high, if they can pull this off and they see a path to efficiency, a path to customer acquisition or customer stopping by or anything like that. Then shoot, if you're an, you know, a suburban or urban dealership, let's go but you weren't you know, yeah.

Paul Daly  09:39

What do you think? And so the co owner Dale, Daniel Wheeler, said he there aren't a lot of chargers in central Wisconsin, and we talked about this, I don't know a few weeks ago now about just like the charging deserts, right as you get up north Midwest. You know, there's just not a lot of people that have Eevee. So he says, but there are a ton of people coming north, commuting north, right and he's like, so he sees like A little flow there. Um, they do purchase five chargers total for 440 $400 each. So 22 grand total is their investment. The GM program plans on installing 40,000 level two chargers across North America. Oh, thank you. We got the map up now. Well, there it is. Big Red Arrow, little red marker. I gotcha.

Kyle Mountsier  10:21

I mean, I guess if you're going from Green Bay to Minneapolis, Minneapolis, John drives or has a drive. I hope that little like little country roads, you know, get out there and into Marshfield,

Paul Daly  10:33

we'll get the stat GM notes that 90% of all Americans live within 10 miles of a GM dealership. Now that's a frickin network. That isn't at work. But let me say this, I think that thinking locally, right? So they're taking the trend. They're taking like the the broader need, or the of Evie there. But I think most importantly, they're championing their community through this. So they spent 22 grand on the chargers, I guarantee you, they are the talk of the town. And if you live in a small town, having something that feels like you're connecting to the bigger trends that you're hearing and seeing all over the place, I think that's going to do a whole lot for that dealership, just local bizdev. Right, if they just took their marketing budget and their ad spend and they like didn't do that for a few months. And they so they could do this charger thing. I think that it's probably worth it because their brand was just taken a step up. Yep. Yep. So I like that play all the way across serve the community, building their brand. And being the first to prepare for the EV kind of the coming things for the Wii. And you and I have a soft spot in our hearts for the early adopters.

Kyle Mountsier  11:43

I love them. I love them. I'm proud of them. And hey, maybe we will reach out and get a little one on one because I like that idea. These are some these are some movers and shakers. So good. Good on good on your fam wheelers family Auto Group. Good on. Yeah. I'm telling you what I'm gonna say Good on you on this next story. So speaking of good on, yes.

Paul Daly  12:03

That was actually this whole show. The whole show. I've really just been waiting to talk about this one.

Kyle Mountsier  12:12

Yeah, I've I've, I flew yesterday. So I've really been waiting to talk about this one now, not the video call portion. But Starlink Elon Musk's satellite internet service provider, who you've heard a lot of especially because of the recent support of Ukraine, has announced that the high speed internet service is coming to commercial aviation starting in 2023. offering us offering this service as fast as get this 350 megabytes down per plane. Wow, that's, that's moving.

Paul Daly  12:50

Let me let me back up for a second if you don't know what Starlink is. So Starlink is satellite internet service. They've been launching satellites in the space for the last like three years now they have a pretty substantial mesh network up there. And so you can buy this, you know, our buddy there and don't has it. And it's like a little disc and you just set it out on your property somewhere. And you can get high speed up and download, you know, no matter where you are in the country, or actually in the world. And so they've just found a way to pop this little sucker on top of a commercial airplane. We typically that little sucker it's probably like, yeah, no, it's not actually no, it is. No, it isn't. It's actually super low profile.

Kyle Mountsier  13:28

They have a profile. It's like that skinny, but I mean, it's a little wide, but it's compared to a plane, it's not that huge

Paul Daly  13:35

compared to inflate. So typical typical airlines speeds. So and the 350 megabytes is shared by everybody on the plane. That's typical speed at max, when you have an airplane that has great internet, you have 100 That's to be shared by everybody. So they're saying now like, you know, video calls online gaming VPNs. So you can have secure communications from an airplane now. Look, I'm not excited about people being on Zoom calls. Or you know, you're not even allowed to be on a phone call on a plane think I don't

Kyle Mountsier  14:02

think you're gonna see this. Well, I don't think so. You can do video calls, you could do an air, you could do a you could easily do a FaceTime call.

Paul Daly  14:11

Could you do a live stream? I'm asking for Fred's stream and we're gonna have to buy all three peanuts, you know, we're buying down the plate. I don't know, put anything past us, past us. But here's the I think the very, very best part of this story. If you go to the shownotes The link is in there is the Starlink site. It's number one. It's beautiful. It's like you're buying an iPhone. Right? It has the features. It has the pricing on it. It almost

Kyle Mountsier  14:41

feels like if you had the money and you weren't an airline, you could figure out how to buy one of these things. Right.

Paul Daly  14:47

So just the retailing side of this. I've never seen a commercial product retailed right and I think it's a good it's a good note to take to auto dealers saying like look, they are retailing a $150,000 satellite uplink with a 12 to $25,000 a month subscription. And they made it simple. And they hit the key points. And then you can preorder right on the site. So look like I just

Kyle Mountsier  15:13

pressed, I hope that every airline, like, at minimum, like a delta and an American should just be all over this should be

Paul Daly  15:24

I will I will literally pick flights based on who has this and who doesn't have this? Yeah,

Kyle Mountsier  15:28

absolutely. I mean, just the the ability to work, the ability to be interactive, the ability to text and all of those things that come with just like having that as access. And I really hope I mean, this, you know, when you break out the cost of this, it doesn't seem that aggressive, like, you know, from a cost perspective for an airline per plane, and maybe I'm wrong about that. I have no idea. But like, you would think that this would be something that would be a new value add because of the access,

Paul Daly  15:57

for sure. Whatever they're doing now isn't cheap. It's got to be somewhat comparable. And I like how they also put a couple little features, which is basically a lifetime hardware warranty as long as you're a subscriber so they just they just kind of made it easy. They just kind of made it easy. That's really all the time we have for now we're about to jump into all things use cars on clubhouse if you're listening on the live stream, follow us over that all things use cars, if not pay tomorrow as a Saturday if you got two Saturdays left still on this month, so let's go get a little bit