‍SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:24

Yo it is so Monday right now. It's been a while since we've been in the studio and it feels like a long time, but not any time at all. So

Kyle Mountsier  00:32

we got a lot to catch up on. So let's just get the Monday morning bounce going and then we'll get into the day go to people really want to know who it is

Paul Daly  00:40

and who it feels really weird to be running a road caster this morning.

Kyle Mountsier  00:46

I know I ran it all last week.

Paul Daly  00:49

So Kyle Kyle's, the one that ran the audio usually during the show I run I run the sound, you know, that sound triggers everything from my board, but on on our little trip car brought his because he drove and I flew and it's easier to drive with the road caster than fly with the road guests.

Kyle Mountsier  01:02

Without a doubt, ya know.

Paul Daly  01:04

So I mean, that's rule number one, right? You never touched another man's road caster. So Kyle,

Kyle Mountsier  01:09

especially when the buttons are all in a different place, you're like, let's start the scope.

Paul Daly  01:15

My labels scratch, if you're watching, so they come with these little labels of trigger pads. So you can label what buttons do what and mine are actually all wrong. Like the trigger pads, I go with my decoy buns, if someone else tries to run the show from my road caster, they're gonna get it wrong, you're gonna get it wrong. So we have a lot of good stuff to catch up on today. You know, obviously, last week, we spent most of the week with dealers and industry partners, but frankly, mostly dealers. And that was you know, we talked about that a lot last week, there's a lot more to come from that, you know, had a great interview with Mike Stanton, Eliza Borges had a lot of other stuff that we did. There's also a lot of news that happened. But because of the nature of us taking some time and travel a little bit, we didn't get to all the news, we have a little bit of catch up before we get into this morning. But let's talk about a solo con because it's one of our favorite things to talk about

Kyle Mountsier  02:04

to talk about a set of con Well, first of all, I'm getting an it's always tough traveling because you know you're being present with the people that you're with, but you're getting emails on email, I mean, my backlog of emails, and then the Text Message Threads. And there's just a lot of energy around it from the industry partners, because that's who for us right now, who we've been able to communicate with the most about it. But we're really excited to, to kind of pour all of the things out that we've told all these industry partners to all the dealer participants and the rest of the industry that just show what we've been working on over the last couple of weeks. And we can't wait because next Tuesday, we're going to launch the full website, we're gonna launch ticket sales to a very select few people, right, there's just going to be a lot of information and cool things that we're going to be able to announce alongside of just getting that going. And so, so next Tuesday is the date

Paul Daly  02:57

I didn't even know that was the official date. Okay, so next Tuesday is going to be July right July 5, coming off the holiday,

Kyle Mountsier  03:04

we gotta go sometime before like when it gets where's the room,

Paul Daly  03:08

but that's it, we're gonna have your calendar July 5 Tickets are gonna go on sale. If you haven't pre registered at a so to con.com. We highly, highly, highly encourage you to do so. Because the people on the pre register lists are going to get first shot at the tickets. All of our events typically sell out this one I am, I already feel bad about the number of people who aren't going to get to go. So if you get on the pre reg list of the show to con.com, you will be the first have the opportunity to buy a ticket, please. We want our crew our our homies or people that have been with us since the beginning to be there with us as well. All right, I also want to send congratulations, first of all, our team crushed it while we were gone. I just want to give a shout out to the asoto crew like literally the asoto crew who had some fun writing the email and running the show and ran some competitions while we were gone. Right a little giveaways based on if you could refer the email. And so congrats, we have a winner to announce actually, and we're not going to do it right now. But a Friday was to win a ticket to a soda con, which in my opinion was the best one we've given up. We're gonna hold one more ticket. And we'll do that like closer to the event when it is sold out. But we'll announce that winner soon. So thank you for referring people to the email, please keep doing it. Even if there's no giveaway because we need our tribe to grow our tribe is growing our people are finding one another. And we need the other people that think like us we need to find the others. And how we're going to do that is by all of us helping to share the word about what we're doing over here.

Kyle Mountsier  04:40

Well and here's the thing I was gonna I was going with real quick real quick thinking about that is we don't just want and and you know this was really apparent to me last week as we are with a whole different amount of thoughts is we don't just want our tribe, our community. We want to invite more people to that that tribe to that community. Maybe that isn't the same exact thought processes or the same intentionality around innovation or, or maybe it's not exactly the way that you think and perceive the world. But that but if more people can kind of understand what we're what we're chanting about what we're saying what what this community is driving towards, maybe fresh perspective actually supports the narrative better. Maybe there's, you know, someone that needs to be encouraged to kind of come to a new realization, whatever that may be. Just bring more people into community, because community is going to be the best way to see automotive. Not just survive, but thrive.

Paul Daly  05:39

Absolutely love that. Good morning, Brooke. Good morning, Larry. Thanks for saying hi, on the live stream. We always love the live stream, folks, because we know you're here with us right now. So in order to do that, give to you right, we got to get to the news a little bit. I lost a segue. I had to say we're going but we're not. We have a couple stories from last week. That's all good. You said important words. You said. Okay, a couple stories from last week that we that came up late in the week, we didn't have time to cover especially because you ran some special programming. But car lots you that name may sound familiar new car lots spelled with a Z at the end is a company that kind of, I guess you could talk about them as like a disrupter, or at least a new player to the used car market. Had it really dialed in branding really went with a unique model of Yes, selling being used car retailer, but doing a lot of their inventory acquisition, actually through consignment. So it wasn't really acquisition was like how do we get cars to sell, we're gonna sell them on consignment. And they went public, their share price was $11, I think and 49 cents was the highest is now down to 46 cents. After a long stretch, obviously, they went through a long stretch of moving things around this a little bit of a drop. But, you know, there's this element of consigning vehicles being really difficult when you can get for prices for your used car vehicle and or used car and a check within like a day. So like, why do you need to wait to get topped out for the car. So obviously a major blow to that model. But they close half their brick and mortar locations 11 stores in total, and reduce their workforce by about 30%. And yeah, so I mean, that's just like a little do you have?

Kyle Mountsier  07:13

Do you have any up near you? Car? Lots? Yeah, we have one we ever want to actually right down the street from where I'm at. And what's that?

Paul Daly  07:22

Is it closed? No, I

Kyle Mountsier  07:24

think it's, well, I drove past it last week, to open so I don't know, they may have shuttered the doors at this point. But they, you know, what I what I did notice is they they took over in an older building, that that used to be a collision center, actually. And they did a really good job at like, delivering what looked like a great retail experience. Yes, from the way they organized the lot the way they the way they did the interior, because you can kind of see it from the street. And so, you know, I just think that there's an element to our people ready for a way of doing business, right. And that's, you know, you see consignment in clothes a lot, but not so much in cars. And some dealers have done consignment in the past, and there's a way to do it. But like you said, with everybody beating down your door to buy your car now for cash, major blood inventory, rough place to be I will say that Carlotta is run by a lot of really smart people.

Paul Daly  08:26

I had a couple of phone calls with Michael bore the CEO actually before they went public. And I would not count them out. Very smart. way smarter than I am way more educated. And this strategic retooling is I think exactly that its strategic. So we'll see just a little more of a retail mindset. So that's exactly it. That's exactly it. When you have a retail mindset in this day and age, you're gonna find a way as long as you don't run out of money. So speaking of running out of money I just couldn't stop. So I just stopped. So the great this great quote came from Elon Musk about the new tech set the Giga factories. one in Austin one in Berlin. Basically Elon Musk call them gigantic money furnaces, he said they should there shouldn't be a sound like a huge roaring, whirring sound that should be played in the factories because they're just burning money faster than you can imagine. And that that quote, just

Kyle Mountsier  08:26

I don't know, if that's like high level of self awareness,

Paul Daly  08:32

or I think that's no filter. I think I think that's just no filter, right? And then he kind of he he said some of these comments in a Texas Tesla kind of enthusiast Owners Group, right. So it wasn't like a press conference or anything. But like, I mean, what? You met the CEO of a publicly traded company, but like, yeah, these new factories we built Yeah, they're just gigantic cash furnaces. We just shoveled cash into them, and they just burn it. But I mean, obviously one of the real realizations is supply chain logistics, you know, he said, to call it again, they're producing a puny amount of cars and that's just another word that would really just come from Elon Musk, you know, when it comes to just quantifying it puny, how many of them making puny amount. And so I just thought it was funny. So I threw it in the show notes because it's just par for the course. But there you go. That's how they're dealing with supply chain issues. Alright, let's get into some today's news. Okay, so high news. I think this is Automotive News This Morning. high gas prices are not swaying owners toward buying smaller cars. If you're around you remember, in 2008, when the gas prices got over $4 a gallon. Everyone was talking sedans,

Kyle Mountsier  10:33

you couldn't get a truck off the lot. Literally. No, it was wild. Ben stock

Paul Daly  10:37

was slinging civics like you couldn't imagine even know back then. But I bet he sold a quite a few civics back then. But that's not happening this time. In survey, only 17% of SUV owners say that they're they're even considering or would even consider a smaller vehicle. A lot in the article cites, you know, the fact that fuel economy is actually in a lot of models gotten up to 50% better. Like one example they cited was the F 154 wheel drive, right? 21 miles to the gallon. It wasn't that case, it used to be like 13, or 18. And so that's just

Kyle Mountsier  11:12

I think this is just, you know, there's a lot of talk about recession, and there's a lot of talk about inflation. And, you know, the thread that I keep remembering and hearing is, is I hear Jonathan smoke, and I hear him saying that the amount of disposable income still left in bank accounts is still at an all time high. Right? So like when you think about the difference between a $40 Fill up and a $90 Fill up? Oh, yeah. Right. That's, that seems like a lot. But I, but there's still obviously enough, you know, enough kind of left in the tank from a disposable income perspective for people to hang on to or seek purchasing of higher miles or lower mile per gallon vehicles,

Paul Daly  12:02

ya know, without his behaviors changed, right? vailable cash where you're prioritizing that cash, we've covered a number of stories saying people are prioritizing travel. Right? They're prioritizing travel, which makes sense when you were locked down for a good period of time to say like, Hey, I'm not going to spend it on this. I'm going to spend it on this. And obviously, like, if you can help it right, you don't want to travel in a Honda Civic, you want to travel, right, and then explore or, and

Kyle Mountsier  12:27

we talked about last week about how it looks like that, that vehicle vehicular travel for summer vacations is going to be at an all time high. So you think about like the cost of a plane ticket compared to the cost of gas and people being willing to take the time to drive. You know, there's still an imbalance there. It's still a cheaper option overall,

Paul Daly  12:49

ya know, without a doubt, oh, gosh, we could have put we could have talked about plane travel today. But we get up. But, but we didn't. Hey, actually, I'm gonna drop into the show real quick. This is a real time correction. Right? Some some news organizations bury corrections on page 87. Right of the knitting section. Not us. Kevin Jones, a good friend of asoto, who says Hi, Carlos was actually a spec. They weren't publicly traded. So thanks for posting that in the comments, real time correction. redact that, from the article, car lots is a spec not publicly traded. So we'll talk about

Kyle Mountsier  13:22

that. Go ahead. No, they weren't publicly traded. They were just on a spec. So

Paul Daly  13:26

they brought us back in the share price. Exactly. Double Double reduction. It's Monday. It's Monday. It's

Kyle Mountsier  13:32

okay. It's okay. We're getting in it. We're getting into it.

Paul Daly  13:34

We got to go. We are. So let's talk. Let's keep moving. Right. Let's get through a couple more stories here. Remember, vehicle subscription options were like the big talk. I mean, I remember vehicle subscriptions as being like the thing that we're gonna kill retail auto dealers, just like four or five years ago. Remember that? Remember? Oh, yeah, people are gonna get they don't they don't want to deal with all the hassle. They're just going to get a subscription, it's going to cover their insurance and their other stuff. It's going to be one payment. Everyone's gonna love it. And everyone's like, crashed. And then fair crash and Cadillac canceled their program, right. And all of a sudden, they weren't the biggest thing. Well, they seem to be maybe making a little bit of resurgence in some niches, a new company called autonomy, and it is autonomy.com. I check. I think they probably paid a couple of bucks for that domain. I was impressed. But its a subscription service that helps is really intended to help users get over that the uncertainty of getting in an Eevee, which is pretty cool, right? So many questions around an Eevee. Can you get in? Will it suit my lifestyle? Will it run out of battery when I need it to so they're seeing that consumer need and they've crafted a subscription service that allows you to subscribe to a Tesla Model three. That's the only vehicle they have subscriptions on for as little as three months. That's pretty awesome.

Kyle Mountsier  14:48

I  have to I've been saying this since I was first selling the leaf back in 2011. Right. And what I've been trying to what I've been saying is that the Eve V model, and specifically, a high level tech vehicle is so ripe for some level of subscription model, especially when you go from engine technology to battery technology, because you're getting closer and closer to phone level technology. And so if you think about it, most phones have moved, basically subscription level, very rarely do people pay the cash upfront for a phone, they actually lease them over time, and then upgrade on time. And so you think like the level of upgrades that you can do. I mean, just recently there, there's now a company that has created a battery that can go 1000 kilometers, which is like 671 miles or something, right? Who wants who wants a car two years later, when you're getting 100 miles, and someone's out here getting 671 miles and maybe more and more and more or anymore, right? And so battery repurposing, like technology, repurposing, recyclables, all of that all of the things that come along with phone subscription services, really, in my opinion, slide over. And I think in the next five years, we're going to see this trend toward how manufacturers can not just have subscription services for their onboard technology, but for the total vehicle. And I think if the OEMs were smart, they would increase loyalty, this is what phone providers have done is they've they've, they've proven how to increase loyalty. So churn rate in most phone providers is actually very, very low,

Paul Daly  16:33

comparative to what you see providers, you mean manufacturers,

Kyle Mountsier  16:37

or manufacturers, yeah, many of and even providers actually going from like, you know, a T, mobile to an AT and T or things like that, because they, they get you in the subscription models. And so loyalty actually becomes much more Premier Plus, they have a really great communication pattern via text. So it's, it's a whole, like it's a whole, you know, capture of market and, and loyalty that I think that auto manufacturers and and auto dealerships have an opportunity to tap into?

Paul Daly  17:05

Yeah, we'll see how autonomy does. So basically, the way they're structured right now you can get as much as a 36 month lease on a Tesla Model three, I don't know how they're acquiring the vehicles, there are a lot of questions, right? Like say I lease it for three months, and then I don't want to keep it what happens to that car. Right? They say most of their cars are brand new, most and or have under 500 miles on them. So basically, they have a couple flexible payment plans. So you can pay $4,900 down and get one for 490 A month or you can pay $1,000 down get one for 1000 a month. Everything's all wrapped in and included. So I mean, definitely solving for a pain point. We'll see if they make it we'll see if you know just like when one startup dies, three usually sprout up and try to try to do a little better or a little differently. And what we'll see where this pans out, I mean, obviously a complex thing when you're using a car like a car versus a phone, but like with mentality shifting technology shifting, we'll see what happens with that just is an interesting little development and reminded me like oh, yes, subscriptions. This, this definitely thing everyone was talking about, though, it's a fixture work. But although they're kind of this, this is a different thing, right? This is a different pain point. It's solving, not just people don't want, they just want ease and simplicity of building like this is different. Like you just pointed out the technology and all that stuff. So speaking of doing things a little differently than we have in the past. Segue a little different.

Kyle Mountsier  18:32

Okay, look. So here's, here's what came out. But then I'm going to tell two stories here. Okay. So several retailers, some of them including target Walmart gap, American Eagles, a few other big box retailers in their earnings calls. I had notes about how stock issues and we kind of ran the story a few weeks ago about like new stock issues are starting to pile up especially from, you know, people not purchasing some of those things that were on the shelves, and so they're having to do heavy discounts. Now what they're running into is stocking on returns. So because there's a high volume of purchasing, and now a high volume of returns, actually stocking those returns and getting them to the places that they need to go is becoming a very big issue. And I cannot wait I just saw this last night and then this morning. I can't wait to call my buddy Matt because he is with a company that runs they actually manage the returns for companies like Best Buy and byebye baby and Home Depot and a bunch of others along that like big box retailers to see like what's the actual trigger here because what his company solves for is the pain points on logistics from I have to get this product either back on the shelf and understand what the discount model is or through to where how could they traveling liquidating it all of all of the stuff and the crazy thing is is return handling costs can be 15 to 30% of the total overall cost of the original items. So what these retailers are now considering? And it seems like it's going to come down the pipe that for a large amount of retail goods, they're actually going to not accept the physical product in return, but only return your money.

Paul Daly  20:20

So it's a return plus return, I've actually had that happen. I mean, that's been happening for years. For me anyway, with Amazon Prime, Amazon Prime, right? You'll buy something and it'll be a relatively low dollar amount and something's wrong with it or whatever. And you got to send it back. And you know, they process it, what was wrong with it? And then they're like, great, you can just keep the item or donate it. And so yeah, I

Kyle Mountsier  20:41

guess, like, I, my wife, actually, we did Instacart this weekend, right. And something that they said was there, or said was said was right, they actually purchased the wrong thing for us. And I'm telling you, within six seconds, we had that thing refunded into our bank account, like, it was just it was so much easier than us having to get on customer support message, take a picture do anything like yeah,

Paul Daly  21:09

all that has a cost to it, or like, like, ease,

Kyle Mountsier  21:13

boom, go. Right. So and so it opens up these retails for fraud without a doubt. And I think that that's, you know, that's probably the, the, they're trying to figure out that solution, you know, you can I know, you know, you go into Home Depot or Lowe's, they actually take your, you know, if you don't have a receipt, and you don't have the item, they actually take, you know, your your photo ID. So there's probably some level of that type of thing.

Paul Daly  21:40

I think, I think it's more along the lines of this. I order something, I return it realize it's an item that's not going to require me to return. I have a Reddit board, not me personally, right? There's a Reddit board somewhere and all of a sudden, the alert goes out to everybody targets gonna be like, hey, look, everybody's buying this little squishy thing for 499. And then they're all returning it. So like, I'm so happy. I'm not in that game, Kyle. That sounds like a terrible thing to have to manage. But the bottom line and the point of a lot of our stories today are that look when creative think well, things change, consumer mindset change, business, logistics, change costs change. creative solutions require that you have to do things differently than you've done them ever in the past or something that might even seem taboo, you didn't mean giving a refund and not getting the item back. But guess what? Business doesn't actually care. Your p&l doesn't actually care about the way you used to do things and only cares about the way you're doing things. Now. The thing you're doing now and today are creative, innovative, troublemaking but more than all of that serve a need, fill in need, and then I bet you'll win.

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