Presidential Resort, New Vehicle Prices Keep Going, Inventive Beer Halls

June 20, 2022
As the Virginia Auto Dealers Association annual meeting kicks off in Asheville, NC, we’re talking about who Dealers are focusing on in their efforts to move forward. We also cover continually rising new car pricing, as well as how to get creative with the business you already have.
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New vehicle prices keep going up, buyers keep showing up

  • Avg new car cost (55,821) is approaching the average income in the US
  • COX Automotive Chief Economist, Jonathan Smoke reports that it has never been higher, but isn’t hearing Dealers talk about affordability issues at all
  • Paul Walser former NADA Chair and  to Mike Manley of Auto Nation say people are begging for new cars
  • One of the few remaining relief levers is financing terms
  • Smoke says the days of a sub 30k new car are gone
  • Take Away: Managing the balance between new and used businesses to serve all of your customers is vital. Remember when new cars were reported as a loss on your P&L?

Beer Halls get inventive with morning joe

  • Owners Sarah and Clay Davies say they had always planned on using coffee as an ingredient in Biggerstaff’s beer and some marinades for smoked and braised meats. They also realized they could cater to customers who might come in at 8 a.m. in no mood for an IPA. “If you’re paying rent, why not have something in-house that makes money during the day, not just at night like most brewpubs?” Ms. Davies says.
  • Owners are dealing with rising costs for the products they purchase and the workers they employ. As a result, many have chosen to go outside their original expertise hoping for more business.
  • Owners are finding similar communities in beer and coffee drinking.
  • Take Away: How can you find revenue sources within your current retail space that both curate and craft community?


SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:32

Yo, it is Monday, June 20. Kyle and I are sitting in a patio in North Carolina Asheville. Did you know 11 presidents have stayed in this place? That's a lot. We're gonna make it 12 Pretty soon. I don't know what that means. presidency United States


Kyle Mountsier  00:50

presidents in the US


Paul Daly  00:52

because there are some other presidents here right now.


Kyle Mountsier  00:54

Yes, exactly. Yeah, we've got. Well, actually I think our good friend Liza Portus is getting she's moving into the president role or the chairman role, maybe va da, we're out here at VA DEA, the Virginia Auto Dealers Association. In beautiful, I mean, gorgeous stuff,


Paul Daly  01:13

dude. Not too many places. Look, there are too many hotels I've been to where you go on the website, and you're like, oh, it looks pretty nice. Usually you get there and you're like, man, they had a really wide angle lens when they took a photo of this room, because it's a lot smaller than it looked, or the place doesn't look as good. We rolled up. And it's like we both came in separate times. We brought our families. And when the daily family pulled up, we were just like, like stunned at how beautiful this place


Kyle Mountsier  01:39

exactly, we rolled up and we first went to a barbecue restaurant, which if you're ever in Asheville, this Barbie, it's it started it's I think it's like lilies or whatever it is. It is on point barbecue. And then like, we're coming up, you know, winding up and my kids are even like, that golf course is gorgeous. Like they haven't seen it than a golf course is because I'm not a golfer. Right? Really that yeah, it's just a really nice place. Beautiful to be here. And it was really cool. Just to be around last night, you know, the opening reception dealers, industry partners. And you know, the thing that I loved most about last night and getting in here. And I think that this is probably pervasive across a lot of automotive, especially at the auto dealer association level was. So our kids are here. And they gave all of our kids name badges. And not just that, but they give them a sticker right underneath that. That said VIP Oh, yeah, my kids are happy about that. Without a doubt I want one. And then they treated them like that. There were games and even the kids table for fat of food table was like it was like 18 inches off


Paul Daly  02:42

of hot dogs, corn dogs, soft pretzels bags of popcorn like dialed in. My kids. My youngest. My youngest daughter, Lee, she showed up with a plate to the table you saw this happen. And it has literally it has to like five inch wide chocolate chip cookie stack with a soft pretzel on top of that, and a pile of macaroni and cheese. And I was like, I know that. I know. You're going back and you're getting some chicken, it gets a protein. Exactly exactly was like what, what it's there,


Kyle Mountsier  03:11

they saw the table.


Paul Daly  03:13

So this place, this place that we're in, we're going to talk about a little bit more about what we heard last night at a conference. We're speaking today we're going to spend the next couple of days with with a bunch of dealers. So however, this place has an unbelievable automotive heritage. When you walk around this, they have pictures of all the people that have stayed here. And I mean, we're talking like Helen Keller like oh, just like


Kyle Mountsier  03:34

Harry Houdini, but even like it was the fire stones. Right? That fan of fire


Paul Daly  03:38

stones. Yeah. Henry Ford, Thomas Edison. They have a picture of the three of those guys around a Model T. And there's a Model T parked on loan from some family that owns it. We're gonna get some epic photos. Yeah, we need we need Bureau now. But the automotive legacy just in this place is unbelievable. Like I didn't realize like Ford and Firestone and Edison were just like, hanging out,


Kyle Mountsier  04:00

just chillin here. It's unbelievable. And then there's actually an auto museum. So yeah, if you're ever in Asheville, the Omni Grove Park Inn is what it is. And there's a there's a history museum for auto so yeah, just a really neat place. And there's some there's some legacy here. And speaking of legacy


Paul Daly  04:19

segway, it's never too we're never too far away from a Segway button. That's right, no matter where we are in this world.


Kyle Mountsier  04:27

No. So last night, the well I guess the president of va da Don Hall, just kind of gave this opening remark that was centered around what we have been talking about in a soda for a while is that the franchise dealer model is under attack legit right. And whether it be from market forces or from from the Capitol Hill, right wherever it is that it is,


Paul Daly  04:57

you know, deregulation exact sales model all that,


Kyle Mountsier  05:00

and what he said and kind of left it there. And I think I'm I'm guessing what's going to be explored, and we're going to explore that as we speak today is is that we're going to fight back. Right? And it was, for me it was this interesting like mode of saying fight that was like, we're going to go with swords and guns back. And I think that my question and my question, and then I'm going to pose and continue to pose to dealers and industry partners is, who is that fight against? Right? Is the fight against, you know, is it against Capitol Hill? Is it against consumers? Is it against, you know, other companies that are coming to disrupt the dealer model? Maybe it's a little bit of all, but I think that the mode of the fight is what we want to talk about.


Paul Daly  05:47

i You said something really interesting, right there, you said, is it against consumers. And I think that if we're not careful, if we're not careful, it's easy to recontextualize or without even mentally looking at Capitol Hill and looking at all the benefits of the way we do business, of turning that against consumers, and not paying enough attention to what the consumers are telling us that they want. Absolutely. And saying no, no, no, it's in our best interest to lock these laws down. Even though it's not what consumers want, we have to be very careful that we don't do that. Because you and I talk a lot about, or actually, the problem we're actually solving is the consumer experience. And we can't do that, if we keep tying their hands behind their back. Because it benefits our business model. It's a very tricky needle threat. Yeah, yeah.


Kyle Mountsier  06:31

So I think the fight is actually a get it, the fight is honestly, it's against ourselves. All right. We're our own worst enemy when it comes to you versus me. Yeah. Right. And, and so if we recontextualize, like, if we fight with ourselves, like, and not this contentious way, but like, hey, look, we recognize that the consumer experience, the way that we've done business is, is, is allowing others to come in from multiple different directions and challenge the way that we've always done business. And so we have to think outside the box in this way that we've always done business, and understand that the legacy of franchise retail is good in the way that it curates community and, and allows for, you know, small businesses to thrive and all of those great things about retail auto, but understand that we haven't done well, on mass, right. And we're not saying there are plenty of people doing well for the customer in in their local spheres, but on mass to serve the customer and prove that this is the best way for him to


Paul Daly  07:33

keep that at the top. Exactly. Right. And and you know, that's one of the things that happens, or is easy to neglect, when things in the industry are so good. And so profit, right? Yes. Right. It's easy to neglect that because like, I must be doing it right? Because I'm making so much money. There's a lot of truth to that. But there's also the everything we do in life, right? We do one thing and it affects something that is down the line, right, what we eat, how we treat people, all these things, right. We're doing it now. And it might seem like a good decision, but there is a secondary and tertiary effect. And so paying attention to what that is one of the big conversation right now. New Car affordability. Speaking of segue,


Kyle Mountsier  08:10

man this a little bit.


Paul Daly  08:13

Got it. We got to segue to Nashville this morning. new vehicle prices are still going up. They're still going up average, price. $55,821 is the average it's approaching. Actually, the average US median income level


Kyle Mountsier  08:30

is nuts, man. I mean, I remember thinking that when I was with Mazda a year ago when Mazda went from like an average new car price, and they finally like came out with the stats that it was no longer 24,000 That it was 27,000 or like my old man that actually Mazda doesn't have like trucks and large SUVs. Yeah, to sway that. But I mean, thinking about anything $30,000 And as an


Paul Daly  08:56

average now, Mark, it's crazy. I mean, it's like double the number you just said, right? Yes. So Cox, automotive chief economist, good friend of ours, Jonathan smoke, DJ smokey smoke for those who love him most. says, you know, it's never been higher. Ever, ever, ever in the history of the auto industry. We thought it was high last year. We thought it was high six months ago. It's never been higher now. But he's like, I don't hear anyone talking about affordability at all. Yeah. Dealers aren't talking about it at all. Well, good.


Kyle Mountsier  09:25

Well, it is interesting, because and we've actually been talking about this last couple days is like contextualizing down what's happening in the market or or in the news down to the dealer level. It seems like there is some loss of like, is that really happening on the ground level? And is it a conversation that we're needing to have at the dealer level? And what what these are saying is, hey, this is not something that is happening as a as a as a mode of well,


Paul Daly  09:52

there's a separation in a little bit in or maybe a lot in what we're talking about about vehicle affordability in general, right use car affordability and new car affordability so new car affordability, much, much more much, much more around like the one buyer, right for a new car if you want to buy a new car, it's a bit of a luxury. And so, you know the folks that are, you know, in new car buyers, there's just no trip and demand constantly. You know, the article in automotive news that we're citing in ours today is Paul Walzer, you know, him former nada chair walls or Automotive Group also, you know, Mike Manley of auto nation are saying, Look, people are begging for more new cars, even at the prices they're at or without it, even in the article talks about a $2,000. f&i average on every unbelieving with that everyone's begging for new inventories.


Kyle Mountsier  10:41

Yeah, everyone that I talked to is like, Oh, we're still sold out into our pipeline, people are still asking for particular models, like they're, they're still sideline buyers, right? So it's, it's not stopping, at least in the in the new car retail side of stuff. I don't see even even if if it was named that we're in a recession tomorrow, I just don't think that demand is going to stop for a significant amount.


Paul Daly  11:04

And then when that happens, like what happens after that, you know, conversations like well, maybe that's what incentives come back when that's pricing. So although inventories just drive steering the ship. So right now, inventory shortage, steering ship. So look, managing the balance between new car, your new car business and your used car business, so that you can serve all the consumers is really still with the focus is so for those who can do it. Great. Remember, it wasn't too long ago when new cars were reported as a loss on your


Kyle Mountsier  11:30

 Without a doubt.


Paul Daly  11:33

Like, oh, the new car business reported as a loss,


Kyle Mountsier  11:36

I would tell people that there was a day in my life, right?


Paul Daly  11:40

I used to tell people that there were the auto industry and they were like, What do you mean, dealers aren't just raking in the money on those new cars? Right. I was like, let me explain.


Kyle Mountsier  11:48

So interesting. All right. So


Paul Daly  11:49

we're moving through the show today, because battery's probably going to die? No, because like, oh boy would die. If we drop out. This is going to be audio only for the rest of the show.


Kyle Mountsier  12:00

It's all good. Well, hey, we saw actually an article this morning, in that we just thought was interesting in the Wall Street Journal, that I'm looking at a couple different beer halls. And I know we're like we're stretching. You're talking about beer halls this morning. Right? We are in Nashville. There are a lot of great beer. That's exactly true, right? That there are they were looking at a couple of these beer halls. And they pointed to one in particular a company are bigger staff and their owners, Sara and clay Davies are moving into a model where they're actually looking to find revenue sources outside of just their beer and food. And they realized that, hey, they were opening up at noon, one o'clock every day when people are into beer and food. And they had all this extra space in in their day to find a revenue source. And they're doing it in coffee that makes


Paul Daly  12:54

it like we have this bar, we have this specialty equipment, we have this ability to mix things together. There it is. And we have people that love coming here.


Kyle Mountsier  13:03

Well, and what they started realizing is that the community that they had already crafted and curated around beer was actually very interested in craft coffee, right surprise. And so there was this like translation immediately of community into revenue source, right, that they had already built. And like, I won't lean too much on that. But you know, you hear me talk a lot about like build a coffee shop, build a something in your dealership that crafts community or takes your current community and just moves it until


Paul Daly  13:36

it's another gap that they already have. Right? It's identifying, identifying the need with the resources you have and saying how can I serve the community in a broader sense? Yeah,


Kyle Mountsier  13:45

so the ground balls obviously in retail auto auto are some sort of food or coffee shop although that's that's definitely a tough revenue source to lean into right to access don't have that already. Yeah, but another ground ball is Evie charging right? Setting up as you're building out you know, the way for people to easily move in and out and thinking about if you are you know, looking at Blue Sky or open spaces for for your next building. Yeah, you know, am I in a high traffic area that may need an Eevee lease?


Paul Daly  14:17

If you are we know you have the parking lot space right now. Exactly. We know that but if you think about like what you can actually do to you know, I don't know how the electricity charging I mean, obviously there's a margin when you charge EVs right we just put one outside our new building we haven't activated yet but there's a margin on the electricity. Yep. Like imagine if you had the ability right now to sell gas at a lower price. And have good coffee and have fast Wi Fi right? You're going to get the commuter traffic especially when he be charging takes 20 minutes 30 minutes, right come in 20 minutes get something great. Evie, you just have the people in community right because then you have all these other things going on like tires. Yep, Tire Service, and anything


Kyle Mountsier  14:55

around I even think about this right is what else do people Well do outside of your normal working hours, right? Who said, you know, watching the Superbowl at a dealership wouldn't be fun? Well, or whoever, Toyota, Toyota, they definitely do that. But there's other there's other ways to recontextualize or open up space or open up time to make sure that you're crafting community. And what that actually does is, is it refeed the other part of your biz,


Paul Daly  15:24

I'm willing to bet. So we were talking about this yesterday and what we'll talk about another time, but David Spade Zack, who you know, who you know, who you know, you know, who, you know, we know, we know, but may not really bold move, and he took his external marketing spend, and he turned it all internal. Right? We'll talk about that more. But imagine if you took a community oriented staff member, and you're like, they're in charge of the community, I'm allocating marketing budget to this community person. Yes, man, I can't see any way where that doesn't get you triple the ROI you got from your marketing spend wherever you went, literally, wherever you were putting it,


Kyle Mountsier  15:58

period. Yeah. And the the hard part for dealers and for anyone looking at revenue on a monthly basis is it might not turn into revenue into


Paul Daly  16:07

it says not it will not it will not turn into revenue in two weeks.


Kyle Mountsier  16:11

Yep. Yeah. So you have to have a forward thinking mindset. Think outside the box. But if you want legitimate business opportunities in one to three years crafting community and finding ways to find revenue and resourcing your community within the spaces that you're already in, are an absolute, like necessity.


Paul Daly  16:30

I'll tell you where it will give you a turnaround in two weeks recruiting. There you go. If you have someone out in the community, it's not just come by a car. It's like Come work at this amazing place I work at without it right. Yes. How much is a new recruit worth holy right


Kyle Mountsier  16:44

now? Man, you should have seen we could have like a billion articles about how small businesses are struggling to hire still, right?


Paul Daly  16:51

Well, I think I think we're on a battery. I think we need a battery. All right. So we're gonna be here for the next two or three days, follow our social media. We're going to try to give you some more stuff here. We'll be here every day, the next couple of days and then we'll be somewhere else. But it's one day it's beautiful. lean in to your people.