“Shifting Top Spots, Auto Intel Report, Cryptokicks by Nike RTFKT

May 2, 2022
It’s a sparkling-fresh new month as May rolls in with lots of optimism and opportunities. Today we talk about the shifting landscape at the front of the pack in Retail Auto as big players have been making big moves. We also talk about this months Auto Intel Report by Steve Greenfield as well as update you a a crypto move we reported on regarding Nike months ago. 
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Lithia (#2 in 2021) overtakes Autonation (#1) in Q1 sales indicating a potential change on the podium 

  1. 64,942 v 56,442 
  2. Lithia’s acquisition strategy has been more aggressive marked by close of 34 store Suburban Group
  3. Asbury (currently #5) is also poised to overtake Penske (#3) this year due to its own aggressive acquisition strategy. 
  4. Adjusted 2025 revenue target from $20B to 32B
  5. Last week reported 39,174 vehicles sold in Q1 +44% YoY
  6. #5 Group 1 Reported 29,498
  7. #3 Penske estimates are around 30k units sold

Steve Greenfield’s Auto Intel Report:  It’s a good time to be an auto dealer 

  1. 2021 most profitable year ever, 2022 tracking to be 15-35% better, but there is change ahead as inventory levels regulate and business dynamics shift like never before
  2. Lithia Motors CEO Bryan DeBoer "In the first quarter, over 97% of Driveway transactions were incremental with consumers we had never transacted with in the past 15 years and the average shipping distance of approximately 920 miles. Amidst this growth, our average Google review was 4.6 stars, , driven by our focus on building the business sustainably and earning consumer trust for the entire vehicle ownership life cycle."
  3. Get the monthly email at automotiveventures.com

Nike releases first NFT RTFKT sneaker drop with some prices already in 6 figures: Nike Dunk Genesis Cryptokicks

  1. 20,000 sold with different levels of rarity
  2. Inspired by the Nike Dunk Low and was released through the MNLTH NFT cube. Owners of the cube were tasked with completing challenges that were posted by RTKFT on various platforms including Twitter and Discord and upon completion, the RTFKT x Nike Dunk Genesis was unlocked. Also included in the MNLTH NFT cube was a special skin vial that allows fans to customize their virtual shoe.
  3. One extremely rare Alien skin vial has sold for 449,000


https://podcasts.apple.com/us/podcast/the-contagious-five/id1588099481SPEAKERS

Kyle Mountsier,Paul Daly

 

Paul Daly 01:03

Yo It isMonday, April 2 April, beginning of a new quarter. Boy it's fresh and squeakyclean full of opportunity. Today we're talking about big movers at the top ofthe pile and a new NFT sneaker collection. That's right. The people really wantto know who isn't who I need to let it sink in this morning. The beginning of afresh quarter to kill gotta get the bounce

 

Kyle Mountsier 01:27

aquarter paul he got the days right though. He got his gains, right. Look,

 

Paul Daly 01:41

I can'tfocus on everything. I got that date. Right. I got the day right. The beginningof something new

 

Kyle Mountsier 01:50

thebeginning of the month. It's so good. It's so you're right. You're like thisclose. I get it. It's Monday. We're gonna make it. Maybe it's

 

Paul Daly 01:58

becausethe weather finally feels like spring in Syracuse. Yeah, you're

 

Kyle Mountsier 02:02

likeeverybody in Syracuse behind ever like

 

Paul Daly 02:05

actually,it's may. I did know it was May. There's a lot stinking. There's a lot movingright now. A lot moving. And today we're going to talk about some things movingand shifting around at the top of the pile. You know what. In all fairness,Kyle, in all fairness, as I'm preparing the show today, most of the stuff we'retalking about is one quarter one reports. Yes,

 

Kyle Mountsier 02:30

yes.Fair, fair. All the q1 reports came out late last week. So that's what I'm

 

Paul Daly 02:35

talkingabout on the new quarter and the

 

Kyle Mountsier 02:38

end,whatever. Oh, it's all good. Hey, Look. Paul, I just want to say real quick. Ihad the opportunity. I want to just like before we get into the new storiesyesterday, you my one of my big passions in life is soccer. And I had theopportunity yesterday to go to Nashville, SC that's my hometown. They're brandspankin new stadium God. It was on believable. But here's what I want to key inon this morning is that since 2014, I've been a part of this community groupcalled a supporters group called the roadies. And I had a part in starting itactually created a a C three with a couple other guys around this communityand, and then was on the board of directors for seven years. And what I find reallyinteresting about communities like that is the way that they kind of like rallyaround many different things, right. And so yesterday, it was so encouraging tome, because I've actually rolled off the board of directors of the same butyesterday, this community that used to just like drink beer and sing songs andhang out in a parking lot has grown to over 700 members. And now, like thethings that they're doing is supporting youth soccer locally supporting, like,a ton of different youth events in the city, that literally people are givingdonations over and over at a tailgate to do to support the community. And Ilove that when when you build community, that community starts to feel likesomething that can have a greater impact. And I was just reminded about theautomotive community. I was spending some time with my buddy, Justin, who I metwhen I was working at Nelson Auto Group, and he's a service manager and justthis, this reality that automotive has that same capacity to create community,build community. And then because of that community, whether that be yourstore, your internal community or your external community, you actually havethis greater capacity for impact in the places that you live in work.

 

Paul Daly 04:44

Andyeah, you still get to drink beer and sing songs in the parking lot.

 

Kyle Mountsier 04:49

There itis. and yell at the top of your lungs and lose half your voice and all thatcrazy stuff. See

 

Paul Daly 04:56

that'sthe beautiful thing about community right? You can do all of those things.That's what's tough when when people just kind of like write checks and like,look, we serve the community. It's like, well, giving money to the community.And really knowing the problems and being involved in the solutions are two verydifferent things. I know which ones I want in my corner. And that's an man Ican't wait to go to a game at this place. I've never been to a pro soccer game.I've never been to anything more than probably like a friend's, you know, likemiddle school soccer game, no high school, I saw a few like higher level highschool games, and it was actually had a lot of fun. I'm the kind of guy I'mgoing to show up. And Nashville SC is going to be my team, right? I'm gonnalose my voice. I'm going to go bonkers and we'll be wearing yellow just byassociation.

 

Kyle Mountsier 05:38

That'sexactly what's getting hit by all the merch. They got the most amazing merch.They do a, they do a print for every match. It's a hot show print. It's a verylike Nash. Like think about that from a branding. Oh, I'm

 

Paul Daly 05:51

gonnajust get off on rant this morning. From a branding perspective.

 

Kyle Mountsier 05:54

Theyliterally do a match poster that's done by one of the local print shops herecalled hatch show print that like if you know Nashville artists and things likethat. It's a very Nashville type thing. And it's just everyone wants it peoplebuy. I mean, they ran out so quickly yesterday, they're collectible, theirmerch and it's like, Yep, I was it's, it's really should do, they should turn.

 

Paul Daly 06:19

That'sall I can think about. I thought about that last year like wait every per game,especially for fanatical base, get to prove you are at the game when whateverwhatever whatever happened? Well, we'll get back to that because I guaranteethat's gonna happen. And when it happens, we'll be like we told you so a coupleof things you want to talk about the automotive State of the Union. Speaking ofcommunity, I'm not going to do segway family reunion remix, it's a party. It'sinformational. It's going to be a lot of fun, you're gonna have a retail SwagShop one week from today. We are one week away in Tampa on May ninth, eventhough you're may 9, we're having the asoto family reunion remix, get yourtickets now we still have some left, go to a so to a s otu.com. And get aticket. Now if you're a dealer, you get in free thanks to our friends at autophi, they paid for all the dealer tickets. But you still need a ticket. Youstill need a ticket. You gotta have a ticket when it sells out. Even if you'rea dealer. I'm sorry, but you can't come in. But you can't say we didn't tellyou so so if you have friends that are dealers or friends that are industrypartners want to go share this with them and make sure they get their ticketsnow because we're probably going to lose our voices a little bit and have a lotof fun and learn a little bit Oh doubt in the process. Hey, aren't this podcastif you listen to the audio version of the podcast, we had a record month lastmonth we jumped almost 25% in listenership last month. We had we launched aSaturday episode for the first time this week, I think we're gonna keep doingit. And got a 62nd end of month, Saturday, close words of wisdom wisdom fromByron benstock. So if you don't listen to the audio version, go to Spotify oriTunes, check out the automotive troublemaker. And you can go here Saturdaysbecause it's audio only. All right, so

 

Kyle Mountsier 07:54

it's twominutes of the best of just the best encouragement. So go check it out. Youshould

 

Paul Daly 07:59

love it.We finish when we're done. Kyle, let's finish what we've done. Well, let's talklet's talk a little news. We let's talk about a little news. So there's been alot of movement in the top five spots in retail automotive, especially when itcomes to new cars, especially when it comes to revenue. The news kind of out ofq1 so Lithia who was number two in 2021 has now in q1 of this year outperformedAutoNation who has been number one for a really long time indicating maybe apotential change at the top of the pile

 

Kyle Mountsier 08:36

I thinkit's going to be a continued changing it's like the guard has changed and we'vebeen talking about drive the driveway strategy for a long time and we're aboutto get into see greenfields auto Intel report, but, you know, Brian de Bourghjust said like pushing into this driveway mentality over 1100 employeesnationwide, that strategy plus a really competent local strategy is is anurging them to do you know, way more than you can imagine on simply a localstrategy alone.

 

Paul Daly 09:08

Youknow, the, if you don't know, driveway is, is lithium is kind of likestandalone brand for us car retailing. So think of it like kind of whatCarvanha is trying to accomplish. But via lithium. But connected to CamillaCarvanhais in big, big trouble when they have new cars, right? So Right. Soit's like the holistic solutionto transportation and they're just executing itreally well. Um, they're acquiring a ton of stores over the last year. And sothe numbers were they reported 64,942 units sold versus alternations 56,442.You know, last year they just went on a total spree of acquisitions, andthey're just set to do more of the same. Also as very who is currently numberfive and the 2021 list is poised to overtake Penske, who Is it number three, sowe have number two, moving to number one, and number five, moving to numberthree, and they just adjusted their 2025 revenue target get this, they werelike yo, and 2025, we think we're gonna be at 20 billion in revenue, andthey're like, no, no scratch that we actually think it's gonna be 32 billion.

 

Kyle Mountsier 10:18

Okay,what's the theme here? The theme here is Lithia. And Asbury, two and threeyears ago made a conscious decision to make a nationwide play. At branding,you've got driveway and click lane, right, and they've done a really good job.And both and the CMOS and the CEOs in those organizations have understood thatthat is the play that having a national impact of local stores gives you it isliterally what Carvanha is attempting to do by by buying ADESA naturally bakedinto the product. Well, that's different. And that's why they're winning. Andit's,

 

Paul Daly 11:00

it'slike, let's talk about a tooth like the branding play, right? That's where itbegins in saying like, hey, like this is how people can understand what we'redoing and come in and be a part of it. I remember when I got my first Amazonbox that had driveway all over the outside of it we've talked about before Iwas like, Yo this is about to get this is like serious. Yes, no doubt. Butreally, the reason it has staying power is because they've just built in solidexecution at the ground level, by not being too far from the consumer. Right?People still want to know and want the safety of, of stability of brick andmortar of knowing that actually, I'm not getting this from 3000 miles away, I'mactually just getting it from like, somewhere I could drive to. So let's let'sjust go right into the next story. So the next story because they really do tietogether. Steve Greenfield releases his automotive Intel report every month.We're big fans, make sure you sign up at automotive, automotive ventures.com.It's linked up in the show notes. But he put a quote, he talks about Lithiaquite a bit. And he put a quote from CEO Brian de Bourgh says in the firstquarter over 97% of driveway transactions are incremental with consumers we hadnever transacted with in the past 15 years. Wow. How's that for market share?97% of the people are conquest. Ah, that blew my mind. I had to read thattwice. 7% That's crazy. And get this the average shipping distance is 920miles. So they're still shipping the car from one place to another almost 1000miles, but they're flooded with new customers. And they're at here's here's thehere's the bow on at all, the average Google review was 4.6 stars driven by ourfocus on building the business sustainably and earning consumer trust for the entireownership lifecycle. Yes, like that's a mic drop moment if I ever seen one.

 

Kyle Mountsier 12:51

That'samazing. That's amazing. That's just so good. So good.

 

Paul Daly 12:55

So it'sreally top to bottom right? It's it's the branding. It's the well, it's theunderstanding of what the market wants. It's the branding. It's the deliveryand execution, building the trust, and that being proven on the tail end by theGoogle reviews, right? Yep.

 

Kyle Mountsier 13:11

It's notVroom,

 

Paul Daly 13:14

the Idon't think that's the value proposition. Once once you get to that valueproposition, you're already in a bad spot, which is, you know, I think a fewyears ago, what franchise automotive was like Carvana, when they jumped out,they're like, hey, it's just not that. Right, it just doesn't suck. That wastheir value proposition, very low bar. You know, we've seen how that we'reseeing how that's working out for him plays out right now. And, you know,retail automotive has more opportunity than ever to like now, like the pendulumhas swung. And now that they're these other examples, there's a lot ofopportunity to take it back. I've actually dealt with more savvy dealer groupsbuilding independent brands for use cars in the last two or three years than everbefore. I mean, yeah, it's kind of the common call we get

 

Kyle Mountsier 13:57

now.Yeah, or at minimum exercising their their like, like their global brand, theirregional brand as more of a brand. Relevance. Yeah, as an umbrella brand,right. You've got groups that are saying, hey, our group website or group brandis actually more valuable than the than the franchise websites, which has thesame power. So

 

Paul Daly 14:19

not onlyto stay in power, but think about it, like the level of control, right? Somanufacturers are shifting everywhere, right? We don't know where it's gonnaland. We don't know what EVs going to do. And that really varies from franchiseto franchise. So for a deal to recognize, like we have this group, we have thisgroup, let's brand level, let's develop that brand level. And then under thatcomes a lot of freedom. It comes freedom to control your content and yourmessaging. It also allows you to control your tech.

 

Kyle Mountsier 14:46

Yeah,absolutely. Yep. Yeah. There's so much control. Oh, I know that. We could talkfor hours about

 

Paul Daly 14:54

we willand we will just not here. And we will certainly but just not here. So All ofthe above that saying and also in the Intel report we'll get we'll try to getSteve on this week and see if we can talk about a little bit. I know he'straveling all over with the dealer fund right now. But he did say 2021 is themost profitable year ever. We already knew this. He said 2022 is tracking 15 to35%. Better. That's the first time I've ever heard a quantified.

 

Kyle Mountsier 15:18

Wow,that's crazy. You know what the one thing that I want to highlight in his Intelreport. I don't know if Isaac has this image. I had shared it. But what wasreally interesting is he kind of took it a largest monthly mover from fromApril and looking at Penske, auto nation and CDK all having massive dollaramount and percent changes. Asbury auto nation, all massive changes, and thenlisten to the companies that saw decreases last month, Tesla rivian Volkswagenwho are massive Evie providers Carvana, arrival and Faraday Future. So everyonein the mobility or online retailer space saw saw the massive decreases. Soreally an interesting kind of dichotomy. So I think the question for me here isis are they the leading indicators of what is potentially to come for theretail side? Or does retail have kind of this I keep using this word stayingpower? Does retail have the ability to stay in the game longer? Because of theway they're set up from an expense structure from an advertising structure andfrom people management structure? So well, that's yet to be determined. But Ithink it's a it's a question mark in everyone's mind. For sure.

 

Paul Daly 16:37

Allright, we're gonna do one last fun one today. So we covered this story when itfirst happened with Nike. We're talking about Nike talking about retail talkingabout company culture, right? Because we're zooming out from automotive for asecond saying, let's look at what's going on. everywhere else. And Nike boughtan NFT sneaker company named artifact, it's actually pronounced artifact, butit's what is it AR t it took out all the the although they went beyond that.They put an art in the beginning, right? It's like, it's like, you know, likethe Phenom pregnancy. It's RT fkT pronounced artifact. They purchased this NFTcompany that makes NFT sneakers and had some great collabs and some momentumthat he's like, great, we're gonna buy that. They don't know how much they paidfor it. But either way, they bought this and they said, This is the future. Andthey just released their first Nike Dunk Genesis, crypto kicks, they justdropped them. And for the life of me, I still can't figure out exactly how youcan acquire them. Because it wasn't like you can buy them. It had to do withbeing a part of this other community. And then you got this kind of like cubethat you didn't know it was inside of it. And then I know and I can't get itand I'm paying attention to this stuff. I was like, How the heck did you eventhe bottom line is this. They? It's like you think it's a sneaker right? And itlooks kind of familiar. It looks like a Nike shoe. And you can have it ascollectible. But also when you're in some Metaverse worlds now you sync it upwith your crypto currency wallet, like where the NFT is held and stored. Andthen all of a sudden, you're wearing them in the metaverse. Right. So youactually kind of have them on the people are saying you may actually get a reala real version at some times what

 

Kyle Mountsier 18:14

theyhave to do you have you have to pull it back into reality.

 

Paul Daly 18:17

tie ittogether you have to tie it I think I think they have to but I mean, it wouldbe a lot so iconic. In my opinion. It's so iconic. Yeah, I can't see them notdoing it. So it was basically inspired by one of Nikes you know, the iconicdunk low, you'd recognize it if you saw it. And in order to unlock these yougot like you had to go through some tasks either way, you get like the coreshoe. And then there's something called an a skin vial. Right? So sounds alittle weird. But a skin is really like just think of a covering recoding. Solike you put a skin on a vehicle and it's like a vehicle wrap. So it's like awrap for an NFT. And they make it look a lot different. And the rarity of theskin vial. And like what it makes the shoe look like really drive the price inNF T's rarity often drives it. One of them sold for $449,000.

 

Kyle Mountsier 19:08

Personally,I just don't understand good on him. I saw that like mining fees for thesethings were upwards of $6,000. Yeah. Unbelievable. Yeah. So like, think aboutbeing like being the broker, which is the guy who's like actually typing in thetransaction that knows how to code all that stuff.

 

Paul Daly 19:26

I'm tryingto think why mining would be so expensive. So either way, man, people areplaying in a space where this all this value changing hands, and maybe youdon't understand it, we don't even fully understand it. But understand this,that there are a lot of people paying attention to it. The younger generationis native to this, right? They're new, they're the newest to it. We joke aboutit all the time. It's like we need to be an expert at NF Ts. And we're like Idon't know about it like a 90 day head start on the next person.

 

Kyle Mountsier 19:56

Yeah,and like a couple of years and World of Warcraft and you Got it.

 

Paul Daly 20:00

I'venever had that. So I guess I was at a disadvantage. But all that to say thatthe temperature is changing, the environment is changing, retail is changing,but guess what? We can keep up. Not only can we keep up but we can be in frontobviously being shown that like being behind doesn't mean you're not going toend up in front. So whatever it is on this Monday, lean into it, pay attention,learn a little something be in front.