Smoke On The Water (and the economy), Minority Dealer #s Rising, Staying Close To Home JULY 25, 2022

July 25, 2022
We’re kicking off a great week with some optimism on the economy. How about that?! We talk through Cox, Chief Economist Jonathan Smoke’s time with us and the All Things Used Car Community last Friday. We also talk about the rise in numbers of Minority Dealers across the country, as well as a Harvard collab with the Census Bureau that studies how far young adults are moving (or not moving).
Listen On

Recap Jonathan Smoke on ATUC

  • Took us to school on what a recession is. Hint: It’s not defined by a single, popular metric of 2 negative quarters of GDP growth but “A broad based economic decline that last for more than a few months”
  • Net import gain, and other factors were accounting factors that lowered GDP
  • Goods stuck on ships finally getting through ports as well as inventory
  • Unemployment rate also a major indicator and seem to be holding strong
  • Consumer spending AND business investment are both up in Q1
  • Certain sectors feeling some pain like tech, but certainly not ‘broad based’
  • Predicts stronger than normal used sales
  • Take Away: Don’t believe what you read, believe what you are seeing…but keep paying attention!

Minority Dealers Are On the Rise

  • Net increase of 123 since 2019 with more growth slated for 2022
  • NAMAD President, Damon Lester said about the goals set out by OEM’s in 2020,
  • "It was the first time in a very long time that manufacturers came out and made a commitment in writing to the world about their [diversity and inclusion] vision, what they believed in, what their goals were and what they wanted to achieve," "That helped us because most of the time we've seen commitments just written to us and not to the world, so that level of transparency really helped us in having a whole different level of accountability."
  • Asian-owned dealerships grew most last year with 62, now totaling 361. African American stores rose by 27 to 292 after several years of dormancy and Hispanic-owned stores were up 17 in 2021 to 591
  • The 2007-2008 recession severely impacted minority dealers as they’re numbers dropped from 1,805 in 2006 down to 875 by 2011. They have been on the rise ever since
  • AV Fleming, executive director of the Ford Minority Dealers Association, said he wouldn't be surprised if the automaker topped its 2021 performance this year.”
  • Take Away: Accountability, diligence, and hard work seem to be the winning formula here.


Young adults are staying close to home more than ever

  • A research paper collab released last week from the Census Bureau and Harvard University reported 80% of young adults at age 26 had moved less than 100 miles of where they grew up, and only 10% moved more than 500 miles away.
  • Focused on US citizens born between 1984 and 1992 (between 30 and  38) focusing on where they lived when they were 26
  • Those in higher income households tended to move farther away
  • Take away: Yet another benefit to localized brand and community building in your local area

SPEAKERS

Kyle Mountsier, Paul Daly, Michael Cirillo


Paul Daly  00:30

We are going to have Brian benstock


Michael Cirillo  00:32

He has substance that can only be gained from experience Liza porches. She is a servant leader.


Kyle Mountsier  00:38

That's just her default mode.


Paul Daly  00:40

The first time I ever met David Long was on a sailboat


Michael Cirillo  00:43

Scott Simon's one of the most caring individuals in the auto industry. Ryan Kramer is someone who loves a good laugh. Patrick


Paul Daly  00:49

Abad Patrick


Kyle Mountsier  00:50

is one of the top operators Damon Lester when I think of a troublemaker, so out and out of trouble.


Paul Daly  00:58

I read the innovation stack totally changed my perspective on entrepreneurship. The author's name is Jim McKelvey, Alex Vetter.


Michael Cirillo  01:04

What's always stood out to me is that advocacy for the


Paul Daly  01:07

dealers Claude silver, she cares about people Dr. Nicole Lipkin. She is the very first person I ever interviewed on a podcast ever


Michael Cirillo  01:14

Dave Meltzer. He is releasing wisdom at like a fire hydrant safe


Paul Daly  01:20

there and don't one of the most prolific directors of our time,


Kyle Mountsier  01:24

he said, We are not precious here. Bob Lanham, the man the myth, the legend has been renamed to meta Bob. Welcome to autocollabs


Paul Daly  01:46

All right, we got to start off Monday with the Auto collabs trailer. I want to go back and do it all again. But we have some things to talk about. We'll talk about that a little more in a second Smoke on the Water minority dealer numbers rising and millennials staying close to home. People mouthful for Monday morning. Yeah, yeah,


Kyle Mountsier  02:02

that was like a false tongue twister almost. I


Paul Daly  02:06

didn't I didn't take a breath. I didn't take a big enough breath. If you're just listening to the audio version, we just rolled the auto collabs trailer at the beginning of the live stream auto collabs.com is where you can get to the new podcast. A Soto is releasing and it's Kyle myself and the one and only Michael Cirillo hosting a slew of conversations in the intro there, we just read through a bunch of the the names that we're going to be doing and you kind of get a feel for the energy and the vibe of that Podcast, episode. 00 is live now. So you can kind of get an idea of what we're doing and laugh a little bit as well. AutoCal labs.com, we just have to let you know, because we're so giddy excited about it.


Kyle Mountsier  02:44

I'm super giddy because and not just that, but we have been and we'll be recording a ton of these conversations. And already, I'm just tuned in to myself as an interviewer. And I think that you and Michael are too in this. Like, I've heard tons of these people I've either heard speak on stages or clubhouse or podcasts. And my goal is to really, like draw out some deeper conversation. I think we say that even in the podcast description. But the idea is to really dig into the thought leadership and and understanding that these people are subject matter experts and really like, hold that out. You know, we'll probably do a little like, where are you from? Who are you kind of thing to introduce some newer people to the audience. But the reality is, is what we want to do is deep dive and get really timely to what's happening in the industry right now. And I'm just tuned up and keyed up for


Paul Daly  03:44

it. So I think one of the most exciting things for me is that everyone we interview is going to be in person at asotucon. Right. So I think that's like a really unique energy is the fact that we're having these conversations, but we will be seeing them and hearing from them in person in less than 60 days from now. And that includes the dealers, the outside the industry folks and all of our collaborators for us. So to con, it's our goal to introduce you to the people and the personalities, and even some of the products that are going to be displayed there. So that when you get there, it's not the whole conference thing where everyone's got to scan a badge there'll be no badge scanning, everyone's got to you know wants to do that hustle know, when we get together it's gonna be like a big old family reunion, be familiar with each other and understand that we're all in this together to get through like that's really what community is no buzzwords here. So if you haven't got your tickets to a show to con get your tickets to asotucon before they are gone you can go to a so to conduct con we have a lot more speakers and collaborators up there now and it's growing every day so you can go check out what the hype is about and it's a good time to book some flights because flights direct to Philly right now are very reasonable from a lot of areas. Yeah, but you know, the airline industry you can't trust it as far as you could throw it.


Kyle Mountsier  04:58

I don't know I said At the price at which you throw the airline industry, the


Paul Daly  05:03

price the price anyway, because obviously we trust it because we get in an airplane, we fly somewhere. And so there's, I would say there's higher than usual trust in an airline, but not the pricing. Pricing. Oh man, we're rolling the pot a little bit early. Today, I'm about to jump in a vehicle with Matt Lasher from the Westar Automotive Group, and we're driving Gary Vaynerchuk new vehicle to him. So it's an interesting day


Kyle Mountsier  05:31

to save your life, and we're just driving Gary Vaynerchuk vehicle to him and which two which most say


Paul Daly  05:40

which we are going to drive by back, the truck that he's been in, that literally has concepted all the brilliant cities concepted over the last three years happen in this truck. And


Kyle Mountsier  05:52

I think it's super awesome. And obviously you have a long term, you know, longer term relationship with him and with the Vayner Media crew. So it'd be cool to kind of see that reunited. But it what I also love is that this just speaks to what the auto industry provides to communities like it's so it's deeper, because the connection of someone in the auto industry allowed. Even a guy like Gary, like he didn't just happen upon whatever closest dealership like there was a relationship that you had formed. And that you were able to link to a particular dealership, and then and then bring together those parties. And that's like probably something that would have taken him a lot longer to get done. Had he just like gone to some random dealership, and maybe the person didn't know him or anything like that. And so that's just, it's just so true man Case in point for it is a lot of motive. Because you talk about him being surrounded by a bunch of competent people. So dealing with like the controller and the COO, right? They still call somebody. Right, right?


Paul Daly  06:54

You have this very, very competent organizations like who do we know that we can call right? And found out that it was me and now I'm now I'm making eight hours worth of driving. So follow on social, we'll post it but I hope I can get to interview. I don't know if she's there today. But she is going to try to get Claude silver who's going to be an auto collabs. We're going to try to get her interview in person because that's how we roll. All right, we got some news to talk about today. It's Monday, the beginning of the week. And dude, my head is still reeling from the all things used car room we had with Jonathan smoke on Friday. I mean, talk about a lot


Kyle Mountsier  07:29

of people know Chris, he's He's our lead writer. And he messaged me on Saturday. And he goes, so I was trying to put into words what Jonathan smoke was great with words, by the way. He's incredible with words. And basically he was like, you know, I'm just gonna try and put the vibes in there and what he was saying and tell everyone to go listen to it, because it's so dialed in. And just his approach. What What I love about what I love about Jonathan, is that his approach to the current market dynamics is so measured. It's any level headed like level headed in a way that so much of media, and so much of like punditry or anything like that is approaching and whatever type of of, of market dynamics it is, it doesn't matter that, you know, I've been listening to him for the past year and a half, probably really steadily. And it doesn't matter what time over the last year and a half. He's been having these conversations. It's just measured and level headed. And not like woe is us doom and gloom. And, you know, one of his biggest things was, is that we could be as a culture, actually talking ourselves into a recession, that doesn't necessarily need to happen, based on the way that the current market looks.


Paul Daly  08:46

Oh, my gosh, the the optimistic view that he has, like some, you know, I've never found economists to just be blind optimists, right? Because they think about things. And they happen to base things on something called data, right. But he says, you know, most the popular indicator for recession, the one that like pop culture throws out there, he said, is actually not even close to the actual measure of recession. The popular the when people say we're in a recession, basically, it means we've had two negative quarters of gross domestic product growth two in a row, then you know, you could, overarching when people say we're in a recession, but actually, he says the recession is a broad economic decline. And he talks about so many things that I had never thought about, obviously. But he talks about things like the fact that gross domestic product is measured in imports and exports, and the fact that so much stuff has been jammed up at port. You know, it's it's been an important that has been stuck, not been able to get into the country. And then all of a sudden, we started to clear the logjam a little bit and then it looks like a flood of imports. It actually makes the economy look weaker, when actually those things getting here are going to spur spending and growth. So he's like it's a backwards Counting way to look at it. He also talks about things like the unemployment rate being strong, which is another broad based economic indicator. And he says that


Kyle Mountsier  10:09

as prices going down, how much in the news three weeks ago was it was like gas prices up gas prices up gas, but nobody's talking about gas prices are down. I mean, in national, it's interesting. They're like $1. Down, literally. Yes. We're not that we're not far that down here in the mid to upper fours. And we're down to the mid to upper threes right now here where I'm at. And so that's a massive, so


Paul Daly  10:33

we were like, we were like just under five in upstate New York. And we were just under five bucks a gallon. And now on Saturday, it caught my attention when I saw something in the 420s. So like 429. So it's definitely down here. I mean, like 70 cents, that's for sure. Right. So that's another thing. He also says consumer spending and business investment is up in q1, also two more very important indicators to indicate whether or not you're going into recession or not unemployment, we've mentioned that already. He said certain industries are feeling some pain like tech, right. There's some layoffs. And there's some you know, there's some revenue declines and stock price dropping he was but this is certainly not broad based. And then for dealers and automotive going into the end of the year. He's saying, look, use cars are looking to remain incredibly strong. super strong. Yes. And so we left Friday's call with like standard, a little taller.


Kyle Mountsier  11:30

Yeah. Well, and I think, you know, and we've been talking about this affordability question. And he said that the I think the word was bifurcation? Is that what it was? Right? That's it so that basically, that the market has pushed, push the boundaries between like low low income earners, and mid to high income earners, because that low income earner has been stretched by inflation by gas prices more than the higher income earner. So understanding that, especially when you're dealing with customers that are in that lower income bracket, recognizing that affordability is a key key purchase indicator to them right now, because of all of the other things in the market. But that, you know, higher income, higher higher earners are not feeling the pressure of inflation or market forces in that and that things are actually better than normal still, for a lot of those those earners. So just just recognizing that, just just paying attention to the news only, and not the dynamics of the current, like actual data is it could be a dangerous road.


Paul Daly  12:35

Unbelievably, so unbelievably. So but the good part about all this conversation is we just dropped a lot of stuff on you. And you're probably like, Wow, that's amazing. Wow, that's great. You can go back and listen to the entire room. You can even listen at 1.5 speed if you want. Click on the link in in the show zero, LinkedIn, there's not a link in the show notes. How are we gonna get them to this if you go open the clubhouse app and you search all things, use cars, it'll be the very last episode, and you can hit play and listen to the whole replay. So you know, as Kyle said, don't believe everything you read, believe what you're actually observing. And if not believe what Jonathan smoke is actually observing. I'm telling you what, when Rhett Reichert runs for president with Glen Lundy, as his vice president, and Liza borsch is as his Chief Heart Officer. And I'm going to put Damon and Lester in charge of all the White House parties. Right, Jonathan smoke. Jonathan smoke needs a seat at the front of the economic advisory line. That's a humble suggestion from Kyle. suggestion. Damon, Lester. Hey.


Kyle Mountsier  13:44

Most of all, before we get into the story, speaking of parties, if you aren't keyed into October, what is 11th or ninth eighth, ninth 10th I think it is or something like that. Name add is happening. And from what I understand I wasn't there last year, but I'm headed there this year. You're headed there. You were there last year and a ton of people over the last couple years have just been talking about how great that environment is both from the party in the automotive industry, but also just the the conversations that happen on ground there. So we'll throw that out. Throw that out make sure you There


Paul Daly  14:19

they met X annual conferences is they know how to do it right. I will say that so minority on whenever they're one of our associate troublemakers is featured on the front page of automotive news. We get excited. This is awesome, because Damon Damon was featured in this article as the president of NEMA not as well actually as the president of NEOMED. And as the dealer principal of Nissan, a buoy but minority dealers are on the rise. There has been a net increase of 123 minority dealers since 2019. With more growth in store for 2022. So is this a quote from David what I put in here? Yeah, so there Oh, yeah. So from all Other news article name and President Daymond Lester who we know said this about the goals OEMs publicly stated, he says this is a big deal. He says it was the first time in a very long time, in 2020, that manufacturers came out and made a commitment in writing to the world about their vision, on diversity and inclusion, what they believed in what their goals were, and what they wanted to achieve. And he's like, that helped us because most of the commitments we had seen in the past were just written to us, and not to the rest of the world. So transparency helped in having a whole different level of accountability there as


Kyle Mountsier  15:34

well. And I love that because this is a key conversation that we've been having with with, even just internally with us, and Damon is like that the communication both both has to be to the dealer world, and to the public, in anything that we're doing, whether that be talking about minority dealers, or agency model or anything like that, and recognizing that, that if it goes both ways, it starts to hold some weight. And, and I think that some conversations need to be drawn one way and some conversations need to be drawn the other. But this is this is an example of that. And we've seen the growth. Interestingly enough, Ford led the way with a net gain of 34 new minority dealers in the Ford ranks. So pretty interesting to see that as that dynamic in comparison to what has been kind of the conversation around Ford over the last, you know, three to four months,


Paul Daly  16:28

without a doubt. Um, so according to the report, Asian owned dealerships grew most last year with 62 new now totaling 361, African American stores rose by 27 to 292. And after several years of dormancy, Hispanic owned stores were up 17 in 2021, up to 591. You know, I looked at the chart, I do when the Reese the 2006 to 2010, whatever you want to call that thing, there was a recession, yes. And a bunch of other stuff. Yeah, minority dealers got crushed, they went down from 18 102,006, all the way down to 875. By 2011, that's a humble I mean, like, That's nuts. You know, and they've been on the rise ever since. You know, Damon Damon, who, as many of you know, if you don't know, he became a first time dealer last year. And he says that his advice to aspiring minority dealers, and I'll quote, you don't have an opportunity to cherry pick your first one. I've been told no, probably more than anyone else in the world. So you just can't take the no for granted, you have to stay true to what you believe in. And what you know, you can do look for on a personal note, like he communicated some of the times where he got to know. And I'll tell you what the resolve it takes and the fortitude it takes to keep pushing forward and watching this step into the Nissan dealer. And we're talking about a first time dealer like not like, I've been in the industry, he's been serving dealers, but he's a first time deal and to watch him stepping in the sun of buoy and start making positive changes and seeing amazing results. just gets me excited. And I think it should be motivational. And I think everybody in the industry should realize like there is there's a huge resource that is just still largely untapped. Yep,


Kyle Mountsier  18:17

absolutely. And I think if you are, whether you're a minority in automotive, you know, you represent a minority and automotive or not paying attention to what name Matt is doing, and specifically Daymond Lester, to encourage that conversation is something that we all should be doing. Because it impacts everyone across the board. I mean, it when you're looking at 875 of 17,000 dealers in the US being owned by minority. That is a stark, stark difference from the way that our culture looks outside of the dealership, for sure. And so, you know, yeah, paying attention, listening and looking at what's going on and what and being a part of name add even is an important thing for our industry.


Paul Daly  19:02

Yeah, let's just say that if you can kind of start to inch your way closer to the name at ecosystem, you will not be disappointed there. You will not and join us at the convention in October because let me just tell you from my experience last year, I was like I can't believe I had never heard about this because it's freaking awesome. Well, Paul, speaking of


Kyle Mountsier  19:19

inching, inching closer segue that two or three for one, episode three, that's Monday, Monday, so we're feeling well, this one's crazy to me. So. A research paper club released last week from the Census Bureau and a Harvard University reported 80% of young adults at age 26 had moved less than 100 miles from where they grew up, and only 10% moved more than 500 miles away. So the study was done on US citizens that are aged right now between 30 and 38. So that's like my demographic. So right in the heart that like center of the millennials, they were trying to figure out like, Are these people moving further from home or staying closer to home. And what's interesting is that more are staying closer to home. And you had a really good point about this in the show notes about what that might mean, for how brands need to need to measure their community impact, right?


Paul Daly  20:25

Without a doubt. I mean, we talk about in local brand building and local community development. And the community development is something that dealers I think, take pretty seriously but building a localized brand. And I'm not saying like Bob's for I'm talking about understanding your community, making content and doing things that actually move people closer to the feeling that you generate when you talk to them. This is just proof that it has a far greater residual impact than any dollar you're going to spend to get some AdWords or some search, right, because you're not wasting those. So even getting those kids like when they're kids and teens and preteens and becoming a part of their vernacular, and their familiarity with the area is going to pay dividends longer and longer than you think. And this, you know, this is just proof proof in the pudding. Right? Like if they're not within 100 miles, it's saying they're moving most of them within 100 miles. And so I think we can we can effectively service an area within 100


Kyle Mountsier  21:25

miles of our dealership. Well yeah. And what's crazy is you can actually start to have a generational like brand impact on multiple layers of a generation if you're communicating to each. So no longer just segmenting, going like here's our determined market, right? Because now point, someone's gonna phase out of that market and someone's gonna phase into it. So understanding that both sides, all sides of the spectrum are important to communicate your brand is really important for any local franchise and especially speaking in auto. I mean, this is this is a no brainer to me to recognize like that people are staying closer to home. This is actually what's interesting is this is a move back to the mid 1900s, where people were not moving far away from home that the family the family nucleus was important in the mid 1900s. So recognizing that, that that like someone could stay sticky to brand. I mean, this is how Toyota made their made their living in the 80s and 90s. Right, no doubt. So that was coming back around


Paul Daly  22:25

and hate all those people are now like talented, young and enthusiastic workers, right. You want them on your team. They know the area, they have relationships, they have the friends so I think any way you cut it is when we consider it a win. They you spent a few minutes here with us this morning. Thank you so much. If you're not on the email list, go to a sotu.com and get on the email list because we shoot this stuff out every day and we want you to be a part of it.