Cox Chief Economist Jonathan Smoke’s report shrugs off recession talk in latest bi-weekly Auto Market report
Costco fends off internet mis-information about raising the price of its $1.50 hot dog deal
Enthusiast website Jalopnic features Dealership markups across the country complete with commentary
Kyle Mountsier, Paul Daly
Paul Daly 00:00
Yo you saw right there ASOTU CON coming in hot. Tickets are open. Tickets are selling. I'm telling you get your tickets. We don't want you to not be there. Today we have DJ Smokey Smoke to talk, well he's not here, but we're talking about his talk and Costco hotdogs. Gotta go. The people really want it. It's true inflation indicator is a Costco hotdog. But we'll get into that.
Kyle Mountsier 00:23
When that look if you asked my kids at Costco hotdogs are on the top 10 list of Greatest things in the world so
Paul Daly 00:31
that you know why one of the reasons is that you remember you ate one for like three hours, okay, I don't know if my kids do but I do. I do. So we thought we talked about it all week. We're so excited. Obviously. It's Friday, we got a little extra Friday energy today. But we gotta let let us just tell you that the momentum picking up with a soda con still over two months away is real and legit. And people are buying tickets and people are calling and asking questions and saying can I be there? Can I help? Can I go? What hotel do I book, right? There's still a lot of things to come. We haven't even announced a single speaker yet. Wait till we announce this jokers. But look, if you were thinking about it, go to a show to con.com. And we just highly suggest you buy your tickets now. Because we don't want the sob story later. Right? And there's not going to be the text messages like yeah, it's cold blooded. I'm just I'm trying to be uncharacteristically harsh, so that people get them. Yes. Because you know what happened? You know what happens? The sold out thing is going to appear when someone logs in to get the tickets. And we're going to start getting a lot of text messages. Hey, is there anything you can do? And we really are limited by the venue? Like we're not joking. This is
Kyle Mountsier 01:41
like literally, we're not allowed to have more people. Like you'd have to stand outside. At that point. Yeah, here Yeah,
Paul Daly 01:47
this isn't this isn't us like pumping it and then like selling out like Oh, there's more tickets. Oh, we just found more there are no more tickets once they're sold, they're sold. So enough about that, we hope you go to a soda con.com And we also on LinkedIn just created an event for it. So if you're on LinkedIn and you want to be part of the event, even if you're not part of the event, you know that that's we're going to be having news and some special stuff there. So check us out on LinkedIn. If you're not following us on LinkedIn we noticed yesterday like we're going in the LinkedIn followings growing the engagement on LinkedIn has been awesome. And they're like people that are part of our OG community that like and and comment and share a Soto posts on LinkedIn that don't even so do
Kyle Mountsier 02:28
Hey, I get it look like following companies is not you don't wake up every morning. company should I follow on LinkedIn and Facebook, right? So we get it. But we would love for more of you to just kind of engage in the community in that way. And whether whatever social platform you're on, just be a part of the community and feedback, right? We love comments and, and people saying, hey, look, I'm thinking this about that. Or, you know, I'm not really agreeing with that. We're okay with that too.
Paul Daly 02:56
Please. Yeah, we love we love when that happens. Actually. We are launching, we're excited. We're launching a new long form podcast called Auto collabs. By asoto. We got some cover art designed yesterday, which made us all excited because we all know that the cover art is 98% of any podcast. Oh, we have some really fun. We have dozens and dozens of conversations that we're about to have that we're going to bring to you long form not like the show or give me the quick fire so we can get a little deeper, more meaningful, more announcements about that soon. And last but not least, we are about to go from this live stream into the all things used car clubhouse room. And if you haven't been a part of that you're missing. In our opinion, the single most valuable conversation in retail automotive every week. We are not exaggerating,
Kyle Mountsier 03:40
not not exaggerating, and people, people I've had this conversation I mean on. You mean on clubhouse there's a conversation that I should be like locking down my calendar for every week? Yes, the answer is yes. It's really honestly surprising how dynamic every single week where I think we're approaching are just about to pass episode 60 of that. And there's so much moving every single week in auto that the conversations that happen in that are not just like hindsight looking or future kind of like, hey, maybe this will happen one day, there are real practical tactical things that your team can doing every single week. So if you've got a team, or if you're on a team, make sure that at least someone on your team is blocking out that time or blocking out time afterwards to listen to the replay. Because it is extremely valuable to dealerships and industry partner business without a doubt
Paul Daly 04:37
we try to chop up some content and bring you some on LinkedIn and Instagram just so you can kind of get a little feel for it. But the real value of the room is that you can be there in the conversation, ask questions, be there real time honestly that that mentality is really part of the model of how we formed a soda con, right to be much more collaborative and conversational, instead of one person, you know, giving you their thoughts and feelings and then you get up and go and hear someone else's thoughts and feelings. Right, it's a conversation. So speaking about someone's thoughts and feelings and stuff, segue. All right, we're gonna get into some news. Jonathan smoke, aka DJ smoky smoke to the people who know him best Cox, automotive chief economist, does a bi weekly, bi weekly presentation on his findings and his kind of analysis of the data from the last two weeks. And so, you know, this, this last one that just came out like a day or two ago, he kind of painted a picture that said, you know, we're hearing a lot of talk about recession. And he kind of put it in a very kind of polite way he's like, you know, I think that really is mostly coming from the people that benefit from headlines that scare people into reading their articles. So he said, as far as his is his indicators, right? He says that, you know, strong labor market, high credit availability, and high high savings accounts, basically, are signaling stability for auto dealers, like signaling stability across retail, automotive, you know, they're not being the new inventory situation that we're in. It's like that stability, the fact that people's credit scores are still high, that stability. And so he shrugged that off a little bit. He also, you know, here, I'll read a quote from this. And he says, My biggest worry from the dealer sentiment data is that the outlook is down lower than the current market, meaning that, you know, the Consumer Index, right, that shows consumer confidence, he said, Actually, dealers confidence is lower than the Consumer Index, which is rare, because dealers are naturally optimistic. So, you know, he said, the numbers are still positive. And, you know, I guess, as we would expect from him to be a little bit strong and steady in his approach.
Kyle Mountsier 06:41
Yeah, I would say cautiously optimistic is the the approach that you should take to, to just economist news like this. And the regular news that's out there, this cautiously optimistic, because we are still seeing, I mean, I was talking to a dealer yesterday that, that three months this year, they've hit Record New Car months, right, because they sold in the pipeline, the vehicles arrived, and they hit Record New Car months. So there are dealers that are continuing to do that month in and month out. And, and so recognizing that that's going to be a continued, you know, just norm for us over the next 912 18 months. But realizing that there is, you know, I think we talked about yesterday, was it yesterday, that or two days ago that the Fed is actually is making decisions based on the sentiment of the nation, and just kind of the feeling around how old you were relation and the psychology. And so recognizing that those, those, like, underlying psychological things that are happening in the news are contributing to potential for recession. And knowing that we're, this is one of the longest periods in the nation's history without any level of recession. So there's, there's, there's imminent recession, at some point, whether it's nine months, 12 months, 1824 months away, we don't know. So being optimistic in the short term and pushing on, but being cautious with the way you're setting up expenses, the way you're pursuing marketing, and, and making sure that you're driving them the right channels allows you to be present when, you know when the inventory is still strong, which is or when the not the inventory, but when the economy is technically still strong, which is still right now.
Paul Daly 08:27
Yeah, without a doubt. I mean, we've talked about this a few times this week, is that operational excellence, operational efficiency in your marketing and your fixed ops and your hiring, retention. All of those things are things that you can control today, all of them 100% And like, I love how you said like, hey, recessions gonna happen. It's just a part of our economic system. We have we have recessions we have, you know, some some of us have been through them. Some of us have not been through them. And I think but in the automotive industry, most people have been through a couple actually by this point. So you know, nothing new. Speaking of inflation and recession, segue double double press, double press,
Kyle Mountsier 09:09
double press. This is this is my favorite. I'm excited. This is talking about hot dogs in Casco right we should search Mar
Paul Daly 09:15
crypto, and benchmark the US dollar and the World Index against the most stable coin that I've ever seen. And that's like hot dog and
Kyle Mountsier 09:26
dollar store was stable. They ain't got nothing on Costco hotdogs in a soda.
Paul Daly 09:31
They haven't done any of that stuff that people usually do, right? Like Gatorade is like, hey, it's the same price but they've strategically designed the plastic mold to reduce what how much fluid is in the bottle by like, 30% No, the hot dog is the same length. It's always been so we're going to start there. Because Costco in their q3 earnings call gave special attention to the hot dog which is makes me so happy. makes me so happy. So in their q3 earnings call A senior vice president Bob Nelson was filling in for their vacationing CFO. I love how they put that in there. Just you know that's, it's a little shot, and I was on vacation. So we got this
Kyle Mountsier 10:09
guy he was on. He's chillin on the beach. So he's talking to him.
Paul Daly 10:15
I didn't put his name in the article out of respect. So so they went through their whole earnings call talked a lot about price stability. And at the end, because there's all the there's a rumor a rumor mill started on the Internet somewhere. I don't know if you've heard but rumor mill start on the internet sometime. And he said, finally, I want to address some incorrect information floating around social media and a few other media outlets, claiming that we've increased the price of our dollar 50. Hotdog and soda combinations sold in our food courts. It was like, alright, children gather around. I need to talk about something serious. It's like, okay, alas, look,
Kyle Mountsier 10:50
I know that you think the dollar 50 hotdog is now $1.70. But when it reads $1.50 It's actually $1.50. So good. It's so good. Right? It's a massive brand play to come at it like that. And not just that. But look, I don't know about you. Are you? Are you Sam's Club or Costco, Costco, Costco,
Paul Daly 11:14
Sam's clubs all closed, by the way. We've only had, we've only had Costco for like four years. I mean, maybe that's why the Sam's clubs closed? I don't know.
Kyle Mountsier 11:21
There you go. Yeah. So I mean, we have we have Sam's Club closer, but it's very similar. It's like, when when you're going with your kids, there's this unique like, when you get to the end of going through this massive store frenzy station begins this frenzy of anticipation. Like we're checking out we're checking out the pizza or the hot dog, you gotta get the pizza or the hot dog, right? Yeah, it's only a buck. Let's do it. Right. And that's just, it's an exciting part of what so it's a big brand play. And then to just kind of like call their shot on it is is just so smart from from them to like, you think about that an earnings call. It's like q3, q2 is up. And we said, you know, here's our EBITDA and, you know, all this type of stuff. And they're like, but the
Paul Daly 12:07
dollar sum perfect. He goes on, he goes on to say, let me just say the price when we introduced the hotdogs soda combo in the mid 80s. Remember the mid 80s? Probably that was $1.50. The price today is $1.50. And we have no plans to increase the price at this time. It's just like when you have the conversation and people say save like the most serious part of the conversation for the end. Right. Now let's talk about something important. Now they did increase the price on a couple of items. They increase the price on their chicken bake, which I can't even remember seeing and I've never had from 299 to 399. So I'm sure the chicken bake people will be just fine. If they were already splurging at 299 and a fountain soda went from 59 cents to 69 cents.
Kyle Mountsier 12:53
Paul Daly 12:55
I love it. I
Kyle Mountsier 12:56
learned he said it's cheaper than still 30 cents cheaper than any gas station out there. Like come on. Yeah. I mean,
Paul Daly 13:02
there are whole research studies that talk about the Costco hotdog. I mean, they obviously use it as a loss leader, but they also use it like you said, as a major brand play, right? This is signaling to everyone, like you're going to get more than you pay for at Costco. Right? And you can trust them. And it's stable, and it's the same size. So like, of all things in the economy, as long as just John Roper just commented, remain cautiously optimistic, as long as the Costco hot dog remains at $1.50. That is, you
Kyle Mountsier 13:33
know, what I want to see, I want to see Steve greenfields mobility index indexed on the Costco hotdog.
Paul Daly 13:42
We'll present that to him next time. I think we just have to do that form. And then just, you know, politely suggest that that's how he should run his business. All right, one more story today. And this one, this one might sting a little bit. You know, usually we leave the hotdog kind of stories for the end, but it just was so good with the economic story, we had to put it second. So if you've ever read the website, Jalopnik cow, I know you knew about it, I think before I did, Jalopnik is like, Are you a Jalopnik person like before, for years past?
Kyle Mountsier 14:09
I always just kind of stayed around it. I appreciate that. They have kind of a similar news bent to us to what we kind of like bring it always, you know, you kind of read the article, and then they give they give you their commentary at the end. Yeah. And I've always appreciated that knowing that like, it's an obvious opinion, like street talk piece. Yep. But just, I like I like knowing that it's they're just very clear. Like, this is what we think, right? They state the facts. This is what we think and you can you can kind of compartmentalize that and when not a lot of news sources kind of like weave their thoughts into the news, right? And they're just like, oh, here it is. Yeah, so yeah, so that's, that's what I like about a lot.
Paul Daly 14:50
So Jalopnik is if you think about it, they're more of like a retail enthusiast angle is their main trajectory, right? And then because it's all around cars, right? They they also have some kind materion some news on what dealers are doing, obviously, because it's about cars. So I don't know how many months several months ago were reported on a website that got launched as is their markups.com or markups.org. Either one of those. And but basically, somebody built a site. Thank you. Somebody built a site that lists consumer reported markups at dealerships all across the country. So go on the site, see if you're on there, and this Jalopnik article, kind of listen, I think they do this once a month. It's like the top 20 dealer markups across the country. So you can go look at this article that we linked up in the show notes and see if your dealer so they're basically reporting on markups.org.org They're doing so markups.org And they just went ahead and curated in whatever whoever the writer is right. His top 20 markups across the country. And will tell you that the punchline in a second. So the the number one or number 20 counting down to one, it was a $1,398 markup on a Hyundai palisade right, some modest markup all the way, you know in the middle is about an $18,000 markup on a ranger XL T putting a ranger at the same price basically as a full size F 150. And then finally, last but not least, was a 2000 $200,000 market markup on an E V Hummer. Which doesn't surprise a lot of us
Kyle Mountsier 16:13
isn't surprised anyone because even like secondary retailers are doing like two to 50 on those things. So they it doesn't matter where you're at in the market, you're paying a lot for an Eevee Hummer without
Paul Daly 16:23
a doubt without because they're only making 12 a day. Right? They're only making 12 a day. So like, as we always do, we don't just take the story at face value, we dive into the comments, right? Because the comments are where the real feelings come out. And as you can imagine the comments had a pretty broad variety, we highly recommend that you go in and read the comments. Now look, when it comes to markup, big debate, big conversation, automotive, everyone is entitled to their own strategy, right, everyone's running their business in their own way. We hope that you go to read the comments to understand how your strategy may be affecting your market and your perception. So you know, but in the comments, I think is a treasure trove of just awareness to the consumer mindset. People saying, What the heck is MSRP? Anyway, some people saying like, Hey,
Kyle Mountsier 17:11
do you know what's crazy? I've had more people asked me, like, from my auto perspective, what is MSRP? In the last like, five, six months, and then ever people that are outside of auto, because nobody's ever actually what I'm realizing is nobody actually knew or, or paid attention to MSRP because it wasn't even a thing was meaning. And now it's like everyone's like if you can get a car at MSRP you win. And everybody's like, what's MSRP? Yeah, you know? So this level of, I mean, we're having to battle evey education and pricing education. And so your team should be very, very well aware and in tune with what's going on in the market. Wherever you decide to place yourself on that plane of markups or no markups. Your team has to be educated to be able to execute on your strategy. Yeah,
Paul Daly 17:59
without a doubt, without a doubt in the comments. So one of the things we've been conversating quite a bit about in the industry is direct sales, right? OEM direct sales, the dealership model legislation, how it's all coming together in this day and age. And what is the consumer think about that? Really, because we all have our ideas and perceptions. Read the comments. There are people in there saying like, Yeah, this is exactly the reason that dealers are going to be eviscerated from the planet and direct sales are going to win. And guess what's next, someone commenting and saying, Yeah, you know what, actually, direct sales will be bad for us, because then one person would have all the control. And then we would all get screwed. Oh, I was like, oh, okay, somebody's paying attention. somebody's paying attention. And so we wanted to bring this to your attention again, go read the comments, click on the link in the show notes and read the comments because you know, they're gonna sting a little bit on one side, you're gonna see some rational thinking on the other side, but it doesn't matter whether or not it's rational or not. The consumer thinks what the consumer thinks and it's our job to change that perception in a positive way.
Kyle Mountsier 19:02
So Paul, would you say consumers go and do what consumers go on? Do
Paul Daly 19:06
I've heard somebody put it that way before consumers gone do what consumers gone do and we're gonna do we're gonna do and what we're gonna do is go into the all things use car room right after this. We hope you join us there on club. Have a great weekend, everybody. Get some car sales done tomorrow. Well, yeah, just show something