Ukrainian President Volodymyr Zelensky delivered a pre-recorded message at last night’s Grammy Awards before John Legend’s performance of ‘Free’.
Finally, a bill to provide Dealers relief from the unintended consequences of LIFO accounting in the midst of the inventory shortage
Lithia could potentially become the largest Dealer in the US per Automotive News Top 150 list due to acquisition and growth strategy
Kyle Mountsier, Paul Daly
Paul Daly 00:22
Yo, welcome to Monday morning, troublemakers. It's a good day to make some trouble. It says it on your bracelet. It says it on my mug. We have some news to talk about some things to talk about. And guess what? April Fool's isn't over. The people really want to know, too. I think we need to. I need to start this morning by apologizing. My wife, this is not This is no joke. So my wife goes, I'm listening to the podcast. And it was just it was like, you guys were just a little bit too locked in. She's like, is anything you told me? True, Kyle? All of a sudden, you're way too good at faking it? Yeah, she goes, Are you guys trying out for like some sort of movie thing? Or is there an acting career for you in Paul? The funny part about the April Fool's podcast episode is like we only had like, three lines of notes. Right? Usually our show is built out, right? We have we have article links, we have bullet points, right. We spent some time it's like a whole page. Well, it was only like three notes. And we were kind of in a hurry. We're like, let's just do it. Let's just do it. And then like, just the first the first serious line that came across that we knew wasn't true. Like we both like, just locked in or like, Okay, we just put all this we were we were in I think there was one moment I said, Do I there was one moment where both of us kind of got hit kind of got struck at the center. I did the old Saturday Night Live laughing.
Kyle Mountsier 01:46
Right. But but it was, it was timely, because we would have kind of laughed at that moment in most of our podcasts anyway. And so I think it was it was so good. It was it was fun. And for those that that hung around on Friday on our social media, on the podcast, in the email, we had a lot of fun, our team had a lot of fun putting it together. And, you know, playing off some of the, you know, what I love is every joke has just a wee bit of truth to it. And we'll just leave it at that.
Paul Daly 02:17
That's what makes a good joke. Alright, thanks for all the people that could take a very friendly, trolling. You know, it's just a sign of a good relationship when you're rib on one another, right? That's how you know you have a real relationship. If you can't make fun of each other, then you're probably don't have that good of a relationship. I also need to apologize for my echo several, several people have like, Hey, you have that nice natural echo going on. I am in a new office. If if you haven't been like following around the stuff we just moved to a new building. Today's our first day in but I moved in early. My sound treatments aren't here yet. And my ceilings are like, you know, 15 feet tall. So we get that nice warm natural reverb. Like if we were singing, this would be the joint right now. We're gonna get we need we need like an acapella group. And for this week, musical is by asotu people wouldn't be surprised. If they wouldn't, they'd be like another day. Oh, man. Um, hey, also want to give a shout out to John Allah for saying last names. But John, real guy, hit 50 referrals over the weekend from sharing the newsletter. So he's gonna get a brand new flat brim hat on its way in the mail to him, you can get that stuff too. If you share our morning email with your friends, you can sign up at a sotu.com If you're not ready on the list, and you can still go back and check out the April Fool's edition. It was just a lot of fun. There were some people that didn't get it till the end of the day. And they were in it. Like, oh, I didn't see oh, it all makes sense. Now. I get it. I get it. I get it. It's so good. So good. All right, let's roll. Let's roll. Let's get to stuff today. Yeah, you got to tell me about so I didn't I didn't actually know about this, this first thing that you dropped on our show notes today about the Ukrainian president. And some cool stuff and how the Grammys brought him to to their stage. Yeah, so we're talking about the Oscars for a lot different reason than we were I mean, the Grammys a lot different than we were talking about the Oscars last week. Right? Different and these issues. So it's funny because the Grammys they they struck, I think a very welcome tone in entertainment. A lot of the the host actually poked a little bit of fun. Everybody from like Questlove that, you know, they were just talking about, hey, everybody stay, you know, stay in your seats stay away from me, like one person came up with a helmet on so it was good to see the industry. So fun. You know, it's a so but I think one of the most touching moments of it and very unexpected. I think there's probably never been an issue like this. We have a world leader from another country addressing the Grammys. So Ukrainian President Vladimir Zelensky he delivered a pre recorded message, you know, and for those of you who may or may not know, um, he's an artist himself. He's an actor. He's a screenwriter, so he's a creative and so I think there's already like that bond of connection and basically What he does did was encourage the people in that room, the musicians in that room, to share the Ukrainian story through their music, to keep singing and really appreciating the freedoms that they have as creatives and as musicians, I'm going to quote from the speech it says our musicians are musicians wear body armor. Now, instead of tuxedos, we sing to the wounded in hospitals, even to those who can't hear them, but the music will break through. Anyway. So, man talk about a heartfelt moment, you know, and you and I are both musicians, right? So this this one hits me, so core so deep, because of the universal connection of music and how deep it is, and and like, gut wrenching, Soul wrenching and connected we are by the aesthetic of music. And so for that to be a center point to the Connect that the connection, he's asking other musicians to allow us all into, in the midst of in the midst of this, and, and I would argue that, whether whether siding on the side of Russia or Ukraine, there's a unique capacity for music, potentially, to be a way out of conflict. That's a great point. You know, there are probably a lot of a lot of musicians and artists that really commingle right between the Russians and Ukrainians, right, there's probably because just proximity culture, right, there's probably a lot of common ground there. And, yeah, like you said, this, I think this is an indicator, and a reminder to us, you know, we talk about like this, bring it back to automotive and retail and us for a second, you know, there are these cultural ties that bring us together, that are far greater than selling a car, servicing your car wearing about a VDP, you know, worrying about a CRM, right, they're really the deeper things that if we can connect on those things and align around those things, then we're just not only going to be more successful, but we're going to be more fulfilled, and we're going to be more of a of an enriching element in people's lives. And last night, you can see it in the article, you can link up to it, we linked up to it. So you can actually, you know, see some of the comments that were made. But it's just a reminder that like, like, in the middle of all the stuff we do professionally, creatively, whatever it's like there's a human thread that it's all built upon. It's all built, you know, this is just related to a from a business perspective is how you allow music into your business, I think is even just isn't is a note on this, right? Yeah, I mean, there are so many ways in order to enhance the guest experience or the client experience with music. So thinking about what are we playing over the radio? What are we playing in the space? How are we bringing even musicians into the space, we've got a couple of people that we know that bring musicians into the showroom live musicians, live musicians in order to enhance the guest experience, because there's so much that music can do and you can decide how the music might actually change the guests experience whether it's high energy or classical, or you know, the different ways in which you bring aesthetic in and you know, manufacturers know this, they're all changing the building aesthetic, right? So you think about the aesthetic of the building the aesthetic of the soundscape. These are things that businesses that high intent businesses actually focus a lot on. Now. This is this is another one but even like scents and smells, right, one and hospitality, though, yeah, you go back to you go to hotels, or, you know, the the one that everyone likes to poke fun at is Abercrombie and Fitch back in the 90s, when they would spray literally every single thing with cologne, right? Yeah. And so thinking about your business in your brick and mortar business, as an experience, we've talked about this a lot, instead of just a place to transact, allows guests to actually transition into more metastatic kind of feel and how their brain is approaching everything that they're being asked to do. As a retail consumer. Everybody understands this, when you walk inside a store, like a clothing store, right? And the vibe actually puts you in a mood, you know, we in this space that we just build out here, like I'm a big fan of having like, loud, like energetic music in the bathrooms. And we also made sure we have like lighting on the mirrors that make you look really good. Why? Because when you go to the room, right to like, get some energy from the music, right? We made sure the speakers were in stereo to like, we went all the way we have stereo sound in our bathroom. And then when you go to the mirror, you look at yourself, you're like, alright, I feel like I look pretty good, right? You're just gonna feel better, you're gonna make better decisions. So, right. We don't talk about music in the automotive dealership enough. But maybe this is the beginning of something because we know people who are executing on this pretty well. There you go. There's your experience with static improvements. Hey here's a little bit more of we're gonna go from like very high level aesthetic creative, you know, a serial thing to LIFO last in first out accounting, we talked about this you know the first time I became aware of it was at our year and extravaganza when then chairman nada Paul Walzer talked about what caught with nada was doing the lobby, well, just I think was just Friday, maybe a US rep. Dan Kildee Democrat from Michigan plans to introduce legislation that would provide tax relief to dealerships that use the lastin first out inventory accounting method, and have struggled to maintain inventory levels because of the global global semiconductor shortage, reading from the automotive news article this morning. So basically, this legislation would allow dealers until 2025, right to kind of regulate their inventory levels, because it's been such, you know, such an unusual situation. And I think this is, you know, nada coming coming through hard for the dealers on LIFO. And, you know, this is kind of blocking and tackling of the business that doesn't get a lot of play, but it's happening. Well, I love it. Because, you know, for me, and, and for many in our industry, I don't care if you sell car service, cars, anything like that, if you're not really tied to the to the financial reporting of the business, this isn't something that's, that's a big heads up. But it's a big piece of what the organizing body of dealers nada is doing on a daily basis. You know, if you think about, like, you know, what are they doing? It was a question for me a lot is, are they really getting anything accomplished? And sometimes the things that are necessary to get accomplished are not the big, sexy, you know, things that are challenging industry perspectives, but they're the blocking and tackling of running a business. Yeah. You know, it's like, when you buy like, an upgraded iPhone, and they haven't changed the aesthetic of it at all. Right, is paid all this money, and it looks the same. It's like, oh, it's all under the hood, and then you use it. Oh, this works a lot better. So thanks to nada, thanks for making everything we do. Honestly, under the hood in Washington, DC, like advocating and making it possible, thanks to automotive news for being so faithful reporting on it, it matters. And if you don't realize that it matters, we're just telling you that it matters. So we said this back in the beginning, like what can you do? Well ask your GM Hey, are we on LIFO? Accounting, right? And if anything, they'll be like, how do you know about that? Or, you know, if you're trying to move up in the world inside your dealership, ask the GM or the CFO, are we on LIFO accounting and watch what that does for your career? You heard it here first kids. There you go. You heard it here. Go ahead, hit the third story. Oh, what about Lithia? Holy cow. This is crazy. Okay, so it sounds like the Automotive News top 150 list of dealers is going to have a new leader here very soon. Being Lithia. If you don't know Lithia has a has experienced massive growth. Due to you know, introduction of purchasing dealerships. They've gone from 87 to 278 dealerships in the last 10 years alone. So we're talking about 200 Plus dealership, almost 200 dealerships, that's a 320% increase in number of stores, they have pressed into Drive where they're global brand of sales. And so they've seen a sales increase from 57,000 to over 260,000. And, and growing and growing. And I know some people there that they're like, Oh, we're not stopping, we're going to acquire more stores 2500 to 500% in 10 years. I mean, it's not quite a 10x 5x. Five, come on. Yeah. Especially if you're operating at that scale. You know, there's, there's something about and if you don't know, because you know, we have some new listeners, right. So Lithia is one of the biggest publicly traded dealer groups. So you have auto nation who has historically been number one for as long as I can remember. Penske, who has been number two Lithia, who came in strong at number three lithium is now in front of Penske lithium is about to overtake the number one spot. You know, one of the things that that I think that I think is the one of the reasons for this is that they pay so much attention to the bigger picture, especially with the development of driveway, right? They're not looking, playing just the traditional dealer game. They're like, how can we get our arms around everything that's happening in the industry and actually take measurable action toward it. And I'm not saying the other the other publics haven't. But I'm just saying Lithia has done it in a very upfront way. When you have driveway advertising showing up on your Amazon packages.
Kyle Mountsier 14:43
I was literally about to say the
Paul Daly 14:44
same thing. Like you're playing a different game. You are playing a totally different game. Your head is up in a whole nother way. You've got connections, ideas, innovation, and you're trying to fork and you're trying things. Yep, right. Like you can't win unless you try unless you fail. You can't unless you try and they're trying and I think it's paying off right this is not an overnight success kind of thing. Right? This is the long game currency O'Brien DE BOER have he actually joined I didn't know this about until I looked it up a little bit this morning, he joined lifting in 1989. And he worked his way through the chain. He went through like manager training, General Manager Training and ADA Academy. So here's somebody he's not like coming in off Wall Street, you know, and just managing a big publicly traded like this is someone who has spent time on the floor selling cars, managing sales staff managing entire store sales service, right, he understands the business. And really, he's he's a pretty astute like financial thinker as well. One of the things a little different about the way Lithia does things that a lot of times they'll buy store, and they'll like, overlay their back end systems, right. So like, they'll share a p&l, they'll get efficiency out of scale, but the let that store keep being that store, which is a little bit different. I don't know how much the strategy has changed since I knew about it a few years ago, like that, but I mean, like, they're just savvy and like, it's very similar today. And they actually they they use these market managers to kind of manage all the relationships with that. But they're roll up his driveway because they realize that because they've gone at it that way. They can't just roll everything down into the dealership. So they're rolling up everything in the driveway. So it is it's still an interesting play for me because there's this, you know, corporate local battle going on, but I think they're doing some stuff, right? If somebody if somebody figures out how to keep local, local and still be owned, like large part by corporate but still really so back in there. That's, uh, that's gonna that's gonna be pretty hard ticket to compete against because we always talk about that, like, hey, the benefit you have as being local is that you're in the community, right? Every day. So if somebody figures out how to do that, I think it'll be in really good shape. I don't know. I think that's enough for a Monday. I think everybody has a lot to talk about. We have a lot of work to do. Sign up for the email list of soda comm. We have another great group of episodes coming your way. A lot of content coming out a lot of new announcements. Let's keep bumping on Monday.