Toyota adjusts profit targets, Retail Auto stepped up, & Flying cars!?

May 12, 2022
We’re back in our respective Nashville and Syracuse saddles today as we give a flyover of the on-the-ground reaction of the Retail Auto Industry to the Carvana layoffs as well as Toyota’s decline in profitability due to raw material costs. Speaking of ‘flying over’, we talk about one company working to bring flying cars to the masses.
Listen On

How the retail auto industry approached the Carvana layoffs: LinkedIn

  • People willing to hire
  • People willing to consult
  • People caring about people
  • Take Away: Matter how big or small the organization is, losing sight of the people that make it up is simply not an option. Take time for your people today.

Toyota seeing decline in profitability due to raw materials costs

  • “The Japanese automaker said it expects materials costs to more than double from 1.45 trillion yen, or about $11.1 billion, in its fiscal year that started in April.”
  • Toyota on Tuesday said it would suspend operations on 14 lines at eight domestic factories for up to six days in May due to lockdowns occurring in China.
  • Take Away: We continue to stress: control what you can. Whether supply chain, or Covid, or inflation, be ready to adjust and pivot but make sure you have your finger on the pulse of what you know best about your business.

AeroMobil working to bring flying cars to the masses

  • “The ultimate vision is to offer millions of customers in the U.S. the ability to use a flying car,” says Patrick Hessel, AeroMobil CEO.
  • Hessel, who was named Ernst & Young Entrepreneur of the Year in 2015, says the main challenge of engineering a flying car is the weight due to the automotive technology inside the vehicle.
  • Take Away: It may not be the next EV, but you can be sure people that you encounter will have questions. Let’s make sure our industry can answer questions for ALL transportation needs.

Paul Daly  0:25  

Oh my goodness, it is so good to be home. We love going away. But boy, it's nice to be back in the saddle. We got some stuff to talk about, primarily how the auto industry is responding to the Carvana layoffs

swag up there. I want to say it was awesome to watch people walking around in a asotu swag Oh,

Kyle Mountsier  0:57  

oh absolutely. They got pushed back sweatshirt, the T shirts on. They got like all the mugs and all that type of stuff just walking around, it was so good. Hey, look,

Paul Daly  1:07  

if you were at the remix event, and they were out of something that you wanted, shoot us an email at crew at a sotu.com We ran out of some stuff because people wanted it. And if you didn't get what you wanted, shoot us an email, we'll see if we work it out. Just take care, take care of our people that want to represent on the streets, Kyle,

Kyle Mountsier  1:25  

we'll figure that out. Let's go. This is a big community. And we just got to share it with more people. And so we'll get it out there.

Paul Daly  1:33  

Man, I'll tell you what, there's so much going on. Sometimes the news ebbs and flows. And, you know, we spent the day together yesterday with a big part of the soda crew, and meeting our internal team talking about the future of asoto. And some new people on the team. Like we always talk about objectivity being a gift, right? For someone who comes into the auto industry from outside of auto and they work at your store, you have like six months of like, the golden hour, where they're going to tell you like everyone else sees it not like you know, your so value, the objectivity. We have some objectivity because we have some new team members. And so asking questions like Yeah, but but I know all this and this and this, but But tell me exactly what we're doing here.

Kyle Mountsier  2:15  

Right? Exactly. Yeah. And coming at it from simply the consumer side. wondering like, why, why we would do this internally, right? Why this isn't necessary in the inside of automotive, to make some of these shifts, make some of these, you know, claims and then draw people together in this particular way. And really codifying that, because and I think what's really cool about that is when we can figure out how to communicate that internally, then what it will do is transmit aisle to customers and community and culture

Paul Daly  2:47  

all day all day. So look, we want to before we get into this Carvana story, which I'm so excited to talk about, because it's it's much more relevant than we even talked about yesterday on the show because of the response we're seeing on LinkedIn. But we do want to have you take out your calendar right now, open your scheduler, and just put a little asterix on the first day, the second week is September, from the 11th to the 13th We're working on something

Kyle Mountsier  3:10  

we may be working on something

Paul Daly  3:14  

might be kind of, we're not ready to talk about yet. Because this is a big something. And we're trying to get pieces in line before we talk about it. So the remix party was great. This is a lot more than a couple hour party. So September 11 through 13th. Just put a little pin in that for us. Alright, let's talk about this Carvana thing we talked about story yesterday, they live off 2500 people, most of them and operational roles, right, they froze executive salaries and laid off operational people, all types of people, you know, in all different types of roles. And you know, yesterday, we're like, man, if there was ever a time for the automotive industry to show everyone else, its strength that's in its stability. It's longevity, like, how can we welcome in these 2500 people who have really worked for a company that has been, you know, saying like the anti dealer. Yeah, this the anti dealer, and how can we show them that there's actually a good side of the fence to be on where they can be taken care of. And

Kyle Mountsier  4:15  

I want to as we get into this and just kind of peruse what has happened around automotive. I want to read our good friend, and third brother, Michael Cirillo.

Paul Daly  4:27  

This morning, Danny DeVito

Kyle Mountsier  4:29  

exam. And the man has a way with words. Let me just say that right. And he wrote this on LinkedIn and so make sure you go you know, drop him some love for this, but it says, here's one reason I love the car business. Carvana lays off 25 people and 25 2500 people, retail auto dealers across the nation are stepping up and offering jobs resources in their network to those displaced. Think about that. Think they're bigger This competitor screws up and they have compassion and empathy on who

Paul Daly  5:06  

people. The people I kind of got first we have some slides to share in a second. I the first I really got kind of came on we were traveling, you know, the second half of the day yesterday, so there's little time in and out. I've just man, I was not on LinkedIn hardly at all during this digital deal. Crazy. But um, I saw a repost from our good friend Samantha Foster, with her friend, Abby McGuire, who's the Talent Acquisition Manager at Carvana. And was just this post was just like, man, it's been, I was ready to come into work today and just and just really be there for some people. And she just started this post saying, like, hey, a bunch of people are laid off. They're really good people. I will help. You know, I want to help get that find them a good place to land. And then I just saw the automotive industry just like, Oh, yes, exactly. You're like we gotcha. So I mean, Kyle, you picked out some screenshots from some LinkedIn articles. why don't why don't you share some of those?

Kyle Mountsier  6:03  

Yeah, so I think we've got this. This is Carlita. mihika, Jr, Jr. And he's the retail development senior manager. I got to meet him back at Brian passes, AAA is last year. And at LaFontaine Automotive Group. I think they've got something like 28 stores up in Michigan. Yeah, what's that? A couple 2323. So they got some opportunities is what we're trying to say here. Right? And so they're just saying, hey, look, reach out. Please send me a me, my teammates a message and we'll try and find a place for you. We are hiring. We're growing. So that was super excited to see and like, this is what's cool. All right. Nobody shares anything on LinkedIn, because everyone No, it crushes the algorithm. This post gets 13 shares. It's like, let's get it out there. Let's, let's help more people find this right.

Paul Daly  6:52  

I want to read this live for people on the podcast. He said that if you know anyone that was affected by this and lives in Michigan are willing to relocate to Michigan, the LaFontaine automotive group is looking to hire more family members.

Kyle Mountsier  7:03  

So good luck, get you on the fields. And then let's see we got a couple more here. Open another one up there with another one. I'll go to the other one. That's another LaFontaine just sharing it from the group. Oh, this I love this from Laurie Foster. And Laurie Foster is a friend of ours. And she does a lot of coaching consulting, does a lot of people management for dealerships, you know, it's everybody really understanding culture. And then she does it for industry partners, and all of this type of stuff. She really knows the HR culture, people personality thing. And she just says, Hey, look, literally on my dime. Carvana. You don't have to pay me any time any place any day. I'll spend a whole day working with your executive staff to make sure things like this never have to come up again. Oh, my goodness, she literally put that in her post. That's unbelievable. To say like, no, look, we want I want to help you Carvana the biggest competitive to the main industry that I work for, ensure that your setup from an HR and culture perspective, to make sure that you never have to worry about layoffs again, and I'm going to on my dime fly anywhere you want me to for a whole day and work on that. That's a big deal.

Paul Daly  8:19  

Sure is. Do we have any more? Yeah, we

Kyle Mountsier  8:21  

got one more I think this is Mike Kavanaugh and he's with me a driveway. I can't be played violations.

Paul Daly  8:30  

Yeah, yeah. Let's just Let's just say earlier, asotu contributor like back in? Oh, gee. And I believe he did win the award for best background. That makes sense. One of the best people in the business. So go ahead. Absolutely. So Carrie, know who Mike is, you got to follow him.

Kyle Mountsier  8:50  

Yeah. And he says, If I can help in any way, reach out to reach out directly, we have multiple opportunities posted and not yet posted. And I'd love to help you find your next opportunity. And your next home. Let's go. And I think that man, all of those things, just they scream, retail, automotive, they scream the way that we care for people in our industry. And I really hope that there's some people within the Carvana ecosystem that either are were let go or that are currently a part of it that just really see this like, oh my goodness, we've been basically telling the story of like, it's not a good thing to do business with these people. And maybe there's just an enlightenment around culture around this moment. Like it's a terrible moment. But it could be a really big moment for retail automotive.

Paul Daly  9:40  

A major I think this is can be a major turning point even from from just the flag in the ground, a symbolic moment where the opportunity to show your true colors. And even like Look, everyone treats people that treat them well. Right. Everybody treats those people well, right when you have somebody who likes you and Nice to write, it's easy to be nice back. But look, the rubber really meets the road and how you treat the people that you're in competition with that maybe there's a little contention with how you treat those people when things happen. And so far, in automotive, I've, I would say we've been a class act. Yeah,

Kyle Mountsier  10:15  

I've not seen a single post that's like, ah, not what I'm saying. See on down even know, right, that's just not been the man

Paul Daly  10:24  

makes me feel so good. Makes me feel so good. Alright, let's talk about a little broader industry news. Toyota is seeing a decline in profitability due to raw material costs increase. They're talking about some unprecedented increases, like we throw that word around. But like, hey, like there have been a lot of material increases. So to say like, oh, no, no, no, we see a like a, an even next level increase coming. The automaker said it expects material cost to more than double, double. And its fiscal year that started in April, it's a lot less, that's a lot of increase

Kyle Mountsier  11:03  

is a ton of increase, we're talking about double from 1.4 5 trillion yen, or 11 point 1 billion. So literally going from 11 billion to 22 billion in raw material costs. And I mean, you think about that, you can't, you can't just simply pass that on to the customer. All these MSRPs are, are baked in built into the process they have to have, you know, they have to roll that stuff out to their dealers. And so it all hits the profit margins. However, I don't think they're doing too terrible, because they're like selling 100% of their inventory as they make it too. So yeah, I was in cons to it, right? There's pros and cons. But it's definitely kind of shocking to see a large auto manufacturer like that. Just saying, Now, it's not so much supply chain, it's we can get the things. It's just a more expensive,

Paul Daly  11:55  

yeah. And they're also talking about shutting down some production lines. You know, the inmate like they're still locked downs in China.

Kyle Mountsier  12:03  

Right now. It's just like, it's kind of what I like, after flying and doing all these things in a week. Yeah, just it's kind of weird to think that there are other countries that are still in that like mode of continuing to lock down things. But it's a reality. I mean, to let Tesla face it last week, and I think he's still facing it this week. And then you've got Toyota facing it, you know, across China, and it's just gonna still be an interesting inventory. Problem going into q3 and q4, I think, yeah,

Paul Daly  12:32  

it is. Our takeaway is this. We said it last week, we'll probably say it again next week, is like you have all these factors piling up inflation and material shortages, and layoffs and all this stuff. Right? You need to control what you can that like fretting about worrying about things. We can't control it, guess what, it just wastes time takes up space in our head rent free, right? Yeah, also what's going on?

Kyle Mountsier  12:56  

And that's honestly why we keep saying this to you gotta get in David Long's all things used car room, oh, every single Friday mark, because used cars are something that you I mean, there's volatility in them understanding the market, but you can acquire used cars, and you can sell you and you can sell used cars without any dependency on a manufacturer. And so understanding and learning from the people in that room that are really doing a great job at used car management. You know, it's it's a no brainer to make sure that that's an hour of learning that you have every single week.

Paul Daly  13:32  

No doubt, no doubt, I worked really hard to try to find a reason to use the segue but I just couldn't do it. Couldn't figure it out, not having it be so forth, of course. So here's what we're gonna do. So speaking of the next story

Kyle Mountsier  13:51  

we know Brian Ortega is watching, right.

Paul Daly  13:55  

We missed we missed so we have these little sound consoles, and it's made by a company called Road our od E and it's called a road caster. And we have all our sounds and our trigger pads. And you know, it's like it's like a blankie right, we have the roadside like, most essential piece of equipment. And, you know, we decided not to bring it with us to nada because we had a bunch of other gear and like we'll figure it out. And man, it didn't take long we were like that was the wrong decision.

Kyle Mountsier  14:21  

It's like It's like if you leave your phone at the house and you thought you really needed it and you feel naked in some way. That's the way we felt we felt like exposed. Oh,

Paul Daly  14:30  

it was best. I just been I just finished in the press the Segway button so I had to do it. Okay, so we talked about cars on the ground. Now let's talk about cars in the air like flying cars, not the quadcopter cars, right? Not the drone cars that like a plane like a runway and the wings. A company called arrow mobile is working hard and they've apparently been working hard. Putting 350,000 hours. That's a lot of time boss. I mean, it's over like the last 10 years, though. Yeah, that's into developing flying car technology. And they said their ultimate vision is to offer millions of customers in the US the ability to use a flying car.

Kyle Mountsier  15:12  

If you're watching the live stream, we've got a, we've got a photo of it up. And if you've seen anything that has some semblance of like flying car, or flying mobility, typically you see some level of like drone capacity, where it's like, four rotor, like four rotors, like a helicopter, just like a jet that is similar to like a large drone or a small helicopter is kind of the way it is. But this likes, in the much more plain slash car like actually, our producer Isaac was like, it's kind of like the boat car, but for the air. But

Paul Daly  15:45  

it looks like when it when the wings are folded up. If you didn't get to see the picture, it looks kind of like you know, when a beetle lands and it folds its wings back, right? It dies. Like that. It's kind of like that. And so this one has a parachute. Right? It has a parachute. So like, I was like, Look, I don't think millions of people were ever get that's frightening. That's right is for some reason, like there's an element of like quadcopters, it feels just like really safe, like I'd get in the quadcopter car. Right? Because like you see drones and they sell fly, and they land themselves when the battery's low, right. They're very stable, you can fly him in the wind. But this is like, it's like an airplane.

Kyle Mountsier  16:22  

Well, I'm basically what they what they were saying. And the reason they made it more look like a car is because the they're saying the technology in the car. And the way it's actually built is the most conducive to the way that a flying car would need to travel similar to a car that's on the ground, as well as some of the safety features that are pre built in to the way that that a car is made for things like head on or side to side collisions are much more likely for that to happen. Exactly. So you're prioritizing that level of thing. So it's built with a ton of carbon fibers so that it can stay light, but still have some of those technology features that a lot of actual cars have. So they're taking it, they're going from like car to flying car, as opposed to what a lot of things are doing, which is like in flight objects, trying to get closer to the car feel. So it's just a it's a different way of moving, moving the same direction. But I think we're still like, if if all EVs are coming out in 2035, we're like, or in 2030 2030? Right, we're just gonna be attend. You know.

Paul Daly  17:30  

I don't know Patrick Hessel. You know, he's the CEO. He's named Ernst and Young Entrepreneur of the Year in 2015. I know you've been working on this for a really long time. I just don't see millions of people getting a pilot's license to pay 1.7 to $3.5 million. And like, at that point, I don't know. But like, look, when you're 10 years in, you're not ballin? Yeah, you know, you're gonna keep running,

Kyle Mountsier  17:54  

you're gonna winners. I try. And at this point, obviously money there for him to keep going. So hey, look, like I push the boundaries. And it might help us push the boundaries in something else that can come close always.

Paul Daly  18:08  

So like this story hits a little bit close to home to make me even more not want to get into one. Because I was on United flights yesterday. Right? Yeah. They have like a game center now in the app that you can play when you're on the flight. And usually I work right, but man, we just ran so hard. It was like 11:30pm and I'm flying in? Or is it probably 1030 I'm flying to Washington DC on my layover, and they have a flight simulator game. So I'm, I'm doing full approaches on my game on my iPhone, like using your direct like, at times. But you what I was like, I had this real experience of like, I gotta land this plane while I'm in a plane on actual approach. And so the planes like moving and it was so disorienting, but I was like starting to sweat a little bit surreal.

Kyle Mountsier  18:57  

Can you imagine though, being the guy that's been on the news all week this week and flying a plane after having never flown a plane because your pilot goes in my head to

Paul Daly  19:08  

do this, but yeah, I'm not getting that I'm not getting that car plane by myself or then it's not happening. But the best part of that car. I mean, the best in my mind, the most practical are like hey, like if the weather is bad, you can just drive to better what better weather and then take off. That makes a lot of sense. Doesn't make. So hey, you know, whatever we talking about a little bit of everything. And that that made us smile this morning.

Kyle Mountsier  19:34  

Made a smile for sure. Look, I just want to go back to the fact that that uh, you know, people say, car businesses is a people business. I would just say like, being a person is a people business. And so if you're in business, you're in a people business. And don't lose sight of that. Check in on your people take time for your people today, because there's no greater asset to any business than its people. Oh,

Paul Daly  20:00  

I can't say anything else than that. That's at our heart right love people more than love cars. Thank you Liza, for giving us more words to live by here on a Thursday but until then, get out there do something you can control and go scoop up some of those Carvana employees way and let us know