Used Car Market Moves, Movers Make Used Cars, Making Meals At Home

August 15, 2022
It’s a fantastic Monday to sell and service some cars. Today we’re talking about the shifts Dealerships are seeing in used cars, and how hundreds of Dealers and Industry Partners are coming together to take advantage of the changing landscape head-on. We also cover a Utah grocer who is breaking convention to serve consumers the way they want.
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Many dealers are in the midst of a Used Car business model shift as consumers continue to search for less expensive used cars

  • Affecting the publics most directly as inflation and higher interest rates are leading consumers to look down market, and retailers to extend their existing parameters for used car age and pricing
  • Group 1 Automotive CEO Earl Hesterberg said in late July, "We're seeing demand shift to lower price points. That shift is happening most prominently among middle-class consumers and those buying mass-market brand and used vehicles.
  • Asbury Automotive Group CEO David Hult said, “Consumers who were "impulsively buying" six months ago are more deliberate in their selection now.”
  • Sonic President Jeff Dyke said, they are seeing demand for vehicles up to 8 years old and started to include such vehicles in EchoPark's inventory earlier this year after having challenges securing 1- to 4-year-old vehicles
  • Dyke also said the demand for a $640 payment for a used car is dropping forcing some buyers out of the market
  • Penske’s CarShop had a target price of $20k for a used vehicle but that has inflated to 30k. They still chose to pass on the $8k-12k vehicles, considering them wholesale
  • The hottest segment are used cars between $10k-15k according to Michigan Dealer Aaron Zieglar

Over 350 Dealers and Industry Partners came through “I could buy more used cars if….” on Friday’s ATUC session with Dealers and Industry Partners

  • Consistent equity mining, Service drive is your friend, POS Material/Kiosk, Appoint a champion, Stop your turnover, Follow the data on new and rental markets as indicators, Have a plan and measure the efforts, Have the right prices. Treat each vehicle as an investment. The right price, the right advertising, the right process. It all matters and is different for each and every car.
  • Dale Pollak even showed up
  • Listen to the full discussion here
  • Take away: Victory goes to the practitioners

Marcellus Foods, A grocer in Utah is opening a store that focuses on meal prep instead of just selling groceries

  • Will only carry about 80 items as opposed to the 260 that the average consumer purchases
  • From a recent Instagram post:
  • Did you know that 98% of people prefer a home cooked meal, but only 10% say they #lovetocook?!
  • That’s because #mealprepping is the WORST & until now, there’s never been a real solution 💡
  • 👋 We are @marcellusfoods, and our mission is to make it easy for everyone, and we mean everyone, to eat well at home.


Kyle Mountsier, Paul Daly

Paul Daly  00:21

If you've ever been to an auto conference, this is the one to start at. If you're sick of auto conferences in general, or you just need something a little different, a solo con is the place to be September 11. Through 13th. We only have a limited number of tickets, and most of our events have sold out. So Exactly.

Kyle Mountsier  00:37

We're really excited and we just hope that you'll join us because we want to craft something that is for the whole industry, not just for a substance

Paul Daly  00:45

or was so to conduct calm Get your tickets now. Yo, it's one day, we're coming in hot. Actually, I have a little tongue twister for this morning, show us car market moves, movers make use cars and making meals at home wasn't as bad.

Kyle Mountsier  01:05

It wasn't that bad as I thought. The Alliteration is another big word to be dressed.

Paul Daly  01:14

I know, you know sometimes in the mornings when we're making the show, we're like what is the most relevant thing to talk about today? And really what you have to work with is just what happened yesterday and some other stuff like we start like really micro with like, is there anything is happening right now? And then like How about like yesterday and coming out on Monday? Not a lot happens in the automotive industry over the weekend. You know, so sometimes we zoom out a little bit. Yes. So

Kyle Mountsier  01:45

down a hands in the dirt all the burners are liars, you know, making making brisket or something.

Paul Daly  01:52

Thank you brisket.

Kyle Mountsier  01:55

Texas. Oh,

Paul Daly  01:56

it was usually hot dogs, right like on the grill. I've never had brisket at a dealership. Unless you work for Patrick a bad and then he's got like, T boned. He's got like porterhouse steak. Grill it says it says number one recruiting tactic. Just have steak dinners at the dealership and invite other people over and you know what people kind of want to some people love people love, man. Oh man. Well, look, this is we are now within one month of a soda con. Did you realize that we're within one month. We're going to Philly on Thursday. And we're going to be checking out the venue final pass through sign companies AV companies hotel room recording some more auto collabs podcasts with Cirilo but things are so ramping up right now that I'm starting to feel that feeling.

Kyle Mountsier  02:44

You know, like I got multiple texts this weekend from dealers, industry partners, people that I know like, hey, how many are there still tickets left? Okay, I'm getting tickets, you know, and and there's been a lot of energy. There's been a couple of dealers and I'm sharing it out. People are coming, don't worry, they just haven't bought their tickets. So don't get left in the dust. No, don't because we've already had some industry partners stressing out. And if you're close to the chest, if you're close to the family, and you're wanting to come you got to Texas right now, because I think we've got like 12 industry partner tickets left. That's it, but we had, we put them behind a paywall, because if you're listening to this, we want to make sure that you're there so yeah, just make sure you they're not a pain.

Paul Daly  03:25

Patrick a bad jumping in the stream this morning. Good steak is just another tool in the toolbox. And by the way

Kyle Mountsier  03:31

to get your little people with toolboxes in your servers, wink,

Paul Daly  03:35

wink wink. People that that work with the toolbox happen to also really enjoy it. Well cook steak. Listen, we got to clear something up. So you know our friend Patrick. He's an early investor. And so actually, I would say Patrick is the one that kind of kicked off the momentum. Because we were having dinner with Patrick and we were telling him hey, we think we're gonna raise a round of investment. He was like, Can I Venmo you right now? And that's when Kyle and I was like, I think I think we're onto something right? We communicate the vision. But what I really want to talk about today is that we've been calling in Patrick Abad for a really long time. And then like that awkward way where we were so like, we have a close friendship spent a lot of time together that somebody said his accuracy was actually pronounced Patrick a bad and we were like shut up. No, no, I Kyle texts, and we

Kyle Mountsier  04:28

were like Oh gracious about it. And it is it is a bad it is so because

Paul Daly  04:32

he's that kind of guy. He's like, I'm not even gonna waste the breath. Because we have more valuable things to talk about. That's just a key to his personality since he was here. We just had a tough year a second. So yeah, if you don't have your tickets go to a so to all the sessions are up. We are ready to rock and roll with you. If you are not able to go to the whole event, but you're listening and you're at a dealership and you're able to get to Philly pretty easily on Monday night. We're throwing a huge party that everyone that works in the day Worship is invited to and we mean, everybody. So come on in. We have a silent DJ our silent disco live DJ karaoke, Nashville's hottest party band 12 South coming in hot and the tickets for that are free. And we have an Eventbrite set up for that don't we

Kyle Mountsier  05:14

do and we do if you if you started a party with the industry, we've got an Eventbrite and it's ready to go. So if Now, if you're, if you're getting tickets to the main event, you don't need to go to the Eventbrite and get tickets there. Yeah, you're good. If you know people close to Philly, shoot him a text, tell them that they can come on in and, and hang out with you that evening, even if they can't make it to the whole event.

Paul Daly  05:35

All right, let's talk about some news. Let's get into his Okay. lead story today on automotive news, many dealers in the midst of a US car business model shift as consumers continue to search for less expensive used cars, not really a surprise to the asoto audience. But, you know, they went down, and they had a lot of quotes from a lot of the publicly traded companies, obviously, bigger inventories, they're gonna be more vulnerable to shifts and pivots. And also, you know, when you think you have a bigger organization, you have like defined trajectories that usually are going out a little bit further, because you know, you have shareholders, you need to keep happy. So you have to have these long plans. And I don't know, if you notice, kind of what the plans have had to change a little bit.

Kyle Mountsier  06:17

Yeah, they have had to change a little bit. And, and I think that, you know, probably, if I had to guess some of the public's are going to recognize the shifts and changes just a little bit quicker than then some others like single rooftop and a, and maybe a rural or suburban suburban area. So I think it's just a good trend to pay attention to that people are seeking out these lower priced vehicles. You know, one of the things that I think is also interesting is that, you know, when I, when I talked to dealers, that they are, they are moving from like, the trajectory of, hey, we don't really have a defined turn. So if you don't know what turnings it's, it's how quickly you, you get rid of your whole inventory. So like, let's say you've got 80 cars in stock. And, and you want to get rid of them, there's two ways to look at turn, either based on the number of days that you that you kind of say, hey, they got to be out of here, or the number of times per year, you could potentially turn those vehicles. So that's what your vehicle turn is. So, for instance, if if you had 80 cars in stock, and you were selling 80 a month, that's 12 turns a year, meaning every month you're turning your complete inventory and, and dealers are going from like, Hey, it's okay to hold a car for 100 120 days, because we can still get out of it profitably, even on a wholesale market, potentially, because vehicle prices aren't rising, we're starting to do see dealers get to a much tighter, like 30 or 45 or 60 day turn saying hey, look, these cars have to be gone by then the pricing more aggressively, which is also driving the price of wholesale down. Right. Yeah. So and then, you know, we were talking actually to Patrick couple months ago, how he was seeing Carvanha bring more and more cars to the auction. So, you know, this has been an indicator that's happening so far. But now we're seeing it on the consumer side that that as the sonic President Jeff Dyk said that they're seeing this this demand for for a higher payment, pre owned vehicle, move down again, and not be so accessible.

Paul Daly  08:23

So yeah. So I mean, look, if you're kind of new to the industry, that's a great little lesson in use car management right there. We're gonna get into a little more of that in just a second. But let's read off some of the quotes from some of the big big groups so group one automotive CEO Earl Hesterberg said in July late July said we're seeing demand shift to lower price points. And the shift is happening most prominently among middle class consumers and those buying mass market brand. Use vehicles Asbury Automotive Group CEO David Holt said consumers who were impulsively buying six months ago, actually a lot more deliberate in their selection today, Jeff Dyk Sonics president who just mentioned said that they're seeing demand for vehicles up to eight years old, and they're starting to include vehicles and eco parks inventory, those types of vehicles in their inventory when previously there, their whole strategy was just vehicles that are one to four year years old. And he basically cited a $640 per month payment point. And he said that point for a use car having that payment, the tolerance for that is going away. So now some buyers are actually even getting out of the market. And finally, Penske standalone used car brand car shop had a target price of $20,000 for their use an average price of 20,000 for their used vehicle stock, but now it's actually all the way up to $30,000 on the average, and they're still choosing to pass on like lower dollar like eight to $12,000 car still considering those wholesale pieces. So and also our friend Aaron Ziggler, Michigan dealer said that the hottest segment used cars right now from his perspective are 10 to $15,000. yours.

Kyle Mountsier  10:00

Yeah, we're heading back to you know, the the kind of like, everybody wants a $300 a month payment. Yeah. And you know, I think you're gonna start hearing that in showrooms again, you're gonna start hearing that in, in marketing, you know, you're gonna see 299 payments being floated around, just just because that's like what that middle class general public typically sees as a target payment. Actually, I was reading something earlier today that, that banks are kind of sitting on a significant amount of repossessed vehicles, and not releasing them into the market, because they understand that it can actually, like, do something to push the market away. Really. It's in our cloud. Yeah, I read that. I gotta find the article. I wish I would have put it up, but that banks are holding on to those cars intentionally. Because they don't want to mess with side on the other side. Yes, exactly. Yeah, that's, that's some strategy.

Paul Daly  10:59

So I mean, the bottom line is this There are a lot of gains to be made and use cars, right. This doesn't mean there's not a lot of money to be made a lot of profit to be had and use cars. However, more watchful strategy, more real time strategy, actually, and a shorter path to decision making seems to be the key. Now we happen to host

Kyle Mountsier  11:20


Paul Daly  11:22

Segue strategies an understatement on that one. Every Friday asoto powers the all things use car room that David Long coasts and creates. It is where last week we had over 350 I think it's actually over 360. dealerships, dealers and industry partners have come through the room. And basically the topic was this, I could buy or sell more used cars if dot dot dot. And there was a slew of who I would, I would say are the tip top experts of use car buying selling pricing strategy. In the industry, Dale Pollack even showed up in

Kyle Mountsier  12:04

the room. I love it that Yeah, I mean, we get like Dale Pollack and Alex Vetter and these guys all the time popping in that room. And it's not just because it's interesting, like, you hear Dale and he gets in the room. And he's like, I'm just listening. I'm learning. Right? He's all alongside of everyone. And I think that there's so so much good that comes to that room, you know, just there were there were kind of a few things that that we want to bullet point out that you that you should definitely be thinking about this week, and really every week that you're operating in your used car business that some of the operators and prior operators laid out. So things like consistent equity mining, digging into your database, knowing that the service drive is your friend, that finding inventory within your service drive is a big deal. Another one was figuring out how to put point of sale point of sale materials, an easy to access kiosk in the service drive in the showroom, for people to self service themselves for trade. And that sale.

Paul Daly  13:08

Is that one right there.

Kyle Mountsier  13:09

I was like, I've never seen that in a store. It makes so much sense. People are looking around me, I really, I really have never seen that in a store. The version of this see everyone's doing it digitally now. And everyone's putting a kiosk and that type of stuff. Actually back when I was first started in the car business, what they what our used car dealer did was and he was actually super, his, our used car manager, he was super diligent about it was there was a big old whiteboard sitting next to the TV in the in the in the Service Drive. And it said we are in search of, and then he would write out the types of vehicles 2000 to 2007. Right, when he

Paul Daly  13:48

looked at the appointments, oh, without a doubt. Like I know, you update them three times a day, right? It was

Kyle Mountsier  13:56

what was so tired about it is so think like this, this was this was this was early, I think that they were early is a guy named Lena Yeah, was very, very in tune with the used car manager. And so they would the night before actually look at the appointments that were coming in between seven and nine in the morning. And they would write out you know, they would put like some of the cars that they needed to fill use car spots, but then they would write out what's coming in the appointments. And and then Lee was there from seven to nine. He was like the early version of the service worker right? This is 2009 1011 that I'm talking about right now. And I'm telling you with out fail now we weren't buying cars from the public. We were really just a trading up buying buying cars from the public was still a very new idea at that point. But I'm going to something new. Exactly. But it was getting. I'm telling you if if we had 22 working days in a month, 20 of them by 9am in the morning. Were like he had a deal sitting on the desk of the of the used car manager ready to go

Paul Daly  14:58

with that's a great That's a great one. That's old school. There's a free story for everybody. That's old. All right, where we are on the list. Next one, appoint a champion, they talked about appointing a champion, someone who really did own the strategy, and was the point person, it's, it's interesting to think of how many places don't actually have this, right. It's like this grip responsibility, appointing a champion, stopping turnover, a very, that just Stop, just stop your turnover. Right? It's a, it's a very,

Kyle Mountsier  15:27

I'm gonna go with that's a quality strategy for all units of operations, a universal thing, but there were some good conversations around that. Here's a good one and kind of alluded to this earlier follow the data on new and rental markers, or rental markets as indicators. Right, right. So and most specifically, the rental markets, understanding like the trends within vehicle purchasing, acquisition of inventory, sale of inventory. were reacting so fast that and not just that, but they are a massive indicator on the volume of available use our inventory in the market. Because it like even if you're not buying directly from them, the auctions are being you know, being filled by these by these inventory sources. And so understanding the dynamics, especially locally of how your rental car fleets are being managed by the local rental, I mean, I would make some friends, I would make some serious friends.

Paul Daly  16:21

Not that hard. It's not that hard for us. I don't know some people maybe are introverts now used cars managers are. What are you kidding me? Finally, have a plan and measure the efforts. As simple as that sounds actually, just writing down a simple plan in one or two sentences really change the outcome of how well you can execute if you just measure results as well. What is the right price right advertising the right process? I'm not sure I remember that one. Was that one day I was talking about? He jumped in either way. If you want to relive that room, like we just kind of gave you an overview, and we totally didn't do it anywhere near the justice that was done. Go to the link in the show notes. Listen to the clubhouse. Remember, just open the clubhouse app and search all things use cars. And it'll be the last room you can plug it you can listen to it at 1.5 speed. And you can see who's talking literally a treasure trove of use card department ideas, and not just ideas like hey, let's throw this against the wall and see if it's six. No, these are people that are actual practitioners doing it every single day. And some of these people seeing it from a very high level with dealers all across the country. Oh, it was Diego Chris Reeves just dropped into the comments. It was Diego. Yeah, yo, yo, Vargas, another talking speaking of a treasure trove of information. So look, our takeaway for this one victory goes to the practitioners, the people that actually do it, try some new things. Be wrong, get closer to being right. And the US car business is always going to be that way. But look, in a world where we don't know about chips and OEM decisions and all that use cars is the department you can control. So get out

Kyle Mountsier  18:03

there Paul speaking about chips.

Paul Daly  18:09

See, I snagged that one, just one little word you said speaking of and I was like Where is he going with this one? Go ahead. Oh, man,

Kyle Mountsier  18:18

there's a new story about a grocer in Utah called called Marcellus foods that is focusing their efforts not on a wide variety or expansive list of available foods and food groups, they are dialing in on just about 80 items that are intentionally made around meal prep now. What I think like just anecdotally, what I think is super interesting about this is it is it calls from like the HelloFresh brand of boxed meals, and then goes there's still something nostalgic about being in amongst the grocery store. And tying those two things together for speed and efficiency of being in the grocery store reduced reducing necessity to make high level or, or intense decisions. And they are they are utilizing education to push in and give people the access to cooking and making it fun again, which is like there's so many dynamics to that type of brand play and that type of intentionality to your consumer base, that it's almost hard to list

Paul Daly  19:27

them all. So they did a good job of listing some things in this Instagram post from their account and you can link it up. Basically it's up on the screen. If you're if you're listening, if you're watching, if you're listening, it goes like this. They say Do you know that 98% of people prefer a home cooked meal but only 10% say they love to cook. That's because meal prepping is the worst until now there's never been a real solution. So they're Marcellus foods and their mission is to make it easy for everyone and we mean everyone to eat well at home. And so they you know want you to follow them for expert cooking tips and kinda like Like the easy way to buy things, that's their secret, right? They only stocked the ingredients you need to kind of create in the article they call the formulas, right. And they're trying to teach you how to be able to, like know how to whip up a fresh cooked meal. And make it easy, by the way, like their brand messaging is dialed in, and they put it all on one Instagram. It's unbelievable. They've been hanging out with Donald Miller, I can tell, look, here's

Kyle Mountsier  20:21

the thing. This there's such a straight line to vehicle ownership, and how a dealership can create quality content that drives people to purchasing and service behavior. I mean, like, I don't want to even spell it out for people because it's such a straight line either people will be like, well, Doc Kyle, but when you think about like the level of education and the intentionality that they're having around their product, and their and their social media profiles, and the way that they are driving people to purchase because they're the educating brand, on doing something that you love is right for the picking at right for the things you did there for auto

Paul Daly  21:06

maybe, you know, empathetic is a little marketing section as we're going to wrap it up here. And pathetic statements make massive, massive impact when they put in their message in their second line. That's because meal prepping is the worst. Why would you tell people it's the worst you want them no meal prep, you're developing the whole business around the meal prepping and you're telling

Kyle Mountsier  21:28

people's heads going like I already

Paul Daly  21:31

know it's the worst the most successful social media posts my agency congruent, ever put out, started with this. dealers have been jerking consumers around for years. And the dealer said, Well, what if they think it's me, and I was like, they already think it's you do? Tell them why you're different. And it blew up and went nuts. But look, this is all about trying new things. It's all about paying attention. It's all about being a practitioner, which is why we practice doing this every single day. We're like doctors, lawyers, car dealers, we're practicing so get out there in practice a little