Volvo Plans Direct, TikTok v Hyundai/Kia, & Breaking Down Consumer Pricing

February 15, 2023
When hump day rolls around and it drops us in the middle of the month, we have to talk about some controversy, naturally. Leading off this morning are Volvo’s plans for a direct to consumer model, followed by Hyundai and Kia battling TikTok and the release of the consumer pricing index.
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  • Volvo’s European plans for direct to consumer sales has US dealers prepping for defensive measures with the automaker.
  • Volvo’s new CEO, Jim Rowan, argued the disconnect between the OEM and consumer in pre- and post- sale environments goes against his experience in the consumer electronics industry.

  • “Dealer associations in at least two states — Virginia and California — sent Volvo letters warning that the strategy might violate the automaker's dealer agreements or state laws meant to prevent automakers from competing with their franchises.”
  • Plans are to use the UK as a proving ground and learning environment for the brand

  • Following the TikTok trend of stolen Kia and Hyundai vehicles, the automaker is set to provide a software update to mitigate the risk to owners.
  • Way back on Nov. 23, we talked about how a St. Louis dealership was installing $200 bluetooth repeaters to prevent theft.
  • Hyundai’s free software patch will be available on 1M out of the 4M affected vehicles, and include an anti-theft sticker to deter attack, a longer alarm, and the need for a physical key to start the vehicle.
  • “Hyundai is committed to ensuring the quality and integrity of our products through continuous improvement and is pleased to provide affected customers with an additional theft deterrent through this software upgrade,” said Randy Parker, CEO, Hyundai Motor America. “We have prioritized the upgrade’s availability for owners and lessees of our highest selling vehicles and those most targeted by thieves in order for dealers to service them first.”
  • Hyundai expects to have a fix for the other 3M vulnerable vehicles in June.

  • The consumer price index was released yesterday, showing slowing inflation, and markets stayed stable despite growth in major index categories like food and energy.
  • The average of all items was up 6.4%, with eggs taking the top spot up over 70% YOY.
  • Vehicles took an 11.6% dip, which we know in the industry, which is a line item attached to only a small subset of the population, in contrast to the other items.
  • Worth noting is the fact that common household items are the largest factors to consider in the impact of inflation on consumers in lower income brackets.
  • “It’s clear that the Federal Reserve has more to do in order to continue to slow down inflation,” said Eugenio Aleman, chief economist at Raymond James.

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Ben Hadley, Kyle Mountsier

Kyle Mountsier  00:29

Good morning. It's hump day, it's the middle of the month, we're talking about some controversy leading off with follows fan plans for a direct to consumer model. Hyundai and Kia battling tick tock and the consumer pricing index was dropped. So people really want to know who is and who it

Ben Hadley  00:45

never gets old. It never gets old.

Kyle Mountsier  00:48

You know, it is like I thought by this point, I would be all done with every single day, five days a week hearing the same little group, but I feel like we've picked the right one.

Ben Hadley  00:59

Yeah, you did. I mean, it's like, gets me going every single time. There you go.

Kyle Mountsier  01:04

Hey, if you don't know, I've got Ben Hadley hanging out with me again, if you listen to the audio podcast, you can't see us. We've had Michael Cirillo, and Ben this week, because Paul is ticking off time with the family, which is great. It's something that's hard to do as an entrepreneur hard to do when you're building something but absolutely necessary. And luckily, we got a bunch of people in the automotive community that can that can lean in. Hey, Ben, what's up? We got? We got pitch tank today.

Ben Hadley  01:30

I know. Yeah, let's go. It's so dope. So

Kyle Mountsier  01:33

if you don't know. And you're listening pitch tank is an audio only format weekly show where three tech companies, service providers in the auto industry. Pitch for three minutes audio only to a host of moderators myself, Ben, I think Steve Greenfield is going to start to join us as a moderator. We've got a bunch of automotive community marketers from the auto genius community in there. And just like if you always struggle with asking the questions or understanding what's next, or what's the leading technology that's coming out, we just open that up, give you a bird's eye view into it, ask the questions for you rate those pitches give give a final score and it's 30 mil we checked it from an hour and like, man, we used to go remember when we were like an hour and yeah, so then we've chopped that down to 30 minutes, we get in get out get you a lot of good information. So it's like taking three demos a week.

Ben Hadley  02:28

And we had on the last one we had sounds like a couple successes to on the vendor side. Yes. If you're listening, that was huge. A couple of people hit us up and said, Hey, look like NAFTA? Yeah, yep.

Kyle Mountsier  02:43

Now that's a big deal. And I love it. Every once in a while, I'll get a call or text afterwards. And they're like, Man, I really, really had to refine who it is, you know who it is that we are, what it is that we do and how we serve dealers to get it down to that 30 minutes or that three minute and just be clear, right? I mean, you think about all of the times that you're walking around the halls or on LinkedIn, or you're on that first initial call, like how do you go, boom, this is what it is, boom, this is the output. This is how you can engage us. And so it's that training ground. It's a learning ground. It's just a whole bunch of mix of fun.

Ben Hadley  03:19

Yeah. 100% Yeah, nice. It's badass. I can't wait.

Kyle Mountsier  03:23

Well, let's get into it. Let's see. Yesterday, you told me a little bit about this story. And we've pulled it up. It's vamos European plans for direct to consumer sales, basically has us dealers prepping to go on the defensive with their measures with the automaker, Volvo's new CEO, Jim Rowan, who came from the consumer electronics arena, basically said that the the fact that the OEM doesn't get a lot of pre and post sale communication in that environment is just a weird thing for him. And he sees that as a loss of trust, loss of opportunity, and really wants to try out the direct to consumer model. So they're starting in the UK. But it already has like the spidey senses up of the Volvo board in the US and a lot of Volvo dealers number two,

Ben Hadley  04:12

back in the day, when the XC 90 got redesigned. It was like oh my god, this is dough. And there's like the first 2000 or something where the signature ones that you had to preorder on So I kind of feel like Volvo has flirted with this before because that's like, it's not direct to consumer, but it's sort of like hey, buy here, pick it up at the store. We'll start feeling a lot like direct to consumer. It's just disguised a little bit. So it's not like out of Volvo's history, and then I'm pretty sure it wasn't the CEO previously, of Dyson or something. Dyson Yep, yeah, see, like you know, I don't know I feel like a lot of times a guy will come in from another retail vertical be like, Oh, I totally understand. I ad use better, right? Yeah. Well, good luck.


The interesting one for me is that that he that he alluded to, like, the communications, pre and post sale communications, that that's the, that's the thing that he wants to enhance more. But every story that I hear and talk to with dealers is, you know, where the mediary between the customer and the OEM because the OEM is typically not leading in like those intimate local conversations and how a consumer is feeling in the moment. And that's, that's I think, that's the power of the franchise dealer network is being that that local touch point to where someone can walk in, say hi to someone to engage with someone that can actually help them solve problems, you know. So I think that, you know, that's, that's, I hope that the dealer associations lean in that way. Looks like in at least two states, Virginia and California Volvo dealers have already sent letters to to them saying like, Hey, watch out, we're gonna make sure and protect these franchise law.

Ben Hadley  06:03

Yeah, dealers back, I'm back into the dealer all day on that, but just on the other flip of things, like, I've got, like two of those Dyson vacuums, but I haven't heard anything from Dyson, you know, so I'm like, I'm just saying

Kyle Mountsier  06:20

no emails.

Ben Hadley  06:23

No, after my No no, like call nothing, no communication after sale. So like, for years, you know, go oh, great vacuum, but

Kyle Mountsier  06:33

that's great vacuum, right, maybe maybe it's such a great vacuum that you don't have to worry about hearing from them. But you know, Dyson, if you're listening, I

Ben Hadley  06:42

could use a new battery though that thing is choking.

Kyle Mountsier  06:46

Speaking of manufacturers listening. While they kind of had no choice to listening, because following the Tick Tock and of stealing Kia and Hyundai vehicles, the automaker is set to provide a software update to mitigate the risk of stolen vehicles to owners, they are producing an update that will be available on 1 million of the 4 million affected vehicles, including an anti theft sticker. That's that's that sticker which will really get you know, those that don't really get a longer alarm and the need for a physical key to start the vehicle so you won't be able to just use the little USB or OBD two thing that they've been using in these stolen vehicles. You know that we ran a story back on November 23, about how a St. Louis dealership was installing these $200 Bluetooth repeaters to prevent theft. So I feel like Hyundai and Kia probably should have gone to that dealer first to be like How'd you figure it out? Right before kind of manufacturing their own thing and going hey, we're gonna put a sticker on your car no big deal I

Ben Hadley  07:49

remember right like back then Hyundai also like contract with some third party there was like a whole like you had to go to a dealer pay 500 bucks get this $200 thing installed. It's all on the customer you know, it's sort of like oh our bad but like we kind of gave came up with a solution just you have to pay for it but the whole thing was all sorts of wacky and then the fact that you just use a screwdriver or a USB cable man, it's nuts. That's nuts that he's

Kyle Mountsier  08:23

talking about a miss I mean, through the r&d process through the through the development process what technology side it's 2010

Ben Hadley  08:32

to 2020 ones right so like 11 years is a while for people I can you imagine the first guy that was just like USB. Like this that work? You know many like, I just imagine like a James Bond situation. He hops in the car. He's like, I don't know what to do. All I have is a spare USB cable and oh, wow, that was that was a lot easier than I thought it

Kyle Mountsier  08:57

was simple, right? Yeah, exactly. So the CEO Randy Parker has come out with a statement saying Hyundai is committed to ensuring the quality and integrity of our products through continuous improvement as and is pleased to provide affected customers with a additional theft deterrent through the software upgrade. They prioritize the upgrades availability for owners and lessees of our highest selling vehicles and those most targeted by thieves in order for dealers to service them first. Man I feel like this is what's interesting. They said that the rest of the 3 million vehicles, there'll be something available in June. If I'm if I'm one of those 3 million I'm looking at Hyundai going. So you're telling me I got another four months to try and figure this thing out and make sure my vehicle isn't stolen and all of that. All that rigmarole but I'm glad to see the autumn walks What's that?

Ben Hadley  09:51

Steering wheel locks I haven't seen those for like a while but

Kyle Mountsier  09:55

oh yeah, the thing? Yeah, no, yeah, it's one of those for a long time.

Ben Hadley  09:59

By Like looking thing Krypton, Krypton or whatever.

Kyle Mountsier  10:02

I mean, when you know when you got anti theft devices going in every single vehicle with the little, you know, flashing red thing. You know, that's like you would think that would be enough but

Ben Hadley  10:14

it misspell Juc. Like, I'm going back to like 2000s You know? Yep. Oh, wow,

Kyle Mountsier  10:19

look at this. So our producer Nathan just said they've provided 26,000 steering wheel locks to this point. So they're like, Hey, this is an option. Let's try this. You want to do this? You know? I can only imagine being a dealer on the side of this like someone coming into the dealership and going, what do I do? I've seen this trend on tick tock or my, my grandkid saw this, or my kids saw this on tick tock, you know, I'm worried about my vehicle. It's parked on the street. It's parked outside every single day. So

Ben Hadley  10:46

I've got egg on my face. Well, not really. I mean, it's fine. But I my mom and mother in law. I was like, here's the thing. Get a Kia get a Hyundai. Like this was a couple of months ago. Like, got him in. So what do we got? We got the Tucson and then the corresponding one for the Kia. I forget what the? It's like the Yeah. It's the same thing, but just Hyundai versus Kia. And then like getting into this one. I'm like, oh, man, now I'm in Vermont. Pretty low likelihood that Tiktok even is going to trend here. The app might not even work here.

Kyle Mountsier  11:30

In Vermont, they shut it down for all of your mind. Right.

Ben Hadley  11:33

5g you know?

Kyle Mountsier  11:37

Like, like, give us off for wide please. Probably got some USB ports? That's for sure. So

Ben Hadley  11:42

yeah, we do have USB not not see, but just just a

Kyle Mountsier  11:47

got a, like 500 megabytes an hour or something like that through USB. Unbelievable. All right. Well, I don't have a segue for this one. We do want to mention that the consumer pricing index was released yesterday, showing a slowing level of inflation, though inflation is still up and market stayed stable. The trading markets stayed stable despite growth in major index categories like food and energy. So the average of all items you can see was up 6.4%. And eggs still taken up the top spot at 70%. Year over year. How many times in your life? Have you like when you're talking about people with shopping? That the first thing they talked about? was like, Yo, did you see the price of eggs last week? Because I'm so I've had that conversation at least a couple of times over the last few months,

Ben Hadley  12:39

which is really? Yeah, I haven't had it at all. Now, again, I'm in Vermont, we get our eggs from Shadow cross farm eggs, shout out shadow cross. Okay. Those are the those are the guys. I don't know if they've actually increased prices. But you know, like, they're the homies I just get I

Kyle Mountsier  12:57

mean, it's 70% year over year, like, yeah, cars were bad. You know? Yeah. Do you

Ben Hadley  13:04

see a dealership car guy posted something like the 2004 Hiya, man, I could have segwayed that Kia Optima has gone up something like 60% in value. He was like comparing it to like the s&p 500. Because like, if you want to invest in something, invest in 2014. Not 2010 once. Yeah. But But crazy enough. Like, I didn't even realize eggs have gone up that much. It's bonkers. Yeah, it's

Kyle Mountsier  13:33

I mean, it's nuts. And what they pointed to was like, Okay, so a vehicle took and 11.6 Dip year over year, percent dip, which we kind of know in the industry has been a reality. But that only affects a subset of the population. The majority of the things that are seeing high level of increase in cost are things like food and energy, basic needs and basic household items, which is still impacting people in lower income brackets a lot more than higher income brackets, right because of those low cost items impacting low income households a lot more. The chief economist at Raymond James Eugenio Alamin, said he he believes that the Fed Federal Reserve still has to do more in order to slow down inflation. It you know, we heard Jonathan smoke I think on an all things used cars a few months ago talk about this bifurcated market where where we see high income earners not significantly impacted by inflation and still purchasing at a high volume but low income households being significantly impacted and almost removing themselves from the vehicle market. So as we head into, you know, the next quarter with tax returns coming back, really helping your people at the dealership understand what's going on in this in this consumer pricing index and what's happening with inflation so that they can care for customers across the board and not just like the The ones that have the best credit or have the highest income, I think he's going to be really important as we as we walk into a time where typically you see lower income households purchasing at a higher rate than then throughout the rest of the year.

Ben Hadley  15:12

Yeah, I mean, as you think about the card can be a luxury but it's also a necessity to get to that job that you just landed to, to go to the grocery store to even buy the eggs. It's like, you know, it's, it's, it's I think it's insanely important that we're holistic in our approach here.

Kyle Mountsier  15:29

Yep. Well, hey, look, that's what we are about here at asoto. Being holistic in our approach to consumer so our employees and everybody around you, that holistic approach will get you a lot further than just slamming someone into a vehicle. It's about caring more than

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