$1.4B of Carvana Stock, Transparency Gap Closing, Dual IHOP-Applebees

Paul J Daly  0:00  
All right, fresh new week, Monday, November 11. We're all kind of rocking and ready to go. Today. We're talking about a big Carvana stock sale, transparency gap, gap closing with consumers. And here comes an IHOP Applebee's Collabs. The one you've been waiting for this

Kyle Mountsier  0:19  
is, oh, I got so many comments on this one, and it's going to get sideways. I can feel it. Monday is going to get sideways. The ramp is going to happen by the end of this show. If you, if you're in for it, stay for it, because it's going to be

Paul J Daly  0:31  
good. We're here for this. We're here for this. Oh, we got a few things we want to talk about. There isn't ASOTU Edge webinar this Friday. We had a postpone. It was going to be last week. Now it's this week, you can go to asotu.com and we are talking about auditing your 2024 ad performance with our friends at stream companies. This is part part one of a two part webinar. First, we're going to be like, walk you through, hey, here's some great ways to analyze your spend and your effectiveness. Part two is going to be like, how do we plan to improve on that? So this is a very timely and effective webinar with our friends at stream companies. We got super ghost, Drew deal Sarah West. We got the the A team out here gonna walk us through some practical things. So make sure you sign up and join that. We also this Wednesday market on your calendar. It's this week now, not next week, not to more than cars. Episode Four is premiering on Wednesday, November 13, at 1pm or 2pm What time is it? 1pm Eastern, 1pm Eastern, pm, Eastern. So just the best way to watch that with us is to just join us on LinkedIn. So if you go to LinkedIn, search ASOTU, click on Events, and then you'll see it right there, you can just join up. And you know, we're in the comments, we're watching. We finally, people think we edit these like, way in advance. Like, no, we don't. We're working hard around here. And last week we finally got the final edit lock.

Kyle Mountsier  1:53  
Awesome. It's good. Yeah, you're gonna love it absolutely. And

Paul J Daly  1:57  
if you've ever, and if you've ever played eight bit video games, you're gonna love it even more. You have to watch the episode to see what you mean by that. But it is an episode I think that really communicates the fun, the competitive nature, and just the, I don't know, the overall dealerships,

Kyle Mountsier  2:11  
a lot of dealerships will see themselves in Mohawk, yeah, right. Like, I think it's a, it's a very like, I can see myself in that, right? The competitive nature, all all the things going absolutely

Paul J Daly  2:23  
and we also don't want to forget, I probably should have this the top of the show. Probably, I

Kyle Mountsier  2:27  
know I was about to do it. I'm glad you're doing it. Thank you. You

Paul J Daly  2:29  
do it. We didn't even talk about this, but I know you're going to do what I was going to

Kyle Mountsier  2:32  
do. Go ahead. Yeah. We just like, today is Veterans Day, and especially all across the auto industry. There are so many veterans in the industry like it is, for some reason, it is an industry ripe with veterans across the dealer side, the OEM side, the industry partners, hard work,

Paul J Daly  2:47  
challenge, teamwork, serving the community. I wonder why we know

Kyle Mountsier  2:51  
what's necessary, like that, that community knows what's necessary, similar to the auto community, and for all the veterans out there that have served our country, and maybe even that is that are still serving our country, right? There's a lot of there's a lot of people in the reserves and and that just, thank you. It's a, it's a, it's a role that probably Paul and I would not ever play, right? And so I it is. It's something that I look to those people and am so grateful because it's something that is not easy to do, to leave your families and to serve in that way and to see what you've seen. So on this day, know that you are thanked and remembered and blessed so

Paul J Daly  3:33  
indeed and once, the difference between Kyle and I is now I'm so old, they don't want me anymore.

Kyle Mountsier  3:39  
Get out. You'll be a strategist. Great strategy. Speaking of being so old,

Paul J Daly  3:48  
or should I say old and rich, Ernie Garcia the second. So we, a lot of us, know Ernie Garcia, the third, CEO of Carvana, but the second, his father, founder of drive time and major investor in Carvana has strategically sold 1.4 get the B Ready billion dollars of Carvana stock since April. Oh, it's a lot of money benefiting from this rally in the company share price amidst this amazing restructuring and turnaround. So Mr. Garcia, the second the older guy, has offloaded 10 million shares, transitioning his class B stock into Class A shares for liquidation. He still controls 69 point 2 million share a couple two trees making up the core of his get this, $17.6 billion fortune. His last sell off was in 2021 when shares had peaked, then the stocks rebound from under $4 at 2020 I know a lot of dealers that bought carbon stock. Oh, they did personally. Oh, yeah, and he held it until it's at 240 a lot of them sold at like 25 bucks, like, I just pulled my money right well. So yet, say, who in a fine. Professor at University of Michigan said, quote, he might just have other alternatives and other investments, or maybe he expects the stock could fall. It's better to sell early than late. Who knows. But in this article, I don't know what it is, but there's a list of people he is richer than, and it was pretty impressive. It

Kyle Mountsier  5:14  
is impressive. Look. I'm gonna go on record. I don't think this stock is dropping. I think used cars are going to be hot in the next 12 to 18 months, and Carvana is going to get a large share of that market, and it's going to be up to dealers and the whole industry to keep it rolling at the speed that I think the used car industry is going to go. And so I like, I'm on the side of I'm just on the opinionated side that he's just got other things he wants to do with that cash. Because my guess is Carvana is up and to the right, just like I think the majority of auto dealers are going to be over the next 12 to 18 months. Interest rates are dropping. Political landscape is changing. There's still a lot of opportunity in the market from sideline buyers, like it's going to be fine. And

Paul J Daly  6:01  
anecdotally speaking, just been hearing from a lot of dealers that banks are just starting, not more aggressive, right, right? And that is a massive recipe for success, especially in used cars, especially

Kyle Mountsier  6:13  
in used cars, and especially when we we are still dealing with some leftover negative equity, and you start to see a little bit of opening value, rate buying a little deeper to those people that are probably more affected by by upside down trades like it's going to be good.

Paul J Daly  6:30  
What a great time to talk about consumer transparency and trust. Segue.

Unknown Speaker  6:33  
What a great time is a good segue.

Paul J Daly  6:37  
Thanks. Ernie capital, 120's 24 buying outlook. This new report highlights the role of trust and transparency and car buying, emphasizing the opportunity for dealers to bridge the digital and in person experience. That opportunity still exists. Apparently, 88% of buyers complete at least half of the car buying process in person, which is up 5% from 2023 underscoring the fact that people still like do things at the dealership. Dealer tools, popular for the early steps, the shopping, research and all that. However, once it starts get down and dirty, people like to do the things in the dealership. Digital Tools, I'm sorry. Trust is driving loyalty. Buyers more than twice then likely to return to a dealer they say they trust. No surprise there with get this, here's the big one, almost half of them are willing to pay more if they feel secure in the relationship. Absolutely. Holy crap. That's right, half. Half are saying we'll give you more money. It doesn't need to be,

Kyle Mountsier  7:33  
it doesn't need to be the best price. Nope. How about that? Absolutely, doesn't. Uh,

Paul J Daly  7:37  
here one we're getting. We have a graph to put up. Let's put the graph up. Transparency is important. While 73% of dealers see the process as, quote, very transparent, or completely transparent, only 55% of buyers agree. So here's the graph. It shows from March 2022 all the way through June of 2024 and basically, what's I gotta make this bigger my screen. I'm doing it right now. Look, the

Kyle Mountsier  8:01  
story is that over the last three years, it's gone from 40% that of consumers agree it's transparent, all the way dipping to 27% in July 2022 and then what happened in in just two months after that, in September of 2022 we had a sodu con, and since then, it's been steadily on the rise. We're

Paul J Daly  8:21  
not saying it's the reason

Kyle Mountsier  8:25  
it's saying 5% now, so

Paul J Daly  8:27  
the 55% the gap is closing, but there's still a big gap. This is

Kyle Mountsier  8:31  
the this is what's interesting to me, is that gap doesn't just need to tighten. In my opinion, it actually has to flip right because we've been in a situation where there's not parity between the dealer stance and the consumer stance. In order to act to actually achieve parity, the consumer has to over believe that the that the process is so transparent, that the dealer is actually trying to catch up to the to the belief in transparency in order for there to be trust, right? That's,

Paul J Daly  9:05  
that's literally right there. That's vision casting. I'm not saying that we're Batman. I'm just saying we've never been seen in the same room at the same time. Yeah, right. I mean, but look, this is what the more than cars movement is all about. All about it's telling the truth about car dealers that they desire deeply, to be honest, to be transparent, to serve the community, to be great places, to work. All of that adds together into one word trust, and the more people trust, the more they're actually feels dirty saying this, but it's like we're capitalists. Or for profit, we're being responsible with what we do with those profits. More trust leads to more money. It's just a cause and effect thing, right? I mean, Brian benstock Maybe said this better than anybody, but the reality is, this graph, there's a gap. There's a 20% gap. That means 75% of us are. Aren't self aware, right? There's a 25% self awareness gap. And, like, we think, Oh, well, you know, they were fully transparent. Customers, like,

Kyle Mountsier  10:09  
you know what I actually think it is? You know what I think it is, but the gap, it's the gap, is actually 73% aren't self aware. That's a dangerous that's a dangerous thing to say. But like, I believe that, Oh, I

Paul J Daly  10:24  
see you're saying like 73% we believe we're this high.

Kyle Mountsier  10:28  
We believe we are trans and we're not the consumer has not felt that, which means that that at some level, that group has not seen the consumer position on this and until that group sees the consumer position, and we flip to actually 100% believe we're transparent, which is because what I'm what I'm seeing, is actually the ones that don't believe we're transparent. There's probably a small sliver that like I'm the one, I'm the I'm the one to blame. Yeah, there's actually probably more of those that are self aware of the entire industry, that are looking at the entire industry as a whole, saying, Nope, we haven't achieved the transparency or the trust, more appropriately, that we need to. And so the self awareness is of the 73% to look at the 55% of the consumers and go, whoop, we actually have it wrong. Maybe it's communication issue, maybe it's a pattern of sales issue. Whatever it is, we haven't achieved that parody until we do. I like when you're there. I like what you're

Paul J Daly  11:25  
saying because it's not saying, like, mostly right is good enough. No, we have it wrong. We have it wrong. We need to get it right, speaking of getting it right. But debatably,

Kyle Mountsier  11:39  
you gonna be able to eat all day because Applebee's and IHOP are launching their first ever dual branded location in the United States, set to open in Seguin, Texas in early 2025 the site will combine Applebee's lunch and dinner with ihops breakfast and brunch, maximizing obviously both brands peak hours with a shared kitchen and cross train staff. To set up aims to cut costs and improve profitability, hopefully trying to like bolster struggling locations for both, it will feature a drive through to meet demand for all premise dining drive through at an apple business

Paul J Daly  12:14  
changes.

Kyle Mountsier  12:19  
Dine brands is the brand that is leading the charge, they plan to roll out 15 dual branded locations in the US, stating the addition of a second brand may improve unit economics. Dual branding has gained popularity and hospitality, obviously, notably with hotels combining two brands into one location, hotels are different. You know this? This is like, Okay, what's

Paul J Daly  12:39  
the KFC combo that you see a lot? Oh, KFC,

Kyle Mountsier  12:44  
come on, right? Like,

Paul J Daly  12:45  
those two things don't go together. They don't go it's just the way. What's interesting to me and I go together actually a lot better. I

Kyle Mountsier  12:52  
think they do. I think, you know, they're both breakfast.

Paul J Daly  12:57  
I hope says no, I hope serves lunch and dinner, but I hop doesn't serve alcohol, right? So now you can have IHOP. I don't know if is it 24 hours? I don't know IHOP pancakes, no. But now at IHOP, you have mimosas, Bloody Marys, right? Like, like, What could possibly go

Kyle Mountsier  13:13  
right? This is, I think this is actually, they've, they've mislabeled it. This is just, what's the restaurant that starts with a P, Perkins. Perkins. This is just Perkins.

Paul J Daly  13:27  
I don't know. Perkins is Denny's, like, I don't, I don't agree. You know, Nathan's putting in notes. Can I order breakfast all day? That's a great question. Oh,

Kyle Mountsier  13:34  
see, this is gonna, it's gonna get this. Like, yes. Could you create a new restaurant? Could dine in? Just be like, could dine brands? Just be like, wipe them out. Create a new restaurant that serves breakfast, lunch, dinner. I know you can't, because Brandon, there's something unique about Applebee's. There's something unique about IHOP and that little combination. It's like, when you can get brunch and lunch and they're both well qualified, and you get someone gets a burger and someone gets the brunch, like, this is going to be a good thing. I think. Jason reading

Paul J Daly  14:02  
the live stream, okay? The Applebee's and I hop news slaps. There you go. It slaps. Really good. And if you don't have, if you don't know what that word means, that means it's really good, yeah, it's a really good thing. Jason reads and down with the J he is. But here's, here's the deal. I think there's a lot of opportunity for dealers to just think of local brands and local partnerships that they can make to, you know, to draft on the brand equity, especially if you're an auto dealer and you have a good reputation. And back to the trust thing, you can actually bring a lot of juice and energy to a local business who they're always local businesses are always like coffee shops, you know, flower shops. I'm

Kyle Mountsier  14:38  
telling you. I was actually talking to a guy out of Franklin that does like social media and content advertising for a dealership, and we did this back in the day, and it's the quickest way to build brand equity locally, especially with restaurants and coffee shops. Like give your social media person a $20 budget every single week, get them in the car, drive to the coffee shop or. Of the thing. Shoot it. Go drive along with a salesperson. Talk to the people, ask them about their business. Spend your money at the local business intentionally, and then cross post that joker. All those businesses are on Instagram right posted.

Paul J Daly  15:13  
Thank you. You're gonna become their favorite dealership in like three seconds. Stop.

Kyle Mountsier  15:17  
Collabs are the way. All right,

Paul J Daly  15:21  
Veterans Day is kicking off to be an amazing day, and I think rightfully so, celebrating all the things that we get to enjoy, like being able to just talk about IHOP and Applebee's on a podcast. Whatever it is you have people in front of you go and take care of them.

Unknown Speaker  15:33  
You

Transcribed by https://otter.ai

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