6th Highest March in Almost 50 years, Retail Follows Auto Industry

Paul J Daly  0:01  
That's when the sliders up. Good morning. It is April 17, Thursday, if my calendar and watch are correct, this is the automotive State of the Union. I'm Paul J Daly. This is Kyle Mountsier. Today we're talking about the people really want a record. Kind of a record ish month. One of my favorite parts about today is talking about how the retail industry is actually following the auto industry, probably the way it should be. You know

Kyle Mountsier  0:27  
what? You know, what's interesting this is, like, you know, what's really cool is, this morning, I was working a bit on our keynote for closing so, by

Paul J Daly  0:39  
the way, we're doing the closing keynote. We're doing the closing keynote Michael Cirillo are putting together, gonna

Kyle Mountsier  0:45  
be a full rip but, but even GPT wrote it in this like, No, you don't understand. We've we've been thinking we're the trailing indicator of retail success. We're the leading inlets of retail success. I mean, reposition your brain cells on how that works.

Paul J Daly  1:07  
The dog just trains it on, you know, what dog just does what you train it to do. That's right. GPT knows what's up because we told it what's up. Yeah. We just came out of a rip roaring time the auto form, JD, power auto form was such a blast, and we came out of that with just a reinvigoration of what this more than cars community means to the auto industry. There's so many people, so many lanes. There's the data, people, there's the insights, people, there's the people, people and the more than cars community is kind of all three, yes, but we just the people, people are at the top of the pyramid. Like, that's just how it feels. Like, remember the health pyramids back in the day? Yes. I mean, you had, like, Hulk Hogan and all those waltz and they got, they were like, Look, you should eat all kinds of bread. Remember that? Like, whatever you do,

Kyle Mountsier  1:59  
make sure you eat your bread. Yeah, Wonder Bread paid millions for that. Great. Lots

Paul J Daly  2:05  
of donations, lots of donations. But listen, the agenda for ASOTU CON is live on the site right now, at ASOTU CON com. If you want to get excited about what you think you should be getting better at, go read the agenda. Even if you can't go, the agenda is like, Okay, this is what I should be paying attention to, to navigate these rough waters, to make my business accelerate. Go to ASOTU CON com. Brought to you by our friends at Reynolds and Reynolds and goo goo. Thank you so much for being the presenting sponsor, by the way. But just read through some of these agenda lists and look you need to get your tickets. You've probably been seeing on LinkedIn, and it's social that, like, all these people are posting, they're cool. I'm going to ASOTU CON bumper stickers. It's because they're going read through the speakers, like, go, go, like speakers, and then click all speakers. I bet you don't know a good number of the dealers who are going to be speaking, and that's kind of like been the calling card for ASOTU, right? I'm excited about that, right? Finding the people who are actually doing the stuff and moving them to the front. If you look at like kind of who's popular and who always gets quoted, I don't like the brag. We don't like the brag. But if you actually try, actually track those back, I mean, you're gonna realize when they first hit the internet. So our speakers, oh, this is great. Nathan just typed in our speakers are the leading indicators. Oh, what

Kyle Mountsier  3:25  
you mean? The people are the leading indicators are the greatest industry in the country. Come on, is good.

Paul J Daly  3:30  
So go to ASOTU CON com. Get your tickets now, book a room. Come be want to talk about

Kyle Mountsier  3:35  
one, one particular because everybody is concerned about this. I've seen a lot of con conversations. There's one particular session that I'm that I am excited about I already I'm already upset because I think someone else has to moderate it because I have to be somewhere else during the time. But it's, it's the panel is called SEO to Geo, and we're terming geo generative engine optimization as a thing that you can be paying attention to. And it's all about like preparing, understanding what generative and then engine optimization is actually doing. And it's not just GPT, it's actually being it's Google. All of these platforms are leveraging AI to prioritize search results and adapting your content strategy to that is important, not just for because it's not AI based search. It is

Paul J Daly  4:28  
not the same. No, it's cool. Everybody knows now you search on Google, what's the first result? Exactly, AI summary. I

Kyle Mountsier  4:34  
actually it's almost hard to click into the link. So we're going to talk about zero click search results and all those type of things.

Paul J Daly  4:43  
That's good stuff. We do have some auto form interviews. We took a lot of good stuff. I don't know. Nathan, where do we find those? Well,

Nathan Southwick  4:50  
this is great because I'll just, I'll just make the call. We're going to be releasing them on LinkedIn. But I think what we're also going to do is do a special episode of this automotive State of the Union podcast. We're. With all of them back to back. Oh, great idea. They'll probably be like 1520 minutes with all of them there. Great idea. Some great ones. John buzzella, auto alliance for automotive innovation. Tom Castrillo, Chairman of nada, Stewart, strap, JD, power. Throw Bernie Moreno back in there. Throw Bernie Moreno back in.

Paul J Daly  5:18  
Good stuff. Cool, very good. Let's get to some news. Market data is in for March, and it was get this the sixth highest march for new car sales since 1976 what before you and I existed? Kyle, unbelievable and even a twinkle in our parents eye in 1976 largely driven by all this pre tariff buying. Our friends at cars commerce are making these insights available for free in their Q and Industry Insights report. It's linked up in the in the show notes, March, sales grew 11% year over year, pushing the q1 average up to 4.8% January, February, we're only up 1% so we offset all of that. Made a big jump. Trade in values are expected to rise in the coming months, fueled by anticipated increase in new car prices. Average new car prices holding steady at around $49,000 it's been that way for the last 18 months, which is 30% higher than pre pandemic levels. So things got more expensive, and they're staying there. The fastest growing segment of new cars are cars between 30 and $39,000 as tariffs are threatening, sub $30,000 inventory. Get this, those affordable cars, as we would call them, 89% of them are made outside the US. The only ones that are made here, Honda Civic, Toyota Corolla and the soon to be discontinued, Chevy Malibu. One last little, little kick. Here is Tesla and non Tesla. EV, search intensity is trending towards parity, meaning about the same. Tesla has had such an elevated advantage in search intensity. We know because people are searching on cars.com they're almost the same now people searching for Teslas or non teslas. And there was a huge gap last year. If you look

Kyle Mountsier  7:01  
at the well, I think that there's two things at play there. Obviously, we know the Tesla and the news, Elon and the news, but there's also a lot more inventory available when it comes to legacy manufacturers building some of the new EVs. So you just like, you're you, we were going to, at some point reach the parity. It's just been accelerated by the broad public news. I think the the other interesting piece to this, I just want to call out, because I'm tracking analytics across a little over 600 sites through the work with auto genius that I do and and one of the things that we saw is we saw the first three weeks of the month already pacing high so everybody's pointing just to terrace, seeing like, all of this increase, and we only, there was only six days of the month where terrorists had a massive impact, because that was when everything finally was stated, like, yes, we're actually doing this. And that's when we saw trap traffic increase and word increase. We saw a study earlier, last, last week, this week, about car wars, noting a 4,000% increase in phone calls, mentioning tariffs, but that was all in those last six days of the month. So we're there was already heightened demand in the market, and so I expect that demand to say hi, whether or not tariffs are a part of the conversation because it was already happening early in March. You wouldn't have seen that level of year over year increase without a full month having growth,

Paul J Daly  8:30  
no doubt. Well, I didn't think about the insights you probably get from that so many auto geniuses. We should talk about it a bit more Insights report yourself. Look, at one, one little anecdotal thing. So I was in New York City for the forum on Tuesday, Wednesday. I took my, my 16 year old daughter around who shot some great photos. We'll be sharing them at the forum. But she'd never been to New York City, so we went around, did a bunch of stuff. I took her to Hamilton, and at the end of Hamilton, when the cast gets up and talked they were raising, you know, they did this little fundraiser thing where the cast comes up and scan this QR code, and they're like, for $100 donation, you get this signed poster. For a $10 donation, you get this pen. So throw your dollars in. They're like, throw your Hamiltons, throw your Washingtons, right? And the characters are coming up, yes, and she says this, and throw your Tesla keys in while you're at it. What? And it got a little rowdy in there for a second, because I don't think everyone like loved the sentiment. Totally, no, but, I mean, they're talking about Tesla at a live Hamilton matinee New York City.

Kyle Mountsier  9:31  
That's wild. I mean, we know why we're on Broadway, you know, but, like, poor cats, but well, but it's still like public conversation. Auto is in the public eye as inside not seen in recent history. And there it is. There it is. Let's talk about retail.

Paul J Daly  9:47  
A little bit more. Retail sales in general made a strong rebound in March, not just in auto. They rose 1.4% retail sales overall to 734 point 9 billion, with. With automotive leading the pack, inflation fears, consumer sentiment, they're saying, is painting this complex picture for future spending. So there was only a point 2% gain in February, for context. Wow. Point 2% February, 4.6 in March. Auto, vehicles and parts leading the way up 5.3% so they went up 5.3% think of the leverage there? If the overall increase is 4.6 and auto is 5.3 how heavy of a chunk that is in the data?

Kyle Mountsier  10:36  
Oh, it's massive. Well, because it's second, it's the it's the largest retail industry in the country when it comes to sales and parts by a lot, like only, the only industry that out GDP is healthcare, right?

Paul J Daly  10:47  
So and So, consumer sentiment fell 11% No, no surprise there, I guess. But here's a little silver lining. Inflation dropped for the first time since May of 2020 that's incredible. So inflation dropped for the first time in almost five years, in five years. So we'll see what that does actually, obviously the tariffs and what's going to happen affecting that a lot. NRF National Retail Federation chief economist Jack kleinheit said the consumer is not feeling great given the confusion of policy announcements from Washington. So just little, little reminder there on how influential the auto industry is to retail and sentiment in general,

Kyle Mountsier  11:27  
yeah, the sentiment that the consumer isn't feeling great, I think it's it's more that the consumer has a future nervousness, and so everybody is bringing forward purchase behavior. And so watch out for that, right? People potentially being in the showroom kind of like, well, I wasn't planning on buying yet, but, and how do you approach that with care and an empathy as you're like, walking into a sale they were maybe planning for summer, and have pulled for their for their purchase behavior. It's definitely a different kind of purchase right, from a consumer

Paul J Daly  11:59  
behavior perspective. One little insight that's not in the show notes, but thinking about, from the articles I read, one of the items that, surprisingly, are getting pulled ahead because of tariff car seats. Ah, because they say people, if they're thinking right, I don't, I mean, they're expensive these days, but if they're thinking about like, hey, maybe this is the year people are buying car seats. So strange, which I mean, kind of goes really good. I mean, I don't know if your dealership do a little, do a little car seat thing. There are people. There are people thinking about it. I mean, it led the indicator on, think purchases being pulled forward well and and not just that, but like so many, car purchase are a part of life's existential moments. Yep, car purchase, having a baby, any of those things? Yeah, right, new home, I don't know. Speaking of those things, stop segway. Lows really follows. Lowe's follows

Kyle Mountsier  12:50  
existential moments, and they're embedding their themselves directly into the sports gaming world through aa sports titles as the home improvement giant targets, younger, gaming savvy audiences, where they already spend time. Lows branding will appear in games like Madden, college football, 26 and EA Sports, FC, a stadium pulse feature will showcase lows during intense in game moments. Players can earn in game perks tied to miles rewards and future ultimate team challenges. E marketer, the company found that interstitial ads, or full screen advertisements displayed during natural breaks in users game experience, such as between levels in a game, are often skipped by gamers, but opt in video ads that offer an incentive to click, like an in game reward, can succeed because it depends on how valuable the award is. It's not just like interstitials, it's like tied to game play. Those will also bring the action on offline with an in person Madden NFL gaming tour. Lowe's described the effort as establishing true connections with the next generation of low loyal lows fans. I mean, I think

Paul J Daly  13:54  
there's a lot to take away from this article, even though it seems, first of all, I think it's really ironic that Lowe's is about going out and doing something, like building something, and gaming is kind of like, we're not going to do that right now. We're going to play games. So a great little, little audience to try to drag into the Lowe's affinity, but I think it's so insightful that they're like, hey, when you're just trying, like, all media placements are not equal, all video placements are not equal. And they're like, no, no, we have in game videos. And they're just like, yeah, and the data shows that no one watches them because it's unimportant to what they're doing. And so they found a way to make it engaging, to actually have that like, when marketing begins to entertain or add value, it becomes entertainment, not marketing anymore. And so they figured a way to actually make that happen by offering a small, costless incentive, and just rework the way they were engaged in the video. So I love that, that element of it, and I think being where the people are is, I mean marketing well, and it's like this,

Kyle Mountsier  14:53  
the sports world is obviously in an affinity network, right? Like, you know. Who you're talking to. You know what they may or may not be interested in building or doing? You already see, I think it was Home Depot did the career pathing stuff alongside sports just a few months ago in their ad campaign. And so it's clear, like there must be some correlation between rabid sports, sports fans and doers and makers. It's something that like, it's what's the data telling you, and I'm guessing, like, if Home Depot and Lowe's are both leaning into that network, there's probably something there. It's what's interesting there, to me, is like, okay, what are the affinity networks that auto needs to pay attention to?

Paul J Daly  15:36  
That's good. That's good. I mean, look, if Lowe's you're clicking on that video, it's giving you a speed boost in the game. And you're looking at the orange sign into the blue sign when you have to buy some lumber. Where you going? You're going to Lowe's look. Get out there. Take care of some people. We'll see you here tomorrow morning.

Unknown Speaker  15:50  
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