Back To ICE, Used Car Market Dip, Costco's Tech Timing

Paul J Daly: 0:11

It's Thursday, Thursday, that kind of feels like a Friday in a way. I don't know why it does. But we have a fun show. Today we're gonna be talking about consumers going back to ice after EVs used car market dip and Costco is tech timing, can they pull it off? People really want to feel like, the last couple of days, I feel like their stores I want to talk about that aren't stories in the show? Right, because it's like one of those rare times where like, there's a lot of context, but you know, there's a ton of

‍Kyle Mountsier: 0:37

context out there like the, you know, I don't know what it is about the middle of June, but everybody kind of woke up and started saying stuff and

Paul J Daly: 0:45

no, one's like, it was like dead out there. But, you know, we want to make room for the stories that are retail focused in the show and not just automotive focus, because we you know, believe deeply that that's a big part of being successful in automotive is paying attention to retail, so we'll get to that. First, we have a really fun way to start the show today. Because we have a podcast called Auto Collabs. Au to co ll abs. We have a lot of fun with Michael Cirillo, there was a really special episode, you should subscribe because it's great audio experience. We had a 13 year old on the show, Kaylee Jewett, she spoke at the women automotive conference, our friends out there at women in automotive, put her on the stage, that's how we got turned on to her got connected with her father, and had her on the show. So we're gonna play a little clip of having her because it was it was just such a fantastic experience. And we want you to listen to the whole thing. But let's let's check out this clip.

Kaylee Jewert: 1:39

Like started off the idea like, well, there's not a lot of automotive like being shown to people in your school, right? Like, you've had people come into your school and talk to you about the high school that you want to go to. And then this is where you're figuring out who you want to be. So why don't you also have people who work in automotive go and talk to you and be like, there's more than just working on cars. There's coding, there's, like data analysis, there's all this. But there was no one talking about that to us. Because, right? I mean, if I wouldn't have been around my dad, I wouldn't have known that automotive has anything to do with a computer other than coding, whatever goes on in the car. What

Paul J Daly: 2:20

is it that you want people to take away? Like? Why do you want people to pay attention to you? What are the traits that you think you want people to gather around when they see and hear from you?

Kaylee Jewert: 2:30

That even though I'm younger, I still have like important things to say. Like there is important things that you can get from the younger generation. It's not just oh, yeah, the adults know everything. Because the kids who have the creativity are the ones who will think of like the next thing to put in the car like, Oh, hey, for the family. Why don't you put a little net that comes in every car, and like the family style ones so that the kids can put their backpacks in them? And they don't like move around? Like it's a good idea.

Paul J Daly: 3:03

Yeah, yeah. And if you're just listening to the show, she kind of looks like Taylor Swift. She does. version it says a lot of

Kyle Mountsier: 3:12

Taylor Swift. Yes. Well, and this is what I love about like her saying there are career fairs, there's people in different industries, sharing with why we should come into their industry. And we're starting to see more and more automotive companies specifically on the dealership side, participating in career fairs younger into the next generation, mostly

Paul J Daly: 3:36

on the fixed off side, though, right? Like Korean mechanic can be a technician.

Kyle Mountsier: 3:40

Awareness is such a big deal right now. It's just like, yeah, we're here. We're avail that's

Paul J Daly: 3:45

that's what I'm waiting for. Now. I'm waiting for the dealer group that goes into high schools with like, tech opportunities, marketing, customer experience, hospitality, sales, right? Like, it's there. She had a great point. She's like, I had no idea you could get into coding or tech or anything like that in the auto industry. So go check it out. Auto Collabs co ll abs. You can also find it from our homepage. ASOTU.com. Just click on podcasts and it'll be right in there. Let's talk about some new shall we? Let's do it. A McKinsey and Company survey has revealed that over get this 40% of current Evie owners are likely to switch back to combustion engine vehicles due to charging concerns mostly but basically the study asked 200 questions to more than 30,000 consumers in 15 countries. These are the places that really make up 80% of current Evie sales volume so very relevant audience 46% of us Evie owners and 29% globally, but 46% in the US said they are likely to revert to combustion engines after they're done with this record, scratch that one twice. Surprise the crap out of me inadequate public charging infrastructure, high ownership and maintenance costs and impacts on long distance travel because of lack of charging are the top concerns that came out. Phillip camshaft, the leader of Mackenzie's future mobility division said quote, I didn't expect that I thought once an Eevee buyer, always an Eevee buyer. Basically 21% of global respondents do not want to switch to an Eevee from combustion 33% citing charging concerns exacerbated by rising range expectations. So, people now expect a range at minimum of 270 miles in 2022. That was all that was, I'm sorry, in 2022, it was 270 miles now they expect a range of over 290 miles. So people are expecting more Evie chargers, not not as plentiful, definitely not as visible. They said, You know, they're behind gas stations a lot of the time behind retail stores. And Philip camshaft from McKinsey said the next generation of Eevee buyers will rely on public charging more much more than the current one. But boy, that feels like a step back.

Kyle Mountsier: 5:58

It's totally a step back. Well, I love the last quote. And we've been talking about this a lot that the next like, the next swath of Evie buyers does not have Eevee charging access out for home right out front of the play younger, right?

Paul J Daly: 6:13

Let's establish Yeah, the other

Kyle Mountsier: 6:15

piece of this that I think is really interesting, and I hadn't even thought of this is the gas there is the mileage range expectation. When you put in hybrids into the market, and you go from having 500 har that has 300 miles of range to my van, a van has 570 miles of range.

Paul J Daly: 6:38

That's a long trip,

Kyle Mountsier: 6:40

that thing you can go. I mean, we basically make it to Ohio and back

Paul J Daly: 6:45

on I could go to Atlantic City, New Jersey and back. You're done. Right. So

Kyle Mountsier: 6:49

you you look at that as like a new metric that that Evie has to scale to. It's just it's different than maybe what was expected seven, eight years ago, when gas engines were not getting that type of, you know, miles per gallon and even just miles per hour that.

Paul J Daly: 7:08

I mean, so we have we have family wagons and navigator and I just filled it up the other day. And I thought about this because I had rented an Eevee a few weeks ago and the mileage at its highest was like a 260 Sometimes a pole star too. Yeah. And so it was constantly like I just he gets under gets to like 150 and I just You just feel anxious, but that's like still 60% Right? Yeah. And but I filled it up and it was like 474 was the mileage. And it's just like, I just feel like I can go forever on that. Yeah, it's got the six cylinder turbo charge. And so yeah, the miles expectation is a big deal. I definitely didn't I mean, I love the driving experience of an Eevee. But obviously, like people are gonna say it's gonna be so much cheaper to maintain. Not so much tires are so expensive. Sorry. And when you're burning through them that way. So yeah, I mean, that is a well, that is that is significant. I went to see what seemed Greenfield thinks about that one, because he's going to have that global perspective on it. But even the global numbers, right, more than a third.

Kyle Mountsier: 8:03

The fact that this came from 15 countries it kind of blows my mind. You know, so 30,000 respondents it was not like, this is one of those like hit you in the face moments. I don't think anybody in the industry well, maybe some people expected or maybe they were hunting for it and expect it and expect it based on all the speaking of

Paul J Daly: 8:19

things maybe we expected. segue to talk this is not nearly as shocking as the first story. Cox Automotive is reporting a slight decline in US vehicle wholesale prices in May, and significant yearly drops, very impacts across different segments of the US car market. Manheim used vehicle index fell to 190 7.3 and may down point 6% From April but down 12% From May of 2023. So we're getting back down there. On a non adjust not adjusted basis prices dropped 1.2% From May to April and 11%. But the adjusted numbers really what we pay attention to seasonally right things happen. Let's see. Let's see seasonally adjusted wholesale prices for luxury vehicles, SUVs, crossovers, compact vehicles, midsize vehicles and pickups are down 11 to 17%. So the luxury vehicles are super expensive last year, I remember they're coming back down to earth. Let's see the survey. So that's the use car price index. Cox has their dealer Sentiment Survey that just went out to include 550 franchised dealers, and 476 independent dealers. Basically, dealer score the used vehicle inventory levels at 48. So that's down from 53, which they scored at last. So it feels like the sentiments coming down on inventory availability. But it's from it was just 44 two years ago. So there you go. Yeah,

Kyle Mountsier: 9:40

I mean, I think that at least my perspective on just getting the feedback individually on the used car market right now. It's like it's a it's a fair buyer's and seller's market like it's, it's kind of right in the fair market. I like that, right? Yeah, there's nothing that is, you know, too hard to get right. If there's it's a little tough to get inventory, but not too hard, and then from a sales perspective, it's not brutalizing the customer because of costs. And so you get this good balance. I think there's still an affordability issue when it comes to interest rates. But I think dealers are feeling a little bit more balanced in the used car market. Like that the imbalance is definitely on the new car market. Still, we're starting to see just higher day supply. We were talking about that yesterday. And then just, you know, overall consumer demand and whether or not you're able to capitalize on that, I think is the biggest concern right now we're hearing I mean, literally, I'll hear a dealer talk about May as like it was raging we had an all time high. Or it was terrible. We had an all time low. It's just feeling massive difference in the market. Right.

Paul J Daly: 10:48

I think that Jonathan smokes favorite word there. We know what it is. It's bifurcated. Ah, speaking of a bifurcated opinion. So you got one coming in. Hi, here,

Kyle Mountsier: 11:00

I have one coming in. So Costco is set to undergo significant changes as new leadership aims to enhance its technological infrastructure and E commerce capabilities. So the new CEO, Ron Baccharis, and CFO, Gary Miller chip are focused on expanding cascos digital presence and fulfillment offering so mainly in their e commerce strategies. Historically, they've been conservative with technology. I got a note on that. Customer plans to improve its buy online pick up in store model, starting with electronics naturally, and enhancing member engagement through technology with over 90% Membership Renewal rates globally. So despite the advancements, COSCO reassures that yes, the dollar 50 Hot combo will price will remain unchanged. The only question is reports will continue. So don't worry, don't worry fam you still get your buck 50 Hotdog.

Paul J Daly: 11:55

You okay, go again, you. We need to go in this. I want to hear the story because usually I would give I have some thoughts on this story, but I feel like they might be colored by your story. They're gonna be your story yet.

Kyle Mountsier: 12:06

Costco has amazing we've been I've been to Costco, Costco, pizza Costco hotdog, it's great. There's a lot of great products, you know, ease of ease of buying in bulk, all of those type of things. But yesterday, my family wife, three kids went to our brand new Costco which we've we've always had Sam's Club coasts. So we haven't been able to do Costco. Well. I'm sure it wasn't brand new Costco. 15 minutes away. They go yesterday, like we're gonna get registered for a membership. First of all, it's, it's, I think, impossible to buy a full membership online. So my wife goes, and it took her 30 minutes because of the line, right? Nope. She had to fill out hand written paperwork. Oh, no, not once. But with two different people said she met three separate people that engaged her in upsell activities, both in the initial table during her standing in line with the three kids and at the checkout terminal. Oh, my. The she said that all of the people in there were clean, obviously older than her. So there was no one in a millennial or Gen X or Gen Z or sorry, Gen Z.

Paul J Daly: 13:33

Age range demo. Yeah.

Kyle Mountsier: 13:34

Demo. She the way she likened it was it felt like she was getting sold a timeshare. Ah, that's unbelievable. Were you there? No, I wasn't and she was like, it was the worst experience ever. And it completely tainted the rest of the trip because she had to spend 30 minutes just getting

Paul J Daly: 13:55

the kids that timer starts ticking the moment you take them home or car Yeah, so 30 minutes and they're not gonna be

Kyle Mountsier: 14:02

the that's not going to be the experience the next time she goes she's just gonna engage in like the retail experience.

Paul J Daly: 14:07

What an opportunity what opportunity all right. Oh, digital,

Kyle Mountsier: 14:11

no digital screens whatsoever. No, that makes sense.

Paul J Daly: 14:15

Because like I've been I've registered a long time ago right so I haven't had that experience in a long time but that makes total sense that they would do it old school because even when you look at when you look at the registration desk, it still feels old school. Oh, right. If you want to return an item do they got that down? It's so easy, right right. Get line give it to him. It could be half eaten. They're like alright, we'll take it back to you. Right money's back on the card. They got that down. But the registration right the cameras all like they're still like Alright, stay in there. And you can tell like this picture is gonna suck and it does. That man Well, the CEO Ron Vaart, victress. Pay Chris and CFO galley Miller chip. We're looking at you saying fix the registration process. So the good news is it's only up from here. I think Get my take on the story before I hear the registration thing that makes a ton of sense is that you don't need cutting edge tech to have an amazing business and I think this just proves that it is like I have to say like I've tried to buy stuff online I've just accepted like I can't shop Costco online it just is not something that I so I don't so I don't know they just you know they do the inside don't really do the Instacart thing but they have that now but I think like buy online pick up in store or even like they said they're going to lean into things like next day shipping two day shipping another reason I don't buy from Costco online also the price is different for online and in store that's something our industry paid a little bit Yep. But But I think they didn't need the great tech to build a great system and a great process that people love the fan bases fanatical they buy everything in the store before you know it you're always gonna buy everything she doesn't need because I put it in the first two aisles it's over mandate so but but again, I think this is we've said this before right tech should serve great process. Tech doesn't replace good process. That's right. And so I think this is an example of that and Wow, interesting story about the CIO. I'm hopeful for them you know? I hope for I O for your wife sake they did they at least they probably didn't get the hot dog either on the way up,

Kyle Mountsier: 16:13

they got they I will say okay, or people $9 Fully fed. All right,

Paul J Daly: 16:19

there you go. That feels a little bit more like it all right. Well, whatever you're doing today, it's Thursday right got today got tomorrow before the weekend even hits in the selling part, you know the big selling part hits. Until then, pay attention to what your consumers do and care about some people will see here tomorrow.

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