Biden Weighs In On Strikes, Ford Bites the Apple, Hardware Standard - Subscription Optional

Paul Daly: 0:26Alright, Tuesday already we have Steve Greenfield in the studio kind of for this morning show. We're talking about Joe Biden's comments on the UAW contract negotiations. And Ford making moves in software as a subscription that people really want to ask more than talk with them. They're actually doing things which is nice to see Steve. Good morning.

‍Steve Greenfield: 0:47

Hey, Paul, how's it gone? Thanks for having me.

Paul Daly: 0:49

It's going well, it's good to have you here. Is it Lana experiencing the heat waves of the summer? Or is that like, just normal Atlanta summer?

Steve Greenfield: 0:56

Well, normal last summer, but this next week is gonna be the hottest week of the year, interestingly enough, for some reason in August. So who knows with Atlanta?

Paul Daly: 1:04

I know, I know. Are you traveling a lot in the summer? Are you experiencing a slowdown? It's been

Steve Greenfield: 1:09

a slowdown, but I'm looking to ramp back up. I've actually got two speaking engagements in the Middle East at two different mobility conferences. So we're starting to expand our reach globally now,

Paul Daly: 1:18

which is no joke. Well, I heard it's hot over there, too. I imagine it is. So it's just, it's just like, just like conditioning. So let's talk about a few things going on. Obviously, a soda con is coming in hot September 26 and 27th. I cannot wait. We can't wait to have you there. We have lots of amazing guests. Mike Stan from nada is going to be there. Jimmy butters editor of automotive news dealers upon dealers and operators and practitioners over 1000 rooftops already represented in the speaker list. And we're probably just about 50% through announcing speaker so it's going to be an amazing couple of days. Also, we have a new show that's launching to launch last week, the next episode is launching today. It's the wheelhouse it's going to be a 1pm live streamed on LinkedIn. If we're ever going to get in trouble for things that are said on the show, this is probably the one but that's okay. Because it's hosted by a GM of Mercedes Benz of Easton, Daniel, go ver. So if he says anything, we can just point at him be like, I don't know, what do you want me to tell you? He's?

Steve Greenfield: 2:21

It wasn't me. It wasn't me.

Paul Daly: 2:23

It doesn't. And somehow, at some point, Brian Kramer from cars is probably going to get the hook from the PR department to they're gonna be like, Yeah, a little too close to that one, buddy. But if you haven't seen it yet, check it out. It's a lot of fun to watch. It's also a lot of fun to listen to. And it's kind of modeled after ESPN is around the horn. There's sound effects. It's fast moving. And, you know, you'll you'll learn a little something as well. But we have some news to talk about today. So let's get into it. Um, kind of in the ongoing saga, President Biden has now entered the conversation in the contract negotiations between the UAW and the big three. He said, I'm asking all sides to work together to forge a fair agreement. You know, just a pretty pretty like down the middle kind of comment. He said in the statement as he urged union auto workers in the Detroit's big three to reach a new agreement. Before their contracts expire. He stressed the need for middle class, a supportive contract amid industry tech shifts, while the UAW represented by 150,000 workers considers the strike if no agreement is made by that deadline of September 14. And the potential strike could lead to a potential 400 to $5 million per week. decline in production. Steve, we haven't heard your comments on this. The whole contract negotiations to talk What's your perspective on the whole situation?

Steve Greenfield: 3:41

Yeah, so this is pulling up a hammer, right? The biggest hammer you can have if Biden gets involved, I mean, things get really messy. But things can get resolved really quickly. And maybe both sides aren't happy. But I think it's um, well, nothing good can come from a strike. Right? I understand both both sides have really dug in. On one side, the OEMs are really worried about setting precedent. And other side, you know, that the unions are saying, hey, you know, give us what to do, especially given the last couple years have been so profitable. I mean, it's been so profitable for OEMs. And dealers are looking at and say, Give us our fair share. But I mean, nothing good can come from a strike, I can appreciate Biden now signaling, hey, I might have to get involved here. If nothing else, it just makes both parties that much sharper with their negotiation, because they realize, you know, Daddy's behind the scenes and may intervene here. But hopefully, for the state of like the industry for the state of the economy, for everybody. This thing does get resolved. And I think you know, Biden's is doing what he has to do at this point. I mean, you would expect him to signal that, hey, we're come comes to shove here and I'm gonna have to get involved.

Paul Daly: 4:45

You know, Jamie butters was that David Kane's event earlier in the year is probably sometime around May. And he said the one thing that people aren't talking about that he thinks is going to be big topic of conversation, is this strike. You know, Shawn, fain kind of knew was seen when he came in? Seems like he's not playing around. You know, he's obviously going very hard on the demands in the front seems like a very tough negotiator. I guess we'll see. I don't know what he was, Do you know what he was doing before he had this position?

Steve Greenfield: 5:14

I'm not certain. I'm not certain. But yeah, good good for him. He's built a brand around himself. I'm certain that the unions are rallying around him. He's playing tough guy for now. But you know, negotiation tactics one on one is to anchor, you know, the opposition to something way out there, you can always come off of that. But if you can anchor them and set expectations way out there, you can come off of it and come up with a reasonable sort of like negotiation at the end of it. But it definitely has been interesting to watch and hopefully fingers crossed. It doesn't get to the point of actually having a strike.

Paul Daly: 5:44

Yeah, I agree with you. I mean, you have parts suppliers already, like just barely keeping up and all types of just like normalization that maybe is starting to happen. Right. And so yeah, well, we'll see what happens. Well, I'll tell you what one of the big three is not waiting around for things to happen. So speaking of Ford's segue All right, so Ford has done it. Again, they appointed another former Apple executive Peter Stern is president of its new business unit, which is called Ford integrated services. He's going to lead the company's customer experience strategy. Good call. Steve was vice president of services at Apple and oversaw some common things you may be familiar with like Apple TV plus iCloud, Apple news, plus Apple books, and Apple arcade, as well as his ad and cloud service. So obviously, a lot of experience with shifting to subscription based revenue streams, his team at Ford is going to bring together hardware software and services across all three units, their ice unit, their model, a unit, and therefore Pro, and he's going to manage some new services, I had never heard of Ford next venture studio. And this is going to include some out of vehicle experiences, kind of like out of body experiences, that utilize car cameras for non driving activities. So here's a quote from Jim Farley, and then get your thoughts on it. Jim Farley says everyone is so focused on the Eevee transformation. But I keep saying the biggest change in our industry is going to be digital product and physical service. So having a digital product that has a physical service attached to it, he said, Our industry is littered with bad choices about subscription service. And that's not the direction we're going in.

Steve Greenfield: 7:28

Yeah, yeah. So this sends a strong signal that we're gonna be more customer centric, bringing an Apple executive in, you know, for it's been probably the most aggressive that we've heard, they've been very successful with Ford Pro. I mean, their announcement earlier this year that they've got 400,000 subscribers on Ford Pro, and the revenue is up 60%, year over year, I think. They, they believe that they can get the$2,000 per year per vehicle and subscription products. And I think it's, you know, the world is their oyster. And I know, it's interesting. Every time I post a LinkedIn article on this, there's always this visceral reaction, people say like, how dare they, you know, there's somebody in the industry that posted this today on one of my LinkedIn posts, I won't mention his name, but you know, you can't install a feature into a vehicle and not activate it for the owner. But you know, I was thinking this morning, it's like, I get cable TV into my home. And so they get on ESPN or toggle off ESPN based on what I'm spending. And it's like, I don't complain. I mean, that's a nice feature to have, that I can pay for in any given month that I want it. So I think that, you know, we've entered a new era where this is inevitable. I think, I think, you know, position correctly, consumers will love it, it'll be a great feature that they can toggle on or off features as they did within vehicles. But I will see there's still friction to be had. I think,

Paul Daly: 8:47

you know, that's an interesting point about like, where are we conditioned to already do that even things like internet speed? Right? What do you want the lines coming into the house, you want us to flip it to, you know, 50 megabytes 100 A gig? I you know, it's just, we're not used to it. Right? It's that new change and we operate like you pointed out that way in so many other areas. But you know, I think when when the conversation around the heated seats came out, remember BMW, I think that was that was a little bit more of a rub, like what do you mean like I have to you're charging me for the heat to you know, just, it's like as if we're just conditioned No, no, like, you have to You're entitled to a warmth but if there's a seat one of those but let's go a little further into the story. So speaking of hardware standard, you know, kind of functionality optional segue. Okay, so this new, this new VP Peter Stern, he wasn't playing around or wasting any time because in a press conference, he also said it's going to be hardware standard functionality opposite optional as Ford is making hands free driving software, blue cruise, it's called standard on many Ford and Lincoln model. So basically, they are going to install the hardware on every vehicle and this is a first for them. And then obviously, you can turn it on or activated if you want. Following the lead, right Tesla installs the hardware on every vehicle, he says, I firmly believe that when services deliver value to a customer, it's appropriate for customer to pay for the services. And it allows them to take their money invest in delivering even better services. So as we have been paying for services, we can make them better. He says, of course, we're committed to delivering a great experience for every customer, whether they pay for a subscription and service or not. But we can do better for them when we have a subscription. And we can have a service that's paid for. So customers can activate blue cruise at purchase for three years, at $2,100. You know, they get a 90 day free trial. And then if they activate it three years for 2100, they can pay 800 a year if they want to buy it annually, or $75 a month, and some select Lincoln model. So the higher end ones are going to come standard with it for four years. So this is a little bit further into the conversation of what we were just talking about.

Steve Greenfield: 11:04

Yeah, but all those sensors, the cameras, the LIDAR that are needed for this thing are going to be installed in the vehicle. Like he said, Paul, like, how are people going to react? It's like, if I don't want to pay for it, then don't pay for it right now, six months, nine months later, you might decide to pay for it. And you know, consumers would say, Wow, at least I have the option. And that's a good thing.

Paul Daly: 11:22

I think the contrary point would be like, especially in a time when we're having so many affordability conversations, and that's at the top right. If that wasn't at the top of the pile in conversation right now, I think there would be less contention around it. But right now, when it's saying like, hey, we were trying to get cars that meet the affordability to bring that average new car payment now, which is up to like, I think it's like 750 or something like that. To bring that down, you're spending the money to add these components into the vehicle, can you just give me a stripped down version doesn't have any of that fancy stuff? I don't want it to make a cheaper car. Right? So I think that's the contrarian point that's probably coming up.

Steve Greenfield: 12:00

So that that'll be the PR around it, right? Just say like, Hey, because we can normalize the manufacturer of these vehicles, every car gets configured the same way. We've managed our supplier network. As a result, the actual cost of building the cars is cheaper now. And it's offset by those users that want to pay for our subscription. So your car is actually cheaper, despite the fact it's got more electronics in it. The interesting thing will be is whether or not you know, consumers figure out ways to hack these things. You saw recently that, you know, there's some researchers that have figured out how to hack and activate heated seats on Tesla's now aftermarket. And, you know, Tesla has not responded. But I gotta imagine, Tesla isn't going to look favorably on folks getting in and toggling on features that otherwise would be paid. And how will the OEMs react to hackers?

Paul Daly: 12:49

Yeah, that, I mean, it's going to be a never ending battle, right. But fortunately, with software updates over the year, it's going to be typically like you're going to need your car updated. And it's just is that experience going to be more like the Apple, your system needs to be updated experience or the windows, your system? Update experiences the real question, because that's, that's really going to color the entire the entire user experience on how easy and automatic is it to have you? Do you own a car that has software over the air updates? or you're not? Yeah, I don't either. So it's there's still like this, this question right around? What is that? Like? How's the car Connect? Is it seamless? Is it annoying? Um, you know, one thing I brought up to my son, my son is 16 the other day, and he's, he's about to, you know, he's shopping for his first car. He's about to get his license in a month. And you know, he's considering leasing either a new Sportage or purchasing, like a Honda Pilot with like, you know, 180,000 miles on it. He's in this. And I, it's got this system, it's got all this tech integrated, which is why he likes the Sportage and I asked him, I said, Hey, if that audit, if your car served you up ads on your welcome screen, right? I said, Would you would you let it do that if it gave you a discount for the car? And he was like, Absolutely not. That would be so annoying. I was like, what if they gave you like $100 A month discount? He's like, no way it has to be. I was like, how much would it have to be? He said, It would have to be like half price. He said, so that's my 16 year old. That's something I don't think we've seen yet. But But I'm curious now with all these software updates. It makes some really reasonable places. That's where you would push advertising. Have you ever heard or thought of anything like that?

Steve Greenfield: 14:36

We've seen some startups that are working on that too. And there might be a revenue share back to the OEM, kind of the same way that if you're on Waze, it'll show you to McDonald's or gas stations nearby. I mean, those in some cases are sponsored, right? People are paying ways for those sponsorships spots. And you know, there right now, I don't know if there's any revenue share back. I don't know imagine there is I mean, Google owns Waze, but you can imagine the future on the dash if the dealer wants to advertise you No Come in today your tires or brakes repaired because we can sense that your car needs them right now, there will be opportunities for dealers to push advertising I would imagine that our consumer friendly advertising to the screen and and you know, there may be third parties like McDonald's or Starbucks that pay some kind of revenue share back to either the OEM likely the OEM, not so much the actual dealer, but they'd have to like, crossed the threshold of like some kind of compelling consumer value, because you wouldn't want your screen to cluttered. You may be able to opt in or out of which vendors actually can advertise to you on your screen.

Paul Daly: 15:33

Yeah, well, it'll be interesting. I mean, where there is a tension, there's opportunity to make money. Steve, thank you so much for joining us on the show today. Whatever you're doing out there, tech, no tech, whatever it is. Go serve some people there in front of you.

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