Carvana Megasite, New Blue Sky Outlook, Dealership Sting Operation

Paul J Daly: 0:06

It's a little sad to see this week of guest hosts end out, but we get to end on the pinnacle. We have Daniel Gover in the studio. We've already been getting sideways, but we're going to talk about Carvana, mega sites, new blue sky and a dealership sting operation executed in front of a Tiktok camera. We have to wait to the end of the show for that one,

‍Daniel Govaer: 0:26

right back where we started,

Paul J Daly: 0:28

right right back where we started. This the full cycle. And I feel like it's like, Oh, I saw this a merry go round. And it's been a good maraghan. We've had amazing guests hosts this week, and I think it's just appropriate that you and I just spent 15 minutes when we should have been live with the show. Um, just in the middle of the the general antics and ongoings that you and I talk

Daniel Govaer: 0:49

about, we'll have, like, meeting after the meeting, we have the bs before the show. It

Paul J Daly: 0:53

was amazing. I feel like, I feel like there are several things that would happen probably end our careers and simultaneously boost our careers into the stratosphere, but we just can't tell which order that happens in. No,

Daniel Govaer: 1:04

that's fair. That's fair. And that's why, you know that's Listen, ask Tucker Carlson how he did it, and then we'll, we'll know at least what the game plan. That's

Paul J Daly: 1:10

a great he did exactly that, because yet, oh no, is actually just the beginning of lots of, lots of listenership and control, I

Daniel Govaer: 1:19

don't know, at least on the task at hand, okay, okay.

Paul J Daly: 1:22

Uh, most important thing it's the fifth Friday of the month, which every dealership rejoices when this happens. And there's going to be a is there 31 days in August we're gonna have a fifth Saturday? Are you kidding me? Yes. Nathan, our producer, is saying yes.

Daniel Govaer: 1:36

And how did we pick this up early? I was on holiday or a weekend, so they certainly

Paul J Daly: 1:40

don't. So we got, kind of got some freebies coming up. We've been releasing some podcasts that we took from the name ad convention, recorded last week. And today we're with Perry Watson the third, yesterday, with Perry the fourth, which is his father, and just total legend. Og you have to check these out. Go to in the dirt, and you can search in the dirt asotu, and these podcasts will come up. But Perry four is dad, GM, part owner of Marysville Toyota, doing some amazing things, focusing on his people and outstanding performance at this Toyota store. And Perry three is at the helm of name add, and he's got some vision. And both of these talking about investing in the next generation super heavily as the way to win. So excited for you to check those out. What else we got? Soda wedge webinar coming up? What's holding your department back? Beth Carol, she's so great. Of national independent vehicle title agents. You didn't think titling could be so fun, but Beth and Erica Calderon of M, A, D, A, are going to be on this and it's going to be a blast. You can sign up at asotu com. It's right there. Just put your name in our 30 minute webinars. A lot of fun. Make titling fun again, right? Mitfa,

Daniel Govaer: 2:50

I don't, but anyway, yeah,

Paul J Daly: 2:52

that sounds that mitva Sounds like, I don't know, not. It sounds like mitzvah. Sounds like a Jewish slang word for like, you know, you get the cupcakes and you

Unknown: 3:03

got this MIT, and it happens I don't have a Yiddish title now we

Paul J Daly: 3:07

have a Yiddish day for a title clerk. That's why people tuned into this show right

Daniel Govaer: 3:10

now, for that type of multicultural I think education. All right,

Paul J Daly: 3:14

we better get into some news quick. All right. Carvana is transforming the Odessa, Kansas City location into its first what they're calling a mega site, blending auto auctions with vehicle inspection and recon that's set to create 200 new jobs in Belton, Missouri, further expanding their retail and wholesale operations. Basically, this model is unique to Kansas City. All other locations, like Odessa, Buffalo and Portland, will be auction only locations, even though they thought they were going to incorporate recon. They're not, they're testing out this mega site first, if you remember, you do remember, they acquired 56 Odessa network sites in 2022 and always, the goal was to make these operationally integrated so it makes them more efficient. Brian Boyd's SVP of inventory at Carvana said, as Carvana transitions to its long term phase of driving profitable growth. We're excited to further tap into the power of our infrastructure by bringing inspection and reconditioning capabilities to more Odessa sites. So they're going to be running both auction lanes still going, but they're also leveraging them as reconci I mentioned

Daniel Govaer: 4:16

anything about short or medium term profitability, but the long term profitability, yes. And I think also, you know, we're talking before about, you know, good publicity and bad publicity, or if there's just publicity, well, in this case, who's talked about Odessa? When? How many times have any, Has anyone talked about Odessa, Kansas City, up until this happened?

Paul J Daly: 4:35

Never. Zero. Patrick, a bad weighs in. Oh, you got him on the show. He probably just wanted to watch the downfall of both of our careers in real time. So he turned into the exit tune in. He says, I thought Carvana was going out of business. I know that was the big conversation.

Daniel Govaer: 4:49

They're onto a new business. That's the model you can go out, where one business closes another opens. And I think honestly, the location isn't surprising compared to the others like. Don't know of a more polarizing example you could give, like Odessa. Kansas City will have this physical location, but Buffalo and Portland won't. Well, that probably makes sense, that they wouldn't be in the future. But, you know, from a location standpoint, they said

Paul J Daly: 5:14

they're not right now, I don't think they said they want. I've been to the buffalo one, several times, and you think about it does carbon is there Carvana in Canada?

Daniel Govaer: 5:23

No, I think they're way too polite for that there, where they're too polite in Canada? Yeah, no. But I think that, I think look, if nothing else, Carvana is at least making us look at what the potential of a company that wants to really take over what used to be considered the periphery or an associated industry. So there's no doubt that there's innovation and intent there. And from that perspective, it's something interesting to look at. I think if they can, if they start doing it, if nothing else, other people that are paying attention will probably be able to do it and probably do it better, and we'll see. I think things like this could be really interesting for driving forward how we're acquiring inventory in the future. I don't know that it's something that I'm going to like raise any red flag or pirate flag just yet for but I definitely think it's something interesting to watch, to see how they are successful or unsuccessful with it, and what we can do with it.

Paul J Daly: 6:08

You know, I just realized something. If Patrick's still on the stream, I gotta show you this shirt. Oh, we got the the special edition. Love people more than you love cars, Beaver, Toyota edition. You can't really get it out from I can see the there it is, yeah, it's, it's legit, or actually doing that, by the way, we're starting to make sure it's for dealer groups co branded with their so their people can wear them on Fridays or Mondays or whenever they want to let or just take them home. Oh, there you go. Special announcement. We'll

Daniel Govaer: 6:35

get more on that soon. March. And I was, you know what? How

Paul J Daly: 6:38

great got to make it your own. Yeah, people need to stand behind this and be like, we believe this, not they believe this. We believe it's we believe. And I believe, I believe too. I'm gonna get, I'm gonna get you one for the wheelhouse podcast.

Daniel Govaer: 6:51

Oh, thank you. If

Paul J Daly: 6:52

you didn't know, if you didn't know, yeah, Daniel hosts a podcast called the wheelhouse. It's a so do podcast collab thing we have going on, where he basically gets people on and asks them really hard questions and has a lot of fun watching them answer. I

Daniel Govaer: 7:07

think they're like fun questions that just don't normally get asked, but they're mostly,

Paul J Daly: 7:12

they're mostly, no, they're real questions. You don't you don't softball it. You ask people questions that other people want to know the answers to, and you do have fun with it, because that's just your personality. Can

Daniel Govaer: 7:20

I give you an example? You know, upcoming this month is Hispanic Heritage Month, and that coincides perfectly with the show. The really, what we're going to be talking about is how much we don't know and how much we're missing, in most cases, about advertising to the Hispanic market and Spanish what you need for Spanish language website, how you do first party data for spin, for your Spanish speaking customers? Oh my gosh. And the panel is going to be outstanding, and it's, I guarantee you, the playbook is going to be laid out, and then it's just going to be up to you if

Paul J Daly: 7:48

you want to do it look. I can't think of a more valuable thing for any dealer that's anywhere near a Hispanic market period. And that's pretty much what percentage of the country you say this is relevant to a lot. Yeah, over a third, easily. Yep. And so it's funny. Now we're just saying all the stories that things that Patrick's really good at, he's good at pretty much everything in his store. He's got basically a used car factory, if you've ever visited his recon in the back, because Patrick was a detailer and also has an exemplary Hispanic marketing I don't even know. It's not even an initiative. It's like a part of who they are,

Daniel Govaer: 8:19

very amazing bilinguality, Patrick,

Paul J Daly: 8:22

I mean, he just showed up today, and look at all this. We're just just showering him with compliments. Moving on. Speaking of mergers and acquisitions, worst segway ever, there's nothing to do with this. But hey, partners has released their q2 2024, Hague report detailing a shift in auto retail marketplace from record profits and high deal dealership values. Basically it's highlighting a 32% decline in dealership profits and evolving trends in Buy Sell transactions. Basically the average dealership pre tax income in q2 2024, was a million dollars, which is a 35% drop from year over year in 23 the number of dealerships sold in q2, 2024, is on track to be down 11% year over year, but the year in total is still on track to be the fourth most active year for buy sells, and you can count the other three just by counting backwards. Blue Sky values remain elevated, but are still down 11% year over year, but there's still more than double pre pandemic levels, public retailers significantly reduced spending on domestic dealerships, with Lithia being the only active buyer publicly traded of domestic dealerships right now. Here's a quote from Alan Hague from the report. He says, quote, We know that many dealers who wanted to grow were sitting on the sidelines over the past few years as they waited for prices to fall. Now it's time to get up. Here's a producer's note. This is a new one producer's note. Thanks, Nathan. He says he spoke with Derek Garber of Hague, who is at a soda Con this year. Um, but he spoke with him when he was at the name ad meeting last week. And Derek said there's still a lot of stores for sale, but they aren't the high producers we saw in 22 and 23 it's still a good volume. Buy, Sell activity, but lower valuations overall. Look at that. That's like an inception insights, like an insight within an insight. I

Daniel Govaer: 10:06

think that, you know, here's maybe not as cool of an inception one. I think it's more than ever. We're looking at a lot of what's tied into inventory, and not just what we're used to seeing in the past few years. As far as, like, the struggles and getting inventory, I'm saying you're looking at brands that, you know, there's not a problem getting a cdgr franchise right now, and there's not a problem getting a Nissan franchise right now. And that has a lot to do also, if you look at their day supply of inventory that's on the ground, and if you look at the manufacturers and OEMs that have much tighter control of that, how easy is it to get a Toyota store right now? How easy is it to get a Subaru store right now? Impossible, right and so, you know, and then, never mind, some of your your Highline brands, and then within Highline, some of those are easier to get based on what the amounts of inventory that they're that they're struggling with, and the RE and how that ties exactly back into profitability, like we've said before. If nothing else changed, except for the rate of sale in the market, dealers, profitability changed based off of floor plan, being a profit source to being an expense source. And then depending on how much inventory you're carrying, that absolutely can equal that sum that they're mentioning, if not higher. And the dealerships that are still profiting from that are those with the lower day supply that are selling through their inventory. And those are the ones that you're still not going to get. I do think just, I'll throw this, since it's recorded, I think when you see, finally, when you see a break in the housing market nationwide, I think when you start to see the housing market break, then you'll see a much higher volume of transactions in dealerships. Interesting.

Paul J Daly: 11:29

I was thinking, just as you were talking about the similarities of this, like Alan's comment, of like, hey, a lot of people want to grow and they want to acquire stores. They've been on the sidelines because prices have been high. That still sounds kind of like the retail market right now as we're I mean, it's funny how those there. I don't think that's the same. Maybe it is kind of a similar reason, but, um, yeah, everything's been thrown into a mix, no,

Daniel Govaer: 11:52

and in the same breath. And also, like, how many new points have opened? And it's not that there's, there's always tons of new points opening, but I think also, and somebody should, I'm sure can fact check it. But I think we're also on pace for some of the fewest amount of new point openings, granting of new points. So there's much fewer of those are furious fight over new points and there and there are dealerships for sale. So you know, to the point of how many people are looking at a pre owned car versus or together with a new car, you probably have to look at a dealership that's in existence, because there's probably not going to be an open point coming anytime soon to where, you know, most cases, to where you're at. Well,

Paul J Daly: 12:27

speaking of new cars, segway got a fun one to end the week here. I think it's fun because justice was served. And there's a little bit of a an acting job that's going on amongst these dealers. It's a savage acting job, but for the good guys, a viral Tiktok video from gossa Kia in Memphis shows a seemingly typical vehicle delivery that takes its surprising turn when the customer is arrested for identity theft. The customer, William hay 63 is facing charges of forgery and attempted theft, accused of using a deceased person identity to fraudulently buy two Kia tellurides worth 158,800 $885 our Kia tellurides like 80 grand now, or the F and I office really got them.

Daniel Govaer: 13:16

It following, following the usual about it, all right,

Paul J Daly: 13:20

so I'll take everything. I'm good. The video begins with the usual celebratory scene of a car purchase, including applause and congratulations, then abruptly cutting to the customer being handcuffed by police. The video is tagged with hashtag. Justice is served. It's going viral on Tiktok with over 15 million views, and we get to show you the video right now, highlighting these brave employees role in this arrest. Let's roll the video.

Daniel Govaer: 13:48

Fake applause. Handshake, too, right? Yeah,

Paul J Daly: 13:51

handshake, fake applause. Picture posing for the camera, hard cut to scene surrounded by three officers in handcuffs.

Daniel Govaer: 13:58

And say, not the best editing, but it didn't even matter. I

Paul J Daly: 14:01

mean, it's terrible editing, but I think the point, you know, you know, in the automotive news article, which I was surprised, automotive news is the one that picked this up and like, Yeah, put it out there on the homepage. But thank you. Thank you, Jamie and team that

Daniel Govaer: 14:14

editorial meeting. Like, who's gonna there's a Tiktok thing. We have to cover. Who wants to where the intern brought it up. Where's the intern? They're

Paul J Daly: 14:20

like, Hey, is the intern? Are you paying attention to this meeting? They're like, they just flip their phone around.

Daniel Govaer: 14:24

They're all, they're all watching it, like, in landscape mode, they're watching it.

Paul J Daly: 14:28

You can't even watch a Tiktok video in landscape mode unless you're watching it sideways. But I think they said in the article that, like, casually, if you listen closely, it's like, cool, and the gang is playing in the background, right?

Daniel Govaer: 14:41

Yeah, and 100% the the salesman, I mean, cool poker player, the shaking hands, the applause. Also, I think just looking from the the, if you seen that meme about, like, if your sales manager has these pants and shoes, you're 100% gonna make it through the recession. That's kind of like, that's the guy, that's the guy, but that's the guy we talked. About this actually on on the last episode of the wheelhouse, and it's your entire CX experience, your entire dealership experience, is on Tiktok. And what Tiktok has done, amongst the things that Tiktok has done extremely well, is pointing out the behind the scenes of everything that's right, and the all aspects of everything. If you want to know what it's like to be a crane operator in Korea, you can get on tick tock, and you can find what that's like.

Paul J Daly: 15:22

I love this so much. This is, this is like, this is basically

Daniel Govaer: 15:26

showing you've got 360 degrees of your business is on tick tock. And I think, and to the and I understand completely where the dealership's coming from. You see plenty of it from the consumer or the fraudster perspective on the businesses, to the businesses against the businesses. And so I'm I'm sure that a lot of the popularity has to do with those of us that have had to experience that on the losing end of it as the dealership, watching, watching a dealership, kind of return it in kind. And I don't think you know of the of what they're getting. I think they deserve a lot of good recognition for what they decided to produce forth in content. I hope they can continue to produce good content. That's not I hope they don't have too many of these, and then they can produce good content, continue to be engaging, just without the necessarily justices served portion of things,

Paul J Daly: 16:09

the necessary felony arrest. Hey everybody, there's one thing. All of this adds up to one thing. If you pay attention to make sure you have thriving people, you will have thriving process, prop profits, the internet will love you, and so will we. That's right, you.

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