Dealers Frustrated With Amazon, Rivian Pre-Owned, Kirkland Towers

Paul J Daly: 0:00

Good morning, Wednesday, September 24 you and I are back in our offices again, like a big thing today. We're talking about dealers being frustrated with Amazon Go figure rivian Getting in the pre owned business and Kirkland towers. Yes, that Kirkland.

‍Kyle Mountsier: 0:16

Yes, that Kirkland. Yummy. Kind of wild Paul, I think this is the third time in five weeks that you and I have both been in our offices with our setups to run this

Paul J Daly: 0:28

show. So good. I mean, it feels good to wake up your own bed. It feels good to have your own coffee. It feels I will say, though, that right there. You know what? I was kind of disappointed that you weren't with me at the VIN Q unleashed event, because the coffee that came out of, like, the catered coffee urns was amazing. Really, somebody mentioned they were like, they were like, This coffee is really good. I was like, yeah, we'll see. Okay, okay, Mr. Dealer, that's awesome. And I drank, I was like, This coffee is amazing.

Kyle Mountsier: 1:04

There's a couple good spots in in in KC, so I wonder if they, they sourced it from one of those local spots. I

Paul J Daly: 1:10

probably did. They had at this new, like, plazas called the cascade hotel. It's right next to this thing they call the Plaza, which is a replica, or, like, built to be a replica, of this place in Spain, yeah, literally, you look out the window and you think it looks like Spain, like the tower, the shingle. It was amazing. And so the venue was dialed in, just thanks to the team of vincu for inviting us out, being so kind to us, talking about more than cars. So just, just good, good friends and partners there, and they just have a group of people together, their team and the dealers that were there, who really do have the more than cars mindset? So they really do, yeah, that sucker's growing comes from that growing is doing good. What else is going on? Oh, man, today, two o'clock, we are going to have some fun. Today's the webinar. Day. Everybody 2030, minute, quick chat. Webinar, webinar. Come hang out with Kyle and I. 2pm Eastern. So everybody can be a part of it's not too early for anybody. How unresolved complaints turn into compliance nightmares. With our friends at dealer resolve, everyone's got complaints, everyone has had complaints, everyone has got complaints that turned into nightmares. Yeah, I feel like this is like the broadest category we've ever had. And you know that you and I are going to ask them about some of the doozies they've heard.

Kyle Mountsier: 2:20

We're going, we're gonna get we're gonna get through it. Yeah, I'm excited to get some storytelling going on, for sure.

Paul J Daly: 2:26

And if you're there, you can tell your story in the chat, or tell some you know, not me, but another dealer I know had this situation, right?

Kyle Mountsier: 2:33

Asking for a friend, someone on you know,

Paul J Daly: 2:38

can you Yeah, yeah. Can you believe they did that? Oh, man,

Kyle Mountsier: 2:42

let's get into it. Yeah,

Paul J Daly: 2:44

let's get into it. There's things going on, but there's there's a lot going on. The automotive Congress is going on. So there's a lot of good, good stuff coming out of that. This is one of the stories, or one of the results of one of the panels. Hyundai's ambitious plans to sell vehicles through Amazon, the kind of testing dealers patience as the initiative is still in pilot phase after being announced over a year ago. During this Automotive News Congress panel, some industry leaders were talking about their concerns. One of those was nada CEO, Mike Stanton, you know him. We love him. He noted the frustration calling the platform this is, this is direct quote, well, it's just another digital retail tool. Oh, got him not a real good one either, right now, rather than a top tier solution that you would expect and all the promises that came out, basically, NAD is actually working hard with Hyundai and Amazon lawyers to make sure the Partnership does comply with state and franchise laws protecting the dealer network. Is Amazon's goal for a seamless customer experience is. This is a surprise to no one on this show. It's a little more complex than anticipated, especially when it comes to financing from multiple sources and trades. Ignamar from McKinsey, she said, I don't know if it's a she or he. I didn't just assume that I don't know. Warned of risks, cautioning dealers about potential loss of customer data. Another layer to this conversation, which Amazon could leverage for marketing other products, like parts and things like that, that the dealers respond on one dealer, Eddie Hall, the third of Hall automotive acknowledged that Amazon could become an additional sales channel, but he emphasized that we love this. The in person dealership visits remain crucial. Stanton kind of said he questioned whether or not, yeah, this is great. This is great. He's like, he's like, our customers gonna make significant purchases, like a car on Amazon. He said, I don't think I'm ever going to go over and buy a car after I buy my

Kyle Mountsier: 4:34

Yeah, I don't know. I mean, the the thing about Amazon is they make shopping easy, right? And if they can figure out how to do that with dealers and with technology partners, I can tell you from some of my conversations with a couple of the people the team over at Amazon, like it's a known it's a known thing, that this is still difficult, right? That there are still, like, you know, ghosts in the closet of what it takes to put a cardio together, that they're that they. Figuring out on their side too, right? This is why so much of like e com, so so many technology partners have struggled to come into auto because there is like it becomes difficult. So, you know, no surprise here. I still think there will be a subset of consumers that will love to shop on Amazon, and if that's a channel that that they're able to shop on, then we, we as dealers, as I think, should figure out the best way to do that for consumers and for the dealer. And

Paul J Daly: 5:30

I think, you know, it's a shopping platform. Is it a buying platform? I don't know. It doesn't have to be in order for it to be a good shopping platform. Because, like all the behavior, right is a good experience. Pick options, absolutely. So I don't know. We'll see. I mean, they'll get there. It seems like there's a lot of attention on this, so I think they will get there, but they ain't there yet. Ain't there yet. I was there's no segue here. Let's talk about another industry disruptor or new entrant. Rivian has decided to dive into the pre owned vehicle market now with its R 1t pickup and R 1s crossover, looking to create new revenue stream as new vehicle deliveries are slowing in the US, it's a step right. Remind you of what Tesla did. Sales of the r1 vehicles have stalled, with registrations dropping a third of a percent in July, pre owned EVs are attractive due to significant depreciation on new models, making them a quote bargain. So rivian still losing money, posted a net loss of 1.5 billion in q2 but expects increased demand for used EVs to help to help solve that analyst Ivan jury of Edmunds praised the program, saying it builds consumer confidence and is almost mandatory for brand legitimacy. Here's a quote, a continued quote from him, says there's an entire segment of buyers who see no value in purchasing new cars because depreciation is always bad, let alone on an EV and a properly implemented, certified pre owned program benefits everybody, except your competition. Oh,

Kyle Mountsier: 7:02

yeah. I mean, the the truth in needing to sell pre owned vehicles yourself is multifaceted. Tesla's obviously seen when you can own the pre owned market at some level as well, you win. You offer price points to consumers that may not be able to afford the new vehicle. So you're getting a, you know, a buyer. And then, you know, early in the teens, we saw so many OEMs put so much effort behind certified pre owned programs because it was a stepping stone for so many people into brand loyalty because of high warranty. You know, the warranty on these certified pre owned vehicles, and the opportunity to go from less expensive to more expensive, certified pre owned a new and then, you know, when you look at like just the margins and the ability to control profitability for a rivian that is seeing a ton of net loss in the company. It's an it's a great opportunity to find those margins. So they're just figuring out what every good franchise dealer knows, which is used cars, is where the money's at. Yes, that's right. Have

Paul J Daly: 8:13

you driven a rivian yet?

Kyle Mountsier: 8:15

Haven't driven a rivian? I want to, I really they seem real nice.

Paul J Daly: 8:19

There's just like, there's just got cool vibes going, Yep, yeah, every time I see you. And now I'm like, every

Kyle Mountsier: 8:24

time I see a rivian, I'm like, oh,

Paul J Daly: 8:26

I need to, like, see going on. I know. I know, I know. I know, speaking of having going on, wow, going up.

Kyle Mountsier: 8:37

Yada, hot dogs are not quite as expensive as maybe this little high rise, you know, buck 50. But Costco has officially started construction on its first ever mixed use development in South Los Angeles, combining a warehouse. So the Costco warehouse with 800 residential units above it, the project aims to tackle LA's housing crisis while providing essential retail services. It's located in Baldwin village, and is going to feature typical services like any Costco, optical care, pharmacy, grocery delivery, and will create 400 jobs, jobs. 23% of the units in the housing development are designated for low income households. The developer Thrive living is using a modular design to keep housing costs low with amenities such as urban gardens, secure parking and that fancy rooftop pool. Opinions, though, if you look across the old internet, naturally, are a bit not on the concept. Oh, really. You know, some are obviously praising convenience, while others are worried about parking and noise issues. My like, my little bit of context, here

Paul J Daly: 9:44

is noise issue for the residents, I guess

Kyle Mountsier: 9:47

so. But like, I don't think of Costco as a noisy place.

Paul J Daly: 9:51

I don't at all, well, okay, Walmart would be noisier than a Costco, without

Kyle Mountsier: 9:55

a doubt. This is interesting. This. This makes total sense to me. Like, I, you know. These big box warehouse retailers are just taking on something that already in cities is very normal. Right in Nashville, you've got a a Whole Foods, a Kroger, like multiple different types of grocery store or retail establishment sitting at the base of these residential units, because it just makes sense for that type of community to have direct access to that. And when you think about like, land area with no vertical opportunities for growth, you know, a Costco in an urban setting would take up way too much, you know, square footage to not have building on top of it. So, so

Paul J Daly: 10:42

I feel like there's, I was thinking about this from a few angles. One is kind of like the Costco brand angle. The other is the dealer angle. So from a Costco brand angle, I feel like there's opportunity to actually, because they're Costco has fans. Like, let's just be honest, the brand actually has leverage and pull in pop culture. And just having, like, some of these units, like you can buy, like the Costco outfitted unit, right for, like, a certain rent point, price point, and you got the furniture, and you got the housewares, and you have the things you need, your pool, swimmies right there. I feel like, I feel like there's, there's a thing there. But when I first saw this story, I was thinking about the we have so many dealers who are developers. Also, right? Yes, they put up these big stores. They buy these big tracts of land in good areas. And I'm wondering, like, if there's a dealer who's going to, like, partner with a developer and develop something cool around the store? Yes, you know, because that's a I don't deal. I just, like, cool. I just do not know why. And the coffee shop, yeah, like,

Kyle Mountsier: 11:47

why a an entire development isn't, isn't, like, rooted with a dealership in the middle, right? Like, you'd

Paul J Daly: 11:54

own it, you'd own that, you'd own it. I mean, this, this Costco. How many units? 800 that's a pretty great, I don't know, Patrick, a bad beaver Toyota service,

Kyle Mountsier: 12:05

right? Like, you don't have to go anywhere for service. You just just go up to the garage, and that's, that's your pickup and delivery, right? Then you

Paul J Daly: 12:12

then can also own some other stuff, right? Like, if you wanted to do the coffee shop or, like, the Ford's garage restaurant or breakfast spot. Like, I want somebody to do this so bad. I want to be petty, too. If you hear this or see this and start to do it, please call us. We would let us see some kind of part

Kyle Mountsier: 12:28

of they have drawings in my closet about this. He

Paul J Daly: 12:33

has pour over mix ratios ready for you,

Kyle Mountsier: 12:36

right? Done.

Paul J Daly: 12:38

I actually, I actually was sitting with a dealer, Rudy, who is the director of Toyota of Berkeley, California, and they have a single point that is spread across three locations. It's the weirdest thing. Oh, one of those locations is a coffee shop. Let's go on coffee shop with like, the things I was thinking to you then too, but either way, all right, hope you gave me something to think about today. Listen. Go to a so to asotu com. Register for today's webinar. If you can join us live, you can get the recording, but please join us live. Ask us all the hard questions. Gonna tell some good stories. I

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