Dealers Sue Scout, Musk Refocuses on Tesla, AI Meets Retail

Paul J Daly  0:00  
Good morning, Wednesday, April 23 this is the automotive State of the Union. I'm Paul Jay Daly. This is Kyle Mountsier. Today we're talking about dealer suing scout. Elon going back to Tesla and AI digging deeper. People really went into retail. Folks, Kyle's got some anecdotal stories on

Kyle Mountsier  0:18  
that. One, the applications are insane, fam.

Paul J Daly  0:21  
Yeah, and they're just getting more insane. We'll talk about it later, because another one. I got another pop up this morning that I sent a screenshot of, which is going to be a total game changer.

Kyle Mountsier  0:29  
I connected some stuff last night on that, by the way, really, yeah, I did. I did. I was like, You know what? We're going to do it. We're going to do it. I know. All right, listen,

Paul J Daly  0:37  
Yes. Agenda for ASOTU CON, large and in charge. Go to ASOTU CON com. Look at the agenda. Detailed agenda by stage is the best place to see everything going on. Pull the list of topics up. These are broad topics, but we have specific sessions on drilling down into each of these. AI, compliance culture, fixed stops, global industry, leadership, marketing, multi rooftop group. I'm appreciating the alphabetical order, Nathan, technology and much more sales. F and I go to the agenda, because you're going to realize these topics and the people speaking on the panel, the dealers, the industry, partners, the takeaways are actionable right now. We're not dreaming about what it could be. We're saying, Hey, this is what's happening right now. These are the things you can take back to your stores to help you solve the problems that you're facing the dealer. Tickets actually have been really picking up. This is how it works. That's how it works the auto industry. You get within 30 days. Now we're within three weeks. No, it's like, it's

Kyle Mountsier  1:34  
like, five tickets a day, seven tickets a day, 10 tickets a day yesterday, 28 tickets, right? It's like, alright, everybody's coming. Just friends, five, don't mess around.

Paul J Daly  1:44  
Five dealers. Five dealer tickets came in this this morning. Yeah, okay, so here's the deal. Three weeks from today, 925, we will be in the first main stage sessions right now. Come on now. Yeah, Claude silver is hanging out with Claude silver. She's gonna be on stage right now, Chief Heart Officer, VaynerMedia, talk about someone who has has really been across the world working with major brands, major executives, major business initiatives, and tying them back, how to make sure the people in your organization are thriving in a way that can accomplish these big goals. She's gonna be a great way to start it off as a dear friend and will be three weeks from now, on the stage at a soda con. So you should be in the room Soto con com. Go ahead. Go to have some fun. You know

Kyle Mountsier  2:29  
what? Like, we don't hold any punches for the end of shows, right? Like we we're swinging right to the end one of the very last sessions that I'm super excited about on Thursday afternoon, meaning, don't get your early flights out. No, this is not your standard conference. It's like, just, there's plenty of flights out all around Baltimore. Fly out after five. You're gonna be fine, okay? But one of the very last sessions before our ending keynote is we've got like half of the entire roarman team. Oh, it's a month talking about how social media has completely transformed their business over the last year, from recruiting to to new inbound leads across service and sales and like, they've taken it on as an organization. It's not just one person that's that's growing so that's going to be, that is that's going to be a

Paul J Daly  3:18  
panel, yeah. I mean, talk about an organization, literally, this session was actually their idea. Yep, they were like, we're so passionate about this. It's working so well. We want to help the other dealers execute like this as well. I want to be there and so, like, I mean that in and of itself, means I think it's going to be the most fire session. And what a way to end the session. It's a shame that people get trained, or have gotten trained over the years, to leave early. That's the end of the conference. Is the least valuable. That's why we keep it tight to two days, like, two full days of content. Because we were like, there are no throwaways. And even for our industry partners asking for placement, we're like, no, no. You don't understand. Last year day two at higher traffic than day one. Yep, right. Because that's and we have the Maryland auto dealer Association doing their thing on day two. It's, it's a real thing. It's a real we

Kyle Mountsier  4:04  
got a thing coming with Steve Greenfield on day two that you're gonna wanna, like, just keep your eyes out for it. Just, you know what people get tickets will tell you about

Paul J Daly  4:14  
going to bed early now, just so I don't have to sleep when I'm in the soda. All right, let's talk about our friends at the California New Car Dealer association is going to court over Scout motors retail strategy, saying that VW, owns startup, is sidestepping franchise laws and undercutting the state's dealer network. Dealers are claiming Scout violates California's franchise laws, in which a 2024 amendment clarifies that new EV brands under a legacy OEM must sell through the franchise dealer if they want to share ownership. Whoa, the cncda argues VW can't legally claim scout is independent when it is wholly owned by Volkswagen, when it's shared leadership, when it's shared financial resources. I'll just go on. The association says VW dealers are being unfair. Excluded from selling scouts high demand electric SUVs and pickups, and the lawsuit seeks over $35 million in fines, plus a full sales halt and deposit freeze in California. Scout motors, General Counsel near Citron, said in a January, January 17 letter that the VW brand dealers have no right to scout branded vehicles, nor do any other franchise dealers. Scott Kyle, Scout, CEO, well loved by the VW dealers for a long, long time, right? Said in February. What's on the table is a lot of press articles with, let's say, threats and things like that. I think it's super clear we have a brand in Scout that does not have a dealer network and did not have a dealer network. 100% startup allows you to make decisions that startups can make. Our friend, Brian Moz uh, president of cncda, says illegal competition will harm not only dealers, but also the communities and car buyers that they serve.

Kyle Mountsier  5:50  
I mean, not backing down. What's so silly is like these dealers want to help you sell the cars

Paul J Daly  5:58  
and deliver a better customer experience, and deliver a

Kyle Mountsier  6:02  
better and be more connected to the customer. And look, I would, if I'm just gonna go out there on a limb and say that if you're a VW dealer, you mean it, right? That's,

Paul J Daly  6:13  
that's a great point. You know what I mean? Like, you know what you understand? You're never heard of

Kyle Mountsier  6:17  
a VW dealer. That's just life in, yeah, half in, yeah. It's a very loyal brand. It's a very like, you know, it's probably a high retention brand. The stores are gorgeous. They've done a great job at the retail experience, and every VW dealer that I know is like, a bit more savvy. So why wouldn't you lean in to that reputation as Scout, it just is confounding me. I do think the move that Scout's gonna have to make, because there's too much legal boundary out there for them, is they're gonna have to decide whether or not to spin up a whole new entity and get it completely removed from Volkswagen, AG, and I don't know how they would do it from a legal standpoint, but, like, I think it's crazy.

Paul J Daly  7:09  
Yeah, I'm trying to think of ways around that. I mean, they have to spin into an entity that is, like, publicly owned, right, like, right, there's, it's, that's a tough thing. I mean, in California, obviously, they made that amendment specifically. I mean, it says, it's a general statement, but it's specifically targeted towards Scout, because, for sure, this is the instance that we're dealing with right now. I think the allure of having, like, a sexy independent brand like rivian or Tesla, that it has no constraints like this, it's such a complicated issue, right? Like, don't get us wrong, we're free market capitalists. However, in this specific instance, the money that was that was used was the money that the dealers made, the leadership, it's like that was used was the leadership that worked VW, not to mention, there's a lot of there's a lot of hurt feelings in heartburn, because dealers, for years, VW dealers for years, have been asking yes for a pickup option for the and they don't have a pickup option. There is no pickup option, but there will be, but you can't sell it, and we're calling it something different. So it'll be

Kyle Mountsier  8:13  
interesting to see. If anyone knows Scott Kyle, we are willing to enter into a conversation. It'll be a really great conversation, like we are open minded type people introduce us. Yeah, for

Paul J Daly  8:24  
sure. Yeah. It would be great to hear from him, because, again, super well respected by dealers for a long, long, long time, long time. And if anyone knows how to make the case and present it in the way that they're seeing it, it's him, I don't know, speaking of someone who's trying to make a case stop. Segue Elon Musk says he will scale back his government work next month and refocus on Tesla and his other companies where sales are dropping, margins are thinning, and investors are getting quite restless. Must Musk says the quote slog of setting up the Department of government efficiency, aka Doge, is mostly done, but he still plans to spend now 40% of his time on it. It's probably been like 100% of his time. Tesla stock jumped 5.5% after Musk's remarks on an earnings call. Shares are still down nearly 50% from where they were just last December. Tesla's q1 revenue missed estimates at 19.3 4 billion, with auto revenue down 20% net profit down 71% okay, here's, here's an interesting, controversial slide. Musk reiterated support for lower tariffs, but acknowledge Tesla isn't immune to macro demand for cars, noting that economic uncertainty leads consumers to quote pause on doing a major capital purchase, like a car. We said none of our dealer friends, none of our dealer friends, as far as what's being reflected in their demand. So I think this is, you know, this is one of the things where just being a little out of touch or spinning it a little way, because, you know, Tesla. Seeing decreased demand for a lot of other reasons, but all of our dealer friends and industry partners are saying volume legitimately

Kyle Mountsier  10:06  
this morning. Paul, a lot. Paul, just so you know, I went into a Google Ads account that I have access to. And I don't know if you've ever been in a Google Ads account, but up in the upper right hand corner, they have this little notification bar sometimes has to do with the Euro account, but they like to drop in macro trends. And in the macro trends, one of its it just said, trend is up for searches for new and used vehicles. Ah, okay, like Google is saying, the trend in the search behavior of consumers broadly, generally, it's just up, like more people are searching for cars. Yeah.

Paul J Daly  10:46  
I mean, yeah. So I'm, I don't know, stock is up 5% it's been a bit of a roller coaster. But I think this is one of those situations, again, where franchise retail dealers understand what's actually going on in the market, and if you're detached from it, you're kind of just guessing, or you're spinning it in a way that you think is beneficial. And so I don't know, well, Tesla's got Well,

Kyle Mountsier  11:08  
I mean, I think the one thing that you can take from this, if you're a franchise dealer, is, like, you know, Tesla is still on the move. If Musk gets re involved, there will probably be a change in the used car side of the business as well, because, like, where his attention goes. You know, Tesla doesn't have a marketing arm. They have Elon Musk, and the marketing arm has been sideswiped by his attention on Doge, his tweets toward that, all of that type of stuff. Imagine the tweets going back toward what he may or may not be planning at the Tesla level, all of a sudden, the marketing arm is spun back up and new and used Teslas take their bait from that and so and

Paul J Daly  11:50  
without too I think another element of him just being around when you know, you read the biography, and you listen and you observe how he works. His team is high efficiency. They get a lot done, but he is a formidable force on the manufacturing floors in the meetings. When he's there, things move faster. You have a really brilliant mind on solving problems. And so when he's back in the mix, I think the shareholders are right to get an immediate boost in confidence, because he is definitely a playmaker when it comes to that company in general, for sure, speaking of playmakers, segway,

Kyle Mountsier  12:28  
playmaker at the top of almost every news article open AI is setting the stage for chatgpt to become a fully fledged shopping assistant, as new code hints at a direct integration with Shopify that could streamline the entire purchase journey from query all the way to checkout. Code found in GPT public web assets includes tags like buy now and Shopify checkout. URL subject suggesting native shopping support. It confirmed that this would allow users to move from query to checkout in seconds. No affiliate links, just direct Shopify powered transactions in the native UI. Obviously, the copilot merchant program with Microsoft in April is something that they're going to look to go right up against copilot already in the Microsoft ecosystem features things like price alerts or incident recommendations so this is like, this is a next step in cat powered agency and buying behavior. So

Paul J Daly  13:31  
does that mean that in the near future, since the more than car store is on Shopify, that you'd be like, hey, buy me one of those. Love people more than you love cars T shirts. And it's gonna be like, this one, and you're gonna be like, Yep, and it's, don't worry, we'll be hot on it as soon as the integration is there. Because I can tell you what, we've got a Shopify store, and you should buy it. I need to buy where you can. I need to buy these. Love people more you love cars T shirts for my entire dealership, and I want it branded with my logo. Can you help me with that? Yes, I can. Come on. Do you have I'll let you know your volume discounts, shipping estimates, and you can submit your graphic. Yeah,

Kyle Mountsier  14:04  
hey, other other chat GBT things you and I were talking about this morning that they've now integrated Google Drive. So I would say, like, check with your IT team if you are on a pro plan to make sure that, like, if you're on Google and Google Admin, that you've got all of the right permission sets and all of that dialed in to make sure you you are keeping things in the right place. But the unlock there is kind of insane.

Paul J Daly  14:28  
Oh, you mean, like I can upload all my sales data, I can connect it to a Google Drive with my sales reports in them, and I can ask it real world questions, get real world answers and strategies moving forward and how I might be able to make my business better just with plain language right from my phone I drive into work in the morning.

Kyle Mountsier  14:44  
Crazy Is

Paul J Daly  14:45  
that what you're saying, it could be, look, I think one thing is very clear, if you're not paying attention to this technology and how it's affecting business, you are falling behind. Great place to keep up. Be on the bleeding edge of this is that ASOTU CON. Where you can talk to people who are doing it and kind of theorize what you can do when you get back to make it a part of your business. We'll see you tomorrow.

Unknown Speaker  15:06  
You.

Transcribed by https://otter.ai

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