Dealerships Up, Franchises down, Rivians Bricked, Human Models Replaced

‍SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:32

Yo, welcome to a another rousing week in retail automotive. Just wanted to start it that way. That's right, we're talking about dealerships up franchises down rivi ins bricks, human models being replaced with AI and anything else we can pick up. We didn't think of. We didn't think of any of that stuff.

Kyle Mountsier  00:49

We didn't think of any of it. It just kind of think of a lot before presented itself as quality content to commentate on. You know, Paul, you remember the one time like, I don't know, a week and a half ago when you're Kyle,

Paul Daly  01:00

how's the story tell this is gonna be a week,

01:04

how's the second half of March feel? And I was like, Yo, in a retail business. It's just It's game time go time. If that felt like that. It's it's another amp level. When you get to the last week of March. Like it's almost in me. I don't know what it is. But there's this thing that builds before that last week of March just in my psyche from being in it for 12 years. That's like, okay, okay, get everything together. Pull it. Let's

Paul Daly  01:32

go. On top of that. It's a Friday, close and a Saturday start to April. So like that combination is like unbelievable. Pandemonium, pandemonium. Well, we'll be reporting live from here. We should just be on location on Friday in dealerships across the country feeling this morning? papapapa. Yeah, they were trying to do that on Friday. Just yeah, like get some dealers to come on. So Friday morning. That's exactly it. All right. I will see if we can make that happen. We'll see if we can make it happen. Hey, got a few things to talk about. We have a webinar this week. If you haven't seen the promo for it. You have to like just go to the Soto on LinkedIn. It's Larry, if you want to see Kyle, lose his mind on a customer service call. We're gonna be with our friends at cole review, talking about driving customer loyalty through service. It's going to be a lot of fun, like the webinar game is we webinars should be fun. Right? They should they shouldn't be lively, should be energetic. They should involve a dealer, which this one will. And so we hope you join us on Wednesday. 2pm. Can you sign up from the website?

Kyle Mountsier  02:33

Yep. So do.com Scroll just a wee bit and then you're right there.

Paul Daly  02:36

They can go. Bingo. Also, we're gonna be in Arlington, Texas on April 5. It is literally is it? Is it one week away from Wednesday? One and a half weeks? Yeah. Oh, good night. Good night. So we're coming to Arlington, Texas. We're going to be at three dealerships beforehand. The night of the fifth, six in the evening. Check it out. So two x.com. So two x.com. We hope you can join us live. We're having a live tonight show Michael Cirillo will be co hosting with us. We're gonna have a live band. We're gonna have lots of people from dealerships all in the area and outside the area. And for those of you who can't make it, we are also going to make it a live stream event. And it's our first evening event.

Kyle Mountsier  03:10

Hey, this might be interesting. The family

Paul Daly  03:13

around the Smart TV,

Kyle Mountsier  03:15

right? Watch this sucker on YouTube fam. They're

Paul Daly  03:19

like, and your kids are gonna be like, so that's what you do at work. And you're not really. You work for Jimmy Fallon? Yeah. That's great. That's great.

Kyle Mountsier  03:29

All right. This week. Motor madness is rolling out. So yeah, the final for this week. Monday. today. We got the 87 Camaro versus the 60 threes, Corvette, and then on Wednesday, we got the, you know, the 2010 ASTRO 22. Raptor. Come on.

Paul Daly  03:50

We were in. We were in the Costco parking lot yesterday. And wouldn't you know it we pulled in next to a it was a safari. It was the GMC Safari, which is you know, the Chevy ASTRO 20. We pull the next of that sucker and Miles who works here at DeSoto. And he's 16. He's, I'm sure you've seen him before. He's like, Hey, dad. That's an astro. Right. I was like, yeah, it is. Yeah. Come back on that. So you know, lots of things moving. Moving along. Speaking of things moving along. Plus, the dealer census. The latest Automotive News annual dealer census shows an increase in the number of franchised dealerships in the US for the first time. In three years, the count rose to 18,008 271 marking a point 4% increase from the previous year. However, the total number of franchises actually dropped by 54 franchises. And the way that Matt maps out a little bit is Ford actually lost 31 franchises, Lincoln loss 54 It would make sense that that franchise specifically had a lot of motion this year. Ford Motor Company in the statement said that many multi franchise Lincoln's stores were dropped to focus on the Ford store. I guess that makes sense with new investment and a new trajectory. They did not comment on the Ford stores that they lost. Mark the PR department there, I got a little experience this year Genesis dropped off 36 franchises obviously they're in the middle of a big restructuring. And those the people that we know that have a Genesis franchise seem to be pretty optimistic and happy about

Kyle Mountsier  05:25

life. Yeah. Every every hyundai genesis Kia dealer is happy about life right now. Yeah.

Paul Daly  05:33

Oh well, domestic badge stores decreased by 66. While imports gain 12 notable I'll put it in there that pole star added 26

Kyle Mountsier  05:43

Have you been past the Pole Star store? I was just in Atlanta at the battery and the Pole Star store. It's right outside of truce Park the the baseball stadium and the poster store is basically like a little corner. Apple Store. White glass everywhere. Two cars sitting on the showroom little order kiosks little information kiosks. And nobody in there.

Paul Daly  06:08

And brand spanking new. Zealand's in there. Oh my gosh, no, I haven't been trying to think like how driven past one probably at some point, but I didn't have a chance to see nobody in there. The average franchise across the board sold 425 vehicles, new vehicles, which is actually an 8.8% decline. Last year, hashtag inventory. Cadillacs per franchise sales actually jumped 45% in 2022. So they rose 45% to 240 new vehicles franchise, that's the largest increase in the industry. And as a reminder, Cadillac dropped 313 stores in 21. So more inventory for fewer stores equals 45% increase in sales, Jeep double x's, exclusive store count all these new Jeep stores rolling out while Hyundai Mazda, Mitsubishi and Kia all added double digit gains,

Kyle Mountsier  07:04

which makes a lot of sense because all of those have said that they're going to be pushing and pushing and pushing to gain market share their smaller smaller market share brands that are looking to add stores I know of multiple people that are getting blue sky open points with those brands right now. So we're gonna see those continue to grow and shrink that the landscape is growing. Overall in franchised dealerships, even though we've seen a decline are still a sign with thing new car inventory,

Paul Daly  07:32

right you would think with all the talk we've had we would not have seen that result but here we go. kind of goes back to the point of like, being in being controlling things you can control it sounds like a whole lot of people are out there controlling the things they can control and not reading the news every day. Right and making all their decisions based on the doomsday not this news. This we just commentate on the news. The Doomsday news the doomsday there's this speaking I don't know how to speak about this next one

Kyle Mountsier  07:58

speaking a little doomsday

Paul Daly  08:01

right there. Not quite, not quite no mageddon brick brick. Again, I don't know how to talk about this one in a sensational clickbait headline. But one upstate New York, this one hit close to home because this is about a little town that my family and I go once a year in the Adirondack Mountains in upstate New York just a couple hours from us. And one upstate New York resident waited three years for his rivian r1 s and then promptly bricked it in deep snow and if you're not aware, bricking something is when you have an electronic device that just goes completely dead. You can't do anything to turn on it won't respond. So Chase Merrill was driving on an unpaved road in Adirondack Mountains, he saw those commercials and the rivian are and he got stuck in a snowdrift. That's okay, that happens. People even do that. And the biggest truck you see a truck out in the middle of the field with the mud and it's like, everybody knows what happened here. So it's tempting to rock the car out of the snowbank. You know how you go rock forward, backward? Yeah, well, he triggered a safety feature that got the car stuck between Park and drive, and therefore render the car completely and completely unresponsive. Wild. Well, he called rivian. Right? What are you going to do in that situation? You're gonna call reveal your Mac, hey, I have this situation. And they were like, you're gonna have to take it to a service center. So he paid 2100 bucks. You know, you know, this was the talk of the town. Right the tow truck driver in the Adirondack Mountains shows up you know, all like Lego rolls Howard

Kyle Mountsier  09:29

tow truck. Diesel, just you and me.

Paul Daly  09:35

Everyone in every little town up in that area heard this story, I promise you. Like I saw one of those electric vehicles up here how to tell her all the way back to Massachusetts. Right. And they don't talk like that up there. But no, no.

Kyle Mountsier  09:49

South of the North, that's all it is.

Paul Daly  09:54

So it's so basically he toes it 2100 miles to the nearest service or $2,100 To the nearest service center center in Massachusetts, which is like 400 miles away. And basically rivian offered to pay for the repair, not for the tow and then Business Insider reached out for comment, and then they offered to pay for the repair. That's how that usually works. So the parently, this could have been fixed. This is this is the funniest part

Kyle Mountsier  10:21

of the whole thing. They were like a simple reset. So you know, that little button that you can stick your pen in and it just like resets everything all they needed, you just needed a pen, hold it for 13 seconds would have been good.

Paul Daly  10:34

I wish I knew what the actual reset process was.

Kyle Mountsier  10:39

Like hard to find with the little,

Paul Daly  10:41

it says hours, minutes, right? That's what you said just a vehicle reset is the third one. So basically, the vehicle came back. And then it said that there was a critical error, right, a critical error warning on the dash. And it said you had to take the vehicle to a service center for repair. So you know, this owner, Mr. Merrill, he says the attitude the whole time from customer service, is that a rivian owner should be able to handle the problem. He says they just think it should be nothing. And for me, it wasn't nothing. So he's had the car super impressive. And I want the company to do well. I think I'm just not the right person to be an early adopter.

11:20

Oh, what a what a story. And this thing's everywhere I've seen it is no short of six or seven times in different platforms on different news sources. So obviously something where from a PR perspective, reviens got to get their, you know, their stuff together, but 2100 bucks, I don't care if you're a millionaire, or you or 2100 your take home pay $2,100 To get your car towed is a thing. And, and, you know,

Paul Daly  11:50

I mean, it's not just the money, just think about all the disruption.

Kyle Mountsier  11:53

It's the disruption. Yeah, and and that's a long way away, probably. And I mean, this is really got what this is what I think that that especially manufacturers have to be thinking of not just like over the air updates for subscriptions, or software or anything like that. But what is what's the Genius Bar response of a customer calling like this, you know, what, what am I doing to, you know, make sure that we're doing everything we possibly can to fix that thing over the phone, when you have all of this access to software access to data, potentially a wireless connection? That that's I think that's the opportunity here, when we have all this this connected vehicle data is what can we do without having to tow this thing to make it work? And I think that dealerships are probably going to have to start thinking about that, like, we have a virtual technician, right. I mean, all the OEMs have it, would a dealership, you know, start to solve problems over the phone. Yeah, for

Paul Daly  12:49

that was kind of reviens tone, you know, the like, hey, like, we have opportunity to do better in this situation.

12:55

It just happens to be one of those situations that came up. And you know, it's just, you know, one

Paul Daly  13:00

of the things you see it on the commercial, and then you see it in real life. I wonder how the family got home? You know, that sounds like a 1990s movie waiting to be made. Speaking of the thing, I don't know, things don't have to be made. Oh, I missed that one. I missed that one. We just were just

Kyle Mountsier  13:23

so energetic this morning, the segways just aren't missing.

Paul Daly  13:25

We'll give it a sandwich, you want to talk about chat? GPT.

Kyle Mountsier  13:29

I do, you know, chat GPT and AI are continuing to dominate almost every cultural conversation that comes up everywhere. And one form of AI is a new visual form of AI and multiple different places. But this company has created inroads to retail clothing manufacturers, Levi Strauss has recently partnered with AI Amsterdam based startup Lala land.ai that claims to create hyper realistic models of every body type, age, size and skin tone to model clothing on its website. So this company has pioneered AI tech last year to show clothing on models of shoppers of a particular size. And a lot of advocates are saying hey, it's really great for shoppers to be able to see what that might look like on them before they try before they buy without having to have, you know, 100 models on the site. And and and so there's there's a lot of people that are it's kind of like one side of the other right, I want to be able to see that models are starting to question whether or not there's validity in the market for them and whether or not this starts to ruin job opportunity. Yeah, so there's concern. Yeah, as well as excitement. So it's

Paul Daly  14:40

just like everything in tech. I don't know. I might have just space and not heard you say the company's Levi's. And yeah. And basically, the big push right to see it's important that people see people that look like them in the clothes. Yeah, right. And I think that's the whole thing, right. So we talked about a variety of diversity From ethnicity to body, body type, you want to be able to like, hey, what does that look like on me? And now to be able to pivot through and see different body types and different ethnicities in the clothing, it's going to help. And so, you know, the partnership makes all the sense and people saying like, well, brand authenticity is super important when it comes to retail clothing. So it's like aI generated models, like kind of, you know, leaning on the talent to exemplify the brand attitude, and the brand values like, right, that is something that actually plays out. Right. So they're saying, How is AI going to going to change that? And maybe, you know, we should go to just, you know, human models, but I think the reality is, AI is absolutely going to displace anything it possibly can. Yep, you know, within, within an ethical standard,

15:50

or, I think enhance, I mean, like, I, a lot of people are afraid of the word displace. And I think actually, it's more of an enhancement. Could thinking about how, you know, how you utilize this to create efficiencies and enhance customer employee, all experience, for sure, is the opportunity, right?

Paul Daly  16:15

Like you're not like, enhanced, what would be like have a human models, doing the original thing, and then the AI, posting varieties of that, right, there's an enhancement. So on this retail wire article, they always have a great comment section of people that have been vetted. And one commenter, Jean detroy, your professor of international business of University of finance and economics in Gs, Gs, you read you, I don't know what it is. And Sanjay China commented This. This morning, my non scientific non projectable research with my coffee shop compatriots suggested that they can't tell the difference between real and AI generated models. So there you go. There's, there's one unofficial man's we have opinions, you have opinions, but we all have a lot of work to do. It's the beginning of this week, which is going to be a real banger. We'll try to get some dealers on the call for Friday, but until now, you have five days to close this month.

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