Fain Files Against Trump-Musk, Auto Credit Tightens, AI Becoming A Turn-Off

Paul J Daly: 0:00

Ah, good morning. It is Wednesday, August 14. We're talking about fun stuff today, feigned Trump, Musk auto credit tightening and AI becoming a consumer. Turn off everywhere I

‍Unknown: 0:19

go. The people really want to know what could possibly go wrong? What

Paul J Daly: 0:23

could possibly go wrong with you can't avoid the politics. It's not really, I mean, it's political, but it's auto. You know, we were just having a blast talking about this live feed from away my lot in San Francisco. We're going to talk about it on tomorrow's show. I think it didn't make it today's show, but I think that's just because we didn't all watch it together, right? And once

Kyle Mountsier: 0:44

we started watching it, we're like, we just talk about this for 20 minutes tomorrow,

Paul J Daly: 0:48

tomorrow. Tune in tomorrow for the hot takes.

Unknown: 0:50

Start placing bats way more, right?

Kyle Mountsier: 0:54

Which one gets out first? Oh, my goodness, that's good. All the people are still now. Everyone's like, we're

Paul J Daly: 0:59

gonna gamify. We're gonna gamify this at asotu con. If you didn't know, you can go to asotu con com right now, and you can see a little bit of a taste of the new esthetic that's coming in 2025 in May, you can actually put your name on the first to know list. Names every day. We're watching the ticker every day, names coming in, people saying, I want to be first to know what's going on at asotu con. So never too early, right? It's May. Summer's over. Let's go. Summer's over. Especially in the spring. It is officially in the

Kyle Mountsier: 1:28

spring or the fall. One of the two,

Paul J Daly: 1:31

no, asotu con is in

Kyle Mountsier: 1:32

the spring. Oh, soda cons in the spring. I'll tell you what. There's like. I was actually talking to a buddy last night, and I started just thinking through all of the things that happened toward the fall. I mean, we've got this thing in our daily email that's saying where we're going to be, and it only has four I think we're going to be at like eight different places this fall, but you start to line that up, and everybody else is like, jockeying for where you're going to be, what you're going to be doing, how you going to prep for the new year. Like dealers are trying to figure out training protocols because of new I mean, it's like the moving parts to get going midway through August, because it gets filling season and it's like, right? What's next? You know, it's, I

Unknown: 2:10

don't even know what to expect,

Paul J Daly: 2:12

but it's going to be cool. Also, we're get, we're gearing up for season two of the more than cars Docu series. We have an episode to release tail end of Season One, season two, dealers are starting to line up. Hand. If you are interested in bringing the show to your store, just reach out. Crew@asotu.com we have some stuff. We've packaged together some new things. It's a lot of fun. And we may have a couple of announcements as Season Two starts to shape up. And yeah, I think that's enough for the morning. People need people need the news, air quotes. People need the News, the news, yes, this morning. Well, let's talk about it. The UAW has filed federal labor charges against former President Donald Trump and Tesla CEO, Elon Musk in Q accusing them of, okay, I'm gonna accuse you of implied threatening actions against striking workers on basically Elon Musk had Donald Trump on a spaces space, an x space is that we call it. Used to be called Twitter spaces, which is a live conversation. Over a million people were part of this live conversation. Trump suggested that employers could handle striking workers simply by firing them all. He described the scenario where, in response to a strike, an employer would tell workers, that's okay, you're all gone, implying that all strike striking workers would be dismissed. Musk, while not directly quoted in the charges, has a history of anti union statements and sentiments, further fueling the union's concern under federal law as a reminder, employees conduct can conduct lawful strikes for economic reasons, such as higher wages. They can't be discharged for that action by their employers, but in certain instances, can be replaced. The charges aim to highlight the UAW stance that musk and Trump oppose workers rights and are unlikely to have any practical impact, like they don't. These things don't have a lot of teeth. It's more of a it's more of a political statement. UAW, President, you know him. You love him. Sean Fain, he stated, when we say Trump stands against everything, our union stands for,

Unknown: 4:13

this is what we mean. Bring back the eat the rich T shirts. Wow.

Paul J Daly: 4:18

He didn't say that last part that was mine, that was added for impact, right? Yeah, emphasis for impact, yeah,

Kyle Mountsier: 4:24

whatever it is. So what's so interesting about this, one to me, is, like, the positioning of implication, right? Nothing's actually been done here. There's no legal paperwork. There's no like, this is what we feel or say. And I think on, they did file a thing. They did file a thing. Well, they filed a thing, yeah? But on, like, the Elon, oh, yeah,

Paul J Daly: 4:48

it's just like word set at a rally, basically, right? And must never even said anything in that interaction. They said he laughed, yeah.

Kyle Mountsier: 4:56

I think what this points to is that there. Is this growing sentiment where, kind of, like the net new EV manufacturers and the legacy manufacturers and even some of their subsidiaries have this, like battle and jockeying for position, and it and it goes all the way into the political spectrum. You know, I like, I think the the turn here is at a local, wise level, recognize that I don't think consumers are caught up in that battle as much, not at all. I don't think they are at all and and they are just looking for their next best vehicle. And considering both almost at equal weights, you run into so many consumers where they're like, you know, the Ford dealership, or which Ford dealership? No, no. The Ford, Ford,

Paul J Daly: 5:43

you know, owned by Ford, the company with the fo r, d blue,

Kyle Mountsier: 5:46

exactly, and, and they, they see, like the majority of consumers now some or some brands that that lean in really, really well, but the majority of consumers just see a Ford dealership, like a McDonald's outlet, right? Like a McDonald's franchise, and and so like this type of political or relational positioning between legacy manufacturers and and EVS and how even their unions are structured and how their workers are structured does not really seep into the consumer matrix. And so as dealership employees, we should not be considering that in, like, how we go to market, or how we kind of, like position ourselves, it's really just, you know, it's always competitive conquest. That's true. You know, I don't know if there's anything else to add.

Paul J Daly: 6:34

I think this has just a lot to do with the state of Michigan, honestly, like, really, I mean, it's a, it's a battleground state, and so, like, OEMs get looped into it. You know, workers get you looped into it. People get leveraged. And Sean fans on the cover of automotive news today. So

Unknown: 6:52

I'm, he's happy.

Kyle Mountsier: 6:53

I'm from Ohio. And so if you want, if you want to throw stones at Michigan, you feel free. Yeah,

Paul J Daly: 7:01

speaking of feeling free, stop less than free. We love our daily email. If you don't get it, asotu.com you should today, it highlighted some recent Cox automotive data. Auto credit availability has been tightening for now for four consecutive months, creating challenges for dealers, as customers find it increasingly difficult to secure loans, especially for used vehicles. Dealer track credit availability index dropped to 92.9% in July, which is down a full percentage point from June, and a point and a half down year over year. So continuing trend is used car loans through franchise dealers are seeing the most significant tightening. Banks are leading the way in tightening credit, marking the fifth consecutive month in stricter lending. Spread between the auto loan interest rates and other investments has also widened, making loans less appealing for consumers, especially or additionally, more buyers are dealing with negative equity asking for, you know, further risk from lenders, tighter restrictions, higher interest rates. Consumer sentiment. See some optimism about the future, but concerns over the current economic situation at large, including high vehicle prices interest rates in general, could potentially dampen the sideline buyers willingness to make a purchase. Yeah, if

Kyle Mountsier: 8:16

you're in a store, you're probably experiencing this already, so it's not new news, but the way to look at this is most likely mid prime and sub prime lending is getting restricted at this point. Right Prime Lending is not as restrictive, except for there is restriction happening on the loan to value rates. So you know, the important takeaway from this is that when you are looking at putting the customer on the right vehicle, or structuring the right loan, or understanding the negative equity going into a deal. It's important to understand the entire deal structure so that you have the best possible opportunity of going into the negotiation or financing or or, you know, the acquisition of credit, you know, with the best foot forward, because you recognize, like, hey, loan to values are, you know, shrinking banks aren't as willy nilly with their 130s 135 one 40% you know, carries and also, when you look at sub and mid prime, you've got to be on the right vehicle with the right equity position to be able to acquire that loan. So it's really like a strategic thing from Hello on understanding the customer, understanding their needs and wants and understanding the potential deal structures, so that you can head into the finance office appropriately.

Paul J Daly: 9:31

And they're not sponsoring the show, but our good friend Matt Lasher over at West her and the team there do have a product called streamline that helps with this exact issue, and I'm sure they're seeing an uptick that helps, like, show customers vehicles based on what will actually get bought, because no 220 $1,000 cars are the same. Not at all. Yeah, that's for sure. Speaking of not at all or not a lot.

Kyle Mountsier: 9:58

Contra. To the NADA show floor recently studied reveals that the term artificial intelligence, or AI in marketing is increasingly a red flag for consumers, suggesting a growing skepticism toward AI powered products. The study surveyed 1000 adults, which is kind of the Gallup results and the way the actuaries love it that AI mentions lowered product appeal, emotional trust drops significantly when AI is referenced, reducing purchase intentions. AI in high risk purchases like electronics or medical devices, exacerbates safety concerns right now. Foresters, December 2023 survey so bit ago shows a split in consumer sentiment, with only 29% trusting Gen AI and 73% demanding transparency when companies use AI. And lead author and clinical assistant professor of marketing at Washington State University, message said when AI is mentioned, it tends to lower emotional Trust, which in turn decreases purchase intentions. How about really interesting in, in comparison to maybe the B to B results of something like this,

Paul J Daly: 11:06

absolutely and so, like, I think everyone's very anxious to use the the letters AI in, in, like, hey, just show, I mean, obviously the stock market momentum behind it, to show that we're forward thinking. We're thinking of the customer. We're thinking of you. But this saying, when consumers hear it, they don't hear the same thing. The business managers here right now, they they're like, because I think everyone's had that experience with some AI bot right where it's delivered some weird thing, or it's janky, or it's slow and like, the question like, am I talking to a human comes up probably more in the chats. And especially it makes sense, the more, the more expensive a purchase, or technical a purchase, you might start to question, because anyone who's used like chat, G, P, T, understands that, you know, quote, unquote, hallucinations are a real thing where all of a sudden it starts to feed you information, and you're like, is that real?

Kyle Mountsier: 11:59

You're like, not real. You know, the the thing that frustrates me honestly, like you see, like meta AI, and you see some of these, like public, public facing consumer brands, Gemini, coming into Google search, right, becoming a little bit more widespread, you know, and then, like in the Olympics, I was watching sales force, you know, promote their AI, because so many users out there are on Salesforce for their business interactions. But the interesting thing to me here is that so much of AI is baked into chat products, and I'm telling you what that is, the place where I get most frustrated not talking to a human and I understand the gap between, like, human payment for things that can possibly be automated, like the, you know, the skills matrix of needing to train and hire humans first, allowing an AI, but Josh, or just in the LinkedIn comments, that human empathy and genuine connection will forever be the driving factor of sales period. And I completely agree, like, if you can figure out the human capital equation of leveraging AI in a B to B scenario, to have your B to C scenario be humanly empathetic, that's the win. There you go. I agree. But

Paul J Daly: 13:18

look, we can guarantee one thing, there is zero. AI in this show where you and I and Kyle are talking zero, we are real people. You are real people. Go out there serve some real people. See how that works.

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