Ford Dealers Unite, Tech Downsizing, How Much Will Turkey Day Cost

‍SPEAKERS

Paul Daly, Michael Cirillo

Paul Daly  00:27

Yo, it's Tuesday, November 8. Today we're talking about Ford dealers banding together to push back. I remember that language somewhere else. Tech downsizing broadly and how much will turkey day set you back this year? The people really want to know who is in who Id they stopped this got my boy Michael Cirilo. Again. Yo, filling out for the late great Kyle mounts here. Well, he's just a great comment.

Michael Cirillo  00:52

I was like, Oh, my God. How? Practice that intro. Do you number are you like, are you just that good of an emcee. Now,

Paul Daly  01:01

I don't know if it's that good of an emcee. But I just rip it. Sometimes it works. Sometimes it doesn't. But I just like, I've really embraced the spirit of the freestyle, just freestyle, hip hop artists. I want to be better at freestyling. So now we just hit the hit the play button, and then we just see whatever comes out, which sometimes is good, and at some point, will, I'm sure will help me lose my career very quick.

Michael Cirillo  01:23

Reminds me of Have you ever heard of Harry Mack? You gotta check out Harry Mack. He he's the dude that freestyles, and he'll just, he'll go on Omegle and be like, Hey, give me four random words. And people have heard about this guy. And he'll go for like 10 minutes and just go and you're like, how does he do that? Dude, you were kind of giving me that vibe. I was okay. Okay, I'll take the music's lined up here like

Paul Daly  01:46

perfectly. I'll take that. Well, we're gonna do that at some point. And I'll take that as a massive compliment. We are both about No, actually, we talked about this yesterday, you are not going anywhere. Next week. I'm about to be wheels up the end of this week, Kyle and I will be at the Moto retail conference in Palm Beach, Florida with a creative track. I think you could still go even though they said tickets are sold out. If you want to go. I bet if you message me and we message Brian and Glenn, they might just let you in. But we're going to teach creative track there. A lot of our friends are also going to be out at us car week coming up. We'll report on that as much as we can. But today, we got some news to talk about. Now. This this first story is we didn't include it in the show yesterday, because I personally don't like starting the week on a conflict point. You know, and there's plenty of conflict wound because that's what all the other news outlets do because it sells papers man. So we didn't want to start in a conflict point. However, it is a very important story. And most of the people mentioned in the story of people have been on an Associate Program at some point. So it's important to talk about dealer associations across the country are confusing, confusing, accusing Ford of overburdening their dealer body for breaking and breaking franchise laws. And we're doing this in a joint letter from over 13 separate state associations and response to Ford's reach recent required investment of either 500,000 or about 1.2 million on facility upgrades, staff training and new sales standards in order to sell EVs. So as a little refresher, the larger amount the 1.2 involves putting I think, to DC fast chargers, which just the charges alone as about a $900,000 bill, one of them has to be public facing. I don't know who's going to a dealership to publicly like just charge your EV we'll talk about that in a minute. Let's go to the dealership when we could go to Starbucks. The other one, the lower tier is $500,000. The lower amount a dealer can only sell 25 EVs ear. So you put $500,000 and you can only sell 25 at the margins we tell you. And so several state associations, including John Devlin, of the Pennsylvania Association, Don Hall of Virginia Association, Robert Glazer of the North Carolina Association all signed the petition or provision as well as sending a letter of their own to Ford. Ford obviously has paying a lot of attention to this. And Tim Hovik, Chairman of their national dealer Council says the company was aware of the state associations positions and communicated that they're still able to make changes and noting that the dealer Council is on board. However, they did say we wouldn't go as far as say to use the word supportive. He said initially, there wasn't a second tier, they added a second tier in response. And they also included a second opt in date out in 20/27. That will allow dealers to opt in who want to sit it out for this first round, just kind of see how it goes. He says Did we get it right? I don't know. But are we going to continue to work on it? Absolutely. So if you remember the original deadline was October 31, which Ford postponed till December 2. So it's coming up here in a few weeks to give them some more time to work on the program. So a lot of talk around this Ford deadline and these provisions um, you have Ford clients, you know people that are for Ford dealer What are you hearing? What's What's the chatter what

Michael Cirillo  05:02

really grinds my gears? Oh, just coming in doesn't sound

Paul Daly  05:06

like we can't use that anymore you know really deplete my battery like what are we gonna say

Michael Cirillo  05:12

it's my hydrogen slash Evie slash diesel replaced battery

Paul Daly  05:19

says what grinds your gears Michael Cirillo

Michael Cirillo  05:21

just how about communicate? Like, we've got billions, dare I say near trillions of dollars floating through this industry every single year? How about like, look, here's where we're going. Here's, it's not going to happen overnight. So we're not going to try and strong arm you into it happening overnight. It reminds me of in Canada when when Toyota was like, hey, dealers, you need to do the whole Siam thing. And I remember one of our Toyota clients. You know, I can't remember what it cost him, let's say two 300,000 back then to re face the building put signage up

Paul Daly  05:55

separate showroom, right? The whole thing? Yeah.

Michael Cirillo  05:57

Two months later, they're like, Oops. So like, how about instead of just following it on everyone? How about you? Like, when are we going to start easing people into conversations and saying, here's what we're thinking about, like maybe four years ago, five years ago, we like we're thinking in this direction, start preparing, here's what you can do to prepare, because like, nothing ever happens overnight. And I feel like this type of thing. I mean, look, cause and effect. This is the type of reaction that you can expect a strongly worded letter, and nothing Oh, more gratifying than a strongly worded letter to send the message, you know, shots fired across the bow, but I really just feel like, you know, Paul, like those shots didn't have to be fired in the first place. If we just put people around a table and said, Hey, here's the direction we think we want to go. Here's where our brains are at. What do you guys think trusted dealer partner, body, let's not skirt around the issue. This is what we want. It's gonna make everybody profitable. But here's how we see the path going. They didn't do that. Here you go. That's why you have all these Dealers Association saying, oh, Ma.

Paul Daly  07:08

It, it's the it's like the quintessential problem in a dysfunctional relationship. And I feel like whenever something terrible happens, like divorce, all of a sudden, everybody starts as soon as you lawyer up, right? Yeah, Everyone just assumes the other person at their worst, because they're playing defense at the point, right, fielder associations are playing defense, Ford's playing defense, and it makes it very difficult to have productive conversations when it happens like that. Now, I do think that kind of the quick rise of EVs in the popular culture that has been accelerated by the pandemic, I think what has happened is, like, everyone, I don't, this is too strong of a phrase, but that you never waste a good crisis, right? Politicians use that right? This is an opportunity to move the ball forward. And unfortunately, I feel like this has been an opportunity with all the supply shortages, the dealers reliance on the OEMs, the OEMs, realizing, okay, this can be really profitable. If we now we kind of got a reset button, that we can manage our business in this way. I feel like all of that, you know, has led some OEMs like Ford to be more aggressive in the Evie rollout because they feel like they can push the ball forward. Now, I do think that, you know, I think the Jim Farley's plan for an Eevee future, like really does have the consumer in mind, which is a good place to start. Right? I really feel like that. And then like, what happens in the middle? You know, our belief is that the dealer is the most effective and efficient and the best way to sell and service vehicles to serve the communities. And we feel like that all works together. Like it's just this mushy middle, bite, you look at an OEM like Toyota, and the way they've handled Evie, and they've just built a lot of trust. I mean, your science story aside, they're not doing that again. Right? God has built a lot of trust with their dealers, we're dealers are like him. Okay, you know, much more measured approach. And even yesterday, we talked about them saying, like, we're taking a very humble approach to this, because we don't know what's going to happen. And frankly, we don't think anyone knows what's going to happen. And they're right. Yeah. So I mean, December 2 is coming. So this is going to have to be sorted in a few weeks. I would be very surprised if we didn't see some more legal action comes from this. And it's not just fighting it on a federal level, right. Like there are 52 battles that have to happen. So, you know, my hope is that everybody kind of we're able to work this out in a way that doesn't win. The dealers are focusing on this guess where they're not focusing on?

Michael Cirillo  09:29

Yeah, 100% customer experience, you know, honestly, it just makes me so much more appreciative of how boring my life is, like, you showed up and picked a fight with 52 state associates. Oh, man, you know, and you're like, Whoa, see what happens. It's like, bro, you're not enjoying Christmas this year.

Paul Daly  09:48

I'm not what and if you are, you are just like, you're just you've got ice in your veins and you're probably not much fun to be around anyway. Oh, speaking of not being around anyway, a

Michael Cirillo  10:01

Segway segway,

Paul Daly  10:06

segway on a Segway. Elon Musk's Twitter layoffs, apparently were not an isolated event as the tech startup sectors ready themselves for broader layoffs, as economic conditions are considering. can't read my own writing as economic conditions change, and hiring policies need to change to be more competitive, and profitable. So here's basically what it is. The Fed has announced their intention to raise borrowing rates to more than 4%, which is substantially changing the way businesses borrow money. To give you a comparison to march 2020, that rate was point two 5%. So what that means is access to cheap money. businesses can hire a lot faster and borrow money to hire because we think about it, it's a lot easier to get an ROI on that money, you borrow it at point two 5%. And the money you borrow at 4%. So it really is changing the game. Obviously consumer spending sentiment, the overall economy is changing as well, inflation. So look at it this way, Twitter was acquired for 44 billion and hasn't been profitable, Michael, it hasn't been profitable in eight years. Like for real? I didn't. I mean, I pay attention pretty closely. But I didn't realize it's been eight years, not profitable. And they think about they really haven't introduced anything new either.

Michael Cirillo  11:23

Elon said one of his, in one of his tweets this past week, that they were, it was either two or $4 million dollars a day that they're losing

Paul Daly  11:31

4 million, 4 million $4 million.

Michael Cirillo  11:35

Like, I know, you're sending people to space, and you want to go to Mars, and

Paul Daly  11:39

how long can you can you take that $4 million? Drain?

Michael Cirillo  11:43

Yeah, like just over there another 4 million Oh, another 4 million. So I get that there's a lot of like, you know, obviously you go on Twitter these days, and you see a lot of people complaining about oh, you they let us all go? It's like, why are you comfortable? Just just to kind of join the conversation. Why are you comfortable working for a company that's losing 4 million a day?

Paul Daly  12:05

Well, because they came into a company that was losing 4 million a day probably. And it was, you know, it's a people like, look, let's face it. When you get a job at a company like that you're really not watching the p&l. You're not right. You're just based on growth trajectory or the public rhetoric. And so the employees were, we'll talk about how they were like, go another day. I think it's like, I understand why they did it. They just basically people went to log into their stuff, and they couldn't anymore. But I feel like there was a more human way to do that. Right? Not like let them know before you shut off access, right? That is just typically how it works at any company anywhere. But there's definitely still some

Michael Cirillo  12:45

get rich and q4. Paul, lawyers are rich and q4,

Paul Daly  12:51

and q3 and q2 and q1. So but here's here's kind of a nice ending a soft landing that I that I saw today is that all the employees were given three months of severance, which is actually twice the norm, or twice the legal level, which is six weeks is what the requirement was. So it's nice to give them some time to land on their feet. I've seen a lot of companies reaching out publicly saying like, hey, Twitter employees come here. In an interesting turn. Former CEO and founder Jack Dorsey took ownership of the layoffs, tweeting, I own the responsibility for why everyone is in this situation. I grew the company size too quickly. And I apologize for that.

Michael Cirillo  13:28

Wow. It's a pretty boss move that his boss. I mean,

Paul Daly  13:31

that's the real reason they needed the layoffs, right. Like fresh eyes came in and said, Whoa, hold on. Like this is a company that doesn't need 8000 people. We need 4000 people.

Michael Cirillo  13:42

Yeah, he can't Elon came into it. Basically buying a $10 In and Out Burger meal for $47 and was like

Paul Daly  13:52

53 to be exact.

Michael Cirillo  13:56

Maybe that wasn't the right thing. Maybe I just made a really bad deal. It makes sense to me.

Paul Daly  14:02

And so like the real point of this story is that it's not an isolated thing. Mehta has also announced that they are going to have large scale, in their words, layoffs, and they couldn't be the biggest this year so far of any tech company. And it would be the first broad layoffs that Mehta has ever embarked on in its 18 years of being in business. The last earnings call just show that they've invested I think is like 16 billion in the metaverse putting a big bet on what things were going to go on. Zuckerberg still says he's like, I think in history, when people look back at this point, they're going to acknowledge the meaningful work we're doing here. But as far as shareholders are concerned, stock price and any level of adoption of the metaverse. We're not seeing it and then you know what happens when economic times are tough. People start pulling back on everything. People spend time where they are most comfortable spending time and the metaverse is just kind of a couple levels from there. And so it's looking like we're gonna see more of these, you know, Facebook and meta are kind of just a litmus test for the rest of the industry.

Michael Cirillo  15:10

I just, you know, maybe, maybe I'm getting to that age dude. But ever since you and Paul were were talking about getting scooters to roll into a soda economy, Daddy's guy, we're gonna buy one of those and I straight up bought a scooter that goes 32 miles per hour dudes doesn't really go 32 Like I've had at 32 miles per hour. 32 is real fast on a scooter real fast it hauls. Now, the whole point being is the pleasure that that actually brings me getting the wind in my face going around the neighborhood. Having fun with the kids. I don't want to do that like like putting,

15:54

putting, oh, oh, good. Hey, blow on my face. You know?

Michael Cirillo  16:01

The nature? Yeah. Tangible applications for learning and things like, I totally get it. But then when it comes to when times get tough to your point, what do I have left? I have the fact that there's air in my lungs, and I can go create experiences on the real face of the planet, by the way. Has anyone paused to think about for a minute, the fact that we walk on the face of a planet that floats through the universe? Wow, we're getting really,

16:31

really, today. Oh,

Michael Cirillo  16:34

the moon is a big space rock that. I'm gonna put these blinders on. Well, I

Paul Daly  16:41

think Elon Musk for one considers that quite often, which is why he's figured out ways to get off of it. But yeah, that is it is tough. It is tough to realize, uh, well, look, it's a lot easier to imagine an embrace and adopt a Metaverse world when we're all locked down from COVID. Right? If you think about that, when that happens, you're like, Oh, I would be pretty nice to go hang out at the Eiffel Tower with my friends and watch our favorite rock band. Right. But when the real world is open, not so much. So what does this mean for dealers and the auto industry? I think it means a couple of things. Number one, the reminder that dealerships are great places to work, they're stable, they offer community, they offer great pay, there's no ceiling and there's also no floor. So championing those things is a great thing to do in your marketing and your messaging, your brand, and your community service, etc. Also, I bet there's some really smart people that we may be able to log into automotive from the tech side that I mean, Michael, you myself, Kyle, lots of others always talk about we need outside automotive people to come inside automotive people. And let me just say Bob Lanham used to be metal Bob now is Bob Now he has one of the best sense of timing I've ever seen in my life.

Michael Cirillo  18:01

You he's a genius getter. We call him a genius. He is one. We can call

Paul Daly  18:05

him a genius. We can call him a genius. Well, I'm trying to think of a good segue for this next segment before we're out, but I can't So speaking of how much Thanksgiving day dinner is going to cost segue. Everyone once in a while, we just mail in a cheap one. So you can expect Thanksgiving food prices to be around, it's gonna be higher or lower, of course higher 13.5% higher than they were in 2021 According to data company IRI with the average cost per person raising to over $60 A person is that accurate in the show notes? No, that can't be it's probably $6 per person is my husband hungry man for like 60 bucks in person we're going out for that. One factor is get this the avian flu has effect on Turkey prices and a turkey shortage. I didn't know that the turkey shortage. The traditional main dish is expected to cost $1.99 A pound compared to $1.15 a pound on average cost of sides like the mac and cheese and the mashed potatoes and all that sweet potatoes 18.8%. And pies alone are 20% Higher. Some relief though is in sight as Walmart. This is a great announcement. I love Walmart for doing this. They announced they were offer Thanksgiving staples at 2021 prices and all these rolling prices all the way back to 2019. So yeah, it all says the article says there'll be 7.4 people at the Thanksgiving table this year but Gen Z and younger millennials are expected to host 9.8 guests while seniors and retirees only six people. So okay, no, no real surprise here. Things are going to be more expensive. Why? Because things are more expensive everywhere. Why? Inflation. However, it's pretty cool that Walmart and all that you're taking, because when you go to buy your Thanksgiving dinner staples, you don't buy just those things. Right? You buy everything else. So when I look at Scotty I have a really important question before before we finish this out. Okay. What's Thanksgiving like in Canada? Because you're in Texas now. I don't know what Texas Thanksgiving is like, is it like steak? Like full rack of ribs?

Michael Cirillo  20:10

No, no, Turkey is stuff. Yeah.

Paul Daly  20:14

It's like kind of shooting yourself. Yeah. Like,

Michael Cirillo  20:16

I don't know if you have a younger brother or not, but like, don't bring up your younger brother, like younger siblings want to be like their older sibling and I consider Canada kind of like the younger sibling to America, where it's like, what what do they do? Now? They got they do turkey and stuffing and sighs Okay, we'll do that too. You know, like, so it's pretty much the same exact thing. It's also fun fact. It's similar in the sense that it's also the dinner that you can expect uncles to start fighting with one another. Clear out the furniture there at

Paul Daly  20:48

the Worldstar fan Worldstar dream come true. Yeah. How many people have run your gaming table this year? Do you know what's up? How many people are going to be around your Thanksgiving table this year?

Michael Cirillo  20:59

There will be five, five,

Paul Daly  21:03

okay. Yeah. Okay, so a small family fair. We're gonna have like, 40 my wife's like inviting the whole side of the family.

Michael Cirillo  21:09

Yeah. Here's why we actually we celebrated Canadian Thanksgiving and all the friends we've met in our neighborhood. We were like, they're like, you're Canadian. That's so cool. We're like fun fact. It's Thanksgiving. They're like we should do a thing. So we had 40 families. When was that other? That was October, the second? Monday in October. Wow. 40 families all gathered together. You deserve a break. Yeah, this one we might do ribs. Yeah, you should.

Paul Daly  21:35

You should Hey, and it's really cool to see Gen Z and younger millennials. really leaning into the Thanksgiving thing. You know, there's that whole Thanksgiving Friendsgiving I'm not sure when that started, but it was a few years ago. So it's good. It's good. Regardless of the price. It's good to see people putting priorities in the right place, which is community. We hope you go out there on this Tuesday. Cultivate community because I'll tell you what, that is the one thing that will be around far beyond any electric vehicle. You can quote me on that

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