Ford Slips, Stellantis Drives Off A Cliff, GM EV Buybacks, Southwest Assigned Seats

Paul J Daly: 0:02

All right, officially dog days we're gonna keep calling it That's July 25. July is almost gone. Today we're talking about Ford slipping stilettos driving off on a little cliff, GM buying back some EVs and southwest, letting you pick your seat right

‍Unknown: 0:18

now. If

Paul J Daly: 0:22

we have thoughts on I don't want to get all the thoughts out or any of the thoughts out right now.

Kyle Mountsier: 0:26

Just know the end is gonna have some opinions if you stick around.

Paul J Daly: 0:30

I also know G Southwest's adopter and I am a late southwest adopter. So we have opposite experiences on Southworth, hey, we want to let everybody know. And this is this is a fun one. If you haven't yet. Head over to ASOTU con.com. We've released first to know list and you can sign up on the site. We don't have speakers information. I think we have dates. We have a design aesthetic. We have some plans and a theme. But go to the website check it out. The design aesthetic is just off the charts. I mean Chiron I spent some time with our close friend of a Soto an adjunct designer he was actually on staff a congruent His name is Ron Robidoux. And he's now like lead motion designer at Shopify, right you know, like he he outgrew us let's just say it that way. But but he's designed like the he was the he was the one that I called in the very beginning. We're gonna have automotive State of the Union live stream. I literally called him it was like at nighttime. I was like dude, because I had the idea was brushing my teeth. I was like, I need a logo that's automotive State of the Union make it look like the President so he had the animation going off to dig that up. The stars came like flying and it looks so official. It was all it was all just it was good. Make people feel like it's a thing before.

Kyle Mountsier: 1:46

He's he's been a heartbeat of the feeling of ASOTU for a long time. Yeah. And his family.

Paul J Daly: 1:51

His family's in the carpets like his he grew up in his uncle's Volvo dealership and it's still actually I didn't even Kyle Yeah, it's a mile from my building. Isn't my Volvo dealership. Yeah, it actually makes more sense. Yeah, that's what he's got. He's like grew up in the car. But his cousin that he grew up with Brian the same age, right? He's a dealer. He moved to the West Coast. Yeah, like it's blood in the blood in the blood. Oh, we got a soda webinar. So edge Quick Shot webinar coming up. In just two weeks, just under two weeks, we have our friend Jim Gunther from Mosaic talking about what's going on with the cars rule is bubbling under the surface right now. It's going to come back up, you should know what's going on, you should be ready for it. And if not, just hang out with us and have some fun. We'll heckle Jim in the comments. If we can, he can handle it. So just go to a soda.com. And make sure you sign up for the webinar so you can join join the fun and a couple of weeks here. Some news. Let's do some news. It's earning train time. It's really fun. Especially, there's like a lot of different information coming out. You know, from from all the all the sides and OEMs but not everybody can be GM. Let's just put it there as Ford's income dropped 4.5% to 1.8 billion despite a revenue increase. So GM had like the opposite problem, or not the opposite benefit for his the opposite problem. So their revenue increased 6.4% income dropped 4.5% You know, but the revenue is up because of strong commercial vehicle sales. Meanwhile, on the Salanter side, their NIC net income plummeted 48% to 5.6 billion euros in the first half of 2024. With operating margins falling below 10%. So Ford's yet Ford's so back to Ford Ford, they're adjusting earnings are down CFO John Lawler cited $800 million in increased warranty expenses, due to some older vehicle recalls. The Ford Pro Division 2.6 billion in earnings and 15.1% profit margins love that fleet business. The model II unit, still reporting a loss 1.1 billion for the quarter. So there's still still a little bit of a little hole in the boat over there. They're trying to figure out so Lance has struggled the most in North America, including an 18% shipment decline. And a lot of pricing pressure. Obviously, we know what the inventory situation is CFO, Natalie Knight of Salanter said there are operational issues we have had in North America where I think we could have performed stronger talking about things like volume output, price cuts, inventory reductions, cost saving initiatives, right, all the things. So everybody's kind of playing a little bit of a different chess game right now. Like across across the major.

Kyle Mountsier: 4:30

You know, I think anybody that's in the industry that has been watching silences inventory grow over the past like nine to 12 months, potentially could have predicted this in the US, right? They over bloated inventory on dealership slots, you know, I don't know what that inventory looks like, right? Is it the right inventory? Maybe that's maybe that's one of the issues where the production actually wasn't matching the demand. So you know, this. I don't know what all of the factors that They're pointing to you know, when it when it comes to like cost saving initiatives obviously they had this big you know, some of the recall issues, although the recalls are Ford sorry. But for like bloat inventory equals, you know missing, demands are going Yeah, margins are going dealers are accepting less inventory and and less throughput on the wholesale side of the business. So, you know, I'm kind of not surprised. I'll you know, it has to hurt to be Ford and Solanas to come on, you know, day two of earnings week after, after Tesla and GM come,

Paul J Daly: 5:35

swing, it's one of those ones where your wish the announce the earnings calls were in the opposite order. Right? Yeah. Right. Like you get the ramp up, somebody sets the high bar, and then you come in, and like, I don't, but it's quarter a quarter, you know, what I mean, like things could turn around. And that's the nice thing about this business, and we'll see what the man does. We'll see what q3 does rolling into back to school time. And we'll see. I mean, this is the long game,

Kyle Mountsier: 5:58

long game. You know, as media industry reporters, we got to let you know what's going on on this. But the fact it's the news, we still go back to the fact that a lot of what the OEM is doing and whether or not their margins are good doesn't change the fact that you can make your own economy drive your own results, you know, through marketing through inventory management strategies, not have to worry about what the global brand is doing, and still be profitable at a local level. So that's the benefit of the franchise system. Yeah,

Paul J Daly: 6:28

I wish I had a good segue there. I just couldn't pull it out. But we're gonna move on to GM. This isn't an earnings call. But GM is ultium vehicles, that new power platform that they have for EVs. They faced significant issues in the past due to some build quality and safety concerns, including remember the fire risks leading now to buybacks. You know, they were just saying, we'll just buy the vehicle back, right, let's get rid of this problem by buying the vehicle back and figuring it out. Now, a lot of these vehicles are re entering the market, GM is putting the back into the market at steep steep discounts. So early 2023 and 2024, blazer EVs, they had software issues, they stopped did a stop sale, the Cadillac lyric was a little less publicized their issues, but still problems with build quality, both of those leading to a lot of buybacks from GM, they were required by GM. And, you know, they are now being sold back into the market with a notification that says, quote, required by manufacturer on the vehicle history report. So you can now models like the 2024 blazer, Evie. The Cadillac lyric, you can get significant discounts sometimes $20,000 below the Original MSRP. So you're saying like, Hey, there's this Cadillac, Lyrica was they they started selling these things at 60 7080 grand. Now you can get one for almost like 40 grand, and it probably only has like 1000 miles on it, or 2000 miles on it.

Kyle Mountsier: 7:50

Man, if I'm interested in one of these vehicles, I don't even care. I'm taking advantage of this savings because that's even that's that's an even greater savings than buying these probably on the used car market right now.

Paul J Daly: 8:02

And it's not like buying an unproved like, like not to foresight in the room. But it's not like buying a Fisker right where it's a new manufacturer that has to be proven. No, you know, GM is going to be there to issue with the you know, the warranty is going to hold up. Well, I know have you ever seen a Cadillac lyric? They're tight. Oh, my goodness. He looked dope when you get in the cockpit of that. Like, this is a suite

Kyle Mountsier: 8:23

I haven't I haven't really one now. I'm like maybe I'm a Cadillac guy. 20,000 office $60,000 vehicle dude, I might be a Cadillac guy. So

Paul J Daly: 8:31

Cadillac lyric is like, I feel like that's not a Cadillac. It's like no when you look at it, it's kind of like who's the driver for that and I can't really put I can't really put my I can't put my finger on like who is the driver of this? I think it could go in number of directions. Right and how your rocket Brian Ortega says in the comment call it the best buy open box sale, which open box at Best Buy has got to be the greatest thing since sliced. That's the first place I go right every time look at the bottom shelf. Like where's the sticker? Okay, you know,

Kyle Mountsier: 8:59

probably fine. It's got a little scratch on the underbelly.

Paul J Daly: 9:01

I know but let us know what you think. Would you buy a reacquired by GM vehicle personally you do it? Personally I would. I would. Especially because you know the warranty is going to be tight. And you know, they're going to be

Kyle Mountsier: 9:12

thinking you're going about being a lyric guy right now.

Paul J Daly: 9:14

Haven't you thought of that? He searched it right now. Sweet vehicle. The range still isn't great though. It's not great. It's not good. I know. Speed. And range. Range is good.

Kyle Mountsier: 9:29

Man. This one will get some people right in the fields. But Southwest Airlines is starting to make significant changes by moving away from its 50 year old policy of open seating whoa airline will soon introduce as a Valentine's Day next year. seating and premium options with extra legroom aiming to appeal to a broader range of passengers and enhance profitability. There has been testing taking place including simulations, employee trials, and and even just like Working on whether or not a new boarding process with boarding priorities different than just one through 60 would not slow down operations. If you know anything about that, you know that a Southwest flight basically boards in about eight minutes less than a delta or American Airlines or United flight for a full flight. The changes come as southwest faces profitability challenges and competition from rivals with more extensive networks and high end offerings. CEO Bob Jordan shared that he expects to generate over $1 billion in additional revenue selling extras like those that allow passengers to board sooner. He said it's the right change at the right time. It also, you know, the article states where the first flights will be headed from and I'm just I'm just proud of this little list right? So one of them is LA to Nashville, right? These people in Nashville right if you're coming to Nashville, you want to you pay that little extra money,

Paul J Daly: 11:02

but if you're flying southwest, you know it's kind of like public transportation to the skies as Jim said, you still ride the bus

Kyle Mountsier: 11:10

it's not spirit

Paul J Daly: 11:11

okay that go la

Kyle Mountsier: 11:14

I don't know. I don't know where spirit goes.

Paul J Daly: 11:16

That's a long flight on spirit right there on that's a

Kyle Mountsier: 11:19

long flight on cardboard baby. The other other places which this is, this will be interesting for a soda CON attendees. Yes, Las Vegas to Baltimore, Los Angeles to Baltimore and Phoenix to Baltimore. Let's

Paul J Daly: 11:34

get going west coast with a little bit of love. That's I love that very, very much. We need west coast of Baltimore, because all roads lead to a soda con and 2025. Alright, my thinking on I like how it's like they've run employee simulations. It's like they have simulations for like group boarding is called every other airline, right? Like it's not an experimental thing. I am really split. You've been a Southwest person for a long time. And right when you and I started, like spending more time together, you're like southwest of the best southwest the best. And then I flew southwest a couple times because it finally came to Syracuse. And I was like, I haven't had the greatest experience. And then like it took about a year for you to be like, yeah, it's definitely lost. Its its mojo. I think the best years are behind us. And I was like, dang it.

Kyle Mountsier: 12:20

Yeah, it for sure. Did.

Paul J Daly: 12:23

You know I think you're still some charm though. Like there's still some southwest charm with the flight attendants and the pilots. Flight Attendants mostly

Kyle Mountsier: 12:29

still have a little bit of more leeway on like having having some fun with the calls.

Paul J Daly: 12:35

They've had a few rough years. It's hard to keep that mentality. But I'm a fan of the it being able to pick your like being able to know your seat before you get on. I understand why they did in the history, right? It is more efficient to board right. And they were like really squeezing things together. They only did direct flights in the beginning. And that is how they turned plane so fast. Is that boarding model, some people love it. I don't love it. Because there have been times where like, you get to the gate, you're you're transferring you're you're like running late, and now you're stuck. You could have had boarding position at seven doesn't matter. You are like center row aisle, you know, row 28, right, center seat. So I like just knowing, right, I'd rather pay a little bit more in the beginning to know where my seats gonna be and know that it's where I'm going to be I wonder if they're going to reconfigure the seating or they're just going to charge more for exit rows.

Kyle Mountsier: 13:26

I think they're going to reconfigure the seating. Eventually, they're going to have like a front seat that

Paul J Daly: 13:30

has a little bit more like it makes sense. There's a lot of profit to be made in those upsells Yeah,

Kyle Mountsier: 13:34

I mean, you pull one row but you can charge so significantly more for

Paul J Daly: 13:38

for like six rows. Yeah, whatever

Kyle Mountsier: 13:40

out of that one row. Yeah,

Paul J Daly: 13:42

I don't know. Let us know what you think in the comments. Are you southwest fans, you like knowing your thing? I don't know. I don't know. Whatever it is. It's a Thursday. It's a beautiful day. It's in the summer dog days of summer. You can get out there, sell some cars, love some people. We will see you back here tomorrow.

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