Lexus & Kia on Top, BYD Share Sale, & Dick’s Sporting Goods Trade Playbook

‍SPEAKERS

Kyle Mountsier, Michael Cirillo

Kyle Mountsier  00:27

Right Welcome to Friday, February 10. Was Cirilo. You know the day where Paul rolled out one day after Cirilo got in his new seat. We're talking about JD Powers some BYD stuff and Dick's Sporting Goods doing automotive. People really want to act isn't who I be telling you, when they see all these other retailers. They're gonna start to realize that auto was really ahead, you know? Okay, maybe we stole a playbook, Apple, whatever. Fine, whatever. So hello, how you doing this morning, sir.

Michael Cirillo  01:00

Excellent, busy day getting lots of messages.

Kyle Mountsier  01:04

You get 33,000 text messages like what do you do?

Michael Cirillo  01:07

Yeah, but text messages LinkedIn messages message Facebook Messenger messages and messengers, messengers. This is

Kyle Mountsier  01:17

the wild one to me the Facebook Messenger messages. Yeah. Like someone messages me on that. And 33 days later, I respond. I'm like, sorry, I'm not a bad human, I promise.

Michael Cirillo  01:27

Yeah, I don't prioritize. I go to Facebook for marketplace. And because my neighborhood has a delightful Trading Post group where they post the animal. Yeah, that's cool.

Kyle Mountsier  01:38

Yeah, and actually the only reason why you you just need a laugh every once in a while you go to the neighborhood thing you're like,

Michael Cirillo  01:44

you get into messenger and you're like, Oh, dang, I got all the what the President of France reached out to me

Kyle Mountsier  01:54

that's so good. Hey, we've got a lot going on in the asoto verse. This is you know, if you didn't hear yesterday, Michael has joined us as our new Chief of Staff he hasn't left flex dealer but he's integrated in the team and we're excited to see what that brings and in a little Trifecta between myself Paul and him and then and then supporting the rest of the what 12 person team that we have now and and we're moving and growing. If you haven't held out some dates you got to put April 5 on your calendar you got to put September 25 to the 27th on the calendar because we're going to be running all over the country with Team A so to but we just seriously we got to get into it because we got all things use cars coming up and just little bit with David Long. David Long's all things use cars and we're talking sales teams this morning. So when you say get in, got anything All right, here we go. So first story, let's just extract the top spot for dependability while Kia who was the top last year dropped to third overall, even though they maintain their top spot in the mass market brands. It we wanted to segment a couple other little things like the most dependable model, both in the Lexus Toyota brand you got the Lexus RX with the top spot tied with the Lexus, the Toyota CHR. And then in the compact SUV which is one of the largest growing segments in the in the world right now and in the country. The Kia Sportage followed by the Buick and vision and the Jeep Cherokee rounded out in that calm, compact SUV category. Now the way that JD Power looks at this as they say they look at a per 100 vehicle issues reported. And responses range anywhere from the low 120s all the way up to the mid to hundreds problems per 100 vehicles. So you're looking at like anywhere between 1.2 to 2.5 problems per one vehicle, and Lexus not a surprise, hitting that top spot again Cirilo.

Michael Cirillo  03:56

Hey, well, you know what, when you figure out how to do a thing, you just keep doing it over and over and over again, right, like, if it ain't broke, don't fix it.

Kyle Mountsier  04:04

Yep. Yeah, it's, it's something that obviously Lexus and Toyota have led for a lot of years and we see them leading in not just overall, but also market segments. The Automotive News article that we cited, stated that information technology is continuing to be a sticking point for automakers, which still has twice as many problems as the next largest category, vehicle exteriors. So it's like it stuff is the biggest issue and then and then you go to like body stuff and the things that manufacturers should be really good at. So I don't know if you know this about me, but I got some opinions about automakers and information technology systems,

Michael Cirillo  04:47

you know that I don't know that but i i could assume that you've had opinions about it, but you know what it makes sense like, I had this conversation with one of my my team members at flex the other day, and as we're developing new products, I'm like, if it's not beautiful people will not use it. And he's like, What do you mean? And I'm like, what kind of phone do you use? He's like iPhone. I'm like, why? Right? It was like a very simple conversation, if it's not beautiful, and I'm with you, because one of the things that I love that grinds my gears about my beloved Silverado, is that it's infotainment systems. So oh,

Kyle Mountsier  05:24

man, I'm glad it's bad. Yeah, I was, oh, man, like, we were in a Orien. Last week and Expedition I think, and with a dealer and and basically, in order to change the air, like move the air, it was four button clicks, just to start that. And the and the person that was driving it was like, I used to just be able to like, hit one button and turn down the air, right. But now I gotta like, hit this hit that wait for it to load, slide it down. And information technology isn't just not the strong suit of automakers like they need to lean. And that's what I love, like the Honda Saudi partnership. That's why I love people leaning into making sure that Apple CarPlay and Android Auto work better and more seamlessly, because just not everybody's in it. Now there is one brand that is into it. And that's Tesla. But here's what's crazy. This year study included Tesla owner responses for the first time, and Tesla scored 242 Problems per 100 vehicle, which would put them basically dead last.

Michael Cirillo  06:30

Well, this is what happens when you're a software maker. This is why people don't get the latest version of Apple OS right away. Or, you know, like you need you need a group of beta testers and automakers are gonna, I think they're gonna get to a place where they're like, Wait, we need beta testers on our cars before we roll out new vehicle.

Kyle Mountsier  06:52

Ah, see what you did there. I see what you did there. I like it. I like it. Tesla's story continues to remain unranked because they just won't let JD Power have access to a lot of user data that would help them get there in the rankings. And yeah, if your Lexus or Toyota dealership I bet you're sitting a little pretty this morning. But one automaker is not sitting so pretty. Segue. Just recently, it has been announced that Berkshire Hathaway has sold off a large portion of their shares in Chinese Evie automaker BYD. Initially they invested 228 million shares for $232 million. The sale lowered the Berkshires, Hathaway, Berkshire Hathaway's holdings from 12.26 to 11.87. In the Hong Kong stock exchange, and yeah, now they've sold off over 95 million, not a million of its original shares, which I just think is like, it's we've seen this from a few different places. And obviously Berkshire Hathaway is is a big investor, but also has a lot of ties to auto they have an auto group, and then also is playing in the in the sandbox of these OEMs. But to see, you know, to see Warren Buffett's company go I'm not quite as sure now, of these of these Eevee automakers and their viability long term. I think it's just like an insights that might be leading to a path of more people that were we've been talking about it all week dealers, and OEMs starting to question more than Evie landscape.

Michael Cirillo  08:37

It's, you know what this, this just maps back to everything we already know about our human nature, which is when something new comes out, what are we going to just shut up and observe before we all open? Alright, and yeah, apps, tech GPT. You know, it's like everything. And I mean, we see this, we see this all the time. And it's like, well, hold on. But what happens when we just just observe for a minute, and think about what the implications of this before we all jump on the hype bandwagon and yep, so yeah, I was

Kyle Mountsier  09:11

actually talking to Scott Simons last night, and one of the manufacturers that he has the pleasure of being a part of, with his group of brands, they're in the valley. They had a meeting, and they were basically like, Hey, don't worry, we've got plans. But we're taking this study, and we realized that the ground game right now is important. So we are still like, depending on dealers and staying like close to the ground and asking you to give us the feedback so that we can make quality plans as an OEM on what's happening on the ground. And I was like, Yo, yeah, okay, this this may or may not be one of those OEMs that a lot of people want to have in their repertoire as groups. So

Michael Cirillo  09:54

right yeah, yeah, percent. You know what I would really love to see though from the Berkshire Hathaway Hathaway umbrella is a is a pure integration between all of their properties like if they're going to be in vehicles. Then I want to open up the glove box and have an unlimited supply of Burger King burgers and a Pepsi machine while towing like a Forest River trailer. I want a slider integration of all of their properties. Yeah,

Kyle Mountsier  10:23

like why should why you know they should just put Burger Kings in all the stores you know, just just be done with it right?

Michael Cirillo  10:29

Yeah, Burger King and a Taco Bell and like KFC and and Pepsi Cola and, and trailers like the ultimate Yeah, playground. Yeah, just create

Kyle Mountsier  10:39

like a little Auto Mall. But all that stuff exists as well. It's a genius play. It's a genius play. Well, speaking of organized partnerships, segue Dick's Sporting Goods in 22 created a relationship with a company called sideline swap, which allowed them to start with 60 trade in events across the US allowing their their buyers and purchasers to trade in their used gear similar to like a played against sports did back in the day and is still there and get credits, or donate their credits to buy new gear, or donate it to someone that may need it more than them. Right now athletes can exchange their use sports gear gear and get gift cards, or donate to local sports organizations. And then anything that doesn't qualify for trade and can be donated or recycled, responsible responsibly. This for me, Cirilo is like a little play out of the automotive trade cycle management playbook, like we're gonna throw a big trading event, right. But what I love is that it gives you like multiple ways to engage with it, and potentially resource others to be able to get into something it's like this charitable donation but trade cycle management and getting people out of their use gear into their new gear. And I think like wrapping that into the auto ecosystem is really important.

Michael Cirillo  12:09

Yeah, this, this is a play out of the genius marketer handbook. Because it like you said, it incorporates gamification. And I mean, we all love a good game. It incorporates service of the community and giving back. So there's an emotional response. And we know that's the highest level of marketing sophistication is when you can induce an emotional response. So they got that. And then like you said, yeah, it's a it's a, it's a play out of just like trade cycle management, and Out with the old in with the new, repurpose the old make it new for someone else, and on and on and on me go. So it's genius. I love it.

Kyle Mountsier  12:47

Yeah, absolutely. It's interesting. They're doing they're moving the 19 states in 200 events. So just just the thought here for me is like, hey, dealers, the reality is, is that people are starting to get much more used to trade cycle management requests. As far as like marketing campaigns are concerned, either from even from major retailers, right phones have been kind of used to this for quite some time now since the early 2000s. But we're starting to see, you know, trade in be a typical term in more retail outlets. So it's an opportunity to really lean into that consumer perception that trading in is good, that it's a regular part of things that I do with everything, and going hey, maybe we just start to throw events, again, centered around trading and less around sales, especially as the use of vehicle market gets constrained, acquiring vehicles gets harder, you know, targeting, trading and trading events are something that people are getting used to outside of the auto vertical. And so it's easy to bring it back and continue to press into it in the retail vertical.

Michael Cirillo  13:51

Yeah, I mean, it's amazing stuff makes total sense. That's why we got to be paying attention. We got to be paying attention to the out and the end of the industry because all of this kind of stuff is happening every day all around us. And those that pay attention. Get the food in the belly.

Kyle Mountsier  14:09

There you go. Hey, give you the last word there. Hey, pay attention. Watch other verticals. Keep your feet to the ground. Look up, look down and keep serving people today. Let's go.

14:33

Right

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