Proton Thwarts Cyberattack, Ford’s Costly Legal Battle, Long-Term EV Adoption

Paul J Daly  0:00  
I gotta get my record button to work, and my record button's not working, I'm not gonna worry about it. We'll get it some other way. We have a very special day. Today. It's episode 999 and none other than Todd Caputo is here to celebrate that with me.Kyle's in the air right now on his way to Syracuse to celebrate Episode 1000 tomorrow we're gonna record it in person, and you get to be 999 I know we

Todd Caputo  0:25  
were talking about that before it started. I feel very, very special. 999 I mean, that's amazing, you guys. I mean, congratulations. Tomorrow's 1000 that's that's amazing.

Paul J Daly  0:35  
Thank I remember when, thank you. It's been a lot of work, and I can't believe it's been 1000 episodes already. Doesn't feel like 1000 it feels like 500 But Nathan put this marker out. I don't know. It's probably like 100 plus episodes ago. Nathan, our producer, who's always on the show, was like, Hey, I'm gonna put this on the calendar. And we're like, Oh, yeah. And then before you know it, it's episode 1000. And like, two weeks ago, you didn't do anything about this or what. We made plans, and Kyle's coming in. You've been a part of quite a few episodes. I'll say, I know I have, yeah,

Speaker 1  1:04  
I know. You know how much I believe in what you guys do,

Paul J Daly  1:08  
for a lot of reasons I do. I sure do. And ASOTU

Todd Caputo  1:10  
CON and ASOTU CON, someone like I am telling everybody about ASOTU CON. I'm so psyched I can't wait. It's gonna be awesome. This is gonna be the best one

Paul J Daly  1:19  
ever. It really is going to be the best one ever I've been you know, is that, do you know Zach kyleman? Oh yeah. Zach k, i n, C, H with Yeah. So gm of Roman Toyota, we actually filmed the more than cars episode out there. Zach has become a good friend, and he's just an amazing, caring person. He's an unbelievable leader. I've seen him in action, in action, in person, and he's going to be coming out, and he just made a post on his LinkedIn talking about, kind of like, I'm sick of the same old conferences. I'm going to give a so to kind of try. Here are the things that I've been hearing about it. And then people chiming in, in the comments saying that, you know, he's basically like, everyone says their event is different. And people in the comments stepping up, saying, No, it really is different. And there is just something different about the energy when you step on the ground at a soda, kind where you realize somebody say, What's the difference? And I would just say, and it's kind of a buzzword now, but you feel the community the moment you start seeing other people at the event. There's no body walk in

Todd Caputo  2:16  
and you check into the hotel, like, as soon as you walk through the door and like, this is not like some kind of sales pitch to get people to go. It gets real. What happens there is 100% real. You're right. And

Paul J Daly  2:28  
it's just the moment you start meeting people and realizing that everyone there is excited to be there, and they're excited to see who the other people there are. It's nothing like anything else I've ever experienced in the auto industry. So you can get your tickets at ASOTU CON com. We're adding speakers and sessions pretty much regularly. At this point, there are a bunch of topics we're going to be covering, all the important topics to run your dealership, and the dealerships are trying to figure out what the best way is to navigate. And we're talking about sales opportunities, marketing, AI, fixed operations, mobile service, we really do get in the weeds on the data and also in the practical. And I think just like every event, the biggest ROI are the people you're gonna meet who are already doing and trying the same things that you trying to do and try and are gonna share their phone number, and you're gonna have that friend to bounce things off. Because you can learn everything you want in a session, but you learn so much more when you have someone who's trying it as well, and they're going to be at a soda con, including time. Good morning. Everybody on the live stream. Kelly, good morning. James, good morning. Beth, good morning. It's so good to be with you all today. Look, we have, we have some news to talk about. Oh, we do want to thank it's funny because this actually ties in a little bit with our first story. Want to throw the graphic up for Reynolds and Google. We want to thank our presenting sponsors this year, Reynolds and Google for the second year in the row. Actually, they did it last year, and they realized it was worth it, so they did it again. We couldn't do this without you. Thank you for stepping up making sure that ASOTU CON is everything that it is meant to be and destined to be. Going to get into our first story. When Kyle and I were at the Reynolds headquarters last year, we went. We made a trip, we got the tour. We saw they have, I don't know if you've ever, have you ever been to the Reynolds headquarters? Todd, nope, never been. Okay. So we're in the boardroom,

Speaker 1  4:11  
and they bring out, cannot imagine what that place looks like. It's amazing.

Paul J Daly  4:15  
And they bring out this thing that looks like a copy of the Dead Sea Scrolls. It's like these two giant scrolls, and they stretch it out the length of this boardroom and beyond, I can't remember, it's like 60 feet, and it's just paper and it's all documentation. And they were like, This is what a deal looks like, end to end. It is 60 feet long. It was pretty impressive. Oh, wow. And back then they were like, and if we had the cars rule, it's going to become 80 feet, which I want to see. If maybe I can get them to bring it to a soda Con this year. It would be really fun to roll that thing out on I need

Todd Caputo  4:45  
to see that, because I cannot really picture that in that mind, like whatever. Well, how many time a deals, how many times a deal gets penciled till it's actually like,

Paul J Daly  4:52  
Fine, all that. No, that's all the documentation needed to close. Oh, all the paperwork, all the docs, all the contracts. The disclosures, and it's pretty cool to see. And oh, that

Speaker 1  5:03  
doesn't miss them. That doesn't surprise and we were and

Paul J Daly  5:07  
so when we were there, we walked by this room that looked like it was out of a spy movie, and they there were. There's people in Compute, like in computers, and these giant screens with maps of the world. There it is. It's the pictures on the screen right now. Walk by this room and they just have people. This is their cyber security unit that they have monitoring real time threats. It looked like the Situation Room in the Pentagon, and it's right kind of across the hall from where all the servers

Todd Caputo  5:31  
that looks like, what that looks like. Remember that movie when we were kids, board games? Remember that movie, war games?

Paul J Daly  5:38  
Oh my gosh, that was Yeah, with Matthew Broderick. Do you know that? I totally do update myself on that one, games.

Speaker 2  5:43  
Yeah, you want to play a game, remember, absolutely you know what I'm talking about. I

Paul J Daly  5:50  
totally don't like the missiles. Is it real? Is it fake? Well, basically, a major cyber security attack nearly hit hundreds of dealerships in early March, but Reynolds and Reynolds proton Security Division stopped it in its tracks on March 12. Proton detected malware disguised as an identity verification check originating from video links provided by Liza. Liza video solutions. Basically the attack was looking to infiltrate dealership employees and customers computers through social engineering, which is the way most attacks get started, proton block the malware across the 1000 dealerships, stopping it from spreading to 40,000 computers. Here's a quote from Brad Holt and VP of Reynolds and founder of proton, said, our team quickly identified how to shut it down, and we pushed out tools to block it. Liza confirmed the issue was resolved by March 15, launching a new security measure. Cyber security expert Eric Nacht bear, called the attack a textbook example of threats dealerships face today, emphasizing the need for early detection and rapid response. This is kind of like the one that didn't happen. We obviously all know what happened last year, and it's kind of fun to hear. You know, obviously they couldn't release it right away. They need to make sure it was squashed, which is why the news took a little to get out, but I think it's it's good to hear that this is happening, and like Reynolds, has their team on lock, but I think it's also a stark reminder of how prepared dealerships need to be in case something does happen.

Todd Caputo  7:14  
Yeah, so that's exactly what I was thinking. Right? The CDK people are, they went through all of it last year, and God forbid it happens to them again. They're probably ready, but the dealers that had rentals never experienced it. And my advice would be, if I was still a dealer and as a consultant, right, like, that's what I do now, I'd make sure, like, you got a plan for everything. God forbid this happens like, you gotta have a plan. You gotta have paper back up, literally, for everything you do, and more importantly, make sure that people know how to use it. Because, I mean, it's going to happen again. I don't care how good security is, it will happen again. There's a question about

Paul J Daly  7:48  
it. Absolutely, you know, there's, there's, I think the the basic, basic steps that we saw, it's easy to think when nothing's going on. I think a lot of people got more prepared during the time. But, you know, I think one of the most effective and practical solutions I saw and heard of during that is like, make sure you have a sample deal jacket, sample paperwork to process any one deal and have it on lock. Have your copier ready so that the moment this happens, you can take out this little packet right, unzip it, and then make copies, and your process and procedure can keep moving without having to scramble and find out where everything is. I just thought that was a real practical and then the service department too, right? When people got services, much more complicated, more

Speaker 1  8:32  
services, way more of a nightmare than sales. I can tell you that straight, yeah,

Paul J Daly  8:36  
oh my gosh, it is. And people in accounting,

Speaker 2  8:41  
let's pray it doesn't happen again, right? But gotta be ready.

Paul J Daly  8:45  
I know gotta be ready. And thanks. It's pretty cool to see that Reynolds is on the scene and they're getting it. If you ever have time to go the headquarters, make sure they walk you by the cyber security room, because it makes you feel it makes you feel pretty special. Speaking of pretty special stuff, segway one dealership got a ruling. Basically, a judge has ruled that Ford improperly used its right of first refusal to block auto dealership partners, that's the name of the company from acquiring a dealership, ordering the automaker to pay $18 million in damages. The right of first refusal, many no allows automakers to reject a dealership buyer in a sale and substitute their own buyer, sometimes using it to close or purchase the store outright. Ford used its right of first refusal in 2019 to prevent the sale of a Ford dealership in Benton, Arkansas, but Circuit Judge Timothy Davis Fox found Ford quote engaged in deceit and fraud by misleading the original buyer about the deal's approval, auto dealership partners was awarded $16 million in punitive damages and 2 million for financial harm from the altered transaction. Larry Crane Jr, co owner of auto dealership partners, said the verdict quote upholds the principles of fairness in the automotive industry, while Ford maintains it followed legal. Procedures and is going to appeal the ruling.

Todd Caputo  10:04  
I figured that there would be an appeal of always, of course, you're not really fine, yeah. I mean, that's, that's a long, detailed conversation. When you talk about buy, sells and rovers and things like that, like, that's not anything simple. My advice, if, if I'm a dealer, and I'm looking to acquire other franchises, which a lot of other dealers are very much aggressively looking to grow. You got to make sure your house is really in order already, and the franchises that you currently have, because if they're not, the factory is going to look very, very close. And if, for some reason, the factory doesn't want you there, they will look to find any reason they possibly can to not allow you to make that acquisition. Then they'll exercise their first right? So we know what that is, that sales effectiveness, it's CSI, and we can go on down the list. So that's important, right? Keep your house in order. This year is going to be interesting. That's for sure. We're mid March and a long way to go this year. Yeah, we do.

Paul J Daly  11:04  
Do you think so? I feel like in situations like this too, it's where I've seen a vast array of dealership focus on relationships with their OEMs, some straight up contentious, like it's us against them, and some going as far as and, you know, Mister, mister sioka, Greg sioka, Senior of the Sioux CEO Auto Group, puts it basically in his core values that they will intentionally value and like cultivate the OEM relationships, The most essential partner, and so I feel like that's that's one of the best ways in that mindset is probably the contentious mindset, is the one that I think sets the stage for situations where the OEM is going to push back and try to leverage their power as much as possible to put who they want in the store. This this court and this ruling. Obviously, the courts are an important check and balance, because it's business, right? So people are always leveraging, and a lot of people just pushing it to the line to see, I mean, because that's basically what business is. A lot of time, right? Like, how can we exert our leverage to try to get the best deal possible? And I think rulings like this are just a reminder that there is a balance, and there's a check, and we'll see what happens with the appeal, but if not pretty big check,

Todd Caputo  12:25  
I think that, you know, it's a win win for for both the dealer and the OEM. If there's a good relationship between the two and the customers and the customer, of course it's extremely important. And you know, look at if you're Ford or Nisa or anybody else you want to have a dealer or dealer group, or even if it's a large public or a large private, you know, really representing your brand properly. And I don't have a problem with that, right? I think where dealers sometimes get upset, and rightfully so, is when there's unreasonable expectations from a manufacturer to maybe spend money on certain things that the dealer has to spend money for, you know, like things to do with, you know, the dealerships themselves, the buildings, the furniture, certain software that they may, you know, I don't use the word force, but in a lot of cases, they're forced to use, in a lot of cases, inferior software, right? Or have an inferior process that they may be better at. And I think that that's, you know, that's what your deal associations are for. That's what nada is for your state deal associations and, you know, your dealer boards, right? And that's why it's important. I think dealers are always in communication and have a good represent, you know, have a good, good relationship with with the OEM. It's really, really, really important, right? They got to get along,

Paul J Daly  13:37  
yeah? Speaking of getting along, stop segway. All right, this next topic, Todd, you and I have a good past on EVs. We have a little recent, some recent adventures on this one.

Unknown Speaker  13:50  
EV by the way, I meant to ask you, it's

Paul J Daly  13:52  
good. I can see it from my window. It's parked outside, and I've got my I got my charging routine on lock, especially because I have a charge a level two charger out front of my building here. I haven't been to a gas station since I bought it. Right? Never had a stop, and I've never had a publicly charged I mean, this, I guess, could be considered public, but this might as well be a private charger that I installed here.

Speaker 1  14:11  
Did you get a charge at your house yet? Or? No, nope. Oh, you gotta get a charge at your house.

Paul J Daly  14:15  
I don't, I don't know if I do really. Well, think about it. I come here five days a week and I spent eight hours here. Why would I ever need to

Speaker 1  14:23  
charge at home? Yeah, I'd still charge at your house anyway. I know, I know, it's

Paul J Daly  14:27  
just, I want to get one.

Unknown Speaker  14:28  
You gotta have a backup for the backup, my friend, well, the backup

Paul J Daly  14:31  
is, is, you know, the 110 I can get, you know, five miles. No,

Todd Caputo  14:36  
that's, that's completely never gonna happen. No, you should get, get a charge at your house, and then set it to charge at night when it costs less money to actually charge, you should be able to adjust it so it only So, not when you plug it in, but at certain times of night, yep, or 10 or 11 or midnight or whatever, and it'll charge to it like that's that's the way to do it. I

Paul J Daly  14:57  
will, I will get one. I've. Already been kind of, like, I've kind of uncertain on where I want to put it, so this has, like, slowed my urgency to do it, like, let me, let me park it in the garage, to try to figure out where I want to park it. And, you know, it's a big vehicle, so the

Todd Caputo  15:12  
further away it is from your panel, the more money it costs. Yeah, that I do know, right closer to the panel you can get, the better, the less expensive it is, but it's worth every penny. I would definitely do

Paul J Daly  15:23  
it all right, I'm gonna do it. I'll let you know what I do some but the Trump administration plans to EV, plans to eliminate EV tax credits, weaken pollution rules and cut charging infrastructure funding, could definitely slow EV adoption, according to new data. Basically, while EVs continue to grow, the tipping point for mass adoption is maybe going to be pushed off further into the future. Analysts are saying ending federal EV support could reduce EV sales by 40% at by 2030 and put factories at risk of closure. President Trump. Congressional Republicans are looking to cut incentives, halt charging station funding, and block California's emission rules. Princeton and Harvard studies estimate 8.3 to 9.9 million fewer EVs on us roads by 2030 if these policies are rolled back. Here's a quote from Ed Kim, president and chief analyst of auto Pacific, says everything that's happening politically couldn't have happened at a worse time from the point of view of EV adoption, while gal Tell Director of electric vehicle research center of UC Davis, says it's clear, based on the evidence, there's no inflection point, no significant market growth without strong public policy support.

Todd Caputo  16:32  
I don't think that us as taxpayers should subsidize EVs period, like we just shouldn't infrastructure. I don't necessarily agree on, I think, you know, it's the government's job to, you know, create infrastructure, pay for infrastructure, and that's our that's our taxpayer money. I have no problem with that, but I don't like my tax money giving somebody $7,500 rebate or a $4,000 rebate to get somebody to drive an EV because, you know, you can talk all day long about, geez, are they better for the environment? Or they're not better than free environment? If somebody wants to buy an EV, let them buy one. But I don't put a rebate on it, right? Let it come out of the manufacturer's pocket, which is probably going to have to at the end of the day, the manufacturers have a ton of money invested in EVs. Now, yep. So that $7,500 has got to come from somewhere. So it's probably going to have to come from, you know, the these OEMs, which is unfortunate. But, you know, I remember when this was happening during the last administration, and I was watching as all these OEMs said, we're just going to go right to electric, right to electric, right to electric. I'm thinking

Paul J Daly  17:37  
myself electric by here, yeah,

Todd Caputo  17:40  
yeah. But you better slow down just a little bit right, for a lot of different reasons. Then again, I love EVs. I think they're great cars, but people should have a choice, right? People want to buy a gas car, to buy a gas car, if they want to buy a hybrid, a hybrid or an EV, but it should not be subsidized by our hard earned tax dollars. No way at

Paul J Daly  17:59  
all. Jim gether, chiming in, CEO, founder of mosaic, says, I agree with Todd. The government shouldn't pick winners and losers. Let the markets do its let the market do its thing. I will say charging infrastructure that is by far the biggest barrier to EV adoption. And the vlog that I posted and the experience you talked about, you learned, actually GM, the OEM one, the OEM charger, saved my butt. The GM charger is the one that really came in at the last hour and saved me, but um, which is funny. GM, saving a Ford, but um, all reality, everyone who's driven this car, because I try to let people drive it. A lot of people have never driven one, including my wife. She prefers this like by far. Now she loves driving it. She it's so easy to drive. She took the one pedal driving. It's, she's like, it's hard to go back. And she hardly ever drives this thing. I think when people drive EVs, if it's practical for their life, and they have a way to charge it like, reliably and without huge inconvenience, I think they'll do it because EV driving experience is just great.

Unknown Speaker  18:59  
They need to be affordable.

Todd Caputo  19:00  
Yeah, okay. Or should be affordable straight up. And right now, from a lot of cases brand new, they're not, and I don't want my taxpayer money subsidizing it. That's right. Me neither buy a used one. They'd appreciate a

Paul J Daly  19:12  
lot. That's right now's the time to buy? Probably not time to buy. 50 cents on the dollar. I'll take that every day. Todd, thanks for being here for 999 tomorrow we'll see you for Episode 1000

Unknown Speaker  19:23  
you.

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