Public Gross Profits Down, Deep Dive on UAW Boss Fain, New San Fran

Paul Daly: 0:02Okay, we are rolling into Tuesday burnin into the week and we're starting off the kind of like official start of the week at a baseball field. What are you doing out here? Kyle? We're gonna really want to know who it is and who I need to know, professionally in a professional capacity or in a baseball field. This

‍Kyle Mountsier: 0:24

is what like, we keep saying we're like, literally the reason why we're recording TV shows and doing all this stuff is like we always wanted to be on a Tonight Show. We always wanted to stand on a baseball field. We always wanted to have a rock concert right? Sorry.

Paul Daly: 0:40

Actually, I wish we planned it out that well, right.

Kyle Mountsier: 0:43

We're not great at that. But we did.

Paul Daly: 0:44

We hope everybody had an amazing Labor Day week on hold. You sold a bunch of cars, barbecued a bunch of hot dogs and hamburgers and are ready for September. Like for Ron, I know it was September like Friday. But now it feels like it's full. It's full

Kyle Mountsier: 0:57

throttle. I had a couple of like text conversations going on with some people and it seemed like Labor Day weekend was hot, at least in a couple markets. So sure, September's just gonna rock on September is going to be extremely hot the second half of September because we're rolling up for a soda con. This weekend. We dropped 100% Well, Saans one Yeah. 1.5% of the full agenda of a soda con. So if you've been holding on, you're like, I don't know, should I go? Is the content gonna be right for me, you can view all the content or view it by stage, break it down, understand who's speaking on what topics whether it applies to you. And we really like I started looking, I was like, Wow, it really hits every area of the dealership. Maybe not accounts payable, but pretty much every other one. Yeah. So you know, wherever you're at in the dealership, there's something for you. Absolutely.

Paul Daly: 1:49

And make sure you go and toggle through the agenda. By stage there is just rich, rich wisdom. As you go through these sessions stage by stage, we look at the dealers and the practitioners. They're like, Wait, they're going to be there. They're going to be there. Yes. And they're all going to be in collaboration mode, meaning they're gonna tell you everything one of my favorite session titles, I started to get texts about this as soon as we released it, stop wasting money on consultants. Yeah, that's gonna get some people fire features and dealers and some consultants, having a really honest conversation about wasting money on consultants or making the right decisions ahead of time. So lots of great content like that, go to a soda con.com Get your tickets now, there are still some rooms left in the hotel, those are going to be gone or at the very least, gonna go up in price by like 200 bucks a room right now they're like 175 and it's cheap. Soda con.com We have some news to talk about today.

Kyle Mountsier: 2:43

We got some stuff lots happened there. What else we didn't throw this story in. But there was some some news this weekend that got like into that half leaked about a major dealer group buying another top 20 dealer group. So we're gonna watch that news. If you haven't heard about it. There's some some leaked information about our news. We're not leaking leaks. So. But we do want to talk about some real news,

Paul Daly: 3:09

if we should for sure. We're also I think, we can't forget to mention cars and stream for CO sponsoring soda con being co presenting sponsors. We can't thank them enough or encourage you enough that they are paying attention to the future of the industry. Not what is now also what is now but yeah, got some progressive stuff coming out to a lot of fun stuff. All right, some news. As projected earlier this summer, f&i profits per vehicle are dropping, and four of the six publicly traded groups. They've reported this in their q2 earnings CEO Joe Lauer set of automation set on July 21. Call that automation is averaging more than two products per deal, which has led to more than 70% of his f&i products, profits coming from products. Yeah,

Kyle Mountsier: 3:52

that's key because AutoNation was one of the two groups to actually raise their f&i profits. So it's interesting because when you look across and you'd like to have the group's actually had to who was the other one? Now, I'm forgetting, it's in the article. We've got it in the show notes and the links. But them citing this like them, using the time in the pandemic, to get better at the sales process in f&i lead to a higher products per deal, which maintained their high f&i profitability. You got good. So pretty big deal there.

Paul Daly: 4:31

Well, analysts are pointing to affordability issues impacting customers ability to purchase the extra products like the protection products, and et cetera, et cetera, and falling vehicle. Wait, I'm sorry, I missed it. You know, you got sunglasses on? We got to know you're trying to talk to the camera. We're at a baseball field in

Kyle Mountsier: 4:49

the heart of the article is like, hey, they the majority of these groups, and we're seeing across the country, the drop in f&i penetration and f&i profits, everybody's out of money, because there's affordability issues. But the other thing was, is that as vehicle prices are dropping, you're seeing less and less margin in revenue, right. And so you see those those minor declines, there's still projection of minor declines over time. But analysts also looked at some of the groups like driveway and and, and even a group one with accelerated seeing higher profits per deal on anything that goes through the digital retailing platforms. So as adoption curve grows on that, they actually expect a rebound rebound of some of the decline over the last couple quarters due to affordability issues. So something to watch out for, I would definitely say like, if you're looking at this as a dealer or dealer group, you are dialing in on your processes for sales to look at what auto nation has done on products per deal, a crazy products per deal at over two, which typically you see in that like one and a half range at a dealer or dealer group. And then also looking at what is your digital retailing process and how many people are touching that digital process in the showroom in online? So funny,

Paul Daly: 6:07

the conversations of the basics started at nada, and they've kind of died down. And this is an indicator that like actually just doing the basics right. Yeah. And focusing on that is going to help you weather all the ups and downs in the uncertainties that are coming our way. Speaking of uncertainties, yeah, that are coming our way. I don't think we have a segue but but right now, but as the strike rhetoric between the UAW and Detroit's big three keeps heating up, many are working. To learn more about this figure this Shawn fain who all of a sudden, this guy had been the feature of a Wall Street Journal article, like on the main site over the weekend, not just the auto section, everybody's paying attention. So we thought it'd be good to give you a little background from that article and some things that we found interesting. So basically, he grew up in a politically active family. His father was a policeman. His mother was a nurse he remained remembers hammering and picket signs because they were very politically active, growing up as a kid. So this is kind of home territory for him. Yeah, started his career as a union electrician for Chrysler. And he actually carries one of his grandfather's pay stubs. It's a Chrysler pay stub from the 1940s keeps it in his pocket. I think it was like 39 cents. That's something crazy. It could have been maybe 39 bucks. So he was the first candidate in 70 years to upset the incumbent president in the UAW election, I didn't realize that he won by less than a 1% margin. And in 70 years, the incumbent has already always won. One of the reasons people save for this is because several of the previous UAW presidents are in prison now. So there was a little bit of motivation for people to get get a different look. And so he references Walter Luthor, a 1940s, Union Boss, he's been influenced by John Lewis, civil rights figure, basketball coach, John Wooden, everybody

Kyle Mountsier: 7:54

who hasn't been John Wooden is like everybody's like, yeah, Don

Paul Daly: 7:58

Wood, of course. So basically, he had this little moment in a rally when he said, How far are you willing to go? Right to have your voice heard? And then he started playing to Eminem? Turns out he is a huge fan of 90s Hip Hop. I wouldn't call that one definitely wouldn't. That's not a 90s hip hop guy at all. But actually, probably from the 90s you see him he's got really long hair. Go for grunge mode. He watched his TED lasso. And here's here's probably the one that fits the best he owns a placard sits on his desk says, and we quote, I don't shoot your coach. That I'm not Willy Wonka. So I think we got

Kyle Mountsier: 8:41

some insight. Yeah, we got some insight. The other news like the real news on the UAW stuff is this weekend. Ford came with a pretty strong proposal back for them. They're pushing back on GM ends to Lantis and saying like, hey, they're not honoring good faith negotiation filed a complaint with like bilateral relations. Yeah, so there's still a lot of things happening. We are less than a week now or read out a week away. Seven deadlines, so just gonna be a lot of stuff heating up, we'll try and like drop that was a little bit longer of a look at why that was kind of a feel good

Paul Daly: 9:15

book. Because we want to start the week off. We're not trying to talk about the bad stuff first.

Kyle Mountsier: 9:21

No, absolutely bad stuff in a good way. While speaking about bad stuff in good ways, I don't know. Some tech billionaires have been planning a city with big promises outside of San Francisco called a California forever, you can click the link in the show notes to go take a look at it. But the website for the city contains a bunch of images that are not even artist's drawings. It looks like they are clearly made by AI of a real walkable town with a Community Focus outside of San Francisco. It's really close to the Air Force base there. But I thought it was intriguing as I looked at the article that The Verge put out there that all of the As you know, massive billionaires and and all in the tech space are kind of moving outside of the city to create to create this environment reboot. And it's a reboot, it's really interesting you start to see, we're starting to see many, many more. This is like the third or fourth story we run over the last six months of communities being planned to build deeper community, right to actually like, put people in places where they can be in a walkable city, revitalize the city. And these were the two really, really interesting things. There was a particular note and FAQs that I was I was interested in. That they are they are going to press hard on redefining and redeveloping the road and highway infrastructure around there, which if you look at all the other plan communities that we've talked about, they've kind of like removed,

Paul Daly: 10:50

rideable, no cars,

Kyle Mountsier: 10:51

right. So that so they're leaning into that the other piece was, they were talking about job growth, and that they want sustainable jobs, and they want jobs to be available. But they particularly cited trade education as a piece that they want to learn to build a city without the trades. Exactly. So all of the trades and not just like creating career paths for tech growth, but understanding that service based address is really, really important. So really interesting, and I think like, hey, if I'm an auto dealer in San Francisco, I'll probably bring in some people I'm

Paul Daly: 11:24

gonna have some cars that are probably only gonna be interesting for me but it would be interesting I think one of the best strategies in this entire plan is to name it after what could be a potential Taylor Swift collaboration. This California forever just sounds like the next Taylor Swift it's just a full album. Yeah, and then they can get the whole thing going she could have a little spot there. But we'll see if this works a lot of these plant communities have happened with billionaire stepping in trying to change or reset the status quo that is really the result of of like, what just happened because of policy and because of all these things, so for them stepping out saying none of that and Oh, Virginia tried to do it separately. Set it up in a new way. We'll always see right apparently the guy who I can't remember his name young guy who founded this it took it took city officials several years to figure out who it was that was actually buying up all the land buying up around the city. They didn't even know who it was, but he's back basically back here being like the asoto version of the city planners he's like you over here let them know we're doing in a minute but first we need all of us to be agreed so I mean, I think that's all we ever Tuesday we are on the set actually have more than cars Episode Four that we're filming today. At Mohawk Chevrolet. You can roll the in. Is it already rolling Maestro? There you go. Episode Four right now. Episode Two is coming out in just about a couple of weeks. Episode Three is dropping out of solo con. Episode Four is dropping while recording now. A couple of days ago.

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