Rates Down/Payments Up, Scout DTC “Exactly What Customers Want”?, Apple’s AI Ads

Paul J Daly  0:01  
Hey, Kyle, do you know what is in Lafayette Indiana?

Kyle Mountsier  0:04  
Bob rohrman, Toyota, I

Paul J Daly  0:06  
was gonna say we are we? Are

Unknown Speaker  0:07  
it

Paul J Daly  0:08  
is october 29 it's Tuesday. Is it Tuesday? Today? It's Wednesday.

Kyle Mountsier  0:12  
It's Tuesday.

Paul J Daly  0:13  
It's Tuesday. It's october 29 we're in Lafayette Indiana, at Bob warm and Toyota to shoot a season two episode of My goodness, but first we have some things to talk about. I don't know if there was music playing or not. We all right. We're good. We

Kyle Mountsier  0:26  
got music. We got these producing things and all that. We

Paul J Daly  0:29  
have the we're rolling heavy. We got like 10 people here. You can see in the back we're starting to set up. We have a full day. We actually have a a family lunch in this episode, which we're super excited about. If you haven't seen any of the episodes leading up to this, you can just go to more than cars.tv or you can go on Amazon Prime Now and see but basically we're going around the country telling the good stories, the real truth about car dealers, and this is going to be one of those. So we hope you can do that. We're also premiering episode four of season one on November 13. So we're just about at the two week mark, a real close, two weeks from tomorrow.

Kyle Mountsier  1:04  
Go to LinkedIn. Make sure you sign up so that you get the notification. Join it. Bring the whole team for lunch. Watch the watch episode four. So much fun.

Paul J Daly  1:14  
It works great in the conference room. It probably does, although we don't get the view count. Show Amazon. People love it. But we'll live. We'll live. We are going to be on the road again next week at the we're going to be speaking to all the communications directors for all of the state associations. It's great. We're going to be the opening keynote. So we're excited to do that and be with the people. Who is job is every single day to connect the dealers with the communities and with the states. So that'll be a fun one too. You probably won't be at that one. Maybe you will. If you're going to be at that one, shoot us an email and let us know, because we want to make sure we say hi. But I think we'll get to meet everybody, because there's only 50 there's only 50 people. So it'll be a wonderful state. There you go. Oh, are we still it doesn't mean we're not going to talk about news today. So JD Powers preliminary October data revealing that while auto loan interest rates have dipped, monthly payments on new vehicles continue to climb, driven by largely reduced trade in values, the average interest, interest rate for a new vehicle is 6.7% down from 7.4% a year ago. So we're moving a little bit, not even a whole point, with monthly payments, though reaching still $738 on average, which is still a 14% increase year over year. Wow, the average new vehicle transaction price is down a little bit to 44 904, with used vehicles averaging still so high, 28,004 72 is the average used vehicle. Trade in equity. Here's the kicker, trade in equity has plummeted 10% all the way down to $7,900 cars are spending an average of 50 days online. Oh, that's more than double what they were last year. Leasing is up to 23% we've been talking about that driven by increased incentives now 6.3% of sticker prices the average incentive. Wow. I think of a quote here. Thomas King J power said, quote, this holiday season may require innovative strategies to entice customers into acquiring a new vehicle. Well,

Kyle Mountsier  3:10  
here's the keynotes for me. On this one is a 50 days, average of 50 days on lots for used vehicles. Like we know what type of impact that has for profitability, what type of impact it has on floor plan interest and so staying keen on the used car inventory is extremely key. The other interesting one for this, for for me, is that I was talking to someone in the financial sector the other day, specifically about mortgage rates, and we're actually seeing, over the last 60 days, mortgage rates climb again while we're seeing auto rates getting reduced. So why

Paul J Daly  3:46  
don't they say that is, I think no, mortgage rates aren't like, lock step tied, because they build into pricing. What they think the

Kyle Mountsier  3:54  
is more about like, hey, look, even though the federal fed interest rate came down, the interest rates on on 30 year mortgages, is going back up, but we're seeing the continued decline in new car interest rates. So it's something to talk about. There's, you know, obviously a week from today, there'll be a lot of speculation about what rates will do in q1 q2 so there'll be, you know, going on in a week from this. Don't talk about it too much, okay, but, but still just heavy level of consideration on spending power, on ability to purchase, on how incentives tie into trade in equity or inequity, and so that consumer education up front still has to be super top of mind.

Paul J Daly  4:36  
Oh man, speaking of Top of Mind, do we have segue? We got it very good. It's always going to get that coordination. I feel like we're banned today. Yes, we've been talking about this one a little a little bit of a different nuance we know. Scout motors, backed by Volkswagen, is embracing this direct consumer model, obviously sidestepping dealers looking for this seamless digital first process. However, dealers are always already pushing back with legal threats. So what? Why we're covering this? And the link in the article today is from something we it's like, it's a, what is it? It's like a tech consumer, yeah, tech

Kyle Mountsier  5:08  
consumer, media aggregator, that's similar to us, but for outside of auto, it's

Paul J Daly  5:12  
called The Verge. And really, the angle of this is pretty much what you would expect from a consumer first perspective. Media saying, like scout is aiming to get rid of dealers. No one's upset about it. Nobody wants the dealers anyway. It's a very familiar tune, but basically Scott Kyle is promising a quote, transparent, super fast and super easy buying experience. They have an in house digital platform. Do you know who's power in that stand? I find out. We're gonna find that out. Scout bypasses the dealership model. Obviously, they're looking to open 25 what they are calling, quote, workshops for service and test drives and scout studios for sale. You call whatever you want. That's what Tesla said, looks like the car dealership. Um, only through direct sales model can scout go give a full 360 view of the customer. Says, VP Cody Thacker, see

Kyle Mountsier  5:57  
that? That one's interesting to me. It's like, oh, look, that's the only way we're actually going to get a complete view of what the what the customer is doing. And I know for a fact that there are multiple companies across across auto looking at like, how do we tie the tier three to the tier one and the data story? But the the bigger thing about this, to me is the unique data points that they're trying to pull out about the buying experience. You know, Scout saying, Oh, look, the shopping or the buying experience takes over 13 hours, which we know from inside,

Paul J Daly  6:30  
yeah, here it is, here's, here's. From the article, the clean sheet approach is trying to remake buying according to research compiled by scout the company, buying experience consumes an average of 13 hours, 31 minutes. Just 8% of consumers have high or very high trust in dealers, resulting in more than 180,000

Kyle Mountsier  6:48  
dealer related complaints every year. So they're saying that customers are spending 13 hours buying a car. This is, this is actually for me, right, like Scott Kyle came from VW, and we know that VW still needs to see the dealer as a winner for them. And so it's interesting to me that they that as a brand, they're kind of like calling this out. But what's, what's the bigger story here? And the one that I want to focus on today is the fact that the verge of very widely used consumer facing brand of media is calling this out as seeing dealers combat this in legal process alone. Yeah, right. And, and that's the perception of the consumer. You know, we were actually talking to someone this morning at the hotel that was like, Oh, look, I never even knew about this Kyle Brown. And now it's like, I can't get away from it the last few days. Yeah, it did a good job on the brand mark. Exactly. They did. They get it. They did they get it. They did a great job. And the PR game has been amazing. That also means that as dealers like our perception is again on the line because of the way that scout is going to market and we and combating that by legal process alone is just never going to win in the court of public opinion.

Paul J Daly  7:59  
So Scott Kyle and Volkswagen are in this tricky boat, because, you know, where's this quote, and you know, Scott says, Scout is 100% separate brands, separate entity, separate structure, separate everything, except for the fact, Scott, where did you work last right? And who tapped you in the shoulder and said, we have this idea to do this thing. It was a Volkswagen employee or executive. So even though you have the legal entity like dealers don't see it that way, we'll see if consumers actually see it that way, right? But, but the reality is, totally agree, the consumer wants the best way to buy a car we've seen now Tesla and rivian and Fisker even, I'll throw Carvana in there, trying to deliver a different experience. And what actual what the actual data shows is that people like dealing with a salesperson. They always talk about them when you review people as the best part of your buying, the salesperson every time, regardless of that. And we've seen the service issues that come up. What happens when there's a problem with the delivery, it's a challenging thing that they're trying to do, and we have examples now to say, like, it doesn't go like everyone thinks it's going to go, yep,

Kyle Mountsier  9:07  
yep. Still. I mean, obviously we have our opinions on this, and we're calling out, like, the facts or the facts, yeah, but like, as dealers, we still have the responsibility to give the best possible experience at every turn, so that the OEM and the consumer has no choice but to go with the dealer experience. For sure.

Paul J Daly  9:25  
Scott's very well loved in the industry, and he's true, he was like, an amazing leader. And look, when you're you're in a track meet, or you're like, What do you want? You want a real athlete competing against you? Yep, right? Because that makes you run faster. Pay more attention. So I love the vehicles, by the way. Yeah, they're so dope.

Kyle Mountsier  9:41  
I'd want to sell them too.

Paul J Daly  9:42  
I would absolutely Speaking of things that are dope. I don't know we're gonna watch we're gonna watch an Apple commercial. They're

Kyle Mountsier  9:49  
usually dope, all right. If you haven't seen it, you gotta go check it out links in our show notes. But this week, Apple has launched two new ads promoting its Apple intelligence. Rules. Interestingly enough, are we going to watch one of these? We got to watch it, but, but what you want to watch out for is that the ad kind of like calls out the general person for maybe not being as on top of their game as they should.

Paul J Daly  10:17  
All right, let's run the ad. I

Unknown Speaker  10:34  
Wow, hey, J this project might need a bit Zhu Jing, but you're the big enchilada. Hollaback Warren,

Speaker 1  10:57  
the most capable individual to undertake this task. Please let me know your thoughts. Best regards, Warren.

Paul J Daly  11:15  
So basically, what you saw there is this, like, kind of like, sloppy looking guy at a desk, and he's, like, talking about how he's typing a text message to his boss or an email on his phone, and then he hits the professional button for the AI to rewrite it, and the boss looks up and looks back over this guy, like, you know, like spinning in his office chair. He's like, You wrote that.

Kyle Mountsier  11:34  
This is, it's, it's really interesting, because I think, you know, the like, consumers are now getting a more widely adopted AI integrated into their everyday technology like, you know, in business, I think a lot of people have been utilizing it, but it's not something that people have adopted on like, a moment by moment basis to enhance their their their speed of work and so to kind of Like, position AI as the way to be smarter is a really interesting move. And actually, this article by Fast Company, the observers noted like so far, Apple intelligence is showing us how to construct a false impression of ourselves, essentially. I

Paul J Daly  12:17  
mean, that is exactly what it does, and it says, critics say Apple's ads subtly suggest that AI is a quote, cure for the dumb and

Kyle Mountsier  12:25  
lazy. Wow. But what's really interesting is, like, Great use of AI actually requires a lot of skill, a lot of understanding. And so my encouragement here is, don't just use AI to be dumb. No, don't

Paul J Daly  12:39  
I think it's, it's different than that. I would say, I would say it's, don't use AI to be somebody else. That's right. And I think that that's where everyone, very quickly, is going to figure out, like, Oh, that's not real. That's, that's not real when they read like your social media posts, like you didn't write that, right? So I think, and that's what this is, like, I'm going to be somebody but the the bottom line is like, that guy is not going to make it because he's not paying attention. He's not thinking critically, he's not working hard. And then everyone is going to elevate to this level, like we we do hiring. Yep, you read resumes, you're like, something has changed. Yes, everyone is not writing at this level anymore. And then actually, it makes it even more important that you look for the differentiating factor, yep, the personality factor. Those are going to bubble that the creativity is going to bubble to the top. The concepts, if you're in marketing, creative concepts, going to bubble to the top, because all the stuff's going to look and feel,

Kyle Mountsier  13:29  
it'll look and feel the same Nice. So you got to look for that, that level of personality, that level of injection of who that person actually is.

Paul J Daly  13:36  
All the outro music, which is, are here in person in Lafayette, Indiana, at room in Toyota to produce one of the cars to talk to people do some things. I heard there's going to be a costume thing going on. We'll find out soon. You

Transcribed by https://otter.ai

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