Sonic’s Boom, Wireless EV Charging, Initial Quality Winners & Losers

Paul Daly: 0:24Yo, first Friday of summer. There's construction crews outside I don't know if you get here or not, but I got to spend time in the dealership today we're talking about Sonic,wireless Evie charging and initial quality winners and losers. The people really I don't know if you remember I remember when we talked about this last year.

‍Kyle Mountsier: 0:42

I did too. Yeah.It's it's kind of staying true to course a

Paul Daly: 0:47

little. Yeah, I don't think I was thinking about that.Yeah. So this morning. This morning I come in and super hot today. Right after this. We're going to be an all things use cars clubhouse room with David Long. So if you're listening to the live stream, head over to clubhouse right after this. And we're going to jam on. I don't know what the topic is something about use cars and acquisitions and values, volume

Kyle Mountsier: 1:08

of appraisals versus a

Paul Daly: 1:10

lookbook. Okay, okay.

Kyle Mountsier: 1:13

Do you want more appraisal, don't care about how many you actually book into trades? Or purchases? Or is looking to book and managing the volume of appraisals? You know,I've got a chicken or

Paul Daly: 1:23

the egg. There's there's some dissenting opinions in that room. Yeah, I want them to, uh, energetic. Always, it always says, I walked into Toyota dealership this morning to pick up a part for my for my Toyota. And I was like, look at all these people that don't know about us. So there it is. And I was like, and it feels like home because it's a Toyota store and it's the service department. So it all felt right. And I just go around I'm handing out people love people more than you love car stickers and just having all these different like stages of like, what what do you do for what this exists? So hopefully,we get some of you all into the asoto community and show you that there are other people doing things in a really really great way in the industry that just got me all fired up. And then we started talking about we should just go round in our cities and just do this for a day.

Kyle Mountsier: 2:11

Just gonna start shelling Shetland stickers all day.

Paul Daly: 2:15

It'd be fun because holistically speaking very few people percentage wise even know what we're up to, but they're about to Yeah, they will

Kyle Mountsier: 2:22

they will vote we got to do the groundwork. We got to do the groundwork isn't the industry

Paul Daly: 2:26

for sure. Got to play all the small venues first.

Kyle Mountsier: 2:30

Speaking of the venues Oh,

Paul Daly: 2:33

segway was, I don't know I know irregular in a regulatory filing and a subsequent news release, Sonic automotive announced the indefinite suspension of operations at eight of their Echo Park locations there used car side of their business citing challenges with lower use car availability, and higher wholesale pricing. Definitely some issues there, Sonic didn't disclose which locations are affected. But they expect this move will allow them to redirect additional US vehicles to key markets to meet current demand.So they do say that their targets for Echo Park to reach breakeven earnings by q1 2024are still intact. And their plans to cover 90% of the US population in serviceable area is still on track by 2025. They have expanded their used car parameters. And this makes a ton of sense. They used to say we're going to sell cars used cars for one to four years, they've expanded that up to eight years old. And obviously, as new car production increases, used car availability is going to increase and they think that'll be a good thing, which we don't

Kyle Mountsier: 3:41

yeah, that's,that's a big deal. That's something that I've known about Echo Park for a while. And they've tried to keep newer pre owned vehicles, which lowers your reconditioning cross costs and increases shopping behavior on especially higher credit tiers. So it just becomes an easier managed portfolio. So it does totally changes a lot of the way that you're going to mark it the type of portfolio,the type of customer base that you're looking at, for going back to an eight year old vehicle. So it's definitely a change that had to come. Because if you look at one to four year old vehicles in the last three years, you have an extremely small volume of new cars entering the market, which means your used cars entering the market are a lot more slim. So it was like a necessary change,but definitely will change a lot about their business. And I'm sure like their employees are going to have to adapt to a little bit more of a different mode of engagement, whether it be online or in the showroom. So we'll see if like, especially their online stuff is able to keep up when when you look at like more mid subprime lending when you look at lower price vehicles or vehicles, so, but I think it's pretty legit. They're like, Yeah, we're gonna have easy accessibility to 90% of the US population by 2025, which is also a target interestingly enough, not just of Santa Like,but also Lithia. So you're gonna see these two major conglomerates just covering a large swath of the US in serviceable regions, it's going to change the game a lot in two years on how like single rooftops engage with their market, because of these, like National local brands entering in.

Paul Daly: 5:19

I'm skeptical on the90%. I think that that really has to do with how you define access. You know, he has done a very clear job as far as saying we're going to be within X amount of miles. Right. So like,it'd be a location, so

Kyle Mountsier: 5:34

under miles.

Paul Daly: 5:35

I mean, because you could say, you could put a website up right now and be like, well, we have access to100 because they're shipping companies out there. Right. So like, I'm really skeptical on like, what that actually means I will tell you, though, like maybe insider knowledge, but it's location knowledge to use car locations in Syracuse, have close to two echo parks in Syracuse. So Syracuse, obviously a smaller market. Um, they did have decent inventory, beautiful stores. So you know, like, I'm thinking of it from the perspective of like, man, a lot of people just lost their jobs this morning, because it's real close to home. But I will say this for the people who are working hard and paying attention and automotive there is an abundance of opportunity.And I think that these people are going to land in some other really great dealer groups, like the Romano group and some other groups here in Syracuse Burdick that they're probably going to do okay, because yeah, I can

Kyle Mountsier: 6:25

tell you this talking to Scott painter over USA motor jobs, there are there is no shortage of great jobs.Oh, Leon,

Paul Daly: 6:32

we should call him today. We're going to talk to him today. And connect the dots with some people we know here in Syracuse, and there you go. Five kids

Kyle Mountsier: 6:40

will call Larry

Paul Daly: 6:40

Shelby to. That's what we got to do. And your comments are cracking me up this morning. Good morning, everybody in the comments. Adrian's like Good morning. She goes Sonic. I thought we're gonna talk about slushy Happy Hour like Sonic.Sonic Giorgio is talking about the backwards hat. Brian Ortega of course puts a cherry on it there you guys to end with a B boy STIs. Like, oh, we might be there maybe

Kyle Mountsier: 7:03

upside down and land on my hat.

Paul Daly: 7:06

You just see his feet spinning in the frame. Also,good morning Hellman. Good to see you as well. All right.Speaking of moving on moving,not really good way to talk about it. In a step that could move EVs closer to a wire less charging future Tesla is reportedly hiring eyeing Wi Fi theory on a German startup specializing wireless charging solutions. potential acquisition comes on the heels of Tesla actually teasing a wireless home charging station in a recent ad you can see it there on the screen if you're watching this marks kind of the exciting possibility of wireless Evie charging like pull in your garage and get out of your car.Wi Fi theory on was founded in2016 and they developed an inductive charging method you know kind of think of like your everybody understands wireless charging, there is a question how much current Can you send through that without wanting to get close to it? I still don't fully understand the science behind it.

Kyle Mountsier: 7:58

That's why big battery thing going on right?

Paul Daly: 8:02

And Tesla doesn't usually acquire companies but the deal is expected if they do to be in the high double digit millions of dollars and yeah, I guess another step forward I guess in the option the news we've been

Kyle Mountsier: 8:14

they've been talking about like Tesla has been talking about and other manufacturers and even like people on the charging side have been talking about wireless charging for eight nine years at this point is a massive thing,right because we're not talking about a little disc that magnetically goes to the back of your phone you're talking about something that has to get driven over probably not actually raise it to the vehicle so you're sending like true wireless current it's not like it's not you know your qi which is like where it's actually touching the battery source so this is it's a whole nother game but I do think that it's probably necessary in the long run to have this as as an option because man that like every single time get out charge get out charge like there should be a way where you can just drive up be like start charging to your vehicle Yes. Done and I think that'll they mentioned

Paul Daly: 9:06

in the article that you know, as Tesla looks forward toward autonomy, it makes sense that the car can drive itself that it can also charge itself no human needed right pull on the spot pull back out when you're charged and go speaking of just being able to get in and go segway

Kyle Mountsier: 9:26

or not get in and go because new vehicle quality is hitting a little bit of a speed bump with carmakers Dodge Ram and Alfa Romeo now outperforming actually leaders like who's betting

Paul Daly: 9:37

on that who's making that bet who's gonna lead Initial Quality dodging I saw

Kyle Mountsier: 9:41

you know, it's wild is the marketing director the CMO for for dodge this morning was like cartwheels,who's back on top on large wheels

Paul Daly: 9:52

doing jumping jacks in his office.

Kyle Mountsier: 9:55

So this is according to the the annual JD Power initial quality study I'm basically what's happened is a surge in issues tied to extremely new features or new technology is starting to create a dip in the overall industry's performance. The trend is up from 2021 to 2023 going from in2021 162 issues per per vehicle per 100 vehicles 180 and 2022 up to 192 per 100 vehicles this year so, you just look at that,like that's almost two issues of vehicle at this point up from on it up from like one and a half.Some of the features that are that are contributing to this are things like even basic elements like door handles,that's well because the problem with door handles there was no drama, but they're getting redesigned because of necessity of aerodynamics, right. Like how do I get in this? Exactly. And then even things like and this is where this is where I got opinions things like you know,wireless charging pads not work not

Paul Daly: 11:03

working.

Kyle Mountsier: 11:04

Which Paul let me talk to you about wireless charging pad talk fast because we gotta get to all things use card why in the world automakers trying to make technology just put a spot in there for the wireless thing that happened to Bob with Apple or to just like come on guys.

Paul Daly: 11:24

Oh, we wish we had more time to go over this. I wish I had time to come up because I got thoughts on thoughts. We're heading over to all things use cars with David Long right now. Have a great weekend. Have a great weekend selling enjoy some sunshine B boy stands Kyle three two.

Unknown: 11:52

I'm not up yet.

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