The 411 on Q1, Hyundai’s Branded Charging, Starbucks CEO Working the Counter

‍SPEAKERS

Kyle Mountsier, Paul Daly

Paul Daly  00:28

Welcome to Tuesday, everybody we have so much to talk about. But we really want to get to the last story, we're going to talk about the financial forecast charging stations in Hyundai, but most importantly, CEOs working on the front line. The people that they're because most hands are dead. Yeah, no, no, it's true. Like, can we just get to the last one, just

Kyle Mountsier  00:50

slide over that one.

Paul Daly  00:54

There's some important stuff to talk about, for sure. Uh, hey, we're having a webinar tomorrow, the next DeSoto edge webinar with our friends at call review tomorrow, driving customer loyalty through service. If you go to a soda.com and just scroll up a little bit, you can register for the webinar, got a bunch of I mean, the dealer vendor mix on this call is awesome. That's like 85% dealer personnel. So look, there's gonna be relevant stuff talked about or trying to make webinars a little bit more fun. Might have a surprise or two or an ad. Or Kyle might just call customer service and get frustrated again, like you did that

Kyle Mountsier  01:26

wouldn't be fun, actually live calling service departments. Now that wouldn't be a that would be.

Paul Daly  01:36

We should do like a secret shopping webinar, where we just talk about

Kyle Mountsier  01:45

get in trouble.

Paul Daly  01:46

No, we literally just have to do a show. And it's called Secret Shopper bias. So do we have to do a show? That would be everybody would today heard it here. We are going to do we're going to be doing some man on the street interviews in Arlington, Texas next week when we're there for the live event. We hope that you'll join us for a soda live tonight. On the fifth which is next a week from tomorrow. In Arlington, Texas, you can go to a so two x.com A so two x.com. Please, if you can join us in Arlington, it's going to be an amazing, amazing event in person. If you can't make it out. That's okay, we got you covered. We're doing a live stream to so you can be a part of the action and it's an evening event. Right. So for everyone who's in the service lanes and on the sale. Like I think it starts at What 630

Kyle Mountsier  02:33

Yesterday. Exactly, yeah. And so yeah, plenty of time to catch it. Catch up with the fam if you're at Yeah, put it on the TV,

Paul Daly  02:40

YouTube, you know, we'll be live streaming on YouTube, and probably the YouTube live stream quality is going to be the best quality to so yeah, hope you join us and have everybody think that that's what you do all day when you go to work is have live bands and dress students and have guests and play game shows. Why not? Why not? Why not? Alright, let's get to the news because we want to talk about this. And we want to get through talking about some important things get to the last story. So yesterday was all about the numbers as cocktail, their q1 2023 Industry Insights conference call and they released the report where they talked about affordability supply and how other factors affected the industry big time in a separate meeting. So there's two kind of it's like a two part first story. First part of the story is that the forecasts are important. The second is Jack Hollis, the CEO of Toyota North America. He also made some comments about what Toyota is forecasts are and talked about, you know, a bunch of stuff coming up. So let's review. Get back to the Cox it's a complicated first story, at least it's not a Monday. It's so according to the Cox report, a consumer sentiment is down almost a full percentage point. Fed interest rates are just point two, five, but yeah, he can be the up and down indicator fed interest rates are just a quarter of a point below the 2006 peak. And if you look at the chart, man, that sucker rocketed up, so we're back to 2006. When it comes to interest rates, dealer sentiment, which is my favorite part of the study, every time is increasing over inventory. It's where they asked me dealers questions, right? How do you feel about Yes, and how do you feel about that? So when asked about inventory, the sentiment is going up feeling pretty good, better about inventory, but profitability sentiment is going down? I guess that makes sense.

Kyle Mountsier  04:25

That makes when they asked you why increases there's some macro economics things happen in this, you know, and you did you go to business school, I must have must have done a little fine. You must.

Paul Daly  04:40

You must be a big shot. Asked about factors holding dealers businesses back they said interest rates, economy and limited inventory are still the top three concerns. At the very very, very bottom of the list is the word competition.

Kyle Mountsier  04:58

They don't even care about the guy Across the street competition with me, me alone and the

Paul Daly  05:04

look bad. That's that's like one of the biggest things that have been talking about like focusing on the game that you're playing, and not focusing on everybody else. Because you make much more impact in your overall business if you're just like not worrying about what other people are doing. So it's interesting that everyone kind of seems to be adopting that used vehicle inventory is down 21% year over year, still hard to find those used cars on lots. The average listing price is also down a little bit from last year 6%. But the average price $26,000,

Kyle Mountsier  05:35

you're still looking at $500 a month payment, on average used car pricing, when typically it used to be under a $400 a month payment 2020 20 and prior 2020 2020 20. Goodness 2020 20 Extra 20. Yeah, so, you know, we're still seeing affordability as an issue. And those used car prices are rising again here over the last month, you can kind of see it like it hit that peak came down, and then it's rising back on up. Yep. On on unit sales, the forecast for the year is still flat, year over year. So you know that that supply, demand and profitability are all kind of leaving everybody in a in a similar place? Actually, the pacing is actually a little bit ahead of last year on both new and used.

Paul Daly  06:22

Yeah. So that's first part of story. The second Jack house, Toyota, North America CEO, he says they are predicting super strong demand for new vehicles there new vehicles, particularly Toyota and Lexus to continue. And he sees the entire new car market average transaction price crossing $50,000. I don't know if that's ever happened before? Wow,

06:44

I don't think it has. That's yeah, that's wild.

Paul Daly  06:48

So he said you know, Toyota's kind of predicting a, like a little bit of a slower first half of the second half of the year is going to pick up enough to have them sell 100,000 more units than they did even last year. And he said we're going to end the year with 30,000 vehicles in dealer inventory, which is exactly where we started, meaning they are going to sell every car that they make

Kyle Mountsier  07:09

12 turns in a year like that. And it makes a lot of sense based on the Toyota and Lexus dealerships that I've talked to. And if you look at them on the scale of days, you got these to Lantis and and and you know Detroit OEMs that are having like 125 250 days supply, and you still have Toyota down at like what was it in the 20s which is unbelievable, right? So I think that they have figured out this supply chain thing and you know that like I think that staying under that 50 day supply is what allows them to maintain profitability, continue to keep happy dealers and if I had to guess them on nail it.

Paul Daly  07:52

Hey, anybody betting against Toyota these days are bringing it back to my favorite. Well, I said another my very super favorite part of the Cox report is when Jonathan smoke their chief economist, who is also a DJ DJ smokey smokey curates a playlist to just get us through so this is his spring playlist get this check this out. This up and Spotify regarding to the banking crisis he picks regulate by Warren G and Nate Dogg. So good. Well, the next one, according to you know, in the topic of credit tightening, it says Say No go by replacing a supply problem with a demand problem he picked it takes two by Rob bass easier. So good. And finally, as of course for forecasting the rest of the year. Run DMC is it's tricky it's tricky, so I may leave it I mean you know people don't usually think economists have like this crazy personality but I wish I wish we could just play the songs right now and not get like it pulled down off YouTube because we might do that in a heartbeat but you know enough of those songs to play in your mind All right, moving on speaking about gotta move Alright, so Hyundai is considering launching its own branded Evie charging network in the US as part of its plans to sell 1.5 million EVs by

Kyle Mountsier  09:24

sing it for him they

Paul Daly  09:27

gotta let it roll just one more time because we're going to be doing this segment why

Kyle Mountsier  09:31

like I feel like January and February kind of let 2030 away get away from us and brought 2030 right back into our lives

Paul Daly  09:42

I just realized I'm gonna have a hard time reading all the

Kyle Mountsier  09:45

BC boil all the BC boil vice president product planning and mobility strategy for Hyundai Motor North America and that ain't a tongue twister. I don't know what is. So the network could be set up in partnership with other companies so they have opened these fast charging state Asians in Seoul, which includes a cafe style and lifestyle store, and they've announced these branded stations for the Korean market. So hey look why not?

Paul Daly  10:12

Right? Well, if you have the leverage, right, just think of the brand play they mentioned, like Tesla being the only manufacturer to really have a meaningful network and they have over 40,000 chargers globally. And think of the brand new refresh and people know that the Tesla charging network is more reliable, it's more convenient

Kyle Mountsier  10:31

they and it's like a massive billboard. Right? You got these charge point chargers out there and these little gray things there's no logo you put you see a row of Tesla chargers and you're like I know exactly what that is. So just it's for me, that's advertising space. You know, it's right

Paul Daly  10:48

from that budget space.

Kyle Mountsier  10:49

Yeah, exactly.

Paul Daly  10:51

That's a that's a really good point like what budget items are you actually pulling from Boyle also considering leveraging the dealer network to be known for just great refueling station whether that's electric or gasoline she quotes with our dealers they have if they have land or property they're not using could we could set up infrastructure hydrogen EVs maybe even partnered up with some oil companies so Hyundai, I would go to a Hyundai Kia like station, I would assume it would be pretty cool.

Kyle Mountsier  11:21

Probably pretty dope.

Paul Daly  11:23

I would I would little bit west

Kyle Mountsier  11:25

stick a DJ there still have a little fun

Paul Daly  11:29

automotive economist DJ in there. Like got yourself a party on the front line. Speaking of the front lungs, segue. Really the rest of the show? The whole show was just

Kyle Mountsier  11:40

28 minutes. No, we're not doing that. Yeah,

Paul Daly  11:45

we got a few more minutes to talk about this. Kyle, roll this one out. We got some thoughts on the new

Kyle Mountsier  11:48

Starbucks CEO Laxman. Nar Yeah, this is why you said that we'll roll this one out. We're gonna go and Laxman. We just started my new role last names. A few weeks ago, announced plans to work a half shift in a Starbucks cafe once a month in order to stay in touch with the frontline of the business. He wrote a letter to the employees and named them the artists and the theater in front of Starbucks stores in the factory in the back and he said health of the company needs to be stronger. In the six months leading up to the role he earned his barista certificate and visited many stores, farms manufacturing facilities. My man Laxman, that's, that's a dude, getting it done getting your Bruce started certificate saying, hey, look, if I'm the CEO of this company, I need to understand the the impact point with every single one of our customers getting into the store, I'm telling you, this is like whenever I talk to a GM or a GSM, or an owner or dealer principal, or anything like that, my constant encouragement is wear jeans, and change some oil, walk into the showroom, and work with a customer, sit on the sales desk, and desk ideal. Use all of the things engage

Paul Daly  13:05

with sitting in the BDC and login to all the tools that you agreed to sign 30 and ADA

Kyle Mountsier  13:10

tabs every single one of those 38 tabs and figure out what it takes for your customers and your employees to interact. And how you're actually able to serve them based on your own feeling. Like if you feel good about that great. If not, then there's probably some stuff and deepen customers or employees, that's not feeling great about it either. And I think honestly, I there, there's probably a retooling. And a reengagement that you're going to see Starbucks have just because of the executive level decision to integrate with the front lines.

Paul Daly  13:45

And now his, he's agreed to continue this, so aren't his barista certificate, he's agreed to work, like every month, like monthly, he's going to be at least half a shift on the front lines with customers with with, you know, frontline workers. And, you know, this is the kind of thing that never ever ever goes out of style, ever. It never goes out of style and and you just think of the the publicity and the the goodwill that this generates, to feel like I mean it also they're going through, they're going through, you know, labor challenges and unionization and all that and you just think of all the problems that are solved by getting the top side of the organization and the frontline of the organization together. And the cool thing about this is that every leader, every manager, every owner has the opportunity to do this, this very instant to plan it right now. And if there's hesitancy to do it, or if there's resistance to do it, or if there's

Kyle Mountsier  14:42

fear to dwell on Paul, tell them

Paul Daly  14:45

that might just be a little indicator that something isn't right and something is out of whack. It just might be so specifically, like I love that Scott

Kyle Mountsier  14:55

from the neck up right there and Paul to say more

Paul Daly  15:00

All right. So Laxman is a 55 year old executive. He's got a degree in mechanical engineering, not what I expected. Right? He would probably fix the espresso machine. He was Chief Commercial Officer of Pepsi and he speaks six languages. German English, Spanish, and three disguise warming up some milk for you everyone and he's rocking that grande latte half Caf almond milk, extra,

Kyle Mountsier  15:28

squirt and pump and give me the

Paul Daly  15:31

I've gotta get one of those special orders that but regardless, the point is this cow shown you're showing your shirt, show me your T shirt. love people,

Kyle Mountsier  15:39

people more than you love. Just put a blank in there and let's coffee,

Paul Daly  15:43

cars, retail, mechanical, whatever you want to put in there. It's always the truth. So look, take this opportunity right now to think who is it that you can empathize, walk a day in their shoes, learn a little bit and make it better for all of us.

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