Why We Should Let The Market Decide with Santosh Viswanathan

Michael Cirillo: 0:00One year I have my niece and nephew convinced that my natural singing voice was an Aaron Neville impersonationUnknown: 0:14

This is Auto Collabs

Michael Cirillo: 0:18

This is Christmas time. And I started singing and they're like, they're like yeah, they're like Sing Sing a Christmas song because it was Christmas. So I went go whoa, hold on. It's perfect. It's the next day they come for so there's a Christmas Eve the next day they drive back our house for for Christmas. And an Aaron Neville Christmas song is on the radio and they are ecstatic to God. Call me and say, uncle, my uncle. You are famous. We heard you on the radio. They

Paul Daly: 1:01

really thought it was you.

Michael Cirillo: 1:03

They really thought it would only you could pull a joke off like that. I mean, my nephew was probably 10. At the time, we didn't reveal the truth to him until he was like 17.

Paul Daly: 1:15

Like the age they told you he was still believing in Santa Claus, too.

Michael Cirillo: 1:21

And we thought you were white devil that leads into a confession about today's guest because you really

Paul Daly: 1:30

get into this today. Well,

Michael Cirillo: 1:31

I felt I well, I felt bad deceiving them. And I felt like I was deceiving everyone at ASOTU Year end extravaganza. Because I wasn't quite sure if I was pronouncing our guests name properly. You had me so well entitled to doing the intros. And my biggest fear is getting somebody's name wrong. You just told me we nailed it. So that's a huge relief off of my shoulders. Of course, we're talking about none other than Santosh Viswanathan, the coolest name beautiful. I've heard in a while. We're gonna be chatting with him today. You guys have gotten to know him a little bit better over the past few weeks. What what are you looking forward to in this conversation with Santosh,

Paul Daly: 2:13

he's got a really balanced way and balanced approach. And we saw this a year end extravaganza and in some conversations we had with him after the event at dinner. And then in between he's he's got a really balanced approach to saying when we're talking about progress and moving forward and legislation and the consumer, what's best interest of consumers and the best interests of dealers, it takes a special person, I think, to balance all those out and communicate well on behalf of all parties involved. And so I just really appreciate his posture in that direction. And you know, I know in the interview, we're going to talk a little bit more about that. So just there's just such a measure, I think measured, I would come up with the word measured, he seems to be one of the most measured people that I've met in the auto industry.

Kyle Mountsier: 3:00

Yeah, well, hey, look, listen, we hope that you enjoy this conversation that we got to have with a new friend and deal but St.

Paul Daly: 3:12

Santosh, thank you so much for spending a few minutes with us. This is really the first time we're getting to sit down and have like a more quiet conversation.

Santosh Viswanathan: 3:19

That's right, have you here. Thank you, thank you for having me.

Paul Daly: 3:23

So you've, you are like have a really unique position in not only the auto industry, but also in the state of Delaware and the fact that you write legislation on behalf of the people. Meanwhile, you're also a dealer. So you kind of are in this place where you're balancing two worlds. Can you tell us like a little bit like how did you even get in this position?

Santosh Viswanathan: 3:43

So I'm actually a Delaware dealer. Plus, I'm also the legislative chairman for the Delaware Auto Dealers Association. In that role, what we do is we weigh in with the state government, the legislature to come up with what I call reasonable, sensible regulations that that positively affect the Delaware buying public when it comes to automobiles. So some of the things that we do is when it comes to raising fees, for example, the motor vehicle department. It affects the affordability of vehicles to our consumers and Delaware. So we kind of weigh in, we kind of give them our feedback on how there could be another way to generate the state revenues without actually increasing the cost to the buying public. So that's just one example. The other example is we come up with legislation in working with the manufacturers, when it comes up to anything involving transportation. And that could be conversations on warranty. reimbursement. It could be conversations regarding franchise laws. It could be anything transportation related We weigh in, because in the end, we're big employers in the state. And most, and we generate quite quite a bit of revenue for the state in terms of the Delaware dock fees that are in the course. Yeah, I mean, so the state, we're big stakeholder when it comes to transportation within the state of Delaware. And people like me, in a larger picture, do this on a on a state level in every state in the US. And so, we of course, we have an overarching goal, which is to make sure that vehicles continue to remain affordable.

Kyle Mountsier: 5:36

You do so go ahead, go. Yeah. On the because you're in the dealership, and, and you do and you are a dealer, you know, that gives you this practical insight into the way that consumers are kind of perceiving automobile purchasing, perceiving, affordability, engaging with the market, the type of demand, and you're seeing not just yourself, but other dealers in your area, kind of react to current market forces. What are some of the things that that you're seeing right now, that the in consumer behavior at like, at least a city or regional level, that are kind of impacting the way that you're starting to advise at the state level.

Santosh Viswanathan: 6:16

So one of the things that that is that is in front and center of us right now is the launch and the rollout of electric vehicles, which is a big deal. Similar to what we used to have when we migrated from gasoline to hybrid engines, the state reached out to us and we came up with the program. And this goes back a few years in coming up with a rebate program that increased adoption of hybrid vehicles, and alternative energy vehicles. So one of the things that the state of Delaware did very well is the state of Delaware came up with its own rebate, in addition to the federal incentives, that helped the Delaware in the the Delaware resident to get an additional incentive when they bought a hybrid or electric vehicle, which really helped a lot because it affected the monthly payments for the Delaware consumer when they bought a vehicle. Now, it's not available for Maryland resident if they come to buy a vehicle in Delaware. This is for Delaware residents. So that's something that we worked in, in concert with the state to come up with a program that increases adoption for hybrids and electrics in the state of Delaware. So that's just one example. The other thing that we have in front of us right now is the state of Delaware, in conjunction with the Department of Natural Resources, is coming up with rules and regulations for a greater adoption of zero emission vehicles. So we're actively engaged in that conversation right now, which is, which is a pretty big deal for Delaware.

Paul Daly: 7:46

So like the reason one of the reasons we're having this conversation and kind of what spurred this, we met in Nashville for the first time and really started talking about some of these issues that, you know, everybody have EV adoption, right, and how legislation could quickly either go help the consumer or hurt the consumer in their general daily life, because there's a lot of kind of like pop culture momentum behind EVs right now. And there's, there's the frankly, there's a lot of political points that could be earned by appearing, that you're in favor of something that people might be in favor of, but when it all comes down to it might actually hurt their daily life. And that's kind of what has spurred this conversation on, it seems to me that you're an advocate of taking, hey, we need to really have detailed conversation, take measured approaches, because one thing that we could do is really disrupt people's regular life in a very unintended way. So can you talk about, like, the dangers of moving too fast with this? Like how to what's, what is it that you're kind of like throwing up the red flag about?

Santosh Viswanathan: 8:53

There's always danger when you come up with the rules and regulations to increase adoption of certain technologies. I think the best way for market adoption for any new technology should be market driven. Let the people decide which technology they like more. And then eventually, you'll start to see the buying public, using their wallets to let us know, which which type of vehicles they like, which type of technologies they like. So for example, I'm going to go back a few years when the migration started from gas to hybrids. The first few vehicles that came on hybrids were not exactly desirable. But when they went into

Paul Daly: 9:35

piles like that's a very nice way to put that's a very nice way of putting that not exactly desirable. Terrible.

Santosh Viswanathan: 9:43

They look kind of weird, but then But then the market let the manufacturers know what how best to create hybrids that sell and then of course, once incentives came in, once we started to see the demand pickup, we started stocking more hype. reds, the manufacturers decided, hey, we need to make them beautiful, give them some great sex appeal. And then guess what happened, people started buying them up. Like, for example, in you know, we we have Ford, we have a Ford dealership, the Ford Fusion hybrids and Ford Fusion electrics, we couldn't keep them on the lot, because they were very popular vehicles. And that's what that's where the market drives the buying habits, which is when people like us, the dealer, and the dealer body as a whole, start to stock more. And that that is the philosophy that I'm trying to. I'm trying to emphasize here that let the market decide, let let the rules and regulations not be put in place in such a way that we're forcing the market in one way and then guess what the people can afford it. If when the market decides the affordability will start to come in play via incentives via lower monthly payments, whatever the case may be, but the market is never wrong.

Kyle Mountsier: 11:02

That yeah, you know, it's, it's an interesting way of looking, it's not an interesting way of looking at it, you know, we see this in other markets, right. You know, there was a lot of people talk about like iPhone adoption and smartphone adoption, and the way that like, if you would have, you know, put any legislator around, like the way that a consumer would need to buy that that type of good. Maybe we would have been all stuck on Blackberrys, right, because that was what everyone kind of perceived as the way to go. I know that's like a much different purchasing power, you know, and element in the market. But it is it's it's very clear to me that a market will consistently run to the thing that the general market wants to be a part of. And you know that the one of the things that we were talking about before this call is that is that the segments of the market within buying power for vehicles are much different in the way that they engage with those cars on a regular everyday basis, including where they even parked their car, and how that affects their ability to buy a certain type of vehicle. Can you talk a little bit about like how you're seeing that and how you're seeing like Delaware as compared to a major metro or the places that that that you're at, and how consumers are interacting with their vehicle on a day to day including the way they're parking them and how that impacts purchasing decisions.

Santosh Viswanathan: 12:24

So I'm gonna go back to your comment on BlackBerry to iPhone. When we moved from BlackBerry to iPhone, the reason it was popular is not only was the iPhone at the cusp of some really good cutting edge technology that the people embraced. The monthly payments were very affordable that were subsidized by the carriers. Okay, so if you came up with an iPhone and you throw a monthly payment, other people cannot afford, you probably would not have taken off as well. But what guess what happened, you have a great product that people love and desire at a monthly peep at a monthly payment that people can afford. See that? That was the secret sauce, right. And we go back to the same thing in the automobiles. Right now. The State of Delaware is talking about following California Rules and regulations by making gas ice vehicles, which is gasoline powered vehicles. They want to phase it out to the point that in 2035, we will not be able to sell gasoline vehicles in Delaware. What if there is like the market that we're going through right now there's a war? What if there's a short supply of components that goes into the battery that is affected by some disruption in pandemic, or war or any natural disaster? What are we going to do tell the buying public that there is no battery, so therefore they cannot buy a car that they need to go to the other state next to us to go buy a gasoline powered vehicle? Because Delaware made it illegal for the Delaware dealers to buy a gasoline powered vehicle in Delaware in 2035. And then is

Kyle Mountsier: 14:02

that is that consideration for only new vehicles right now? Or is that new and use? What

Santosh Viswanathan: 14:08

is the proposal right now is for new vehicles? Gotcha. Because if you cut off the new vehicle supply, there is no used vehicles in the market eventually. Right? Yeah. Right. So so that's where we think that this is this conversation needs to be there needs to be more thinking behind this because just making it illegal for the state of Delaware dealers to sell ice gasoline powered vehicles and state of Delaware. It's just not I don't think it's the right move. I think the market let the market decide. Let's not jump the gun and make rules and regulations that make the sale of, of gasoline powered vehicles in Delaware by Delaware dealers illegal. That's just not the right answer. Because if people want the vehicle, they're just gonna go to another state and buy.

Paul Daly: 14:50

Right. And then you're in Delaware to Yeah,

Kyle Mountsier: 14:53

we ran this segment at the Year End extravaganza that was called the year 2030. Right. And I know this is kind of a look at the year 2035 And it was it Just in a bit, because there's a lot of manufacturers talking about 2030, there's a lot of state governments and manufacturers talking about 2035 as target dates that are somewhat arbitrary. They're put on the fives, you know, which is kind of a round number that a lot of people like to place targets on. But they are kind of arbitrary. And they don't, they don't take into consideration what the market may or may not do over the next seven or 13 years. And I think that's what you're saying, like, hey, if the market decides, and the market demands that we're they only want ice vehicles by EVs by 2035, the manufacturers probably going to make them like that. But if if they're not demanding that if they're not shifting their buying behavior enough, then most likely that'll be pushed out, right? Like, you're, you're saying, hey, there may be a situation by 2030, the manufacturers are just forced by way of what people are asking for in the market, to only, you know, to move to 90 or 100%. And if that's what the market says, Let's go that way. But if the market says it needs to be 2040, or it's 2041, or 2050, let the market decided it's just at the markets time, whether that's faster or slower.

Santosh Viswanathan: 16:14

So I'm going to give you a good example of California, California decided that they were going to be done with nuclear power plants. But just a couple of months ago, Governor Newsom said, Well, wait a minute, ended the leases, right? Because guess what the conditions on the ground has changed. Since the legislators created something like this a few years ago, the conditions on the ground should dictate what's happening in the marketplace. You know, if, for example, if all the manufacturers decided that they were going to only produce electric vehicles, and they only push out electric vehicles, what would be the need for the state of Delaware, to say it's going to be illegal to sell gas vehicles? Right now? There are no gas vehicles. So why would you even say that it needs gonna be illegal, there is no need for such a law. Yeah, there's no need for such a rule. And a putting such a conversation into the hands of department natural resources. I think the state is bypassing the legislature, who is who are pretty much elected by the people in probably speaking to what the people might actually want. Because, you know, this is kind of bypassing the legislature as a whole by just putting in the rules and regulations. Box, if you will,

Paul Daly: 17:29

right. So it's not it's not it is a law, but it's a law by way of rules and regulations, not by way of, you know, thoughtful debate public opinion, right, and listening to the voices of the people. You know, let's talk for a second, let's just shift, we're talking about not being able to buy a nice vehicle by 2035 in the state of Delaware as the proposed, you know, rules and regulations. But let's talk a little bit more practically for a moment. Because EV, EV life is a different way of, you know, it messes with your routine, right? And I changed his routine. And, you know, there are a lot of conversations about like, well, if you have a house with a garage, and you can plug in, well, then that seems kind of convenient, right? I don't have to go to the gas station anymore, right? We can just plug the car and it's ready to go in the morning. But what is the situation in Delaware? Lots of people don't have a house with a garage, which seems like it'd be a much quicker disruptive impact than just banning the sale of the cars.

Santosh Viswanathan: 18:26

Correct? I lost you guys there.

Paul Daly: 18:28

Okay. So basically, the question is this, can you can you talk for a minute about all the other contingency disruptions that happen once you start to only have an EV? When it comes to charging just general lifestyle getting to and from work? Like, what what do you see as the real reason that Delawareans should be paying attention to the conversation that you're having right now?

Santosh Viswanathan: 18:50

Okay, so one of the one of the so we've had some of these calls, with the department natural resources that invite some of the public some stakeholders to get in on these phone calls. One of the things that one of the stakeholders said, is for all these EVs that are in front of some of these grocery stores when you go and let's say there's 10 chargers, what we're finding out is that out of the 10, chargers, maybe only for work and when you go into the grocery store, and you ask them, you know, you tell them that look, this charging station is not working. The employee, the grocery store doesn't even know who owns the EV chargers. They don't even know whom to tell you to call. And who do you call, you know, you've been waiting in line for 30 minutes just to get to the charger, you pull up, you pull up in line and you find out that out of 10, holy for work, and now the line is getting longer. That's one conversation we need to have. So clearly, the maintenance of these chargers is a big deal. Number two, I spoke to a mom that lives in an apartment and I was just kind of giving her some insights on this new proposed rules. And the first thing out of her mouth is well I live in an apartment. There are no chargers. I parked my car on the street. What's going to happen to me when this law goes into effect, right now she can go to a gas station and get gas There are no chargers on the street. Who knows if there is going to be and you got, you know, all these people living in condos and apartments, where they're going to charge the vehicles? Well, okay, they go to work and they have a lunch break, they can charge it during lunch break, they go to the lunch break, when were they going to charge because everyone is doing the same thing at that time there was trying to get to the charging station. And now here you're gonna have a line during lunch break. And it has, it's just not, it's not

Paul Daly: 20:25

in its time, right, we need time to think about it. And back to the conversation about the market driving demand, right? When the market has the demand, there'll be 100 chargers at the grocery store, right? Because it'll be a plate which starts to shift that whole, hey, if you live in an apartment, you charge at the grocery store, you charge at the office, because the parking garage is wired up with chargers, right? Like it gets there. Right, but just like that, like back to the California conversation about the nuclear power plants, like making a rule and then be like, Oh, actually, maybe just leave it open. It's the opposite, though. Because the infrastructure doesn't exist, at least for the California, it's like, well, we won't close the thing that's already working. Yeah, it's a lot different than like, oh, we have to make these appear out of nowhere, Santosh. So one of the big parts of dealer life is serving the community. And again, back to the beginning of our conversation, you serve the community by providing transportation and mobility, but you're also serving Delawareans, by making sure that their interests with transportation are represented well in the community, how can they, you know, help you do that help you represent them? Well, like, what should the average Delawareans? Who might think, Well, 2035 is a long time away? I don't really have time, or I don't need to pay attention to this conversation right now. What would you say to

Santosh Viswanathan: 21:39

them? The the one and only thing that needs to happen is the Dell Republic needs to be engaged in this conversation. Because when I go around town, and I have these conversations with the regular people, first thing that people they're in shock, they can't even believe something is something like this has been discussed, where they have no choice or option to charge a vehicle at the at the place of, you know, wherever they call home. So the first thing that needs to happen is the Delaware public needs to get engaged. And they also need to get educated and what's coming down the pike. If they don't, if they're not engaged in this in this conversation, because they do that, how do they do that? Well, they have to, they're the one the one thing that we would want people to do is to let the department natural resources, which is Dan rec in Delaware, know how they feel, and and how this will affect their lives. If these rules really go into effect, and not let the market decide, you know, they, the people need to voice their opinions by way of a phone call to the department natural resources, or to the state legislature, or to the state representatives or to the state senators, so that everyone is listening. And everyone is commenting on how they really feel about these rules and regulations. Because I can just tell you that 2035 comes around, and we don't have enough chargers, and the cars are not being built. And they're all electrics. And the prices are sky high. Were some of the new legislation that's come down from DC, for example, the inflation Reduction Act. And as some people refer to it as the IRA, it has taken away some of the incentives that was subsidized the monthly payment on some of these electrics. So the same electric that was that is today since today's the last day of December, the same electric that has incentives today, in the first week of January, those incentives go away. Right, so the price of ownership of these electric vehicles are also simultaneously going higher, which is all which is then going to make it unaffordable to the to the buying public.

Paul Daly: 23:45

One question one more question. We only have a few minutes left. But that's to the consumer. What do you say to the other dealers and dealer associations around the country? Because you're kind of at the tip of the spear on this conversation. We haven't been hearing a lot but it's it's definitely going to start coming up more and more, what would you say to the dealers and dealer associations around the country whom whom you know this conversation is going to be at their doorstep.

Santosh Viswanathan: 24:08

So, every dealer has a dealer Association in their state on a local level, every dealer needs to be deeply engaged with their Automobile Dealers Association, so that the so that the conversation can happen and not be in a position of being reactive. You know, so for example, when, during COVID, when the states around us were shut down from from doing business, for example, the state of Pennsylvania, the Delaware dealers could not stay open until after the governor decided that he was going to be shut down is when they started to be reactive. Whereas instead of Delaware, we sat down with a governor and we made a case for why we thought why we thought that the delta but that the Delaware dealers need to stay open. So we will not reactive, we were proactive in engaging with the state government to come up with what I call reasonable solutions, as opposed to the states around us, where the governor just shut down the states and said, Sorry, normal car sales, those dealers had a very tough going. Yep.

Kyle Mountsier: 25:16

Well, and I think I think what you've presented is, and I love that you said reasonable solutions, you're not saying, absolutely no, one way or the other, you're saying, hey, look, the consumer, the dealer, the legislative arm, all need to be on the same page all need to be moving in the same direction. And there's good legislation and there's, there's, there's things that will put, you know, things in motion to help move things along, especially an EV, or in anything that has to do with mobility or dealers. But also, hey, let's be let's pay attention to the market forces, let's pay attention to the consumer care for the consumer, with both the way that we do business and the legislation to make sure the consumer can always drive the market and drive what we make and sell. So, Santos, it has been a pleasure hanging out with you today learning from you, and giving you the ability to kind of share with us and the soda community in the in the broader consumer community at large. What Delaware and other dealers are doing to make sure that consumers are cared for in the legislative arm and appreciate the work that you do. And

Santosh Viswanathan: 26:23

I just want to add one thing, I think all the dealers in the US love electric vehicles, it is not that we have a distaste for it, we love it, we sell them. That's how we make our money. But we just feel like the rollout should not include anything that makes it illegal to sell gas.

Kyle Mountsier: 26:42

Yeah. That's that's a great point. And I think well stated at the end, I don't think anyone would disagree with you there.

Michael Cirillo: 26:53

One of the things that stands out to me about the kind of overarching narrative of this conversation with Santosh is the fact that in cow you were mentioning, this is pretty much the what we think the foundation of what our industry believes, as well as you gotta let the market decide what it wants. That's a fundamental business concept. There's so many business owners out there struggling right now, because they're doing something that in their gut, they think is just going to make them money, or maybe it's a quick win. And they wrack their brains about why isn't this succeeding? Why am I never getting ahead? And it's like, well, because maybe you forgot to ask your customers, maybe you forgot to ask the people that are actually going to exchange their hard earned dollars for whatever it is you're trying to sell. And certainly that seems to be the case with what Santosh is dealing with in his home state? What were some of the insights that stood out to the to you from that conversation? Yeah,

Kyle Mountsier: 27:47

I think it's interesting that like, anecdotally, but I don't think it's anecdotal that when he talks to, or when other people in his position are talking to consumers, they're almost completely unaware that the political narrative is we have to move this way. And many of them are saying, hey, look, Ev is kind of scary to me. I don't know if it's something that I would do, or even how am I going to charge? You know, like, we think rangs range anxiety is the biggest thing, but it's actually much more for the majority of the market is what he's saying. It's like, not even, can I get the range? But can I even charge my car without having access to that, as an apartment owner? Or as you know, a renter? And who's gonna be responsible for that? How am I going to have access to that, and then just the general knowledge. And so really, this letting the market decide needs a lot more education around the electric vehicle, even if that's even the way that the market demands? us take it. So I think that like the media and the political narrative is what he's saying is, is not that evey isn't a good thing, or that it might not be the best thing. It's just that we need to kind of take a step back. And as Delaware and other states are kind of looking to the New York's and the California is making these big, broad decisions, going, Hey, let's take a measured approach as to make sure and get in front of more consumers and have that conversation. I mean, his his whole heart behind this, this interview, as we actually learned off camera was hey, I want to utilize this to allow me to share with more people with media outlets with, with different people that can actually bring this to consumers and say, this is a conversation that we want to have. And I think that most consumers would enjoy that as as the narrative is we want to have this conversation.

Paul Daly: 29:33

I don't think any anybody and speaking specifically of consumers, enjoys being the ragdoll being pulled between, you know, political points and things that affect their daily everyday life. And, you know, when he said in the interview, you know, he talked to one of his employees and they said, Well, if this deal goes through, I'm screwed and they talked about their situation and how it would really affect that negatively or be unsustained and evil. And so just the bridge, I think dealers have an opportunity here, the bridge between what's in the best interest of the consumer is their it's their opportunities to be an advocate for the consumer very openly, and aggregating that consumer sentiment and the consumer attention toward the political decisions that are being made, probably for political points more than in genuine belief in an Eevee future, when you look at the length of term limits and things like that. So it's good to be a part of that. It's great to be a part of that conversation. And I am convinced that whatever consumers pay attention to enough and whether that is products, or its politics, things tend to move in that direction. So thanks for joining us again, on behalf of car mounts here. One and only Michael Cirillo, and myself. Thanks for joining us on auto collapse.

Unknown: 30:52

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