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The Shifting Auto Market and AI’s Growing Role in Car Buying · Automotive Informants

• Chris J. Martinez: Welcome back. This is Automotive Informance. And we have a special guest for you guys, Mark. you know, I've been working with him and his group for several months now, and they do a really good job in California. There's a lot of just recent articles. I w I didn't even think about that, Mark. We can even talk about the the new pricing thing that's now I mean it's a really big deal. It's not just California, it's actually in Connecticut as well, but definitely want to hear your opinion. But Before we get into it, Zach, thank you for joining as always. But Mark, if you can kinda give us an intro so that our audience knows who you are and what you do. Mark: Sure. Yeah, my name's Mark Lamplu. I'm the CMO of Tim Moran Auto Group. I've been I've been with the group I guess it's been about a year and a half now. And this is my first role in the auto space. I came from healthcare marketing, which there's a lot of i it's really different. than what I was used to. I did do sales in the automotive space back in the early two thousands with Saturn. I was actually with them when they went out of business in two thousand eight. that's kind of what ended my time doing sales. but yeah, so I b I flew out of here. I'm from Pennsylvania originally, but I moved out to California a year and a half ago. and I kinda specifically looked for a marketing role in the auto space. so that's why I ended up moving because I always did like the business when I worked in it. And I I love cars, so it was like, you know, the perfect fit. Chris J. Martinez: Yeah, no, good a good job. You know that from Pennsylvania, we've got some dealers out there in Pennsylvania. And so wha what was that that shift from going from that environment in Pennsylvania to California? Outside of the weather. I mean, I imagine the weather's just amazing, but Zach Fritz: Yeah. Mark: Yeah. I I never saw myself living in California. it's probably the last place I th ever thought I would live. I did live in f South Florida for ten years, from twenty ten to twenty twenty. And then I moved, you know, from Florida back home for a position a head of a head of marketing and growth for a very large oncology practice. And I don't know why I ever left Florida. I I miss it every day. Chris J. Martinez: You know, that's what I you know, I I said that about when I moved to Oklahoma. I miss Texas so much, but you know, after a while you get used to it and I I really I had a great experience in Oklahoma. I I wish I actually could do that again. Like it was like perfect the the weathered you had four seasons, it was it was cool. Texas Mark: Mm. Chris J. Martinez: just it's just different. but I can imagine what it's like in Florida versus California for sure. Mark: Yeah. Chris J. Martinez: I imagine it's it's definitely we we and there's a couple of differences right now that we can talk about. Let's jump right into it. and actually I wanted to Zach, your your opinion because you just put a a post on YouTube on your channel And it had a really nice headline. And I was like, Okay, that's that's an interesting one, you know. So if you kinda wanna expand on that, and this it could segue right into the wholesale values. Zach Fritz: I assume that we are talking about how the automotive market or the car market is about to crash, right? Chris J. Martinez: Well no, you didn't say crash, you said collapse. Zach Fritz: Okay, collapse, yeah. I can't remember. I think I was testing a couple different title ideas, but Mark: Yeah. Zach Fritz: I do wholeheartedly believe that. Now, if we look, one of the most recent articles was talking about wholesale prices dropping fifteen percent, which Chris J. Martinez: Well, it's so it wasn't all wholesale. It was just the non-EVs under 15 miles per gallon. So what does that mean? Trucks and SUVs. Huge Zach Fritz: Yeah. Trucks and SUVs. Chris J. Martinez: part of the US market. So 15% values year to date. So if you had a n a hundreddale tundra or Tacoma not Tacoma, but like a I don't know, Chevy or some some big truck. Zach Fritz: Mm-hmm. Chris J. Martinez: it it's dropped substantially since the beginning of the year. Now like the likelihood of you keep having that on your lot still, I would hope is not good. Like I hope you don't have that on your lot. But if you did, I mean, even if you had it for ninety days, you've lost, you know, a couple thousand dollars realistically on that vehicle. So I I could see that part. Zach Fritz: It's tough. So, with some of the data that I use to create my video, so I'm sitting at, you know, the makeup with that 15%, you know, being trucks and SUVs, you gotta kind of call that out as being, you know, sort of your more blue-collar, middle class, you know, trucks, people driving for work, and SUVs are for families. So who does that kind of capture for the market? That middle segment. Then you roll into days on lots, sitting around what, 84 days in most situations, with the exception of a few luxury brands. That starts to tie in cars where people are paying a whole hell of a lot for their floor plan at the moment. You got cars sitting on the lot, rotting out, and Then you have the hybrid sales and sedans starting to come back and people wanting those because of the gas being being squeezed out. Then you tie that in to three out of 10 people rolling 6,900 on average negative equity going into a new car and they're being forced to. And that's backed up by trucks and SUVs, vehicles that are not excellent on fuel, being what's driving down these wholesale prices, whether it be both auction side from repos or people just getting out of it and saying, you know, hell. The gas prices, that's gonna offset my negative equity. So it starts to trickle down and create a snowball effect where we are going to start seeing these wholesale prices drop even further. Mainly because we're seeing used car retailers like CarMax, Carvana go after tier two and tier three, which is going to force the entire thing down and affect trade-in values, drive up that negative equity number that people are being forced to roll, and it's gonna get awfully ugly. Chris J. Martinez: What do you what do you think, Mark? Mark: you know, we we have the probably highest gas prices in the country out here. and you know, trucks are probably you know, our biggest sellers still both for, you know, the F one fifty and you know, the Silverado here, you know, over at the Chevy store. So we haven't really seen like too big of a slowdown with sales on new use Yeah, I don't know. It hasn't been too big. Chris J. Martinez: Yeah, you know. Mark: No, I mean yeah, we're probably selling as you know, just about what we have been with us. Chris J. Martinez: Yeah, so you know, I'll I'll and that's a real good point right there. These sometimes these headlines can look really, really sensational. I've even been called sensational too, so I get it. You know, I'm trying Zach Fritz: yeah. Chris J. Martinez: not to be sensational. I'm just trying to, you know, point out some certain things, but people are like, you're just being sensation. I'm like, no, I'm like so I I get it, but think about it. Repos are up year over year, nine percent. But The argument I think is okay, well, it's up, but we also were in like the best market ever a couple of years ago. During COVID, I mean, everything was going through the roof. w the SAR increase the beginning of the year, it was bleak. They're saying it's gonna be like fifteen million SAR for new cars. Now it's like they revised estimates, it's gonna be sixteen point three or something like that. still selling more cars. I I don't You know, new car prices have incre continue increasing. So I you know, I I see that used cars I I don't see any reason why used cars couldn't actually do better because new cars have gone more. And understand that Carmax and Carvana, they're really just a small percentage of the whole pie. Like it's not like they're doing fifty percent of the business and that's really, hey, let's pay attention. It's hey, let's pay attention to what they're doing, but let's not base our whole you know, I'm gonna forecast on what the little percentage that they represent. and so that's what I look at. But thinking about those repos up nine percent year over year, that's still like if you compared it to twenty twenty two thousand eight twenty twenty two thousand eight, it's still like twenty seven percent lower than two thousand eight. So it it's it's up year over year, but it's It's looking at also it's up from 2019 because you know you gotta remember that people needed cars and it was I the it was like a rush to to get inventory because they stopped selling new cars. So Zach Fritz: Mm-hmm. Chris J. Martinez: I don't know. I don't I don't think it's quite to the collapse moment, but I can see that it, you know, it it could be, you know, the who knows? The numbers are there. Mark: numbers are there. You got it's one of those you got Yeah, you got the perfect weather. One maybe one little th something else happens, you know, an escalation of a war somewhere or, you know. Chris J. Martinez: yeah, and then you you you can't well Zach Fritz: Yeah. Chris J. Martinez: the wars that are happening all over the place, Mark: Mm-hmm. Chris J. Martinez: the the mnemonic plague now that's you know that they're starting to spread all over online. Like there's a lot of different things that co could go, you know, sideways pretty quickly. but you know, I I think it doesn't matter in any market, whether it's down or up. I think the best always figure it out. So I think Zach Fritz: Hundred percent. Chris J. Martinez: Good points, but even more importantly, like that you're in California, highest gas prices and your volume and in trucks haven't you haven't skipped a beat. So good job. It it might just be 'cause you guys are, you know, very good operators and and you just outperform the market or the market really hasn't shifted. So I I think you guys are great operators. So I think it's gonna be one of those. But then the next thing is so when you are marketing And looking at some of this shift for use cars, do you pay attention to what's selling? Like right now, the the article that just came out of you know, Asian brands now equate to fifty percent of the market for new cars, and Mark: Yeah. Chris J. Martinez: the top three Detroit are doing just over thirty six percent of the market. So do you s change your inventory strategy based on what's selling new and look at it free from a use standpoint? Mark: E well, even looking at the Chinese, some of those Chinese brands are amazing. It's like I I almost kinda wish they would come into the Chris J. Martinez: Yeah. Mark: US, you know, 'cause that that's some pretty impressive vehicles. you know. yeah. Well trouble that they Chris J. Martinez: Yeah, those Chinese the Chinese brands, I I don't know that they'll make it here. I mean that's that's another another topic, but you know, I think that that technology's is pretty slick. I know Zach Mark: Yeah. Chris J. Martinez: has his opinions on that, just because I know that, you know, the pricing on on those cars are definitely something that a lot of buyers in today's market might actually find a relief because they're so Mark: Uh-huh. Zach Fritz: Mm-hmm. Chris J. Martinez: inexpensive. Zach? Zach Fritz: I think that's the only way for it to reverse what's going to happen with the industry as a whole. You know, we see I mean, cars, in all honesty, they've kind of become unaffordable and people are just financing their way into whatever they think they need Mark: Yeah. Zach Fritz: or it gets sensationalized that they need, whether it be a hybrid or EVs or whatever the latest greatest 64-inch dash, you know, screened car is. And then you start to see it as people just incurring more debt. So the only solution to that would be going into some of these cheaper import vehicles, but then you've also got your, you know, auto workers unions and all these automakers lobbying and saying, Hell no, we won't go, don't let in. So where does it break? That's kind of my big sticking point. Mark: Yeah. Well, Ford's coming out with that new model that's supposed to be like a lower, you know, Zach Fritz: Mm. Mark: a truck, like the slate. they'll be coming out with that, try to get the lower income people. I think it's gonna be under thirty thousand. Zach Fritz: Yeah. Chris J. Martinez: And if you think that that could do be a big deal for them because I mean even the lightning so outsold like Tesla the first the first quarter that it was out. So I mean it's it could be it it could sell even more, but it it is coming out as electric though, right, Mark? Yeah, so Mark: Yeah. Yeah, I believe I believe it's electric, yeah. Chris J. Martinez: But we're still we still run into the same, you know, structural. Are they gonna let allow the the the buyer to plug directly into the Tesla infrastructure to make it easier? But then what ends up happening and speci especially in in a market like California where there's more Tesla buyer or drivers? Like I'll tell you in in my my hometown here in San Antonio, there's been it doesn't happen often, but once in the last year, well that's how how often it happens, there's been times there's I'm at the Tesla charger station and there's like twenty charging stations. And you'll see a couple of different brands there. So and then now I've got to wait for someone to move before I can charge my vehicle. So, you know, does that put more pressure on on that capacity? And then does Tesla say, okay, now I've got to add more spots? I don't know. Like I I think there's a lot still a lot of challenges for ever the everyday driver, especially if you live in an apartment where you Mark: Yeah. Chris J. Martinez: have to go and use because this is a renter economy now it's not what it was. price the aver medium ho house price now is what four hundred grand or something crazy like that. it's just not what it was. So I don't know ch that's where China I think that conversation would need to go because they've figured out a way to put more of those charging stations in their homes in more places. So that's how they've been able to get 70% market share or some crazy number like that. I forget exactly what the number is. Mark: And I think one of the brands is charging the car like in ten minutes or something like that or five minutes. Yeah. Chris J. Martinez: Yeah. Yes. They actually have that technology now. And Mark: Yeah. Chris J. Martinez: actually the way they're gonna bring it to US is I think Tesla's already gonna be starting to put those where the robotaxis are at because you'll be able to drive on top of the charger without plugging it in and it just charges Mark: Yeah. Chris J. Martinez: underneath the car. So exactly like that. Mark: Like like a cell phone, you know, you you like that's mad. Chris J. Martinez: Isn't that crazy? That's Mark: Yeah. Chris J. Martinez: yeah, amazing technology. Now the future looks pretty incredible. We're gonna have robots and you know, AI and you know, all kinds of things happen. I know Zach's Mark: I Chris J. Martinez: not ready for that 'cause he's still living in Mark: I've been eyeing those Zach Fritz: Yeah. Mark: Tesla ones up. the the minute I can afford one I'm one for my house and cut my grass and do my dishes every day. Chris J. Martinez: Right. I c that's a real thing. But what happens with like having to fix it, Zach? What do you think? You you think Mark: Mm-hmm. Chris J. Martinez: everybody it'll be open source? Zach Fritz: I mean, I don't, because that's kind of the problem. So, you know, to go back a little bit, we talked about Ford. If it's Ford, who is the jackass, quite frankly, who's all over the media, you know, Jim Farley, talking about no right to repair. We're not gonna open this up for other people to fix it. So them launching a complex EV when there's already a shortage of people to work on it, like it's just it's gonna be, you know. Closed source, Mark: Yeah. Zach Fritz: they're not going to allow anybody to work on it. There's not going to be any independent repair facilities. It's going to be stuck going through the dealership, which is already backlogged. So it's just kind of I would support the idea if it was a lot more like you said, open source, where everybody had access to this and it wasn't such a, you know, constricted thing where everybody's locking down their tech just like Tesla and the Chargers. Chris J. Martinez: Well, I think w to think thinking through that, you know, how many moving parts on a nice engine? Like, I don't know, three thousand, whatever it is. And then how and how many moving parts on a Tesla or some kind of electric ve vehicle? It's like a hundred and fifty, right? So if Zach Fritz: Sure. Chris J. Martinez: there's less parts, less move like things that are gonna break. And most of this technology now is doing over the air type repairs. I think that's why the argument of that push to go more EV, not only because it supposed like helps the environment and we can have there's like a whole different conversation on that one, but then it's also less moving parts, l longer like from cost of ownership, it's s you know, supposedly easier or better, but Mark: Yeah. Chris J. Martinez: nobody talks about how many tires you have to replace. You have to replace tires more often because Mark: Yeah. Chris J. Martinez: those batteries are so heavy. And you know, if you in on a normal ice car you might have to replace them every couple of years. On a you know, ice vehicle, depending on your driving or E V vehicle, you might have to repa replace them every year. So, Mark: Yeah. Chris J. Martinez: there's other costs that they don't really talk about. but I don't know. I think Mark: Well and I think they're probably protecting their i if there's less parts affix that that kinda helps them protect their service, you know. Chris J. Martinez: we got w I think we lost you Mark. I think you got some lag right now. Mark: no. Chris J. Martinez: What was that? We we we hear you now. Mark: I said you know, with the less moving parts, they're you know, more or less probably looking into the future to try to protect some of their service revenue because if Zach Fritz: Mm. Mark: people are bringing in the vehicles less the repair, they gotta find a way to get in, you know. Zach Fritz: It almost makes me think like maybe that's the threat that we see. Like one part of this is right now we have this whole Stellantis, Carvana, you know, dealer franchise, state law scenario going on where everybody's all upset. But then I look at the other side where it's like, okay, we've also got people trying to block companies like BYD from coming into the US because they would be more open source. And if it's open source, like think about 3D printers. Everybody got into that market. There were a few guys in the beginning, then everybody got into it, and now it's super cheap and attainable, and everybody can do it, and it's popular. And I almost picture the cars being that same way if we're going to go this route. it it would open it up and then you've got all this competition versus yeah if we've only got a couple brands that launch you know affordable EVs, you know, you're just never gonna get to that affordability. Chris J. Martinez: Well but then are th but then we got we got those Optimus robots that maybe they we can now have them work on those types of you know, hardware. Zach Fritz: Yeah. Well it's yes, but then you look at like you know, like what Scout's doing, for example. Scout with all this investment there in South Carolina, they're having to throw all this money in there, which is going to just continuously raise the price of the vehicle and we just go back to this unaffordability loop because we're trying to engineer our way around of fixing them to cut out the people, and then it just At what point does it just make sense to say, hey, screw it, let's just go back to like, you know, little Ecano boxes from like the early nineties? Cause we know how to make Like at what point do we just say, hey, that works? Chris J. Martinez: the b the beetle that you could literally fix pretty easy, right? I mean they Yeah, but Mark: Yeah. Zach Fritz: Terrible Chris J. Martinez: you y you knew how to fix every month, you know what I'm saying? So you could literally just Zach Fritz: Yeah. I mean a a beetle Mark: Mm-hmm. Zach Fritz: with a golf cart drivetrain, I I don't understand why that wouldn't work. Then you just gear it super, you know, you know, put a transmission in it to where you can gear it out and then you know, torque vector and reduce it and you're done. Solves the problem. Chris J. Martinez: Well, that's some some s high level stuff right there that I I don't even know what you're talking about, but it's it's good information. Zach Fritz: Yeah. Mark: Ha ha Chris J. Martinez: but here's here's another good one. since we've got Mark, your CMO, you've been doing this for a long time now. Marketing is, you know, your your deal, right? Like what what do you think about Meta's Muse? It's been a lot of topic, a lot of conversation recently because It's I mean six point six million downloads in sixteen days. Chat Mark: Yeah. Chris J. Martinez: GPT only did a million downloads in thirty days. The likelihood and the scale of this could grow even faster and compound because they've got three billion users on their platform and it's everywhere. They're advertising on TikTok. I mean they're advertising everywhere this this new free app. What does this do for marketing? Mark: I s I th they can beat Chat GBT out or OpenAI with theirs because they got the they got the people, you know, as as far as the subscribers and they've had for years. So anytime they really launch something, they they're they gotta leg up because they're instantly in, you know, like you said, six billion homes. I haven't used the Muse yet. I w I started using the agents back last year when, you know, Open Claw came out. I love I I I I'm use for everything. I mean I got it Yeah, I got Chris J. Martinez: For everything. Mark: answering my cell phone now. you know, but as far as you know, with the marketing and stuff, I have tried some of Meta's AI to create ads. You know, they have that new like you you put in one ad and it'll make you ten ads similar to the one you up it's it's just not there yet. You know, it it doesn't make really good For a a small mom and pop business, okay, you know you know, Chris J. Martinez: Hundred percent. Yeah. Mark: but for a a bigger group or organization I don't think it's there yet as far as the the quality, you know, so to speak. But I don't think it's gonna take long to get there, you know. Chris J. Martinez: No. Yeah. It they've got a really good talented team behind them and I've been using it and I've I did it to test it out, schedule some posts for my company. And it w it was actually pretty good. I was like, wow, that that was actually pretty good. so I think it's probably even better than the last time you've looked, because it can even go in and you know, check your your actual ad strategy, your ad campaign and and optimize Mark: wow. Chris J. Martinez: it and post the campaigns for you and not only post images and I haven't tried videos, but it does post images. and it can it schedules it and creates a plan for you and says, hey, look, every Monday we're gonna review all the images and this the Mark: Mm-hmm. Chris J. Martinez: content, the copy, and then you just approve it and then it'll go out Monday through Sunday and all of the content that you approve. And so I thought that was interesting because Mark: Time. Chris J. Martinez: you know when when you look at it from that perspective, the I I do think buy here, pay here, you know, that's definitely something that they could be using 'cause you don't have to be a tech savvy person. You you just need to know how to connect that Muse app to your Facebook pages and it does it for you. You just say connected. Mark: Follow the prompts. Chris J. Martinez: Yeah. And it just it tells you, okay, do this, do this, and then it you're you're connected. And it's it's really that easy. But it's it's changing everything even Grokbot. I've I've been using Grokbot a lot, and now you can plug in your financials and and it'll advise you on how you're doing so there and Muse is going in that direction too. Like you can plug into you know, QuickBooks, you can do anything. so the more people, the more adoption there, it's it's changing the landscape for a lot of things. Zach, what do think? Mark: Yeah. Zach Fritz: Yeah, it's interesting. So I will say it's frustrating for me because it seems like every single week we get some new updated version of AI. So it's I went from Chat GPT, I went to Claude, now I'm gonna switch over to Muse, and I'm like, Mark: It's true. Zach Fritz: damn it, what subscription do I need? so that's a little frustrating. Mark: Yeah, that's so true. Zach Fritz: But it's a good thing. I think that we are evolving and the like you said, Chris, the more it gets fed. The more it improves. And so I can speak to it from a you know technical perspective here with, you know, let's talk about, I'm gonna try to operate within the bounds of an NDA that I'm under. But I did work on a project where it was my role to train an AI model to essentially replace like a all data or you know, service times, you know, warranty work. So you see, you know, training it from that perspective, then you get more powerful models and it's like, holy crap, the, you know, fifty hours it took to train it on, you know, one vehicle That's now cut down to like two minutes because it's pulling from everywhere else. So it's like the more we see it with access to different things and all these different APIs and plugins, the more potential I think there is in it. So I think we're finally getting to that point where, Mark, to your point, where it creating ads and being, you know, improved over prior versions where people can't necessarily say, hey, this is AI, this is, you know, the AI slop we see thrown around all the Mark: Yeah. Zach Fritz: time. It starts to evolve. And I I think that's a good thing for all of us 'cause it gets a little fatiguing after a while. Chris J. Martinez: Well, that's the other thing too. So, Mark, I'd love to get your opinion on it. Like AI slop, you know, that's a big thing on LinkedIn right now. You can Mark: Mm-hmm. Chris J. Martinez: actually just click the the image and report it as AI slop. But then what determines AI slop? because my my what I think looks good versus what you you two might think looks good may be vastly different. And then Mark: I think some people just write that just because they want to write it, because they're so dead against AI, they're bored and they, you know, because so some of the times you see that you can't even tell that it it was made by AI. You know, like, come on. Chris J. Martinez: Yeah. Mark: at w at what point do you you know, you some of the times you can't even tell now. So I I think that's just a a lot of that is some people just you know, c I guess talk and smack, yep, putting people down and Chris J. Martinez: Talking smack, trying to put it people down and it like and you hear like from the gung-ho people that the experts, right? The experts that are like, this is slop, and I'm just looking at them like and then I people get mad at me because the the I'll use AI all the time. And they'll they'll say, what was it? One of the comments that someone said, I don't even remember now. But they said something that I was just looking at. I'm like, okay, so let me guess. You don't you also don't use a calculator. You don't use Excel. You're not using Mark: Ha ha ha. Chris J. Martinez: any new technology. You're not using a computer. You're using you're writing handwriting everything. Like there's a reason why AI exists. It's only gonna help I I look at it a t like a tool, like a calculator. I'm not gonna do some complex thing. If I'm if speed is my game, I can do s fifteen, twenty different Mark: That's that's what I was gonna say. Like, I have so many projects that I'm able to work on simultaneously right now. You like you couldn't it would take you two years, three years to to work on one, you know, five years ago. It's just amazing. And I and I think the people that are s like so pushed up against it, they just don't get it. Like This is coming and if you don't adopt this into your your daily lives and learn how to use it to make your job and your role better, you're gonna be left behind. I mean, it's just Chris J. Martinez: Yeah, I agree. Cause n even OpenAI just came out with their version of that. It's called Dots. And I've been Mark: That's Chris J. Martinez: and now I've got Dots, Muse, Crockbot. You Mark: Mm-hmm. Chris J. Martinez: start looking at all these different tools and I'm like, well, I really like how it works here. I like how this one works here. And I like how this one works there. And I'm like, damn, now I've got three different excuse my language. Now I've got three different tools I'm using that are really good. And actually it's like I've got like all these different executive assistance and some just do things better than others in different areas. And now I'm like, okay, well, I like how this happened. Should I now cancel these and try to see if I can get them to do it over here? And I don't know if I'm prepared to to cancel one of them yet. Like it's it's not good because you know all this expense just keeps going. But Mark: Mm-hmm. Chris J. Martinez: At the same time, it's doing so much work. Now I'm just justifying it like that's an employee. I'm like, well, that's that's my employee and I'm paying them, you know, pennies compared to what a full time person would do. Mark: Exactly. Chris J. Martinez: And it's the future is definitely gonna look Different because now what if 'cause right now I've got an AI talking to another AI working Mark: Mm-hmm. Chris J. Martinez: on another tool that I'm building and it's crazy, right? Like I'd never in a million years and what are you gonna have now? Optimus training this agent to talk to that agent to do the work with that agent? It's it's gonna be a weird Mark: I just saw a company yesterday, it's called Dream. anyway, p you know, consumers sign up for it and the agent goes out and shops for a car. And then gets them the best deal and then, you know, brings the person in to do the paperwork. So I I'm assuming this agent goes to all the chats on all the websites of the dealerships and just starts trying to work a deal, you know, or or calls but I can't Chris J. Martinez: Well, I'm glad you brought that up because does that put those companies out of business? Zach, I know you're there's one company that's near and dear to Zach's heart that he he looks up on a regular. They have AI agents that shop for consumers, negotiate the deal. They charge like, I don't know, forty, fifty dollars for that agent. Zach Fritz: Mm-hmm. Chris J. Martinez: Do those go away with these new other tools? Zach Fritz: That's the big Chris J. Martinez: What do you think? Zach Fritz: question is, you know, at what point does that then become free? You know, at what point is that something where I can just pop into Claude or GrogBot or Muse or whatever I'm using, you know, whatever my muse of the day is. Yeah. Mark: You probably could if you had the skill set. You could do it. I mean th the the the everyday person can't, but somebody that knows how to work these tools could Zach Fritz: Yeah. Mark: very well do that right now. I mean Chris J. Martinez: Well, Muse definitely does that. I'll tell you, here's Mark: Yeah. Chris J. Martinez: an example. I literally, and this is well, this was we can get right into it. This wasn't an article that I've read. This is something research I did on my own. So think about I asked Muse, okay, I asked it, you know, I'm looking for a ramp for black XLE in my immediate neighborhood and within you know driving distance and it literally in like five minutes went and or two minutes it might have been a minute or two it went through every dealer in town that gave it access to the actual shopper because not all it not all dealership websites currently give the shopper access to crawl their website. Mark: Uh-huh. Chris J. Martinez: And so it but it didn't even look at any of the listing sites like Carguru, Auto Trader, Cars.com. It went to the dealership's website specifically. And I'd say of the 79 stores it looked at sixteen of didn't give it access. So almost eighty percent did give it access, but that twenty percent, those outliers didn't give it access. And it found me the one vehicle you know, 20 minutes from me and it didn't give me any recommendations for the other two stores that were in driving distance. Like it gave me the one vehicle over there. And if I'm a consumer, I'm gonna look at that and be like, okay, let's go there. And then I'll go there versus, well, what how come I you didn't show me those other 16 stores? Or, you know, why didn't you show me the one that was down the street? What what was the difference in price? Like it didn't show me any of that. It just told me, hey, this is the best value They're discounting it X amount of dollars, and this is what they're they've got their dock fee. Everything is transparent. That's what it told me. And you know, as a dealer, and you know how many of your are you allowing your stores to be sh open them up so that AI shoppers can go to your stores? Mark: Yeah, that's a that's a great point. Well a lot of the vendors of the you know the website providers, they put the block on the websites. But I y I for that particular reason I use a company called Firecrawl for my API connection and it gets around that. So when I'm doing competitor research, I'll send I'll do it through the Firecrawl API and it gets through all the blo you know, per you know, the blockers. Chris J. Martinez: Okay. Yeah, but well I did a that same test I asked, okay, well which listing site blocks the a the shopper agent and auto trader did was completely blocked. It wouldn't even allow them. Cars dot com did sometimes. It didn't do it all the time. And then Car Gurus was actually the one that I think was the one that actually opened it up for more of those AI shoppers to shop. But if they're not even going there and they're going to the dealer's website Does the dealer then d you know, cause click through rates have already dropped. I don't know if you you've seen that with Mark: Exactly. Chris J. Martinez: your stores, but Google search is not the same as it was. I mean, there's still people going there, but it's not what it was. Now it's AI first. Gemini is primarily where where people are searching, not the Google conventional search. So the the links, the ranking, all that is not the same. And now with AI shoppers, someone said this was the yellow pages moment for them. Does that then translate now that every dealer needs to open up their their websites to be crawled? What do you think, Mark? Mark: I would say y yeah. you know, we're not we're not doing that right now. It's something I guess really think about, you know. I guess you have to look at what's sort of the the negatives of it and what's the positives of it, you know. Chris J. Martinez: Well, there's two things too. I don't know if like the MCP. So like you can have an AI agent go through that I forget exactly it's called MCP something protocol. I forget the the acronym, what it exactly stands for, but that's where what I found was most of these shoppers go through for looking at vehicles like or shopping a safe way versus, you know, going and crawling your whole website and Mark: Yeah. Chris J. Martinez: scraping it and doing all that stuff. It's only there to do the task of shopping. So that's kind of one of the things that I'd seen. Mark: Yeah. Yeah, they don't those those bots are from what I understand of them, they don't go on the website like a normal person does. They're kinda like looking at it through the the code or w you know, or the the page code. Yeah. Zach Fritz: Sorry, man. Chris J. Martinez: Model yeah, model context protocol is what it's called. It's an open source standard introduced by Anthropic in twenty twenty four. that connects AI applications, large language models to external data sources. So that's that's what that MCP is, you know, people are putting on their websites so that the AIs can go that route, a s like a safer route, instead of them allowing them to kind of go and scrape all of your data and pull it from your site. Mark: Yeah, 'cause that that's gonna mess up all your you know, all your analytics, you know. Zach Fritz: Yeah. Mark: so you wanna do it in a way that you can c kinda measure that away from your real traffic, because it could skew your numbers up. Zach Fritz: Yeah. I mean, what happens whenever we get a you know, Car Edge, for example, launches their own AI where you can shop from? I mean, that's where I then think we're seeing a divide, right? Where people are gonna say, Hey, let's block the bots so we can track it and then we see people who are like, hell yeah, like let it crawl. Why not? It's who's right? You know, what's the what's the correct thing? Because then Who starts playing a game of, okay, how do we trick the AI into making it making our listing rank higher? You know, just like SEA. Like how do you play tricks with it, you know? We already see that across LinkedIn. Chris J. Martinez: Well that and and do well so so Meta has talked about charging somebody a percentage of everything the a the shopper buys for you. They haven't ironed it out yet. So that's why they're giving it free right now. Get you hooked, get you addicted, you Zach Fritz: Yeah. Chris J. Martinez: need it, and they say, Okay, by the way, it's like a credit card fee. So every time you go Mark: Yeah. Chris J. Martinez: and buy something, now they actually get a percentage of that transaction. Mark: They also Chris J. Martinez: So Mark: coming out with they're gonna start not allowing you to share more than two hyperlinks on your post a month on your Facebook page, and when you share a post with a link, you're gonna be down to two a month, even if you put it in the comments, unless you it's a hundred and forty nine dollars a month they wanna charge businesses. Chris J. Martinez: Yeah, they gotta ch you gotta pay to to do that. Isn't that crazy? I looked at that and I was like, Yeah, I don't need to put a link. But Mark: I don't think that's gonna last. I think that's gonna cause a a revolt, you know. I think it's gonna anger a lot of people, but Chris J. Martinez: Well, I think what of the aren't they making two hundred billion a year or something crazy like that? Like what's this gonna do to their stock? I mean, if you get this type of mass adoption, it's you know, meta like is gonna just dominate, continue dominating, right? Like this is a a real threat, I think, or could be to companies like Google, you know, unless they come out with their own shopper quickly. 'cause I don't, you know. This is it's definitely gonna change, but I do think the companies like the ones you those AI shoppers, they're in trouble because those ones might unless they can create some other type of value ad for the consumer. These shoppers, I don't because it was trying to put in a lead and everything and try to negotiate. Mark: Mm-hmm. Chris J. Martinez: The deal was all like, well, I'm not quite there yet, so we'll we'll just hold off on that. Mark: Mm-hmm. Chris J. Martinez: but that that could be, you know, I don't I don't know what the the shelf life is for those tools, but I I do think it's gonna put a lot of these AI startups out. And believe me, I'm looking at it every day too, because I'm not naive to think that, you know, there's not some new latest and greatest tech that even can put me out. So Mark: Right. Chris J. Martinez: I gotta make sure that I'm ahead of everything and making sure that we continue to innovate and do, you know, things that, you know, most people don't think about because they've never sat in that dealer's chair or or sold cars or serviced them. So, It's it's definitely gonna change a lot of the landscape's changing faster than we really understand it. 'cause even now I I'll talk to c dealers about this specifically and they look at me like, what is this guy even saying? You know what I'm saying? Zach Fritz: It's tough, and the one you know, I'll play devil's advocate here for a second. The Mark: Yeah. Zach Fritz: one thing I will challenge is if you think about all these different improvements that AI is bringing and it's, you know, cutting out parts of the process that a dealership typically fills, at what point is direct to consumer literally the easier path for manufacturers? Because I mean, short of the service department, literally. And what the wash bay? You literally don't have functions that can't be controlled by AI or can't be, you know, taken over. So is it smarter as, you know, the industry to say, hey, like, leave the AI out, don't do it, so that we can preserve this, or do we just have a rep essentially that is kind of Chris J. Martinez: It's like asking a finance manager, hey, do you wanna take the use the typewriter or the the printer? Or do you wanna use Zach Fritz: Yes. Chris J. Martinez: this computer that prints electronically? What do you think? Like I do I do think that this is so different that it's not like You know, I always talked about the McDonald's versus Chick-fil-A analogy, right? Like Chick-fil-A Zach Fritz: Mm. Chris J. Martinez: is very heavily on the people. McDonald's has been trying to innovate and use kiosk or at least screens and remove people. And I there's even in I was in Florida last year and I went to like a Wendy's drive thru and they had the drive thru was an AI getting taking my order, right? Like that was like I couldn't even believe that that was a real thing. but but the AI was taking my order. I don't know if they see those in California, but it was definitely in Florida. and it was weird. It actually took my order pretty accurately. but I don't know. I I think you're gonna see the the the companies like Mark said earlier that don't use this to help their employees and make them, you know, amplify their good employees are the ones that are most likely gonna be, you know. left behind to a certain degree for sure. And I and it could be left behind that maybe their their years aren't they're not making as much because the the guy across the street is using all these technologies and kind of just siphoning all and it's not like a immediate like you know you don't notice it right away, but it's at some point it's like, wait a minute, I don't have where where'd everything go? Like the have you guys read Zach Fritz: It's gonna be Chris J. Martinez: that book, Who Moved My Cheese? Like that's basically that that event that happens. Zach Fritz: Yeah. It's kind of I I think right now it's if you go back and you know, history obviously repeats itself. I think right now we are in this Renaissance era where we have all these bright things that are on the horizon, interesting tech coming out, things that are designed to make life easier and make us not have to work as hard, which is great. Coupled with you know economic challenges. But I think right now the people who are going to win are the creatives. It's people who can do things that AI can't. So if you are worried about AI being the advantage for the dealer down the street, I think right now's a great time to say, well then where do I shine? What makes me unique and creative that I can do that they can't replicate? Mark: Yeah. Chris J. Martinez: Well how many is well that's that's a good one because the creative always is really w the outcome that that wins, right? So Mark, you've been in marketing for a long time. You know the difference between good creative and bad creative. Good creative makes a phone ring. Bad creative doesn't. with AI, I've s I've seen a lot of graphic artists and people that were really good still lose business because, you know, they just couldn't do like AI was doing a lot of those little simple tasks that they were normally doing, what does that do for for more positions in that space? Mark: I I don't think it's gonna be more. I think the even those really creative people if they're learning how to adopt the use of this stuff, you know, they're gonna shine because they're gonna be able to you know, they got that creative they can probably prompt very well because they understand the process of making something be excellent, you know, to you know, the average person. So even them using tools to make that stuff would probably come out better than, you know, the average person that's just putting make me a social post, you know. So Chris J. Martinez: That's true. I mean, now you got these prompt engineers and I I I think you just w wrote a book, I thought, Mark, and I I need to buy it. I'm gonna definitely get it. Yeah, I'm Mark: Yeah, yeah, I put one out with thirty six hundred prompts. Yeah. Chris J. Martinez: gonna definitely check it out. I just you know, you for sometimes you just got so many things it moving at one time and everything's working. I'm like, man, I need to do that. It's just it's on the top of my mind. So I'm I'm going to do it. But I mean we're we're coming towards the top of the hour. We've talked, you know, I I don't like to really go down the direction of talking about AI because I'm even sick about hearing it. but for some reason it always kind of just gets we go down the path because it just well, it's it does this and well it does that too. So if we were to think about all of the conversations we had, wholesale prices going in the a collapse, you know, we'll use Zach's word. wholesale prices, the used car market potentially go go sideways or in your words collapse. we talked about you know Muse, we talked about these listing sites, we've talked about robots, a lot of different things on the horizon for dealers. How do they cut through some of this noise 'cause sometimes it I I think it could be sensationalism, which I've been, you know, been called out on personally. So I'm you know, it what do you think about that? If you're gonna t the how do you tell the dealer what they should look for and what they should be doing today? Mark, we'll start with you. Yep. Mark: Are you sorry me? I I would just say, you know, pay attention. to you know, everything that you can and everything that you you usually monitor and just, you know, be on top of it. I mean, 'cause it it everything's changing so quickly. I that's another thing too, that the pace at which changes are coming. If you're not you know, if if you you're not looking for a couple of days, y you could miss something, you know. So y you you gotta really just kinda keep your finger on the pulse and and, you know, make the best decisions that you can based on w the information you have. Chris J. Martinez: Yep, no, I agree. Zach, what do think? Zach Fritz: like that, you know, kind of, you know, going towards, you know, the word collapse, right? Since it's our kind of buzzword, is, Mark: Yeah. Zach Fritz: you know, you've got to look at it, you know, whether it's sensational or not. You know, I think it's relative to the market, right? To the consumer who drives the market and or the people who control the market and are involved in it. You know, we didn't choose this, you know, automotive career. I think that's the one thing that we all have in common is we all say, hey, we like cars. And so therefore When we look at saying words like collapse and are, you know, saying, well, it's sensational. Well, yeah, it's all sensational. Because if we look at right now, technology's changed, the buyers have changed, running a dealership has completely changed. Doing anything in this industry has changed to where it was even just a couple of years ago. And then you back it up a decade, well, holy shit, that's is a collapse. It's a collapse of the lifestyle, it's a collapse of what we thought our careers were all going to be. But I think the one thing to take away. If you're a dealer and you're watching this, is doing the right things for the right reasons right now. Because if you focus on your quality and factor that into whatever AI model you end up choosing out of the multiple that we discussed today, whether it's Muse or not, it's all a sum of the input. So if you put crap in, you're going to get crap out. If you're doing the right things for the right reasons and finding new ways to innovate and be creative, then either your AI or your employees are going to reflect that. Chris J. Martinez: That was a good that was a good point. I like that. And and I love the angle on you know, everything is different. You know, like I I saw a video the other day where someone was standing by the payphone. You don't know this lifestyle, Zach, by the way. Zach Fritz: Yeah. Chris J. Martinez: but I remember being at a payphone and waiting for a phone call at a payphone. Mark: Ha ha ha. Chris J. Martinez: And it's funny because my kids won't ever know what that lifestyle is. So for sure that that did collapse. Like it was, you know, and the same thing 10 years from now. What does that look like with you know all these robots walking around? Because I can't wait till that I mean, if they can cut my grass and fold my clothes and do all that stuff, cook me breakfast, hey, I'm in, you know. But Mark: Yeah, me too. Chris J. Martinez: that's gonna be, you know, we're definitely in the iRobot era or the Mark: Yes. Chris J. Martinez: demolition man era. You may want to look at that one, Zach. I know that one was quite a long time Zach Fritz: Yeah. Chris J. Martinez: ago, but Sylvester Mark: Mm-hmm. Chris J. Martinez: Stallone came. out with that one. It was use it's actually really good. Zach Fritz: Yeah. Mark: Yeah. Chris J. Martinez: but I I think you're right. I think you know quality is always gonna matter no matter what. It doesn't matter you know the AI slop or all this as long as you you have some real good intent and how you're training these different agents and tools, the quality is always gonna gonna matter. I think currently I've seen a lot of tools out there where they do train these models a certain way and they're good. But you know, I'm always trying to see how we can get better. And so that's, you know, to become great, you you you have to do, you know, things that you're not trying to be the status quo. You're trying to do things at a higher level. And that's what, you know, my goal is for my company. And so f as you as a the operator. Just do just do good things by good the by people and then try to when you're training the things that you're trying to train, make sure that you're taking the time to really put some good context in there because the outcomes turn out to be so much better. So this has been great. Mark, I appreciate your your expertise, your knowledge, your background. Love to hear what you're doing at your group. Zach, as always, you know, I love the the the devil's advocate and the things that you bring, Mark: Mm-hmm. Chris J. Martinez: as always. but until next time, if you guys could please share, subscribe, tell everybody about automotive informants, and And we we'll do it again next week. But Mark, I definitely want you to come back on the on the podcast again, because this is great. I love to hear your feedback, especially somebody from California, marketing. It's definitely something and we didn't even talk about the the new pricing. We didn't even get to do that. I mean, it Mark: We didn't even t talk about the computer. I know. Zach Fritz: Yeah. Chris J. Martinez: it was going by so quick. I'm like, man, what there's so many things that I wanted to talk to you about. And I'm like, here we are, top of the hour. So until next time. I appreciate you guys. Thank you guys. Mark: Thank you. Zach Fritz: Thank you.