Latest / Automotive Informants / Gen Z Won’t Buy New Cars, Robots Are Coming & the Auto Industry Is Changing Fast

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Gen Z Won’t Buy New Cars, Robots Are Coming & the Auto Industry Is Changing Fast · Automotive Informants

• Zach Fritz: Welcome back to the Automotive Informants, your place for the most unbiased, unfiltered, and sometimes unhinged automotive news. I'm here with my co-host Chris Martinez, and today we have a very special guest, my father, Marty Fritz. Welcome, Marty. Marty Fritz: Thanks, Zach. Glad to be here. Thanks, Chris. Appreciate it. IgniteUps.ai: Welcome, Marty. We're excited to have you, Marty. We're really excited. You know, the little known fact for people in the audience, you know, Marty and I go way back. I I actually met Marty in I think 2005, may have been two thousand six, something like you had just moved to the store, and I the story was you had moved Dallas, ⁓ then they said, no, no, no, you what? We need you in San Antonio, and or something like that. And the you had literally moved two places Marty Fritz: Somewhere around there, yeah. IgniteUps.ai: In like 90-day span, and because they said, you know what, we'd actually really want you over here instead. Marty Fritz: Yeah, there was a I'd been in Northern California having a blast, running a location with about twelve hundred units a month recon and twelve hundred units a month sales, plus a wholesale auction on a postage stamp. And ⁓ said, Come back to Texas, we're gonna bring you to Dallas. So I was all lined up to go to Dallas, had been working with realtors, and then out of the blue, we're gonna pivot, pivot, right? In the old famous pivot scene. And we pivoted and it was, we're going to San Antonio. And that was an interesting sell to ⁓ the wife. The kids really didn't care. They were like, Hey, we'll get back to Texas, more grandma and grandpa all the time. But the wife was like, Why San Antonio? And I said, ⁓ really can't get into the details. Let's just say somebody got promoted to customer. So ⁓ IgniteUps.ai: Yeah. That's unreal, right? Like that's and you know, I think when I got hired on there they had thirty locations, so Marty Fritz: Right. IgniteUps.ai: It was still early, you know, days almost startup mentality type thing. And it's kinda cool to, you know, in in real time to see, you know, or remember in real time what that looked like and sounded like. And now it, you know, it's it's kind of veered off and done something a little different than what, you know, I think w in the beginning what it w was sought out to do. I think it's it it's failed to kinda evolve from that. So I ⁓ the the evolution Marty Fritz: Yeah. Yeah good. IgniteUps.ai: So ⁓ I'm glad to have you on board here. Marty Fritz: ⁓ definitely. Yeah, definitely. It was you're right. It was one of the early stores. And what was really funny, a bit of trivia for you, is they numbered the locations based on how they bought the real estate. And the funniest part was that particular location, the last two digits were 52, meaning it was a 52nd piece land they'd purchased. It had ⁓ probably ⁓ years to the location I'd been at prior, which was numbered 47. So they bought that property before, but mothballed it. yeah, I I think that that San Antonio location opened 96-97. it was probably, like you said, one of the first 30 that opened. And then ⁓ they kind of stopped. And then it was gangbusters after that. And then it's kind of been interesting to watch over the last 10 or 15 years. IgniteUps.ai: Yeah, that's kinda cool, man. But you know, we've got a we've got a great ⁓ lineup today. Zach, I know we we looked at some of the the headlines before jumping on. You wanna go and get started with that one you were talking about? Zach Fritz: Yeah, you know, it kind of this intro makes me think, you know, there should be a punchline here with how many ex-CarMax employees does it take to run a podcast? You know, I guess the number right now is three. So you know, had discussed beforehand. We were talking about last week's episode and that analog resistance with Gen Z not wanting new cars, which a lot of data coming out is supporting. And so I kind of wanted to get your take on this, Marty. With are you seeing this across the industry? You know, what do you What do you think the deal is? Marty Fritz: Yeah, I I I think gonna continue to see it. And I think there's a couple factors at play. One is obviously just the cost, the acquisition cost, right? And second one I think is one that we don't often think about in the automotive space, but it's it's the cost of living. So just rent or lease or or a mortgage payment is significantly higher than it was 10 years ago, even five years ago. You know, you think pre-COVID, we've seen dramatic increases there. And so a lot of these Gen Z are choosing to live closer to where they work. So they don't need a car. They're going to walk, they're going to bike, they're going to lime, they're going to Uber. And they look at it mathematically and they say if my average payment is somewhere between seven and eight hundred on a vehicle, I can. definitely do that for less and put that money towards eating out or paying rent or whatever they look at. And I think that's a factor that doesn't go noticed very often. I think a lot of people just leave it out of the conversation. The other thing I think that's at play is, you know, a lot of these Gen Z are just starting out in their career. And so percentage-wise, if you broke it up, I'd say a good two-thirds are not at an earning level where they can even afford a vehicle that they want, especially a newer model. Vehicles. So now they're looking at used. Now you look at used prices though, and they've stayed fairly elevated over the last few years. And that leads them to look even deeper in the aging, right? And so now they start looking at these 10, 15, 20, 25-year-old vehicles, and they become more of a project car, kind of a know, just something that's not necessarily a daily for them. Yet I think a lot of them will start transitioning to dailies with that type of vehicle. and then I think lastly, they're they're just a Different mindset. They look at things differently. They they're more of a a cashless society, if you will. And so when you think of that, they're at what do I want now and in the moment. And if I can tap my card and buy dinner, or I can tap my car and take an Uber or tap my car and buy whatever you know personal goods I need, that's how they're going to do it. Versus, hey, if I have to kick seven, eight hundred a month to a car payment and then top that off with insurance and maintenance and fuel. Yeah, I could put that to better use is their mindset. Zach Fritz: Hundred percent and Chris, that kind of goes with what we were talking about earlier with debt to income. You wanna hit on that a little bit? IgniteUps.ai: Yeah, you know, I was gonna say that, like you think about how much people are making, that that really hasn't increased, everything else has increased, right? You you said the the real estate, you've got your mortgage payments or rental payments, rents have gone through the roof, insurance. Think like even Your renter's insurance, if you even have insurance, homeowners insurance, all of the insurance, the car insurance, all of it's gone up. And then you think about the income hasn't, so then you got your payment to income. You know, payment to income, looking at at deals the last 23 years, is been always been around 15%, is like really where you wanted to have your payment to income. Right. And the average new car payment at seven hundred and sixty. That's like 68%. So you're looking at that like, okay, well. You know, there's a reason why let's go look at this twenty-year-old car because the ten-year-old car is like twenty grand. And you're just like, Well, man, I ⁓ we can't even afford that because you get a ten percent interest rate. Average n interest rate today is nine point five two. That's on new cars. So just imagine what a used car payment i in interest rate is. So Yeah, there's there's a lot when you when you start looking at what what the market where the market's at, the data that's coming out, and this is all you know verified by you know Cox Automotive. ⁓ they they released this report yesterday, actually. So when you look at this data, it's it's not looking good. And and the people that are buying these sixteen million cars a year are people that ac are more affluent. I mean, new car price, average. New car price is $49,855. So $50,000 for a new car now. I mean, it's it's unreal. I I think you're gonna see more of it for sure. Zach Fritz: It's kind of one where I've even seen with myself, you know, I've been buying up project cars lately and kind of flipping them on the side and you just kind of messing around with that. And everything I've bought has been two thousand to two thousand and seven is kind of my range right now. And it's almost instant the moment you list it up on Facebook Marketplace and the margin is absolutely insane. And you see this divide where you have people who are affluent, like you said, and can afford these, you know, almost fifty thousand dollar new cars. And then they get rid of their old car for next to nothing. I've paid as low as two hundred dollars for a driving car. then you go flip it to somebody and it's, you know, a few thousand dollars. And they're all Gen Z. They're all younger kids who are like, Hey, this is gonna be my daily driver. But I work in, you know, for it's downtown Denver and they ride a scooter to work or they lime around or ride a bike and they're like, Yeah, I just need this for the occasional trip out of town. IgniteUps.ai: Lo look at even what the data says. compact SUV are down, mid-size SUV sales are down, but subcomp Subcompact SUV sales are up. So everybody's literally just downsizing. And so it's that average new car payment of six seven sixty-eight. Just imagine if you you took out those subcompact what the real payment is. You know what I'm saying? Because that that re that actually equated to because those two segments are down as far as they're down, that's like sixty-six percent of the entire market. So it's Zach Fritz: ⁓ yeah. Yeah. IgniteUps.ai: It's not looking good. You know, and so then, you know, I talked about it last week about that one article that, you know, the SAR by twenty forty is gonna be down, you know, f to from sixteen million to fourteen million. That's It's only gonna get worse. I don't see it getting any better. that's I think dealers really need to focus on service, maximizing, increasing, you know, your even your hours potentially. you know, w we did a really good job. Marty did an amazing job. when we needed more bays, we went on a 24 schedule to recondition more of those cars because you couldn't you you couldn't put enough throughput ⁓ because everything was at capacity th during the day. So he's like, you know what, let's just open it up twenty four hours, we'll have a night shift and let's let's work that those hours and get th that reconditioning and pump out more units and you know, with that type of you know, people I hadn't heard of anyone doing that. And then much less today they're not doing it. So, you know It's kinda interesting that when you see and look at 'cause I I I talk to dealers every day and when I talk to first things I I talk to ⁓ about is w how many service space do they have, what kind of capacity, what could we do to to help drive more revenue there? Because ultimately that's what's gonna drive your UIO and help get you more sales, because you've got more customers there. So Marty Fritz: Yeah, there was Zach Fritz: I loved night shift. That was whenever I worked for CarMax, was on night shift and it was so quiet and peaceful and you you see this interesting and maybe actually a better thing to bring it back up this time around, especially with this new generation of technicians and people working in dealerships. You see a lot more people who are both working in a relationship, so their spouse is off working during the day. They're watching the kids during the day, so whenever they're flipping schedules at night, it might be easier to get talent in the door if you do have that night shift. And that's a great IgniteUps.ai: Well yeah, that's a challenge. N nobody's got it. I mean, how many stores do you know of that you guys ⁓ talked to? I mean, Marty ha when was the last time you heard of anybody doing it? Marty Fritz: He well he's he's taken my playbook. So when I built it out, that's that's part of what I looked at it. Historically, I'd find I'd found at locations that were running the night shift, didn't have the best behaviors on the night shift. And I go back to when I was a teenager, my parents said nothing good happens at 2 a.m. You don't need a two a.m. curfew, you need a midnight curfew. Because at two hours, that's when the trouble happens, right? And so I that forward and it was true. Every location I'd run prior to coming to San Antonio, I'd seen that challenge where mistakes were made or ⁓ you know, behaviors were bad. And so where I took it with San Antonio, I changed it and I said, this is going to be where it's an, it's a, it's a privilege to be on night shift. It's because it works for you, but you're going to make it work for us, right? So it had to be a two-way street. And what Zach just said is really true. I had a lot. We had a lot there in San Antonio who that exact scenario played out. Spouse worked with during the day. You know, our technician or detailer or painter that was on a night shift or even inventory was taking care of kids or taking care of the home. And then five o'clock, six o'clock, they came in and worked their night shift. And where it became really successful is when you did make it a privilege because now you had your best for performing associates. Your most responsible people were on that night shift. And I do think that's something that causes pause or hesitation for a lot of shops and dealerships to create a night shift because they don't Want that risk because again, if there's very few places to go for dinner or or grab a snack or a drink at two in the morning, your risk is pretty high. Now, one could argue today there's a lot more choices than there were 10 or 15 years ago. However, I still think the challenge is there's less people out at those hours. And so getting a team that's focused and being able to do that, he's also right when he says it's quiet. I'm telling you, volume and productivity shoot through the roof in those overnight hours because again, they have less distractions. They don't have salespeople coming back saying, hey, can you check this? Can you check that? I got a I got a customer ready to buy. You don't have managers looking for things. You don't have any kind of those, we'll call them heat cases, whether it's coming from sales or service, right? And then lastly, it's it's also an opportunity for you, like you said. Chris, to really metric and look at what is your efficiency or productivity potential per bay. So what are you doing today and what could you be doing? And again, I think a lot of people try to start at 100%. They say, ⁓ I got to be at 100%. No, you need to look and see where are you today? Because you're probably going to be below 100. When you do the real math, you're probably going to be 50 to 70. Now, what you have to do is say incrementally, how do I get back to 100? And then anything over 100 is just a bonus, right? It's it's not An expectation. You have to be really careful because when you look at that, there's always going to be things that slow you down. Always going to be interruptions or distractions, especially during the normal daylight hours. And at night, something happens, it can slow you down a lot worse. You know, if the compressors go down or the power goes out or inclement weather comes in, it's a it's a game changer at the overnight hour. IgniteUps.ai: It really is. You know, I I think about so, you know, one of the stores that I helped run, we took a a used car department from fifty cars a month to over five hundred cars a month. when you start thinking about reconditioning, where you're gonna put your people, how do you get the throughput, how do you get maximize your your shop? We to pull out every every play I knew that I worked through. And I that's why I always think CarMax helped me play at a level outside of them. that you know has helped me the last 23 years. So I think those things that I learned from you, from the team there at in San Antonio, I mean, I've taken that wherever I've gone. And now, you know, we've also expanded that when I was at my Mercedes store to mobile service and things like that where you can really kind of optimize. But there's so many dealers that are just kind of sleeping on the opportunity that's at hand and why This right to repair bill could potentially, you know, make things even harder for them because right now, yes, profit is up in in service, it's ⁓ at some stores. say I I don't know what the percentage is, but every store I've talked to, yes, the profit's up. RO count down though, right? And where's that where's that RO business going? It's going to all the independence. And if they they see that dropping year over year today, what's that look like? Marty Fritz: Mm-hmm. IgniteUps.ai: When the this right to repair bill passes and everyone else is playing the same game. Marty Fritz: Yeah. It's huge challenge for the industry 'cause I I think it's the the first thing there is is they've they've got a big decision to make. Are they gonna be in the service business or not? And historically service business does way more than keep the lights on. You know, it it puts a lot of revenue on the top and that comes down through to the bottom line. And so we have to figure out how do we keep that trend going and potentially even get it to start to have a positive trend line to where we're getting some growth and and scale. The biggest challenge in front of us though is staffing. It absolutely comes down to can you get enough people to fill the bays, to do the work, to answer the phones, to supply the parts, to do all the necessary functions, whether it's daylight or after hours, overnight type shifts. That that's really the key element. And I mean, every article I've read over the last geez, 10 years, we have more technicians leaving the industry than are coming in. And I think that kind of goes back up to Gen Z is how do you get these Gen Z kids To say, and I shouldn't have said kids, how do you get these Gen Z individuals, these young adults, to come in and say, How do I get into this industry and make money? And the reality is they can do really well in this industry. It's just getting them in the industry, getting them acquainted with the industry, getting them to see the positives and the value, because I think that also changes the narrative. I I look back when I was you know, eighteen years old, fresh out of high school. I had no intent of being in the automotive industry for three decades. I I didn't ever think, huh? They had cars. We had we had we had wheels that we carved out of stone with chisels and and we peddled with our feet, but it worked really well. But Zach Fritz: They had cars? They had cars? IgniteUps.ai: Yeah. You know, it Marty Fritz: But I didn't. I had no inter I I it wasn't on my radar. And it it really was something I fell into during during college when I answered an ad for a part-time job in the tire business. And when I got in the tire business, I saw three things. It was it was a lot of fun. I was I was making a difference. I was solving problems for people, which sounds crazy, but you were. You were getting people back on the road. And then the other thing was I was making good money. And I was like, wow, if I can do this here, let's see where this goes. IgniteUps.ai: Well I think that's the challenge what I see. Th I hear a lot of people talk about there's not enough people, not enough people. And I'm under the impression that if you just have process where you can train ⁓ the people or when it's because I think there's a lot of people available. I just think there's no real roadmap in the industry today where they have a a you know, a or some kind of roadmap to say, Hey, look, this is how we're gonna train people. We're gonna onboard them here, we're gonna get them through this process and show them that roadmap. Because all they're looking for is people with experience. Well, everybody's looking for experience. I mean, that's i it is what it is. So go after the people that have ne no experience, teach them, show them the roadmap, and then grow them. I think if people just got behind growing your own people, and I think that's one of the the plays I took out of CarMax, right? They hire all their people, they teach ⁓ all. They don't hire people with an they get people with no experience and then they teach ⁓ how to do it. And I think if the industry can kind of go that direction, but then they've got tools, and I know I I think you and Zach might be doing something in that training type thing that I think would be amazing. I don't know if you guys can fill me in on that or if that's if I kind of preemptively said something out loud, my apologies. Zach Fritz: It's okay. It's I've been working on this for I think I'm on year four of putting this together because it is a lot. especially to kind of tra take everything that I've worked on with, you know, UTI, ASE, Audi Academy, Mercedes Star, and put all this together and figure out well, how do you then translate that into a roadmap for people who want to join the industry? IgniteUps.ai: But ⁓ it's ⁓ Zach Fritz: And then same thing that I do in my content, where it's, you know, you need to go to trade school or do you just start off as a lube tech and then work your way up? And then how do you then negotiate that? How do you then roadmap this out to become successful in the industry without giving that false hope of you'll make six figures? Like, not off the bat, but how do you get there responsibly and actually build your career without hitting a wall, which I think is the discouragement for a lot of technicians as well as a lot of people entering the industry is they just go in with high hopes, but their expectations might not be appropriately set and therefore they just stall out, they burn out and they say, Hey, screw it, I'm gonna go, I know, make a Subway sandwich for people or whatever they do after the automotive industry. Marty Fritz: Well and and I'll add I'll add this. There there's a couple elements as well that you know you mentioned UTI. And so you I I think UTI is a great, great school, great format, offers a wonderful program. The the thing that's tough is it it's not free, right? Unl unless you've got some kind of you know or fund that's that's helping you go through that school for the majority of the students, this is a a program paying for. And it's not too off the equivalent time for a regular college or university program that we see today. So we're talking 30 to 50,000 annually to go and get an automotive degree from an accredited school like UTI. ⁓ And some of the others out there. You're gonna come out and you're gonna be well trained, you're gonna be ready to hit the ground running, but you're gonna hit the ground at an entry-level role. And I think that's the setup that's tough. Most of the students come out of UTI thinking I'm gonna be in the mid-20s, maybe even $30 an hour on my flat rate. And the reality is they're gonna come into the industry between 15 and 20 and probably be put on hourly, probably be put in an apprentice program that's six months to a year, and they are not looking. For that. And so you see a lot of churn. So if they start at a CarMax, they may do that for three or four months and then they may leave for a traditional dealer or the reverse. The other thing that plays out here too how do you sit ⁓ value on if went to trade school, where does that rank? If I've gotten ASEs, where does that rank? Are there any state credentials that are needed? And then are there any manufacturer-specific training or OEM-specific training as well? So, how do you put all these in there and say, here's what that warrants as far as a compensation range? So, and word, you're gonna laugh. We called it Techometer. We literally had this. We literally had this way to do a an analysis, not saying it was it was bulletproof. It wasn't, it was swag, but we were able to put some information in there and you could get you a range that made sense and it lined up. Today, many people aren't using anything like that. I think if we were using things like that to be consistent and to be fair, and then if we were being equitable and saying, okay, you've been with us six months, and since you started, you were at zero ASEs, now you're at four, you've got 10 OE certifications here through whatever make or brand. Now we're going to give you a bump, right? We're going to bump your pay a little bit. Not maybe not a full bump, but a little bump, right? And so those kind of things are motivating, they inspire. And then I think another element that's achieved. Challenge today comes back to when do you ⁓ do you get these individuals interested? When do you create the awareness? And right now that awareness is kind of happening because they're coming to it. Nobody's necessarily going to them. Now there are their trades, trades or career fairs, there are events like that that they'll go to, but they're not hitting consistently. And not every dealership is taking the time or the opportunity. One of the best things I ever attended was ⁓ Wiotech. So started out in Wyoming and they've got campuses now across the country. But I remember going to the old Wiotech, the original campus in Wyoming, and going there and just seeing rows and rows of tables and all these dealerships and automotive groups and independents and CarMAX and we were all there and we were vying for all these students for their attention. And that's the kind of thing that we've got to be thinking about. How do we take that deeper or earlier in the in the phase? Not waiting. Waiting until they're enrolled in the school, but how do we get their ⁓ excited about it beforehand and then maybe even create a way or a path that they don't have to bring on so much debt? If you took away that 30 or 50,000 and found a way to to create maybe something a little more tangible for them in the beginning, I I believe that changes it as well. I believe that that's going to bring more people into the industry and they're going to stay. Because like Zach said, they may not make six figures in year one. However, I've I've been chatting with some some friends I have with a a group in the automotive space, I'll call it. And they actually recognize their technicians that earn six figures. They actually have a club for these these technicians. And now some people may say, Well that may not be right. Well, wait a minute. This is about them billing hours, getting work done, driving revenues, profitability, and most importantly, fixing vehicles for the customer, getting customers back on the road. So they're recognizing and rewarding. We do this across all different facets of the dealership. But I think a lot of times we look at service and we say, hey, it's a revenue spot, but we want to be cautious with how we gain that revenue because we we don't want to give up customer service for revenue. Well, you don't have to give either one up. You just have to pair them together. You have to run them in parallel so that they're successful. IgniteUps.ai: I agree. I think that yeah, I I think if they can have that in a p in a way that, you know, helps these Z not only from a financial standpoint, 'cause let's just let's be real. Th how many MBAs do you see ⁓ today's market? They spent a fortune going to ⁓ They these this I got my MBA, this and that and and you know, what's their entry level position? I mean, they're not even making, you know, gonna take you know, six ⁓ to years to pay out whatever they did in and I actually I've seen people taking twenty, thirty years to pay off these student loans. It's kind of crazy. Like they're just never not paying this and then they're they go through periods where they're pausing it and then they're redoing it. And it just keeps this a crazy cycle. So I agree. I think that that sixty Marty Fritz: Mm-hmm. IgniteUps.ai: For you know, going to a tech and then mate then then they just get a job as an entry level and it's it's not good. Zach Fritz: Mm-hmm. Cool. Marty Fritz: It's hard. It's at fifteen dollars an hour, that's roughly thirty-two thousand annualized. And if I'm carrying sixty grand in debt, right, and now I I certainly can't buy a new car. I'm living in my parents' basement or spare bedroom I'm liming or walking to work. Zach Fritz: That doesn't even buy you a new car. Get to work. Marty Fritz: Because I don't have the funds. And and I and I'll say this too, you mentioned the MBAs. I think you're right. A lot of people get the MBA because they want to have it on their resume. And maybe it gets you a title. But the interesting thing is sometimes titles can be misleading. A VP at a very small company may not be in the same earnings range as a VP at a large company. And you can even see the inverse of that, right? And I think the the other piece that occurs there as well is back to If if I'm not earning enough to pay down my debt, then my objective shifts. I'm no longer focused on that job. I'm focused on finding a better paying job. And so now I've lost that that interested person. And it's it a lot to when that customer comes on the lot, right? And you think of an up system, the old up system, right? Where everybody's on the up list and we're waiting. And as a client, customer comes. comes in, that's my up. that's the same mindset is we've got to find a way to control that ups list because once we've got them in the door and once we've got them on the payroll, we need to keep them. We need to find a way to grow them because that organic program I think is what's always been missing. CarMax a pretty good model on it, but even that wasn't locked in. I think just you've got to find ways to motivate them to stay. for the long term so that you can build. IgniteUps.ai: Well, I mean and here's the here's the worst part. Here it this kinda jumps to this next article where now your car could be worth or cost you even twenty thousand dollars more, depending on, you know, these new tariffs one for one f out of Canada. What what do you think about all that? Zach Fritz: Ha ha Marty Fritz: I I I think this is the thing. At the at the end of the day. You know, we can we can look at it. The reality is it it all comes back around, right? And and we what we're seeing play out is a lot of geopolitics, but we're also seeing a lot of, in my opinion, some some people would call it old school saber rattling, right? Of of I'm I've got more sway than you. It still comes back to is it the right thing for the country? Is it the right thing for the consumer? Because remember, in America Our government is there to do things to take care of us, to ensure our freedoms, right? And our ability. And when you start ter putting tariffs like this on there, I I don't know as if I support that. Because to me, I I struggle with it. Well, how does that help us? Because all that that that country is going to do is put the reciprocal on, right? They're going to come right back. Exactly. IgniteUps.ai: Yeah. Well, that's what they're doing. And here's the worst part. What did ⁓ I mean, they just refunded all kinds of billions of dollars to all these other companies, yet everybody else had to pay more for it. I know Zach feels really good about that. Zach Fritz: saw my hip piece talking about Ford and them complaining. Yeah. ⁓ Marty Fritz: Well well and and and I'll take you back a few years. When I was in I was with a ⁓ cleaning chemical company for a few years, led the administrative and operations side, and when started in and they started talking about it, ⁓ it it made coming out of China impossible to find it empty, to load it up. And so you were paying to ship and empty it back. Just to get your product put in a container and shipped back to you. And so not only were your cost elevated, but your time was triple. So what used to take 30 days was now taking 90 to 120. you were paying anywhere from 10 to 20, as much as 30, is what I heard people were paying to get an empty container here in the US, because nothing was going back to China from the US. And so the only way to get a container over there and fill it was. To ship it. And it was again, those kind of things. We we've gotta look at this, you know. I I I think politics is is that line where you're kinda dancing and saying, Do I hear the ice cracking? Do I need to run back to shore if I talk too much? And think that's where we IgniteUps.ai: That's a good analogy. Yeah. Marty Fritz: I and I think that's where we are, Chris. I think truthfully a lot of people don't understand that but we're on a frozen pond in when you think of politics. And it's all about do I hear the cracking of the ice? And the minute I hear the cracking of the ice, I've got two choices. Run back to shore or take a couple steps back and just stop and hope that it's not cracking underneath me. And and I think that's the risk with the tariffs. I think eventually it's just gonna drive prices up here. I think consumers are gonna shy away from it. We're gonna see the, you know growth of our economy is going to stall out again. And it's just, to me, it's a cycle that we're just repeating over and over. I think we need to work, work harder, work better at finding solutions that are more tangible and more agreeable to the general population. Zach Fritz: Give you a little bit of an optimistic approach to this. So, which is very contrary to how I normally am. ⁓ at this, I do feel like this might just be a squeeze to get that pipeline out of Canada. Fair enough, right? They don't really like to play ball, and you know, maybe we can trade them some maple syrup. I don't know. However, will argue whenever we about bringing manufacturing back to the US, because that's truly the constraint here, is These tariffs matter because parts aren't made here. So if it becomes expensive to bring parts in from other places and it starts to run parallel with the argument that hey it costs too much to manufacture here, at a certain point it's just going to be cheaper to manufacture here because it's so expensive to import it. And maybe long term that is more of the play. I mean, I hope it is, because I would love to see a man American manufacturing come back. And then the other hand is you see. That start to be reflected more in the cars and you've got these fuel prices. And what did the administration come out and push? These smaller, more fuel efficient, tiny trucks and SUVs and vehicles. Maybe it all lines up. Maybe there's some master planned or scheme going on that pushes this all forward. But I I don't disagree. It sucks right now. It is very expensive. IgniteUps.ai: I do think I think it i it sucks. It it's unfortunate right now for sure. I think that I do think though that if that does happen, what will happen that yes it'll be you know, jobs create jobs here in the US for a period, but the minute these robots take over, all gone anyway. 'Cause think about it. Zach Fritz: Yeah. IgniteUps.ai: These some these robots are being trained to do basic, you know, movements. just saw a video ⁓ yesterday about the ones that in China, these are super robots. They can run faster than Hussein Bolt, they can jump higher than anybody in the world, they're smarter, they all have AI in They can move their hands, they can fold clothes, wash dishes. What's who's not to say? They're already in China there's there's some factories that are near dark, meaning they're all robotic a hund almost a hundred percent. If that if that happens, they bring more stuff here, it will get cheaper for sure. But they're not gonna it's not gonna create more jobs in my opinion. I think it's gonna displace the first to go. What's the biggest expense here? The unions and I I imagine I get some pushback from that, but you're gonna you're gonna i ⁓ these are it's real. I mean, is ⁓ is that gonna, you know, make ⁓ even real position that that that happens ⁓ 'Cause what what that guy Elon Musk is saying is that there's gonna be probably like a billion robots in in the world at at some point or one-to-one. If there's seven billion people, there's gonna be seven billion robots. So what are your thoughts on that? Zach Fritz: Mm. Marty Fritz: I think I think we're seeing the movie iRobot play out. I mean, I'm in to tell you the truth. I mean it and it's funny because I watched it just a few weeks ago and I sat there with my wife and I said, Wow, this is eerie because so much of what's in that movie is what we're talking about now and what we're seeing play out in the world. And y I think you're right. I still though think the challenge is there's there's a human in the loop need in a lot of spaces. And what's that percentage? It's tough to to put that number out there. Some could argue it's as high as ninety percent. Some may say, ⁓ it's not even greater than five. I don't think you can put that there until you start seeing the mistakes that do occur without a human in the loop. Because I think about like the industry we all come from and we're all in. And I think about if I take my car in a robot does a brake job and rotates and balances my tires, how do I know with certainty that that robot is getting everything right? And I say this from having been at the forefront of an AI machine learning powered company doing some really cool stuff and really big name in the space. And I can tell you that when something went down, when we had downtime, it wasn't a robot. It wasn't the AI, it wasn't the the the machine learning or the large language model that solved it. It was a human. It was a human. Whether it was a reboot, yeah IgniteUps.ai: Well, you're seeing that now. I think, yeah, like so I'll tell you, I drive my Cybertruck every day and I I do FSD. eight percent of the time it's driving by itself. ⁓ now and then it misses an exit or ⁓ ⁓ know, there's some goofy thing that it does that it maybe instead of parking closer to the parking spot, it's like, you know, far away. So like there's there's certain nuances still that human involvement needs to get Marty Fritz: Yeah. IgniteUps.ai: Even if it's fifty percent of the im the staff at those factories, they're already at ninety percent in China near dark. I'd say it's probably gonna be closer to that pro that point than than else. think i it's just you know, this is I'm thinking five years from now, because I think at the end of this year or beginning of next is when Optimus starts coming out. And I don't know Marty Fritz: Mm-hmm. IgniteUps.ai: when China, you know, more than likely they're not getting the cars here. I I can't imagine them letting robots in here either. So but Japan may they may create some stuff, you know, that's it's there's there's nothing will surprise me at this point. Everything is like, ⁓ you know, saw the movie Demolition Man. That everything seems like it's coming to pass there. I robots coming to pass. Like they everybody, you know, we all thought about it watching these movies. Zach Fritz: Yeah. IgniteUps.ai: Now it's here. You know, it's kinda it's kinda interesting. Now they're they're talking about flying cars here shortly. I don't know if you guys have heard that, but ⁓ Marty Fritz: ⁓ yeah. ⁓ yeah. Well they they're we're we're close. We're close. You've got you've got two companies out there that have got FAA approval. Zach Fritz: It's already exist in the agricultural space. Marty Fritz: for for demo and and they just haven't launched true passenger flights for these robo taxi helicopter style aircraft. And I think as those truly get up get to that point of yes, we're gonna do passenger flights open to the public, I think we're gonna see that transition move very quickly. And I think it still comes back to how do we, you know, there's gonna be a cost there too. So not everybody's gonna be able to afford to outfit their their shop or their factory or their assembly and their production with robots, they're still gonna have to do it with human health. And there's gonna come a, you know, what is that intersection? What is that cost factor versus my ROI, right? And how do I get there? Is it driven by scale? Is it driven by something else? I think there are risk factors, right? That maybe robots mitigate, but then there's risk factors that the robots bring. And you're gonna see, I think, a new era of even jobs, if you will, that come in that manage how the robots are implemented and how the robots are managed going forward. So again IgniteUps.ai: Yeah. I think yeah, I think you're right. It's it's another industry. One kind of moves this way, because at one point there was horse salesmen, right? Now now there's there's not as many horse salesmen. You know? Yes. Yes, of horse. ⁓ I need to enunciate a little bit better, but hey, you you won't need any robots if at this these stores. L let me tell you this next headline real quick. Marty Fritz: Yeah. Zach Fritz: Hold on, you said horse, right? Like the four legged animal? Equine. Okay. Marty Fritz: Mm-hmm. IgniteUps.ai: This one, can't imagine you need even people. I mean, you got car dealership guy reported ⁓ sixty eighty-six dealers had zero they're sitting on a goose egg for the month of August in sales. So that's a big percentage. what do what do you I mean you think about being in that store, like I I could I'd be yeah I'd be questioning my whole life if we I hadn't sold a car the whole month as a dealership. What do you guys think? Marty Fritz: Let me guess. Let me guess. it surprise me that brand is right, right. IgniteUps.ai: This is Maserati, by the way. You know, it's great car. I mean, I thought it's always a good looking car, but you know, when you look at some of the comments, I posted this yesterday, comment, ⁓ somebody said, and actually I know who she is, she said, I have owned two and I more on service than any car payments I ever had for the life. So, you know, when you think about that. And it's not that I've heard it from a lot of people that they're constantly in the shop. Marty Fritz: I ⁓ I, you know, back in the day, looked at one in wholesale and said, wow, this is a beautiful car, low miles, we were in it right. And I was like, I think I'm gonna buy this. And I talked to a a a fellow team member there who owned one. And you know who I'm talking about. And I said, Hey, how's this car? He goes, It's great to drive, but the worst drive is to the service department. He said, It's so painful. He said it's four figures every time. IgniteUps.ai: Mm. Marty Fritz: Just for an oil change. He says it's like $1,500. And I was like, really? And that was it. That was that was my the end of my love affair with that brand. but to the question, does it surprise me? No. the reason is I I just don't think they're competitive with the other, you know, luxury brands, whether they're domestic or imported. And I think the choices now, and and whether it's an ICE vehicle or an EV or a hybrid, I think consumers are going to look at it and say, I can go and I can buy this other brand and my maintenance cost is going to be next to nothing compared to yours. And I and then I will say this, they do need people though, because clearly there's it sounds like there's nobody in the dealerships because they're not selling. There's nobody working the uplift then again, if there's a if there's nothing on the up list, there's no work. So I don't know. Maybe that's where the robots, well, that's if I'm if I'm Maserati, maybe I bring robots into the showroom to see if it changes it. Maybe it's a novelty play. ⁓ IgniteUps.ai: You know, if well here's the challenge too, I see. You know, that's prop I'm not saying specifically that brand, but I've seen other brands they've got a two month wait before they can even get into service, right? So ⁓ are they like that? Are they expanding their capacity? Are they trying to figure out a way to to capture more of those customers to retain them so they don't go somewhere else? Marty Fritz: Yeah. Yeah. You know, and that's i great question. IgniteUps.ai: But then then the thing is the parts, right? Do they even have parts available? 'Cause they're probably stuck on the Hormuz Strait where we we're in this other debacle that's causing more price increases. ⁓ I know you want to comment on that one, sir. Zach Fritz: Yeah. Marty Fritz: Yeah, I Zach Fritz: I'll start with Maserati. I feel like Maserati for me, you know, Marty going back to whenever you almost bought one, I've never peer pressured you so hard in my life. So I'm glad it didn't work in that equation, because, you know, I've got to rely on an an inheritance one day, hopefully. then you look at Maserati as a whole, Maserati, I guess I think of luxury brands, I almost want to equate it to like Toyota and Lexus, right? Where they've got their sub-brand. But then they create this luxury variant, but it's still a good car at its core. In quotes. you look at Maserati, Maserati doesn't have that. Instead, they're like, hey, how can I piecemeal this from Ferrari and all these other different manufacturers? Cobble something together and push it out. So that reliability factor has never been there. It's the same way with British cars, it's the same way with like Jaguar, who that's another story about their whole artistic, you DEI cover yourself in blood. absolute PR disaster that they pulled. And it doesn't surprise me that Maserati's in the exact same boat because if you don't have an emphasis on quality, and I know no Maserati tax, like literally none, and you just want to cater to this niche market who is, what, too poor for a Ferrari but feels like their nose is too far in the air for a Lexis, then what do you expect, especially in a consolidating economy? Marty Fritz: Yeah. I I don't think you've missed much there. I again I go back to I I I I can't anybody I know that works for Maserati today. IgniteUps.ai: Yeah. ⁓ Marty Fritz: You don't see them on the road. So it doesn't surprise me. I mean, they're out there, I know, but people aren't driving them as a daily driver because it's too expensive to drive it as a daily. And I think it comes back again to when's the last time you saw really any kind of marketing or or even just press release here in the US that was the brand, promoting the models. Though this is the only press release I've seen on Maserati in the last 12 months, you know? ⁓ IgniteUps.ai: Well, and it w and that wasn't really a press release. That was just some a car dealership guy talked to a dealer and then he said, Man, I just heard about a dealer where sixty of the dealers haven't sold a car this month and and ⁓ and one of the comments was maybe they're sandbagging and I'm like, Well, I mean it's the end of the month. I'd I'd hate to think you're sandbagging Marty Fritz: Right. Well or or or maybe our friends out in Arizona, affectionately the the Carvana crew is gonna buy up a couple of the dealerships and blow the sales through the roof in the next ninety days. Maybe that's the model they need, right? I mean, know, I I I doubt it. IgniteUps.ai: Yeah. They need something. I they need something. Well, you know, before we wrap up, there's one more article I wanted to touch base on. It there's actually like it's like two in in one. So FTC allegation is a dealer that, you know, payment packing and then another bad apple, a two million dollar lawsuit. on that sued because something l you know credit ⁓ information other contract details were misrepresented and when i i read these articles the reason why i wanted to bring it up because i recently saw a social post for a guy named i forget his name zach his name's zach I think I forget his last name though ⁓ and he's Car Edge Marty Fritz: Mm. Zach Fritz: Mm. IgniteUps.ai: And you talk about a company that I think is gonna is putting some real pressure on the the other traditional listing sites, is this company. the reason why I say that is he's calling people out left, like he's literally showing a dealer. He's like, Man, here's a Toyota dealer. This is what they're priced on car gurus, this is what it says, everything's you know, accepted, like it every everything's disclosed online. Then you go to the store and they've got a four thousand dollar addendum and all kinds of ads and I'm like, okay, so here's a people are clearly, and this was just yesterday, these people are clearly not looking at the FTC allegation where they're getting sued, this dealer group, and then this other dealer having to pay two million dollar lawsuit because of these questionable tactics that they're doing. At what point do you think dealers listen to articles, like ours that they wake up and say, Hey look, you know, w w maybe we need to do something. Marty Fritz: I've been asking that question for a while. know, I IgniteUps.ai: Twenty Well, how long when did you start an automotive at with ⁓ CarMax? Marty Fritz: ⁓ Carmax ninety nine. So IgniteUps.ai: Ninety nine. Okay. I started ⁓ three. So think about it. You've been questioning it since you got there. Zach, what do you think? What do you think about all of this? ⁓ he's got something. Zach Fritz: Well twenty fifteen for me, you know, my little Carmex badge. it's shocking that you still have people who are so ignorant to the fact that everything is online, everything is posted, everything is recorded and streamed and then you have IgniteUps.ai: Forever. It's not like it's, know, one done. It's forever. Like they they're gonna go back and they're gonna they're gonna review the tape. Like it's wild. Marty Fritz: Yeah. Zach Fritz: Yeah. Is it a is it a it true just ignorance? Is it the audacity to think that you're not going to be targeted as well? Or it just bad business trying to pull the wool over somebody's eyes ⁓ and like you're I just I don't comprehend how you can be this idiotic in our industry today. Especially with all these people out there who are creating videos and saying, ⁓ well I called this dealer out, this salesman on the phone and you're trashing careers and you still are gonna act that way? I baffling. Marty Fritz: Well, it it's the old beg for forgiveness play. I that's really I see it is, you know, I'm gonna play above the fray where I need to, but then if I wanna change the price and I wanna put in a addendum on it, if I wanna make some kind of we're out of that one, but we've got this one, you know, kind of the old bait and switch, which was really a problem years ago and that kind of went away. And now we see what we we have today. ⁓ IgniteUps.ai: Well, it's been redisguised, right? It's been redisguised. I mean it's the same thing, it just now they moved it this way. Marty Fritz: Exactly. Yeah. Yeah, because if you remember back when car dealers published in the newspaper, if you remember, there was a newspaper, you know, they printed it off and threw it on your driveway every morning. And Zach doesn't know those, he knows the online, but but they had to list the stock number, right? They had to put here's the unique stock number, and and it never failed. You could drive into that dealership, say, I want this one. we just sold it. They have it to begin with. A stock number is a dummy, right? But IgniteUps.ai: Zach doesn't know those days. Okay. Marty Fritz: The problem with it is there the the litigation is going to keep piling up until there's a decision, until there's a realization that you can't keep doing this, because the industry has always had this ebb and flow of having of a a negative connotation around this kind of behavior. And then you clean it up and everybody's like, ⁓ no, it's it's good. This dealer, that dealer, they're all they they operate above board. And we wanna believe that. But in order to really believe it, in order to live it, we have to change. And the industry can't keep allowing this kind of behavior to go on and think that, ⁓ that just puts a black eye on that particular dealership or that particular group or organization. It puts a black eye on the whole. And every one of us in the industry, and you think back, how many times have you had somebody question the ethics of the industry to you? It happens too too often. We need to do better. We need to do better around the ethics and and really try Not just try, we need to do. We need to do it because you know you guys mentioned something about experience. Experience is what you get when you don't get what you want, right? And when you say you're gonna try, it means you're beginning to fail. And so we need to do, we need to change, and we need to make these changes. We need to not be afraid to tell dealerships or groups that make bad decisions and get caught in this. We need to not be afraid to tell them, hey, that's not okay. We need to hold them accountable internally within the industry. And we do need those organizations, whether it's state level or federal level, levying fines. And and ideally is going to change it, but I think it still comes down to there has to be, I'm going to call it peer pressure internally within the automotive industry to not allow our peers to do something out of line. And I think when we look at successful industries, you know, we've talked a lot about robotics and AI. I think there's a lot of pressure in there. try to stay within an ethical world, right? We've got a lot of oversight pressuring that and limiting releases of different iterations of AI. We need more oversight here, and some of it is internal. We can't rely on states or federal agencies to hold us, hold us accountable. We have to look at the agencies and the organizations. You know, we've got some great ones. We've got NADA, we've got, you know, a lot of different other organizations. We need to ask and establish some guidance. Guidelines there where there's maybe a certification program, even, you know, and I'm kind of out there spiffballing now, but how do you get something that gives that consumer more confidence that I can walk into a dealership and I know I'm not going to be taken advantage of. I know I'm going to get fair treatment. And the dealership should feel good about that too, because it it allows you to go home feel good. And that's that's something I will say about 20 years at CarMax. There wasn't a day I ever went home and felt bad about a decision. we made for a customer. Everything was made with the customer first and then the employee second. And I think that's huge. And if everybody in the industry will operate from that playbook, it changes quick. IgniteUps.ai: I agree. I w you know, I w I wish I wish everybody had that same thought process and you know, I think with technology today you're gonna see just only more of these headlines with the FTC and think that people th ⁓ it's just in a time that you cannot claim ignorance. You cannot claim like I didn't know well he doing it and I think part of our industry is there's just not a lot of training. There's I mean, there's not a lot of You know, it's e it's either sink or swim. Someone taught me the old way and this is the way we're doing it. We've been doing it for a hundred years and you know, n never got caught before and so we're doing it and it's y y you you've gotta educate yourself and you cannot I mean, with at your fingertips as easily as it's ever been in the world. in history, need to do better. So ⁓ ⁓ so before we head on we're ⁓ the end, and I hate to to cut it off like this, but we got b before we leave, I always like to ask how everything we talked about, we talked about quite a few things today. What can how can we tie it all together and help our audience Marty Fritz: Absolutely. Zach Fritz: Yeah. IgniteUps.ai: Get better or apply it in their business today. Zach, you want to go first? Zach Fritz: You know, I really like what Marty said with trying to each other accountable to do the right things. And ⁓ always heard the automotive industry referred to and it's mostly in a negative light, with it's a good old boys club. Well, maybe act more like that. Now hear me out before you f freak out, but maybe we more like that as far as helping each other out, you know. actually being a club or a fraternity and holding each other accountable and making sure that hey your neighbor or sister dealership down the road is doing the right thing by the customer. If they're not, well then why in the hell are they getting invited to recruit out of our trade schools? Why are they getting invited to NADA? Why are the manufacturers not just pulling, you know, their charter or their, you know, ability to sell cars? aren't we acting more like that so we can all rise the occasion, especially in a challenging industry? And I think at the end of the day it comes down to doing the right things for the right reasons 100% of the time. And if you're doing that, you'll likely have some success. And also don't sell Maseratis right IgniteUps.ai: Today's not a probably a good good time for that. Marty, what what do you th what do you think? Marty Fritz: You know, Zach's really close to where I am. I I agree entirely with do the right thing for the right reasons, especially when nobody's watching, right? And and that's something I've I've lived my career, I've I've trained. And I believe it's critical. the other thing I think is we need to slow down. You know, sometimes in this industry we're we're running really fast. You know, we're trying to take care of every customer. We've got associate challenges, we've got vendor challenges, we've got things going on, right? It doesn't matter whether it's a traditional dealership, a used car company, an independent repair shop, an MSO in the space, running as fast as they can. However, if you slow down, slow just a little bit to pause, take a good assessment, and then develop your plan. Your response, you're gonna change the things that you're working on for the better, and you're actually gonna move faster, you know. And really what I would encourage everybody in the space and everybody listening is finding ways to slow down to go fast. It's something I've preached for the majority of my career because every time you run into somebody, they're always looking for the deadline. Hey, you're gonna meet that deadline, right? Well, do we understand what the deadline is? Do we understand what the expectations are? And more importantly, Importantly, do we know how to get there the right way for the right reason? And the only way to do that is to slow down and make sure we've got all of the tools, all the resources, all the knowledge, and even the right people to help us achieve that. And if we can do that, and again, I agree with layer in some controls too. You know, is there some, hey, if you're gonna be part of NADA, it's not just, hey, I filled out a form, said I want to be in, and I pay my dues. Show us that you have a you you you earned the right to have that. You know, I go back to it sounds kind of funny, but Better Business Bureau, right? There was a time where that was a big deal and those stickers were all over the doors. And I can promise you there wasn't a CarMax location that didn't have them. It wasn't involved. And and that's think there's there's a need to get back to that mentality of of the change the perception of the of the consumer by changing the perception of ourselves. So if we think there's a dealership or a group out there that's not above board, let's change. Let's work together to help them. Don't just just throw rocks. We're all in a glasshouse. We need to work together. IgniteUps.ai: Yeah, you know the ⁓ go ahead, go ahead, Zach, real quick. Zach Fritz: Think I was gonna say I think that collectively, as an entire industry, everybody this weekend or whenever you have free time, go watch the movie Tommy Boy. IgniteUps.ai: That's a good one. That's a good movie. I like it. You can get your you can get ⁓ what was the the the saying he said? You can get a better ⁓ Zach Fritz: You can get a good look at a T bone steak by sticking your head up a bull's ass, but I'd rather take the butcher's word for it. IgniteUps.ai: That was a great movie. Marty Fritz: Well, I think ironically there are a lot of lines in that movie to take away. But again, it comes back to I think you you can take lines from whether it's Tommy Boy or any movie. I think there's so many great examples that are out there. But again, it just comes back to do the right things for the right reasons, especially when no one's looking, and slow down to go fast because it will change the way you run your business. And more importantly, it'll change the way that your customers see you. Zach Fritz: Absolutely. Yeah. IgniteUps.ai: I agree. I agree. I think do the right thing even when it's not the easiest thing to do. I think ⁓ 'cause the right thing to do is always the right thing to do. I think ⁓ a oftentimes it's so much easier just to do, you know, the wrong thing than to do the right thing that people they get stuck and they just say, Well man, I can make, you know, six grand here if I just do this at the end of the night, you you wanna look look at yourself in the mirror and and feel good about yourself. And more importantly, you want I I think oftentimes people ⁓ that they they want someone to be the example and and learn from and and at the end of the day sometimes you need to be that example and so you need to do the right thing and and and push yourself to to to be better. So you guys said, sage advice, ⁓ great talking today. Everything that we ⁓ went through today, I I think we could have gone even longer. There's so many other articles this last week that I posted that there's just a lot there. Like I think today with the information as as easily as it's available, I think everybody just needs to just start learning. You know, turn on a a podcast, turn, you know, open social media. I know some people are just peop people that just don't want to be about social media and they just listen to mainstream media. That's where your information is today. if you're looking at mainstream media, that that that news is like two months old right now. So if you need Marty Fritz: Yeah. IgniteUps.ai: Need to understand where you're at in today's business. Open up some podcasts, open up LinkedIn, social media. I I promise you you'll learn a lot more there than you will on mainstream media. but until next time, Marty, you for for joining us. I hope next ⁓ we can get you on the the pod again soon. it's it's great to to talk with you and you know, over the years, understanding that you a big part of ⁓ you know. Zach Fritz: Mm-hmm. IgniteUps.ai: how what I learned in this business. and I've been able to take it with me everywhere I've gone and been able to do some pretty big things with it. So thank you for that. ⁓ until time, I want everybody please like, share, subscribe, do your thing. Until next thank you guys. Marty Fritz: Yeah. Zach Fritz: Thank you. Marty Fritz: Thanks.