Latest / Automotive Informants / Did We Get the Future of Cars Wrong? Hybrids, EVs & What Buyers Actually Want

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Did We Get the Future of Cars Wrong? Hybrids, EVs & What Buyers Actually Want · Automotive Informants

• Chris J. Martinez: All right, welcome back. This is automotive informants. Actually, Zach, I know you wanted to kick us off. So you want to go ahead and get get us Zach Fritz: Ooh. Chris J. Martinez: started? Zach Fritz: Well, I think we have to introduce Boris. We really appreciate you being on the podcast today. Why don't you tell us a little bit about yourself before we get too far down the rabbit hole? B/LetYouKnow.com: Yeah, what's up guys? so my name is Boris. You can call me B, I mean and as you can tell I represent lety know.com. Now, me personally, I came from academia, so that's my background, economics, mathematics, statistics. but at the same time, what I was actually highly interested is because I'm passionate about deals, so I wanted to launch a marketplace where you can strike those deals instantly. So on your own terms, right? Like you do your research, and this is especially relevant in AI age, because AI Can help you to do a lot of research. You can find the best deal based on the information that's out there, and then you take control of the price, and boom. I mean, you name your own price. That's what I wanted to do. And that's something I guess that drove me, you know, towards automotive world. It's just because I collected a lot of data and I developed in you and it wasn't just me, it was a whole bunch of other people. You know, I don't want to take credit, yeah, because there are a lot of other you know people who probably. But but anyway, to cut the long story short, you know, based on that data, I developed some mathematical models, matching models, and tada, you know, we launched lety know.com. But my background is more technical, you know. I guess I can say it's not exactly a typical automotive guy, right, who knows the sales floor inside out. Like you guys are gonna be talking about front end, back end. F an ideal. So I mean I understand the the lingo, I understand how it works too. But you know, historically I guess I came from a little bit different background, right? I was looking more like from a consumer perspective as well as the business perspective, like maximi 'cause I my data wasn't just spinning across transactions, but also across like let's say what makes dealership profitable, etc. etc. So then I was maximizing those functions, you know, deriving Chris J. Martinez: Well that's what I that's what I love about automotive. It's so there's so many parts to this space that, you know, I always love to to to know what's going on in in different parts of automotive and why we have this this show and what we do and what we talk about because you know it's it's you know, how do we get more educated on what's happening in today's market and how we can better and and get better and better evolve. Of what we're doing in our business. So Boris, I'm I'm glad you're you're here. And we do have a pretty stacked lineup of questions, not so much Zach Fritz: Yeah, look up for it. Chris J. Martinez: questions, but just really topics of what's happening in automotive today. Zach Fritz: Mm. Chris J. Martinez: And some of the things that I've been looking at personally, are we we have quite a few things to discuss, but I actually was more interested in getting to Zach's topic because that's something that I is not on my radar right now. Zach? Zach Fritz: Ooh, alright, I've got to be really careful how I say this because I have a video coming out later today. However, I'll give you sort of a lead-in, so pay attention to what I say between the lines. There is or was, still technically is kind of a in-between right now, a job listing that was posted where it gave away a little bit too much information, and this job listing came from a small compact truck company that is awaiting. Delivery to customers. In this job listing, it listed out two very large players. sort of a I don't know, maybe vending machine of sorts kind of player, a lot of different locations across the United States, and maybe getting in an eye. Chris J. Martinez: You wouldn't be happy to be talking about Carvana, would you? Zach Fritz: Who? I don't know who you're talking about. That's crazy. and then the other one, actually unrelated. Maybe we should move on to your next topic, Chris, with that. New report by Cox Automotive, which would be really interesting, talking about what cars are actually selling. Chris J. Martinez: Okay. Well, you know, there's so from from what I looked at on this the Cox Automotive report, it was talking about how, you know, l looking at the the the different vehicles that are actually being sold in the marketplace. And so Kelly Blue Book said average new car transaction price is reached fifty thousand five sixty two, right? So it's fifty two dollars below the all time high. Which was kinda like re like getting better, right? It's actually, you know, dipping to a certain extent. But primarily those the dip is really based on some of the incentives that the manufacturers are are giving. but then once I looked at it a little bit deeper, it showed that subcompact SUVs are up thirty three percent, compact car sales are up eighteen percent over eighteen percent, mid sized cars up eighteen percent. But once you start reading a lot of what's up It doesn't really tell the story of what's like down, right? So you got trucks and SUVs that are down or forecast to decline. And it's not big decline, saying 1.4%. But when you look when I read these things, you know, I always think about stocking what's selling, right? So if you got a low market day supply, that's the type of inventory that you should be trying to source. And I had a comment on one of the posts that I did and a dealer basically or not dealer but one of the managers said, hey, well, I mean, that's great and all, but how do you get all those cars? And so, you know, for me, you know, it's always been, hey, how do we get more out of our service department? D making sure we have a strategy there, making sure we're advertising that we actually do that, because you'd be surprised how many people don't do that. And then the other thing is actually buy those cars. You know, I've been to stores where They say they buy cars and the minute someone comes in with a car that they don't want to retail, they tell the customer, Yeah, we we're not interested. So, you know, take it to Carmack. So Zach Fritz: Take it to CarMax, right? B/LetYouKnow.com: So hold on, Chris, are you talking about used cars as well or you're talking about new cars? Because I mean new cars it kinda makes sense about the compact, because there is a shift right now because of you know fuel costs, right? A lot more consumers are kinda like realigning their purchases towards hybrid cars, right? So that's some trend that you especially saw like in September and Zach Fritz: Or B/LetYouKnow.com: because of geopolitics and things like that, right? But on the on the used market, I'm sure it's gonna be a similar shift, of course. It's not gonna be maybe identical because you have a different composition of cars that used to be produced back in the past. But still is that report is that encompassing old cars or just new cars? Chris J. Martinez: Well, it was just new cars, but when I look at it, I I everything well the way I look at it if people are buying those in new cars, then I'm looking at how do I sell more used cars? And I think that's the the challenge that I see with a lot of stores. B/LetYouKnow.com: So you're looking at signaling, you are saying, okay, so that market signals me, okay, that there is a shift towards like let's let's say this compact car. So you're Zach Fritz: Yeah. B/LetYouKnow.com: kinda anticipating, okay, if this consumer is for new cars are buying a whole bunch of different compact, let's say hybrids, right? Well then I gotta look at my used car acquisition, right? And kind of like reposition myself. to anticipate what's gonna happen at the store next month, right? With use compilers. I see, I see. Mm-hmm. Chris J. Martinez: Absolutely. Yep. Absolutely. Yeah, and and what what I look at too is, you know, because I'm always about how do I grow my used car inventory in parallel. Like if I'm trying to grow new car sales, I wanna also grow my used car sales in parallel. Like I wanna be able to sell one to one and and in some s scenarios you may have to sell five used cars to one new car depending on availability. I know there's definitely some OEMs today that are having a a hard time and it may just be by design, but they need they need a they need more new car inventory. So if you don't ha if you're with an OEM that don't doesn't isn't stocking what they used to, then you need to have a strategy and a plan to sell what is selling and used cars is where it's at. B/LetYouKnow.com: Mm. Zach Fritz: Giving you allocations, because that's been a hot topic with Porsche lately, but we don't have to go too far into that one. I think what's interesting, Boris, with what you said with it kind of signaling, and you know, maybe this is a little bit of, you know, conspiracy, but I just find it a little bit ironic, is when it comes to Cox putting out this report, I wonder if that's kind of more to signal there's a surplus of these at auction, which they also own the largest one, Mannheim. That's kind of interesting. Or B/LetYouKnow.com: Yes. Zach Fritz: if this is just, you know, reporting what they're seeing to then drive prices, which is set by K B B which don't they also that just weird. Chris J. Martinez: Well, it's I mean th there's a lot that that you can kind of pull back from that, but you're you're kind of in that that space specifically about new cars, what's happening. Boris, what's what's your take on on some of the what's going on in the marketplace today online? B/LetYouKnow.com: my take is pretty simple 'cause I kinda mimic what you just said. I see that a lot more people wanna bid on hybrid cars, okay. So there there there is a whole and plug ins, okay, as well. and then there was like some kind of pullback on EVs. It seems like EVs were kinda going hot and then it kinda cooled down a little bit. But I but I feel like this is temporarily. Why? Because there is a shift towards hybrid as a compromise. 'Cause you don't have to educate consumers as much in terms of how you utilize that, right? Because it does still operate on gas as well as you know, you also get a benefit of the electric mo motor itself, right? So but I I you know I I see exactly the same picture as you do, you know. But my my whole take is that I am kinda like neutral in a way that you know I don't really care what's actually selling. I just wanna I I just want to create an environment where I reduce the cost, right? And just unleash the supply. So whatever is not selling, I want to move That discreetly without affecting the regular sales for the dealer. That's the key. And so in in a way that I don't want to be taking a roll and saying, these cars are selling, so you guys should be stacking it up. my goal is okay, say, well, this is not selling, well, let's move it, you know. So so how Chris J. Martinez: Yeah. B/LetYouKnow.com: do you how do you move it? Well, I mean, you know, demand is an interesting concept, right? I mean it's If there is a reason Chris J. Martinez: Well B/LetYouKnow.com: why it's downward sloping, right? So if the price goes down, I mean there gonna be more people who's gonna be buying those vehicles, right? I mean you just you just mentioned the an interesting like let's say I don't wanna call it phenomena, but you said that the prices are all time high. Well guess what? If the price is all time high, you're not gonna get as much of a quantity okay demanded or sold on the market, right? Historically speaking, today relative to what it was before, just because the price is up, right? So so here we go. I mean but as far as I'm concerned, I just wanna be like let's say kinda like neutral and more like facilitate all these different transactions that could have been made, you see, that are not made. Yeah, you Chris J. Martinez: Yeah. That's interesting. Well, you did part of what you did say was about the EVs and Polymarket just came out with a report that said for the first time the share of global new vehicle sales is be gasoline only is under fifty percent. So all of the globally all the vehicles that are being sold today under fifty percent are gas only. So That's you know, the world it it seems to be moving away from gasoline only vehicles. You know, the United States though, we've you know, with new administration things have changed. And not only that, I mean it it was really like the the consumer was really saying no because they just weren't buying unless you w were heavily discounting I still don't think the US is at a point where their the infrastructure's still not there. because fully electric vehicles in the US accounted for six point four percent of what was sold. And if you added all the OEMs combined, Tesla outs outperforms all of them. and so, you know, I I don't see that happening. here in the US until maybe some maybe there's changes in the the opinion of what the administration or new administration's gonna happen down the road. but I don't know. I I think hybrids i it happened Not just because the gas prices are like ridiculous right now, but because they still the the mandates that the government places still makes the dealer or makes the manufacturer still create those types of vehicles so that there's some type of gas consumption savings or or s to that effect. So I don't know, y you think that the hybrids are are the way or do you think Zach with some of these new initiatives that are coming out with tiny cars and stuff like that that we're gonna just, you know, get back to the the gas guzzling days or gas economy days? Zach Fritz: It's this is one that I have racked my brain on just I I've lost so much sleep over this because it's hard to anticipate where we're going because I see a world in which both really exist. You know, yes, do I love my big gas guzzling V8 on 35-inch tires? Hell yeah, it's great. However, I also, you know. I really enjoy riding around on golf carts because they're compact, they're easy to park, and so if there was to be some sort of happy medium that I didn't have to go to the gas station, I didn't have to wait in the line, I didn't have to fill the damn thing up, it would be very convenient. Now, I look at hybrids as being kind of this happy medium area where yes, to some extent they are trying to get those, you know, fuel numbers up as far as a mileage perspective goes, but then that's just kind of redundant at a certain point. So I almost feel like we need to shift either full gas or full EV. And I think we see a lot of companies like REO going gas and Slate going electric, creating a very similarly aligned product. But then we also look at other countries. So you've got that Paris Auto Show. What was it? not the Peugeot, the Citrone, the 3C little compact car that was introduced and that's gone all sorts of viral. And I think that right there would be a perfect example of if we could get small EVs here in the US that fit this kind of small K-car mentality, they would get better range. So range anxiety would be reduced. But then you're also fighting against all these people driving their big old suburbans. So then you've got safety as an excuse. And then you've got the grid. Then you've got so many other factors that unless we can force gas cars off the road through planned obsolescence, through, you know, parts companies going under, through vehicles being expensive to insure, register, or purchase on the used market. I don't really see it happening. What about you, Boris? B/LetYouKnow.com: But but but don't o underestimate the power of capitalism and here's what I mean. Okay, technological improvement. 'Cause you guys are looking at from an angle, okay. So we got these EVs, and the problem with EVs is the infrastructure. And the reason you're saying the infrastructure is because you gotta have all these different charging stations, et cetera. And that goes back to the range, right? Like the range is the problem, correct? I mean that's at the end of the day, is the issue why some people are hesitant, right? So you have these adaptation rates. That are going up, and it kind of like crossed one of the key thresholds, I can tell you, which is about two and a half percent, because the first two and a half percent of the distribution are the hardest to get. Once you get there, it's a pretty straight line to the top in terms of adaptation. But let me tell you this: okay, one of the key things if you look at EVs is you gotta look at okay, so what are the key components? One of them are well batteries, right? Batteries as we have today are pretty bulky outdated technology. Technology of the past, okay? And the way it works is like imagine that you have a parking lot. Okay, you have a parking lot, and when it's empty, it's really easy to find a spot, right? Because you just see the whole lot and you park your car anywhere you like. Now, once it fills up, right? So imagine that you go to the so you guys are from Chicago, right? So you go to like let's say watch Black Hawks or some, you know, whatever, bears, Zach Fritz: Get on. B/LetYouKnow.com: right? I mean, or you go to Soul Soldiers Field, okay, and you need to find a parking spot, okay. and it's kinda delicate everything is taken and maybe there is a spot but you have to drive around find it. And that's the same with the charging, it's the same problem. I mean that's why it's easy initially to charge it and then I mean the efficiency goes down tremendously. But that's right now. What's in the pipeline and th this is especially evident if you look at China, what they are developing, especially with a lot of a lot of their cars, is that they are redesigning, redeveloping the whole concept of of these batteries. So those are lighter and far more efficiently. A totally different technology. Now you redesign the battery, it can give you like let's say a 1000 mile range, guess what? There is absolutely zero anxiety and it doesn't really matter what the weight of the vehicle is now you don't have the engine, you don't have the rest of it, and up and and the battery itself doesn't weigh as much, guess what? Now you have a totally different product. And my point is if you introduce that kind of technology, right? And because of capitalism, that's why I actually started with capitalism, not exactly technology, is because capitalism breeds competition, right? So like let's say if you have a company that's completely, completely, totally invested into regular gas, and yet you see this kind of breakthrough, well, I mean you either die or you're gonna, you know, go on. So You do wanna survive in the future, right? Every single day is a s you know, it's a it's a story of survivorship, you know. So you're gonna say, you know what, what can I do to actually capitalize on that? Because all of a sudden that will make such a big difference in terms of mindset because nobody wanna be talking about the range issue anymore, right? One thousand miles, that's it. I mean that's way better than what do I have right now. Chris J. Martinez: Yeah. th that's definitely the future f for sure. I think it's it's possible. Yeah, yeah. B/LetYouKnow.com: Yeah, yeah, and I agree what you're gonna say. Like it may not be like tomorrow, right? And that's where I agree that in the interim, right, in this midterm, hybrids seem to be like this kind of compromise, right, between the two. Like some people are probably thinking, like, I'm I'm just kinda like bouncing these ideas or you know, not not not really, you know, I'm not doing any survey. I'm just kinda like looking at what I see. And from my perspective is some people are probably th saying Okay, I'm gonna switch maybe to that EV if it's really good. But that's gonna be maybe two thousand thirty-one, two th two thousand thirty two. In the meantime, let me actually go to something that I'm comfortable with, which which is well, I still need to take care of that high gas cost, right? So hybrid seems to be kinda as a good compromise, right? And again, it's not a solution forever that I'm just gonna keep buying hybrids. It's more like, well let me get it right now and then see what happens, right? I mean to to me that's the story. Let me get it and see what's gonna happen down the road, you know? So Zach Fritz: Right. There's just not a clear path forward on either side with gas prices coming down or EV technology improving that we know of yet. So it's kind of a one foot in, one foot out, let's just hedge, get into something we can drive right now and suits our purpose today, so that in the future we can kind of go either way and be comfortable with it, right? Chris J. Martinez: It's gonna take B/LetYouKnow.com: Yeah. Chris J. Martinez: it's gonna take a lot more a lot of time. because right now think about even if you had a thousand range, right, you still need to be able to have the charging stations to do it. a lot of people right now we're in a big renter economy. They don't have a home that they can, you know, charge at their house. they actually have to go to these charging stations. And so you if and then a lot oftentimes even now there's charging stations that are completely packed and you can't you have to wait thirty minutes just to to get in l into one of these charging things and then just to wait another thirty, forty minutes just to charge your full vehicle. There's there's some pain points that happen. But here's the other thing. There's two hundred B/LetYouKnow.com: But but that goes back well hold on, so let me interrupt. But that goes back to that old technology of the battery, okay? Because it's really why is it taking so long? You Chris J. Martinez: Yeah, yeah, yeah. No. B/LetYouKnow.com: see, so when I say one thousand miles, I'm also talking about that b this these batteries are not gonna be like forty minute charge time, okay? Chris J. Martinez: No, and I I agree. Like I because China's already got the technology at five minute charge. So believe me. Yeah. If we can yeah, B/LetYouKnow.com: Ex exa i that's what I was about to say. Next, know, that that's it that's it. Chris J. Martinez: if we can get that here and at s like mass, like get that turned on, but then you know, is your your grid, can it take on more of that, you know, capacity, right? Like does it even have the capacity to charge th that many vehicles at scale? and then here's the here's the real the real litmus test right now. Like you've got two hundred and forty two million US drivers right now. Two hundred and forty two million. We sell sixteen million new cars a year and thirty-eight million used cars are sold every year. So there's a big population or part of the population that isn't buying anything. They're just hanging on to their vehicles. So I don't know that, you know, you could ever I mean, you it would have to take a lot of concerted effort to try to remove gasoline only here in the United States. And hybrid does sound like a a happy medium because you're still using gas, let's be real. you're just now extending the life of that gasoline. So fifty miles per gallon. but outside of that, I I don't see it in the short term. I I don't know. what I do think d does drive people to do things like that is s the technology in advancements that they are doing, like the self-driving, some of the cool features that you you can do with the vehicle now. like the summons, you know, I yeah, there's been several times I've been had to park super far. And it's hot and I'm like, you know, I don't really feel like walking over there. So then I just have the car drive to me. that's these are some nice little features to have. and and make you feel like man it it was worth the money that I spent. You know, so until it there's like mass technology advancements across every OEM, not just Tesla, that's where I don't that's where it needs to go. Like if it goes there, I think you'd get a way more adoption here in the US, but six percent in the US today doesn't feel like the global fifty percent that polymarket says or under fifty percent. So I I don't know. I I what do you guys think about the the the gas, the ten year old cars that you know people are just are hanging on to or, you know, longer. I mean what Gen Z's buying twenty year old cars, right? B/LetYouKnow.com: But that goes back that goes back also to your point in terms of the sales. Like Another reason why people are holding to these cars, holding on for their dear lives, is because cars are actually much more reliable now than they used to be in the past. Like for for instance, okay, if you compare the car today to the car, let's say back in the nineties or eighties, it's not even close in terms of comparison. I mean and the and it used to be like Japanese cars were super reliable and everybody were like lagging way behind. Now you're talking about this Chris J. Martinez: Well well part of it was planned obsolescence, right? Like they they wanted to these things to break so that you could come back and and buy a car, right? That was back in the day Zach Fritz: Mm-hmm. Chris J. Martinez: and there was big, you know, you know, news that that hit the waves. But you know, where I like that what happened with the Japanese models was they focused on, hey, let's build it right and let's let's make sure that everything works, you know, and that's kind of what got them going. B/LetYouKnow.com: Yes, and everybody caught up. So everybody else because again you see those competitive forces that push the market towards the outcome that Chris J. Martinez: Well, there there may be some OEMs that never did catch up, but we won't we won't po them. B/LetYouKnow.com: Well well yeah, yeah, yeah, of course. There w there's gonna be always exceptions. But but I almost assure you that if you look at empirical data again, I mean Chris J. Martinez: for sure. B/LetYouKnow.com: I I don't have it in front of me right now, so I'm not gonna be like quoting some numbers. But even for that OEM, if you look at what they used to perform relative to today, you're gonna see a big difference. There always gonna be somebody on top and somebody on the bottom. But imagine that if let's say previously you had as an example, there was a let's say a seventy percent probability your car will be broken, okay, in the first year alone, versus like let's say point zero five, and the bottom one is let's say point zero seven. Well d the difference yeah. There is a difference, but it's so small that it wouldn't even matter actually if you had that kind of statistic back in the past. You know, that's I guess what I'm trying to say. You know, and also, I mean, you you raised great points in terms of like let's say technology kind of catching up and many other things that gotta happen for EVs, right? To be like let's say mass adapted in the US. But and one of the things you said, like let's say whenever you whenever you compare globally to our market, is you gotta look At it from a perspective, let's say you live in I don't know, Belgium. Okay, distances are pretty compact. Yeah, you're part of the EU, but you are still it's it's it's not like you're actually just traveling from like let's say Belgium all the way to Greece every single day, right? But in the US, the distances are more widespread, people live in metropolitan areas rather than in the city itself, right? So you have a lot more driving involved. And because of that, right, because of that, distances matter a lot here. And they do in some other parts of the world, right? And so in our case, it goes back to what Zack brought up initially, which was that anxiety whenever it comes to range. And to me that's the the bottleneck. You solve that, you solve the whole issue. And how do you push a lot of cars to eventually like let's say gear up towards EVs is exactly that. I mean if the range is solved, there's gonna be a whole bunch of other variables that will be solved as well, such as the cost of electricity will go down. Why? Because there gonna be a bunch of different innovations how we actually harvest like let's say solar. Because if you look at the technology it used to c like let's say I'm talking about even fifteen years ago, how much it took like let's say to get like one kilowatt versus today. The cost is like way, way down, you know, and it's gonna continue sliding down because of competitive forces you have in China a whole bunch of innovations. And you have in the US a whole bunch of innovations. in this respect too. A lot of inverters, a whole bunch of other stuff. They actually test in, I believe somewhere in Netherlands, they are testing this new technology where they have you have a pavement, okay, that's connected to chargers. And so you can drive a car and the pavement itself will charge your car, right? So Zach Fritz: Like a model train. Yeah. B/LetYouKnow.com: Yeah. So so and then and then my my point my point is okay with all these self driving technology I mean you have many different con c you know ki kinda like a c you know a lot of different forces that at the confluence, right? Where all of that is emerging at the same time. And it's not just one innovation and then everything else kinda like stays on pause. It's everything at the same time moving forward. And so the world is changing in a a a lot. And let me let me give you an example in terms of time. Which seems to be unrelated, but from an economics point of view, I think it's a really good example. I talked to somebody back in it was like two thousand thirteen, two thousand fourteen. It's not automotive, but it will mirror exactly the concerns you guys raised over here. So I talked to someone and they were bringing up the points to counter my economics intuition, such as they're saying, like, look, we have all these different trade agreements, like let's say with South Korea, we are you know, lovering our bury. Years with the Philippines, and you see this customer service jobs just migrating to Philippines and a whole bunch of other countries. And they're saying that's really bad because you're losing jobs, and that's it. To me, that's a myopic view. Why? Because you're just focusing on what's actually happening today rather than let's say over a 10-year period. And what I said is I said, look, what's gonna happen is, yes, some jobs are gonna get shipped, but there are gonna be a lot of people, really brilliant people, who gonna start thinking, how can I make money and actually kill That competition now in Philippines. And I said they're gonna be something that will be all of a sudden autonomous in a way that it will actually talk without a human being, sorta kinda like AI. I actually said that's exactly what's gonna be invested right here in the US in the next ten years. You're gonna see that. And the interesting part is I was c calling, like let's say, to negotiate my plan. I have this XM series plan and I call these guys every single year to negotiate. You see what I mean? To get my price. Okay? Every every year, every September I call them. And I call Chris J. Martinez: Mm-hmm. B/LetYouKnow.com: them. Boom, after 2013, all the all the calls go to Philippines, every single one, except 2026. I talked to AI. In 2026, I was negotiating with AI. Those jobs are gone. Now, that's a tr that's over trillion dollar industry that's already bringing up the productivity tremendously in the economy. And that just tells you How unpredictable certain things are. Because if you're looking at 2014, could I actually say definitively, well it's gonna be AI, it's gonna be this and this and that? Of course not, because you cannot know exactly what's gonna happen in the future. Yet I did say something like that, right? And my and and my intuition came that what's gonna happen is there's gonna be somebody who's gonna think like, how can I make money? You see what I mean? By creating this massive value. And my point is there are gonna be a bunch of bunch of other people who gonna realize, okay, so the batteries are getting us to a point where the range is possible. Well, what about the consumption? Because all these people are gonna be buying what? Electricity. Well, guess what? How do we get the electricity for as cheap as possible to make our profit as high as possible? Here we go. You see what I mean? They're gonna be all these different brilliant ideas that are just not even part of the equation in 2026 that will be in 2030. That's my point. Zach Fritz: Mm-hmm. B/LetYouKnow.com: And then all of a sudden the whole market may actually be totally different than whatever it is today. Zach Fritz: That's where I have a theory that I've heard bounced around. So this is a little out there, but if you think about Nikolai Tesla, right? That's an interesting one with what he tried to do as far as energy harnessing and bringing energy in, which would solve all of our charging range anxiety, like pretty much all those problems. Why does it seem like everybody is now hedging with this administration? And you've got Elon Musk and you've got all these people pushing EVs. Oil companies have let go and now they're saying, yep, pipelines are fine. We don't care. Pull from Venezuela, pull from Iran, pull from Alaska. That's interesting. They typically wouldn't do that, especially when money is involved and people are capitalist. And then you also look at all of this now initiative to push these small electric cars. Why would we push that if we couldn't, you know, facilitate charging them? And then you look at family relationships between Donald Trump and Nikolai Tesla. Just interesting. Do your homework on it. It's kind of a fun topic. Chris J. Martinez: Yeah, I def it sounds like I need to go down another rabbit hole. Zach. I don't know where you get Zach Fritz: It's interesting. Chris J. Martinez: some of this data point from, you know, but I I'll Zach Fritz: Yeah. Chris J. Martinez: d I'm always game. I'm always love to to learn what what else is happening out there since a lot Zach Fritz: Yeah. Chris J. Martinez: of these conspiracy theories actually turned out to be true, right? So Zach Fritz: Is conspiracy theorist even a thing anymore? I mean Yeah, it's crazy. Chris J. Martinez: Yeah, I don't know. I think everything's true now. But here's here's one of the B/LetYouKnow.com: Yeah. Chris J. Martinez: things. we we're talking about le used cars and Auto Zach Fritz: Mm-hmm. Chris J. Martinez: Nation. there was a I forget exactly where they were at. The group one. It was not Auto Nation, it was group one. they were being interviewed and they said this was an automotive executive at at for group one, says they see a potential for leasing. or leases to eventually account for more than twenty percent of used vehicle transactions. Wha d do you think this is look, so used car leasing isn't new. It's been around for quite some time. Before I left Mercedes there was a couple of banks that were actually really pushing used car leases and then we actually did a few of or several of because Mercedes they have you can lease CPOs and it's retired loaners and we used to do that all the time. But for use car specific, those guidelines weren't as readily available. Now they are pushing that. Do you think this becomes a thing going forward? What what do you guys think? B/LetYouKnow.com: Well it's hard to say because it will boil down to interest rates, right? I mean so so that that's Chris J. Martinez: Well, if the if the money factor's right, if the payment it it all comes down to payment in my mind. Like if that payment is Zach Fritz: It's Chris J. Martinez: cheaper than a used a new car and they get the same protection, they get a warranty, they get all the the the protection that you have on a new car, why wouldn't you buy a used car or lease a used car? Zach Fritz: I feel like it's the only way to compete. I mean, if we're if we're if we really back out and look at it, if people are not buying as many new cars as they are used car, you've got all this pressure, you've got all these rate issues, you've got payments that are just astronomically high, well, yeah, it makes sense. It makes total sense. If we can warranty a used car and CPO it, we started doing that years ago, it's kind of the same thing. You're just stacking it on and being able to warranty the car and You know, same thing with the lease option versus buying. It's just not that different. So I as much as as a consumer, I hate it because again it's, you know, trying to get money from where we can. I think it's a brilliant move on group one's part. If they can pull it off, I would be shocked. And I think it would be very, very successful for them. Chris J. Martinez: I you know, it I do based on the current landscape today, right? New car prices are through the roof. U even used car prices are ridiculous in some places, right? Or depending on the models. And it's It's just for me, when I look at, you know, housing, in car insurance, you look at all of these different expenses that the the the normal person like ourselves that actually has to pay every month, and you're looking at it like, man, like at some point something's gotta give, right? Like it it just can't keep everything can't just keep going up forever. And I remember two thousand eight when the financial crisis was happening, because when I l I used to live in Las Vegas. It's two thousand five. In two thousand five, like ever like housing, everybody was buying a a house, prices are going through the roof, it's ridiculous. And everybody kept telling me from two thousand five to two thousand eight, the bubbles gonna pop, bubbles gonna pop, bubbles gonna pop. And I've been hearing something similar to that for the last couple of years, where th and but the last couple of years it's been the everything bubble. And I felt like we were gonna go down that path, but then all of a sudden COVID happened and it almost just prolonged it. And so like we've been down this path and now you've got, you know, these crisis, these two wars going on right now. You got gas. gas cr crisis, you've got just a lot of different things happening in the marketplace. This this seems like an approach that most people should be doing, I think. I think dealers should be really figuring out this this strategy for sure to stay in the game a lot longer. Zach Fritz: Absolutely. And it goes to Boris's point about cars lasting longer is now we we have more of the ability to do this, especially from a used perspective, leasing the cars out, being able to back them as far as a warranty is concerned. But at the end of the day, all this is going to do is now push your service department a little bit more. So you're able to bring another round of cars back in for service. You're able to kind of prolong this. You know, Chris, to your point, I do think that we are heading towards something, you know, I don't want to say cataclysmic, but it's going to be Chris J. Martinez: Mm-hmm. Zach Fritz: very interesting to see how it plays out because it cannot sustain forever. So yeah, right now you should be looking for every opportunity to try and sustain, stay alive, and you know still play the game at the end of the day. Chris J. Martinez: Boris, what are your thoughts? B/LetYouKnow.com: Well, my thoughts are a little bit they they're little bit different, okay. So the way I think about it Chris J. Martinez: Hopefully they're a little bit more optimistic. B/LetYouKnow.com: well the way I think about it, I I don't know whether it's optimistic or not, but the way I look at the picture is okay, so look, when the prices go up, right, what happens is quantity demanded goes down. Okay. Now, what probably group one you mentioned, okay, they wanna go into this listing for the used cars, what they notice okay, so we have a drop off. So let's say instead of seventeen million, we have sixteen million okay cars, new cars that are sold, right? So one million. Out of that one million you have a proportion of people who are perfectly okay not to own the car. But to lease the car, right? So these consumers never materialize because they never purchase the cars because the price is high, right? So how do we convert? So let's say let's say it's 20%, okay? So out of those million, 200,000 could have been converted into used cars because they typically lease cars. So what they are looking at, okay, so there is this chunk, okay, that could be captured. And I believe that's what they're looking at. So instead of like let's say selling all these new cars right here, we lost these consumers. Now eighty percent of them still wanna own cars. They're not gonna go for those leases. But twenty percent of them, well let's recapture them. How do we recapture them? Because they are okay with leases. Well we gotta make sure that goes back to what you just guys actually said that I completely agree. Is that all we have to do is we have to provide and because they have a lot of dealerships, right? About Plus dealerships, we gotta provide the warranty work to make sure that those cars, if they do break down, okay, we cover them. So they don't have that worry on the back of their mind. So we remove that and real allocate them from new cars to used car leases, saying, Hey, you're not gonna you're not gonna stress out if if it breaks down, we got we got you cover it, right? And of course, what's gonna happen is those guys are gonna come back to the service department, which is really good for them, right? Because they may actually Say not only stuff that's covered by warranty, but maybe it's time for your new oil change or your brake pad changes or anything like that. In fact, I can tell you this, on let you know, that's kind of unrelated, but goes back to the same point. Okay. We wanna roll out every single thing. It's not just about cars. Soon we're gonna have people naming their own prices. When I say name their own prices, bidding in with instant results across every like virtually every single good, new good and service that you can think of. And one of the things we were testing was like, let's say oil changes. Alignments. So then somebody got a deal, let's say, on oil change, our dealer got them by paying absolutely nothing, right? They gave them a really good deal, right? That nobody knows because it's hidden. And yet when the customer arrived, they were able, let's say, to sell them a whole bunch of other stuff, in addition, right, to that oil change. So it was almost like just get them in in our in our door, and then let's let's let's upsell them a whole bunch of stuff, right? And the same is gonna be with those services, right? Because they're gonna come in and say, hey, looks like my engine light is on so you guys need to fix it because it's covered by the warranty and they yeah yeah yeah no problem and then they say hey look look lo looks like you need a new battery or you d you gotta replace your tires, you know, or whatever the case may be. And that obviously generates more business, right? And that goes back to what you guys said. So in a way, my point is I think they're looking at the Delta in terms of the demand, okay, that would be between two points in quantity demanded from like let's say when prices are whatever they are now relative to whatever they used to be, let's say back in 2019. And they are saying how can we recapture some of those people who are perfectly, perfectly naturally, okay, acceptable of this listen idea, right? And so how do we recapture them? Well that's how. We just rechannel them to the used car market. Chris J. Martinez: Well, that's that's a that's that's a good point. I think that what I look at now is from to trying to be a little bit more optimistic than you know, doom and gloom. Cause I you after a while you start hearing a lot of this stuff and you're like, man, let me just quit hearing Zach Fritz: Yeah. Chris J. Martinez: this stuff because it's just bringing me down, right? You start crapping yourself out. But well anyways, I think that you know, if a new car if you're if you're already hey, I'm selling sixteen million a year, that's that's good. We're selling thirty eight million used cars a year. How do we capture those extra people? and get them into the market and lease used car leasing might be that that that extra increase. So a great, great, great discussion. We're actually I I hate to end this now, but you know, I've got to jump on another call here shortly. But I appreciate you guys what before we be end the end this, let's just do a quick one two minute, you know, recap. Everything that we've discussed today, we we discussed quite a bit of stuff. there were stuff other topics I wanted to get to, but some of these topics just we had a lot of good information on it. before we go though, Boris, what how do you based on everything that we discuss, how can a dealer get better today based on the information that we've shared? B/LetYouKnow.com: Well, first of all, dealers should be on let you know, okay, capturing our customers. So that's a plug for let you know. But outside of that, you guys brought up a couple excellent points, such as well, how can we get the demand that could have actually landed in our showrooms. And that goes back to like let's say whether it's gonna be leases on used cars, okay? or whether it's gonna be like let's say better acquisition strategies for used cars, right? Because if like you said, if the signal is such that people are buying hybrid cars, so then what should you be focusing on? Well you should be focusing on hybrid cars. And if you know if a new market tells you anything, well that just that that's it. I mean you gotta capitalize on that. Of course at The at the same time I would be looking at it and say, okay, so if hybrid cars are really, really getting hot, these guys gonna come into service pretty soon and they're gonna become used cars, right? So there so then what what happens in the service department relative to hybrid cars, you kind of have to anticipate, right, what what kind of problems may happen with those type of vehicles, right? And so Chris J. Martinez: for sure. And and there's w that's like a whole if different topic we could go down the rabbit hole on for sure, because Zach Fritz: Yeah. A big one. Chris J. Martinez: some dealers are getting just crushed on some of these used cars that they're buying and not anticipating battery replacements and stuff. So that's that's that's another challenge for sure. But but Zach, no Boris, thank you for that that insight. I I appreciate it. Zach, real quick minute before we head on out. Zach Fritz: yeah. So I think right now the one thing that's resonating in my heads like if I could tell anybody in this industry, it's don't be afraid to try new things and to keep yourself educated. Because right now all this data is doing, even though it sounds very much doom and gloom and dark and like the sky's falling and we should just all appear for the second coming right now. I I get it. I do. However, I think if you look on the other side of that and what it's all building towards, it's a better future. It's I think we are eventually heading towards EV once we get that technology sorted out. The hybrid data proves that buyers are interested in at least trying it or halfway committing to it. And it's just also a matter of making sure that you're educated, whether it be selling on a new platform, whether it be, you know, stocking your lots with cars that you might be uncomfortable working on or selling, or it's exploring new models to lease used cars. So whatever you can do to stay educated, up to date, and Also not be afraid to try new things because you gotta risk it for the biscuit. Chris J. Martinez: You gotta risk it for the biscuit. You know, someone told me that one time, a good friend of mine named Alex, g it was it was some sage advice for sure. well, Zach Fritz: Yeah. Chris J. Martinez: no, you know, my quick is my take is that what you just said. Be a student of the game. Like I that's that's just been my ph philosophy. always learning. Don't be open to try things. but you know Give and give it a fair shot. Don't do it for 20 days, 30 days and say, it's not working. you if you're gonna d have a strategy, you at least need to do it for 90s days to six months. Get a real opportunity to to test it out. And then if it doesn't work to your market or how you're doing things, then let's find another plan. But I appreciate you guys. thank you guys for jumping on. Please, for the audience, please share, subscribe. Tell everybody about automotive informants if you liked what we had to share. And always message us if you need if you need us to to bring up a a specific article that no one's really talking about. We're always open to to learning and d digging deep into some of these topics for sure. So I appreciate it, Boris. Thank you. Zach Fritz: Absolutely. Chris J. Martinez: how can they reach out to you? You said lety know dot com. B/LetYouKnow.com: Yes, my email is really easy, Boris at letyou know.com. Of course, follow let you know on social media channels, whether it's LinkedIn or Facebook or Instagram or TikTok or whatever the case may be. We are present across all these different channels. So yeah, absolutely. Chris J. Martinez: Perfect. B/LetYouKnow.com: Yep. Chris J. Martinez: All right. Well, I appreciate it, Zach. Thank you. Until next time. We'll see you guys. Zach Fritz: Thanks, Chris. Thanks, Boris. B/LetYouKnow.com: Thank you guys so much, Zach Fritz: Take care. B/LetYouKnow.com: appreciate you. Zach, Chris, you guys are awesome. Thank you. Zach Fritz: Likewise.