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Can Dealers Survive the Next Wave of Automotive Disruption? · Automotive Informants

• IgniteUps.ai: Two one. Go ahead. Zach Fritz: I thought you were doing it. IgniteUps.ai: Welcome back, everybody. This is Automotive Informants, where we bring real topics, headlines every week. We we try to give everybody our perspective from the headlines and topics of the industry in automotive, from people who have run automotive stores, been on the front lines, sat in every chair, and we always try to bring on a a special guest every week. And and and Zach, we've we've got a a really we got a two-for-one special. Like we got the best. Car Guy Coffee representing the house today and Fred and Lou, if you guys can g do a quick intro on on who you are and and and your background so that our audience knows and can understand what your perspective is when you when you start talking about some of these headlines and topics. Fred and Lou: That's a great question. I'm glad you asked. Thank you for having us. Well, you know, we're very honored to be here, Chris. You know, I've been following you for a long time. I think we've we've met a few times and we've had the pleasure of, you know, exchanging some great ideas. And I always love what you're doing. You're always looking for ways to educate What's going in automotive, right? And I really appreciate the time that you're giving us today to be able to share what we know and what we want to bring is the energy, right? Car guy coffee is a big deal. So our journey began over 20 years ago. much like you, Chris, we started in the early 2000s, moving metal there at a Mitsubishi store that had Hyundai and Izuzu also, which was a lot a unique place. So we dealt with a lot of subprime. Even back then it was like that, right? So we got really good at being able to help people, be able to show people different things, working deals in a million different ways. And we had to do it at a fast pace. we are we are around surrounded by great mentors, I believe. good and bad, right? Like you just learned a lot from them. You got really good at it. Lou came in the business about a year after me and he was Just the man right off the rip, right? He came in with a lot of reasons to do what he needed to do and just did it good. We're both prior military. He's got kids. He's got four kids, now three grandbabies now, right? So even more reason. But you know, but we you know we came in, we're both prior military, I'm Air Force, he's army, huh, right? We we had a great time doing those things, but we integrated a lot of the stuff we were taught, how we understand you know, order and how to make sure process is being done right. Right. And when you do the process, whether you know you could see it or not, you know it's gonna work. And it ends up working every single time. So we're big believers in that. We created the Car Guy Coffee podcast after twenty years inside retail. and together, you know, I'll let Lou finish the Car Guy Coffee story, but together we've Done a lot of things over the last six years with Car Guy Coffee and almost seven years now. So it's been amazing. Yeah, after a career of solving problems in different dealerships all throughout the country, we then started to harness that and really start to brew a solution for the industry, which was really to bring encouragement and to encourage people that look inside of this industry with the knowledge of how good this industry can be. we got less and less impressed with the status quo and want To do a little bit more for ourselves and for the people that we are around and then beyond. So we started the podcast, interviewed so many people inside of the industry, including you, and it was great to be able to learn from everybody that we learn from. We love to be the promoters of all those that are brewing solutions good in this industry. And for those that are doing good things, we've been able to connect, speak on big stages, speak in big dealerships, small dealerships, all throughout the industry. We've had a great time learning. And growing and enriching what this industry can be, and had a had a great time so far becoming better because we've connected with so many incredible people in the industry. But now we actually are boots on the ground almost on a weekly basis. We're in different dealerships where we're helping out underneath the certified solutionaries banner, where we're raising up solutionaries all throughout the country that are the biggest problem for a problem and the worst case scenario for a worst case scenario. Yep. We have adopted a mentality that if any problem finds its way to us, it's because we're the ones that are supposed to solve it. And with that, we solve transportation problems with multiple partners from all types of brands throughout the industry and and have a fun time talking about those solutions that we find on our show. IgniteUps.ai: That's awesome, man. No, you guys always do a great job, and I love when you guys are at the events too, because you guys got the flashy coats and I need Fred and Lou: Yeah. IgniteUps.ai: to I need to start wearing some of those flashy coats, man. You guys you guys pull it off really good. So Fred and Lou: Bro, you are Mr. GQ himself, bro. I watched you walk in down. You you you definitely s you you definitely set yourself apart from others, man. It's custom suits, all this stuff, bro. We see you. IgniteUps.ai: No man, you guys are great. Hey, so let's get right into it. We've got we got a pretty good bunch of good topics today. So Zach, I know you've got one that's that you just recently read and you you wanna go ahead and Zach Fritz: Mm-hmm. IgniteUps.ai: enlighten us? Zach Fritz: Yeah, we can kick it off with that. So I've got my little note sheet here, so I get this correct and don't get corrected down in the comment section. But I was reading a survey that was conducted over in the UK. So pretty close to what's going on here in the US, in my opinion. And plus, we're never going to survey US workers. We're way too proud for that. Come on. We don't share our emotions. Now, a thousand workers in the automotive industry got surveyed here. And this was kind of relating to stress, anxiety, and some of the numbers that were reported were absolutely astounding. So we had 57% report that they felt super stressed, not just stressed, but highly stressed. We had 52% poor sleep, which relatable, right? We can all agree there. Then we go into what this translates to out of the whole. One in six reported that they frequently skip meals while working in the industry. One in five had major financial issues. I've never taken out a loan for a toolbox, that's crazy. And one in four reported that they want to leave our industry. That's like twenty five percent. If we lost a quarter of our industry tomorrow, how would that impact? IgniteUps.ai: You know, I've got I've got a lot to say about it. but Fred, Lou, who wants to kick it off? Yeah, well y you know, a couple things. I mean, just to kind of piggyback on what you said, I think I I really do think I do think it's, you know, when it comes down to it, there are it definitely is a culture thing, right? So depending on the store though, too, because I've been in stores where y you weren't fearful for your job and then you've been I've been in, you know, places where that was the threat every day, like, hey, someone's gonna come and replace you. So I get it. I do think though a lot of this stuff can't be self inflicted. So like it's all in your mind. I think that a lot of this stuff sometimes can be made up. because it doesn't matter, you know, what industry you're in, you're there's always different levels of of stress, right? And then you choose what your that level's gonna be. And I think I'll tell you, give me an example. I interviewed somebody one time, a young lady, and she was I asked her, you know, hey, what if what would you do if you went 10 days without selling a car? And she she like literally just kinda like freaked out and was like, my God, like I I don't I I I I would I don't know what what I would do and almost like like started crying in in front of me and I was just like, you know, this probably not the the right role for you because you know, if if this is a hundred percent commission, then you know, this is not gonna be the right fit for you. So, you know, I I think about it, you know, when I when I look at people like that that There are going to be those people that don't understand, you know, what when you're getting into that hundred percent commission type of paycheck, that it's not as easy as the people that have this safe, secure feeling, but those jobs can be replaced as well. And the worst part of those types of jobs is you do have that safe, you know, that false sense of security, but then that's all you're you're capped at what you're able to make. So I don't know. I think there's a a couple of ways to look at it, but Fred or Zach, which one which one which way do you guys look at that situation? Zach Fritz: It's kind of tough whenever I look at it from a technician's standpoint because we're not necessarily fearful of losing our jobs. You know, there's not many people who can work on complex cars. So it's less the fear of losing your job. It's more we have to pay bills, you know, we've got to pay off that toolbox or pay off the snap-on guy, you know, whatever the situation is. And I think a lot of technicians kind of live in this, you know, cycle of debt. Right, where you're either buying the new box, the new tools, and you've constantly got payments, and you have to flag hours to make those payments, as well as afford to live. And I think that it's tough to look at it as a metric where we need to make the money, but we're reliant on cars coming in to be fixed and warranty work and everything getting approved. But then also say, well, hey, it's the end of the week, you know, it was just a slow week. I've maybe flagged 30 hours. Maybe I should work a Saturday. So then you start to degrade that work life balance a little bit over time, which self inflicted, sure, but it also could be driven by the service department. So it's just it's tough to strike that balance. Mm-hmm. IgniteUps.ai: Yeah, and I think a lot of times people, you know, that do get that clarity, at the end of the day, I think s a lot of times they just they're just not, you know, putting in the effort to do more. And they think they they wait till the last minute and then they put this extra stress on themselves that had they just done what, you know, we've been talking about for the last, you know, thirty days and they don't wait till the last day of the month and they're like, my god, I gotta go find another job you know, and that that happens often. Well, so here's the thing. Let me let me just add one let me add one thing before we go to the next topic or article. so w okay, now so you're talking about good leadership that are, you know, giving clear path. So what do the people do that are in that environment that have an opportunity to grow, but then every day they're getting threatened about their job? Ha ha. Zach Fritz: That's a better answer. I was gonna say drugs and alcohol, but that's another problem. Yeah. IgniteUps.ai: Sink or swim. Yeah, a hundred percent. Well what if what about well here's here's the thing. What about the the guys that are mis interpreting passion for like aggression, right? You you hear the that quote in from time to time that they they just have that perception because this this coach is pushing you and getting you uncomfortable, they immediately think, my god, this this person is being hard on me and I'm in like this culture is like terrible. What do you what do you say about that? Like it. That's that's good. I like I do like Zach's though. go ahead. Go go ahead, Zach. Zach Fritz: Drugs and alcohol. Or there is one ultimate hack that we know works every single time across the entire dealer world, whether it's the service department, the sales department, finance, whatever, throw a pizza party. Everybody loves it. IgniteUps.ai: Yeah. Yeah. Let's get a Zach Fritz: Yeah. IgniteUps.ai: pizza party. Yeah. Or Subway. I remember this one store every weekend it was Subway and I was like, You guys are crazy. Like, let's do something different. So all right, cool. Let's get let's get on to the next topic. So this is like a two part topic or headline. this recent article that I read. I'm gonna read both of just because I feel like they kind of, you know, work together. but you know, there's this article that came out, you know, ninety percent of this manufacture in China went dark. And what I mean by dark is this this factory, assembly plant, whatever, had enough robots that 90% of it was robotic and didn't really involve humans. And so when I read that and I started looking at it, I was like, man, what is that gonna look like when, you know, you know, these new tariffs, new administrations pushing everything to be manufactured in the US. Is this all for nothing? Because what's gonna end up happening is people are gonna start modeling what's happening in China and having these dark factories. And this goes to the second part of the the the article that I read where this this from investor news are is America's industrial illusion. Is that is you know, it's built or designed here, but it's built somewhere else. And now with these new tariffs and trying to drive all of the manufacturing here in the US and these new robots, is it all for nothing? What do you guys think? Well, just let me answer that one part of that question. some of the EVs in China, and that's one of the reasons why they're trying to push it away from the US, is some of these EVs are like eight grand. Granted, there's a lot of heavy subsidies and everything in China, but still eight thousand dollar car, new car. I mean, what's that look like in the US, even if it's double the price? Zach Fritz: Mm-hmm. IgniteUps.ai: You you were Zack. Zach Fritz: I love this concept. I mean, so I have owned and operated and sold businesses in the CPG space, both with subtractive and additive manufacturing. So I love it in the sense that with this, you don't have to employ people, right? So you, you know, for my example, you know, CNC machines and whatnot, that automates 99% of the process. So therefore, you can run super, super lean. But with that, It comes a whole layer of accessibility because manufacturing technology, let's face it, is probably one of the worst investments you can make as a business owner because it devalues so rapidly. And within 30 days, there's already new tech that's better, faster, more efficient. So then it becomes this driving factor to bring all of this equipment down. So the robots in this case, I feel like if we let this roll for a couple years. We will start seeing robots and assembly lines come out of China like we do now for every other industry, for even essential oil manufacturing. You can see entire assemblies that have this distillation process, the packaging, the bottle rollers, labeling for a couple thousand dollars. So what happens when that applies to cars? Is that now a hundred, two hundred thousand dollar investment, maybe a quarter? And then a guy in his, you know, couple thousand square foot warehouse can start manufacturing small vehicles here in the US? It's I think it yes, it kills our manufacturing from a certain perspective, but I think it also in lieu makes it easier for us to access the equipment to manufacture that we don't have right now. IgniteUps.ai: Well, I'll tell you, thinking about, you know, you know, Elon Musk, he's the one that's gonna be a big contributor of all these robots with the Tesla robot, but he keeps talking like there like it's gonna get to a point where there's like, you know, a robot for every human in the world. And he's also talking like at some point because of so much, you know, a drop in manufacturing and everything. at some point there's gonna have to be a universal basic income. Now I know initially I wasn't thinking about even talking about that, but when you start really I I don't know people really understand like what could happen. And the reason why I feel like I the more I look at it 'cause I'm I I deal with AI every day and then I drive my cyber truck every day and it drives me everywhere. And so when I start thinking about the future and and where where we're at right now and what it could look like, and when I read articles where ninety percent of the factory has gone dark, where they're just ninety percent of robots and removing a lot of the headcount there already, what's not to say, you know, 'cause I mean we we have all of those big and I probab I guarantee you no one wants to hear it from what are those big unions? that really try to drive the costs of manufacturing up in the the United States. Like they're not gonna wanna hear that because then that what if that happens and I believe it will happen, then there's no need to have those people ever. Like they're just out of a job too. Well. Zach Fritz: Yeah. Uh-huh. IgniteUps.ai: Yeah, well I mean I think about it like the the pager salespeople, right? That they had to do something, right, when pagers went away. You know what's crazy is is I used to have one and I don't for the life of me, I don't even remember like what I used to do when the my they would go off. Like I it's just it's just funny. Like thinking about those things. Yeah, Zach Zach doesn't know anything about that life. Zach Fritz: No, no. What is that? Like, yes, I bought a phone. IgniteUps.ai: Yeah, and I think well I look, just to kind of kind of put what you guys are saying, think about, you know, as much as some people live in the future, I'd live in today and look at what's happening today. EVs, you every manufacturer is just coming out, you know, discontinuing them, writing them off. I mean, Ford wrote off nineteen billion dollars. I think in the last eighteen months or sixteen months, it's over a hundred billion dollars in write-offs. Infrastructure wasn't there. Not only did the manufacturers lose, the de dealers definitely lost. I know I was running my store and every one I hated the look at every one of those cars because I just knew how much I was gonna lose to to move it. And then the old manufacturer like removed all our discontinued all the rebates and incentives, and then we kind of got left holding the bag and it was not fun. So, you know, you know, can it can it happen? I think it's it's anything's possible. But how soon? It may not be, you know, five years, but ten years, twenty years. I I think at some point it it's gonna get there. but it'll come down to infrastructure and and what that all looks like and but it's gonna be it'll be interesting time to say the least. But Zach, I know you coming out of the technician side of things, do people even think of or see things like this? Zach Fritz: It's interesting to me because we've always everybody I've ever talked to is like, well, I thought by now we'd be living like the Jetsons and we would have flying cars. But yet we have such a fear and an adversity towards technology evolving. And it kind of goes back to the entire EV premise, right? Whenever Elon Musk came out and was hey, I've got this electric car, and everybody was like, Hell yeah, let's go. And then I guess, you know, politically and all that, people got involved, and now we just hate EVs. Like, what's the what's the I thought we were on that bandwagon? IgniteUps.ai: Well correction, I I I like E Vs still, so just you know. Zach Fritz: It's I know, but it's it's just interesting to me. And then everybody says, Well, hey, China's the future. Hey, they've got all this new technology and cheap cars, but now we're against it. And I feel like that a lot of that's driven by bureaucracy as well as these unions, right? Which that's a whole different topic that I'm not a fan of because we gave the union a chance to run the industry and all they did was drive up manufacturing costs. We're We no longer can manufacture, but they still want to pander and act like, hell yeah, blue collar. Well, you screwed blue collar, so it's your own doing. And from a technician standpoint, I don't think any of us are opposed to robots. I love the robotic tire machines that do everything for you. You're there fighting the bar and worried about losing a tooth when it pops back on you. It's great. I'm a fan. Yes. IgniteUps.ai: That's awesome. Well, you know, I don't know if it's enough to drop new car prices today, but maybe down the down the road. I mean, the new average new car is now fifty thousand two twenty-five. So I Zach Fritz: Yeah. IgniteUps.ai: mean, it's it it what's it look like another five years? Are they gonna be sixty thousand? I mean, w w is there any end in sight on this? This is what Cox Automotive just released last week. What do you guys think? Well, COVID kind of like accelerated the cost substantially. And it hasn't gone backwards. Well, here's the thing, and let me give it to you from my perspective. So I I was w definitely one of the people that raised the prices and let me tell you why, because I was in the used car game. I sold a lot of used cars, but I also sold a lot of new cars. And when I looked at the the limited availability we'd add a new, there's no way I'm gonna sell a new car at MSRP when I'm buying these used cars for five, ten grand over sticker. It just never gonna happen. I'm not there's no world in my mind that's gonna allow me to give away a car with zero miles for ten grand less than I can go and buy for used car. So there was was supply and demand, it there really wasn't an issue there, and we had to raise the prices and and and that's part of what happens. I mean, think about these concerts. Big ticket items come in, random day, it started at this amount. Where does it go to? Same thing for Airbnbs. You you got this big event coming in town. I guarantee you during the World Cup in Dallas and Houston, they were raising ho housing prices for rent just for those couple of days and and and that's just the market is the market. So yes, Zach Fritz: Mm-hmm. IgniteUps.ai: there are some that maybe took even more advantage than others, but Well, 'cause then they they they took some of that margin. They just said, Well, we're gonna rate our c But then that that raised prices for everything across the board, not just because they saw us, we they saw the market, then they raised them, then everybody else raised their prices. Groceries, everything got raised because transportation got more expensive, gas more everything just got just increased. So it was like this this tidal wave or this ripple effect that just everything in the market just went up. And that and now we're in a position where I mean, wages have gone up, everything's gone up, and so now you can't go backwards. So and that's the scary part. Interest rates come down, do they go up does everything go up even higher? Well, hey, I hate to cut you guys off. We got a few minutes before we gotta roll, but I I wanted to leave you th with this real quick. Think about what happened with Cuba and Venezuela. At some point prices just went through the roof and people just couldn't afford to buy new cars anymore. And so they were just fixing their current cars and selling used cars and all of that. Do we continue down this hyperinflation type of thing where at some point and that and then look I d there was another article I read last week where there's they're predicting by twenty forty that the SAR will be at fourteen million. So two million new cars are gonna be completely just off the table because nobody's buying because they're too too expensive. So you know, when you start thinking how how, you know, down this rabbit hole we can go, it it starts to l really make a lot of sense. And, you know, part of what I do is I try to read through all of that stuff. And I think what you guys said is, hey, look, the future looks bright in the US. I think no matter what, we've got innovation, we're gonna figure this out. It's not gonna be something we answer today, but as it evolves, I think I think we're gonna come out on top. So in we got four more minutes left. So if you guys could kinda tie everything in a bow, what we discussed, Zach, Fred, Lou, just tell me, you know How can the dealer learn from this and what can they do in their business to improve it based on all the information we've discussed? That was real good. Lou? Zach Fritz: That's great. I absolutely love that. But the big thing I want to focus on is the key words you said, which is adjusting. You can't adjust unless you're relaxed, unless you're not worried about the future, unless you can roll with the punches and be a duck. Let it roll off your back. And I think that's the big thing that a lot of people in our industry miss out on is they just get too wound up, too caught up in the moment. They don't focus on the right things. They don't do the right things for the right reasons 100% of the time. Maybe it's closer to 80. And I think if we all took a step back and we just relaxed. de-stress a little bit, didn't act like those thousand people that were surveyed that we had talked about earlier, I think we'd be all a little bit better off. IgniteUps.ai: That's awesome. No, you're great. I I l I loved everything you guys just said. And actually it reminded me of what Zach said a couple weeks ago about the young bull and the the more experienced bull. If you c if you wanna just say your quote again, Zach, I forget exactly how it goes, I don't want to mess it up. But I think that's kinda Zach Fritz: can't remember now the only thing I'm thinking about is the stepbrother's quote about well she's had the old bull, now she wants the young calf and I can't remember what my quote IgniteUps.ai: No, it's not that one. So it's saying it it essentially essentially what it means is look, understand if you if you have that leadership, that that good leadership like you're talking about, Fred, and Lou making sure that focus, the vision, and the calmness that Zach is talking about, instead of being in a hurry to go do things, you analyze your your market and and and just take take all of the the the the the cattle out there. So I think that was kind of the the premise of that, Zach. So I I appreciate you guys coming on to our audience. Please continue to subscribe, share, and tell everybody about the automotive informants where we help you identify the headlines, the topics to help you grow in this industry. So thank you guys. Until next time, I appreciate you guys. All right. We'll see you.