Latest / CBT Live / The 2% Fee That Cost a Dealer Group $1.9M, Stellantis Caps Ad Prices (09.21.26)

Transcript

The 2% Fee That Cost a Dealer Group $1.9M, Stellantis Caps Ad Prices (09.21.26) · CBT Live

0:02
SPEAKER_03: And is it another record year for MA activity?
0:05
SPEAKER_03: Those stories and much more coming up on CBT Live.
0:45
SPEAKER_03: Hello, everyone, and welcome to the show.
0:47
SPEAKER_03: We hope you all had a great weekend.
0:48
SPEAKER_04: Yes, we did.
0:49
SPEAKER_04: Very, very relaxing.
0:50
SPEAKER_04: It was.
0:51
SPEAKER_04: It was very nice.
0:52
SPEAKER_04: Very relaxing weekend.
0:53
SPEAKER_04: I hope you all had the same.
0:54
SPEAKER_04: But uh so coming up, we're gonna be joined by Paul Daly and Kyle Mountseer, who is with More Than Cars.
1:01
SPEAKER_04: You guys know I don't even they they don't even need an introduction.
1:03
SPEAKER_04: We're gonna talk to him about the upcoming Asotukon West Summit.
1:07
SPEAKER_04: And uh and then we'll be joined by Aaron Kerrigan, and a founding partner and managing director of Kerrigan Advisors, who talked to us about the second quarter Blue Sky Report.
1:17
SPEAKER_04: So looking forward to today's.
1:19
SPEAKER_04: I know it's gonna be a great show.
1:20
SPEAKER_03: We know there's gonna be some energy with those guys, so we are looking forward to that.
1:24
SPEAKER_03: No question about it.
1:25
SPEAKER_03: Yes.
1:25
SPEAKER_03: So before we get to all of that and a few stories that we've got here today, I would like to thank today's sponsor, Capital One.
1:32
SPEAKER_03: Navigator Platform from Capital One gives you the solutions you need to drive leads, conversations, and results.
1:38
SPEAKER_03: You deserve a partner that helps you win in your market.
1:40
SPEAKER_03: Reach out to your Capital One representative to learn more about how Navigator Platform can help your dealership take the lead.
1:47
SPEAKER_03: Thank you, Capital One.
1:49
SPEAKER_03: Without you, we couldn't do the show.
1:50
SPEAKER_04: That's right.
1:51
SPEAKER_04: What's in your wallet?
1:53
SPEAKER_03: We've got a few stories today that we'll talk about here.
1:59
SPEAKER_03: The first one is interesting.
2:01
SPEAKER_03: It's not a great story, but it's an interesting one for sure.
2:04
SPEAKER_03: Two dark cars dealerships in New York have agreed to pay more than one million dollars in customer refunds and$700,000 in penalties, fees, and costs.
2:13
SPEAKER_03: Now, the settlement follows an investigation by the New York Attorney General into Dark Cars Lexus and Dark Cars BMW in Mount Kiska.
2:22
SPEAKER_03: Now they found that dealerships added a 2% fee to nearly every vehicle sale and lease.
2:28
SPEAKER_03: The fee was labeled as a sales commission.
2:32
SPEAKER_03: So interesting.
2:33
SPEAKER_03: But the attorney general found that it was optional, but many of the customers were not clearly told that they could decline it.
2:41
SPEAKER_04: I have no idea what that is all about.
2:44
SPEAKER_04: I've been around the business a long time.
2:45
SPEAKER_04: They were charging the 2% fee that was supposedly.
2:50
SPEAKER_03: For a stand-up quarter counter.
2:52
SPEAKER_04: Just a couple more quickly, just a couple more questions for you.
2:56
SPEAKER_04: Yeah.
3:00
SPEAKER_04: We'd like a$3 tip on that$8 copy.
3:03
SPEAKER_04: Because Starbucks doesn't have enough money to pay the employees, evidently.
3:07
SPEAKER_04: No, that that's very interesting.
3:08
SPEAKER_04: That that whole story is just first of all, again, folks, this is another wake-up call that not just the federal government, you know, is after you, the FTC, but also this has woken up the state attorney generals to go, yeah, there's a whole lot of money buried inside these car dealerships.
3:24
SPEAKER_04: So let's go after them.
3:25
SPEAKER_04: Let's find everything we can.
3:27
SPEAKER_04: Now in this case, I don't know.
3:28
SPEAKER_04: It's almost seems like dark cars.
3:34
SPEAKER_03: Wow.
3:34
SPEAKER_03: So they were good.
3:35
SPEAKER_04: 97% of the deals had this 2% on there?
3:38
SPEAKER_04: Okay, dark cars.
3:39
SPEAKER_04: I that's that's a new one.
3:41
SPEAKER_04: You know, and and again, this is one of those situations where the the$1 million or$1.9 million fee is one thing.
3:48
SPEAKER_03: It's refunds, it says here too, which is interesting.
3:50
SPEAKER_04: Oh, refunds too to the consumers.
3:51
SPEAKER_03: The$1.17 million in automatic refunds is what I think.
3:54
SPEAKER_04: Automatic refunds.
3:55
SPEAKER_04: That's one thing.
3:56
SPEAKER_04: But it's another thing to have that in your local newspaper or you know, news, I should say, newspaper.
4:02
SPEAKER_04: Do we people read get newspapers anymore?
4:05
SPEAKER_04: But anyway, too, you know, for that to be in the media right away, car shoppers go, well, not going there.
4:10
SPEAKER_04: Yeah, you know.
4:11
SPEAKER_04: I know.
4:12
SPEAKER_04: That's too bad because dark cars is a good company.
4:14
SPEAKER_04: I mean, they've been around a long time and you know, so it's it's but but you know, dealers, I hope you're listening to this.
4:20
SPEAKER_04: This could happen at any one of your locations right now.
4:24
SPEAKER_04: Right.
4:24
SPEAKER_04: So keep an eye on what's going on.
4:26
SPEAKER_03: And something else to keep a level playing field, Stillanis is um changing the way its dealer can advertise vehicle prices beginning October 1.
4:35
SPEAKER_03: Dealers will have to follow a new minimum advertised pricing policy.
4:39
SPEAKER_03: Um that means Stillanis will set a floor for how low a dealer can go on the publicly advertised price.
4:45
SPEAKER_03: They can negotiate as low as they want, but okay, they can't advertise below a certain number.
4:50
SPEAKER_03: When and they're really following suit with some other manufacturers that are already doing this.
4:54
SPEAKER_03: Toyota, Mazda Kia, and Hyundai are already doing similar policies.
4:58
SPEAKER_03: So I mean, it's a good move.
5:00
SPEAKER_03: Yeah, that's good.
5:01
SPEAKER_03: That would help.
5:02
SPEAKER_03: So here's another interesting story.
5:04
SPEAKER_03: Toyota is considering one of the largest factory automation investments that they have seen with robotics.
5:10
SPEAKER_03: The Automaker is investing$6.4 billion every year beginning in 2028.
5:17
SPEAKER_03: They told investors that approximately 400,000 robots could be needed across its manufacturing network.
5:23
SPEAKER_03: So that's all of Toyota.
5:24
SPEAKER_04: 400,000 robots.
5:26
SPEAKER_03: Yes, and these won't be just the humanoid robots that you're thinking.
5:30
SPEAKER_03: This will be in, you know.
5:31
SPEAKER_04: Well, I was showing it right now.
5:33
SPEAKER_04: It could be the robots that actually assemble the cars.
5:36
SPEAKER_03: Exactly.
5:36
SPEAKER_03: Right.
5:37
SPEAKER_04: Now something tells me, just to break away from this for a second, that the Chinese have got this down, and you know, and and I think a lot of car companies, especially um you know, the the uh Japanese imports and such, are realizing that if you want to bring down the cost of a car, then you can bring down some of those legacy costs of the workers, the factory workers.
5:56
SPEAKER_04: You know, I know this isn't gonna come as good news to the UAW because as those uh as those robots and those robotics get even better and better, it means less workforce.
6:06
SPEAKER_04: However, it also means less cost going into that car.
6:09
SPEAKER_04: So in order to compete on a global stage, you know, this is one of those deals that I'm gonna be talking to uh to to the boys at uh uh More Than Cars.
6:19
SPEAKER_04: That's right.
6:20
SPEAKER_04: I want to get their take on this.
6:21
SPEAKER_04: I want to get their take.
6:22
SPEAKER_04: Yes.
6:22
SPEAKER_04: So be be ready.
6:23
SPEAKER_03: That's right.
6:25
SPEAKER_03: We will be talking to you about this.
6:26
SPEAKER_03: Oh, so one more thing I want to talk about because you recently sat down with David Speezak.
6:31
SPEAKER_03: Yes, and it was a great interview, it's airing on CBT News today.
6:35
SPEAKER_03: Yes.
6:35
SPEAKER_03: So um he talked he's talking about how obviously AI is a great tool for all of us to use, but it also can have some some issues.
6:44
SPEAKER_03: Um so anyway, we'll just take a look at the clip.
6:47
SPEAKER_03: How about that?
6:47
SPEAKER_03: And then we can talk about it.
6:49
SPEAKER_00: Give you an example, right?
6:51
SPEAKER_00: One of the things that they brought up was a Chevy store in California, their AI engaged with somebody else and managed to go back and forth in a negotiation in which the negotiation landed at an$81,000 Tahoe agreeing to sell it for one dollar.
7:08
SPEAKER_00: Oh my gosh.
7:09
SPEAKER_00: Now, here's the best part.
7:11
SPEAKER_00: The final thing the AI said is this is a legally finding offer.
7:16
SPEAKER_00: Oh my gosh.
7:17
SPEAKER_00: Wait, and then it actually said, no take the backsies.
7:22
SPEAKER_00: Right?
7:22
SPEAKER_00: Wow.
7:23
SPEAKER_00: How about a service advisor that's trying to do the right thing?
7:28
SPEAKER_00: They're trying to figure out, you know, I need to get this warranty approved, so maybe I can save time.
7:33
SPEAKER_00: So they take the the RO, they upload it into chat, and they say, How can I get this RO approved for warranty?
7:41
SPEAKER_00: Uh-uh.
7:42
unknown: Yeah.
7:43
SPEAKER_04: Oh boy.
7:43
SPEAKER_04: Yeah.
7:44
SPEAKER_04: That's that's problematic in that case.
7:46
SPEAKER_03: But so there's still things that need to be watched and verified and selling cars for a dollar through AI.
7:51
SPEAKER_04: That's kind of yeah.
7:52
SPEAKER_04: But you know, it's it still has its tremendous advantages in running a dealership.
7:57
SPEAKER_04: I wouldn't throw AI out of it.
7:59
SPEAKER_04: Just yet overnight.
8:00
SPEAKER_03: Letting them make all of this decisions this thing, it's not like we're at the beach while AI is running our church right now.
8:07
SPEAKER_04: That's right.
8:08
SPEAKER_03: So, not yet anyway.
8:10
SPEAKER_04: That's right.
8:11
SPEAKER_03: All right, joining us now are Paul Daly and Kyle Monsenior.
8:15
SPEAKER_03: I'm sorry.
8:15
SPEAKER_03: Monsignor.
8:16
SPEAKER_03: Monsignor.
8:17
SPEAKER_03: I didn't even go to church this morning.
8:18
SPEAKER_03: Monsieur on the show today?
8:20
SPEAKER_05: Oh.
8:23
SPEAKER_07: This is not the first time his name is Vegas.
8:26
SPEAKER_03: You brought me right back to my Catholic upbringing.
8:29
SPEAKER_03: All right.
8:30
SPEAKER_03: Well, like you said earlier, there needs to be no introduction for these guys.
8:34
SPEAKER_03: They don't need to be able to do it.
8:36
SPEAKER_03: Everybody, right?
8:37
SPEAKER_03: They see these guys like, wait a minute, what channel are we on?
8:39
SPEAKER_08: I thought we were on CBT.
8:41
SPEAKER_08: We're all friends here.
8:42
SPEAKER_08: We are on CBT.
8:43
SPEAKER_08: Obviously, here let me tell you why we were we know we're on CBT.
8:47
SPEAKER_08: First off, we started on time.
8:51
SPEAKER_05: We tried.
8:52
SPEAKER_05: We tried.
8:53
SPEAKER_08: I think that's how everybody knows we're on CBT.
8:55
SPEAKER_08: Thank you so much for having us.
8:56
SPEAKER_08: We have been loving watching your live show.
8:59
SPEAKER_08: Oh, good.
8:59
SPEAKER_08: Thank you.
9:00
SPEAKER_04: We think the energy and the synergy that you two together bring on the literally we've been watching you guys and we're jealous, Phil.
9:08
SPEAKER_04: We gotta give them random their money.
9:10
SPEAKER_08: I mean, I know I'm maybe dating myself a little, but Regis and Kelly had nothing on the two of you.
9:14
SPEAKER_03: Oh, I love it.
9:15
SPEAKER_03: Thank you.
9:16
SPEAKER_05: I think you just said I'm as old as Regis, Regis, who by the way is no longer with us.
9:20
SPEAKER_03: Oh my god.
9:21
SPEAKER_08: I understand that.
9:22
SPEAKER_08: I understand that.
9:23
SPEAKER_08: But you know, you're not that old.
9:26
SPEAKER_03: That's right.
9:27
SPEAKER_03: Um I did appreciate um the fact that you promoted live, the live that you were going to be on the show today.
9:37
SPEAKER_03: That was really cool.
9:38
SPEAKER_03: Um something's missing is that graphic that you guys do as well.
9:42
SPEAKER_04: You run your own on this one.
9:45
SPEAKER_03: What is it?
9:48
SPEAKER_08: It's the only reason people would would like come to the show, is the the thing that's missing.
9:55
SPEAKER_03: No, I'm just messing your time.
9:57
SPEAKER_04: Sorry about that.
10:01
SPEAKER_04: She's like, what did I do so wrong to these guys?
10:05
SPEAKER_03: No, I know.
10:05
SPEAKER_03: People are still getting used to me being on a get it, get it.
10:09
SPEAKER_03: No big deal, no big deal.
10:10
SPEAKER_05: Well, like they said, you're the reason they tune in.
10:12
SPEAKER_05: So no, no.
10:14
SPEAKER_05: That's right.
10:16
SPEAKER_03: Well, thanks for being here, guys.
10:17
SPEAKER_03: We really appreciate it.
10:18
SPEAKER_06: For real, for real.
10:19
SPEAKER_04: That's right.
10:20
SPEAKER_04: That's right.
10:20
SPEAKER_08: So, what are we talking about today?
10:21
SPEAKER_04: Oh my god, we got so much to talk about.
10:23
SPEAKER_04: So, uh, before we jump into Asotocon West, let's talk a little shop here.
10:28
SPEAKER_04: Um there's so much going on that I want to get your take on if we can.
10:32
SPEAKER_04: First and foremost, because it's um uh the uh the the state of the union, the automotive state of the union.
10:38
SPEAKER_04: Give us a little bit of the automotive state of the union.
10:41
SPEAKER_04: How how do you see things from your perspective with regard to retail automotive today?
10:46
SPEAKER_04: Maybe just some of the high points.
10:47
SPEAKER_08: Kyle, you want to take a swing?
10:49
SPEAKER_07: Yeah, I mean I mean obviously you tour around dealer OEM, uh everything that's happening in retail right now.
10:57
SPEAKER_07: I think that that the broad conversation is.
11:00
SPEAKER_07: I was at the SEM conference just last week.
11:04
SPEAKER_07: And the disparity between understanding what AI can do and what it's doing today or what our first adopter did is very broad.
11:16
SPEAKER_07: So a lot of people introduce conversations on AI, whether they're the phone or app very early.
11:22
SPEAKER_07: And that's still kind of the even code mentality for where AIDS.
11:29
SPEAKER_07: But there's small percentages that are going to be needed to build a connect, understand how operating can be found changed, not just an operator, which is like a conversation.
11:43
SPEAKER_07: And I think that when we look across the business, that's a gap that we have to figure out.
11:52
SPEAKER_07: Uh no different part of the green field is looking at the amount of day.
12:04
SPEAKER_07: And that's all due to the pace of AI.
12:06
SPEAKER_07: So it's going to continually be something that dealers or operators are trying to figure out whether or not they can consume this much change in their business in the next several months.
12:18
SPEAKER_04: Okay.
12:18
SPEAKER_04: We're having a little problem with the audio on on uh Paul.
12:22
SPEAKER_04: I mean on Kyle, however.
12:23
SPEAKER_04: Uh yeah.
12:24
SPEAKER_04: And I actually echoey.
12:27
SPEAKER_03: But no, but uh great great points there, for sure.
12:30
SPEAKER_03: Yes.
12:31
SPEAKER_04: Yeah.
12:31
SPEAKER_04: So, Paul, let me ask you uh um with regard to uh Chinese vehicles.
12:37
SPEAKER_04: Uh I know that you guys do a lot of shows.
12:39
SPEAKER_04: Can you can you hear me?
12:41
SPEAKER_04: No?
12:42
SPEAKER_04: Oh, we're having an audio problem.
12:44
SPEAKER_04: Okay.
12:44
SPEAKER_06: Wow, we got to tile kind of back?
12:52
SPEAKER_04: Okay, cool.
12:53
SPEAKER_04: Can you hear me now, Paul?
12:55
SPEAKER_04: No.
12:56
SPEAKER_04: Now we can't hear him.
12:58
SPEAKER_04: Okay.
12:59
SPEAKER_03: You know, I think he's avoiding the question.
13:01
SPEAKER_04: Okay.
13:02
SPEAKER_05: No.
13:02
SPEAKER_05: Are we good now?
13:04
SPEAKER_05: Are we good now?
13:05
SPEAKER_05: Okay.
13:06
SPEAKER_05: Come on.
13:08
SPEAKER_05: No?
13:09
SPEAKER_05: Still can't hear us?
13:10
SPEAKER_05: Paul can hear you.
13:11
SPEAKER_05: Hello.
13:12
SPEAKER_05: Hello.
13:12
SPEAKER_05: Can you hear him?
13:14
SPEAKER_05: Can you hear me, Paul?
13:16
SPEAKER_05: I can hear you now.
13:16
SPEAKER_05: There we go.
13:17
SPEAKER_05: Oh, you can hear me now.
13:18
SPEAKER_05: Paul's in the house in there.
13:20
SPEAKER_05: You gotta love Zoom.
13:21
SPEAKER_05: That's for sure.
13:22
SPEAKER_05: Yeah.
13:22
SPEAKER_05: All right.
13:23
SPEAKER_05: So let me let me ask you this.
13:24
SPEAKER_05: That's part of live right here.
13:26
SPEAKER_05: I agree.
13:29
SPEAKER_04: To our audience, stay with us.
13:30
SPEAKER_04: Stay with us because we'll fix it.
13:32
SPEAKER_04: We'll fix it.
13:32
SPEAKER_04: But Paul, let me ask you with regard to Chinese vehicles.
13:35
SPEAKER_04: You guys do a lot of store headlines as we do here as well.
13:39
SPEAKER_04: What what are what's your take on this Chinese vehicle situation?
13:43
SPEAKER_04: I mean, I think you know where I stand on this.
13:45
SPEAKER_04: I've I've made it clear that I think they should be allowed in with guardrails.
13:49
SPEAKER_04: I've taken a lot of shots at on this.
13:51
SPEAKER_04: However, it seems as though a number of OEM executives are looking or are saying that, yeah, it's kind of inevitable.
13:58
SPEAKER_04: These things are gonna come to our shores five or ten years from now.
14:02
SPEAKER_04: But what are you hearing and what's your take on Chinese vehicles?
14:05
SPEAKER_08: So um, you know, Kyle and I had a the opportunity to uh drive a lot of Chinese vehicles last year.
14:10
SPEAKER_08: We went to Central Asia, we went to Kazakhstan, so we had a lot of firsthand experience, what it feels like to drive one.
14:15
SPEAKER_08: Oh, that's how they're marketed, how they're merchandised, and and we can just say like gorgeous vehicles, um, they're marketed beautifully, and it's just such a complex issue on how they come to the US, if they come to the US.
14:29
SPEAKER_08: We have a lot of conflicting priorities, and you know, so it's like, do we render an opinion?
14:33
SPEAKER_08: Like Kyle and I really haven't rendered an opinion on whether we think they should or they shouldn't, but when we kind of come up from the consumer lens, when we're in the middle of an affordability crisis and you have vehicles that are coming in saying, we can promise you not only an affordable vehicle, like some twenty thousand dollar new car, but we can do it uh in a way that also adds a lot of features on top of it.
14:54
SPEAKER_08: Um it's very hard for the consumer to not be on the side of that.
14:59
SPEAKER_08: Now, they're gonna have national security issues, I agree.
15:02
SPEAKER_08: There's job security issues, we agree.
15:04
SPEAKER_08: Um there's a level playing field that you know we're trying to uphold, and the fact that the way Chinese vehicles have developed and the technology and the speed at which they've come has been an unlevel playing field.
15:15
SPEAKER_08: And we s hear Senator Bernie Moreno all the time ask, like, hey, we want a level playing field.
15:19
SPEAKER_08: Yeah, yeah.
15:19
SPEAKER_08: But then you layer in the national security issue on top of that.
15:22
SPEAKER_08: And we have people, I've heard, really smart people on both sides of the aisle.
15:25
SPEAKER_08: Some people saying, Do you want a car that was made in China that can be spy on you, that can be turned into, you know, uh weaponized if possible, you know, especially the spying thing.
15:34
SPEAKER_08: And I think it was Brian Bensock that said, but like somebody asked me, he's like, Hey, where's your iPhone manufactured?
15:39
SPEAKER_08: And he was like, You got me.
15:41
SPEAKER_05: Yeah, right.
15:43
SPEAKER_08: So there's so much complexity in that argument.
15:45
SPEAKER_08: So you know, we we try to stay up on it.
15:47
SPEAKER_08: We talk to a lot of the people who are making the decisions, but I think in the end we are all in this boat where um we think you know President Trump's going to make a determination and a decision.
15:58
SPEAKER_08: Uh and we're kind of gonna kind of gonna have to live with whatever that is for now.
16:02
SPEAKER_08: And I was speaking with a group of dealers just last week in in Washington, D.C.
16:07
SPEAKER_08: And I I said on the stage that I think that there are dealers have two opinions on this.
16:12
SPEAKER_08: And the one opinion is like we need to protect our OEMs, we need to protect our country, and then like as soon as the mic is off, they're they're saying, But if they come here, I want to be first in line to be.
16:24
SPEAKER_04: Yeah, that's the same thing, that's the same thing we're getting.
16:27
SPEAKER_04: Same thing.
16:27
SPEAKER_04: In fact, some of them stepped up and said, I want to be a distributor, I want to be the next Jim Moran, or you know, Southeast Toyota sounds pretty good.
16:35
SPEAKER_04: I know, I know.
16:37
SPEAKER_08: Exactly right, right.
16:38
SPEAKER_08: Yeah, and that's and that's the relationship when when we were in Kazakhstan, that is the relationship um that the deal there were a lot of dealer-distributor relationships there.
16:48
SPEAKER_08: And so um, and even some in that country, manufacturer, distributor, retailer, right, right, all the same person.
16:54
SPEAKER_08: So um, yeah, I mean it's it's a very it's a very attractive proposition when you look at what it could be if they are allowed in the country and maybe the question.
17:03
SPEAKER_04: Uh that perfect segue.
17:05
SPEAKER_04: Give us the 411 on your Kazakhstan trip.
17:07
SPEAKER_04: What what was that all about?
17:08
SPEAKER_07: Uh a little bit of a little over a year ago we had the opportunity to go out of Kazakhstan.
17:14
SPEAKER_07: And it was an incredible experience just because you start to see what was happening uh in in other countries.
17:21
SPEAKER_07: Sure.
17:21
SPEAKER_07: And in Kazakhstan, they're they're of course closely bordered to or they're right bordered to China, and so they have a lot of imports coming in.
17:29
SPEAKER_07: They're bringing in those vehicles uh legally.
17:31
SPEAKER_07: The most interesting thing that we saw is we saw all of these vehicles uh that were Chinese vehicles that we believed to be uh only EVs, they're as gas vehicles.
17:44
SPEAKER_07: And so when we look at the the Chinese threat uh you know for profitability, uh when they look at the U.S., they're not just looking at the U.S.
17:52
SPEAKER_07: as an EV uh attraction.
17:55
SPEAKER_07: They're looking at it as like, hey, look, what if we put gas vehicles, hybrid vehicles, EVs in there depending on uh what the market needs.
18:03
SPEAKER_07: That's right.
18:04
SPEAKER_07: And I think that's the biggest thing that that we have to be concerned with because they're not just interested in getting the technology or the EVs in, they're looking at taking over the market.
18:13
SPEAKER_07: And and any good business person would want to take over the market, but China has a political agenda too.
18:18
SPEAKER_07: Uh so I think that there's right to be concerned uh, but if there's guardrails put around it, we're we actually already have Chinese relationships with vehicle manufacturers, Geely Volkswagen.
18:28
SPEAKER_07: Yeah.
18:28
SPEAKER_07: Uh so it's not like it's it's not a precedent that hasn't been set, but there's gonna have to be stringent and more more tight guardrails and potentially uh tariff assertions on that, similar to how there is on uh CPE, you know, package goods, iPhones, technology that we already have in the U.S.
18:43
SPEAKER_03: Sure.
18:44
SPEAKER_03: Exactly.
18:44
SPEAKER_04: Yeah, no question.
18:46
SPEAKER_04: Um yeah, and and you know, the the recently I've had some discussions uh with dealers and uh individuals on the show where we we've talked about this Chinese situation, and everybody of course points to the fact that it's not a level playing field because the Chinese government is subsidizing these vehicles.
19:04
SPEAKER_04: And but my feeling is that okay, that's one side of this equation.
19:08
SPEAKER_04: The other side is the technology, the styling, and uh and you know, the to be able to charge a battery with, you know, in less than 20 minutes and have a you know 400 or 500, 600-range battery.
19:21
SPEAKER_04: I mean, there's a lot of technology and styling that are going into these vehicles that doesn't have anything to do with the fact that the Chinese government is subsidizing that.
19:31
SPEAKER_04: I uh my feeling is that let's challenge the American car makers and even the Japanese that are doing business here and building cars here, because there are two different issues.
19:40
SPEAKER_04: How come we're not seeing that level of technology coming out of our manufacturers here, coming out of Detroit or coming out of Toyota or Nissan or Honda that's being built in the U.S., obviously Kia, Hyundai as well.
19:53
SPEAKER_04: So so I think that they're conflating the issue by saying, well, no, no, it's a Chinese, you know, the government's subsidizing.
20:00
SPEAKER_04: Well, yes, that's on the money side of it, but not on the technology side of it.
20:04
SPEAKER_04: I think that we American ingenuity can compete on this level.
20:08
SPEAKER_04: At least they should be.
20:09
SPEAKER_07: And should be forced to.
20:10
SPEAKER_04: Yeah.
20:11
SPEAKER_04: That's right, that's right.
20:12
SPEAKER_08: It's one of those uh it's one of the scenarios that we get into a lot when the existing industry has to keep building and innovating while flying.
20:20
SPEAKER_04: Right, right, right.
20:21
SPEAKER_08: And it's something that didn't happen to ha have to happen early on because of the subsidies.
20:26
SPEAKER_08: They were able to build for building's sake, and we're seeing this actually we're seeing this span a lot, even in AI technology, because companies that have to retrofit legacy structure to now innovate with an AI layer on it are not able to make changes as fast as a new entrant who just comes and gets to build from ground up on modern architecture, modern technology.
20:46
SPEAKER_08: They have the time and capacity to think about these other things and to pour into these other avenues, like back to the manufacturing, battery capacity, styling, amenities, we're not, you know, new ways of doing things from the ground up.
20:58
SPEAKER_08: So it's another layer of complexity that it's a it's a challenge that I think uh American entrepreneurs are up to.
21:04
SPEAKER_08: And I think one of the things that legislation has done and maybe can continue to do is is just provide enough of a time window to like catch your breath and go ahead.
21:15
SPEAKER_04: That's right.
21:15
SPEAKER_04: That's right, before these cars start hitting and uh taking taking the marketplace.
21:20
SPEAKER_03: So let's change gears here and talk about a Sotokon and the summit that's coming.
21:25
SPEAKER_03: But you have established Asotocon on the East Coast.
21:28
SPEAKER_03: Every year you have a big conference and it's bigger every year.
21:31
SPEAKER_03: So now you're moving to the West.
21:34
SPEAKER_03: So let's talk about that.
21:35
SPEAKER_03: Tell us all about Asotokon West.
21:39
SPEAKER_08: So Asotokan West um is a little different than the East Coast one.
21:43
SPEAKER_08: It's been so successful, and what we hear from Asotocon in general are that people just make in invaluable connections.
21:50
SPEAKER_08: We talk about topics that are pressing on-the-moment topics.
21:54
SPEAKER_08: It's why we wait so long to release our agenda.
21:56
SPEAKER_08: And the goal is always to give people actionable relationships.
22:00
SPEAKER_08: And actual tech actionable technologies and strategies to move forward.
22:03
SPEAKER_08: So there's so much space between the Sotocons.
22:05
SPEAKER_08: There are so many things going on in the industry right now.
22:08
SPEAKER_08: We said, what if we make a fly-in, fly out version of a Sotocon on the West Coast so it's accessible to a large group of dealers who may not be able to make it all the way across the country for a number of days?
22:19
SPEAKER_08: How can you fly in and fly out?
22:21
SPEAKER_08: Programming starts at 10, it goes until 5.
22:23
SPEAKER_08: And um, we basically hand curated three topics that we think are the most pressing topics, or at least three that are easily deployable right now that solve some of our profitability issues.
22:35
SPEAKER_08: And you know, we brought in some first-time speakers for it as well.
22:37
SPEAKER_08: I'll let maybe Kyle talk about more of that.
22:40
SPEAKER_04: Yeah, that's great.
22:40
SPEAKER_04: Yeah, we'd love to hear.
22:41
SPEAKER_04: What are the three topics that you that you chose?
22:44
SPEAKER_07: Yeah, so uh mobile service is one, and we've got great partners with Kirby gonna be bringing some dealers in for that.
22:50
SPEAKER_07: Uh we've got AI in the dealership, and and Mia is thinking about that as I uh as I was looking, uh as I was talking about, not just on the conversational side, which is where their their forte is, but all the way to the operations.
23:03
SPEAKER_07: Uh, and then our our good friend Jimmy Douglas and Plug have brought together a unique subset of EV uh retailers uh and wholesalers that are gonna show what's the art of possible when it looks like selling EVs at scale, especially in a time wing timeline where used EVs are accelerating into the market at a at a pace we've never seen before because of the off-leased used EVs.
23:26
SPEAKER_07: Uh so those are gonna be our our core topics sitting in there.
23:30
SPEAKER_07: Uh it's all gonna be centered around the profitability in the dealership uh and and how dealers can be uh sustained into 2027 uh and and thriving.
23:39
SPEAKER_07: Um but then I'm uh extremely excited uh to bring in uh three uh big heavy hitters.
23:47
SPEAKER_07: Uh one that I mentioned already, Steve Greenfield, will be bringing a brand new talk to the stage uh at Asotukon West.
23:54
SPEAKER_07: And then uh our new friend Jack Hollis, former COO at uh uh at Toyota here in North America, and now managing partner of our Creole Equity Partners.
24:04
SPEAKER_07: Uh, and then uh a new friend as well, Vic Keller, who uh historically was um with Berkshire Hathaway and was right hand uh to Warren Buffett, or or sorry, not right hand, but answered directly to Warren Buffett and his strategies uh on leadership and career growth in in retail automotive.
24:23
SPEAKER_07: So we've got uh the pairing of three retail-centric topics with very uh big, broad understanding of of how to lead in retail auto today.
24:33
SPEAKER_04: That's great.
24:33
SPEAKER_04: That that is a good lineup, no question about it.
24:36
SPEAKER_04: Highly encourage dealers to get out there.
24:38
SPEAKER_04: Um talk so now, talk to us a little bit about a Sotokon East.
24:42
SPEAKER_04: Uh you guys must be busy as hell.
24:44
SPEAKER_04: I know what goes into these.
24:45
SPEAKER_04: We both know what goes into these uh holding these conferences, but uh so it's in May, right?
24:50
SPEAKER_04: Talk to us for a second about that for those people that are that are making their plans.
24:56
SPEAKER_08: So this is our our flagship event.
24:58
SPEAKER_08: I heard a little rumor that maybe we'll have a Jim and Bridget Fitzpatrick this year.
25:01
SPEAKER_08: This next week.
25:05
SPEAKER_08: It is in May.
25:06
SPEAKER_08: It's the week after Mother's Day.
25:08
SPEAKER_08: Kyle, you can check me on the dates.
25:09
SPEAKER_08: I think it's the the week of the 11th.
25:11
SPEAKER_05: I think it is.
25:12
SPEAKER_08: Yeah, and so it's it's just south of Baltimore, just south of BWI Airport in Hanover, Maryland.
25:18
SPEAKER_08: We wanted to make it at a place where it's just easy to get to, ten minutes from the airport, and you're at the venue.
25:22
SPEAKER_08: Uh it's our fifth, is our fifth year at this venue?
25:25
SPEAKER_08: It's such a great spot to be just big enough that we can have uh a real experiential uh event where you come in and there's a lot of you know uh inspiration that happens while you're there because I feel like that unlocks a different part of your brain when you walk in and you look up and you're like, oh wow, this is beautifully designed, it's easy, everybody is together.
25:45
SPEAKER_08: And we we wish we could tell you what we're going to talk about, but we hold the agenda so tight, not because we have it and we don't want to share it, but because we don't know what the most important things to talk about are.
25:57
SPEAKER_08: Good point, are good.
25:59
SPEAKER_08: That's right, that's right.
26:00
SPEAKER_08: And so we really don't uh release the agenda typically until about 12 weeks out.
26:04
SPEAKER_08: I mean, we'll have some drip feed and some speakers, but the agenda and the topics come out much slower.
26:09
SPEAKER_08: But if you go to asotukon.com, you can look at last year's site, and our whole goal is to get practitioners and people at the tip of the spear in there to share the ideas and kick them around from stage.
26:23
SPEAKER_08: We can map back to a lot of products that actually hit the market within a year after they were kind of formulated on an Asotukon side stage.
26:31
SPEAKER_08: So um, again, that's our flagship event.
26:34
SPEAKER_08: It's in May.
26:34
SPEAKER_08: Uh circle the week after Mother's Day right now.
26:37
SPEAKER_08: That's probably the most planning you can do.
26:39
SPEAKER_08: You can go to Asotukon.com and put your email in.
26:41
SPEAKER_08: We already have already have a bunch of people on that waiting list, so uh, you're the first to know.
26:46
SPEAKER_08: We always have a Black Friday sale on tickets, and uh every year we sell a lot more tickets on Black Friday than we did because they're half price.
26:53
SPEAKER_08: And um, so that that that's the main event, but um, you know, obviously we have one in between the uh the two of those.
26:59
SPEAKER_08: So that's right, that's right.
27:00
SPEAKER_08: You know, we're swinging away.
27:01
SPEAKER_04: Well, and well, I'm sure we're gonna have Jan Moore uh to talk about this as it gets closer in May.
27:06
SPEAKER_04: Um it's always uh an incredible event.
27:08
SPEAKER_04: And uh yes, you will see Jim and Bridget out there.
27:11
SPEAKER_04: So for those of you uh that uh looking forward to it.
27:14
SPEAKER_04: That want to make your plans now, you know, make your plans.
27:18
SPEAKER_04: See you there.
27:18
SPEAKER_04: So we will definitely see you there.
27:20
SPEAKER_04: And we appreciate all that you do for the industry.
27:22
SPEAKER_04: You guys do an incredible job, as you know.
27:25
SPEAKER_04: We've told you that before, and uh you've got so many followers, and uh just just keep doing what you're doing, man.
27:31
SPEAKER_04: It uh it's really uh a great job.
27:33
SPEAKER_03: Great job, guys.
27:34
SPEAKER_03: We appreciate you.
27:34
SPEAKER_04: Yep, yep, thank you so much so much.
27:36
SPEAKER_04: Thanks for having us.
27:37
SPEAKER_04: Thank you.
27:37
SPEAKER_04: Thank you.
27:38
SPEAKER_04: Paul and Kyle from More Than Cars.
27:41
SPEAKER_04: I love it.
27:42
SPEAKER_03: Great guys.
27:42
SPEAKER_04: Yep.
27:43
SPEAKER_04: All right, take care, guys.
27:44
SPEAKER_04: Thank you.
27:45
unknown: Thank you.
27:47
SPEAKER_03: Yes, they're great guys.
27:50
SPEAKER_04: Yeah, they're great guys.
27:50
SPEAKER_03: We love talking to them.
27:51
SPEAKER_03: Yeah, yeah.
27:53
SPEAKER_03: So, real quick, um, we talked about their newsletter.
27:58
SPEAKER_03: For more information like this, you'll get um content from our website, from our live shows.
28:04
SPEAKER_03: Sign up for our free newsletter at cbtnews.com.
28:07
SPEAKER_04: That's right.
28:08
SPEAKER_04: Yeah, that's right.
28:09
SPEAKER_04: And it's uh it's funny because they they had started that event.
28:13
SPEAKER_04: Uh he said five this might be his their fifth year now, and it's just grown and grown and grown and grown.
28:18
SPEAKER_04: Right.
28:18
SPEAKER_03: I love, I know I talked about this the other day, but Paul says that the he was just getting into automotive, I guess, or or his first conference in automotive was the CBT News conference back in either 16 or 17.
28:28
SPEAKER_03: I can't remember.
28:29
SPEAKER_03: I think it was 17.
28:30
SPEAKER_03: Okay.
28:30
SPEAKER_04: I think it's the one he went to?
28:31
SPEAKER_04: Yeah.
28:32
SPEAKER_03: I remember him being there.
28:33
SPEAKER_04: So yeah.
28:33
SPEAKER_04: He was Gary Vee.
28:35
SPEAKER_04: They do such a great job.
28:36
SPEAKER_04: It was cool.
28:37
SPEAKER_04: They really do.
28:38
SPEAKER_04: All right, so um we've got uh uh it's funny, his comments about the Chinese uh good observation there.
28:46
SPEAKER_04: I guess how how about the fact that they're in Kazakhstan?
28:49
SPEAKER_04: Is that that's incredible?
28:50
SPEAKER_04: There now these guys are international.
28:52
SPEAKER_04: We got to go international, Bridge.
28:53
SPEAKER_04: Oh, we do.
28:54
SPEAKER_04: But but they had an opportunity to to get a look at these Chinese vehicles, and it's it's incredible.
29:00
SPEAKER_04: The technology is just unbelievable.
29:03
SPEAKER_04: And as I said before, you know, the money's one thing, but the technology is something entirely different that I would really say to the auto manufacturers here in the States step up and get to that technology that consumers want.
29:16
SPEAKER_04: You know, it's gonna get to the point.
29:18
SPEAKER_04: Michael Dunn has already told us we're on an island here in the U.S., everywhere else is selling them.
29:24
SPEAKER_04: That's not gonna be able to be sustainable, you know, even though I know that our friend Senator Bernie Marino and Senator Slotkin are trying to make it what he says hermetically seal the U.S.
29:34
SPEAKER_04: I think that's gonna be tough to do.
29:36
SPEAKER_04: And by the way, Wednesday, the president is sitting down with the you know the leader of China.
29:41
SPEAKER_04: We're gonna see what comes out of that.
29:43
SPEAKER_04: Or should I say China?
29:44
SPEAKER_04: China.
29:46
SPEAKER_03: So I guess we should.
29:49
SPEAKER_03: All right, the dealership buy-sell market is always something to watch.
29:53
SPEAKER_03: The latest blue sky report from Kerrigan Advisors took a close look at the second quarter.
29:58
SPEAKER_04: That's right.
29:59
SPEAKER_04: Joining us now is Aaron Kerrigan, founder and managing director of Kerrigan Advisors.
30:04
SPEAKER_04: Aaron, thank you so much for taking the time out of your busy schedule doing those billion-dollar deals to spend some time with us here at CBT News.
30:12
SPEAKER_04: Little humble CBT News.
30:14
SPEAKER_04: See, they're still talking to the little people.
30:15
SPEAKER_04: That's which is nice.
30:16
SPEAKER_01: Hello, Aaron.
30:17
SPEAKER_04: Welcome to the show.
30:20
SPEAKER_01: Rigid, it's so nice to see you and Jim.
30:23
SPEAKER_05: Yeah, you as well.
30:24
SPEAKER_01: So thanks, Jim, for always, you know, poking and prodding.
30:30
SPEAKER_04: Anyway, you you guys do an amazing job.
30:33
SPEAKER_04: And by the way, everybody's still talking about that billion-dollar deal here right here in Atlanta.
30:36
SPEAKER_04: That's right.
30:37
SPEAKER_04: We know we know that family, the Hennessy family.
30:39
SPEAKER_04: They couldn't be happier.
30:40
SPEAKER_04: So that's great.
30:42
SPEAKER_01: It is right there in Atlanta.
30:44
SPEAKER_01: And we are so we're so lucky to have them as clients.
30:48
SPEAKER_01: So uh that's right.
30:49
SPEAKER_04: They're lucky, they're lucky to have you as advisors, I think.
30:52
SPEAKER_04: That's the thing.
30:53
SPEAKER_04: So anyway, so tell me a little bit tell me more about the uh latest report um that you guys have just published and what's going on in the buy-sell market.
31:03
SPEAKER_01: Yeah, sure.
31:04
SPEAKER_01: So um, you know, it it it never ceases to amaze us.
31:09
SPEAKER_01: Uh the buy sell market yet again hit a new record in the first half of 2026, and we had 462 transactions completed.
31:20
SPEAKER_01: It's pretty amazing in the first half.
31:22
SPEAKER_01: It was 224, which by the way surpasses what we were doing annually before COVID.
31:29
SPEAKER_01: So annually we were doing about 200-ish transactions a year.
31:34
SPEAKER_01: Now we do that in six months.
31:36
SPEAKER_04: So incredible.
31:37
SPEAKER_01: Um, pretty rapid pace for sure.
31:41
SPEAKER_01: So very busy.
31:42
SPEAKER_06: Yeah.
31:43
SPEAKER_01: So, Aaron, are the publics very active?
31:47
SPEAKER_01: They are.
31:48
SPEAKER_01: So, one of the thing characteristics of the buy sell market this year has been more multi-dealership transactions and larger multi-dealership transactions, and that's partly also with the public.
32:00
SPEAKER_01: So the publics spend$2.6 billion in the first half.
32:05
SPEAKER_01: And on a trailing 12-month basis, when you include the Hennessy announcement, they get to$6 billion in total closed or announced transactions.
32:14
SPEAKER_01: That's nearly as much as they did in their record year.
32:18
SPEAKER_01: I mean, it's it's about the record year was$21, about$9 billion.
32:23
SPEAKER_01: So we're at six, but you can see the pace is is really picking up in a significant way.
32:28
SPEAKER_01: So um they're very active.
32:32
SPEAKER_01: Incredibly, the average spend per dealership on Blue Sky by the public's in the first in the first six months, including the Hennessy deal, was$119 million per dealership, which is double what they were paying per dealership even the last few years.
32:51
SPEAKER_01: So you're really seeing them lean into certain assets and pay big numbers for certain marquee assets, like you know, Penske bought the two Lexus stores in Orlando for estimated half a billion dollars.
33:03
SPEAKER_01: So, you know, that deal plus the Hennessy deal, it's it's it's a market where the leading consolidators are really fixated on the prized assets.
33:15
SPEAKER_04: Does this kind of does this level of activity surprise you?
33:20
SPEAKER_01: It it does to some degree, because typically you don't see a super active buy-sale market when interest rates are rising and earnings in your industry are going down, which is what we had in the first half, right?
33:33
SPEAKER_01: So the average earnings in the industry went down between 10 and 20%, depending on market and franchise.
33:39
SPEAKER_01: The publics were down 15%.
33:42
SPEAKER_01: So in that kind of environment, you don't typically see buyers leaning in and paying record prices and being more active than they ever have been.
33:51
SPEAKER_01: So that is pretty unusual, I would say.
33:54
SPEAKER_03: Yeah, for sure.
33:55
SPEAKER_03: From your experience, what do you think is going on here?
34:00
SPEAKER_01: So I actually think we're in a pretty monumental moment in our industry where Wall Street is also valuing these companies at record levels.
34:12
SPEAKER_01: So so four of the six publics hit all-time record stock prices in July.
34:17
SPEAKER_01: Again, with this backdrop.
34:19
SPEAKER_01: I think what's happening is the scale, the scale prerogative and the scale business case is now starting to get it, is now becoming more clear in part because of folks like Carbana that have shown that you can really ramp this business with technology.
34:41
SPEAKER_01: And I think that the markets and the leading consolidators are saying, we the the bigger we get, it's not about, it's it's no longer gonna be about holding gross.
34:53
SPEAKER_01: It's gonna be about how much revenue you have, whether that's on a group level or on a rooftop level, that's gonna be the key to profitability.
35:01
SPEAKER_01: I mean, if you look at Amazon, for instance, Amazon doubled their revenue and doubled their profit margin at the same time.
35:11
SPEAKER_01: And I think our industry is moving away from the legacy hold gross kind of model to more of a true volume model, and that's what Carvana has really demonstrated to our industry, the ability to use technology on a scale level.
35:28
SPEAKER_01: And I mean, it's interesting.
35:30
SPEAKER_01: One of the stats in our Blue Sky report is the fact that uh the number of vehicles sold across state line has grown 30% in the last since 21.
35:44
SPEAKER_01: Wow.
35:44
SPEAKER_01: So that is showing us that you know, the old model, the concept of, you know, your franchise represents an AOR and a PMA, and that's your that's the playing field in which you're operating, I think that's gonna change pretty dramatically.
36:01
SPEAKER_01: And so the leading consolidators are saying, okay, we we need to own the specific franchises and the markets in which we operate, because we're gonna use those to expand the market area and and cover bigger areas.
36:15
SPEAKER_01: And the more scale we have in each market we operate, the more scale we have on each rooftop level, that's where our margins really, really soar.
36:24
SPEAKER_04: Sure.
36:25
SPEAKER_04: It's still is it amazing to you that that we are in this middle of this uh economic situation right now where affordability is almost at the forefront of everybody's mind.
36:36
SPEAKER_04: Consumers, dealers, I know we have executives.
36:39
SPEAKER_04: Um we've got a war in Iran uh that's got gas prices through the roof.
36:44
SPEAKER_04: Um we are also looking at technology that's changing the industry, as you mentioned.
36:50
SPEAKER_04: Um we are a million vehicles off the SAR from where from the high water mark of you know 17.5 million vehicles.
36:57
SPEAKER_04: We probably won't do 16 and a half million this year.
37:00
SPEAKER_04: And yet these numbers for these dealerships continue to go up and up and up.
37:05
SPEAKER_04: And while there's margin compression on the dealer's side, I mean it it it's incredible to me as to how strong the market is for franchised dealerships, even in light of all of this, which then begs the question can you imagine what they'd be worth if we were doing 17 and a half million new vehicles and the economy was rock solid?
37:26
SPEAKER_01: Well, I mean, I think COVID taught us that that the SAR isn't necessarily the best benchmark upon which to determine the health of the industry.
37:35
SPEAKER_06: Yeah.
37:36
SPEAKER_01: Uh I mean, we really need to look at the retail sales because those years when we were at the 17 million mark, we our retail sales were not at the 17 million market.
37:43
SPEAKER_04: Right.
37:44
SPEAKER_01: Uh actual retail sales last year by some SMS were all-time highs, including revenue per dealership.
37:50
SPEAKER_01: So it's it's a little bit, you know, we as an industry have have had false, um, I think sometimes false data points that that that are that are boosted up by fleet sales that really don't help a auto retailer per se.
38:06
SPEAKER_06: Yeah.
38:07
SPEAKER_01: Um that being said, again, I think it really is, if if you look at what the leading consolidators are buying, I mean, they're buying primarily import, and even the most they're buying, the publics, are at about 50% plus of import luxury.
38:25
SPEAKER_01: The number one franchise acquired by the publics year to date is Lexis.
38:29
SPEAKER_04: Lexus.
38:30
SPEAKER_01: 18% of their acquisitions were Lexus.
38:33
SPEAKER_01: Now that's pretty interesting when you think about the fact that Lexus represents less than 1% of the franchises in the country.
38:39
SPEAKER_01: Wow.
38:40
SPEAKER_01: So I think it really is um there's a huge flight to quality.
38:44
SPEAKER_01: I always like to say there's sort of a K-shaped recovery in auto retail, too, where you know buyers are paying huge premiums for these very finite assets in the markets in which they operate.
38:57
SPEAKER_01: Um, 56% of the acquisitions year to date have been by dealers who are already in the markets they're buying the dealership.
39:04
SPEAKER_01: And in the public's case, it's over 90% of the transactions they've announced or completed are in markets they already have a presence.
39:11
SPEAKER_01: So everyone, we're really, I like to say to some degree, we're in this, you know, mid-innings, maybe like you know, fifth fifth inning of regional consolidation.
39:23
SPEAKER_01: We're not in a national consolidation mode.
39:26
SPEAKER_01: Carvana may may test that, right?
39:28
SPEAKER_01: Carvana with a with one franchise may start to look more like a national player if they buy sites in each in each region and they you know they blow up the the geographic boundaries.
39:41
SPEAKER_01: But for now, we're really in this heavy regional consolidation world.
39:46
SPEAKER_01: Um, 10, if you look at the top 10 fastest growing metros in the US, major metros, uh a third of, or pardon me, two-thirds of the top franchises, so Toyota and all the top luxuries are already held in the hands of the top 150.
40:07
SPEAKER_01: There's only a third of those franchises left to even acquire.
40:11
SPEAKER_01: So when when that Lexus of Orlando comes up, it's not coming up again.
40:16
SPEAKER_01: Like so, so I think, you know, sometimes our industry gets confusing because there are so many dealerships still, yeah, and people think, oh, we're so fragmented.
40:25
SPEAKER_01: But when you actually look on a market-by-market basis and on a franchise by franchise basis, in some markets we're actually quite consolidated.
40:32
SPEAKER_01: And so um, and then when you look actually even more interestingly, about 70% of the new vehicle sales are sold by just 30% of the rooftops.
40:47
SPEAKER_01: So we're also we're getting more and more consolidated on a rooftop level.
40:51
SPEAKER_01: So there are that means that that 70% of dealers only sell 30-ish percent of the unit.
40:59
SPEAKER_01: So we're getting a we're getting more and more lopsided.
41:03
SPEAKER_01: And that's what we what what we see uh in terms of why sellers are coming to market is, you know, I heard you talk about China.
41:10
SPEAKER_01: I mean, China is for sure on people's minds.
41:13
SPEAKER_01: Um, FTC regulations on people's minds, um, Carvana is on some of these folks' minds.
41:20
SPEAKER_01: Uh, and and just the ability to to to continue to thrive in this industry, you know, this industry was somewhat of an inertia industry.
41:31
SPEAKER_01: We just you could pass it down to the next generation and you didn't necessarily have to own that many dealerships.
41:37
SPEAKER_01: And right, it was a great family business.
41:40
SPEAKER_01: I think now there is some risk factor to this concept that it can that you can just own a few stores and it it and it'll just keep going on its merry way.
41:50
SPEAKER_04: Sure, sure.
41:51
SPEAKER_04: So would you categorize this as a seller's market or a buyer's market right now?
41:57
SPEAKER_01: That's an excellent question.
41:59
SPEAKER_04: I do this for a living.
42:00
SPEAKER_01: That's uh you do a good job.
42:04
SPEAKER_01: You know what, Jim?
42:05
SPEAKER_01: We're Jen and Bridget, we're both in the right seats.
42:09
SPEAKER_01: Um so I would say it's it's definitely a seller's market for the top assets in a big, big way.
42:18
SPEAKER_01: Um there the the the demand for the top franchise and the top assets and the high growth markets is we are definitely in a game of chess where the buyers are taking chess pieces off and they're being very strategic.
42:33
SPEAKER_01: I would say that um it's not as strong of a seller's market necessarily if you have assets that are in smaller rural towns, um, if you have some of the weaker franchises.
42:46
SPEAKER_01: Uh that being said, the number one franchise acquired year to date is Chrysler.
42:52
SPEAKER_04: Really interesting.
42:53
SPEAKER_01: So it shows you that at 14% of the buy-sell market, it shows you that yes, those franchises can be acquired.
43:01
SPEAKER_01: There are buyers on the other side, but it's all about price, right?
43:04
SPEAKER_01: So it's also one could look at that stat and say it's also the number one most divested franchise.
43:09
SPEAKER_01: So which is I would I would say that's really what that stat shows.
43:14
SPEAKER_01: However, it it you there's a buy-sell.
43:17
SPEAKER_01: So someone's on the other side.
43:18
SPEAKER_06: Yep.
43:18
SPEAKER_01: Um, and the buyers of that that asset, just like Nissan's the number one import franchise uh in terms of market share.
43:27
SPEAKER_01: So the buyers of those assets are buying them at a low price, and you know, they could be the smartest people around because with a turnaround, their return on equity would be very, very high.
43:38
SPEAKER_04: Yeah.
43:38
SPEAKER_04: Well, that's for sure.
43:40
SPEAKER_04: That's it's it is amazing to watch all of these huge numbers being transacted.
43:45
SPEAKER_04: And uh, and right now, I guess, you know, at the average age of today's dealer being in excess of 70 years old, uh we talked about this before.
43:52
SPEAKER_04: Um, they they are looking at that that door, that exit door a little bit differently, right?
43:57
SPEAKER_04: In in light of all of the things that you just mentioned.
44:00
SPEAKER_01: You know, it it's funny.
44:02
SPEAKER_01: I often find it's not the dealer, it's it's their children.
44:04
SPEAKER_01: They're like, you know, I don't necessarily uh need to compete with um uh whomever, Amazon in the future.
44:13
SPEAKER_01: I I if we can exit, I I think that's not a bad idea.
44:16
SPEAKER_01: So um dealers usually want to keep on going.
44:19
SPEAKER_01: I mean they they love this business and it's really hard.
44:23
SPEAKER_01: It's a hard one to say goodbye to and and um it's very emotional and and and we we understand that as a firm and and and take that very seriously.
44:35
SPEAKER_01: These are very, very uh big decisions that these dealers make uh when they do decide to sell their business.
44:42
SPEAKER_01: And um and so it needs to be done super professionally because this is their this is uh generations of hard work.
44:50
SPEAKER_04: Oh yeah, for sure.
44:51
SPEAKER_04: I can remember uh in the late 90s uh and early 2000s when AutoNation was doing uh just out there acquiring, I was with Auto Nation, then we were acquiring so many stores so quickly, paying top dollar for them.
45:04
SPEAKER_04: And you would go back two years later with the people that sold these dealerships to Auto Nation, and they were right back in the business in many, many cases.
45:12
SPEAKER_04: And it was just like, what are you doing?
45:14
SPEAKER_04: You left with you know 90 million dollars or whatever the number was that the seller got, and but to your point, they love the industry, you know, and they realize that they're not ready to retire yet.
45:26
SPEAKER_01: It's really something it's it's a really wonderful industry, it does so much good for the community, and that's right.
45:33
SPEAKER_01: Um, as much as we are obviously very involved in the whole consolidation process, sure, uh it it it is uh uh auto retail is one of the most involved community uh uh industries um and and is so important to our economy and to to our community.
45:55
SPEAKER_01: So no question about it.
45:56
SPEAKER_01: Yeah, we couldn't agree more.
45:58
SPEAKER_04: We work uh you you guys, you and your husband uh Ryan work together.
46:02
SPEAKER_04: Obviously, we work together.
46:04
SPEAKER_04: Um who's a harder worker?
46:07
SPEAKER_03: Which one is more like me?
46:09
SPEAKER_03: Which one's a harder worker?
46:11
SPEAKER_04: I'm gonna I'm gonna go with Aaron.
46:12
SPEAKER_04: I'm going with Aaron on it.
46:14
SPEAKER_04: Sorry, Ryan.
46:14
SPEAKER_04: I'm going with Aaron.
46:15
SPEAKER_04: You don't have to answer that.
46:16
SPEAKER_04: That's right.
46:17
SPEAKER_01: I'm not answering it.
46:18
SPEAKER_01: I do get up the earliest.
46:20
SPEAKER_01: Okay.
46:21
SPEAKER_04: Here you go.
46:21
SPEAKER_04: That's right.
46:22
SPEAKER_04: All right.
46:22
SPEAKER_04: Well, thank you so much for joining us on the show.
46:24
SPEAKER_04: Very much appreciate it.
46:26
SPEAKER_04: And uh, and for those that want to get their hands on that report, there's a link right below the video that you are currently watching.
46:32
SPEAKER_04: Well, not if it's live.
46:33
SPEAKER_04: Right now.
46:33
SPEAKER_04: But uh in the 10 minutes it'll be available.
46:37
SPEAKER_01: Well, it's fun.
46:38
SPEAKER_01: Oh, there is a link.
46:38
SPEAKER_04: I'm told this just in.
46:41
SPEAKER_04: There is a link.
46:42
SPEAKER_04: So how about that?
46:43
SPEAKER_01: So that's my first live interview, so this has been super fun.
46:48
SPEAKER_01: Oh, cool.
46:48
SPEAKER_04: Well, you did great.
46:49
SPEAKER_04: Congratulations.
46:50
SPEAKER_04: Congratulations.
46:50
SPEAKER_04: We appreciate you being here.
46:52
SPEAKER_04: That's right.
46:52
SPEAKER_04: This is our Bridget's 21st live show, and uh, we're having a blast with it.
46:57
SPEAKER_04: It's going great.
46:57
SPEAKER_04: So thank you.
46:59
SPEAKER_04: Thank you for being part of it.
47:01
SPEAKER_01: And uh hope to talk to you guys soon again.
47:04
SPEAKER_04: You will do that.
47:05
SPEAKER_04: Thanks so much.
47:05
SPEAKER_04: All right, sailor Ryan for us.
47:07
SPEAKER_01: We'll do.
47:07
SPEAKER_01: Bye bye.
47:08
SPEAKER_01: Have a good day.
47:09
SPEAKER_01: Thanks, guys.
47:10
SPEAKER_04: They're awesome.
47:11
SPEAKER_04: They do, they do such a good job for dealers.
47:13
SPEAKER_04: They really do.
47:14
SPEAKER_04: Yeah, awesome.
47:15
SPEAKER_04: Class act, yes.
47:16
SPEAKER_03: Yeah, and another husband and wife duo.
47:18
SPEAKER_04: So doing billion-dollar deals, by the way.
47:20
SPEAKER_04: I know.
47:20
SPEAKER_04: Yeah, wow.
47:21
SPEAKER_04: So, but anyway.
47:22
SPEAKER_04: That is incredible.
47:23
SPEAKER_04: So, um, I want to you guys know that I show I show social clips and uh funny social clips.
47:28
SPEAKER_04: I'm I'm like addicted to it.
47:30
SPEAKER_04: You're always going, why are you always looking at your phone?
47:32
SPEAKER_03: You're always paying attention to me.
47:34
SPEAKER_03: I'm just kidding.
47:36
SPEAKER_04: I'm sorry, what are you saying?
47:38
SPEAKER_04: Exactly.
47:39
SPEAKER_04: No, but I I love that the auto industry has jumped in on TikTok and the other platforms, and they're all so creative on their uh videos that they're doing.
47:48
SPEAKER_04: Some are, you know, for it seems like some are for the cons uh some are for the consumers, but then some of them for the industry.
47:54
SPEAKER_04: Right.
47:54
SPEAKER_04: Like in this case right here that I'm gonna show you, uh a consumer wouldn't necessarily get this, but I do, and we do in the industry.
48:02
SPEAKER_04: So roll tape here, folks.
48:08
SPEAKER_02: See what that says, the beginning of the month.
48:11
SPEAKER_02: We're about a thousand dollars away.
48:13
SPEAKER_02: You know, I'm gonna let them walk and then I'll reach out to them tomorrow.
48:15
SPEAKER_02: Follow up with them tomorrow.
48:17
SPEAKER_02: Cool.
48:19
SPEAKER_02: Now it's the end of the month.
48:21
SPEAKER_02: Last day of the month.
48:21
SPEAKER_02: Clark.
48:23
SPEAKER_02: Four grand, we're four grand away.
48:25
SPEAKER_02: It's the end of the month.
48:26
SPEAKER_02: Come on.
48:26
SPEAKER_02: All right, take a look at it.
48:31
SPEAKER_02: Made the deal.
48:31
SPEAKER_04: Thank you.
48:33
SPEAKER_04: So that is so funny because and it's spot on, by the way.
48:37
SPEAKER_04: Spot on.
48:38
SPEAKER_04: Soon as the month starts all over again at manager, and I've been there, you're feeling kind of cocky.
48:42
SPEAKER_04: We got all muck to sell this car.
48:43
SPEAKER_04: There's no major push here.
48:45
SPEAKER_04: You know, you're a thousand bucks away, blow them out, you know, and uh or try to try to close them.
48:49
SPEAKER_03: Uh and I think customers are starting to, they're odd that.
48:52
SPEAKER_03: I think I think so.
48:53
SPEAKER_04: Yeah.
48:53
SPEAKER_04: Especially with all of the now the the brokers that are online, all of the social media, buyers.
48:59
SPEAKER_03: Well, things like that.
49:00
SPEAKER_03: You know, there's a lot of consumers that are gonna see that too, not just yeah.
49:04
SPEAKER_04: And um, but it is funny because uh when you on that last day, when you got to hit your number, especially if it's a number that says, you know, you've got to sell so many cars on a stair step program and you need the neck the next car to RDR, man, you will take you will do anything, you know, to to make that deal happen.
49:20
SPEAKER_04: Stepping up on the trade or cutting the profit or doing them, whatever you gotta do.
49:24
SPEAKER_04: So I think that's funny.
49:25
SPEAKER_04: That's a good one.
49:27
SPEAKER_04: That was a good one.
49:28
SPEAKER_04: Maybe maybe it's just maybe it's just me.
49:30
SPEAKER_03: No, it wasn't just you, it was funny.
49:31
SPEAKER_04: It was funny.
49:33
SPEAKER_03: All right, thank you so much for joining us today.
49:35
SPEAKER_03: We'll be right back here tomorrow for another CBT live at noon Eastern.
49:39
SPEAKER_03: So we really appreciate you being here.
49:41
SPEAKER_04: Yeah, and if you enjoyed our show, we'd love for you to share it uh with your team, colleagues, and don't forget to like, comment, and subscribe.
49:47
SPEAKER_04: We love the interaction with all of you, and uh so go out and make it a