Latest / Automotive Informants / Cars Are Getting Smarter. Ownership Is Getting Harder.
Transcript
- Chris J. Martinez: Welcome back, Zach. Welcome back, everyone. This is Automotive Informance and where we give you real talk, real conversations, real opinions on today's automotive headlines. and we've got several discuss. I don't know that we're gonna be able to go over all of them, Zach. Zach Fritz: To be that. Mm-hmm. Chris J. Martinez: because some of them may go a little get a little longer than most, right? So just to give a rundown for everybody of the ones that we want to try to get to, FTC talks, buying own software, Hyundai joining the race of self-driving. We've got Zach Fritz: Yeah. Chris J. Martinez: The new loan starts underwater. Fifty-seven percent of the new loans are starting underwater, meaning they have a ton of negative equity. gas prices at all-time highs. There's some viral posts online. We got flying cars. ⁓ got nearly in four new car buyers are now financing at 84 months or greater. there's a lot, a lot to unpack here. I know we talk about well, we can talk about robotaxis and you Zach Fritz: Yeah. Chris J. Martinez: You know, Carvana's little tool. ⁓ there's quite a bit that we can we can discuss, but the before we g roll right into it, Zach. how was your weekend, man? You got you have a good weekend? Zach Fritz: Yeah. It wasn't it's never long enough. That's always my issue. But I did have a good weekend. Went couch shopping and got the house cleaned up. What about yourself? Chris J. Martinez: It was good, man. Good. You know, well, with one caveat, my son broke his arm. He was playing soccer. Some k bigger kid pushed him down and he the way he landed was not not good, but it freaked me out. Had to run on the field. It was i it it just definitely, you know, one of those things that 'cause even my my son, you know, I talk about, you know, being aggressive in soccer and and, you know, don't don't be afraid to, you know, you know, check someone that's pushing you around. Zach Fritz: Yeah. Chris J. Martinez: but the way this guy did it was yeah, he took it to a whole different level. So but talking about that take it to a whole different level, let's get started with the first topic. ⁓ FTC released auto industry ⁓ FAQs, pricing FAQs. doc fees and let me just run down the list real quick. So doc fees have to be disclosed in the the price. So if it's a $40,000 vehicle, the doc fees $500. The advertised price has to be $40,500. Conditional rebates, if it's not included for everybody, you can't include them on the in actual disclaimer. It has to be for everybody. and then financing, that's dependent discount be presented as a universal price. So if it's $39.99 and if you do the dealer financing for $37.99, the lower number is not the price available to every customer. So you have to keep the $39.99. mandatory add-ons have to be on the price. So if you got a $35,000 car, $4,000 addendum, your advertised price needs to be $39,000. Inventory in transit vehicles have to be disclosed on the website as in transit. They can no longer just be shown as for sale. And then ⁓ third party dealers, ⁓ third parties dealers should make sure the same accurate pricing across all websites and marketplaces. So a lot a lot to unpack just on this one article. what you think, man? ⁓ Is good, bad? Zach Fritz: It's would love to say it's good because I think it's going to force a lot of transparency as we've discussed. But I also think there's a whole layer here. My approach and angle is more of okay, what does this then mean for the dealer in terms of effort or work or what they're gonna have to change in their process? And I think for a lot of dealers, we probably get locked into this complacent cycle of, hey, like we've got a car, like let's just copy the details from this previous deal. ⁓ And or we have similar makes and models. There might be a few add-ons like Window Tint or PPF. We can just kind of copy and paste the details on the website. It makes it easy for whoever is managing that. That's gonna have to change. is actually proper lot walks and inventory count and keeping ⁓ up all of that. But then it makes me wonder: are we going to just start to see more of a ⁓ piece of leverage for the dealer to say, well, you know, w we haven't really counted the cars on a lot, we don't really know what's come in because trucks are coming and going all the time. So you need to come into the dealer now to see what's on the lot and actually work a deal. So is it another avenue to get them in the building? Chris J. Martinez: Well, things I look at. When you think about how the dealer actually what that process is. So if you've got Viato or whatever, you know What I forget what the the actual term it is. but the w the V Auto is the this the software that would actually get the like transmitted to all the different third party lead sources, right? Your broadcasting tool or whatever I forget exactly what they call it. but here's the problem you can update your pricing there, but if you've got Reynolds or C D K, whatever uploads here should be pushed to your DMS. Oftentimes it's not. So you have to go update it here and then update it over here. then so don't really necessarily update both prices at the same time. if they and then most aren't giving the V auto pricing to the salespeople. ⁓ And so when come in, they've got this that that's where they come in with this different pricing. So as a dealer, you're you know Zach Fritz: Mm-hmm. Chris J. Martinez: be to be compliant, you're you're gonna need to give away some of this access to ensure all everybody's on the same page. more importantly, you know, working with ⁓ DMS provider to ⁓ I I l you know, be pushing them to try to get them to get the the the broadcasting specifically from like V Auto or something where you can if you're updating all your pricing here, no sense in having to go and update it twice, if they can eliminate that one step, could solve a lot of things for the dealer pretty quickly. Zach Fritz: ⁓ yeah, it's gonna force modernization and it almost makes me wonder does this then force a lot of dealers have already adapted to this, but does it the ones who haven't and have kinda lagged behind, does it then force them to kind of get more in the times with, you know, transponders or, you know, barcodes and quick scanning cars in and inventory checks? It I don't know, it then makes me wonder like, was this pushed by some lobbyist at V Auto to, you know, some deals for DMS? ⁓ Chris J. Martinez: Well, no, I think it's just, you know, the the the the compu consumers are getting louder and and with the social media it's just getting more and more profound. When you look at what these guy these some of these brokers are doing and I mean they're just, you know, going to you know tap Yeah. Well with the some of these concierge people, ⁓ Zach Fritz: They're not brokers. We can't say that. They're not brokers. Yeah. Chris J. Martinez: They they are they're I mean they're they're slamming. I mean they're not they're not holding back at all. They're like ABC type dealer was you had this price here, this is what their price is, and I'm talking they're getting millions of views. And so I'd imagine, know, the FTC is got he's basically both these guy there's actually like several of them on there right now that are just kind of just rolling everybody. Zach Fritz: Mm-hmm. Chris J. Martinez: And I imagine FTC's just taking notes, you know, they're just like, okay, yeah, let's see that was a million views. Let's go make sure he has it's boom, here's a fine, I need your last six years pricing, everything, I need you to document it. I mean, it it can get ugly pretty quickly. So, I hope that dealers are listening to what is being ⁓ you they're they're in focused on what's happening in the marketplace, they're understanding what's happening on social media, 'cause I know there's still a lot of dealers that just don't even care to be on social media or look at it. and those are the ones that, you know, run the risk running into some pretty crazy Zach Fritz: Yeah. Yeah. Chris J. Martinez: Challenges down the road. But, you know, it's gonna it'll be interesting ⁓ for especially those parties that those website companies that just scrape data, how accurate that is. because they're not getting a direct feed from the dealer, what does that look like? if their price like an old price they scraped a week ago and it's not real-time Zach Fritz: Do you think that we're going to Yeah, it's interesting because there are with some of those third-party websites who are getting a kickback. I know that they do also dealers out, so that's an interesting one to see how that's going to roll out. But I'm also curious, at some point in this will stop being on the sales side alone because there will just be Uber transparency across the industry where nobody can hide the social media guys have just called out every single dealer and bad actor. But ⁓ Chris J. Martinez: But you I I wish they'd call out Walmart and Target, or any of these other online retailers because you know, oftentimes like when I go to these retailers, Buy or whatever, I mean, they've got an online price that is different than what's in the store. I mean, i ⁓ I'd for them to, you know, call these people out too because frankly it's you know Zach Fritz: Yeah. Yeah. Chris J. Martinez: There's so many times that I just pay whatever they charge me and and my wife's God bless her, she's got the the app and she's double checking every price to make sure it's accurate and and saves me some cash, you know? So it's Zach Fritz: Yeah. Chris J. Martinez: You know, God bless her p for taking the time to do all that. But, you know, I think, know, if these guys are gonna be, you know, you know, smashing dealers left and right, hey, keep keep the conversation across the across the board. That'd be great. You know, we get 'cause Zach Fritz: Yeah. Just do not bring it to the service department. I I yeah, I'm going to hate the day that we start getting calls in the service department of, hey, how much is your oil change running right now? ⁓ my gosh. Chris J. Martinez: Too late. Too late. It's already it's already out there. It's and I you know, some of the talks that I've had with ⁓ partners of mine and f and people that I know in the space, they're they're doing some some pretty cool things with ⁓ in regards to something which you just alluded to. So it's ⁓ it's it's happening. it's definitely gonna be here. but you know, I think Zach Fritz: Mm. Chris J. Martinez: You know, doing the right thing is still just doing the right thing. I think these these laws have been in place for many years. It's not really anything new. They're just now just reinforcing it and just telling you, Hey, look, we're gonna c w you know, they put everybody on notice with those ninety seven letters, you know, months ago. Zach Fritz: Yeah. Chris J. Martinez: And now they're just there's no grace period according to what the the report was. Like they catch you, it it is what it is. Like you're it's they're gonna audit everything and figure a way to ⁓ Well, I don't know about straight to d Joe, but y talk be to write a check. You know what I'm saying? So and it's not gonna be a tiny one, it's it's gonna be big. But ⁓ this actually helps me go right into next article. Zach Fritz: Straight to jail. Mm. Chris J. Martinez: And automotive news to it within a week posted, and I just saw another one just now, and I'm gonna have to write about that one. That's three in a row in within a week about different dealers that are creating their software. And I'm one of those guys too, so I'm not you know any different than what they're reporting, and that's what I'm seeing across the board. But from the tech people that What's interesting though is there's some people that are in the tech space building stuff that were dealers once upon a time, but have been now in the tech space for, you know, quite some time. It's interesting for them to say these some of these things that are like, hey, dealers need to stay in their lane, or ⁓ interesting because you know they they make it seem like dealers don't know how to hire people or find good talent, aren't ⁓ heavily capitalized. and can put a deal together like, you know, it's like Red McCombs. I mean the guy you know, football teams, ⁓ teams, ⁓ in sh well, you know, bought Clear Channel, has invested in tons of different software And it's like because he was a car dealer, like he couldn't do anything, like he's supposed to stay in his lane. You know what I'm saying? Like it's just it's it's just a weird argument that some of these tech people and look, I consider myself a car guy first. I've been doing it twenty three years, but I've also been building software for the last, I don't know, since two thousand fifteen, so eleven years now. So, you know, it's Zach Fritz: Yeah. Yeah. Chris J. Martinez: the I still know tech but even technology experts can get it wrong. I've I've already you know, there's a prominent I haven't called these people out. There's a prominent company out there that I heard some, you know, challenging things, but even they can get it wrong. Look at what happened to the more public one that they had a big, you know, cybersecurity attack and it's easy for anybody. Like So to say that, you know, dealers are just, you know, need to stay in their lane, I I thought that was that thought that was interesting. What do you think? Zach Fritz: I think that's a mentality that has just it one I think it stems first off from jealousy, right? And that usually comes from an inability to do something yourself or a unworthy. ⁓ Chris J. Martinez: ⁓ I don't know. I wouldn't I wouldn't call it jealousy. maybe well no, finish your thought. Sorry. I just ⁓ Zach Fritz: Well, I was gonna say it in the way that it they do it for themselves, or they don't want somebody else to be as educated or know as much as they can because then they feel like they can't compete on that level. Such as, you know, if a dealer wants to come out and say, Hey, we're going to develop our own technology, our own software, whatever the case is, and you get some tech bro who comes out and says, Well, no, you can't do that. Just stay in your lane, sell cars, you know, buy my tech. That's kind of a dick move. Chris J. Martinez: Here here's here let me tell you this one. So what about Circuit City when they decided to get non car people to build one of the largest car companies in the world? Zach Fritz: It worked. Chris J. Martinez: It it's like telling them, hey, look, you can't sell cars because your tech people or your circuit city you sell appliances and radios and things like that. You're not allowed to sell cars. Like that's just the craziest. I'm not I'm shocked that some of these guys the platform on LinkedIn that I'm seeing it and I I respect several of them. They've done a amazing things in this industry. Zach Fritz: Thank Chris J. Martinez: But you know, at the same time I'm also glad they shared their opinion. I mean, like, hey, that's you know, more power to you. I'm all about, you know, people who have their own opinion. They share their opinion. We may not always agree, but I'm gonna tell you my opinion too. You know what I'm saying? So it's ⁓ it's always good to, you know, get the conversation and l ⁓ hear the other side has to say. And I'm all it. I do think though that i i it's just More and more dealers are gonna do this. can tell you it it really isn't easy though. they're in for some ⁓ heartache. in they're in for, you know, they thought selling cars was tough. selling software is even tougher. B2B is not easy. so it's know the the and maybe it's not that they're have the intentions that they want to go sell their own software. I think it's really just hey how can I make my dealership operate at a level that I don't need to spend as much money on software. And so that's where I think maybe the conversation needs to go because Zach Fritz: Yeah. Chris J. Martinez: companies like ⁓ mine, we can come in and help the dealer if they've got some technology that they're trying to build. we can plug in certain things to help facilitate some of the their processes and make it easier for them. at the compliance side of things, the tech side of, you know, the the complexity of what is involved in some of the things that they're trying to accomplish, we'd to help and we'd love to be a partner there. So because that's my ⁓ my goal to help figure out a way to collapse a lot of this technology stack that dealers are spending a fortune for. I'll tell you my stores Zach Fritz: Yeah. Chris J. Martinez: thirty, sixty grand a month on technology in different processes and any more, it's like it's it's almost as big as your retail or your real estate rent. the the rent you pay in real estate. You know what I'm saying? So it's it's interesting. Zach Fritz: Yeah. It it's insane. And I think that's know, to your point, I think there is a big differentiator. And, know, part of it is, you know, staying in your own lane. Do you remember whenever Carvana went into the vending machine lane, but we didn't see all these independent vending machine operators get all pissed off and say, No, you can't do that. Anyways, all kidding aside, I think it does come down to people who ⁓ either to gatekeep and then ⁓ say, well, no, the dealers can't do this on their own, they're idiots, and blah, blah, blah. Well, that for me is a pretty big fear. signal that hey this isn't proprietary then. So that's kind of a towel. But then there's also two different levels where you've got people who want to come in and they just want to screw the dealerships over and then charge them, you know, so much money for their proprietary special thing. And then you've also got people like you who genuinely want to come in and help build things and work and collaborate with the dealers. So it's just two different sides of the industry. And in the end, I think sides like yours will win out because they're truly there to take on partnership with the dealerships and help, not screw everybody over. So that's a good thing. Chris J. Martinez: Yeah, and I you know, that's that's my vision, right? Like how do we help the dealer money and sell a lot of cars, service a lot of cars, acquire a lot of cars, and now we're proving the model and it's it's ⁓ it's helping stores, so it's pretty cool. talking about somebody that's also like refined and collapsed a lot of industries and is probably gonna put a big dent in ⁓ cell phone shortly and maybe one of the companies that Zach Fritz: Mm-hmm. Chris J. Martinez: you know, could take out Apple or Android, when you think about what they're trying to accomplish. so Tesla is in the news again. This time though, because Hyundai is now jumping in the self driving race. Zach Fritz: What? Chris J. Martinez: And I you know, I know I've talked about this several times on different episodes, but the self-driving, I am convinced everybody in the world will be on self-driving in about ten years. Like ten years time. Zach Fritz: Yeah. Chris J. Martinez: you everyone will be on self-drive. Right now, Tesla's at 50% of their on Tesla. People who have a Tesla or drive a Tesla, more than 50% of those customers are on FSD. And it's only gonna be it's gonna gonna happen. And right now when you think about Hyundai cut jumping in the space, but it's not just Hyundai. Rivian, Ford, Motors, Mercedes, BMW, Honda, Nissan, Toyota, Lexus, Stilanis, Volkswagen, ⁓ Audi, Subaru, they're all going FSD. And there's a handful that just haven't announced that they're in it. Zach Fritz: Yeah. Chris J. Martinez: What do you think? What are your thoughts? Zach Fritz: So I don't want to nerd out too much on this because this was really where I, you know, built my career in the industry with advanced driver assist systems. when it comes to this, I remember, you know, 10 years ago, I thought we were at the point where everybody was going to be self-driving. However, if look at this tech and people who can then say, Hey, I'm well, I'm going to subscribe to it now because the cars are already equipped. Most cars within the last decade, well, most higher end cars, excuse me, in the last decade are capable of this. With a little bit of hardware, a little bit of software, it's done. But the problem has always been our roads and our infrastructure and not having data. That's really kind of the key is now that we've got everybody running all these different applications, you know, Apple Maps, Waze, and things like that to start to piece the world together. In a digital form instead of just its physical form. Now we can correlate that with technology and then that with what the car's seeing and make ⁓ function. But we just didn't have that before. So I agree. I think 10 years' time, I think we'll probably see at least I don't want to call it a hundred percent of the people self driving, but I think, yeah, you're probably looking at like 50% of the population will be self driving. Chris J. Martinez: Yeah, I agree. Like I I don't I've been driving it now for a year I as as I get in the car, I'm telling Grok to take me wherever I need to go. And it it's just so easy. Like you don't have to think about it. Like the minute I have to drive every now and then, like where it's maybe missed an exit because was a car there, right? Like you there's certain thing little nuances here and there, but I'd say about ninety-five percent that I on self-driving ⁓ and drive-throughs, you it's still not quite, you know, ready for drive-throughs, and then parking Zach Fritz: Mm-hmm. Chris J. Martinez: Sometimes I let it park for me, but sometimes when I'm in a hurry I just park myself 'cause it'll just sometimes it'll just r go around a couple of times and find the furthest parking, which I'm okay with 'cause w have the summons feature and I've used the summons feature several times now because you know, it's, you know, a mile away because it's a big parking lot and it's downhill and I I don't really feel like, you know, going over there, so I'll just bring it to me. but you think about all these people handicapped, like a lot there's a lot of different reasons ⁓ like they should be using self-driving. ⁓ but Hyundai, I don't know. I mean twenty twenty nine or end of twenty twenty eight, it's there's end of twenty twenty eight where it'll be comparable to what Tesla has today. Zach Fritz: Yeah. Chris J. Martinez: But I mean that's today. Tesla's October 1st of releasing the their new roadster that's taking a hundred years. I know he's been talking like it's supposed to come out two years ago and he's been, you know, the timelines kind of change every now. But there's also a viral video on social media right now going around where they're showing like a shadow a car like Flying. So Is he in October 1st gonna come out and turn this into a flying car? And I'm not talking like a flying car that looks like a drone, actual car that or an actual flying mobile automobile that it looks like a car, drives like a car, but can also fly. That was gonna be interesting. I don't know if you've seen those videos at all. I know I posted a couple on social media myself. I re-shared them. but ⁓ what you think about that? Zach Fritz: Mm-hmm. I'm hm Trying to pick my words carefully. So think that if we did see that come out, like I've seen this play out in like kind of like the drone quadcopter quadcopter excuse me space a lot of ag stuff. And I think that that could definitely be applied to a car. Do I know if that's the right application? maybe not. I do think it would reduce congestion. But it would be extremely interesting to see that actually get launched because I think that it's it it all it's gonna take is somebody with the resources, the money, the infrastructure to say, hey, we're gonna do something different than have a car actually connected to the ground. And then it's just gonna be off to the races. But until that happens, we're all just stuck, you know, grounded. Chris J. Martinez: Well, with self driving technology, you could have self flying technology. I know the airport or airplanes at some point I know that that was they do have a lot of autonomous flying here and there, but I know at some point they're they were looking to try to do a hundred percent of that. and I don't see any reason why that couldn't be solved I d I do think it's Zach Fritz: Yeah. Chris J. Martinez: It's gonna still be a not as adopted like FSD, I think is that's a a foregone conclusion. Everyone's gonna be doing it. Flying cars right now, what's the price of that gonna look like? It's gonna be a you know, half million, three hundred grand. I mean, what's that gonna look like? So it's only gonna be limited few. but then then you start looking at it like, would love to do that, but then air controlling, what does that look like? because imagine you have a hundred thousand people Zach Fritz: yeah. Chris J. Martinez: Flying, know, now you have more because they gotta put these flying things. I mean ⁓ Zach Fritz: Yeah. Be like virtual geofencing. Where you're restricted to like a lane of travel in the sky. And yeah, there I mean there's there's a whole multitude of things that it opens up know, realm of possibility. I'm like, okay, well, you know it can be crazy. Chris J. Martinez: Yeah. 'Cause we I mean look you see with the the the challenges with drinking and driving. Imagine flying and driving or drive drinking flying and driving, drink drinking and flying. But as long as there's FSD Zach Fritz: I just worry more smoking and flying and being like, I'm so high up right now. Chris J. Martinez: It could be it could be f it could be crazy. But I would only wanna do that if it was like self flying. Like it just it's gonna just fly for me. It's gonna take me where I need to go, and that's it. Like I don't have to think about it. You know, it's you know, I don't wanna worry about thrusters and flaps and whatever, you know, it takes to to fly. I I've I've got a a few friends of mine that fly and Zach Fritz: Yeah, yeah. Yeah. Chris J. Martinez: Man, I hate heights to begin with. I I couldn't even imagine what that looks like. I hate I hate even flying, to be honest with you. But I do it 'cause it's the most it's the fastest way to get to where you need to go. But I think the future looks bright either way. I think it's gonna be pretty amazing. Zach Fritz: Yeah. Yeah yeah. Yeah, I guess. Chris J. Martinez: And when you see those videos of that car kind of just moving up and it's it's just a shadow. It's not even, you know, but that's what they're alluding to, like that is the car. But Zach Fritz: Mm-hmm. I'm kind of excited for it. I'm I'm just I got my fingers and toes and everything kind of crossed for October. I'm like, well, you know, let's just let's see what happens. Maybe there's something that I'm just not privy to and you know, I don't know, some static electricity powered, you know, magic. I have no idea. I think that would just be beautiful. Chris J. Martinez: Yeah, I d to me, I think that's probably still a pipe dream s simply because if if anything, it's gonna be is that term in automotive we like to use? It's a concept, you know, hey, this is a concept, but it's actually a working concept, which would be kind of cool. but what what is crazy though is that the American economy today Gas price at all time high. That's one of the the articles. But then you couple that with new loans are starting fifty seven fifty-seven percent of all new loans are starting underwater. And when you start thinking about how much more negative equity people are are rolling in, plus the interest rates, life average lifetime of the interest alone is about sixteen grand, just in interest. So they get this new car, they roll all this negative equity, and then they gotta spend sixteen grand in interest. Zach Fritz: Yeah. Chris J. Martinez: What do think? Zach Fritz: I I can remember a time whenever you could go buy a new Kia sole for like sixteen grand. That was like the MSRP on a new car. ⁓ There was. No. Chris J. Martinez: Yeah. There there was a period, remember? I and what's crazy, it wasn't that long ago. And it's not like you would see those clippings in when I first started in the business in two thousand three. I remember, you know, seeing these old newspaper clippings of a of some kind of vehicle, I forget what kind of car it was, but a three thousand dollar new car in like nineteen sixty or nineteen forty or nineteen fifty. ⁓ Zach Fritz: Yes. It was like a Camaro or a Chevelle. Chris J. Martinez: It was something crazy, right? And now you look at it, mean like this is just five years ago you could get one for sixteen grand. Zach Fritz: Yeah, I mean hell, I was watching a video this morning and it was like, ⁓ yeah, a a or a Yukon A T four and it was like a hundred thousand dollars and I'm what you talking about? A hundred thousand dollar card of me as a Ferrari. I ⁓ Chris J. Martinez: It's crazy. It's just it's nuts, man. It's here, let me just kind of tell the two the the so fifty-seven percent of track loans included negative equity. and when you look at the average underwater trade-in in 2019 was fifty-three hundred dollars. Now it's almost seven thousand dollars. So it's up two grand. And then you start looking at what the average buyer's paying in interest, it's just it it's crazy, man. It's I I and I don't know that there's ever a way to fix that. Like, cause, you know, I'm forty six years old and you know, for as long as I can remember, like everything just kept going up every year in prices. So like nothing's ever stayed consistent, like, hey, this is what you're gonna go pay for. Unless you go to Costco and get their hot dogs, right? I think those are still gonna be You know, their loss leader to get people to go go there. Zach Fritz: Yeah, yeah. I mean that ⁓ that's that has become a more regular dinner, in all honesty, because of the affordability factor. However, if it almost makes it to where I know we're kind of joking about this Tesla Roadster and new technology coming to the industry, At the same time, there isn't some new technology or new mode of transportation or propulsion, even that comes out, I that's the only way I see it actually correcting the car market. Where I think about subprime right now. How in the hell are people even getting work? Maybe that explains some of the unemployment problems we're seeing. ⁓ Chris J. Martinez: Well, ⁓ so think about real estate. You you talked about it last week. Real estate is all time highs, it's a renter's economy. You know, for years I heard a lot of people talking about the renter economy, this and that, and it's now like it's here. at, you know, what the average home prices are, average interest rates. so is that gonna translate to the the ⁓ the market where Zach Fritz: Yeah. Chris J. Martinez: Car prices are so high that the SAR continues to go down people just can't afford the new cars because you know average new car price is over fifty thousand dollars now. And are keeping their used and the used car market, you know, the prices are are high because people are can there you just can't there's not a real a big availability of used cars. People people are keeping And so do now do these robotaxis they're trying to make those cheaper and it cheaper just to, you know, ha you know, rent a robo taxi for the day just to get around town wherever you need to go and that's it. just now you become a renter in the car car market. Zach Fritz: Yeah. That is an interesting one, which I love that segue too, because we had talked about that as being one of our topics, the Robo Taxis from Tesla. The It's almost like the grown-up version of like a lime scooter. So I really appreciate that. And for people who are living in a big city like, you know, Austin, Texas, I mean, my brother lives down there and he doesn't necessarily ever really use his car. Instead, he's been kind of scootering to work. for me, I'm like, okay, great. So if he ever has to go somewhere that's a little bit further out of town, well, that there's a taxi. That's why it exists. And you can avoid a car payment. You can avoid a lease. Chris J. Martinez: Yeah. Zach Fritz: payment and having something sit, it would probably help with parking congestion and overpopulation in some of these areas. I'm not opposed to that. Chris J. Martinez: Well, I mean, it could be come it could come sooner than we think. And I I think that if if that kinda were the case you what I do think could help the econom or f s you know, some of these prices is similar to we're in the technology space where we're, you know, trying to combine a lot of different current tools and just trying to help collapse that that margin and w the way I look at it now is Jeff Bezos said it a long time ago, margin is my opportunity. And ⁓ if ⁓ get the Optimus style, you know, where now can, you know, help reduce the cog of the the build of the that could be something. transportation. I know Tesla's doing those semis. Does that become now a way for autonomous where they can transport vehicles even cheaper? there's lot things that you know in you know, zooming out into big picture ⁓ that, you know, thirty years, could be something that could help? You know, if we today? I don't know. It it It's interesting 'cause right now the way I look at it, think about you know, I had this conversation the other day too. Venezuela, you got ⁓ I mean, how many new cars do you think they sell out there? the majority of those vehicles are ⁓ still the road from the nineteen fifties because Zach Fritz: Those are your three thousand dollar nineteen sixties cars. Chris J. Martinez: because they don't I mean they they had all kinds of embargoes and everything then so all the OEMs pulled out and they nobody really was selling new cars, so they just had to keep their used cars. And look at China or not China, Russia. The that Russia Ukraine war, almost every pulled out of Russia because of what what ⁓ was transpiring. And so now the Chinese manufacturers had to go in there and start supplying new cars to their mar that market. And that were in Russia that you know were a you know, whatever franchise dealer were, and then the next day the franchise said, Hey, we're pulling out 'cause, you know, what's going on. All you know, not only of the war, but po politically there was, you know, there's just a lot of different reasons what what's transpired in that market. I don't know. It's it's it's an interesting Zach Fritz: It just makes it to where where do you put your where where do you put your where do you hedge your bets right now? Do you hedge it on, hey, things are gonna improve and we're going to outpace our manufacturing as opposed to inflation to where that's gonna offset our prices and control that? Is it a renter or a lease economy with cars where nobody really owns a car but they exist and then you've just got big companies that own them and foot the bill, or is it hey, something Chris J. Martinez: But it's good to everything, right? You're going it's from coming from every direction now. And then you've got gas prices that are, you know, all time highs. I mean, eight dollar diesel doesn't necessarily hurt just hurt truckers. It raises costs for everything. ⁓ and then think about it like Zach Fritz: Yeah. Yeah. Yep. Chris J. Martinez: So had a I had ⁓ posted this one article where it shows that California somebody did some viral post and saying, Well, look, this is a you know, a California problem, it's not our problem and I'm like, No, you you you guys are missing the point. ⁓ Zach Fritz: Yes. Chris J. Martinez: You know, I mean it is everyone's problem 'cause it ⁓ kinda trickles, you know, across the board. I mean, how how many people are in California and then if you're a dealer there and you're transporting and you know, there's just there's a lot of different things that you really need to kinda look at. So Zach Fritz: Yeah. It's got me kind of experimenting with some projects of my own with, you know, hyper miling. So I I have an ongoing project with a an engine that I've been able to source for around 250 bucks, put it on a bicycle, and then go out and get over a hundred miles to the gallon on that. And so that's kind of been this experiment of okay, well then what makes the most sense to upsize or downsize and then correlate that to How does it look at scale within, you know, our economy and the vehicles we drive? Like we've seen vehicles get lighter and smaller and try to increase that efficiency, but then compare that to electric. And then it goes back to a conversation we had a few months ago with some of these, you know, ten to twenty thousand dollar vehicles coming out of China that right now are just being blocked. So maybe the solution is to bring that in. Chris J. Martinez: Well, you know, Trump did allude to allowing Chinese to come into the United States, but you had to build them here. So, you know, th they're they're cheap enough. You know, could that happen? I mean, and they already have those dark factories over there, so they bring their dark factories over here. Zach Fritz: Yeah. Which is jobs. Chris J. Martinez: Yeah, it it it could collapse a lot of the the challenge we have in pricing today. You know, I would love to see, you know, some kind of movement there. but don't know what that looks like. It's you know, it's maybe it's little too complex for my brain. You know, I'm I'm one of those car dealers that, you know, can't doesn't know how to think that big. but who knows. ⁓ Zach Fritz: Yeah. Yeah. I just that's where you gotta stay in your lane, remember? I just want us to get back to a world in which we can go back to what was it like twenty ten where or no not even where we had the Kia sold for like thirteen or fourteen grand MSRP in the hamster commercials and everybody was happy, gas was like what, a dollar ninety a It just we need to get back to that. Chris J. Martinez: Ha ha ha. Well look, I remember when I first started in the car business, ⁓ when I was at CarMax, I remember selling the Mitsubishi was that Mitsubishi that looked kinda like a a ⁓ LS? I can't remember the ⁓ the Mirage, a little bit bigger than that one. ⁓ Zach Fritz: mirage? A lot. Chris J. Martinez: I used to sell a ton of those things. I would they were we were selling them for $11,998. I remember thinking, man, this is such a great car. Got 10 10,000, 12,000 miles for 12 grand. I was sell like we had rows of those cars. And I remember like, man, let's just go buy, let's just buy all of those. Like every day I was selling a car. Like it was like amazing. And Zach Fritz: Yeah. They were perfect. Chris J. Martinez: y that just doesn't exist in this world anymore. You know, I remember people like bloody murder if you showed ⁓ a a four point nine nine interest rate and in a used car. ⁓ Zach Fritz: Seven one is what it just did. are you talking about? I just I i i it's it's mind blowing right now and I mean I I don't know what the solution is. ⁓ Chris J. Martinez: But that's not it's but the car payment, it's not just the car payment, it's the insurance has gone through the roof, gas is going through the roof, maintenance has gone through the roof. I mean, once you start adding the whole flywheel up, I mean Th there's a reason why I think it could be considered a renter economy. Look at look what this other article that we just posted. Nearly one in four new car buyers are now finance over eighty four months. That's Zach Fritz: I mean, the car's not gonna last eighty-four months from a or even mechanics perspective. Chris J. Martinez: Well, it depends on the the the model, right? Zach Fritz: Well sure, right. Like if it's a toilet, you're probably fine. But I mean hell, if you're going and doing a I a Chrysler, for example. ⁓ don't trust Chrysler products to eighty four months. But at what point I mean, no wonder people are rolling negative. The car breaks before they can pay it off in most cases. It just I do you get ahead? Chris J. Martinez: Well, and then then so then hear this, I just I just posted I'm actually I haven't even posted it yet. This is one of the one that I'm working on right now. Sonic Echo Park, used car arm. ⁓ they're averaging twenty-nine sixty-five in the back end, but only averaging three hundred and twenty-eight dollars in the front end. Zach Fritz: Mm-hmm. Chris J. Martinez: So the and and and you think about like looking at all these other companies, when you look at let's see where is it Asbury, ⁓ they're averaging, you know, twenty two hundred in the front and twenty seven ninety nine in the back. no, this is the this is still the back end number, but ⁓ Penskey, eighteen fifteen b the reason why I I brought this up because somebody was basically saying most car dealers are not really car dealers. They actually just sell back end products. I think Carmax was the biggest in the front end, 2173 in the front, but no real back end. Penske was like ⁓ 4300 the front, which was impressive. Yeah, 4374 with an 1815 back end. Zach Fritz: Mm-hmm. Chris J. Martinez: I mean that's that's pretty strong and that's just on new cars. Carvana, yeah, Carvana running thirty-six twenty-nine in the front, twenty-six thirty-five in the back, but Carvana's different on the back because they have other, know, finance reserves and different things that they have there. Asberry twenty seven in the front, Auto Nation twenty three eighty one, Auto Nation used fifteen two. Zach Fritz: The NAS currently makes sense now. Yeah. Chris J. Martinez: Excuse me. Sorry about that. I forgot to put some mute fast. I could I wasn't fast enough. It just came out of ⁓ left field. Sonic, three hundred and twenty-eight dollars. Shh, that's what it is. Three hundred and twenty-eight dollars in front. So if maybe that's their competitive edge to take market share and you know, figure out a way to take over the market, I don't know. They figured out how to sell three grand in the back. Zach Fritz: What is it? Here yeah. You're allergic to this inflation. Yeah. I know that there are big plans to expand there. I can't hmm. I'm gonna share too much on that. Just what I know versus what I've been told. but ⁓ Chris J. Martinez: Well, here's the thing I was gonna tell you. Car CarMax, how are they only averaging five hundred dollars in the back, bro? Like, why wouldn't they just by now, the whole market is saying, hey, look, even if you took the averages of the top ten dealer groups in the country, could you at least get fifteen hundred dollars in the back? You know what I'm saying? What would an extra thousand dollars a car? Zach Fritz: Mm-hmm. Chris J. Martinez: And it'd still be competitive, it'd still be better than whatever th they're doing. another thousand dollars in the back end times how many cars do they sell a year? That's gonna be my next story. Zach Fritz: It's an insane amount. Chris J. Martinez: They sell one one point three two million vehicles a year. a thousand. What's that do to their bottom line? They wanna solve a problem, ask for more in their back end, and it's still cheaper than the market. Zach Fritz: They wouldn't have had to lay off all those employees they just did. Chris J. Martinez: that's that's what I would be doing times a thousand. You that's only one point three billion dollars extra to the bottom line a year, by asking more. You won't you don't think your their shareholders would appr appreciate that? Zach Fritz: Mm-hmm. Yeah. I mean Chris J. Martinez: And they're still then that'd still be competitive. It'd be cheaper than everybody else. Crazy. I I don't know, but that's just me. I'm just hey, that I don't I that's just my little brain. You know, I can't really think that that big. You know, I'm trying to stay in my lane, sir. Zach Fritz: But their problem is the exact the Stay in your lane, you know. Yeah. A hundred percent. Hundred percent. But that's Carmax's issue is CarMax was has for so many years has been so worried about how do we, you know, come out and say, ⁓ well, you know, we're CarMax and the way car buying should be and have these dumbass commercials that nobody relates to, versus how do we actually make money? No wonder Carvana has come through and just passed them. And it's now a But I Chris J. Martinez: Well, they haven't passed them in volume and they haven't passed them in they just recently passed them in profitability. ⁓ but what's interesting is they because they have so so many eyeballs on their on their ads, and I that's why I keep going back to Carmax dropped the ball on advertising digitally on social media and just keep it simple, you know. Zach Fritz: Well, sure. Mm-hmm. Yeah. Chris J. Martinez: The they they car Carvano just went f after the people that are sitting on the the couch and hey, just buy it from your couch. And if Carmax kinda just, you know, flipped the script and kinda went a little bit towards that direction, 'cause they already have that model, I think they could turn it around. Zach Fritz: Yes. Yeah. CarMax has the gallant customer from, you know, 15, 20 years ago. They have that customer already captured, and that's fine. But then they never went after this younger crowd that doesn't want to walk into the dealership. They just want to order the car off their cell phone. they didn't focus on that, which I think is a big missed opportunity for them. And How do you how do you recover? I mean, I've got that CarMax video that I did a while back. That thing has got almost a million views on it. And almost every other com comment is I went into CarMax and the experience sucked. You know, CarMax screwed me over. Hey, I bought a lemon from CarMax. So if you can't focus on quality, then what the hell do they even do? Chris J. Martinez: Y you know what I th he this you know what I think it is? I think they're listening to the wrong people. Cause let me give you an example. I was in a meeting one time. This was maybe a year and a half ago, two years ago, maybe three years ago, and company and this I was at in I was in an OEM meeting. Zach Fritz: Mm. Chris J. Martinez: And the marketing department was there for the OEM and they're t telling us how amazing the ads are running and it's you know, the they their their little consumer point basically said that it scored an a hundred percent and how amazing their advertising was and and I'm like, I'm But aren't sales down? I go, so it really working? and I and I happen to just, you know, ⁓ think loud at the time, because sometimes I just, you know, can't stop myself. And I I said, that's that's weird, but weren't sales down? And then the the the marketing rep looked at me like she wanted to kill me. And ⁓ was like, Yeah, no, it's kind of weird, you know, and I'm like Zach Fritz: Yeah. That tells me it's a hundred percent working and it's scoring a hundred percent for your harebrained idea that doesn't work. Chris J. Martinez: And and look, and I'm being a little facetious because the opposite could happen too, right? Like you have your marketing, marketing it it could be a lot of outliers that are causing things people not to buy. You may be driving a lot of traffic, people might be going to your stores and there could be conversion issues. I mean, there's there's gotta be a lot of things. The first thing when sales are down, the first thing they do is hey, how do I cut marketing? And generally not the answer. The answer is usually let's look at conversion. Zach Fritz: Sure. Chris J. Martinez: Let's look at there's a lot of more deeper rooted issues that may be an issue. and if you can't solve those, then yeah, maybe you do need to cancel your marketing. But I'll tell you this: most stores that do that, it doesn't so much hurt them today. What happens is 90 days from now, when they don't have any traffic, and they're like, ⁓ my God, we need to get advertising. We have and then it they think they can turn it on on a dime. Zach Fritz: Yeah. Chris J. Martinez: And it takes it's a process, you know, like y it takes up time to, you know, mature and get all the things that working where they need to. and but still it w I th that was kinda funny. Zach Fritz: Yeah. What is it? what what is it? friction, and marketing is usually kind of the diagnostic process. Where's the friction in the process right now that's causing the decline? Where's is it a financial constraint such as a seven point one percent interest rate? Still nuts? Or is it marketing? Not Chris J. Martinez: Okay. Zach Fritz: marketing needs to go first. So it sounds to me like that meeting was somebody in the marketing department who was a little worried about their job and wanted to that people knew that they weren't the ones screwing up. Chris J. Martinez: But I'll tell you, when I looked at some of these ads, I just didn't I think they could have been tweaked. I think the message wasn't landing and I I tell I push back on my marketing team often where like, look, this you yes, I love this, but y you still need to keep this hook. and it's all about how how you can attract these people to get to and or influence their decision. it's not just about Zach Fritz: Yeah. Chris J. Martinez: Saying, Hey, we got cars, you know what I'm saying? Zach Fritz: Yeah. You know, I'll give you two examples. The ⁓ think about like drug commercials now. Drug I don't I don't understand half the time what the what the actual problem is, except you watch the commercial and it's like, ⁓ that disease comes with a hot chick and a puppy, that's neat, and a hot air balloon ride. Makes no sense at all, and it's like a, you know, advertisement for some form of, you know, rare lymphoma. Or ⁓ You know, you see GM bringing back their whole heartbeat of America advertising. I think that is brilliant. I mean that's probably the best marketing I think I've seen in the last decade on GM's behalf. Chris J. Martinez: haven't seen any of that. but I'm also do I don't have conventional TV. I haven't had conventional cable in probably fifteen years, maybe twenty, I don't know. I I I cut the cord a long time ago, so it's kinda really it the only way you're gonna get to people like myself is through some type of digital platform. You know what I'm saying? Whether it's social media ⁓ or Zach Fritz: Yeah. No. Yeah. Chris J. Martinez: Blue, Netflix or something like that. But even then it's hard because you know most of the time you're paying for no ads. You know what I'm saying? So and now they've they you know, they kinda got everyone addicted to paying more for no ads that harder to you know get through to those people and the only way that I think you can get there is through social media. So whether it's TikTok, Instagram, Facebook, Zach Fritz: Placement. ⁓ yeah. Chris J. Martinez: Or maybe unless they're shopping at Amazon. So that's kinda Yeah, that's the only Zach Fritz: Amazon autos, yeah. Yeah, that makes me did you hear about the whole Copart acquiring ACV? Yeah, that's an interesting play. Chris J. Martinez: I did. Yeah. That we didn't I didn't really into the the weeds of that one. I wanted to. I saw a lot of articles on it. but I just haven't taken the time to do I I do need I I've been telling myself I need to research that more, dig deep, find out all of the little things. but you know, if it's anything like Zach Fritz: Yeah. Mm-hmm. Chris J. Martinez: What's happening with these other, you know, parts companies buying each other up and trying to, you know, understand that that's the future. Fixed operations in my mind is the future. if cars keep going up as high as they are, you better have a plan to grow your service department. Don't just, you know, ⁓ on the customers that are coming in today. RO are down because they're not only just you know, shopping you, but they're like they're just hanging on their cars and deciding not to service or going to these chiffy lubes or of the world, you know. Zach Fritz: I think that's a very scary proposition. And trust me, I'm not a big I like some independence, I don't like the independent chains. But I think you're gonna see consolidation there too, because as soon as these auto parts suppliers start to consolidate further. Well, then now the independent shops can't get their parts. They clearly don't buy from the dealer very often. There's not a lot of cross-collaboration. That's going to cause them to go out of business or consolidate on their own. And yeah, I think we are going to see a major shift on that front where even the independent shops that service independent dealers will then start to consolidate that don't have their own service departments. Chris J. Martinez: Yes, I I believe that's that's really the direction. well we're we're coming up at at the end of our our our talk, our conversation. Zach, we we head out, what do you think ⁓ where's this all going? You know, I I I think on my last newsletter I wrote that it's we're we're getting, you know, the dealer needs to like really understand that the math is changing. Zach Fritz: Yeah. Mm-hmm. Chris J. Martinez: And you need to be pre pr be prepared to what's coming. do you think? How do we end it? Zach Fritz: You know, I think this is probably one of the most difficult weeks really just say, hey, here's the here's your exact plan forward, because I think so many things are up in the air right now. The biggest one is don't stay in your lane because that's not gonna benefit anybody. But in that same vein of, you know. Thinking outside the box, doing the right things for the right reasons, and understanding this world of transparency in which we live, you know, maybe that is a good piece of advice is to just focus on one small thing to get outside of the current lane that you're in and try to improve. And focus on your service departments, because I think across the board, everything we've talked about, whether it be new technology, new cars and or cars becoming so damn expensive. All roads point to the service department going forward. That's where the money's gonna be. Chris J. Martinez: Service is where it's going. I think that's the that's the real thing. I think really need to understand if got s you know, you know I walked into a dealer one time, it was a big OEM franchise, it was smaller And when I l I he was t asking me how to improve his, you know, volume and what he's I first thing I asked him was, Well, how many tech bays do you have? And he said he had eight. I said, Well, what what's your plan to double that? Because ⁓ only way you're gonna retain say you grow volume, okay, Nick, then what? How do you retain those customers long term so you keep selling ⁓ Well, you're gonna need to double your bay count. Like unless you're go twenty four seven and have your used car recon team work at night, expand your hours, double shifts. like eight de tech bays is not the answer. Like you gotta figure out a way to how am I gonna have twenty tech bays, thirty tech bays because, know, that's that's where your your growth the biggest growth potential is because I guarantee you there's probably you know, a Midas or, you know, one of those independent shops that's literally down the street from you and then they're all the people you can't service, they're taking or they're undercutting your price and they're taking anyway. So ops is fixed ops is really the way to go, I think, for the next decade or the next foreseeable future. Like people are retain keeping their cars longer. Zach Fritz: Yeah. It's frightening. Chris J. Martinez: And that's just the way it's gonna be. I I think that, you know, in a in a place now that if you don't have a really dialed in ⁓ op like then you know the the idea of growth is just not Zach Fritz: Yeah, a hundred percent. Chris J. Martinez: So until next week, Zach, this was a lot of fun, man. We I think we've got this is probably the longest one we've had. ⁓ it was good. I think we was still a couple of other ones that I wanted to get to, but we're we're at that that time. But everybody please like, share, subscribe if you enjoyed the podcast, if you got good value from our conversation, what to do, how to do what how what we try to do is help dealers. ⁓ Zach Fritz: Yeah. It was. All right. Chris J. Martinez: salespeople, people in the industry understand the market and how they can learn from it and what to look out for and more importantly how they can apply it in their business today. and if you got any value, please like, share, subscribe. Zach, it's always great talking to you. real quick, I just wanted to, you know, could you just plug your your company real quick and then where they can find you? Zach Fritz: Yeah. you can find me all over the internet at Evo One Industries, Evo Oneindustries dot com and then on YouTube at Real Zach Fritz. Chris J. Martinez: Thank you, Zach. Until next week, I appreciate you. I'll talk to you. Have a good Zach Fritz: Thanks, Chris. Likewise. Take care.