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Sen. Moreno on Auto Sector Plan, Greenfield on Auto Retail VC, Murphy on OEM Futures | Daily Dealer Live
Sen. Moreno on Auto Sector Plan, Greenfield on Auto Retail VC, Murphy on OEM Futures | Daily Dealer Live
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About this episode
A dynamic discussion unfolds with U.S. Senator Bernie Moreno, who shares insights on automotive legislation and the economy, emphasizing a pro-business stance. Steve Greenfield from Automotive Ventures discusses the current state of automotive venture capital, highlighting the rise of dealer-led tech startups. John Murphy, formerly of Bank of America, now at Hague Partners, offers a perspective on OEM performance and M&A trends, suggesting opportunities for dealers amidst industry challenges. The episode wraps up with a focus on the importance of adapting to market changes and leveraging technology for growth.
Topics:
automotive legislation
venture capital
dealer-led tech startups
OEM performance
M&A trends
market adaptation
technology integration
profit maximization
consumer preferences
EV market dynamics
Cars:
Ford Bronco
Kia EV6
Kia EV9
Kia Sportage
Mercedes-Benz C-Class
Subaru Ascent
Subaru Crosstrek
Subaru Outback
Toyota Camry
Toyota Land Cruiser
Toyota RAV4
Today's show features:
Sen. Bernie Moreno (R-OH)
Steve Greenfield, General Partner of Automotive Ventures
John Murphy, Managing Director of Strategic Advisory at Haig Partners
This episode is brought to you by:
Lotlinx - Get the best possible market advantage on every vehicle transaction. Optimize operations and boost profits using artificial intelligence (AI) and machine learning. Learn more @ https://lotlinx.com/
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Toyota Leaned
"sedans and EVs stayed choppy. Toyota leaned on familiar names. RAV4 sales surged 20% year ove..."
Car
Toyota RAV4
"Toyota leaned on familiar names. RAV4 sales surged 20% year over year. Camry climbed 14..."
Car
Toyota Camry
"RAV4 sales surged 20% year over year. Camry climbed 14%, and Lexus added 12%. Altogether, 225..."
Car
Kia Sportage
"...ehind with 83,000 sales. Carnival, Telluride, and Sportage kept the core line up hot, while the new EV9 and ..."
Car
Kia EV6
"... kept the core line up hot, while the new EV9 and EV6 also set records. And Ford kept pace too, moving ..."
Car
Kia EV9
"...Sportage kept the core line up hot, while the new EV9 and EV6 also set records. And Ford kept pace too,..."
Car
Subaru Crosstrek
"and a 19% lift in EV sales. Subaru's Crosstrek had its best month ever, but softer outback and a..."
Car
Subaru Outback
"...u's Crosstrek had its best month ever, but softer outback and ascent numbers left the brand slightly down y..."
Car
Subaru Ascent
"...k had its best month ever, but softer outback and ascent numbers left the brand slightly down year over ye..."
Car
Ford Bronco
"...o Group expanded in Idaho with the acquisition of Bronco Motors. So in a prior world, I worked for a Swiss..."
Car
Mercedes-Benz Cclass
"is the acceptance of each other's standards. So with the EU, if you make up a C-class Mercedes for Germany, that same car can be sold in Ohio or California."
Select text to request an explanation
We're doing better as a result of social media presence.
It doesn't do those three things, then it's on the chopping block.
It's in return on investment discussion.
Welcome to another edition of The Daily Dealer Live.
I'm your host, Steve Dark, and back with us today, co-hosting is the Cardiola ship guy,
Yossi, what's up?
Welcome back.
What is up?
Let's go.
Yossi, what are you wearing there?
This is an Eagles jersey.
Is this the win last night, yeah?
I was saying I went into my closet, I said let's pick out an interesting shirt for
today's show.
It's feeling spicy.
I love it.
I didn't want to go the 18-year-old Miami shirt, so I had to come out with
the Eagles jersey.
I love it.
I love it.
I'm changing it up.
Changing it up.
It's going to be a great show.
Yossi is a reminder to everybody, joining the live stream.
We're live across all SMEG social media platforms.
Post your comments.
We'll bring them into today's show, and Yossi, what a show we have in store for
our Daily Dealer Live audience.
Coming up today, Ohio auto dealer turned US Senator Bernie Moreno is on to talk
all things automotive and government.
Also, we've got Steve Greenfield, general partner of Automotive Ventures here
to talk automotive VC.
You remember that Bank of America car wars report?
Well, we've depended on it.
Many have depended on it for a long time.
We've got the author of that report here with us today who's made a
career shift.
John Murphy will be up shortly, and he'll share more about his latest
moves.
But first, let's dive in today's biggest headlines.
All right.
Next up today, Tesla has proposed a record shattering, and I have to say this
is saying a record shattering $1 trillion, that's a line directly from
Austin Powers, compensation package for CEO Elon Musk, stretching over ten
years, tied to growing the company's market value to at least $8.5 trillion.
With Tesla's market value hovering near $1 trillion today, Musk would need to
grow it more than eightfold, while also scaling the company's robot taxi
business to unlock the payout.
If Musk hits the target, his stake in Tesla could rise to 25% or more,
cementing his influence over the company far beyond his current position.
The package is designed to replace Musk's prior $50 billion plan, which
a Delaware court struck down earlier this year.
Tesla's still appealing that ruling.
Looking ahead, shareholders will vote in November, setting up what amounts
to one of the largest corporate bets in history.
One trillion dollars, Austin Powers.
Did you get that, Yossi?
Let's go, right?
All right, next up today, August was another strong month for the
auto market, with SUVs and hybrids continuing to carry the load while
sedans and EVs stayed choppy.
Toyota leaned on familiar names.
RAV4 sales surged 20% year over year.
Camry climbed 14%, and Lexus added 12%.
Altogether, 225,000 plus vehicles, up double digits from both last year and July.
Honda followed a similar script, but leaned harder on electrified models,
setting a record with nearly 44,000 hybrid and EV sales, or 36% of its mix.
Hyundai logged its best August ever at 88,000 units,
up 12% with EV sales soaring 72% year over year.
Kia wasn't far behind with 83,000 sales.
Carnival, Telluride, and Sportage kept the core line up hot,
while the new EV9 and EV6 also set records.
And Ford kept pace too, moving 190,000 units on the strength of SUVs
and a 19% lift in EV sales.
Subaru's Crosstrek had its best month ever,
but softer outback and ascent numbers left the brand slightly down year over year.
However, Mazda and Volvo both cooled with refreshed launches,
not enough to offset the declines in their core lineups.
The big takeaway here, momentum is exactly where it's been all year.
Core SUVs, crossovers, and hybrids.
And next up today, in the M&A activity,
and you can make sure to check out the Bicell Tracker here at CDG
to check up all of the latest Bicell activity.
CDGbicell.com.
CDGbicell.com.
Hey, I like, hey, it's a ringtone.
Yeah, yeah, we need a ringtone, so.
CDGbicell.com.
Let's, we'll bottle that one and then bring it back over and over.
I love it.
Steve Napleton Auto Group just picked up Hyundai and Chevrolet
of Palatine from Auto Canada.
Many have been anticipating an announcement
about different Auto Canada divestitures for a while,
rebranding them under the Napleton name.
That brings the Napleton family's Chicago area footprint
to 11 dealerships, with four of them now clustered in Palatine.
The deal is part of Auto Canada's larger retreat from the US
after announcing in July it's selling 13 dealerships
across the country.
Further out west, the Kendall Auto Group
expanded in Idaho with the acquisition of Bronco Motors.
So in a prior world, I worked for a Swiss-based insurance
company.
I worked very closely with Grant Peterson
and the entire team at Bronco Motors.
It's a 54-year-old family-run business
with Hyundai, Nissan, and Infiniti.
It's been a staple in the Boise and Nampa area in Idaho
for a long time.
Grant and his kids are a heck of great people.
For the owner, it was the first time
his family group became a seller rather than a buyer.
He'd resisted selling for years,
but after working with Kendall on a smaller deal last year,
he decided they were the right long-term fit
for the rest of the stores, put it all together,
and the theme is clear.
Regional family groups like Napleton and Kendall
are stepping into opportunities left
by big publics and multigenerational families
cashing out, tightening their grip on local markets,
where clustering and scale can deliver
a real competitive edge.
And now on a side note, again, I know Grant Peterson,
great family, they ran an incredible business.
That's a great legacy for Kendall to pick up,
also a great group out west in the Idaho marketplace.
Finally up today, dealer outlook held steady in Q3,
even as profitability and customer traffic slipped
according to a new survey from Cox Automotive.
Franchise dealers saw confidence dip slightly
while independence ticked up,
and while expectations for traffic and profits softened,
market outlook for the next three months actually improved,
proof that many dealers see opportunities ahead.
Additionally, dealers still see the economy rates
and market conditions as the biggest headwinds,
but concern levels are trending lower
compared to the last quarter.
EV sentiment, though, fell to a record low
reflecting anxiety over the federal tax credit
expiring September 30th.
What's the bottom line here?
Will the mood suggest resilience?
Dealers are adjusting operations, keeping an eye on costs,
and writing out political and economic swings
without losing sight of near-term opportunities.
And that's a wrap on the news for today.
So, I'm going to hear again to the guests.
Yes, let's go right into the guests.
All right, first up today, Yossi,
this is an exciting guest who will have many opinions
on all things economy, politics, and elsewhere.
Let's turn to U.S. Senator for the state of Ohio,
Senator Bernie Moreno.
Welcome to the show, Bernie.
Welcome to the show.
Good to be here.
Great to have you on.
Wow, so many questions to ask you.
I want to start right away with just your first nine
months, how have things been for you?
Or roughly nine months, I would say.
As a senator, would love to know what's in your mind
and how you recapped these first nine months of your term.
Well, first of all, I'm having a ball.
It's an incredible honor to be representing
the 12 million people of the state of Ohio.
Not in a million years would I think I would be here.
I wasn't even born in this country,
born in South America.
I enjoyed my life as a car dealer for 20 plus years,
actually 30 plus years, geez, I'm old,
then in the retail automotive business.
But we got a lot of stuff done.
I mean, we've got a tremendous amount of accomplishments.
We got rid of the California emissions exemption.
So now it's one federal standard for the whole country.
We move cafe fines to zero.
So no more paying companies, paying huge penalties
for not meeting cafe targets.
We got rid of the EV subsidies,
which are a total disaster.
We got rid of the EV mandate.
We made auto interest and America
made automobiles deductible.
That was my bill, super proud of that.
And that's just in the car business
and we had a lot more to do.
But in a short period of time, we've gotten a lot done,
which is really why I got here.
Well, Senator, what would you say has been
or will be the most impactful of the changes made thus far?
Letting the marketplace dictate the pace of innovation.
So I'm not against electric vehicles.
I drive one of the cars I have is a hybrid.
I don't have a pure EV, but there's nothing wrong with that.
If you want to buy a Tesla or a pure electric car,
that's your choice.
But the government shouldn't interject into that conversation.
The government shouldn't say,
this particular powertrain is better than another powertrain
because it makes the system not work properly.
The system works when consumers are telling dealers
who tell manufacturers, hey, build this type of car.
It'd be like if the government subsidized red cars
and then penalized people about white cars.
Doesn't make any sense whatsoever.
And by the way, it's almost as arbitrary.
Mm-hmm.
You know, it's definitely refreshing
that the administration is pro-business
and seeing good or welcome changes being made.
Like you said, free market, very pro-free market.
That's obviously a great thing.
As I read a lot,
and one of the things I've been paying attention to
that I want to get your take on
is just the overall, the macro economy, right?
I read this morning something about, you know,
rate cuts almost being certain at this point.
The labor market weakening to, you know, pandemic levels
and core inflation still being above 3%.
And I just get concerned when I see these things.
I wonder, are we, you know, are we at this point
where we're going to get into
whether it be a recession or not,
but, you know, a real big pullback on the economy.
How is that going to impact the sector?
I'd love to just start high level like,
how do you feel about the overall macro economy, right?
You're doing great things from a legislative perspective,
but there's also things that are out of your control.
What are the signals you're seeing
and how do you feel about the overall health
of the macro economy right now?
Well, you got to dive a little bit deeper into the numbers.
So if you look at the employment picture,
you're looking at the employment numbers
for American-born citizens massively increase,
almost 2 million new jobs for American-born jobs.
Foreign-born jobs are drowned about 1.6 million.
So that's a result of deportations
of much stricter border control.
That's net positive for the country.
You also have a massive change
from public sector employment to private sector employment.
During the four years of Biden,
when the Democrats were in charge,
the government grew dramatically.
We've trimmed the federal workforce,
just the federal workforce, almost half a million jobs.
So you got to factor in,
when you're looking at the top number,
what's driving that number below it?
And that's exactly what we wanted.
We wanted more private sector employment,
more American-born employment,
less foreign-born employment,
and less government employment.
So you're seeing that.
But look, our policies are very straightforward.
It really comes down to the following.
You want to have a tax environment that encourages growth,
and we did that in a one big, beautiful bill.
We now have total and complete certainty on taxes,
full depreciation of new equipment,
full depreciation of new factories,
no tax on tips, no tax on overtime,
total certainty, all those things,
except for the tips and overtime are permanent,
which is a big deal.
Second is tariff policy.
We've pretty much done the tariffs that needed to be done.
We have a deal with the EU, Japan, South Korea.
We're going to get the Mexico-Canada deal done.
That's a big change that now we've reset the tariff table.
And then the third component of that
is huge unleashing of American energy.
Energy is the underlying cost of a lot of things.
So we've driven down the cost of energy in a big way
by unleashing domestic energy production.
And the fourth one is good workforce policies.
So encouraging more people to get skilled up and trained
and not be able to be dependent on the government
without having some work requirement.
So those are the policies that we've put in place.
And we also have, Yossi, by the way,
almost 10 to 15 trillion dollars
in new investment commitments to America
coming in over the next three years,
which will pay massive dividends.
So, Senator, again, the administration
has made tremendous progress at a very short period of time,
and I totally give all the credit.
But I'm mentioning these things because, like I said,
there's still other parts of the economy
that I'm observing and get me concerned.
And so my second question, my follow-up to the first one
would be, you spoke about employment.
And one of the promises by the administration,
initially, was to curb illegal immigration
and to really focus on employment.
There's too many details for me to dissect right now,
but you mentioned American-born employment.
Now, do you think that, do you think your constituents
where do they really want,
or do they really know the impact of,
you mentioned that American-born employment is rising,
but yet employment has declined?
I think the Bureau of Labor Statistics put out
their revision for June non-farm payrolls,
which was actually a negative print
in the first one since 2021.
And so is that ultimately where are we headed?
Are we headed for short-term pain
for long-term gain for the country?
Are you concerned about a short-term blip, recession,
pullback, more unaffordability for the consumer?
What do you think about this entire situation?
Well, the first problem we have
is that the BLS numbers have been a mess.
As you know, these are based on surveys.
The response rate on these surveys has been very low.
So there's maybe some politicization of the numbers.
So we're gonna get to the bottom what the numbers are.
But look, here's the fundamental piece
that we're trying to do.
We want more opportunity for American-born workers,
less reliant on foreign-born workers,
less government employees, and more private sector employees.
And we're doing that.
And I'd push back that employment has dropped.
It hasn't grown overall top line
as much as we would want to.
We're gonna see those numbers are real.
But when you dig into it,
it's doing exactly what we wanted it to do.
More opportunities for Americans,
less importation of low-skill, low-wage workers,
which is good for Americans.
And you'll see the number you should really be focusing on
is real wage growth,
which is the increase in your wages versus inflation.
And we have about 5% annualized real wage growth.
That means your paycheck is going further.
That's actually the most important metric
of all more important than inflation or anything else.
Let me just say one more thing,
and you hit on it a little bit.
We have a guy who's an inspiration
to every incompetent leader on earth,
which is Jerome Powell at the Fed.
This guy's a total and complete disaster.
He's keeping our interest rates artificially high
by about 2%.
So we should see at least a 2% drop
in the central bank rate.
And that will make a big difference as well.
That's the last piece of the equation
that's holding us back.
On that note, last time we had the COVID interest rate cut,
we went into a really big inflation spiral.
Is this a concern for you, for the administration,
that if we're gonna drop rates,
which almost seems inevitable at this point,
to some extent, whether it's 25 bips, 50 bips,
or more, who knows what's gonna happen.
Are you concerned about us entering
this phase of inflation again,
as we all experienced over in the early 2020s, 2021?
What do you think about that?
Well, it should be 200 basis points, by the way, not 25.
We need to get down to at least 200 basis points.
That's where it should be,
based on where our inflation is looking like.
It should be, but it's not,
it doesn't seem at least based on all the Goldman Sachs
or all the reports out there,
doesn't seem like it's very realistic.
Or JP Morgan, they said like 25 to 50 bips
is what may happen.
Again, it's all speculation, no one really knows.
Yeah, I'm just telling you what I think should happen.
And let me tell you why,
because we're actually doing something
that we haven't done here in Washington DC in decades.
We're actually curbing spending.
So we're dropping the amount of fiscal stimulus
into the economy.
What happened during COVID was the exact opposite.
You had a generational historic level
of government spending that got unleashed.
I'll give you a stat that will blow your mind, Yossi.
We used to take about four and a half trillion dollars
to run the federal government in 2019,
four and a half trillion dollars,
more or less, to run the federal government.
That number got the 7.1 trillion by 2024.
That is an absurd increase in federal spending.
And when you do that, that's what's inflationary.
And then on top of that,
they had regulation on top of regulation,
which made it harder for productive producers
to generate economic activity.
So they're doing everything possible
to stifle supply while raising demand.
So we're doing the exact opposite of that.
We're unleashing American energy,
lowering energy pricing,
dramatically less regulation.
Lower interest rates is what should follow.
It's just that we have a guy who wants to be a politician
leading the Fed instead of an actual economist.
But hopefully that changes very, very soon.
Bernie, something that's more tangential
and unrelated to auto or semi-related,
but when you think about just
the geopolitical state of the world,
we've sort of moving into this like multipolar world,
China has clearly risen over the past couple of decades.
They just had that crazy military parade,
which I'm sure many people listening here
got a chance to witness and just watch a little bit.
And you see that and you can't help but wonder, right?
What is the future of our country?
Like, what is that going to look like?
How will our daily lives be impacted?
When you see something like that,
you think about the future of America,
just globalization, de-globalization, right?
We rely on China still for manufacturing,
of course, Taiwan with all the chips.
This is more of, again, I don't have a specific question here.
I'm just sharing with you my deep down thoughts
that go through my head.
When you see stuff like that,
does it concern you for the future of our country
or what goes through your mind as a senator?
Well, it reinforces the idea
that we made a huge mistake 25 years ago
when we normalized trade relations with China.
We basically built that Chinese military
that you saw in that parade was built by American CEOs
that went in there chasing cheap labor
and built their economy.
Consumers that buy cheap Chinese goods
to save a few bucks built that Chinese economy.
Politicians that encouraged US companies
by giving them actual incentives
to go out and do business with China.
So what's the answer?
We got to be self-sufficient here in America.
We got to be self-sufficient in the industries that matter.
Steel, pharmaceuticals, PPE, energy.
We have to make certain that we have
the industrial capacity here in the United States.
We got to make things here in America.
25 years ago, China had no idea how to make a pencil.
Today, most of the manufacturing equipment
and manufacturing technology exists only in China.
That's a huge threat.
The good news is President Trump understands this
and is working overtime in a very short period
to undo all these bad things that we've done.
We have to focus much more on the Western Hemisphere.
We should build a Western Hemispheric Alliance.
I call it looking up and down instead of left to right.
Thinking about what we can do here
from the tip of Argentina to the tip of Canada
and create a Western European Alliance
where we have a lot more opportunities.
We have a shared heritage, a shared culture
and rely dramatically less on Asia
and allow Europe the space it needs
to defend and take care of itself.
Well said.
Sam, I could ask 10 other questions,
but I'll give you an opportunity.
Yeah, yeah, so Senator, it's interesting
when you think about the auto industry
and you think about our dealers
that are listening to this show today.
What advice would you give as you think
about the next six months, the next 12 months in automotive?
How do dealers win in this, the tariff environment,
the potentially decreasing interest rate environment
that's coming up over the next three to six months?
From your perspective as an expert,
from your perspective as an ex dealer,
you've got that insight.
What advice would you give to dealers, business owners,
looking to potentially either expand, consolidate, sell?
How do you win over the next three to six months?
Well, first of all, the fundamentals always matter.
There's fundamentals that stick with you
no matter what you got.
You need velocity and use cars.
Make sure that you order your new car inventory
the right way.
You stock the right cars.
You take incredible care of your clients
do that by taking incredible care of your team.
Make sure you hire really great, competent people.
Don't be afraid to fire when it's somebody
who's not fitting inside your culture.
These are the things that really, really matter.
What I would say is how to navigate
the next almost 30 days.
If you have an electric vehicle in your inventory,
get rid of that thing.
That thing needs to be gone by September 30th.
Now we did do something that is very dealer friendly
and treasury.
If you have a signed purchase and sale agreement
with an actual deposit, and you have that by September 30th,
even if the car comes in after September 30th,
the $7,500 incentive will apply.
But make sure you cross all your T's and dot all your I's.
Don't be left behind eating that incentive yourself.
So that's the most important thing.
Clear the decks on EVs.
Make sure that you do that.
I'm sure most dealers already have those plans in place.
Look for opportunities to use AI.
AI is going to change the dealer landscape quite a bit,
not just on acquisition,
but on communicating with customers
and whether it's service appointments.
I see it as a tool to help assist, especially BDCs.
Make sure you're not on the bleeding edge of that,
but make sure you don't get left behind.
Look again, I'll just repeat.
Fundamentals, fundamentals, fundamentals.
But I say everywhere I go, Sam and Yossi,
I am incredibly bullish on the retail automotive business.
They've said, when I say they, the so-called experts,
so that this model is broken and going to die,
they've been saying that for 40 to 50 years,
car dealerships are going to thrive in the future.
They're the greatest entrepreneurs in the country.
And I actually sorely miss
the retail automotive business quite a bit.
It's one of the greatest businesses you can be in.
What's the flip side of the EV demand, do you think?
As rebates go away, it's interesting to talk about
how the rebate still qualifies
if you have a signed deal prior to the deadline.
We talked about that, Aaron Ziegler did
on our team call this morning with our team.
So they know that they're running towards that.
There is demand right now.
There's urgency.
On the other side of this,
what's EV demand going to look like?
And then I've got a follow-up question
about China and what they're producing in EVs.
It'll probably settle in somewhere in a single digits
by 5, 6, 7% is where that's a baseline normal rate.
Look, hybrids are a much better alternative.
I think you're going to see car companies doing a lot more
around whether it's a full plug-in hybrid or regular hybrid.
I think you're going to see a lot more of that.
But here's the important part.
The customer gets to decide.
The customers are the ones that give us that signal.
They make decisions every day in the showroom.
That's why car companies should listen to their dealers.
The dealers are talking to their customers
every single day, build what customers want.
That has been a mantra of the auto business.
That's what's made it successful.
That's what we should keep doing.
But pure 100% EVs, probably somewhere around 5% or 6%
would be my guess.
And I still hold that I think the industry settles in
at a $16 million SAR, which is what I said back in April
at the New York Auto Show.
The S&P Global of people who are experts that spend all day
studying macro trends and reading all kinds of reports,
said the industry is going to be at $11 or $12 million.
I can't imagine being that wrong,
and yet continuing to make a big salary
like these guys do.
So shifting to China a little bit, Senator,
it's interesting.
A lot of interesting technology as it relates to EV vehicles
and technology around EVs is coming out of China.
And they're just putting their inventory
all over the world.
So it's from Mexico to Australia.
India is a big market right now that is kind of a dumping
ground for these EVs.
How do you look at it when you advise President Trump
and the administration?
How do you look at that?
Our economy is protected from those vehicles for now,
but as that develops and it becomes better and better,
is there a point where we need to open our doors to it
and compete with it to stay current with it?
What's your take on that, protecting the US economy
from the flood of Chinese imports,
but technology that is quickly and rapidly evolving?
Yeah, as far as I'm concerned,
we'll never let Chinese cars into the American marketplace.
I went to Mexico, encouraged them to do the same thing,
kick the Chinese out of Mexico.
It's a cancer on their automotive sector.
I've said the same thing.
The EU should be mirroring our policies
when it comes to China.
These are cars that are designed,
not for domestic consumption,
but for the destruction of Western auto companies.
And then they want to dominate this industry
for a reason, because these are good jobs
that take up a lot of a country's GDP.
So we will never allow Chinese cars in this market.
We won't allow them to plug into our telecommunications
infrastructure.
We have the connected car rule.
And one of the things that we did in this trade deal,
and it hasn't been talked about enough,
is the acceptance of each other's standards.
So with the EU, if you make up a C-class Mercedes for Germany,
that same car can be sold in Ohio or California.
That's a big deal.
We're doing the same thing.
We got that done with Columbia,
and we're doing the same thing with Japan and South Korea.
So we want to have a mutual harmonization of standards
at some point, but accepting each other's
at this point really matters.
And we want to box out China,
and we're going to do that
because we will be the ones that develop
the next level of technology,
which is what consumers want.
So do you think in the race to evolving that technology,
the US gets there well before China does these?
Because it is interesting,
Yossi made that comment about this military parade
and kind of this band of,
it was a crazy picture that we saw with Putin
and the president of North Korea.
And it was like a cast of characters from X-Men almost
watching them parade in this military parade.
The global environment is becoming more dangerous
and a little bit less friendly to the United States.
At some point, do we need to compete with that technology?
Are we okay with it?
Yeah, Sam, the technology that wins
is a technology that consumers want.
China is singularly focused on EVs.
When I just said to you,
the market's going to settle in at 5%,
95% of consumers are saying that's not for me.
So what we're going to do is listen to consumers,
let the marketplace develop naturally,
and that's how we win.
The Chinese are terrible at making hybrids or ice cars.
It's not what they do.
And that's what consumers want.
So the Western world, the Americas, EU, Australia,
South Korea, Japan, the great alliances
that make up 50, 60% of the world's GDP are on one page
and you isolate the Chinese, they can't make money.
They have like 90 different Chinese brands
that are all supported by the government.
They all race to the bottom to see
who can make the cheapest cars
and then ultimately all go out of business.
That's not a good sustaining model.
And I think we're going to cripple the Chinese auto industry
and not play their game.
What Biden was doing was playing their game.
He was crippling where we were good
in the ice world, in the hybrid world
and adopting their standard
and then having the US taxpayers pay for that, right,
by 7,500 bucks a pop.
We're just not going to do that.
So we don't need to do that.
What made America successful
is that we were a consumer driven market.
We built and designed products customers wanted,
not what politicians wanted.
So not what was politically correct.
If somebody wants a 1200 horsepower car
then make 1200 horsepower cars.
Don't say that, well, that's bad
for the environment, et cetera.
I can't wait to see what happens
to all these Chinese batteries
when these cars are littered all over the globe
completely useless
and there's no place to dispose of these disasters.
Senator, we appreciate your generosity with your time.
Just final question.
What are your plans for any collaboration
with the dealer community, auto associations,
NADA over the coming months?
Can you tell us a little bit
what you have on the horizon in the works?
Yeah, we work with them all the time
whether it's NADA or the auto alliance.
We communicate on a regular basis.
NADA has a fly in here in DC.
Next week we'll be speaking at that event.
We're doing some events with car companies as well.
We'll be at the NADA event in February,
NADA convention in February.
So really advocating for the auto industry.
This industry is really, really important to our country.
It's really important to me
and I'll keep advocating to make certain
that we make this industry successful.
And I just want one quick thing
that you didn't talk about
when you talked about auto sales.
You guys should do this chart.
Take a look at the percentage of automobiles
sold in this country, made in this country.
And you'll see a massive increase
in American-made automobiles.
That's phenomenal for this country.
Senator, thanks for joining.
And thanks for all you're doing
for the American people, for the industry.
We really appreciate it.
So thanks again for coming on.
Thank you, I appreciate you guys.
Thanks for being here.
It's an interesting conversation.
So much to talk about, Yossi.
I got the juices flowing for sure.
It goes way beyond just the auto industry.
Just the impact of all these things.
It's like I said, the biggest thing for me
was I understand how positive it is
to have more American-born employment, of course, right?
It's our country.
But at the same time, if the constituents
are demanding this, are they willing
to potentially have it come at the expense
of short-term revenues and profits, right?
That's just like, it's math.
So, and these are the things I think about.
Like what are we asking for?
What are the repercussions?
And where are we heading next, ultimately?
Or the impact on the industry
and following these jobs numbers?
I don't know.
I mean, I assume these numbers are the numbers.
Of course, they were revised down twice,
which clearly tells you there's big errors.
So I do agree with them there.
But it's a lot of question marks, right?
What's next?
And this upcoming year, what we're going to see
from just an affordability perspective,
a demand perspective in SAR, which he has, he is correct.
He did predict to be on track for roughly $16 million.
So he was correct with his prediction there, more or less.
And his opponents were projecting $11 million.
So he won the right side of that.
Well, let's talk support of the show Lotlinks.
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All right, well, let's transition directly
into our next guest.
Next up is General Partner of Automotive Ventures,
Steve Greenfield.
Welcome to the show.
Hey, guys.
Good to see you.
Welcome, Steve.
Good to see you, guys.
Glad to have you on.
I'm honored and you squeeze me
between two really great presenters.
So I'll try to live up to their standards here.
No, we're doing a world tour today.
We've got geopolitics.
We've got venture capital, auto tech.
Then we're going to soon have OEMs.
Yeah, I know, right?
Steve, for those unfamiliar with you,
can you just give a brief intro
about who you are and what you do?
Sure, sure.
25 years in auto, spent 10 years at Mannheim,
the largest auction company in the world.
Spent five years at Auto Trader,
which at that point was the largest
classified site in the world.
And then a couple of years at a true car
on the West Coast.
And then five years ago decided
to do a pretty dramatic pivot with my career.
Started a venture capital firm, Automotive Ventures.
And we're now on our third fund.
We've made 45 investments in five years
and we're hunting the globe
for really talented entrepreneurs
who are trying to solve really, really big problems
in the automotive and more broadly
across the mobility spectrum.
Excellent, Steve, can you give us an update
on just a state of auto tech venture capital?
Lots of dealers over the past couple of years
have invested in automotive startups,
things that they're using in their own stores
are benefiting them.
Some have even actually launched
their own auto tech startups from within dealerships.
We'll talk about that as well.
Can you give us a start with just an overview
of the state of auto tech?
Yeah, so I think you've characterized it quite nicely.
I think the valuations are down pretty considerably
over the three or four last years,
which isn't great if you're a founder.
It's been a hard time to raise capital
over the last like 18 months.
So that isn't getting any easier yet.
And I think until the IPO markets open up,
there's a cascading effect back to earlier stage stuff.
But to your point, I'm amazed.
Like even this morning I talked to a dealer
who's got a couple of stores and he's got software,
he's built internally that he wants to take
to other dealers.
The barriers to entry for software development
are so low now.
And it's amazing now, you know,
the three of us over a weekend,
we could spin up a brand new software product
and start selling it to dealers.
So I think we are in the cusp of a,
I'm sure we'll talk about AI,
but even outside of AI,
we're on the cusp of, you know, tremendous innovation
where 10 years ago it was expensive and hard,
you had to hire a CTO, et cetera.
Now it's really, we've democratized software development,
which is going to mean that we're gonna see
a wave of new innovators helping dealers
solve some of their biggest pain points.
Well, Steve, you've been on the forefront
of a lot of innovation in the industry.
You didn't mention it and I think it's important,
but you worked on some of the biggest M&A
acquisitions in our industry, right?
Auto Trader, KBB, I believe,
and you know, you could name a bunch of other names.
What's next?
Like where do you see these companies
that I just mentioned, right?
They have obviously grown tremendously,
became staples within dealerships.
What are you seeing next when it comes to
that next wave of a must have tools
and tech within dealerships?
Yeah, so I think that dealers should be excited
that now it's gonna be easier to build software.
And in some cases, easier to build software yourself.
So if you've struggled in the past and been concerned
whether the silos around data,
dealers always complain about that,
whether that, you know, my software vendor
isn't reactive enough
and can't get me the solutions I want,
all of this is gonna get solved pretty quickly here
because you're gonna be able to build your own software
and or at least push the vendors
to innovate much more quickly.
On the flip side, if I'm a vendor,
you know, I'm one of these legacy vendors,
it's concerning, right?
There's speculation out there
that software as a service might go away entirely
as we sort of like enter into this new AI fueled era.
And a lot of the defensible notes
that someone might have had around their software
might start to evaporate.
It's exciting on one side.
I think it'll be net net,
it'll be very positive for dealers.
They're gonna see a wave of new entrepreneurs
attacking the space, providing new solutions.
But I think for some of the incumbents out there,
it's a little concerning
when they're trying to figure out
how much of a threat AI might be in general
and whether the moats that were defensible in the past
will continue to be something that they can depend on.
Do you think dealers should care?
Like, do dealers just benefit from this
or do dealers, you know, have to actually,
does it destroy any value within the dealership?
Right, like what actually,
how do you see this playing out
and ultimately impacting dealers?
Yes, so maybe I'll defer to Sam here
as the expert in house, but you know,
I think that I would talk out of both sides of my mouth, right?
At one point, dealers should be more excited than ever.
I mean, the cusp of innovation that's coming
is gonna be in some ways maybe overwhelming, right?
I mean, imagine when we go to NADA,
like Bernie just said, in a few months,
we're gonna see all sorts of AI tools
and dealers are having a hard time making sense
of like, is there any value to these things
and how, what should I adopt
and how should I adopt these things
and internalize these with my processes?
But at the same time, I think the challenge
is going to be keeping up to speed on all the stuff.
Like we could spend all of our time just reading the press
and trying to understand chat GBT
is just launching new AI tool.
You know, we had news here this week
about Apple's AI initiatives
and what that's gonna mean
when AI is on every single device in all of our pockets.
And I think this is gonna be the challenge
is like, how do you filter out the signal
from the noise, so to speak
and make sure that you're staying abreast
of relevant information,
but not getting overwhelmed with the sheer magnitude
of like these press releases that are coming out.
And I think that the buzz is only gonna continue
to build to a crescendo.
Yeah, and so Steve, I would actually add to that
that one of the biggest challenges
with AI in today's world is there's so much of it.
It's devalued every new idea out in the marketplace
because there's all these promises
and so few of the promises actually get executed on
and in automotive, I think part of what makes us successful
in automotive is we're fast to execute
or fast to produce a result.
And I think a little bit that's why automotive
in some areas is so resistant to AI
as it completely taking over.
Yossi and I've talked to many BDC directors
where they're like, you know what,
we still like a manual BDC because we understand it.
I think these AI companies need to do better
at making the promise, delivering on it
and understanding what the implications are.
And then the other challenge is
there's so many disparate systems still
that one thing that brings them all together
still remains a challenge
and fully understanding all the consequences.
And I would actually ask you in your role
looking at what are the effective AI tools?
How do you break through the noise?
How do you find those tools that work?
And do you have any recommendations for dealers?
You've created great programs in the past
that have made dealers a lot of money.
If I'm a dealer today,
September 2025 frustrated with the AI noise,
how do I break through that and find the real tools
that will help me make money
and deliver my best to customers?
Yeah, it's a great question.
And I think about this a lot, right?
It's getting harder and harder
to get time and attention to folks like you, Sam.
You're a busy guy.
You're into running a bunch of dealers.
You're on here and you're trying to get
on your schedule to pitch you for 30 minutes
is almost impossible, I'm certain.
Well, you got to come on here
because this is where we all learned together.
This is our dealer 20, right?
There you go.
But yeah, I think that step one
is to push on your current vendors, right?
So every vendor by NADA will have a new AI module.
I think sit there because as you said, Sam,
that's where your data is now,
your historical transactions, your consumer data, et cetera,
find out what your existing vendors are.
But then on the other side, be very open-minded.
In some cases, these big vendors,
and I've been there, I've worked for a number of them,
are very slow to move.
And these new startups can move so quickly
that if there are big opportunities,
big pain points that you're suffering,
I think push first on your existing vendors,
but then be open-minded to who's out there
that might solve these things.
With the caveat, as you said, Sam,
is like the data integration will continue to be an issue.
And you may find a startup that's really onto something
with a great founder,
they've got a good value proposition for you
that's solving a big pain point.
But if they can't integrate back into your data,
are you just gonna continue to be frustrated?
Steve, you mentioned the barriers to entry
are lower for creating software, I totally agree.
Yet the probability of success also seems a lot lower.
And I think to the fact,
when I just talked to dealers off the record
and they say, I'm reluctant to try another tool,
I already have all these other tools.
And it almost feels a common sense to me
that dealers are going to continue gravitating
to these connected solutions
as opposed to point solutions, right?
I can't have a separate chatbot and a separate CRM
and a separate digital retailing tool and a separate AI.
Like it's just, it's gonna become too challenging.
How quickly do you think that's gonna happen
to where we're just gonna see this wave of consolidation
in the industry and dealers go from using five AI tools
for all these different departments
to just one singular tool that dominates the market?
Is this like a winner takes most
or winner takes all situation?
I think not.
I mean, I've been in the industry for a while 25 years now
and we could have had exactly this conversation
25 years ago.
And I think that you're still gonna continue
to see really smart people come into the space,
build really great compelling new value propositions
for dealers, they'll get acquired
so that the big incumbents realize
that in many cases they aren't going to be the innovators.
They're gonna buy innovative companies
which is gonna fuel entrepreneurs.
There's a lot of M&A.
We talked about M&A and you will next with John
about M&A for the dealer buy-sell market
but there's a lot of M&A that continues
around these startups and the big incumbents,
the CDKs, the Reynolds, the Coxs, the JD Powers.
And at this point, when they look at strategy
it's as much about acquisition as it is
about trying to innovate something new from scratch.
And it makes a ton of sense for 20 million
or $40 million, they can buy a product that's proven
and not have to run the risk
of trying to launch something from scratch.
And by the way, take out a potential competitor
that's only gonna grow stronger over time.
You know what's also, you mentioned M&A
and I started thinking about that time
where like the lines were starting to get blurred
between wholesale and retail, right?
Wholesalers and just getting into like
dealer to dealer transactions or whatnot.
But then I think about tech and I'm like, wow,
like we're seeing this in tech as well
where the DMS platforms are integrating payment systems
and CDK using a real example
like the integrated payment system
and inventory analytics platform, right?
First thing that comes to mind is like the auto
and stuff like that.
And it's like the lines are getting blurred.
These companies are, they're going up and down the funnel
and saying, how else can we replace tools
that our dealers are already using,
put them all under one stack
so that's an easier, just a better user experience
for the customer and everyone's doing it in different ways
but you're seeing it and manifest with many,
in many different ways.
I want to slightly change topics.
So again, being a former venture back founder myself,
I think about the power law
where there's quote unquote alpha in our industry.
And I've noticed that a lot of the big successes
in this industry recently
and this might be some like survivorship bias
because I'm maybe not paying attention to others
but I have noticed that
you're seeing a lot of big successes come out
of dealer grown auto tech, right?
So some examples like drive centric,
busy car who's on a tear.
I've heard Vincu's doing well
and I'm sure there's many other that I didn't mention.
What's your take on just dealer grown tech?
I mean, it's clearly, it seems to be doing well
or maybe I'm only paying attention
to the ones that are doing well.
Do you think that is where the alpha is in our industry?
Do you think that is really the next generation
of tools for dealers, literally dealers built by dealers?
I mean, look at this platform, right?
This is like we pride ourselves
in being a media platform from a dealers for dealers, right?
So is that like where we're headed?
Well, look, I mean, some of the secret for VC secrets
in terms of generating alpha,
which for everybody out there
that's above average returns than any benchmark
like the S&P 500 or whatever is unique insights.
And unique insights can come
from a bunch of different places,
but I'm willing to bet that
if I spent half an hour with Sam in his office
and we whiteboarded one of the biggest pain points
that you've witnessed across your career
that have not yet been solved,
he'd probably have like five different businesses
we could literally start right away.
And that's not gonna come out of some kids
out of Silicon Valley, right?
They may come in, they may interview Sam,
but like unless they can get access
to the right people that have the right knowledge,
they're not gonna really be able to tease out of that
the right problems that actually need to be solved.
We love when dealers are innovating.
I love dealers that have said,
look, 15 years ago, I did identify this problem.
I never had a way to solve the problem
and I've never had a vendor come up to me
in 15 years to solve that problem.
And now finally, you're here, right?
You're here with a company
that's gonna potentially solve that problem.
That's the big unlock and the big aha
to get alpha or above average returns
that we kind of look for.
It can come from a different couple of different sources.
If you've got an entrepreneur
that partners really well in the early days
with a couple of power user really smart dealers,
they can get that knowledge out of the dealer's brains
and then they can go execute.
But to your point, Yosi, I mean, it's also very exciting
now that it's really easy to build software
when you get dealers who say, like, look,
I've waited long enough, Sam sitting here and said,
15 years, I've been waiting for a vendor
to walk in my door to solve this problem.
And you know, Sam finally says, screw it,
I'm gonna go hire a developer
and I'm just gonna get started and build this myself.
And this couldn't have happened 20 years ago
because it was so expensive and time intensive
to build software.
So I think, like I said, I mean,
we are gonna see so many more dealers
with the frustration seeding new entrepreneurs.
And I think it's gonna be a very exciting cusp
of new innovation, a new wave of innovation
that we're gonna see in the space.
So is maybe part of the takeaway
for a dealer audience watching
that now is a time maybe unlike 10, 15, 20 years ago
to find that developer and see that idea
and create that, you know,
is the entry that low on software development
that if the problem is more key
than having the ability to create the software
on the other side?
It's even better than that, Sam.
So this gentleman, I won't disclose who it is,
but somebody you know this morning running a group,
he literally has coded this himself
because now this quote unquote vibe coding is so easy
that you can sit there with a chat bot open
on your screen and you can tell it what you want.
And in real time, it'll write the code,
show you exactly the functionality.
And he admitted like this morning, he said,
look, I've had a hundred iterations of this thing
since January when I started.
But Sam, like literally if you wanted to
by the end of this weekend,
you could have a piece of software
that no external developer touches and it would work.
It would integrate into your systems.
If you could point it to the APIs
from your software providers and it would actually work.
So I do think, and you know, 18 months from now
it's gonna be even easier
and cheaper to build this stuff.
So I think we are at Sam to your point
on the cusp of like a massive amount of innovation.
So if you're a dealer and you had this problem
that hasn't been solved by vendors
that you've been sort of percolating on
has been incubating in your brain
now would be the time to start exploring this stuff.
So I'll buy if you talk about being able
to enter it into this program and it'll help create it.
Where do you source the developer to solve the problem?
That's the thing.
You don't need a developer any longer.
The software, your chat GPT window is effectively,
it will write the code in real time.
As you continue to iterate, say look,
I don't like the colors in the background
or I don't like where that button is.
It'll come back and say, well, what about this?
And it'll be writing the code in the background
at the end of it.
You take that code, you upload it
and you're ready to go.
The software is live.
There's a couple companies that do this.
And there's a million, but there's replete,
there's lovable.
These are companies that you could just literally go on it
and prompt it, chat GPT and build your own software.
It's pretty incredible.
Steve, I wanna ask you a question about your fund.
So you've raised, I believe, multiple funds.
I'm an investor in the first fund.
You are, thank you.
Yes.
So two-part question.
First, I wanna talk to you about how your fund is doing
and are you still raising capital?
And then I wanna move on to actual portfolio companies.
I'm curious to know if there's any exciting outliers
at the moment or anything that's particularly
taking over the industry.
But let's start with that first question.
Are you still in fundraising mode?
Do you think you're gonna raise another fund?
Where are you at?
Yeah, I mean, you're kind of always in fundraising mode.
We're on our third fund now.
We've made 10 investments out of that fund.
We actually wrap up, the fund raised,
the final close for that is in a few weeks here.
And we're gonna be oversubscribed.
The target was 15 million.
We're gonna end up just north of 18 million
by the looks of it.
I've still got a few LPs coming in.
But yeah, I think we're off to the races here.
Like I said, we've made 45 investments.
To answer your second question,
our standout, if I can mention by name,
is WarCloud, a company you know well,
you've invested in, it's gonna do extremely well for you.
And very simple problem it's solving,
but a problem that every dealer has,
which is how do I get paid faster
through my warranty reimbursements from the OEMs?
And typically dealers have a clerk
or a human that's doing them.
If that clerk's sick or lazy or not doing a good job,
then it's a cash flow issue.
So, you know, WarCloud automates all that.
The dealers get paid faster.
There's never any errors.
And we're showing interestingly enough, because of errors,
dealers on average make 14% more per RO.
So we're looking for solutions like this
that automate problems at dealerships
using fairly straightforward technologies
that have a demonstrable and immediate value back to dealers.
You know, and I'll say one more thing.
What I like about small funds, Sam,
is that your interests are sort of aligned
with the general partner.
You know, you go to these big funds, billion dollar funds,
and they're making so much on fees
that it's like they don't really care if, you know,
they get carry, right?
If you sell a company, you know, they care,
but it's the interests are not as aligned.
And here I do enjoy smaller funds.
I just think that, you know,
the general partner really has an incentive
to find the winners,
because ultimately they make money when you do.
And so it's a, it doesn't, you know, it doesn't work out well.
Wow, Steve, that's a great update.
Appreciate it.
Of course.
Sam.
Steve Greenfield.
Yeah, Steve Greenfield, general partner,
automotive ventures.
Thanks for being on the show
and sharing some really cool insights with us
on all things AI and VC.
So thanks for being on the show.
Guys, I'm honored to be, I'm honored to be here.
Thanks for everything you do for the industry.
Thank you.
Yo, Steve, that's, it's, it's interesting to me,
one big takeaway to me, and this is big in my mind,
it's the problem.
It's not the technology that's the key right now.
It's finding that problem that needs to be solved
because it sounds like the technology is cheap.
The problem though, really is there's so much technology
out there is getting the technology to actually deliver,
I think is also a problem.
With this technology,
as someone who's made this mistake,
you don't want to build a solution
and then look for a problem.
I've literally made this mistake.
You need to find a problem and then build a solution,
which is why even here at Cardioship Guy, right?
When we spin up new media properties or anything,
it's like, why are we doing this?
What problem do dealers have
that we can solve by way of content media, right?
Education, that's, you have to be very,
very focused on that specific thing.
Because otherwise, why are you creating something, right?
Are you launching a live show just to launch a live show?
No one's gonna watch it
if it's not adding some value to their day.
So anyways, that was interesting.
Don't create a solution looking for a problem.
So all right, next guest up,
let's turn to John Murphy,
Managing Director of Strutee.
Actually, we're gonna hold his title for a minute.
So we're gonna start where he's been.
John Murphy, welcome to the show.
Well, John, so I asked John,
we were talking about your career at B of A
as an equity, as an automotive,
North American automotive equity analyst.
You've covered a lot.
You've covered the OEMs.
You know a hell of a lot more than me about the OEMs.
You've now transitioned to Hague Partners.
Hague is a partner of Cardioship Guys here
on the platform.
You're Managing Director of Strategic Advisory.
So just start telling us,
why did you decide to leave the B of A
as an analyst to come over to the retail side, really?
Let's just start there.
Why did you make that change?
Well, I kind of alluded to this before.
Maybe if you didn't hear me that well,
the sell side is a great job.
It's a great way to learn, travel the world.
Got to know a lot of investors,
got very deep in the industry,
covering the automakers, suppliers and dealers.
And really that puts me in a deep position,
I think for a lot of folks,
because a lot of what's going on
in any one of those links
and has massive impacts in the other two.
And I think really that's going to help me with the dealers
and hopefully with relationships with the automakers
as well provide a lot of value in the M&A process,
but also as well as the advisory process.
I went through the last couple of years,
loved my job, B of A was very supportive
for a very long time.
But I kind of wanted to make a transition
and I spent a lot of time thinking about this
because it was a great run at B of A,
really good, great run, a lot of great...
26 years.
I know I was in the industry very well.
Yeah, it's a wild pile.
Yeah, it's been a minute, it's been a minute.
I spent a lot of time thinking about this
and I wanted to get into an entrepreneurial environment,
a place where I could really make a difference
and really do that with folks that I know well,
I trust.
And I've been talking to Alan for a number of years.
This kind of has popped up more recently
and come to fruition.
But, you know, everybody in the space and, you know,
Alan is really I think one of the most trusted
and respected folks in the industry.
And I have run my franchise in a very similar way
to where you're not always necessarily
right on your stock calls,
but you do, you know, hopefully very good work
and really, you know, do foundational work.
So you're not just kind of making stuff up
like some folks are.
And I think where, you know, our platforms
are going to go together very well.
I mean, M&A and advisory really dovetail together.
And I think we're going to, you know, have a great run.
I'm looking forward to working with him, with the team
and everybody else listening on the line here
as all the dealers.
And I kind of just would say,
I kind of went through this transition,
which I think a lot of people do when they're kind of
thinking about selling their dealerships.
You know, I was kind of exiting old career
and looking for the next thing.
And, you know, Alan was the answer
as far as maximizing value to use it,
you know, the tagline of Hague partners
of what I wanted to do next.
So I think I'm going to be, you know,
hopefully very helpful on the M&A side, the advisory side
and really help the whole industry in many, many ways
that, you know, a lot of other folks
don't really have the perspective on.
So I'm super curious about your perspective
having come from Bank of America,
having all the data, all the resources you've had,
looking at the different OEMs that are out there,
you're thinking about the M&A.
Which OEMs do you see as being the strongest,
most compelling for a buy in today's marketplace,
September of 2025?
And then give us two or three that are struggling
and then the potential turnaround.
And, you know, be curious your perspective on that.
Sam, you're putting me on the spot.
You know, it's real interesting.
I would say just in generally in the industry,
when I think about sort of the product pipeline,
this year and next year are historically very low
years for product introductions, right?
So if you're a dealer, you know,
simply you want a lot of new fresh product
and that's really kind of where there's kind of a hole
for most folks.
Only 29, right?
New models.
It's the lowest in a long time according to your report.
Usually we're five to 46, you know,
we recover, you know, three, four years out.
But, you know, a lot of companies been way laid
by, you know, the EV investments, right?
And, you know, kind of, you know,
have been canceling a lot of those and pushing those out.
So that's part of the big problem in the industry.
But I would say, you know, some of the brands
that are struggling on the product development
are Nissan, Stalantis, you know, the obvious ones.
A lot of other companies, even like Toyota,
have a little bit of a lull, but Ford's got a little lull.
Everybody's got a little lull over the next couple of years.
So I think as you look three to four years out,
the industry looks fairly strong
on PD product development and intros.
And I think, you know, there's kind of this question
and I'm going to learn this in this new seat of,
okay, sort of, you know, necessarily a bad company
can be a really good stock and a really good investment.
And a really good company can be a bad investment in stock.
So I, you know, I've got to get in the weeds
on, you know, the multiples and valuations here,
because I think that's what we're going to help people
really uncover.
Can you explain that, John?
Can you explain that?
So I can a bad company be,
yeah, well, why can a bad company
be a good stock and vice versa?
So if you invest in a bad company
and the multiple is very cheap
and hopefully there will be a turnaround
by the management over time,
you know, you might get ultimately the best return over time.
But if you're paying a very high multiple for a good company,
that good company might not be able
to get much better over time.
So the multiple won't expand
and you won't make as much money on that investment.
So sometimes buying underperforming companies or brands
may not get you the highest ROI.
And I'll be honest, I mean, we're in the early days
joining Allen and team to understand
what the valuations are on the different brands.
But I think that's going to be something that holds very well
holds true to some extent, I should say,
in the dealer in a world.
So we're going to be doing a lot of work
on stuff that's somewhat similar to car wars
and brand analysis and trying to bring
sort of that understanding to dealers
where they can get the best return
on their investment going forward.
In addition to a lot of other things as well.
So John, you've said, even in light of these
fewer launches that Detroit automakers
could see profitable years ahead,
what's driving that profitability
and can dealers expect to trickle down
on the franchise model in stores, fewer models.
So, you know, Sammy, it's a great question.
You know, when you look at this,
they understand product development.
The underneath is a little bit of a lull here.
They're struggling like everybody else
with the EV investments.
But there are three brands or three companies
that have the biggest opportunity
to work on strengthening the distribution channel.
So I think, you know, if you're a dealer
and you can provide value to GM Ford or Stellantis,
I think they're going to look to partner more and more
with those dealers over time.
Now, this is all still in process
and still in development.
But I think that, you know, over time
the companies themselves being given
a little bit of breathing room around EV specifically
can lean pretty heavily into their core truck businesses.
And that's really for all three companies
is where they make their money.
I mean, in some cases, more than all their money.
I think moves and money, you know, every place else.
And they can lean into those
and lean into those with the dealers.
And I think the opportunity here,
and this is for the whole industry,
to mine and grow the parts and service business
further than it's being leveraged right now
is a big deal.
Ford Pro is a good example of understanding
some of their commercial customers
and how they can really service them
and hold on to the vehicle.
But the reality is dealers are capturing
less than 40% of the parts and service work
and years on average in the industry.
And that's just money being left on the table.
John, I got to ask though,
you've been covering OEMs for over 20 years
and you have moved over to essentially the retail side
which to me implies that you don't believe dealers
will be disintermediated or anytime soon
or like, you know, direct to consumer
will kind of take over this industry.
What gives you, as someone who came
from a very objective position previously,
you were not in retail, right?
Directly at least.
What gives you that kind of vote of confidence
with all the knowledge you have
and everything you've seen
and all the cycles in the industry, right?
Like why are you so confident in that
to then literally come and, you know,
be on closer to the retail side
and not think that direct consumer OEMs
will try to lean into that even more
than they have historically.
Well, I think Alan's biggest risk of losing me
is me going to be a car dealer over time
because I get involved in some of these things.
Let's go, come on over.
I think once I'm further,
I really believe in this model, right?
There's no, there's no kidding around here.
Be careful what you wish for.
Yeah, no doubt.
Well, you never know.
So, I think, honestly, like you said,
I've analyzed the industry for almost 27 years.
You know, I see where the value is really created.
And I think that dealers provide far more value
than the skeptics even can understand.
And, you know, when I'm talking about this opportunity
of, you know, getting more of the aftermarket,
I mean, dealers capture $55 to $60 billion
of the profit off the vehicles in their lifetime.
On an annual basis,
there's about another $135 billion
that goes away from these dealers, right?
So, when I look at this industry, you know,
I think one, you know, you have staying power,
you know, massive diversity in the four verticals.
Two, can really increase the profitability.
And one of these things in this advisory side
that I really want to get after is helping dealers
get after that extra $135 billion that they're not doing.
And I believe that a partnership,
a greater partnership and collaboration with automakers
can really drive that.
And all boats can be lifted in a huge way.
Now, I'm going to play shuttle diplomacy here
because sometimes there's, you know, there's not, you know,
there's no love loss between, you know, dealers
and certain brands.
But I think there's a real opportunity
for everybody to work to get together here
and take back their fair share of these massive investments
the automakers and the dealers are making
that other people are siphoning away and it's just wrong.
It's just, you know, it's just kind of wrong.
And I think the customer was that.
I think the customer was that.
Yeah.
And John, and I was going to say,
and it tells me also, you know,
I like the kind of pattern matching thing.
And it also tells me that you likely believe
that the industry is going to see more consolidation
because you're literally, and part of a firm
who advises on M&A as a big chunk of what they do.
And that implies consolidation, the more consolidation,
the more advising that needs to be done.
And so again, you're a very smart, thoughtful guy.
I just have to imagine that's part of what you might see
in the future.
You can correct me from wrong here.
No, I think you're exactly right.
I believe there's power in consolidation
and the industry is going to continue to head
in that direction.
And whether it's, you know,
two to 3,000 owners over time
or it's 100 to 200 owners of franchises over time,
I don't know, it's debatable.
But it will probably be less, you know,
there'll be less owners over time.
I think some folks are certainly aging out.
I think there's some new pools of capital,
family offices and private equity
that will need to get in with operators.
We all know they just can't get in naked by themselves
and maybe they shouldn't.
But, you know, certainly with some good operators,
you know, and partners, there'll be a way to play.
But I mean, think about this.
I mean, we've got, I don't know, 17 and a half,
17 and a half thousand dealers, maybe 18,
it's, you know, in that zip code, you'll get a rooftops.
Over time, you know, that's a relatively limited number, right?
That might shrink, you know, if the D3 can, you know,
rationalize, it might grow a little bit
if new brands come in, some ad points, but it's kind of
a finite of points, finite points of dealerships.
And if I'm sitting here saying, hey, listen,
I think I can help and, you know,
and hate partners can help you grow your profits 50%,
maybe more, help the automakers as well.
Think about that.
We've got a finite supply of points
that are generating great profits as they exist right now
that we're going to get out there.
And I want to work my tail off, you know, to grow,
you know, that becomes something
that is incredibly attractive,
not just the people that own the points,
but over time, you know, people that want to get in
and invest and that will, I think,
the new capital coming in might have a greater appetite
for maybe giving up a little bit of near-term profit
to drive long-term profit in value.
So, no, I firmly believe this.
I firmly hope to, you know, help folks,
you know, get after this.
And like I said, Alan's biggest, you know, risk of losing me
is, you know, that I get out there
and try to do it on a two-in-two as well.
So, I really-
Okay, so wait.
Join the game.
So, John, I got to ask, you know,
feel free to respond to this if you can,
but if I'm a Chevy dealer, GM dealer,
and I just read an article that the CEO of my company
just sold 40% of her stock,
what am I missing?
Is that, how is that normal?
So, go ahead.
Well, I think, you know,
Mayor's held a lot of dock for an amount of time.
I certainly think that, you know,
in first blush, you might be like,
yeah, that's, you know,
certainly not necessarily a great sign.
You know, stock is near, you know,
all-time highs or near highs since it's IPO
and the stock, you know,
before this has not had a great run,
but Mary actually has done sort of objectively
a really good job
and the profits have been relatively stable
and near record highs recently
and they're buying back stock as a company
pretty aggressively,
which is a good strategy on capital allocation.
So, I think what Mary is doing right now
is, you know,
what any prudent person would do is diversification
of what is a fairly large, you know,
asset pool of her own in the stock.
I wouldn't read into it
that something is going wrong at GM
or it's a sign of something about, you know,
fall out of bed there at all.
And I think Mary's pretty committed to the business,
you know, Paul Jacobson, Mark Royce,
the senior management there committed to the business.
They've brought in some real new talents,
some folks from the finance world
that I know they're near and dear friends
and I think are going to drive that business fairly well.
And I think like a lot of automakers,
I mean, this is one thing
that I think everybody forgets about this industry.
And this is a weird wonky, you know,
endless thing to say is, you know,
capacity in North America is a cap you is running,
the best unitization has run around 70% right now, right?
If we were kind of sitting here 10, 15, 20 years ago,
you would say the industry is collapsing, right?
What's happening right now is the automakers
are putting up near record profits at 70% cap you.
Usually 80% cap you is where you break even.
So the idea that the industry is operating
at lower vimes and nobody is really jamming hard
to take market share and go from 70% cap you
to 90% and get out there and take a lot of market share.
Everybody is starting to really understand
at the automaker level.
I think it's a good message for the dealers
that if they operate at lower levels
and higher prices, they can make more money, right?
I get really wonky and grungy
profit maximization equation.
I won't even get into that on the show.
We can talk about that later.
But they're understanding this stuff.
And I think GM really gets it.
And I think this focus on trucks,
there've been sort of unburdened by carb
and some of the EV mandates.
I think a lot of these companies have a pretty bright future.
And I think they're auto dealer partners
where they've built a really good opportunity for it.
And yet there still are OEMs that have stair step
and are leaning heavily into it to push the volume, right?
So it's still a factor in the game.
All bad actions are gone.
But I think the general is acting a lot better, Sam.
I think it's a fair point.
Yeah.
Well, John Murphy, managing director, strategic advisory
at Hague Partners.
Thanks for being on the show today.
Thanks for sharing your perspectives
and bringing these unique insights.
Wait, we've got to ask, though, who
takes over the Car Wars report at Bank of America?
Did you ensure its continuation beyond you?
Or is it the dead now?
We'll see.
But we might have some people doing a conference at NATO
on February 3rd, where we'd love to have everybody come.
Where you might see something that
sort of some brand analysis that might be somewhat similar.
But I've got some great old colleagues
at Bank of America.
Federico Morendi is a fantastic analyst
who's working on it right now.
I hope to help, but I also help to help everybody
with some new brand analysis.
That's right.
February 3rd at NATO.
Look forward to seeing everybody.
Thanks for being on the show.
Amazing.
Thanks, guys.
Thank you so much, John.
You'll see some great conversations today, yeah?
Yeah, what a lineup of guests.
That was super interesting and great topics.
Really, really, really fun show.
Yeah, well, that's a wrap on this Friday.
We're back Monday.
Thank you to our daily dealer live audience for watching,
where we break down the biggest car business.
You want to say something and go Eagles, right?
Car business as they happen.
Don't forget, we're here live every Monday, Wednesday,
Friday.
So if this is your world, hit like, subscribe,
turn on those notifications so you never, ever, ever
miss a beat.
Go Eagles.
Go Bears.
Sam, when I sent the picture to the team
before we came on, Cole sent me a message.
He's like, if you're going to wear the jersey,
you've got to come on the show fully inebriated as well.
Well, maybe Monday I'll come on with a jersey.
That's the challenge for Monday.
We'll see everybody next episode.
Thanks for joining us.
See you Monday.
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