Speaker 1: Now remember when it across an arm and a leg
Speaker 1: just to buy a used car. Well, new data out
Speaker 1: there shows the prices have actually been decreasing, including in
Speaker 1: October from the month prior, and are now down more
Speaker 1: than three percent on a year.
Speaker 2: Over year basis.
Speaker 1: Here to talk about some of those trends in the
Speaker 1: used car market is George Shamone. He's the CEO of
Speaker 1: a company called ACV. It's a digital platform for dealers
Speaker 1: to buy and sell use cars.
Speaker 2: Thanks for being here, George, now, thank you for having me.
Speaker 2: Really appreciate it.
Speaker 1: I think we all remember those halcyon days, at least
Speaker 1: for those folks who are selling use cars where you
Speaker 1: can basically name your price.
Speaker 2: And get everything.
Speaker 1: We've seen a moderation in that, or may be a
Speaker 1: renormalization of the market. Give us a sense here at
Speaker 1: the wholesale level dealers coming in looking to buy. Are
Speaker 1: the prices much more competitive now than what they were?
Speaker 2: I don't know, maybe four years ago, Yes, certainly.
Speaker 3: I mean used car values have continued to come down
Speaker 3: over the last couple of years. Affordability from consumers obviously
Speaker 3: has been a big challenge, and we've seen prices come
Speaker 3: down a big part of that is as new supply
Speaker 3: comes back and the incentives for new peak about now,
Speaker 3: all of a sudden, there's great lease payments for a
Speaker 3: lot of the great vehicles out there. So as the
Speaker 3: new lease incentives come out, new prices come down, used
Speaker 3: car values also come down.
Speaker 1: Give me a sense here two with ACV, because you're
Speaker 1: dealing main with dealers, it's basically a wholesale network more
Speaker 1: or less. Here the types of dealers you're dealing with.
Speaker 1: Are these kind of single one off dealers, Hey, I
Speaker 1: got my you know you know Joe blows Ford, you
Speaker 1: know on Route ninety six, or are these more kind
Speaker 1: of those big kind of multi brand dealership. So with
Speaker 1: the kind of sale, everything under the sun.
Speaker 2: At ACV we work with both.
Speaker 3: We have some of the largest dealers in the country.
Speaker 3: Leveraging our products. We have several products.
Speaker 2: One is ACV Auctions, and we also have a product
Speaker 2: that helps dealers source cars.
Speaker 3: From consumers, and one third of all of those new
Speaker 3: car or franchise dealers are working with ACV. In addition,
Speaker 3: independent dealers, as you mentioned, are a big part off
Speaker 3: the independent used car sales.
Speaker 2: We probably have around a third of the end penance
Speaker 2: or more working with ACV as well.
Speaker 4: What kind of demand is there for hybrids versus evs
Speaker 4: versus ice vehicles.
Speaker 3: So there's definitely today the highest demand for ice but
Speaker 3: plug in.
Speaker 4: Hybrids because of the price point.
Speaker 2: Price point, trust comfort, you know.
Speaker 3: Electric vehicles, especially dealers buying these cars after we think
Speaker 3: about our network, our network of dealers are comfortable buying these.
Speaker 2: So we've seen residuals.
Speaker 3: Did come down early in the year quite a bit.
Speaker 3: With electric it kind of leveled out and just came
Speaker 3: down a little bit more. Plug in hybrids have stayed
Speaker 3: very strong.
Speaker 4: Yeah. Yeah, I ask because a lot of people are
Speaker 4: leasing evs right now. You know, it's a way of
Speaker 4: testing out whether they want to permanently adopt this, and
Speaker 4: that means in about three years there's going to be
Speaker 4: a lot of supply coming onto market, maybe even too much,
Speaker 4: given you know, it's been a slow transition to evs
Speaker 4: from ice vehicles.
Speaker 2: Yeah, I just think all this stuff levels and stuff out.
Speaker 3: Every single one of these cars will get purchased at
Speaker 3: the end of lease, at the end of its term.
Speaker 2: It just then corrects the price.
Speaker 3: So every one of these there's a transaction price for
Speaker 3: every one of these assets, and we're obviously seeing now
Speaker 3: a lot more incentives for new evs and they will
Speaker 3: also drive the prices down.
Speaker 1: Our expectations, though consumer expectations, the dealer expectations for that matter,
Speaker 1: kind of a little bit normal in terms of pricing,
Speaker 1: because there was a big disparity there, not just in
Speaker 1: used cars, but we saw that in new cars as well.
Speaker 1: I'm just wondering, have we gotten more in alignment.
Speaker 3: There's definitely more alignment, but there's gaps of vehicles that
Speaker 3: dealers will definitely pay all the money for certain cars.
Speaker 3: So there's many consumers out there. Keep in mind, the
Speaker 3: age of vehicles stand the road is eleven years old,
Speaker 3: average age, highest it's ever been. So many consumers are
Speaker 3: sitting on vehicles that they would be surprised what dealers
Speaker 3: will pay for these cars.
Speaker 2: And we power these.
Speaker 3: Trade into for well over one thousand dealers across the
Speaker 3: country where consumer right in their driveway can put in
Speaker 3: their data, take pictures using artificial intelligence and get a number,
Speaker 3: and the number is actually pretty high. And so you've
Speaker 3: seen all the media on prices have come down, but
Speaker 3: there's still a lot of consumers out there, especially the
Speaker 3: consumers have bought cars five years and prior have incredible
Speaker 3: equity in these vehicles.
Speaker 4: How do you see demand from consumers to upgrade their
Speaker 4: vehicles or to tread in their vehicles changing? If interest
Speaker 4: rates continue to decline and be it, I'll bet a
Speaker 4: little bit more slowly than perhaps people had projected at
Speaker 4: this earlier this month.
Speaker 3: Yeah, the cost of capital drives obviously both new and
Speaker 3: used affordability opportunities. So we're already seeing it with new
Speaker 3: So as you're seeing interest rates come down, you're seeing
Speaker 3: the OEMs lean in on incentives. Yeah, as their cost
Speaker 3: to capital goes downd and I'm used, the same thing
Speaker 3: will happen.
Speaker 2: So all of this.
Speaker 3: At the end of day, the everyday household is thinking
Speaker 3: a monthly payment. So whether they buy a twenty five
Speaker 3: thousand dollars car or a thirty thousand dollars car, they're thinking,
Speaker 3: how do I pay three hundred and three hundred.
Speaker 2: Fifty dollars a month.
Speaker 4: It's like the reverse engineer it, that's right.
Speaker 3: And so we're already seeing new get corrected. Used prices
Speaker 3: are going down as interest rates go down. It's going
Speaker 3: to be a really big factor for the everyday consumer.
Speaker 2: To be able to buy these vehicles.
Speaker 1: What's the growth story for ACV going forward. I mean,
Speaker 1: you guys have come a long way in a very
Speaker 1: short time, and a lot of people don't even know
Speaker 1: your name. I mean they might be familiar with the
Speaker 1: product here. Is there sort of a plan in place,
Speaker 1: I guess to not only just broaden the business, but also.
Speaker 2: Just broad in the awareness of it. Yeah.
Speaker 3: Our objective is we think both new car dealers and
Speaker 3: independent car dealers have unbelievable locations across the country. So
Speaker 3: think new car dealers, there's sixteen five hundred locations. As
Speaker 3: you all drive by these BMW stores, Mercedes stores, Forward stores.
Speaker 3: They need technology, they need the tools. They want to
Speaker 3: compete against those big box companies that come out of
Speaker 3: shows like this, and we're here to help them.
Speaker 2: So think about ACV and some.
Speaker 3: Of our products like clear Car are enabling technologies.
Speaker 2: So think B to B two C.
Speaker 3: So that when the everyday consumer wants transparency and trust.
Speaker 2: And to value their vehicle, they're going to be able
Speaker 2: to go to that.
Speaker 3: Local dealer, start in their driveway, show up, know the
Speaker 3: value of their car, and we're the ones going to
Speaker 3: be powering.
Speaker 1: That all right, George's going to have to leave it there,
Speaker 1: a great conversation and a great product. George Shimone is
Speaker 1: the CEO of ACV