WEBVTT - ACV CEO George Chamoun Talks Used Cars

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<v Speaker 1>Now remember when it across an arm and a leg

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<v Speaker 1>just to buy a used car. Well, new data out

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<v Speaker 1>there shows the prices have actually been decreasing, including in

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<v Speaker 1>October from the month prior, and are now down more

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<v Speaker 1>than three percent on a year.

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<v Speaker 2>Over year basis.

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<v Speaker 1>Here to talk about some of those trends in the

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<v Speaker 1>used car market is George Shamone. He's the CEO of

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<v Speaker 1>a company called ACV. It's a digital platform for dealers

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<v Speaker 1>to buy and sell use cars.

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<v Speaker 2>Thanks for being here, George, now, thank you for having me.

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<v Speaker 2>Really appreciate it.

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<v Speaker 1>I think we all remember those halcyon days, at least

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<v Speaker 1>for those folks who are selling use cars where you

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<v Speaker 1>can basically name your price.

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<v Speaker 2>And get everything.

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<v Speaker 1>We've seen a moderation in that, or may be a

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<v Speaker 1>renormalization of the market. Give us a sense here at

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<v Speaker 1>the wholesale level dealers coming in looking to buy. Are

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<v Speaker 1>the prices much more competitive now than what they were?

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<v Speaker 2>I don't know, maybe four years ago, Yes, certainly.

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<v Speaker 3>I mean used car values have continued to come down

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<v Speaker 3>over the last couple of years. Affordability from consumers obviously

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<v Speaker 3>has been a big challenge, and we've seen prices come

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<v Speaker 3>down a big part of that is as new supply

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<v Speaker 3>comes back and the incentives for new peak about now,

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<v Speaker 3>all of a sudden, there's great lease payments for a

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<v Speaker 3>lot of the great vehicles out there. So as the

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<v Speaker 3>new lease incentives come out, new prices come down, used

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<v Speaker 3>car values also come down.

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<v Speaker 1>Give me a sense here two with ACV, because you're

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<v Speaker 1>dealing main with dealers, it's basically a wholesale network more

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<v Speaker 1>or less. Here the types of dealers you're dealing with.

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<v Speaker 1>Are these kind of single one off dealers, Hey, I

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<v Speaker 1>got my you know you know Joe blows Ford, you

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<v Speaker 1>know on Route ninety six, or are these more kind

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<v Speaker 1>of those big kind of multi brand dealership. So with

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<v Speaker 1>the kind of sale, everything under the sun.

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<v Speaker 2>At ACV we work with both.

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<v Speaker 3>We have some of the largest dealers in the country.

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<v Speaker 3>Leveraging our products. We have several products.

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<v Speaker 2>One is ACV Auctions, and we also have a product

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<v Speaker 2>that helps dealers source cars.

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<v Speaker 3>From consumers, and one third of all of those new

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<v Speaker 3>car or franchise dealers are working with ACV. In addition,

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<v Speaker 3>independent dealers, as you mentioned, are a big part off

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<v Speaker 3>the independent used car sales.

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<v Speaker 2>We probably have around a third of the end penance

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<v Speaker 2>or more working with ACV as well.

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<v Speaker 4>What kind of demand is there for hybrids versus evs

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<v Speaker 4>versus ice vehicles.

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<v Speaker 3>So there's definitely today the highest demand for ice but

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<v Speaker 3>plug in.

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<v Speaker 4>Hybrids because of the price point.

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<v Speaker 2>Price point, trust comfort, you know.

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<v Speaker 3>Electric vehicles, especially dealers buying these cars after we think

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<v Speaker 3>about our network, our network of dealers are comfortable buying these.

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<v Speaker 2>So we've seen residuals.

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<v Speaker 3>Did come down early in the year quite a bit.

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<v Speaker 3>With electric it kind of leveled out and just came

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<v Speaker 3>down a little bit more. Plug in hybrids have stayed

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<v Speaker 3>very strong.

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<v Speaker 4>Yeah. Yeah, I ask because a lot of people are

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<v Speaker 4>leasing evs right now. You know, it's a way of

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<v Speaker 4>testing out whether they want to permanently adopt this, and

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<v Speaker 4>that means in about three years there's going to be

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<v Speaker 4>a lot of supply coming onto market, maybe even too much,

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<v Speaker 4>given you know, it's been a slow transition to evs

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<v Speaker 4>from ice vehicles.

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<v Speaker 2>Yeah, I just think all this stuff levels and stuff out.

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<v Speaker 3>Every single one of these cars will get purchased at

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<v Speaker 3>the end of lease, at the end of its term.

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<v Speaker 2>It just then corrects the price.

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<v Speaker 3>So every one of these there's a transaction price for

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<v Speaker 3>every one of these assets, and we're obviously seeing now

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<v Speaker 3>a lot more incentives for new evs and they will

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<v Speaker 3>also drive the prices down.

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<v Speaker 1>Our expectations, though consumer expectations, the dealer expectations for that matter,

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<v Speaker 1>kind of a little bit normal in terms of pricing,

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<v Speaker 1>because there was a big disparity there, not just in

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<v Speaker 1>used cars, but we saw that in new cars as well.

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<v Speaker 1>I'm just wondering, have we gotten more in alignment.

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<v Speaker 3>There's definitely more alignment, but there's gaps of vehicles that

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<v Speaker 3>dealers will definitely pay all the money for certain cars.

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<v Speaker 3>So there's many consumers out there. Keep in mind, the

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<v Speaker 3>age of vehicles stand the road is eleven years old,

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<v Speaker 3>average age, highest it's ever been. So many consumers are

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<v Speaker 3>sitting on vehicles that they would be surprised what dealers

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<v Speaker 3>will pay for these cars.

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<v Speaker 2>And we power these.

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<v Speaker 3>Trade into for well over one thousand dealers across the

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<v Speaker 3>country where consumer right in their driveway can put in

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<v Speaker 3>their data, take pictures using artificial intelligence and get a number,

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<v Speaker 3>and the number is actually pretty high. And so you've

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<v Speaker 3>seen all the media on prices have come down, but

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<v Speaker 3>there's still a lot of consumers out there, especially the

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<v Speaker 3>consumers have bought cars five years and prior have incredible

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<v Speaker 3>equity in these vehicles.

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<v Speaker 4>How do you see demand from consumers to upgrade their

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<v Speaker 4>vehicles or to tread in their vehicles changing? If interest

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<v Speaker 4>rates continue to decline and be it, I'll bet a

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<v Speaker 4>little bit more slowly than perhaps people had projected at

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<v Speaker 4>this earlier this month.

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<v Speaker 3>Yeah, the cost of capital drives obviously both new and

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<v Speaker 3>used affordability opportunities. So we're already seeing it with new

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<v Speaker 3>So as you're seeing interest rates come down, you're seeing

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<v Speaker 3>the OEMs lean in on incentives. Yeah, as their cost

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<v Speaker 3>to capital goes downd and I'm used, the same thing

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<v Speaker 3>will happen.

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<v Speaker 2>So all of this.

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<v Speaker 3>At the end of day, the everyday household is thinking

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<v Speaker 3>a monthly payment. So whether they buy a twenty five

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<v Speaker 3>thousand dollars car or a thirty thousand dollars car, they're thinking,

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<v Speaker 3>how do I pay three hundred and three hundred.

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<v Speaker 2>Fifty dollars a month.

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<v Speaker 4>It's like the reverse engineer it, that's right.

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<v Speaker 3>And so we're already seeing new get corrected. Used prices

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<v Speaker 3>are going down as interest rates go down. It's going

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<v Speaker 3>to be a really big factor for the everyday consumer.

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<v Speaker 2>To be able to buy these vehicles.

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<v Speaker 1>What's the growth story for ACV going forward. I mean,

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<v Speaker 1>you guys have come a long way in a very

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<v Speaker 1>short time, and a lot of people don't even know

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<v Speaker 1>your name. I mean they might be familiar with the

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<v Speaker 1>product here. Is there sort of a plan in place,

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<v Speaker 1>I guess to not only just broaden the business, but also.

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<v Speaker 2>Just broad in the awareness of it. Yeah.

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<v Speaker 3>Our objective is we think both new car dealers and

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<v Speaker 3>independent car dealers have unbelievable locations across the country. So

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<v Speaker 3>think new car dealers, there's sixteen five hundred locations. As

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<v Speaker 3>you all drive by these BMW stores, Mercedes stores, Forward stores.

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<v Speaker 3>They need technology, they need the tools. They want to

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<v Speaker 3>compete against those big box companies that come out of

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<v Speaker 3>shows like this, and we're here to help them.

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<v Speaker 2>So think about ACV and some.

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<v Speaker 3>Of our products like clear Car are enabling technologies.

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<v Speaker 2>So think B to B two C.

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<v Speaker 3>So that when the everyday consumer wants transparency and trust.

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<v Speaker 2>And to value their vehicle, they're going to be able

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<v Speaker 2>to go to that.

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<v Speaker 3>Local dealer, start in their driveway, show up, know the

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<v Speaker 3>value of their car, and we're the ones going to

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<v Speaker 3>be powering.

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<v Speaker 1>That all right, George's going to have to leave it there,

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<v Speaker 1>a great conversation and a great product. George Shimone is

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<v Speaker 1>the CEO of ACV