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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: I'm Hannah Elliott and I'm Matt Miller.

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Speaker 3: This is Hot Pursuit.

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Speaker 2: Coming up on today's podcast. We've got Kevin Tynan, the

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Speaker 2: director of research for the Presidio Group. Now we know

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Speaker 2: Kevin as the head of automotive intelligence for Bloomberg. That's

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Speaker 2: how we have met him and known him for years.

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Speaker 2: But he is such a great analyst and communicator of

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Speaker 2: what's actually happening in the automotive market. So I'm very

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Speaker 2: happy to have Kevin.

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Speaker 3: And a massive gearhead. I mean, he has an amazing

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Speaker 3: garage in New Jersey with it. So it's packed with

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Speaker 3: guitars hanging from the wall. You've seen it, right, and

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Speaker 3: like amplifiers everywhere. And then he's got like Mercedes.

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Speaker 2: Well, we haven't seen it. I don't think I've seen it.

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Speaker 3: It's insane. It is so good, it's like I don't

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Speaker 3: for some reason, I think of like if Gene Simmons

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Speaker 3: was a gearhead and built his own garage, it would

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Speaker 3: look like this. So I'm looking forward to that conversation

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Speaker 3: as well. We're going to dig into the big problems

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Speaker 3: that especially German automakers are facing, in the face of

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Speaker 3: Chinese competition and high cost production. But I want to

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Speaker 3: focus in with you for a moment, Handah on German automakers,

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Speaker 3: because you and I have both been driving a lot

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Speaker 3: of BMW's. I recently bought one, and you've had specifically

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Speaker 3: a string of M cars that would make you know,

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Speaker 3: a teenage roadent track subscriber drool. What have you been driving?

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Speaker 2: So, as you know, I was in the M two

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Speaker 2: CS and the the M four, and last week, or

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Speaker 2: actually this week, I should say, I've been in the

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Speaker 2: M five to two, which is of course the wagon.

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Speaker 2: The one I had was in this amazing green color.

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Speaker 2: Somebody said it looked like a green slug, which is

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Speaker 2: kind of cool. It's like this olive green.

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Speaker 3: Yeah, I thought it looked like an olive pretty much.

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Speaker 1: Yeah.

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Speaker 2: I love the spec. Of course. It's a four point

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Speaker 2: four leader V eight eight speed starts at about one

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Speaker 2: hundred and twenty two thousand dollars, so kind of the

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Speaker 2: same price as the M four, and I loved it.

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Speaker 2: Now I know we're gonna have a little conversation about this,

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Speaker 2: because coming out of the M four, going into the

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Speaker 2: M five, the M five felt instantly more adult, more powerful,

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Speaker 2: more uh, just more of a serious car. As you know,

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Speaker 2: I thought that the M four to me is a

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Speaker 2: little bit just soft. I this actually felt great to

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Speaker 2: get into.

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Speaker 3: I take the other side of that bent because I

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Speaker 3: a couple of weeks ago. Also as driving the M

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Speaker 3: five Wagon, mine was in an amazing purple, like a

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Speaker 3: plum purple color. And they're nailing it in terms of

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Speaker 3: their paints. And normally I'm a massive fan of the wagon,

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Speaker 3: like I adore a station wagon. My first car that

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Speaker 3: I ever bought myself was an Audi a four Avant,

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Speaker 3: And I mean I would never option a sedan when

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Speaker 3: I could have a wagon. But to me, the M

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Speaker 3: five Wagon or not, I've driven both versions of this generation.

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Speaker 3: It's just like too good. It's so good that it's

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Speaker 3: boring a lot like a nine to eleven GTS. I

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Speaker 3: just can't really feel the gear changes. It does have

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Speaker 3: those like teenage pops on DCEL, which I'm very much over.

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Speaker 3: And it's just so big.

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Speaker 2: It's it is long. It feels long for sure, it's

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Speaker 2: a slug and.

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Speaker 3: I don't really love the way it looks either. Like

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Speaker 3: I think the M four is more much more attractive

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Speaker 3: and more resolved design. And I also recently drove the

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Speaker 3: M two CS, which is much more raw and exciting

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Speaker 3: and you know, a visceral experience everything that we want,

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Speaker 3: even without the stick. I loved the M two CS.

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Speaker 3: So for me, I'd say the M five is the

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Speaker 3: is my third choice of those three.

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Speaker 2: Wow, I am really really shocked. Really, I am very

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Speaker 2: shocked because with this IN five, for instance, Okay, it's

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Speaker 2: got that urban green the factory color is urban green.

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Speaker 2: It's a five thousand dollars option, but also the it

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Speaker 2: was like twenty and twenty one inch dual spoke bicolor

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Speaker 2: wheels that were super cool. It's got all of it's

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Speaker 2: got the glow package on the kidney grill, It's got

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Speaker 2: all of these extra like black roof and shadow line

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Speaker 2: lights and like obviously red red break calipers, and like

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Speaker 2: all of these things that all the Beamer bros love

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Speaker 2: and I kind of get it. Maybe I wouldn't buy

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Speaker 2: it from my personal car if I only had one,

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Speaker 2: but I'm very surprised because this to me, was more

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Speaker 2: brutalist and like structurally interesting in the four, which, again,

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Speaker 2: the M four to me was just like a little

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Speaker 2: bit of a version of the M two with all

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Speaker 2: the edge rounded and off, it just felt a little

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Speaker 2: bit soft, a little bit bloated.

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Speaker 3: No, you're right, I get it. I get what you're saying,

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Speaker 3: and I think you're wrong. Like the M two and

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Speaker 3: the M five are both much more severe designs, right,

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Speaker 3: and the M four looks a lot more like every

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Speaker 3: other BMW, Like you wouldn't be able to tell if

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Speaker 3: that's really an M four or an M six and

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Speaker 3: the when you look at it.

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Speaker 2: And but that's why I'm surprised you like it.

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Speaker 3: But but but uh, I think it's so the M two.

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Speaker 3: I love that it's so in your face and raucous,

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Speaker 3: and it drives that way as well, which is what

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Speaker 3: I love. The M four, I just think is a

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Speaker 3: more attractive vehicle, Like objectively, it's it's finished the way

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Speaker 3: you would expect the M five. To me, it's just

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Speaker 3: nothing can hide how big and heavy it is. It's

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Speaker 3: just and I and I just for some reason don't

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Speaker 3: dig the way it looks. I yes, the wheels are cool,

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Speaker 3: black roof. I've never understood why you would want unless

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Speaker 3: it's you know, just the carbon fiber look like, why

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Speaker 3: do you want a heat sink? On your roof and

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Speaker 3: on your hood. I've never understood why people do black

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Speaker 3: roof and hood. If you're gonna do anything different than

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Speaker 3: do white roof and hood, you know there's a look well,

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Speaker 3: but not not for the look, right, but so that

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Speaker 3: you don't have the sun boiling you on the inside.

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Speaker 3: I don't know.

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Speaker 2: To me, let me ask you this so fast.

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Speaker 3: And it's so and it's so good that it's like boring,

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Speaker 3: and it still has the big sharp screen on the

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Speaker 3: inside that I can't get along.

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Speaker 2: Find that screen that I know we've talked about this

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Speaker 2: for some reason that didn't get me. Let me ask

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Speaker 2: you this, how much does your seventh series way?

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Speaker 3: The seventh series must weigh more? I don't actually know

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Speaker 3: the M five. I wouldn't be I wouldn't be surprised

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Speaker 3: if they're about the same. But the thing is so

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Speaker 3: I had the M five wagon the same week that

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Speaker 3: I got the seven series or a week later. Yes,

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Speaker 3: And one of the problems for me with the M

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Speaker 3: five is I would walk out to my driveway look

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Speaker 3: at this new fangled high tech M five and it's

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Speaker 3: fast and it's precise, and then I would look at

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Speaker 3: my big boat of a seven sixty and it's like

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Speaker 3: driving a diesel locomotive. I chose the seven sixty more

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Speaker 3: often than I chose the M five. Part of that

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Speaker 3: is probably because I just got it. It's mine and

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Speaker 3: it's new, new to me.

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Speaker 2: Well, that's totally fair, that's totally fair.

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Speaker 3: But I just if I were going to order M cars,

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Speaker 3: I think I would put the M five Like last,

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Speaker 3: I would rather have an M two. I would rather

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Speaker 3: have the new M three cs Hans Shelter. I would

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Speaker 3: rather have an M four. I would rather have They

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Speaker 3: don't make the M six anymore, I don't think. But

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Speaker 3: I'd rather have the M eight even as you know, like, yeah,

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Speaker 3: so all of those for me would would trump the

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Speaker 3: big wagon, which is interesting because I'm such a wagon guy.

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Speaker 2: Yeah, I'm surprised. It's good to know. Yeah, I mean,

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Speaker 2: I'm not. Does a wagon fit a child seat in

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Speaker 2: the in the.

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Speaker 3: None of those cars, except for the seven series, will

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Speaker 3: fit a large rear facing child seat behind a driver

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Speaker 3: who is pushed all the way back like that doesn't

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Speaker 3: work in a range rover unless it's the long wheelbase.

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Speaker 3: That's why I like these big German limousines, because it

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Speaker 3: does work in the A eight to L. It does

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Speaker 3: work in the seven series, the L versions, which almost

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Speaker 3: all Americans ones are, and it does work in the

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Speaker 3: S class. That's for a dad, that's a huge bonus.

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Speaker 3: By the way, I want to just pivot to Mercedes

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Speaker 3: before we get to Kevin, and we'll talk with him

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Speaker 3: about Mercedes a lot because he owns so many and

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Speaker 3: he's a big fan, and we're going to focus on

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Speaker 3: German cars. But there has been so much hate for

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Speaker 3: AMG online and there's always I mean, online is where

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Speaker 3: hate lives, so I guess that's to be expected. But Callari,

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Speaker 3: I've been driving the AMG GT sixty three that you

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Speaker 3: and I both love. You picked it for your Car

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Speaker 3: of the Year last year of it, but I've been

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Speaker 3: driving like the pro version. So they make this big

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Speaker 3: beefy hybrid, the s E Performance version with eight hundred

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Speaker 3: horsepower a thousand pounds feet of torque. That's to me,

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Speaker 3: the AMGGT version of the nine to eleven turbos, right,

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Speaker 3: And they make now this GT sixty three pro version,

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Speaker 3: which I'm gonna call their GT three touring. It's like

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Speaker 3: a nine to eleven GT three touring because it's it

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Speaker 3: takes away the hybrid components, so it's just the motor. Okay,

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Speaker 3: it's not naturally aspirated, but it's a big V eight

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Speaker 3: with turbos. And you can't get a stick with the

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Speaker 3: AMGGT either in any form or even a DCET. They

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Speaker 3: have their own transmission, but it's like lighter, five hundred

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Speaker 3: pounds lighter. It's a lot more nimble as a result,

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Speaker 3: and some of the luxury like sound deadening is stripped out.

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Speaker 3: But it's just an amazing car. And for all of

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Speaker 3: the for all of the shade that AMG gets, for

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Speaker 3: going down to four cylinders or even no cylinders, I

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Speaker 3: think these amggts are just amazing vehicles. Granted they cost

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Speaker 3: a ton of money.

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Speaker 2: They cost a ton of money, but I have to say,

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Speaker 2: and I was just with Mercedes earlier this week in

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Speaker 2: Beverly Hills. They had an opening for their new my

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Speaker 2: Boch Attilia and they unveiled a new Mercedes my Boch SUV,

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Speaker 2: the GLS six't eighty. And I had some time talking

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Speaker 2: with some of their board members and executives this week,

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Speaker 2: and this is going to sound very oversimplified, but they

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Speaker 2: are so smart and they are so good they know

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Speaker 2: what they're doing, and they are able to articulate exactly

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Speaker 2: why they're doing things in a way that is not

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Speaker 2: calm among every other automaker. And I always say, the

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Speaker 2: products indicate what's happening in the company. Again, maybe this

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Speaker 2: is an oversimplified thing, but it remains true. The products

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Speaker 2: indicate what is really going on, and there is a

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Speaker 2: lag time between product and where the company is. But

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Speaker 2: that has that has always been true in my experience,

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Speaker 2: and the products at Mercedes continue to be good, some

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Speaker 2: better than others. But to your point, Matt, they understand

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Speaker 2: that that there is a very strong appetite among certain

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Speaker 2: people like us who are appreciate and love that car

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Speaker 2: and really need that car who to exist. I mean,

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Speaker 2: they get they understand that.

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Speaker 3: I just wish it was making sense thing too. I mean,

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Speaker 3: I just wish it wasn't so expensive like this one

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Speaker 3: starts at I think two hundred and fifteen or two

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Speaker 3: hundred and twenty thousand. If you want the se performance,

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Speaker 3: you're paying you know that. Plus it's like it's unaffordable

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Speaker 3: for almost anyone. Right, Yeah, let's get to SpaceX. Let's

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Speaker 3: get SpaceX shares.

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Speaker 2: And that reflects the fact that these things are becoming scarce,

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Speaker 2: which makes them luxury objects.

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Speaker 3: But I also think that it can hold its own

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Speaker 3: against Obviously a nine to eleven is a slightly different

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Speaker 3: use case, but definitely they're priced that way too. When

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Speaker 3: you get to the Turbo and the GT three, it

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Speaker 3: can hold its own in my opinion, against the Lamborghini Temorio,

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Speaker 3: which I drove last week, and although it took me

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Speaker 3: a while to fall in love with it, I did.

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Speaker 3: It feels like more of an Audi than a Lamborghini.

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Speaker 3: But it's twice the price of this GT sixty AMGGT

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Speaker 3: sixty three Pro, and the AMG sounds better. The AMG

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Speaker 3: is more comfortable and maybe in some circles, also more

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Speaker 3: socially acceptable. I feel like it's a supercar. It's a

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Speaker 3: legit supercar. These amggtas car, for sure, they're so powerful.

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Speaker 3: I'd rather have a Corvette than either one. But oh wow,

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Speaker 3: well because I save so much money that way, right, Yeah,

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Speaker 3: The Corvette has a six point eight liter naturally aspirated

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Speaker 3: V eight and it starts at like seventy five thousand dollars.

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Speaker 3: That's insane, I know.

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Speaker 2: I think you lose something on the fit and finish

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Speaker 2: components inside, but.

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Speaker 3: Maybe but something that an extra you know, one hundred

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Speaker 3: and fifty to three hundred thousand dollars would make up

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Speaker 3: for maybe.

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Speaker 2: Yeah, good bye two of them.

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Speaker 3: By the way, quick, just my quick take on the

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Speaker 3: GLS right my box or not? And Mercedes are not

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Speaker 3: in my opinion, any three to row suv that it's

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Speaker 3: not body on frame truck. Forget about it. Like we

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Speaker 3: have a GLS, I know you do, and I wish

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Speaker 3: I had a Tahoe. You know a friend of mine

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Speaker 3: has an X seven. Uh, he wishes he had a Yukon.

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Speaker 3: The same is true when Audi comes out of the

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Speaker 3: Q nine, like if it's not a body on frame

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Speaker 3: truck and it's not like Kia EV nine, like it's

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Speaker 3: for me, it's a miss that is too big for

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Speaker 3: a unibody vehicle.

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Speaker 2: And you're saying that because of oh, sorry you can

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Speaker 2: I don't know if you can hear that horn or not.

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Speaker 2: You're saying that because of the way the car behaves

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Speaker 2: in motion.

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Speaker 3: No, because a hell on American roads and the suspension

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Speaker 3: just cannot handle it. They're just not heavy duty enough

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Speaker 3: to drive around the northeast of the decrepit United States

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Speaker 3: of America Highway system and that for that you need

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Speaker 3: a Tahoe or a Yukon or an expedition if you're

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Speaker 3: willing to forego a v which I don't know why

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Speaker 3: you would be in that size vehicle, although you know

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Speaker 3: I love the Nissan Armada. By the way, quick note

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Speaker 3: on audio. Throughout this interview with Kevin Tynan, you're gonna

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Speaker 3: hear some grunting, maybe some whining a little.

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Speaker 2: It's not are you saying that? Wasn't you?

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Speaker 1: Yeah?

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Speaker 3: No, I'm holding my twenty seven day old baby because

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Speaker 3: my wife, who's been up all night feeding him, is

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Speaker 3: now recovering some sleep, and I am on daddy duty.

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Speaker 3: I'm actually on paternity leave for the next like five months.

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Speaker 2: So we're so happy for you.

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Speaker 3: As Freddy is joining the conversation today.

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Speaker 2: Yeah, this is Freddy's first appearance appearance, not his last

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Speaker 2: by any means, and he's been he's added some wonderful

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Speaker 2: grunts and.

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Speaker 3: He's cooing a little bit. All right, Without any further ado,

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Speaker 3: let's get to Kevin Tynan, formerly of Bloomberg Intelligence, now

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Speaker 3: at the Presidio Group. That the reason, Kevin, that that

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Speaker 3: Hannah and I both were thinking about having you is

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Speaker 3: because we're hearing about so much upheaval in the automotive industry,

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Speaker 3: and specifically because I've lived in Germany for ten years,

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Speaker 3: I'm getting so many messages from friends who are terrified

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Speaker 3: about the state of the industry and the economy there.

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Speaker 3: Folkswagen wanted to fire fifty thousand people, now maybe it's

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Speaker 3: one hundred thousand people that they want to fire. They're

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Speaker 3: talking about closing down factories all over the country. And

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Speaker 3: it's harder for them, obviously because they have so much

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Speaker 3: union control and so much government control. But how bad

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Speaker 3: is it especially for Folkswagen.

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Speaker 1: Well, look, you know, if you ask me, I think

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Speaker 1: Europe has a China problem. Right. If you're gonna just

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Speaker 1: import Chinese vehicles, this is what you get, right. It's

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Speaker 1: for manufacturers, that's a zero sum game. And not only

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Speaker 1: are you now unable to sell right like that, that's

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Speaker 1: jobs specifically, And when you look at how quickly Chinese

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Speaker 1: manufacturers have taken market share in Europe, it's amazing, it's

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Speaker 1: actually terrifying. So you understand that what we're facing here

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Speaker 1: in the US is a similar story. Right, It's like, well,

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Speaker 1: cheap appliances or jobs because we're not just like Europe.

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Speaker 1: We're not low cost manufacturing countries or regions, so we

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Speaker 1: can't compete on price for a lot of those things.

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Speaker 1: And I think once that gets in the consumer's mind

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Speaker 1: of oh, look at this, you know, they don't care

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Speaker 1: that it's a subsidized vehicle and that it's half the price.

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Speaker 1: Right to them, it's a better value. And that's costing

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Speaker 1: your jobs. That's market share, that's just flying out the window.

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Speaker 1: And it's very difficult to stop it. But Luna, come on.

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Speaker 3: But know, I mean to me that part of the

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Speaker 3: problem is Folkswagen was relying on sales in China, so

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Speaker 3: it's not just about losing markets here in Europe, right,

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Speaker 3: And for for years or decades they agreed to minority

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Speaker 3: stakes in jvs where they willingly gave their IP and

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Speaker 3: their tech to the Chinese. You know, they were essentially

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Speaker 3: trading control for access. And now it's time to pay

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Speaker 3: the piper. Like they they they have as much responsibility

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Speaker 3: in this as the Chinese.

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Speaker 1: And you know what too, And that's one of the

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Speaker 1: things that that as you know, a watcher of this space,

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Speaker 1: and albeit from a different perspective, you know, in this

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Speaker 1: role that's one of the things about China that is

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Speaker 1: scary is China two point oh China three point zero,

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Speaker 1: which is to say, come on in, take a minority

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Speaker 1: stake in this venture. You have access as a manufacturer

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Speaker 1: to a what twenty five to thirty million unit market, Right,

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Speaker 1: so when you think about that globally and absorbing costs

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Speaker 1: like this is great. You just you can just run

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Speaker 1: the factories here. Meanwhile, once they're ready, and they say,

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Speaker 1: you know, we can sort of turn off that demand,

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Speaker 1: row you out whatever rules you want to change, and

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Speaker 1: you're right. I mean, and I can't believe. And there's

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Speaker 1: a lot of things that I say, or I say

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Speaker 1: this a lot about a lot of things. I can't

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Speaker 1: believe auto manufacturers didn't see that coming, you know, just

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Speaker 1: like electrification. You know, you can't tell me, well, you

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Speaker 1: know that Toyota did the math, but you can't tell

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Speaker 1: me that everybody did the math, and says, China owns

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Speaker 1: the entire supply chain here, how does this ever become profitable? Right?

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Speaker 1: If it's not profitable on day one or even close, right,

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Speaker 1: look at Ford model eve the law loss is there

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Speaker 1: five billion dollars a years? How does it get profitable

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Speaker 1: when China controls that supply chain, which is which is

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Speaker 1: a strategy that's been in place for decades, you know,

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Speaker 1: controlling the mind, controlling the processing. So I agree with you,

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Speaker 1: you had to see this coming.

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Speaker 2: We're here with Kevin Tynan, the head of research for

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Speaker 2: the Presidio Group. More with Kevin Tynan. After this, we.

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Speaker 3: Are back with Kevin Tynan of the Presidio Group, formerly

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Speaker 3: of Bloomberg Intelligence. Let's get back to our conversation.

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Speaker 2: When we go back and look at the history of

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Speaker 2: of this and how this all unfolded. What are what

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Speaker 2: are historians going to point at and say was the

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Speaker 2: fatal flaw which led to them not seeing this coming?

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Speaker 2: How how could they miss this?

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Speaker 1: So, yeah, this probably would be and out unpopular way

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Speaker 1: to put it. But right, so you go back to

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Speaker 1: the diesel cheating scandal. Right, and as a global manufacturer,

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Speaker 1: which a lot of those German companies are and were

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Speaker 1: and will continue to be, right, you want to share

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Speaker 1: as much technology platforms parts as possible. Right, That's the

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Speaker 1: point of being global. But when you understand that the

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Speaker 1: demand profile and all these regions is very different. Right,

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Speaker 1: we drive big trucks here that just doesn't work in Europe,

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Speaker 1: it doesn't work in a lot of parts of the world,

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Speaker 1: probably other than here. So when you think about the

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Speaker 1: diesel scandal, I think there's this sort of light bulb

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Speaker 1: that goes off for European manufacturers, German especially, that says, Okay,

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Speaker 1: maybe diesel's not the way forward, and if it's not

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Speaker 1: the way forward in Europe, well then it's not going

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Speaker 1: to be the way forward in the US. And we

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Speaker 1: always sort of push back on dieseline. I know, people

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Speaker 1: love diesel, but it was never it was never a

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Speaker 1: high volume. It was a.

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Speaker 3: Diesel, you know, right, it.

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Speaker 1: Wasn't you know, it was it was niche. Right, So

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Speaker 1: now you say, okay, like, let's face the reality that

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Speaker 1: that diesel is not going to be our way forward.

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Speaker 1: And then you get the cheating scandal, and then it's like, okay,

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Speaker 1: now we have to be environmentally responsible and you know,

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Speaker 1: and do what we need to do. So now you

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Speaker 1: sort of invite electrification and you say, hey, look we're

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Speaker 1: going one hundred percent EV and then there's China waiting

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Speaker 1: by the phone, going, you know, funny that you should

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Speaker 1: mention that because we've accumulated all the assets and and

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Speaker 1: the and created the supply chain, and we can do

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Speaker 1: it cheaper than anybody. We can get you EV's you know,

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Speaker 1: all day, every day. And when you just let them

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Speaker 1: export to you and you import those products again, that's

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Speaker 1: that's zero sum. That's one proble. What you bring in

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Speaker 1: is one you don't build and sell in your own country.

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Speaker 1: And then that snowballs. Once that Pandora's box is open,

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Speaker 1: that foot is in the door, it's hard to reverse it.

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Speaker 1: And I think that's exactly what in hindsight it will

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Speaker 1: look like, is that.

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Speaker 3: Is that then, I mean, no problem for US manufacturers

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Speaker 3: in the sense that Americans for the most part aren't

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Speaker 3: really buying evs and we're not allowing Chinese imports.

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Speaker 1: Right. But but then what do you hear? You hear

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Speaker 1: you know what I called we're getting technology shamed. And

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Speaker 1: I don't know if that's you know, the narrative that's

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Speaker 1: coming out of China or or from our own country,

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Speaker 1: which says like, oh, we're falling behind because we don't

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Speaker 1: do evs as well or to the volume that China

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Speaker 1: does them, you know. And my my response is, well,

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Speaker 1: we don't have to. We do We do pickup trucks

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Speaker 1: better than everybody else. Now, what's what's going to happen though,

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Speaker 1: and what the side of the that argument is that? Okay, well,

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Speaker 1: now look at China exports. They are vehicle exports, right,

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Speaker 1: one point one million exports in June alone, Right, so

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Speaker 1: a twelve million unit a year run rate just on exports,

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Speaker 1: never mind their own domestic market. And then look at

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Speaker 1: the size of the total global auto it's seventy million vehicles,

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Speaker 1: ninety ninety five if you include commercial stuff. So they're

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Speaker 1: already exported a large part of the world's vehicles. That

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Speaker 1: we're not going to undo that by standing and going

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Speaker 1: toe to toe, like I think Bill Ford just came

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Speaker 1: out and talked about going toe to toe. And you know,

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Speaker 1: as I'm traveling around and talking to dealers and I

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Speaker 1: see other speakers and this this idea of going toe

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Speaker 1: to toe with China, you understand that fight, especially on

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Speaker 1: EV is already over right. This is not oh, we

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Speaker 1: stand toe totel. We're not going to take back those

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Speaker 1: China export markets, right, If they're exporting twelve million units

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Speaker 1: a year and growing, we're not going to win that

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Speaker 1: market back because we're not a low cost manufacturer, because

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Speaker 1: we don't control the supply chain, right. So again, to me,

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Speaker 1: the best thing that US manufacturers could do is, you know,

432
00:26:25,960 --> 00:26:28,640
Speaker 1: and if it means joining up with the European manufacturers

433
00:26:28,680 --> 00:26:34,640
Speaker 1: in South Korea and you know, other Asia manufacturers saying like, hey, look,

434
00:26:34,680 --> 00:26:38,440
Speaker 1: you've won the EV battle. We're going to the next technology.

435
00:26:38,480 --> 00:26:42,520
Speaker 1: Whatever that is. Whether that's better internal combustion, whether that's hybridization,

436
00:26:42,640 --> 00:26:46,399
Speaker 1: whether that's hydrogen, I don't know, whatever it is, but

437
00:26:46,720 --> 00:26:53,040
Speaker 1: understand that the export and the EV fight, China's already won. Wow,

438
00:26:53,320 --> 00:26:54,880
Speaker 1: And I think one of the dumbest thing we could

439
00:26:54,920 --> 00:26:56,639
Speaker 1: do is to go, yeah, we'll stand here toe to

440
00:26:56,720 --> 00:27:01,720
Speaker 1: toe with you, right, because you know, and it's not Let.

441
00:27:01,680 --> 00:27:04,280
Speaker 2: Me ask you, Kevin, when you say you're basically saying

442
00:27:04,280 --> 00:27:07,320
Speaker 2: like the American EV has been crushed, which I think

443
00:27:07,480 --> 00:27:11,040
Speaker 2: was a headline that we saw from that New York

444
00:27:11,080 --> 00:27:14,240
Speaker 2: Times piece a few days ago. In your mind, does

445
00:27:14,280 --> 00:27:20,119
Speaker 2: that also include pure play EV makers in America like

446
00:27:20,440 --> 00:27:26,040
Speaker 2: Tesla Lucid Rivian or are they in a separate category

447
00:27:26,080 --> 00:27:28,199
Speaker 2: when you're talking about going toe to toe and we

448
00:27:28,240 --> 00:27:29,959
Speaker 2: shouldn't we're not doing that.

449
00:27:30,440 --> 00:27:36,680
Speaker 1: Well, here's the thing, is I I'm my second question

450
00:27:36,840 --> 00:27:41,480
Speaker 1: is always well, what is your definition of winning? Right?

451
00:27:41,600 --> 00:27:46,440
Speaker 1: And so you say, like, okay, is losing money right

452
00:27:46,560 --> 00:27:50,200
Speaker 1: for Ford modeling? Or look at Lucid. Lucid it's like

453
00:27:50,359 --> 00:27:53,800
Speaker 1: at its bill of goods, at its gross profit line

454
00:27:53,920 --> 00:27:57,800
Speaker 1: is like one hundred thousand dollars per vehicle upside down,

455
00:27:59,160 --> 00:28:02,480
Speaker 1: so you know, and Ribbean's closer, but still you know,

456
00:28:02,680 --> 00:28:05,159
Speaker 1: no operating profit there. So you say like, well, what

457
00:28:05,920 --> 00:28:10,399
Speaker 1: would and you know Tesla's profitability and you saw it

458
00:28:10,440 --> 00:28:13,480
Speaker 1: the other day, you know, and I would argue, is

459
00:28:13,520 --> 00:28:16,320
Speaker 1: not on the on the automotive side, is not anywhere

460
00:28:16,320 --> 00:28:19,960
Speaker 1: near certainly what it used to be or even what

461
00:28:20,040 --> 00:28:24,200
Speaker 1: it used to be reported as you know, because if

462
00:28:24,240 --> 00:28:26,760
Speaker 1: you look at what every other automaker does on the

463
00:28:26,800 --> 00:28:29,640
Speaker 1: P and L in terms of profitability, I can't believe

464
00:28:29,720 --> 00:28:31,720
Speaker 1: Tesla is that different at the end of the day,

465
00:28:31,800 --> 00:28:34,720
Speaker 1: right if you really, if you really got into the numbers.

466
00:28:35,280 --> 00:28:38,800
Speaker 1: So that said, you know, what is winning is winning

467
00:28:39,640 --> 00:28:42,640
Speaker 1: purposely losing money. And that's and that's part of the

468
00:28:42,680 --> 00:28:46,840
Speaker 1: issue too. And and it's not that Chinese manufacturers are

469
00:28:46,880 --> 00:28:49,640
Speaker 1: that much more profitable. You know, if there's one hundred

470
00:28:49,640 --> 00:28:54,240
Speaker 1: and fifty manufacturers in China, you know, a handful are profitable,

471
00:28:54,960 --> 00:28:57,840
Speaker 1: and and and the point of that is that because

472
00:28:57,880 --> 00:29:01,960
Speaker 1: it's not automaker versus automaker, it's automaker versus automaker plus

473
00:29:02,080 --> 00:29:05,240
Speaker 1: China's balance sheet, China government balance sheet, and it's just

474
00:29:05,320 --> 00:29:11,440
Speaker 1: not a fair fight. So the China the US ev

475
00:29:11,640 --> 00:29:14,720
Speaker 1: getting crushed. I'm saying like, well, if you can't make

476
00:29:14,760 --> 00:29:17,880
Speaker 1: money doing it, and you know I've said this for years, right,

477
00:29:17,880 --> 00:29:19,480
Speaker 1: if you can't make money doing it, you're not going

478
00:29:19,560 --> 00:29:22,480
Speaker 1: to want to do it. And that was who's argument? Right?

479
00:29:22,560 --> 00:29:25,400
Speaker 3: And no way, Kevin? Why does I mean with Tesla,

480
00:29:26,480 --> 00:29:29,760
Speaker 3: Elon wants to have another business or many other businesses

481
00:29:29,800 --> 00:29:33,280
Speaker 3: and it's not valued as a carmaker anyway. With Rivian

482
00:29:34,040 --> 00:29:36,840
Speaker 3: you say, maybe they're closer to not losing one hundred

483
00:29:36,840 --> 00:29:42,040
Speaker 3: thousand dollars per car. With Lucid, why bother? What's what's

484
00:29:42,040 --> 00:29:45,320
Speaker 3: the point? Who's who says like, ah, we should continue this?

485
00:29:46,080 --> 00:29:48,440
Speaker 3: Maybe he light at the end of the tunnel, or.

486
00:29:48,840 --> 00:29:51,640
Speaker 1: Well, Saudi Money says let's continue this. But well, I

487
00:29:51,680 --> 00:29:56,120
Speaker 1: think I think a big factor of it was when

488
00:29:56,120 --> 00:29:58,680
Speaker 1: you go back in time and this happened. Even this,

489
00:29:59,040 --> 00:30:01,080
Speaker 1: you can make this argument for why Ford did what

490
00:30:01,120 --> 00:30:04,560
Speaker 1: it did. What GM did, which is to say, when

491
00:30:04,600 --> 00:30:08,080
Speaker 1: you look across the room and there's Tesla worth a

492
00:30:08,160 --> 00:30:12,280
Speaker 1: trillion dollars for doing things you know you can do. Also,

493
00:30:12,840 --> 00:30:16,040
Speaker 1: you're not sure that the profitability is there, right because

494
00:30:16,040 --> 00:30:17,880
Speaker 1: you've done that math and you go like, I don't

495
00:30:17,880 --> 00:30:21,560
Speaker 1: see it, but but he's worth a trillion dollars, right,

496
00:30:21,600 --> 00:30:26,000
Speaker 1: His money losing automaker is worth a trillion dollars. Maybe

497
00:30:26,040 --> 00:30:28,800
Speaker 1: we get there, or we have access to capital that

498
00:30:28,920 --> 00:30:33,200
Speaker 1: somehow gets us there, but the math just didn't work right.

499
00:30:33,240 --> 00:30:35,400
Speaker 1: And that's what I'm saying is Toyota did the same

500
00:30:35,440 --> 00:30:38,080
Speaker 1: math and said we don't get it. They're the one.

501
00:30:38,560 --> 00:30:41,960
Speaker 1: They're the ones who's stuck, stuck by their analysis and said,

502
00:30:42,040 --> 00:30:44,720
Speaker 1: you know we and they remember they were vilified for that,

503
00:30:44,880 --> 00:30:48,480
Speaker 1: like oh you're a dinosaur, and now they're the smartest guys. Right,

504
00:30:48,560 --> 00:30:53,600
Speaker 1: So there was that valuation component of it, right. So

505
00:30:53,680 --> 00:30:58,160
Speaker 1: if Mary Bara Jim Farley can take four GM from

506
00:30:58,840 --> 00:31:03,320
Speaker 1: forty billion dollars market cap to one hundred and forty

507
00:31:03,360 --> 00:31:08,840
Speaker 1: billion market cap even on a money losing business model, right,

508
00:31:08,880 --> 00:31:11,480
Speaker 1: that's that's still value to them, right, And then you

509
00:31:11,560 --> 00:31:14,720
Speaker 1: hope that the day comes where where you can get

510
00:31:14,760 --> 00:31:17,200
Speaker 1: profitable in it. But it doesn't look like that day

511
00:31:17,240 --> 00:31:21,160
Speaker 1: is coming. In fact, it seems like they've they've accepted

512
00:31:21,160 --> 00:31:23,520
Speaker 1: that that day isn't coming by writing down those assets.

513
00:31:23,600 --> 00:31:26,840
Speaker 3: Dude, Can we get back to the German automakers, because

514
00:31:26,880 --> 00:31:30,120
Speaker 3: I really want to understand what's happening there, And obviously

515
00:31:30,160 --> 00:31:34,240
Speaker 3: you cover the entire industry globally, but you have, like

516
00:31:34,320 --> 00:31:37,959
Speaker 3: many of us, a love for a particular German brand

517
00:31:38,200 --> 00:31:42,320
Speaker 3: and motors that they aren't going to be making anymore. Mercedes,

518
00:31:42,360 --> 00:31:46,040
Speaker 3: you have like a at least one V twelve there right, so,

519
00:31:47,160 --> 00:31:50,160
Speaker 3: and Lauria, you do you have like an SL sixty

520
00:31:50,200 --> 00:31:51,920
Speaker 3: five and a sixty three or something.

521
00:31:52,120 --> 00:31:54,880
Speaker 1: No, I have an older six hundred, so I have

522
00:31:54,960 --> 00:31:58,320
Speaker 1: the naturally aspirated V twelve, the R one twenty nine

523
00:31:58,400 --> 00:32:01,920
Speaker 1: platform which ended in two thousand and two. I also

524
00:32:02,000 --> 00:32:05,720
Speaker 1: have that car in the V eight, the silver Arrow edition,

525
00:32:05,800 --> 00:32:08,640
Speaker 1: the last one they made. And then and then I

526
00:32:08,720 --> 00:32:11,840
Speaker 1: have an m L fifty five, a MG so the

527
00:32:11,920 --> 00:32:16,920
Speaker 1: little knock around truck with the naturally aspirated five point

528
00:32:16,920 --> 00:32:20,720
Speaker 1: five leader there and they're when they work there, unbelievable.

529
00:32:22,160 --> 00:32:24,840
Speaker 3: But Mercedes as I as far as I understand it.

530
00:32:25,560 --> 00:32:30,120
Speaker 3: Mercedes is doing better than Volkswagen in this crisis, and

531
00:32:30,280 --> 00:32:33,200
Speaker 3: BMW is doing better than both of them. Is that fair?

532
00:32:34,600 --> 00:32:41,960
Speaker 1: Yeah, I BMW's announced some things, but but yeah, that

533
00:32:42,160 --> 00:32:46,680
Speaker 1: that's fair. And I and I think you know when

534
00:32:46,720 --> 00:32:50,320
Speaker 1: you look at BMW and the component of that is

535
00:32:50,480 --> 00:32:57,640
Speaker 1: obviously heavy, BMW rolls Royce, Mercedes right, different different client

536
00:32:57,760 --> 00:33:04,000
Speaker 1: tele right, and then within Volkswagen, the competitor would be Audi,

537
00:33:04,160 --> 00:33:08,000
Speaker 1: which has really moved down market, especially here in the US.

538
00:33:08,040 --> 00:33:12,440
Speaker 1: When you look at transaction prices of BMW and Mercedes

539
00:33:12,480 --> 00:33:16,120
Speaker 1: in the high seventies heading towards this is the average

540
00:33:16,320 --> 00:33:19,040
Speaker 1: high seventies towards eighty thousand, and then you look at

541
00:33:19,240 --> 00:33:23,040
Speaker 1: Audis in the sixties, you know, low to mid sixties.

542
00:33:23,520 --> 00:33:27,400
Speaker 1: So I get the point of finding open clear air

543
00:33:28,160 --> 00:33:30,240
Speaker 1: to operate in and not going head to head with

544
00:33:30,320 --> 00:33:34,040
Speaker 1: BMW and Mercedes. But I think it's hurt the brand.

545
00:33:34,040 --> 00:33:37,680
Speaker 1: It's sort of it made it not look competitive to

546
00:33:37,800 --> 00:33:40,280
Speaker 1: the other two. But look at the end of the day,

547
00:33:40,320 --> 00:33:42,880
Speaker 1: you said it in your first question, which is you're

548
00:33:42,920 --> 00:33:45,440
Speaker 1: dealing with the unions. It's hard to take costs out.

549
00:33:46,160 --> 00:33:51,800
Speaker 1: So when your market share regionally globally is declining quickly,

550
00:33:52,000 --> 00:33:56,160
Speaker 1: and you can't right size your enterprise by getting costs

551
00:33:56,200 --> 00:34:00,320
Speaker 1: out of the system. Whether it's capacity, whether it's head account,

552
00:34:00,400 --> 00:34:02,960
Speaker 1: whatever it is, you're going to have a problem. And

553
00:34:03,000 --> 00:34:08,520
Speaker 1: that's what that's what the European manufacturers are facing now

554
00:34:08,640 --> 00:34:11,680
Speaker 1: is do we continue to lose market share? And if

555
00:34:11,680 --> 00:34:14,759
Speaker 1: we do, can we get costs out quick enough which

556
00:34:14,840 --> 00:34:18,560
Speaker 1: usually you cannot or you have to find somewhere to

557
00:34:18,600 --> 00:34:23,120
Speaker 1: go to rebuild that revenue somehow.

558
00:34:22,719 --> 00:34:27,360
Speaker 2: How how serious is this movement in the US to

559
00:34:27,600 --> 00:34:32,160
Speaker 2: expel companies with I think is it fifteen percent Chinese ownership?

560
00:34:32,960 --> 00:34:35,600
Speaker 2: How serious a thread is that? I know Mercedes is

561
00:34:35,880 --> 00:34:39,960
Speaker 2: fighting against it, We had a piece on them. Is

562
00:34:40,000 --> 00:34:42,839
Speaker 2: that a serious threat? And I asked also in light

563
00:34:42,880 --> 00:34:48,000
Speaker 2: of what happened with Pollstar, how you know could that

564
00:34:48,040 --> 00:34:50,680
Speaker 2: actually happen to Mercedes as well?

565
00:34:50,320 --> 00:34:53,360
Speaker 1: It's a long tail on that. I think the number

566
00:34:53,400 --> 00:34:55,680
Speaker 1: what's twenty by twenty thirty, which I guess is not

567
00:34:55,800 --> 00:34:58,000
Speaker 1: that far away, probably be here before we know it,

568
00:34:58,840 --> 00:35:00,800
Speaker 1: you know, And maybe if that goes a couple of years,

569
00:35:00,920 --> 00:35:02,960
Speaker 1: gets pushed out a little bit further. I don't think

570
00:35:02,960 --> 00:35:05,240
Speaker 1: it would go as far as hey.

571
00:35:05,040 --> 00:35:07,800
Speaker 3: What's the what's the number? Twenty percent ownership by twenty

572
00:35:07,840 --> 00:35:14,120
Speaker 3: thirty right and right now mercecial provision. Right now, Jillie

573
00:35:14,200 --> 00:35:16,440
Speaker 3: owns like ten percent of Mercedes fifteen.

574
00:35:17,080 --> 00:35:20,520
Speaker 2: I think they're at fifteen, right, combined with Glie and

575
00:35:21,120 --> 00:35:22,000
Speaker 2: private ownership.

576
00:35:22,280 --> 00:35:25,560
Speaker 1: Right, So it would be you would you have you know,

577
00:35:25,680 --> 00:35:29,000
Speaker 1: three four and if it's becomes twenty thirty two, I

578
00:35:29,000 --> 00:35:31,920
Speaker 1: don't think it becomes twenty thirty five. But basically, you know,

579
00:35:32,000 --> 00:35:35,200
Speaker 1: you divest them, you know those those Okay, so.

580
00:35:35,120 --> 00:35:37,120
Speaker 2: They get it adjust basically.

581
00:35:37,800 --> 00:35:41,160
Speaker 1: I mean, I guess if it's China that says we're

582
00:35:41,160 --> 00:35:43,120
Speaker 1: not giving up our steake, but I guess you would

583
00:35:43,200 --> 00:35:43,480
Speaker 1: have to.

584
00:35:44,600 --> 00:35:50,160
Speaker 3: But but Kevin, in trying to understand the problem with VW,

585
00:35:50,960 --> 00:35:53,960
Speaker 3: Mercedes and BMW and how bad each of these German

586
00:35:53,960 --> 00:35:59,440
Speaker 3: companies is impacted, it's pretty apparent that BMW, which is

587
00:35:59,480 --> 00:36:01,920
Speaker 3: doing the bad, produces a hell of a lot of

588
00:36:02,120 --> 00:36:07,080
Speaker 3: vehicles here in the US, and Mercedes mercedesuces some. Right,

589
00:36:07,160 --> 00:36:10,719
Speaker 3: the MW has in Carolina, Mercedes has in Alabama, and

590
00:36:11,760 --> 00:36:14,720
Speaker 3: Volkswagen has like none. Okay, they have a Chattanooga plant,

591
00:36:14,719 --> 00:36:17,200
Speaker 3: but no one buys Volkswagen brand cars because they don't

592
00:36:17,239 --> 00:36:21,600
Speaker 3: really have any cool cars. And then Audi and Porsche

593
00:36:21,640 --> 00:36:24,040
Speaker 3: obviously are made in Germany for the most people.

594
00:36:24,800 --> 00:36:30,520
Speaker 1: Yeah, and look, and that's an interesting point. And I

595
00:36:30,960 --> 00:36:34,360
Speaker 1: started to look at this last week before I was traveling.

596
00:36:35,520 --> 00:36:39,560
Speaker 1: You know where where the operating profit comes from from

597
00:36:39,640 --> 00:36:45,799
Speaker 1: global automakers, right, and and and two examples I usually give.

598
00:36:45,880 --> 00:36:50,279
Speaker 1: One is Nissan and the other is Stilantis, which is right.

599
00:36:50,400 --> 00:36:54,120
Speaker 1: Think about when it was Fiat Chrysler and Sergiomachioni was

600
00:36:54,200 --> 00:36:58,120
Speaker 1: running the company. The presence in North America and the

601
00:36:58,239 --> 00:36:59,640
Speaker 1: US specifically was big.

602
00:37:00,080 --> 00:37:00,239
Speaker 4: Right.

603
00:37:00,360 --> 00:37:02,720
Speaker 1: You always knew who was running the company. You knew

604
00:37:03,080 --> 00:37:05,799
Speaker 1: who was in charge. You knew you know, like he

605
00:37:05,960 --> 00:37:08,560
Speaker 1: was a he was and this is a very important

606
00:37:08,640 --> 00:37:10,640
Speaker 1: market in terms of operating profits.

607
00:37:10,760 --> 00:37:12,840
Speaker 3: You were always in Auburn Hills, all the heads.

608
00:37:12,640 --> 00:37:16,960
Speaker 1: Of the right, right because because of Jeep Ram and

609
00:37:17,000 --> 00:37:20,000
Speaker 1: the money that those those brands made here is very

610
00:37:20,000 --> 00:37:24,600
Speaker 1: important to the global enterprise that became Spillanthus, Nissan is

611
00:37:24,640 --> 00:37:29,560
Speaker 1: another example. Whatever the situation the politics with Carlos gon

612
00:37:30,120 --> 00:37:32,400
Speaker 1: once he's gotten the same thing, right, Like he was

613
00:37:32,440 --> 00:37:35,360
Speaker 1: a guy that you knew who the head of Nissan

614
00:37:35,600 --> 00:37:38,880
Speaker 1: was in the US in North America for better or

615
00:37:38,920 --> 00:37:42,200
Speaker 1: for worse, you know, with with whatever their strategy was.

616
00:37:42,239 --> 00:37:44,960
Speaker 1: But really, since then you're kind of looking at that

617
00:37:45,040 --> 00:37:49,000
Speaker 1: company and I don't you know, and maybe that leadership

618
00:37:49,120 --> 00:37:53,400
Speaker 1: is great, but if it's over in Japan, I feel

619
00:37:53,400 --> 00:37:58,080
Speaker 1: like this market loses interests and you really have to

620
00:37:58,160 --> 00:38:02,200
Speaker 1: be on top of this market because it is a

621
00:38:02,239 --> 00:38:05,239
Speaker 1: truck market and like it or not, you know, that's

622
00:38:05,280 --> 00:38:09,319
Speaker 1: where the profit is. So you have you know, you

623
00:38:09,360 --> 00:38:12,520
Speaker 1: can have your your Nissan Censors, but at the end

624
00:38:12,560 --> 00:38:14,600
Speaker 1: of the day, it's going to be it's going to

625
00:38:14,680 --> 00:38:19,680
Speaker 1: be Rogue and Pathfinder and your pickup trucks that that

626
00:38:20,239 --> 00:38:22,359
Speaker 1: frontier that make the difference here.

627
00:38:22,680 --> 00:38:25,800
Speaker 3: And you can't just forget the Armada my favorite largest

628
00:38:26,680 --> 00:38:29,759
Speaker 3: Yeah right, so I love the Armada so much.

629
00:38:29,840 --> 00:38:34,160
Speaker 1: Yeah, I just saw I was walking in Atlanta the

630
00:38:34,200 --> 00:38:36,400
Speaker 1: other day, so what is it like the QX eighty

631
00:38:36,520 --> 00:38:42,200
Speaker 1: and fifty enormous. But the point is is that you

632
00:38:42,360 --> 00:38:47,319
Speaker 1: had visible leadership, you had vocal leadership in in the

633
00:38:47,480 --> 00:38:51,759
Speaker 1: US and it's a big contributor to the profitability of

634
00:38:51,800 --> 00:38:53,799
Speaker 1: those firms. And when that went away, I feel like

635
00:38:53,840 --> 00:38:57,120
Speaker 1: those brands really slipped and have to get back to that.

636
00:38:58,080 --> 00:38:59,960
Speaker 2: I want to go back to Mercedes for a second,

637
00:39:00,239 --> 00:39:05,279
Speaker 2: because this AMGGT four door that they've come out with,

638
00:39:05,640 --> 00:39:10,120
Speaker 2: which is the electric sedan with the fabricated V eight sound,

639
00:39:10,840 --> 00:39:17,000
Speaker 2: is so polarizing. And Kevin, what like, we're talking about

640
00:39:17,040 --> 00:39:20,440
Speaker 2: the strength and the merits of Mercedes. What does a

641
00:39:20,520 --> 00:39:27,440
Speaker 2: vehicle like that do to the company? Potentially? Is it

642
00:39:27,640 --> 00:39:30,400
Speaker 2: a non issue because it's just gonna be here and

643
00:39:30,400 --> 00:39:31,839
Speaker 2: then go away? Because no one?

644
00:39:32,520 --> 00:39:34,080
Speaker 3: Do you see that real I sent you the other

645
00:39:34,160 --> 00:39:35,799
Speaker 3: day on Instagram?

646
00:39:36,000 --> 00:39:36,799
Speaker 2: Yes I did.

647
00:39:37,080 --> 00:39:41,680
Speaker 3: There's a parody. Somebody made this parody reel which is AI.

648
00:39:42,920 --> 00:39:47,840
Speaker 3: But you have actual Mercedes and AMG execs bragging about

649
00:39:47,840 --> 00:39:51,200
Speaker 3: how they've ruined AMG. And I don't think that's the case.

650
00:39:51,200 --> 00:39:52,360
Speaker 3: Hannah and I both love you.

651
00:39:52,480 --> 00:39:54,799
Speaker 2: This is this is why I'm asking Kevin, let's get

652
00:39:54,840 --> 00:39:59,080
Speaker 2: some actual adult in the room, because you know, if

653
00:39:59,120 --> 00:40:02,560
Speaker 2: people hate it, but the executives, of course say it's

654
00:40:02,800 --> 00:40:04,880
Speaker 2: a game changer, et cetera, et cetera. I am going

655
00:40:04,920 --> 00:40:06,799
Speaker 2: to drive at this fall, so I'm looking forward to it.

656
00:40:06,840 --> 00:40:08,160
Speaker 2: So give us a prep.

657
00:40:08,560 --> 00:40:12,200
Speaker 1: Well. I think one of the things that's important is

658
00:40:12,200 --> 00:40:15,319
Speaker 1: is and you know my view is this is a

659
00:40:15,360 --> 00:40:18,279
Speaker 1: push industry. The manufacturer's going to do what's good for them,

660
00:40:18,320 --> 00:40:22,120
Speaker 1: what makes them, what makes them profitable. But I understand

661
00:40:22,200 --> 00:40:25,840
Speaker 1: the value of meeting the customer where they are, right, So,

662
00:40:27,400 --> 00:40:29,359
Speaker 1: but that means there has to be choice. So you

663
00:40:29,440 --> 00:40:32,480
Speaker 1: can do your ev your plug at hybrid, your hybrid

664
00:40:32,719 --> 00:40:39,279
Speaker 1: whatever it is. Ag yeah, right, like you know, but

665
00:40:39,280 --> 00:40:41,400
Speaker 1: but you got to you got to understand where the

666
00:40:41,440 --> 00:40:45,400
Speaker 1: money is made, right and and and as long as

667
00:40:45,440 --> 00:40:52,120
Speaker 1: they're doing that to go only EQ war electric, right,

668
00:40:52,160 --> 00:40:54,560
Speaker 1: I think is the mistake. Is My point is that

669
00:40:55,480 --> 00:40:59,359
Speaker 1: you know, as my wife, my lovely wife often says, look,

670
00:40:59,360 --> 00:41:03,839
Speaker 1: there's an ass every seat, and and that's and that's true, right,

671
00:41:03,880 --> 00:41:06,320
Speaker 1: But but I think when you start limiting the choice

672
00:41:06,480 --> 00:41:13,280
Speaker 1: of the consumer because of profitability of because the government

673
00:41:13,320 --> 00:41:15,520
Speaker 1: is telling you you have to move to one technology

674
00:41:15,560 --> 00:41:18,640
Speaker 1: over another, I think that's where you run into a problem.

675
00:41:18,880 --> 00:41:22,239
Speaker 1: I think Mercedes, and I know, and and I was

676
00:41:22,320 --> 00:41:25,319
Speaker 1: just saying, like, we spend time with Adam Chamberlain at

677
00:41:25,320 --> 00:41:28,719
Speaker 1: our conference in in May, and like he gets it.

678
00:41:28,760 --> 00:41:31,160
Speaker 1: He's a car guy. He's showing me, you know, pictures

679
00:41:31,160 --> 00:41:33,440
Speaker 1: on his phone of his little go to sl that

680
00:41:33,520 --> 00:41:37,799
Speaker 1: he's having restored. And I like ad yeah, like and

681
00:41:37,880 --> 00:41:38,719
Speaker 1: he gets.

682
00:41:38,440 --> 00:41:42,360
Speaker 2: It eeo of Mercedes spends USA, we should say for listeners,

683
00:41:42,560 --> 00:41:44,759
Speaker 2: right right right yeah.

684
00:41:44,880 --> 00:41:49,520
Speaker 4: So so so as long as that sort of passion

685
00:41:49,600 --> 00:41:52,000
Speaker 4: is built into the brand, I think it'll be Okay,

686
00:41:52,040 --> 00:41:55,279
Speaker 4: there's go there's going to be compliance cars, there's going

687
00:41:55,320 --> 00:41:58,440
Speaker 4: to be missions, fuel economy mandates.

688
00:41:58,680 --> 00:42:01,239
Speaker 1: I mean, look at Ferrari. I mean that's what that is.

689
00:42:02,600 --> 00:42:05,279
Speaker 1: There's things you have to do so that you can

690
00:42:05,320 --> 00:42:07,200
Speaker 1: do the other things that you want to do or

691
00:42:07,280 --> 00:42:11,520
Speaker 1: the very profitable things. And that's just the price of

692
00:42:11,560 --> 00:42:12,360
Speaker 1: doing business.

693
00:42:12,520 --> 00:42:16,239
Speaker 3: Kevin, how badly has do you think the luce has

694
00:42:16,560 --> 00:42:19,920
Speaker 3: hurt Ferrari more than you would have expected? It seems

695
00:42:19,960 --> 00:42:22,200
Speaker 3: the fallout seems pretty severe.

696
00:42:22,480 --> 00:42:25,440
Speaker 1: It did. But you know, in the scheme of things,

697
00:42:26,200 --> 00:42:28,000
Speaker 1: what's it going to be. You sell a handful of

698
00:42:28,000 --> 00:42:30,439
Speaker 1: good clients and you promise them a fire breather down

699
00:42:30,440 --> 00:42:34,880
Speaker 1: the road, right So now, And I don't know, I

700
00:42:34,920 --> 00:42:38,480
Speaker 1: didn't do the sort of research and analysis on this,

701
00:42:38,600 --> 00:42:42,440
Speaker 1: but you know there's probably some sort of global volume

702
00:42:45,480 --> 00:42:47,960
Speaker 1: sort of regulation that says, look, if you want to

703
00:42:48,000 --> 00:42:52,080
Speaker 1: sell this many units, you have to have emissions or

704
00:42:52,520 --> 00:42:57,400
Speaker 1: reduction or fuel economy level around here and this is

705
00:42:57,440 --> 00:43:00,920
Speaker 1: the compliance car that gets you there is what This

706
00:43:01,160 --> 00:43:04,520
Speaker 1: is the Chevrolet bolt that lets you sell Silverado's all

707
00:43:04,640 --> 00:43:05,040
Speaker 1: day long.

708
00:43:05,280 --> 00:43:05,440
Speaker 2: Right.

709
00:43:05,640 --> 00:43:09,520
Speaker 1: So, so you build a handful of them, you get

710
00:43:09,560 --> 00:43:11,720
Speaker 1: your good clients to buy them, and now you're free

711
00:43:11,760 --> 00:43:14,399
Speaker 1: to do the things that you want to do, which

712
00:43:14,440 --> 00:43:18,720
Speaker 1: is my point. And until we get you know, governments

713
00:43:19,160 --> 00:43:22,160
Speaker 1: around the world that step out of the industry and

714
00:43:22,280 --> 00:43:25,960
Speaker 1: let you just be what you want to be, fail

715
00:43:26,160 --> 00:43:28,520
Speaker 1: or succeed based on what you want to do. That's

716
00:43:28,560 --> 00:43:32,160
Speaker 1: what that's the cost of doing business. So I don't

717
00:43:32,640 --> 00:43:36,160
Speaker 1: I didn't think. I thought the react it was an

718
00:43:36,200 --> 00:43:40,920
Speaker 1: overreaction to that. I understood what it was. Would I

719
00:43:40,920 --> 00:43:44,560
Speaker 1: have made it better looking, probably well, but I understand

720
00:43:44,560 --> 00:43:44,960
Speaker 1: what it means.

721
00:43:45,040 --> 00:43:47,719
Speaker 3: It's interesting that the reaction just continues to live and

722
00:43:47,760 --> 00:43:52,120
Speaker 3: maybe that's an online you know, amplification. But I want

723
00:43:52,120 --> 00:43:54,319
Speaker 3: to just I want to get back to Mercedes, Kevin.

724
00:43:54,360 --> 00:43:57,200
Speaker 3: I want to get back to Mercedes because because you're

725
00:43:57,200 --> 00:43:59,520
Speaker 3: a fan, because Hannah and I are fans also of

726
00:43:59,680 --> 00:44:04,879
Speaker 3: actually the amg GT sixty three. I'm currently in the

727
00:44:04,960 --> 00:44:09,080
Speaker 3: AMGGT sixty three Pro, which is like their I guess

728
00:44:09,120 --> 00:44:12,759
Speaker 3: GT three version of the car. Because they take out

729
00:44:12,800 --> 00:44:16,080
Speaker 3: five hundred pounds by removing the hybrid pieces. But the

730
00:44:16,400 --> 00:44:19,680
Speaker 3: I also have driven the se Performance version, which is

731
00:44:19,680 --> 00:44:22,120
Speaker 3: like eight hundred plus horse power a thousand plus pounds

732
00:44:22,120 --> 00:44:27,800
Speaker 3: feed of torque. It's insanely good. Yeah, And I've recently

733
00:44:27,840 --> 00:44:32,120
Speaker 3: noticed because I'm always hunting for older amggts and hoping

734
00:44:32,120 --> 00:44:35,320
Speaker 3: that they'll fall in price, they're not falling in price.

735
00:44:36,080 --> 00:44:36,439
Speaker 1: It's true.

736
00:44:36,440 --> 00:44:39,319
Speaker 3: With the X S sixty five and the SL sixty five,

737
00:44:39,400 --> 00:44:43,920
Speaker 3: I keep hoping they're gonna depreciate more, and they're not depreciating.

738
00:44:44,200 --> 00:44:47,319
Speaker 1: I know. And look, I think that speaks a lot

739
00:44:47,640 --> 00:44:53,120
Speaker 1: to you know, and maybe it's niche in this country,

740
00:44:53,200 --> 00:44:56,719
Speaker 1: but you know, people will pay for the for the

741
00:44:56,760 --> 00:44:59,000
Speaker 1: fire breathers. I mean, I thought it was an interesting

742
00:44:59,080 --> 00:45:06,000
Speaker 1: move when you know, Dodge kills SRT, scat packs, hellcats,

743
00:45:06,080 --> 00:45:12,000
Speaker 1: demons to make an electric daytona thing. But the fact

744
00:45:12,040 --> 00:45:14,839
Speaker 1: that they're making them as ridiculous and I'm talking about

745
00:45:14,840 --> 00:45:19,040
Speaker 1: Mercedes as ridiculous as they are for the everyday driver,

746
00:45:20,400 --> 00:45:24,640
Speaker 1: to me again, like that's sort of the point, and

747
00:45:24,680 --> 00:45:28,600
Speaker 1: it shows that they understand that there's a consumer there

748
00:45:28,680 --> 00:45:31,360
Speaker 1: for that product. And then you have to kind of

749
00:45:31,440 --> 00:45:34,919
Speaker 1: accept that every once in a while, you or more

750
00:45:34,960 --> 00:45:36,600
Speaker 1: than every once in a while, but you have to

751
00:45:36,640 --> 00:45:39,920
Speaker 1: do you have to do the compliance vehicle to be

752
00:45:39,960 --> 00:45:43,480
Speaker 1: able to hit certain regulatory targets that enable you to

753
00:45:43,520 --> 00:45:47,680
Speaker 1: do the things that your brand is passionate about. And

754
00:45:48,040 --> 00:45:51,080
Speaker 1: you know, I don't expect the consumer or media to

755
00:45:51,160 --> 00:45:54,120
Speaker 1: necessarily understand that or like it, but it's just it's

756
00:45:54,239 --> 00:45:57,280
Speaker 1: just the realities of doing business in the United States

757
00:45:57,360 --> 00:45:58,359
Speaker 1: so or in Europe too.

758
00:45:58,920 --> 00:46:05,719
Speaker 3: But on that point, Hannah, let me just mention, we're

759
00:46:05,719 --> 00:46:10,600
Speaker 3: always bemoaning the death of the manual transmission, and you

760
00:46:10,640 --> 00:46:12,520
Speaker 3: and I have talked and will continue to talk a

761
00:46:12,520 --> 00:46:15,759
Speaker 3: lot about the BMW cars M cars that we love

762
00:46:16,400 --> 00:46:19,040
Speaker 3: for so long, the CS, like the M two c

763
00:46:19,280 --> 00:46:23,520
Speaker 3: S doesn't have a manual and the M three CS

764
00:46:23,520 --> 00:46:26,520
Speaker 3: never never did. Now the BMW is putting out an

765
00:46:26,680 --> 00:46:31,799
Speaker 3: M three CS with three pedals and a stick and

766
00:46:31,840 --> 00:46:36,520
Speaker 3: it's US only, which I thought was crazy, Like we're

767
00:46:37,200 --> 00:46:39,160
Speaker 3: you know, we always talk about the fact that Europeans

768
00:46:39,160 --> 00:46:41,680
Speaker 3: know how to drive standard transmissions, but the BMW is

769
00:46:41,719 --> 00:46:45,120
Speaker 3: only selling this han shelter version in the US, which

770
00:46:45,200 --> 00:46:46,520
Speaker 3: is which is pretty cool.

771
00:46:46,800 --> 00:46:50,239
Speaker 1: Yeah, And I think they just because I you know

772
00:46:50,360 --> 00:46:56,360
Speaker 1: my son is involved. There's a four. He had a

773
00:46:56,480 --> 00:47:01,240
Speaker 1: manual transmission Z four I think went out of production

774
00:47:01,480 --> 00:47:04,680
Speaker 1: or was he? I know he because you know he's

775
00:47:04,719 --> 00:47:07,560
Speaker 1: a young guys. He's one of the twenty somethings who

776
00:47:07,600 --> 00:47:13,080
Speaker 1: can actually drive a manual transmission daily. And uh and

777
00:47:13,120 --> 00:47:15,160
Speaker 1: he wanted to get another one. And I guess whether

778
00:47:15,160 --> 00:47:18,040
Speaker 1: it wasn't in the program or anymore or whatever happened,

779
00:47:18,040 --> 00:47:19,880
Speaker 1: but it was. It was just a point. So now

780
00:47:19,920 --> 00:47:23,239
Speaker 1: we're in the market looking for something with that we

781
00:47:23,280 --> 00:47:24,520
Speaker 1: can peddle ourselves.

782
00:47:24,880 --> 00:47:27,920
Speaker 3: The Z four is a great used purchase. So is

783
00:47:27,960 --> 00:47:31,319
Speaker 3: a base M two and there, I mean a Z

784
00:47:31,520 --> 00:47:34,920
Speaker 3: four in green rag green rag top with a stick

785
00:47:35,040 --> 00:47:36,000
Speaker 3: is such a dream?

786
00:47:36,360 --> 00:47:40,759
Speaker 1: Yeah, he was. His was purple with a white interior

787
00:47:41,239 --> 00:47:42,040
Speaker 1: and black top.

788
00:47:42,320 --> 00:47:44,920
Speaker 3: His hist approve of that color combination.

789
00:47:45,200 --> 00:47:49,040
Speaker 1: Yeah, it was very nice. His his X six, uh

790
00:47:49,760 --> 00:47:52,160
Speaker 1: X sixty or whatever it is is is that green

791
00:47:52,239 --> 00:47:55,120
Speaker 1: color now very cool truck too.

792
00:47:55,960 --> 00:48:00,000
Speaker 2: So Kevin, do you do you think even in America,

793
00:48:00,640 --> 00:48:07,000
Speaker 2: EV's ultimately are still the future, because you know, everyone

794
00:48:07,480 --> 00:48:11,480
Speaker 2: in quotes says they still are. It's taking longer than

795
00:48:11,520 --> 00:48:15,040
Speaker 2: we thought, but they are still the future. And if

796
00:48:15,200 --> 00:48:19,360
Speaker 2: and if that's the case considering what you said before,

797
00:48:19,400 --> 00:48:23,359
Speaker 2: which is China has already won EV's Yeah, what does

798
00:48:23,400 --> 00:48:25,680
Speaker 2: that mean for us?

799
00:48:25,960 --> 00:48:28,719
Speaker 1: Yeah? I look, here's here's the thing. And you know,

800
00:48:28,880 --> 00:48:33,239
Speaker 1: I've talked about this since I was a child, which is,

801
00:48:35,800 --> 00:48:42,200
Speaker 1: first of all, manufacturers and dealerships will sell anything that

802
00:48:42,360 --> 00:48:45,279
Speaker 1: makes them money, right, you can, They'll sell you a

803
00:48:45,320 --> 00:48:48,640
Speaker 1: bag of sands, right if they can make money on it.

804
00:48:48,719 --> 00:48:51,480
Speaker 1: So this idea that automakers don't want to do it,

805
00:48:51,640 --> 00:48:55,319
Speaker 1: or dealers don't want to sell them, or it's it's

806
00:48:55,520 --> 00:48:58,480
Speaker 1: just it's it's about profitability.

807
00:48:58,960 --> 00:49:01,919
Speaker 2: The purpose of karkampanies is to make money. This is what.

808
00:49:04,080 --> 00:49:08,839
Speaker 1: Yes about making causes about making money. So if I'm

809
00:49:08,880 --> 00:49:14,000
Speaker 1: working backwards from that, to me, that's that's the argument,

810
00:49:14,120 --> 00:49:19,560
Speaker 1: which is to say, well, we don't control the mining,

811
00:49:19,600 --> 00:49:24,960
Speaker 1: we don't control the materials processing. We're way behind on that.

812
00:49:25,480 --> 00:49:27,719
Speaker 1: Do we develop our own supply chains? We're not going

813
00:49:27,760 --> 00:49:32,279
Speaker 1: to mine here. I can tell you that. Do we

814
00:49:32,320 --> 00:49:37,080
Speaker 1: get to the point where it becomes cost efficient enough

815
00:49:37,120 --> 00:49:41,560
Speaker 1: for us to be profitable on EV? If so, yes,

816
00:49:41,640 --> 00:49:45,800
Speaker 1: it's the future. Are we so far away from profitability

817
00:49:46,400 --> 00:49:49,160
Speaker 1: on EV because we don't control any of that supply

818
00:49:49,280 --> 00:49:53,040
Speaker 1: chain or just you know, the the dynamics of the

819
00:49:53,640 --> 00:49:57,520
Speaker 1: cost inputs of that technology will never make economic sense.

820
00:49:57,600 --> 00:50:00,360
Speaker 1: Then I would say then no, we're not going to

821
00:50:00,440 --> 00:50:03,160
Speaker 1: have eeds here. And at the.

822
00:50:03,239 --> 00:50:06,920
Speaker 2: Point when when Chinese made vehicles would be sold in

823
00:50:06,960 --> 00:50:13,440
Speaker 2: the US.

824
00:50:09,640 --> 00:50:09,960
Speaker 3: Well.

825
00:50:11,360 --> 00:50:14,160
Speaker 1: Again, and I think that they could do that with

826
00:50:14,560 --> 00:50:19,759
Speaker 1: almost any technology because it's subsidized. So if now you

827
00:50:19,760 --> 00:50:22,480
Speaker 1: have to understand right what they China doesn't want to

828
00:50:22,480 --> 00:50:26,040
Speaker 1: be dependent on for and oil. They've accumulated the electricity

829
00:50:27,040 --> 00:50:33,360
Speaker 1: assets they are, so it made sense for their for

830
00:50:33,480 --> 00:50:36,680
Speaker 1: what they've built and their long view of it to

831
00:50:36,760 --> 00:50:41,760
Speaker 1: be electric, to make their transportation electric, their generation electric,

832
00:50:43,200 --> 00:50:47,160
Speaker 1: and it and you understand that they want the world

833
00:50:47,160 --> 00:50:50,719
Speaker 1: dependent on China and them not dependent on anything. So

834
00:50:50,880 --> 00:50:57,040
Speaker 1: it's this great capacity uh supply chains to go in

835
00:50:57,200 --> 00:51:01,279
Speaker 1: that direction. And now essentially the job is convince the

836
00:51:01,320 --> 00:51:03,480
Speaker 1: rest of the world that this is the direction that

837
00:51:04,000 --> 00:51:05,439
Speaker 1: you all need to go. And that's what I called

838
00:51:05,440 --> 00:51:08,680
Speaker 1: it technology shaming. Before, well, it makes sense for you

839
00:51:08,760 --> 00:51:12,320
Speaker 1: to go electric, China, and now you've convinced Europe and

840
00:51:12,440 --> 00:51:15,480
Speaker 1: Australia that you need to go electric. And you know,

841
00:51:15,560 --> 00:51:19,520
Speaker 1: whether that's the argument of you know, it's an ESG

842
00:51:19,800 --> 00:51:22,240
Speaker 1: argument or whatever it winds up being, but it seems

843
00:51:22,280 --> 00:51:27,120
Speaker 1: like the evidence in terms of market share, the evidence

844
00:51:27,200 --> 00:51:29,720
Speaker 1: is that if you buy into that and go electric,

845
00:51:29,800 --> 00:51:36,480
Speaker 1: you give your your manufacturing industry to China. Now keep

846
00:51:36,520 --> 00:51:39,240
Speaker 1: in mind, also, and I've been saying this, there probably

847
00:51:39,320 --> 00:51:43,840
Speaker 1: will be an administration, maybe the next one, that says, hay, China,

848
00:51:43,920 --> 00:51:47,759
Speaker 1: build your factories in the US, hire the UAW share

849
00:51:47,800 --> 00:51:52,600
Speaker 1: your intellectual property, reinvest all your profits here in our country,

850
00:51:53,040 --> 00:51:56,000
Speaker 1: build all you want and export, but you can't import anything.

851
00:51:56,480 --> 00:51:59,080
Speaker 1: There probably will be an administration that says, look what

852
00:51:59,160 --> 00:51:59,960
Speaker 1: I did, I brought.

853
00:51:59,800 --> 00:52:02,000
Speaker 3: You Trump already Trump has already said that He's like,

854
00:52:02,040 --> 00:52:04,520
Speaker 3: I'm fine with the Chinese that they build their factories here.

855
00:52:04,400 --> 00:52:08,000
Speaker 1: But that changes the cost dynamics for them also, Right,

856
00:52:08,400 --> 00:52:12,600
Speaker 1: so now they're not this low cost manufacturing in China

857
00:52:12,680 --> 00:52:17,200
Speaker 1: and then dumping vehicles all over the world. It changes

858
00:52:17,280 --> 00:52:18,440
Speaker 1: that dynamic a little bit.

859
00:52:18,520 --> 00:52:22,160
Speaker 3: Not that they can steal whatever ip they haven't yet taken, right.

860
00:52:22,520 --> 00:52:26,279
Speaker 1: Basic, right, right, But the endman is toe to toe

861
00:52:26,320 --> 00:52:29,160
Speaker 1: and we'll steal we'll steal it back, you know which

862
00:52:29,200 --> 00:52:29,600
Speaker 1: we Well.

863
00:52:29,520 --> 00:52:33,719
Speaker 3: You're not going electric, Kevin, and neither me, Hannah.

864
00:52:33,440 --> 00:52:37,240
Speaker 1: So, and again I'm not I'm not anti anything, right.

865
00:52:37,080 --> 00:52:41,400
Speaker 2: I love I love the Electric five hundred are.

866
00:52:41,719 --> 00:52:45,600
Speaker 1: If it has wheels, I love it. I'm just saying

867
00:52:45,760 --> 00:52:51,520
Speaker 1: from a financial analyst perspective, it just doesn't make sense.

868
00:52:51,640 --> 00:52:54,040
Speaker 1: And I and I understand that there's there's not a

869
00:52:54,120 --> 00:52:56,400
Speaker 1: whole lot of things that I would want to drive.

870
00:52:56,880 --> 00:53:01,839
Speaker 1: But that's because you don't as a manufacturer. You don't

871
00:53:01,840 --> 00:53:04,919
Speaker 1: want to accidentally sell a lot of something that you're

872
00:53:04,920 --> 00:53:08,200
Speaker 1: losing money on. It's the opposite point. It's why we

873
00:53:08,239 --> 00:53:12,160
Speaker 1: don't have great ones here. I think it's why you know,

874
00:53:12,320 --> 00:53:16,399
Speaker 1: Chevrolet Bolt, right, Like you look at Chevrolet General Mode

875
00:53:16,520 --> 00:53:18,520
Speaker 1: is a good example, right, You look at both and

876
00:53:18,560 --> 00:53:21,120
Speaker 1: it's like, oh, it's not competitive to Tesla who doesn't

877
00:53:21,160 --> 00:53:25,279
Speaker 1: care about profitability, you know, or even looser and Rive

878
00:53:25,400 --> 00:53:28,279
Speaker 1: and don't care about profitability. And you're saying, well, both

879
00:53:28,400 --> 00:53:30,319
Speaker 1: is uglier than all of those things. And it's like,

880
00:53:30,719 --> 00:53:33,320
Speaker 1: you can't tell me that Chevrolet, who makes the C

881
00:53:33,480 --> 00:53:36,359
Speaker 1: eight Corvette and has made corvettes for you know, since

882
00:53:36,440 --> 00:53:38,920
Speaker 1: nineteen fifty three, can't come up with a better design

883
00:53:39,320 --> 00:53:42,480
Speaker 1: if they wanted to, if they wanted to sell that product.

884
00:53:42,480 --> 00:53:45,080
Speaker 1: And it was important and it was profitable, you would

885
00:53:45,080 --> 00:53:48,560
Speaker 1: get an incredible EV. Right, But when you look at

886
00:53:48,560 --> 00:53:51,120
Speaker 1: the P and L and you're losing fifteen thousand dollars

887
00:53:51,840 --> 00:53:54,840
Speaker 1: a pop and the government isn't making you hold the

888
00:53:54,840 --> 00:53:57,960
Speaker 1: way it is in China right BYD was getting forty

889
00:53:57,960 --> 00:54:00,120
Speaker 1: four thousand dollars a vehicle in the early day. As

890
00:54:00,160 --> 00:54:03,920
Speaker 1: a EV, it's probably about still in the teens across

891
00:54:03,960 --> 00:54:07,839
Speaker 1: the board for those manufacturers. We're never going to directly subsidize.

892
00:54:08,360 --> 00:54:11,239
Speaker 1: So until you get that, where's my motivation as a

893
00:54:11,280 --> 00:54:15,520
Speaker 1: manufacturer to you're forcing me to do unprofitable things?

894
00:54:15,760 --> 00:54:19,279
Speaker 3: You would be the Silverado and the Sierra are amazing.

895
00:54:19,760 --> 00:54:24,080
Speaker 1: Yeah, yeah, even if you're losing money on them, you're

896
00:54:24,120 --> 00:54:26,399
Speaker 1: you're able to write. So those are those are again

897
00:54:26,520 --> 00:54:30,080
Speaker 1: those can be your compliance vehicles. I understand CAFE and

898
00:54:30,200 --> 00:54:35,319
Speaker 1: a mission those regulations are different now, but so and

899
00:54:35,400 --> 00:54:38,839
Speaker 1: I would always joke something like Bolt or Silverado EV.

900
00:54:40,040 --> 00:54:42,880
Speaker 1: If it were important to hitting some sort of corporate

901
00:54:42,920 --> 00:54:46,800
Speaker 1: average fuel economy or emissions target, you would you would

902
00:54:48,239 --> 00:54:50,880
Speaker 1: you would put a number on the cubicle of an

903
00:54:50,920 --> 00:54:54,200
Speaker 1: intern that says forty thousand units. As soon as that

904
00:54:54,239 --> 00:54:57,600
Speaker 1: forty thousand unit is sold, that intern comes running out

905
00:54:57,600 --> 00:55:00,279
Speaker 1: of the cubicle, goes to Mary Barr and says, did

906
00:55:00,320 --> 00:55:02,920
Speaker 1: it stop selling, issue a recall, whatever you gotta do,

907
00:55:03,360 --> 00:55:06,520
Speaker 1: and now go sell all the internal combustion super profitable ones.

908
00:55:07,040 --> 00:55:09,000
Speaker 2: And I'd like to say, I'd like to just say,

909
00:55:09,040 --> 00:55:11,399
Speaker 2: for the record, there have been many EV's that I've

910
00:55:11,440 --> 00:55:15,840
Speaker 2: given positive reviews to. For instance, g Wagon EV I

911
00:55:15,880 --> 00:55:24,279
Speaker 2: thought was great, Rolls Royce Specter, also great, Dodge Charger, Daytona,

912
00:55:24,920 --> 00:55:27,640
Speaker 2: the Electric I had a lot of fun drag racing.

913
00:55:27,840 --> 00:55:31,120
Speaker 3: Yeah, I loved, I love. I lived that car for

914
00:55:31,160 --> 00:55:34,800
Speaker 3: a week and absolutely loved it. Taikon, especially the Wagon

915
00:55:34,880 --> 00:55:40,800
Speaker 3: version that discontinued. Absolutely loved the BMW I seven I adore.

916
00:55:41,239 --> 00:55:46,640
Speaker 1: And what have they been common? What they're probably better?

917
00:55:47,040 --> 00:55:51,080
Speaker 3: No, you're right, you're right there. That was a conversation

918
00:55:51,200 --> 00:55:54,080
Speaker 3: with Ken Kevin Tynan, which will continue on the other

919
00:55:54,120 --> 00:56:03,600
Speaker 3: side of this break. This is we are back with

920
00:56:03,800 --> 00:56:07,719
Speaker 3: Kevin Tynan of the Presidio Group formerly of Olberg Intelligence.

921
00:56:08,080 --> 00:56:09,880
Speaker 3: Let's get back to our conversation.

922
00:56:10,360 --> 00:56:12,560
Speaker 2: So call it for the first half of the year.

923
00:56:12,960 --> 00:56:15,759
Speaker 2: Are there any names that come to mind in terms

924
00:56:15,800 --> 00:56:19,680
Speaker 2: of brands that you think are beating everyone else or

925
00:56:20,080 --> 00:56:22,520
Speaker 2: really doing especially poorly.

926
00:56:23,160 --> 00:56:27,720
Speaker 1: Well, it's interesting because of the expiration of the federal

927
00:56:27,800 --> 00:56:31,920
Speaker 1: tax credit in September of last year, which in a

928
00:56:31,960 --> 00:56:37,520
Speaker 1: maybe nuanced way, enabled US or any manufacturer selling in

929
00:56:37,560 --> 00:56:41,560
Speaker 1: the US to kind of go back truck, right, And

930
00:56:41,640 --> 00:56:44,000
Speaker 1: keep in mind, and when I say truck, I mean everything,

931
00:56:44,600 --> 00:56:48,319
Speaker 1: pick ups, crossovers, minivans, whatever. We're eighty four percent of

932
00:56:48,680 --> 00:56:52,000
Speaker 1: it's eighty four percent by volume in this country now, right,

933
00:56:52,560 --> 00:56:58,640
Speaker 1: So that financial pressure of a compliance money losing ev

934
00:56:59,160 --> 00:57:03,160
Speaker 1: or small car was a little bit risk off as

935
00:57:03,200 --> 00:57:07,080
Speaker 1: of the end of last year. So what you're seeing

936
00:57:07,160 --> 00:57:11,680
Speaker 1: is is, you know, GMC, for example, which is really

937
00:57:11,680 --> 00:57:16,200
Speaker 1: good stuff. And I'm talking also from the perspective that

938
00:57:16,240 --> 00:57:19,320
Speaker 1: we have at the Presidio Group, which is, you know,

939
00:57:19,320 --> 00:57:21,840
Speaker 1: looking at the M and a market, right, dealers really

940
00:57:21,880 --> 00:57:27,880
Speaker 1: interested in in GMC and maybe surprisingly, and I don't

941
00:57:27,920 --> 00:57:30,800
Speaker 1: mean it's in a bad way, Buick as well, you

942
00:57:30,800 --> 00:57:35,560
Speaker 1: know bugs, yeah, I know, right, own guys like us

943
00:57:35,680 --> 00:57:39,080
Speaker 1: still think that. But I think what's interesting is by

944
00:57:39,120 --> 00:57:43,800
Speaker 1: transaction price, Buick is actually GM's most affordable brand. It's

945
00:57:43,800 --> 00:57:47,120
Speaker 1: not Chevrolet anymore, right, because they're not doing big pickups.

946
00:57:47,520 --> 00:57:50,440
Speaker 1: So I think that I think that that you know,

947
00:57:50,800 --> 00:57:55,800
Speaker 1: average buy er age of might still be any early hundreds.

948
00:57:55,840 --> 00:57:59,040
Speaker 1: But but it seems like that sort of rolled over

949
00:57:59,360 --> 00:58:02,680
Speaker 1: and you your generation is saying like, hey, I need

950
00:58:02,760 --> 00:58:06,880
Speaker 1: something affordable, and this is it's not obviously depressing.

951
00:58:06,960 --> 00:58:09,680
Speaker 3: Dude, I gotta say, like, so a GMC is among

952
00:58:09,720 --> 00:58:14,600
Speaker 3: my very favorites. If I have, you know, a Yukon

953
00:58:15,160 --> 00:58:18,480
Speaker 3: eighty four in the driveway, like I'm making every excuse

954
00:58:18,520 --> 00:58:21,280
Speaker 3: to go on an errand right, if I am test

955
00:58:21,360 --> 00:58:24,240
Speaker 3: driving a Buick and Vista, it makes me literally depressed

956
00:58:24,280 --> 00:58:25,360
Speaker 3: about life.

957
00:58:25,240 --> 00:58:29,960
Speaker 1: Right, right, But that that's sort of the that's sort

958
00:58:29,960 --> 00:58:31,960
Speaker 1: of the point, right It's it's going to be a

959
00:58:31,960 --> 00:58:35,240
Speaker 1: loss leader. But but what you understand, though is if

960
00:58:35,280 --> 00:58:40,440
Speaker 1: you take Buick out of that mix, GM's average transaction

961
00:58:40,600 --> 00:58:44,120
Speaker 1: price is probably north of sixty thousand dollars. And what

962
00:58:44,160 --> 00:58:46,920
Speaker 1: you're doing in that instance, and what has happened over

963
00:58:47,000 --> 00:58:52,080
Speaker 1: the years, is that you're basically telling the consumer, we

964
00:58:52,200 --> 00:58:56,360
Speaker 1: have nothing for you until you're ready to spend sixty

965
00:58:56,440 --> 00:59:00,280
Speaker 1: thousand dollars because we're not going to make a you know,

966
00:59:00,760 --> 00:59:04,680
Speaker 1: and you're seeding that market to your you know, mostly

967
00:59:05,000 --> 00:59:11,280
Speaker 1: Asia based competitors who can willing to lose money at

968
00:59:11,520 --> 00:59:14,840
Speaker 1: sub thirty five or twenty five thousand, or thirty or

969
00:59:14,880 --> 00:59:18,800
Speaker 1: twenty five thousand dollars, because what they're saying is, we

970
00:59:18,800 --> 00:59:21,440
Speaker 1: will use this as a loss leader. We but we

971
00:59:21,480 --> 00:59:23,640
Speaker 1: think you're going to like the product and the dealership

972
00:59:23,680 --> 00:59:27,440
Speaker 1: experience enough that you'll come back. That same argument for

973
00:59:27,520 --> 00:59:31,240
Speaker 1: somebody like GM without a buick or you know, the

974
00:59:31,280 --> 00:59:34,000
Speaker 1: bottom of the market Ford stuff has gone away. What

975
00:59:34,040 --> 00:59:37,360
Speaker 1: you're saying is is that we don't believe in our

976
00:59:37,520 --> 00:59:41,200
Speaker 1: sort of customer retention from twenty five to thirty five

977
00:59:41,240 --> 00:59:44,360
Speaker 1: to forty five to fifty five where you're profitable. That's

978
00:59:44,440 --> 00:59:48,000
Speaker 1: for unprofitable vehicles. We have to sell you hoping you

979
00:59:48,160 --> 00:59:51,920
Speaker 1: come back into the money making part of our portfolio.

980
00:59:52,120 --> 00:59:56,120
Speaker 3: So, by the way of first of all, GM has

981
00:59:56,200 --> 01:00:00,000
Speaker 3: an Asia based product, right, so they can tell you attracts.

982
01:00:00,000 --> 01:00:01,880
Speaker 3: And by the way, part of the problem is tariffs

983
01:00:01,920 --> 01:00:04,200
Speaker 3: because it's more expensive for them to produce that kind

984
01:00:04,200 --> 01:00:06,360
Speaker 3: of vehicle here than it is for them to produce

985
01:00:06,400 --> 01:00:08,640
Speaker 3: in Korea and import it. They'd rather take a fifteen

986
01:00:08,680 --> 01:00:11,560
Speaker 3: percent hit. On another note, Kevin, I have to say,

987
01:00:11,960 --> 01:00:15,920
Speaker 3: so I recently bought twenty twenty BMW M seven sixty.

988
01:00:16,360 --> 01:00:20,840
Speaker 3: It's the six point six literer of E twelve. I

989
01:00:20,880 --> 01:00:24,240
Speaker 3: love it. And after I got it, I took it

990
01:00:24,280 --> 01:00:27,880
Speaker 3: to the BMW place here in port Chester for service.

991
01:00:29,040 --> 01:00:33,040
Speaker 3: I had them you know, check and test everything from

992
01:00:33,600 --> 01:00:37,000
Speaker 3: the radiators to the hydraulic you know, the air suspension,

993
01:00:37,040 --> 01:00:39,640
Speaker 3: like everything, just because I want to keep it forever.

994
01:00:40,120 --> 01:00:44,520
Speaker 3: And I also hit a pothole on the Wanta Parkway

995
01:00:44,600 --> 01:00:46,200
Speaker 3: and blew out a tire, so I had to take

996
01:00:46,240 --> 01:00:49,640
Speaker 3: it to the BMW Dealership and Date in Bayshore, Long

997
01:00:49,680 --> 01:00:52,760
Speaker 3: Island to replace my tires. All this is a long

998
01:00:52,800 --> 01:00:57,360
Speaker 3: way of saying I've experienced BMW service and it is

999
01:00:57,760 --> 01:01:02,240
Speaker 3: next level. It is the dealer The BMW dealership service

1000
01:01:02,320 --> 01:01:09,280
Speaker 3: experience is for me only paralleled by you know, German

1001
01:01:09,560 --> 01:01:12,439
Speaker 3: like when I had my Portiae in Berlin, or when

1002
01:01:12,480 --> 01:01:15,920
Speaker 3: I bought my g Wagon in Stutteguard. Like that's the

1003
01:01:16,120 --> 01:01:19,600
Speaker 3: level of service at these BMW dealerships. I'm so impressed.

1004
01:01:19,920 --> 01:01:23,000
Speaker 1: Yeah, and I think, you know, that's one of the things,

1005
01:01:23,000 --> 01:01:25,160
Speaker 1: and it's one of the areas in terms of the

1006
01:01:25,200 --> 01:01:28,240
Speaker 1: dealerships I've been looking at a lot is fixed ops,

1007
01:01:28,280 --> 01:01:32,320
Speaker 1: you know, parts and service. And what I'm starting to

1008
01:01:32,400 --> 01:01:36,840
Speaker 1: believe is that is that the problem there that the

1009
01:01:36,880 --> 01:01:45,600
Speaker 1: consumer has with with franchise dealer service departments is its capacity.

1010
01:01:46,360 --> 01:01:46,560
Speaker 3: Right.

1011
01:01:46,600 --> 01:01:51,120
Speaker 1: It's you know, there's not enough text, there's not enough bays.

1012
01:01:51,600 --> 01:01:54,880
Speaker 1: It's not and it's really not much more expensive when

1013
01:01:54,920 --> 01:01:58,640
Speaker 1: you look at the hourly rate of independent repair shops.

1014
01:01:59,640 --> 01:02:01,560
Speaker 1: But the fact of the matter is when you call

1015
01:02:01,640 --> 01:02:05,120
Speaker 1: a service department and they're two and a half three

1016
01:02:05,160 --> 01:02:08,760
Speaker 1: weeks out from an appointment, is a big deal, right,

1017
01:02:08,840 --> 01:02:09,480
Speaker 1: And that's that.

1018
01:02:09,640 --> 01:02:12,440
Speaker 3: Then that took me immediately right well, the way the

1019
01:02:12,440 --> 01:02:14,640
Speaker 3: way the way the tech works on me, I trust him.

1020
01:02:14,680 --> 01:02:16,440
Speaker 3: I don't feel like I'm getting ripped off even though

1021
01:02:16,440 --> 01:02:18,320
Speaker 3: the prices are high, you know, real.

1022
01:02:18,200 --> 01:02:21,480
Speaker 1: They show your V twelve and they probably closed the

1023
01:02:21,520 --> 01:02:23,960
Speaker 1: shop and went home for the for the month because

1024
01:02:24,000 --> 01:02:26,920
Speaker 1: you you just send everybody to college.

1025
01:02:27,160 --> 01:02:29,400
Speaker 3: It's not that bad, it isn't. I mean, it's isn't

1026
01:02:29,400 --> 01:02:31,440
Speaker 3: It isn't cheap, but it's not crazy.

1027
01:02:31,240 --> 01:02:33,960
Speaker 1: Yeah, now, And that's that's one of the things that

1028
01:02:34,120 --> 01:02:37,520
Speaker 1: like I'm saying, is that we we think that because

1029
01:02:37,520 --> 01:02:40,680
Speaker 1: when I look at repair or r counts of customer

1030
01:02:40,760 --> 01:02:43,760
Speaker 1: pay what we would call customer pay of the franchise

1031
01:02:43,800 --> 01:02:47,200
Speaker 1: dealer base, they're flat. But when you look at the

1032
01:02:47,320 --> 01:02:50,600
Speaker 1: value of vehicles, the number of vehicles, the age of vehicles,

1033
01:02:50,640 --> 01:02:53,480
Speaker 1: how much we're traveling, you would think that dealership ros

1034
01:02:53,520 --> 01:02:56,320
Speaker 1: would be going gangbusters through the roof, and they're not.

1035
01:02:56,800 --> 01:02:59,480
Speaker 1: And I think it's a capacity issue, because I don't

1036
01:02:59,520 --> 01:03:01,840
Speaker 1: think it's to your point. I don't think it's an

1037
01:03:01,880 --> 01:03:04,920
Speaker 1: hourly rate issue either, because it's not that much worse

1038
01:03:04,920 --> 01:03:08,960
Speaker 1: than what you would get at a BMW specialist, you know,

1039
01:03:09,080 --> 01:03:11,440
Speaker 1: in Great Neck or wherever you wound up. Being so

1040
01:03:12,600 --> 01:03:15,840
Speaker 1: interesting dynamic happening in the franchise base in terms of

1041
01:03:15,880 --> 01:03:21,320
Speaker 1: parts and service. But yeah, for us guys with V twelve,

1042
01:03:21,400 --> 01:03:24,480
Speaker 1: that's a it's a little scary. I'm wrestling with mine

1043
01:03:24,520 --> 01:03:29,720
Speaker 1: with an obscure engine code right now, but it's a

1044
01:03:29,760 --> 01:03:30,480
Speaker 1: little bit older.

1045
01:03:30,680 --> 01:03:34,120
Speaker 3: Dude. I don't want to keep you for the entire afternoon,

1046
01:03:34,160 --> 01:03:36,280
Speaker 3: like I do, still have a million questions, but I'll

1047
01:03:36,320 --> 01:03:38,080
Speaker 3: just I'm going to come over something that.

1048
01:03:38,560 --> 01:03:40,760
Speaker 1: Yeah, stop, I let me know when you're in town.

1049
01:03:40,800 --> 01:03:43,040
Speaker 1: We'll go. We'll go for a rip. I got a

1050
01:03:43,080 --> 01:03:45,280
Speaker 1: good I got a good little windy road on the

1051
01:03:45,400 --> 01:03:50,440
Speaker 1: river here that we that it was funny during COVID

1052
01:03:51,240 --> 01:03:53,440
Speaker 1: we're all isolated, we're all working from home in those

1053
01:03:53,480 --> 01:03:55,880
Speaker 1: first couple of weeks, and I got a good neighborhood

1054
01:03:55,920 --> 01:03:59,520
Speaker 1: for car guys. And about twelve o'clock every day you

1055
01:03:59,520 --> 01:04:01,560
Speaker 1: would go down on this river road and there would

1056
01:04:01,600 --> 01:04:03,560
Speaker 1: just be nine to eleven's and me and my V

1057
01:04:03,760 --> 01:04:06,080
Speaker 1: twelve and it was like it was like a just

1058
01:04:06,080 --> 01:04:08,640
Speaker 1: waiting everybody, just everybody blowing off steam in the middle

1059
01:04:08,640 --> 01:04:12,480
Speaker 1: of the afternoon. And uh, you know, if you got plullbelvi,

1060
01:04:12,600 --> 01:04:14,200
Speaker 1: you just cost it into your hand a couple of

1061
01:04:14,240 --> 01:04:17,400
Speaker 1: times and the cup let you go. It's it was

1062
01:04:17,440 --> 01:04:18,240
Speaker 1: the good days.

1063
01:04:18,560 --> 01:04:19,680
Speaker 3: They were the great days.

1064
01:04:19,880 --> 01:04:23,720
Speaker 2: Love Lockdown, Kevin, Thank you for joining us. It's so

1065
01:04:23,760 --> 01:04:27,640
Speaker 2: good to talk with you. That does it for this

1066
01:04:27,680 --> 01:04:30,920
Speaker 2: week's show. Remember to follow and subscribe to Hot Pursuit

1067
01:04:31,280 --> 01:04:34,560
Speaker 2: on apples, Spotify, and anywhere else you listen. You can

1068
01:04:34,600 --> 01:04:37,600
Speaker 2: also send us your comments. Email us at hot Pursuit

1069
01:04:37,640 --> 01:04:40,080
Speaker 2: at Bloomberg dot net, and.

1070
01:04:40,120 --> 01:04:42,800
Speaker 3: Check out Hannah's columns and stories on Bloomberg dot com

1071
01:04:42,840 --> 01:04:45,520
Speaker 3: and on the Bloomberg Business app. Go there for car

1072
01:04:45,560 --> 01:04:48,520
Speaker 3: Rebus events and stories that you won't find anywhere else

1073
01:04:48,600 --> 01:04:52,960
Speaker 3: find it all at Bloomberg dot com. Slash Pursuits, slash Autos.

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Speaker 2: I'm Matt Miller and I'm Hannah Elliott will be back

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Speaker 2: in your podcast feed again next week