WEBVTT - AutoNation CEO 'Feeling Good' about Consumer Demand

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 1>Jason Kelly on Bloomberg Radio. All Right, the driver's seat

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<v Speaker 1>a familiar place to Cheryl Miller. She knows a lot

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<v Speaker 1>about cars as the president and chief executive officer of

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<v Speaker 1>Auto Nation. Joining me on the phone from Charleston, South Carolina.

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<v Speaker 1>I have to say, if I was jealous of Taylor

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<v Speaker 1>Riggs being in San Francisco, I'm much more jealous of

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<v Speaker 1>Cheryl Miller being in one of my favorite cities in

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<v Speaker 1>America or the world, Charleston. Cheryl, how are you. I'm

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<v Speaker 1>doing great, and it's a great thing in Charleston. I

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<v Speaker 1>know it always is, isn't it. I mean, it's just

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<v Speaker 1>it really is one of America's great cities. I know

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<v Speaker 1>you don't just listen Rainy the New York this morning.

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<v Speaker 1>I know we're the worst this time of year. So

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<v Speaker 1>what are you seeing in the car business right now?

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<v Speaker 1>Being strong custer and demand. So we reported all time

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<v Speaker 1>record quarterly and full year earnings per share today. Fourth

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<v Speaker 1>quarter was up in the quarter year of a year,

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<v Speaker 1>and then the annual was up fifteen. So we're seeing

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<v Speaker 1>low unemployment for our customers. Three interest rate cuts and

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<v Speaker 1>a lot of strength. So as we look at compared

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<v Speaker 1>to two thousand nine, we think total industry sales between

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<v Speaker 1>new and used will be at a similar level, and

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<v Speaker 1>that's a really solid level. So we're feeling good well

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<v Speaker 1>and investors, we should point out, clearly happy as well,

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<v Speaker 1>pushing the stock up six point three uh percent, So

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<v Speaker 1>talk to us about you know, inventory and and and

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<v Speaker 1>customer demand as you go sort of a level deeper, absolutely,

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<v Speaker 1>So inventory is in great shape. We've reduced our new

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<v Speaker 1>vehicle inventory by eleven thousand units year over year, so

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<v Speaker 1>we're around the fifty two days supply, which is a

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<v Speaker 1>really healthy supply. So we love the positioning as we

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<v Speaker 1>go into the spring selling season. And what we've seen

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<v Speaker 1>from a customer perspective is customers continuing to migrate from

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<v Speaker 1>new to nearly new. And why is that. Over the

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<v Speaker 1>last five years, we've seen average prices for new go

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<v Speaker 1>up about fifteen percent, so a five thousand dollar increase

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<v Speaker 1>from two thousand fourteen to today in new vehicle prices.

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<v Speaker 1>There's still healthy new demand, so we're seeing new retail

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<v Speaker 1>being down about two to three percent, so it's still

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<v Speaker 1>a pretty healthy retail news Star, but we are seeing

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<v Speaker 1>customers love the affordability of used, so that migration is

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<v Speaker 1>something we anticipated years ago. We built the automation brand

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<v Speaker 1>towards that, and we're seeing success in the numbers. If

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<v Speaker 1>you look at the fourth quarter use vehicle profitability up alright,

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<v Speaker 1>So play that affordability question out for me, because if

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<v Speaker 1>you are a manufacturer of a car, how much does

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<v Speaker 1>that worry you this sort of trend and transition. There's

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<v Speaker 1>some great products coming from the manufacturer, so just to

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<v Speaker 1>be clear, particularly an electric and as you know, they're

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<v Speaker 1>investing a lot in electric. So we've got the new

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<v Speaker 1>portion of Icon coming out that's would be in our

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<v Speaker 1>stores this quarter that's going to be spectacular, already sold

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<v Speaker 1>out and back ordered for the next six months, and

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<v Speaker 1>it's really an outstanding vehicle. So they've been investing in electric.

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<v Speaker 1>It's not just Porscha, but you see the major premium

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<v Speaker 1>luxury manufacturers coming out with product. They've got good production

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<v Speaker 1>in terms of trucks and SUVs, cuvs, and that's what

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<v Speaker 1>the customer demand is right now. There's a reasonable level

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<v Speaker 1>of Awfully's vehicles, so they're also playing in the certified

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<v Speaker 1>pre owned space. So we feel like the manufacturers they're

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<v Speaker 1>going to have to continue to invest in electric. The

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<v Speaker 1>payback is further out for electric. But they've done a

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<v Speaker 1>good job of production. So one thing that we're not

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<v Speaker 1>seeing is we're not seeing O. E M stuffing inventory

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<v Speaker 1>on us. That's really great place to be. Well, let's

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<v Speaker 1>talk a little bit more about e v s if

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<v Speaker 1>we can, because you know, you mentioned some brands other

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<v Speaker 1>than the one that we are obsessed with talking about,

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<v Speaker 1>which is Tesla. You know you mentioned the Taikon. That's

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<v Speaker 1>something we've talked with Klaus Selmer a lot on this

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<v Speaker 1>program actually about what they're doing. We saw their big

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<v Speaker 1>Super Bowl ad, the heist, that was all the very

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<v Speaker 1>sighting and and as you say, you know, they're really

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<v Speaker 1>pushing that forward in the in the demand seems to

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<v Speaker 1>be there. Where are we more broadly in terms of

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<v Speaker 1>big manufacturers embracing evs and maybe more importantly actually getting

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<v Speaker 1>them out to customers. Yeah, so in the next two

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<v Speaker 1>years you'll be seeing those come out. So you see

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<v Speaker 1>Audi out with product, you're going to see BMW. I

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<v Speaker 1>was just at summit with BMW and saw some of

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<v Speaker 1>the new product coming out, and then behind that you're

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<v Speaker 1>going to have Mercedes Bend, so they're actually going to

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<v Speaker 1>be coming out on the roads, and I think that's

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<v Speaker 1>the difference rather than just being in the pipeline. You're

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<v Speaker 1>actually going to see those coming in place. That's actually

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<v Speaker 1>great for automation because we love servicing complex vehicles, so

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<v Speaker 1>we like hybrid servicing, we like electric servicing. We even

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<v Speaker 1>service autonomous with Weymo. So you're actually going to see

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<v Speaker 1>those vehicles on the road with manufacturers that can produce

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<v Speaker 1>at scale, and so we think that's pretty exciting for customers.

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<v Speaker 1>And we do think the Ticon as an outstanding car

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<v Speaker 1>and that's going to be a legitimate competitor for Tesla.

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<v Speaker 1>I drove one recently and super fast. You have to

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<v Speaker 1>be a little careful when you when you hit the

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<v Speaker 1>pedal on that one. Well, and I have to say

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<v Speaker 1>I got to sit in one. I didn't get to dry,

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<v Speaker 1>but I got to sit in one here at Bloomberg

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<v Speaker 1>when they were unveiling it, and uh, it feels like

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<v Speaker 1>a pretty sweet ride inside. Only about a minute left here. Cheryl,

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<v Speaker 1>you mentioned Weymo. You know you are a chief ARCHITECTI

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<v Speaker 1>of that deal. Remind us what that is and where

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<v Speaker 1>it goes from here. So Weymo is really a way

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<v Speaker 1>that we have one ft in the future. So about

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<v Speaker 1>three years ago now in Phoenix, we started a partnership

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<v Speaker 1>saying I wonder what this is going to look like

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<v Speaker 1>over over the next several years. So I'm pleased to

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<v Speaker 1>say three years later, we continue to have a great

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<v Speaker 1>servicing relationship with Weymo. So we got to see what

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<v Speaker 1>it was like to service autonomous vehicles early in their

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<v Speaker 1>life cycle, and now that they have many more miles

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<v Speaker 1>on the road, were able to see the evolution of

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<v Speaker 1>what service looks like in autonomous In addition to that,

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<v Speaker 1>we started doing parts delivery with Weymo out in Phoenix,

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<v Speaker 1>so a continued expansion of that partnership. We want to

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<v Speaker 1>make sure we're running the business for today, but also

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<v Speaker 1>that we're leaning into the future with things like our

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<v Speaker 1>partnership with Weymo and also our investment in room. All right,

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<v Speaker 1>Cheryl Miller, thank you so much. Come see us here

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<v Speaker 1>in New York City, maybe when the weather is a

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<v Speaker 1>little bit nicer, when we can get you out at Charleston.

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<v Speaker 1>The president and CEO of Auto Nation, Johnny Men on

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<v Speaker 1>the phone from down there in Charleston uh A nice

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<v Speaker 1>report for uh ITS investors today. Auto Nation stock up

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<v Speaker 1>six point three p