The Automotive Troublemaker w/ Paul J Daly and Kyle Mountsier

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Welcome to a beautiful Thursday in the Auto Industry, folks. Today we talk about another glitch in VinFast’s US Launch. We also cover GM CFO’s recent purchase of GM stock, as well as a new campaign by Staples that touts humans over AI.

• Vietnamese EV maker VinFast recalls its entire first US batch due to a safety risk. This decision follows the U.S. National Highway Traffic Safety Administration's warning about a software error in the dashboard of 999 VinFast's VF 8 vehicles, potentially increasing crash risk.
  • Software error in the dashboard display causes it to go blank while the vehicle is in motion
  • 700 of the 999 vehicles have yet to be delivered
  • The company isn’t aware of any incidents and an update is set to go out today
    
• In a move deemed 'unusual' by analysts, General Motors CFO Paul Jacobson has invested $1.01 million of his personal funds to buy 31,000 GM shares. The move seems to be an indication of Jacobson's confidence in GM's transition to electric vehicles, amid GM's market cap being lower than Ford's
  • "I’m sure he finds the stock quite undervalued and he believes in GM’s EV transformation," said David Whiston, auto analyst for Morningstar.
  • "Paul’s stock purchases reflect his confidence in our ability to deliver both today and into the future as we grow our EV portfolio, and scale Cruise and other growth opportunities," said GM spokesman Jim Cain in an email to the Detroit Free Press.
  • CEO Mary Barra has been in the role for 9 years and has only purchased $26k worth of GM stock by comparison
    
• Staples has introduced a new campaign called "Business is Human" to showcase the irreplaceable value of human interactions in the age of growing AI reliance. The campaign highlights the unique roles and expertise of Staples staff, asserting that customer service is more than just an algorithmic exchange.
  • The initiative aims to remind consumers that despite the digital evolution, Staples values personal connections, expert advice, and the human touch that builds customer trust and loyalty.
  • The campaign presents its employees in various ‘human’ situations like one employee sharing their personal "Workday Kickstart," expressing their preference for a good cappuccino, underscoring that "life is too short for bad coffee."

Hosts: Paul J Daly and Kyle Mountsier
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We’ve made it to the middle of the week! Today we’re talking about GM’s record pickup and SUV sales in Q2, Tesla’s tough Q2 and how Google is not getting rid of cookies after all.

Show Notes with links

• General Motors has raised its 2024 earnings forecast following a strong second quarter, driven by record North American sales of pickups and SUVs.
  • CEO Mary Barra emphasized in a letter to shareholders that responsible growth and efficient capital use amid shifting market conditions. "As excited as we are about our portfolio, we are committed to growing responsibly and profitably in any demand environment," Barra said. "Over the next few years, third-party forecasters now see the EV market growing steadily, but more slowly than it did over the last few years. As a result, we are adjusting our spending plans to make sure we're capital-efficient and moving in lockstep with customers."
  • Q2 net income rose 14% to $2.9 billion, with global revenue hitting $47.97 billion.
  • North American profit surged 39%, setting a new record at $4.4 billion.
  • GM adjusted its full-year EBIT guidance to $13-$15 billion, despite lowering net income forecast slightly.
  • The company reported increased EV sales but scaled back production targets due to lower-than-expected demand.
    
• Despite slightly better-than-expected revenue, Tesla's Q2 earnings report highlighted declining profits and raised investor concerns, particularly during a tense earnings call with CEO Elon Musk.
  • In Q2, Tesla's net income dropped 45% to $1.5 billion, down from $2.7 billion the previous year, while revenue rose to $25.5 billion, exceeding analyst estimates of $24.8 billion.
  • The company also experienced a 4.8% decline in global deliveries to 443,956 vehicles, following an 8.5% decline in the first quarter.
  • Musk had a elevated Q&A session as he was asked a variety of questions, most of which received short, blunt answers
    • When asked about diverting GPUs from Tesla to xAi, Musk by stating that the news was based on an "old article." as he assured that the diversion of GPUs to xAI was "in Tesla's interest," not detrimental to the company
• Google no longer intends to remove third-party cookies from Chrome, a major shift from its 2020 announcement. The company will retain third-party cookies, focusing on enhancing user choice instead.
  • Cookies are an important part of the $180 billion ad-tech industry, allowing advertisers to track users and target ads effectively.
  • The original cookie deprecation date was in 2022, and has been pushed several times by Google since then.
  • Google's alternative, Privacy Sandbox, aimed to preserve ad mechanisms while protecting privacy but had a rocky rollout.
  • Early reports indicated significant revenue losses (up to 60%) for publishers without cookies, though Google claims its tests showed a 20% drop for Ad Manager publishers.

Hosts: Paul J Daly and Kyle Mountsier
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Today is Tuesday! Things are happening in the auto industry, like how lower used car prices are driving down inflation, VinFast is forming a US dealer advisory board and Rivian is pressing ahead on future plans.

Show Notes with links

• Used car prices have plummeted over the past year, reaching their lowest level since 2021, and are now the leading category reducing inflation, according to CoPilot’s analysis of CPI data.
  • Cox Automotive reports that the average list price for a used vehicle is now $25,251, down 7% from last year and the lowest since summer 2021.
  • The June CPI report shows a 10.1% drop in used vehicle prices over the past year, with a 1.5% decline in the last month alone.
  • The previous surge in used car prices was driven by a supply crunch in new vehicles.
  • CoPilot CEO Pat Ryan explains that the supply of new vehicles has increased by about 50% since July 2023, easing pressure on the used market.
  • “Consumers have finally found themselves with more options to buy new, rather than used,” Ryan noted.
• EV manufacturer VinFast is strengthening its presence in the U.S. by forming a Dealer Advisory Board to navigate the American market.
  • VinFast aims to expand its U.S. dealership network with strategic advisory board members including David Coyle of Leith VinFast in NC, Damian Mills of VinFast Triad in NC, David Sansing, Elie Hanna, Bill Auffenberg
  • VinFast has received 70 applications from dealers and plans to establish 125 third-party sales points by the end of 2024.
  • David Coyle, Dealer Principal of Leith VinFast commented “This board represents a great opportunity for open communication and collaboration, ensuring VinFast remains at the forefront of the EV market.”
• Rivian CEO RJ Scaringe recently sat down with the Verge to cover the EV maker’s future plans, why every EV looks like a Tesla, and the joint venture with VW.
  • Rivian announced five new models this year: R2, R3, R3X, and updated versions of R1T and R1S. The R2 is set to launch in 2026 and already has 100K pre-orders.
  • Scaringe believes that the slowdown in EV growth is not due to a lack of demand but rather a lack of variety in available models. He believes there is significant latent demand for EVs that meet diverse consumer needs. “Because of the Model Y’s success, you have a lot of incumbents that have built products that look and feel and are shaped a lot like a Model Y.”
  • The $5 billion joint venture with VW focuses on co-developing Rivian's streamlined electronic architecture, which reduces the number of ECUs (electrical control units) in vehicles, simplifying software updates and cost efficiency. VW aims to leverage Rivian’s advanced technology across its brands, including Porsche, Audi, and Bentley.
  • Rivian also just launched an EV Charging Outpost near Yosemite National Park, converting an old gas station into a rustic charging site, featuring a lounge area, complimentary librar

Hosts: Paul J Daly and Kyle Mountsier
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Today, we pause and reflect on the events of 9/11/2001. No crisis can win.

It’s Wednesday and DG is back for round two. We’re talking about how Ally Financial is dealing with consumer credit challenges, how GM is drawing a line in the sand for its salaried employees and busting the EV slowdown myth.

Show Notes with links:

• Ally Financial is grappling with growing credit challenges as high inflation impacts borrowers, resulting in increased delinquencies. Shares plummeted 17.62% on Sept. 10, signaling the pressure the lender faces
  • Delinquencies in Ally’s retail auto sector increased by 20 basis points in July and August compared to Ally’s expectations, and net charge-offs (unrecoverable debts) increased by 10 basis points during the same period.
  • Borrowers are also cutting back on loans amidst high interest rates.
  • Ally has sold its lending business to Synchrony Financial to address its credit issue.
  • CFO Russell Hutchinson specifically mentioned that the number of borrowers in the 61+ day delinquency category has become a point of concern, with more underperformance expected in this bucket
• General Motors is intensifying its push toward an all-electric future, making it clear that salaried employees must align with its EV vision or move on. A series of organizational changes this year underscores GM’s dedication to selling only electric vehicles by 2035.
  • GM is downsizing its global headquarters to streamline operations and create cost efficiencies.
  • As we covered early this year, the automaker revised how it evaluates employee performance, with a stronger focus on productivity and innovation.
  • New bonus metrics now align more closely with the company's EV goals, emphasizing those who contribute to the transition.
  • Remote work privileges have been reduced for some employees to promote better in-office collaboration and push productivity.
  • The goal is to become more agile and tech-focused, modeled after top-performing companies in the technology sector.
• Despite misleading headlines claiming otherwise, EV sales continue to rise globally, though growth percentages have naturally slowed as the market expands. Media reports about an EV sales “slump” overlook key data points.
  • Misinformation has led some to believe EV sales are dropping, but the reality shows the opposite: gas-powered car sales are actually declining.
  • Despite declines from major automakers like GM, VW, and Tesla, overall EV sales in the U.S. still increased by 7% in Q1, reflecting continued growth in the market.
  • EV sales growth rates have slowed as expected but remain positive globally, rising about 10% in advanced economies,
  • From the Electrek article, “Each journalist who has spent the last year perpetuating the myth of an EV sales slowdown could have read any one of our articles, or googled a single number showing year-over-year EV sales in any region or for most countries and most brands, and found that they are still goin

Hosts: Paul J Daly and Kyle Mountsier
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The second half of 2024 is rolling and we’re talking about CDK’s race to fully restore services in teh next 48 hours. We’re also covering the drop in average EV prices below Tesla's for the first time in over a year as well as how our friends at Mohawk Chevrolet's "The Office"-inspired TikToks are taking the internet by storm.

• CDK Global expects its DMS to be fully restored by July 4 following cyberattacks that disrupted operations starting on July 19th for thousands of dealerships across North America.
  • CDK has been restoring services in phases, with many dealers already back online as of July 1.
  • Beyer Auto Group's CDK system came back online unexpectedly on July 1, which helped ease some anxiety among the staff about the indefinite outage.
  • Despite the restoration of the core system, their customer relationship management system and third-party integrations are still not functional, causing ongoing operational challenges.
  • Employees are now focused on the monumental task of recording all deals and service orders manually entered during the outage into the system, as explained by COO John Altman.
  • "There is some exasperation. I can see on their faces that they are just looking at this monumental task. But at least they know where they are at this point." - Said Altman
  • The disruption is expected to cause a 10% drop in Q2 earnings per share for major U.S. dealership groups, potentially costing nearly $1 billion.
• Automakers have cut electric vehicle prices to a level below Tesla's average for the first time since early last year, driven by increased competition and market dynamics.
  • The average transaction price of an EV, including Tesla, was $55,235 in April, $433 less than Tesla's average price.
  • The trend continued in May, with the industry average EV price being $56,648, $721 less than Tesla's.
  • Tesla's pricing cuts have influenced the market, pushing competitors to reduce prices or offer discounts, leading to an average discount of 12.4% on EVs in May.
  • Despite price cuts, new Tesla registrations fell 17% in April, while EV registrations excluding Tesla grew 69%.
  • Used EV sales have surged, growing 84% in May, as declining prices and federal tax credits make them more affordable for consumers.
• Mohawk Chevrolet in upstate New York has gained viral fame with a mockumentary-style TikTok series inspired by "The Office," featuring real-life dealership antics.
  • The series, starring digital branding creators Grace Kerber and Ben Bushen, began with a video about hiding tiny ducks around the office, which went viral with nearly 2 million views for the fifth episode.
  • The videos are created quickly, with Kerber and Bushen writing, shooting, and editing each episode in a day, leading to significant engagement and a rethink of the dealership’s social strategy to focus more on TikTok.
  • "There are probably some big and funny personalities that you work with so just wing it and see what happens." - Gr

Hosts: Paul J Daly and Kyle Mountsier
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