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There are four waves of innovation sweeping through the automotive industry that will disrupt vehicles more in the next 10 years than they've changed in the last 100.

Each week, we explore connected cars, electrification, changing ownership models, and autonomous self-driving vehicles, as we seek to understand and prepare you for the future of transportation.

Jul 25, 2019

EP013 - Auto Intel Summit Recap with Joe Overby

http://www.vehicle2.getspiffy.com

Episode 13 is an interview with Joe Overby, Senior Editor of Auto Remarketing & Auto Remarketing Canada; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. 

Joe makes his return to the podcast to talk with Scot about all of the happenings at AIS; from their favorite sessions and what was covered to the diversity of this year’s show. 

If you enjoyed this episode, please write us a review on iTunes!

The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo.

 

Transcript:

Scot:              

[00:56] Welcome to the vehicle 2.0 podcast. We are live recording here at the 2019 Automotive Intelligence Summit from sunny Raleigh, North Carolina. It's Wednesday, July 24th. It's been a long day. We're here at the end of the day, end of day two. So two thirds are a little bit more than that through the show. And excited to have Joe over beyond Joe is as a reminder to listeners as senior editor of auto remarketing. Also, you're the first guest we've had on the show twice. So, so you're famous.

Joe:               

[01:24] That's awesome. That's a come back, man. I feel special.

Scot:              

[01:29] So in addition to your role there, you guys put on this show. So you've been kind of, you know helping with a lot of the content and everything. So we thought we'd check in now that we're through the bulk of the show can get a read from you. What's been kind of the topical top of mind with it?

Joe:               

[01:45] Yeah, I, I think I think yesterday some of what stood out to me kind of in the, in the general sessions at least was the cybersecurity. It was, I, I don't know if scary is the right word, but the the ability of, of hackers to be able to generate, to get into you know, dealership systems and automaker systems and, you know, even even you, our personal data or personal credit card information, I think it was really eye opening, especially that, that last panel a with or that last a fireside chat with Ryan Bachman. GM financial. I thought I thought, you know, I, I got to sit in on your session yesterday, Scott. And I thought it was a couple of things really came up in that session that was interesting to me that just the I think it was one of the first charts you showed with how fast the rate of change and digital automotive has been compared to what I would the last 50 years prior. That the retail model is just you know, changed so quickly. And then you know, I think look

Scot:              

[02:52] At how fast Carvana came out of nowhere. Like I've never heard of them two years ago, maybe 18 months ago. And you know, you've got the

Joe:               

[02:59]  Vending machines everywhere and, and you know, everyone here is talking about their experience. I, I'm new to this digital retailing that's kind of, it has been a big topic that I've picked up on. Yeah, absolutely. And I thought, I thought today, you know, really was a big kind of digital, digital retail day. The particularly that dealer panel where we, we had four, four dealers and the, the president of the North Carolina auto dealers association talk about for a good bit of their time, you know, on the panel they talked about the digital retail experience and how, you know, I believe it. Okay. I think it might've been the, the gentleman from, from flo who talked about how dealers have the infrastructure and an inventory to do digital routes, the best of that to do their best position that guests to do digital retailing.

Joe:               

[03:52] And you know, they had some, some interesting thoughts on Carvana as well. And you know, as part of that panel and then also a couple other, you know, just discussions was the fact that I guess the key to digital retailing, you know, whether you're a dealer or whether you're, you know, Nordstrom's or whomever is offering kind of a blended experience between the online and in store based on what the customer wants. And I'm sure you've seen some of the same things with any commerce's. We, there was a long phase where we called it Omni channel and now they call it harmonized. So omnichannel was kind of trying to just like make your inventory counts work across online in the store, just kind of the basics x's and o's. And then harmonized is things like I add something to my cart on a tablet and then I go into the store and the sales associate can like know what's in my cart.

Joe:               

[04:47] So it's interesting to see the same conversations going on here. The dealer network makes it more complicated. It's almost as if every store was its own little business. Yeah. So imaginary Nordstrom's was independently owned and operated in a way, you know, a, or a franchise. I bet that's gonna make it really hard because you may have one dealer that's kind of, you know, within a, an OEMs world, far along the spectrum. But then another one's not. If the consumer starts at the OEM site, they're gonna have very different experiences. They go into different dealers. So it feels like a lot of it's going to have to come down from the OEMs. And I haven't heard a lot of talk about them. And it's interesting too, because a lot of these digital retail, you know, providers that work with dealers, you know, if a dealer wants to do digital retailing and you know, they work with one of these tech providers, you know, to do so, you know, you have these companies that are providing it on a dealer level, kind of a dealer group level, and then also the OEM level.

Joe:               

[05:46] So it's, it's Kinda, it can be, you can imagine where the messaging kind of gets mixed up in that process. Yeah. Yeah. The consumer wants to look across inventory, right? Yeah. You don't just, you don't, as long as the target, you're looking at it, you know, the target store is within 10 miles and you're looking for a very specific thing. You have some flexibility there. So it's gonna be interesting to see how that Nav, how that evolves. Yeah, absolutely. The another, another thing that jumped out to me today was it was also during that, that dealer panel where the head of the NC auto dealers association, Bob Glazer, he asked the panelists, the, the dealers when they thought, you know, he was using Raleigh as an example when Raleigh would have fully autonomous vehicles on the road. And, and you know, one of them said, Oh, you know, 2020, 23, another one set out, it'll be like 20, 40.

Joe:               

[06:41] And then the woman from crossroads automotive, who's there, she's there, court corporate counsel. She said, you know, this is the lawyer speaking to me, but never, you know, she said it's the insurance companies will be playing a bit of a, her term was, you know, having a punting match on who's going to take liability. So I think that that just illustrates some of the, you know, I don't know if I would say never, but it illustrates some of the complicated you know, issues out there with autonomy. But I think you could say the same thing about, to certain degree about subscription and other shared shared usage models. You know, who's gonna take insurance liability, who's going to pay for x, Y, and Z. I think those are, those are issues that are going to be raised for sure. Yeah, it's interesting. I can kind of argue either side.

Joe:               

[07:31] I see, I totally see your point. But on the other side, if you believe some of the stats, like even just kind of the level two in three stuff reduces accidents by like 80%. The insurance industry should be happy for autonomy and you know, I think they have a business reason to get around it and say we'll take on more liability because the liability we have today is going down by 80 or 90%. So that's how I talked myself into the other side of that. Again, and they, I think one of the one of the panelists or not panels, one of the sessions talking about the, you know, there's insurance companies now that are working with some of these subscription platform providers to figure out, you know, they, they to write specific policies that, you know kind of all the different usage cases of subscriptions in it and what kind of policy that driver would need and the you know, companies would need to do those types of things.

Joe:               

[08:24] So to your point, I think a lot of the companies are seeing it as a business opportunity. Yeah. Okay. Any other big trends? Well, I think that one of the funnel sessions was interesting to me. The the startup portion where they were talking about, you know, just opportunities for collaboration. And Quinn Garcia, who the managing director of, of autotech ventures mentioned that, you know, a lot of times we see startups as, or they're referred to as disrupting, but you know, in a, in in many ways they kind of help solve problems within a traditional industry like automotive because they, they have the ability and willingness to, to innovate and move quickly. The other side of that, he said they're challenged. Scaling can be a challenge, but what they're really good at is innovating and, and, you know, changing you know, being willingness to change and, you know, company we refer to lift, you know, and their their ability to work with some of these more traditional players in automotive. You know, for working with dealerships, for example, to provide loaner fleets or transporting service customers to and from dealerships. I thought that was an interesting point. And as a side note, I thought it was interesting that when he was talking about having two guys live at his house and while they started Lyft, I just immediately thought of the show Silicon Valley

Scot:              

[09:57] There Erlich Bachman's house. And started the company there. Yeah. He always says that co that car that's like from like six companies again, he always says it was Bob before its time. Wait, none of us, I don't think we've ever learned what that company did. That's funny. Yeah. And then they lived in his parent's house or something. Yeah. Very silicon valley thing to do. Yeah. I thought that was arresting. We, we see that in the retail world where a lot of retailers have these innovation centers. They kind of go through this cycle where they'll open up the Silicon Valley Innovation Center and they realize how expensive that is to hire engineering talent out there. And then also it creates a weird thing internally, right? So imagine you're not in the innovation center and you're just aligned level executive or developer and you just feel like you're outside of the innovation.

Scot:              

[10:40] So then that, that's one cycle they'll go through and then they'll, then they'll, they'll kind of make it more of their overall DNA. And then part of it is being able to partner with startups and, you know, definitely spiffy. We're feeling that from the automotive industry where a lot of these parts manufacturers, so for example, Mon humble is a, an investor in us and they are a filter company, you know, what you'd think is a very boring uninnovative innovative space. But they've realized that, you know, they need to understand what the consumer's behavior is changing. So, so we're seeing a lot of the auto companies you know, really I think very quickly invest in this space much more, you know, the retail industry took kind of 20 years, but it seems like the auto industry is moving very fast.

Joe:               

[11:20] Yeah, absolutely. And I would add one of the one of the other points that kind of stood out to me in the past couple days was one that you, you raised yesterday about the car sharing companies, the two largest ones having raised a combined $900 million combined. And it's interesting to see that, that that there's that much interest in car sharing, which I don't, I don't know that car sharing is as talked about as other segments of, of this mobility.

Scot:              

[11:53] Yeah. It's kind of under the radar.

Joe:               

[11:54]  So they, they, those companies go out of their way to kind of call themselves rental car companies, but they're essentially longterm rentals. So they're kind of like, I think their average is three or four day kind of rental kind of things. And so, so the two companies are Touro and get around. What's other, what's also interesting is you kind of see kind of to quote unquote godfathers in the auto space forming. So you've got Interactive Corp IAC. We were talking to the folks at honker and I didn't realize they had, they had led a very significant round for those guys, for example. So I see a, I see bought they have their own Angie's list. They started Expedia. So it's a very Diller's company and they have this whole suite of family home service type businesses and then in travel.

Joe:               

[12:41] And then they're also in the dating world. Oddly enough, this kind of smattering of Internet companies seems like they've got a directive to, to get really involved. And then the other big one is Softbank. So Softbank you know, just investing, they have like this $80 billion fund and they're investing a ton in the auto space. I know they're in a bunch of parking companies. They're in they're the ones that are funding get around. So, you know, there, there's two really big anchor investors there that are, seem to be driving a lot of that investment. Yeah. I think there's you know, just moving, moving appetite from Silicon Valley and even Wall Street, you know, towards, towards automotive and, you know, cause it's, you know, it's an industry that has been around for, you know, a hundred years and has only, it's only been in the last you know, five to 10 years. We're seeing this level of disruption. And then, you know, of course, the, the huge part of that is, is the used car market, which is 40 million annual sales. And then you have and that's just retail. Then you have a whole wholesale market that's 20 million each year. So it's, it's a, there's a lot of room for, for such investments in growth and quote unquote disruption.

Scot:              

[14:02] Yeah. I think, I think Amazon has shown us that, you know, digital technology can create such a better zero friction experience and then every time you do something in the car world you'd kind of, or you know, you encounter a lot of friction. So I tried to buy a car about a year ago and I had set it up where I was, I only had two hours cause I knew they would try to drag it out and it took like four hours and you know so and then, you know, no one ever gets really excited about, Gee, I'm going to go and get my car, you know, my oil changed or anything like that. So there's, there's a lot of opportunities to really increase the user experience around everything auto, which I think the VCC and they're pouring a bunch of money into that, just like Uber and lifted with taxis effectively Kinda saw that there was a really bad experience there that that could make much more 2019. Absolutely.

Joe:               

[14:52] And I think, you know, the, one of the biggest pain points automotive at least in the consumer buying process is that, is that financing process, you know, that it takes hours to get in there and find it to deal. And you know, one of the couple of the panels that we've had particularly the, there's one we had with Alex Mertz Zach with, with Ernst and young and he had three folks from the, the, you know, the, the finance world kind of go in and just speak about how, how they're changing the process. And I think that's probably, you know, the one area that it's pretty ripe for disruption as well.

Scot:              

[15:32] Yeah. Insight. Yeah. Yeah. You should. Yeah. It should be a lot faster. I don't know why it's so long. I think that it's a profit center and they, they've turned it into a pain point for the consumer to make profits. There's misalignment there and any company that flips that back the other way is it's going to be really making a lot of money. Yeah, absolutely.

Joe:               

[15:51] The another kind of the session that kind of stood out to me that I was able to get in today was the a one on the from Pala skier with the, with Nice Nielsen Auto Cloud. And she had some interesting interesting takes about, you know, she was sharing some data that I think for for Gidic for brand recognition that TV is the best form of advertising, but on the opposite in that axis you know, for actually decisions to buy that something like direct mail, digital retail or rate way higher than TV. So the key is not one or the other. It's kind of, you know, doing that, doing a blend of both. And I think that can be, you know, as she was saying that I kind of related that to what we were talking about with digital retail, that it is an Omnichannel approach, you know, a harmonized approach to, to to blending a lot of different methods based on how the consumer wants to interact with you.

Scot:              

17:01] Yeah. The, the challenge with TV is, you know, people that are kind of like 40 and younger, don't watch what they call kind of analog TV anymore. They're on Netflix and they're waiting for the next, you know, they're on, on Hulu and they're going to be on the Disney. It's going to get worse because we have a whole raft of new new subscription programs launching. So, you know, you're, you're almost kind of creating this challenge by just being on TV in that traditional OEM world because that's, that's, that's not the audience they all want. That kind of millennial kind of person are harder to find. And it'd be interesting to see. Yeah,

Joe:               

[17:33] Yeah, absolutely. I think you're at on point there. Half the shows. I, I still have a cable subscription, but I, you know, half the shows, I'll watch her either on Netflix or Amazon or I'll watch it on HBO

Scot:              

[17:45] Or something. Yeah. The only live TV is sports. Yeah, exactly. Certainly

Joe:               

[17:50] Watch, fair, fair. Share that with the, with NC state football starting up in about a month. So I'll be tuning back into the TV for that. Cool. anything else do you want? Huh. Well, you know, what, I, I think the only other other thing that stood out to me was just the diversity of, of companies here and different players in the market. I mean, you know, we're for 20 years we've had some iteration of what we call our, our used car week or in national remarketing conference where it's, it's, you know, for pretty much, you know, dealers, auto auction can signers and banks and, and it's interesting that to have a conference like this because in addition to those folks that they still come to this conference, you know, we get companies that are startups or investors or you know, people like the Nielsen's and Ernst and Young's and, you know, the spiffy is of the world that, you know, maybe are new to us, but they're, you know, getting into automotive and it's, it's really interesting to, to watch all these companies kind of come together.

Joe:               

[18:54] I mean comparing this conference to say, our fall event there, there's a lot of people here that haven't yet met each other. And so you get a lot of that. Oh, I met so and so at Auto Intel summit and you know, we're gonna work together. We're, you know, our fall event. It is, it's a lot more people who have, have known each other for years. So it's just, it's an interesting dynamic and it's Kinda fun to watch. Yeah. Yeah. One's more kind of like get business done today and the other one's more forward looking. Yeah, absolutely. It's the, you guys can balance the two of those. It's good to be able to provide two shows with a different flavor. Yup. And I should, I should add that our used car week conference is going to be November 11th through 15th at the Red Rock in Las Vegas. So thanks for the quick plug there allowing me. Yeah. Awesome. Cool. So start saving up those pennies for, for the  bandits.

Scot: 

[19:50] Cool. And then, so tomorrow the conference wraps and I'm sure you're looking forward to that. You can kinda go and take a couple of personal days. I'm sure these things are stressful. So tomorrow we've got Costco, there's a fireside chat about their car program, which is wildly popular. And then some interesting things around the finance side. And then a bunch of us get to repeat our sh are toxic. And so if, if, if folks missed the ones on Tuesday or had to choose between x and Y, you know, it can go to the other one tomorrow. So I think that's good though. We will be at my previous company, we ran several shows and you always get people to complain. You know, I, I couldn't make it to all the content, so I think it's good you didn't play that. Yeah, yeah. Yeah. Awesome. Well, thanks for joining us. I know you're, you're busy and look forward to seeing how things wrap up tomorrow.

Joe:               

[20:34] Well, Scott, thank you so much for being here and doing all these great shows and, and for your presentation the other day. Thanks.

Scot:              

[20:40] Thanks for having us.