Money Furnaces, Vehicle Subscriptions Are Back, Returnless Returns

The Automotive Troublemaker w/ Paul J Daly and Kyle Mountsier

It’s full speed ahead this Monday as we hit the ground running on some lingering items from last week and take a fresh look at what’s happening with Automotive, retail, consumer demand, and preview what’s in store this week as we move toward closing out June with massive momentum.

• Catch up stories from last week:
  • Carlotz closes 11 stores (50%) and reduces workforce by 25-30%
    • Consignment model, went public in 2021 (share price 11.49 to .46)
    • May release facilities to ‘interested parties’
  • New Tesla Factories are ’gigantic money furnaces’ - Musk
    • Producing a ‘puny’ amount of vehicles compared to what they could if supply lines were freed up
• High gas prices aren’t swaying owners and buyers toward smaller cars
  • In 2008 gas was over $4 and there was an exodus to smaller, more fuel efficient vehicles
  • In some segments, there has been an almost 50% increase in fuel efficiency, like the 2022 4WD F150 that has 21 mpg combined
  • Only 17% of SUV owners say they want to downsize
  • It’s all about supply. Very few sedans even being made comparatively to 2008
  • EV sales are substantially up over 2008, but that is also due to availability
  • Take Away: You can’t change your new car inventory, but you can make some lifestyle marketing cues from this data

• Vehicle subscription options making a comeback because of EV hesitancy
  • EV leasing company, Autonomy, offers as little as 3 month subscription for Tesla Model 3 with flex payment options between 1k down and 1k mo and 4,900 down, $490/mo
  • Capitalizes on ‘try before you buy’ value prop
  • All fees and insurance included, doesn’t show up on your credit report
  • Take Away: Find a pain point, and work to solve for it.

• Several retailers (Target, Walmart, Gap, American Eagle) consider the ‘returnless return’
  • With shipping, and logistical cost at all time highs, it’s sometimes cheaper to have consumers ‘keep it’
  • Net margins 1-5%. Return handling costs can be 15-30%
  • Some companies already have a glut of inventory from many spring clothing items
  • The downside can be extensive fraud
  • Take Away: Creative solutions often require us to let go of the way it has always been done

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Hosts: Paul J Daly and Kyle Mountsier
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