Money Furnaces, Vehicle Subscriptions Are Back, Returnless Returns

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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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