Show notes
Let's just dive right into things. I know. I know it's a, it's an interesting market and you got some, a couple of points you want to talk about, so let's do it
All right. Surely. So it's, it's going to sound a little crass. I'm afraid. But I, I guess we've never been accused of being good or really polite about things. You know, as we're watching this thing and it was starting to settle down a little bit, you know, and the prices look like they were normalizing, you get your head around things a little bit, you know, and the crazy things that were happening with the late model trucks were starting to dissipate. And you know, of course weren't bringing over MSRP were three years old. They were starting to come back down to where you actually thought that you had a grip on things and then CNN plowed in CNN did it. So in other words, CNN and the virus. So as we all experienced the craziest thing in a world that ever occurred ever in the car business, add everything up, add it all up.
Nothing's even close. If you took it all on one side of the ledger, everything that was nuts before, and then just this thing over the past year and a half, nothing's coming close. Right? And we thought we were coming out of that a little bit. You dig it. And then bingo, there, it goes, record cases, record this, record that, and then it occurred to me, right? I don't think you need anything other than a daily report of how many cases there are in Texas and Florida and displacing that place to understand the insanity of wholesale pricing. Right? In other words, as COVID goes up directly pegged to it is insanity and wholesale pricing direct, right? So the last couple of weeks we're sitting here, you know, we've got 700 cores, you're going to the block and you normal butterflies. Let's get moving to see what happens here about a bang, we're selling everything, right.
And next thing you know, boom, and I'm buying it and being in a boat, man, then all of a sudden the idea that we found normalcy is right out the window at them when I'm watching who's in, not just in our little thing and in Manheim, but in other places you see asymmetrical people, right? So in our little thing that we track, right? In our normal business, not on the technology side, but on our normal business, we know to really a natural written, how many people are logged in to the lane, how many participate, who it is, the participates, how often they participate when they do them, when they don't, when they're an observer, as opposed to a player. So in the stands or on the field, right. And that changes on a, on a weekly basis. And it's kinda like, you know, are you hungry when you go to the grocery store, are you just going to grocery store, see what you got in stock, right?
Or are you going to the ball game to play? Are you going to watch you follow me? And it's all about not just being a player, but being a fan of them being a fan of them being a player, right. To understand, you know, where you stand with your attitude about cars, the depth and the breadth of what you're doing when you're appraising, because that absolutely changes just like your appetite. When you're going to walk and pass potato chips, you're not hungry. You're not grabbing them. Welcome pay potato chips. You got a little growl on a belly. You're grabbing them. Same identical thing happens when it comes to appetite to buy inventory as a, you know, as a acquisition person. So when you add to that, it's sanity add everything up that happened in the car business until today until COVID on one side.
And then on the other, you know, Hertz is out of business. Avis is gone, they're finished, they're bankrupted their dominance over the tornadoes, blow everything up. And they got no cars. 80 million cars got blown up in a tornado somewhere. God did it right. So they're done, they're finished. There's not the talk about right. And next thing you know, bingo, out of the clear blue sky, you go to the Fort Lauderdale where just five 50 a day to rent a car, you know, from 1999 on limited Isles to like some crazy number, which impossible to imagine and what happens next since they sold all their inventory and everybody bought the rim through it, he's more as we're going out of business. So in other words, forget about them. They got no more chorus. Now what happens next? When you're logged in and you're watching what's happening at the wall street of wholesale, everything that middle bell curve, mud thing that kind of looks like a rental car man.
And not without a sun breaths that no, sir don't need an avatar. So anything that's like a normal mud based car, the roll over it like stink on poop, along with Avis, along with this one, that one, the other one. When you add to that, a couple of corporate people there's trying to drive top line revenue. We won't name who they are that are also kind of blindly buying inventory because they're going to increase their, you know, their stock value because they're going to double their revenue. So you know what they paid don't mean nothing. Cause all I got to do is buy it and make it disappear. Top line revenue flies. When you add those little COVID driven elements to the normal auction rat pots like us, like the average dealer we've been so encouraged to, in my case for 50 years, the average guy, the regular guy, that's the backbone of the industry, the backbone of the auction industry, right?
When we now have to contend whether you're a buyer or seller it's good or bad with these anomalies that have popped up. Now these anomalies ain't going to be around forever. You ain't going to get for 400 a day for a Malibu at the Orlando airport, I think going to last forever and they're going to get their appetite filled. You know? So you could say it's another whatever period of time it is for it to get filled. But until then these anomalies or in conjunction with all the people that don't get shots, they want to go on trips. They're going to go on a trip. But when they go on a trip, what do they got to do to got to rent a car? They got to rent a car. The company has to have cars. And now you have like a perfect storm of, you know, for many rational thinking person up insanity.
Now you can pontificate about it or you can participate in it, right? So pontifications what we're doing here on this show and this little thing, right? The fact is we're going to be participating in it. And as a acquisition person when you're going to be on doing your little proxies or doing whatever you do or seat of your pants or showing up maybe someplace to buy a car, you have all these other things to contend with. Then you have to think about who the best end user is, who the best end user is. You can't contend with somebody that can get to 75 a day to rent a car, you know, for the week it's 1275. So they rent the car five weeks, it's five GS. They made their money. Eh, so if that happens the last 10 weeks, they doubled their money. Right.
That's different than because you're competing with somebody that's in a different business with the same commodity. Right? So it, it, it turns out to me as a participant slash observer, it adds extra complications. It's no longer arithmetic. It's beyond algebra. It's actually, it's actually like calculus in terms of all the ins and outs and who did it and why they did it. And Carvana did the thing and other thing and all these goofy things, they're all flying around. And then when you take the next step back off of that, get your nose off of being the analyst and the pontificator, you kind of just stop and think about, does it really make any difference who is going to buy decor as long as you know, that you can duplicate that price. And if you're in a position to buy the car and you can resell it for whatever reasons that you're going to actually buy that car, right?
It becomes like a, a moot point. I guess the moral of the story is being a moot point. You're better off with the knowledge of what the ingredients are to get you to the point that we're at. Because as you know, you gotta stop thinking about this now again, they're not going to continue to buy cars. The rental car companies won't continue to buy cars forever. It's not going to happen. Right. So when you think about when they're in the market or when they're out of the market, what does it do to you know, your individual let's call it the calculation that two seconds of when you've got the itch to do it or not do it, what you do to, to your decision to actually acquire or not stretch on a trade or not. Right. it just turns out to be like a I would say one more level of of understanding of the intricacies of what we do this leads then to the last piece that is showing it, because we don't want to get people goofy with this who is the best end user, right?
So when you're trading cars or you have cores in inventory that turn out to be something that you, you rent and of course not retail except rent. The core is retail. If the rental car company is willing to pay as much or more than what you'd be able to retail the car for, and they're doing it for a different reason, they're not in your business or retail in the car, they're in the business, a GAF in the consumer at market value to actually put it on a highway. It's it's a very weird thing, obviously COVID related. So, so when we're saying that the pricing is directly pegged to CNN yapping about 4,000 cases a minute in this place, in that place. In other words, it's not like people are thinking about that, but it's directly related to, you know, the whole chip scarcity, the car scarcity, all the other that goes with it.
It's not. I'm sorry to say that all the other items that are involved in this and how the net end result is all of us have to deal with you know, in our case, it's actually a good thing when it hurts us. It's like having a retail customer in the lane, which is illegal, but they're not a retail customer, even though they're a retail customer, right. From a buyer standpoint, it's probably not a good thing because as we can see there, there's knocking them cars right up to what they would be worth, you know, on the best day of its life. So if you're like in the needs, that kind of category of car, it's going to be very difficult to, to drag them hamburgers home. I don't know if any of that made any sense, Sean, but when I was watching it last week in particular as the market skyrocketed way, way better than what I anticipated when we went into the into the arena it was shocking actually. And then when you think about it, the world's coming to an end because COVID is going up like a like a you know, one of these rockets that are going up into outer space. You know what I mean? It's very weird. It doesn't make any sense. Unfortunately, it's a fact. So you can't deny it right?
Put your sleep Shawnee me, boy, are you snoring on the other end here? No, sir. I just love the park.
Hello. It's competing with somebody in a different business with the exact same commodity. And you know, I guess I think you mentioned that a bushel of corn, to me, Watson, some people make corn flakes and some people use to make it use that bushel to make Doritos
Gotcha. Different gets a commodity. Everybody's got a better end use. And that's what drives value. It's identical to the commoditization of anything, a Venice commoditize best based in an open market, aggregated cars, aggregated buyers to identify the best end user, the best end user can be. The brand specific dealer could be the sharecropping wholesale dealer. It could be a sharecropper used car dealer by your buy your whatever, or in this case, an asymmetrical buyer, right? Rental car companies. Unbelievable, but true. Can't be insatiable. It's not going to be insatiable. You know what I mean? It seems like it is at the moment, but I can't imagine that it's going to be. And if it is, you know, hold on your bridges, the base number, those cars, see, this is the other weird thing. When we, we have a tool that we're telling the dealer target, target trade, what you'd love to trade the car for, right?
Target retail, I'm sorry. Target all wholesale. So target auction price, a price that you should be able to duplicate no matter who you are, not you're at a great associate or in the world. You're going to get three grand over that. That's an anomaly. That's not a duplication of circumstances. Not many people can duplicate that, right? So it's not realistic to plentiful a dealer to be trading a car for target retail. If they don't have access to the broader market, that's the whole theory behind our toolset. Right? so you can't tell dealers that, well, you know, Hertz is buying Camrys and you should trade the Camry for four grand, more than it's worth to you in your localized marketplace. You can't do that. You become dysfunctional. It did the, the transparency between the dealer and the consumer becomes false, right? Cause the dealer can't meet the expectations of being the best end user on that car, because it just isn't true.
If that were true, you only need one person in every auction because they'll buy all the cars. Cause they're the best end user. That ain't the way it works. You follow me, everybody's appetites based on, you know, and that's why he got puts in calls on, on the commodities, man, you got, you got a need for X amount iron or while you're not going to buy all the iron or in the world of the competitors, also willing to pay X amount of money. You now have the commoditized value. That's what we do with Vince, right? Sean,
100%. I think that's a great way to end it for today. Thank you, Bob.
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