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EP008 - ICRS Recap and Industry News http://www.vehicle2.getspiffy.com Episode 8 is a news-focused episode, recorded on April 25th, 2019. We start off with a recap of last week’s International Car Rental Show (ICRS) from Karl Murphy, President and Co-Founder at Spiffy. After talking with Karl, Scot dives into a variety of recent news items, including: Smartcar, who we featured in Episode 3, has accused Otonomo for allegedly stealing from their API documentation. Recent study shows that consumers are ready to make payments via connected car dashboard. Getaround expands outside of US with acquistion of European counterpart Drivy. Ford invests $500 million in EV pickup truck maker Rivian. China is pushing EVs to make up 20% of total auto market by 2025, while the US is expected to hit 7%. Tesla reveals hardware chip for their Full Self-Driving initiative. Uber S-1 discloses $457 million in R&D costs for autonomous vehicles, flying cars, and other “technology programs”. 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: [00:51] Welcome to the Vehicle 2.0 Podcast. This is Episode 8 and it's being recorded Thursday, April 25th, 2019. Welcome back Vehicle 2.0 listeners this week on the show. We are going to take a break from all the guests we've had on. We've really enjoyed and learned a ton in the last arc of gassed. And we're going to cover some news here in the automobile industry related to Vehicle 2.0 in last week's episode seven, we had Chris Brown from Bob Business Media and he is the editor of auto rental news where they think a lot about the changing ownership models out there. And if you recall, he curates the international car rental show, also known as ICRS. First, uh, to kick off this news episode, we have the co-founder of spiffy our very own Karl Murphy and he's gonna give us a trip report, a fresh off the heels of his trip to Las Vegas last week to the show. Welcome to the show, Karl. Karl: [01:52] Thanks Scot. Scot: [01:53] So you were in Vegas last week at the trade show. It's our first time ever going to this trade show. We were a, uh, we were an exhibitor, um, and uh, you know what? Uh, so it was a great show for spiffy and enjoyed a really exhibiting there. Uh, but that's not what we want to talk about today. What are, I know you were able to peel away and see a bunch of the content. Um, what were some of the trends and topics going on at the show? Karl: [02:16] Sure. So it's, uh, an interesting show. It had a mix of both large companies like Avis and Hertz and Ford and Toyota and small entrepreneurs. You know, companies like spiffy that makes software and entrepreneurs that have small fleets, maybe 10 or 20 cars and they're renting to a, uh, small Mitch. So it was interesting to talk to global companies and small folks. Um, it's uh, like three quarters us attendance and maybe 25% international. So we spoke to people from Brazil and Australia, Canada, a couple of Europeans were there. And so it's, it's interesting to get their perspective. It's, it's interesting, you know, um, their, their challenges are the same year. They all sort of a, from a vendor standpoint talk about the same things and want the same things. Karl: [03:01] Um, it was well attended. It was at the, you know, it was in Vegas at the Paris hotel in a, from a, from a provider's standpoint or vendor stand standpoint, really high quality attendees. It's like the people who showed up at our decision makers, they were running the fleet or they're the CEO or their, you know, sort of at a, at a corporate, you know, if they're smaller company, if it's a corporate level, it's sort of the, the decision maker or sort of one level away. So there wasn't a lot of um, you know, sort of distracting boost traffic, people looking for chotchkies and that sort of stuff. Nobody, nobody cared about our pens and penguins. They cared about our service and um, and sort of the things that we're doing to help fleet operators provide better preventative maintenance. Scot: [03:43] Cool. So, um, uh, so when we had Chris on the show, he talked about a lot of the different trends. Um, it feels to me having come from the ecommerce industry that, that it must feel a lot like a kind of retail shows where everyone, you have kind of the, the, you know, the, the industry stalwarts there kind of a little bit in shell shock and then this whole new group that kind of sees the future. Uh, did you get a vibe that, you know, folks are in denial about what's going on or is everyone kind of onboard with it? Karl: [04:12] Uh, there's like two camps, right? So there's the accepting the changes in the industry and the, and the changes in mobility that are going on and that, that Uber and Lyft exist and those companies are gonna be around for awhile and they impact the rental industry. Uh, clearly, um, the large auto companies see those guys as a threat to people taking, you know, taking their business. Um, there was an enormous amount of, uh, small entrepreneurs and small, you know, I mean it could be 2000 cars. It's sort of a small fleet, um, to, you know, maybe 20 or 30, but small entrepreneurs looking to get into, uh, you know, the changing mobility landscape. So they're either subletting, sub leasing cars to Uber drivers on a, on a short term basis. You know, it could be a day or a week or a month depending on sort of their model. They're software companies, they're providing all kinds of software to solve those problems for entrepreneurs. Karl: [05:06] Um, you know, some of those were companies that didn't make the comp competitive cut against Uber and Lyft and they repackaged and rebranded and now they're trying to help smaller entrepreneurs who are delivering services. Um, and, but there's clearly like there's some definite old school companies trying to solve old school problems. Um, I attended a, um, for like 10 minutes, there was a presentation on the, the um, sales characteristics and recruiting profile of a high performing counter agent, you know, and, and, and essentially, you know, they just want to sell you insurance, right. Um, and get you in, you know, they want to take you from the, the Toyota Tercel to the Tahoe. And then add, you know, double secret, leave the keys in the road, incentives at grid, coordinate insurance. You don't owe us anything. Um, and, and I, I was here for like 10 minutes. I'm like, you know, it's sort of like you who's selling buggies today, you know, like, I need somebody really good to sell buggies. Karl: [06:02] Um, because as a client I don't ever want to have my, my car rental customer experience breaks down when I go see the counter agent. Yeah. It's like the opposite of what the customer experience should be. Yeah. Yeah. It's like, I just want to like get keys and go to the car and drive away. Like you have my Amex and you have my id and my driver's license and I'll give you a retina scan and a fingerprint if you want. I would put a track, I mean, I'm sure you have a tracker on the car already. Right? And there's some of that stuff too. And, and so there's this dichotomy of there's all this connected car data and they talked about being able to shut down cars, you know, because I guess there's some issue where people will, you know, they'll rent in San Antonio and drive to Mexico and strip the car apart. Karl: [06:38] And, you know, you never, you never see the vehicle again. They, that's, that's a problem the industry for them. Um, and I was like, you know, this, this is sort of a wasted, you know, this is a 1970s, um, uh, session versus, you know, sort of impact of micro mobility and, and, and, and there's a lot of opportunity for it. I think. Um, you know, as the previous guests said, you know, there's all this data being shared that cities and governments are looking forward to, to reduce traffic problems. Um, and, and that, you know, I think that's a way for the industry to get on the side of, of government, hey, we got all this data. We can, we can better route traffic or we can charge different fees for different access points and when there's rush out and that sort of thing. Scot: [07:22] Yeah. Um, I saw a fair amount of Twitter traffic around. Um, there's a lot of pundits that come to these shows and kind of share their vision into the future. A Cox auto's has a, an economist there. Uh, it must be nice to have an economist. We don't, we're not big enough. It's 50 to have our own economist yet. Karl: [07:39] That's you, Scot. Scot: [07:40] Yeah, I'm a, I'm a couch economist. The uh, uh, what, what were some of the trends he was talking about and they've certainly been really active in this space. Karl: [07:48] Yeah. So it's interesting. They, they, uh, so at a, at a high level, they thought, um, GDP was like in the high ones, so like one five to, to sorta depending on, um, trade tensions, Paris and that sort of thing, you know, x, some sort of a dramatic positive or negative impact on the economy, you know, terrorist incident or some crazy tax cut or something. He was outside of things we can't forecast. He thought he was sorta like, here's my bets. Like one, eight, one, nine. Um, and then, uh, at the car level, it was interesting. I just don't, I don't really think about this stuff, but he's like, the average cost of a new car is going to tick over $40,000 in the next year or so. I can 2019, maybe 20, 20. Um, and it's, it's being driven by the desire for consumers, for larger cars, SUVs and trucks. Karl: [08:38] Um, and then the dealers just, you know, from a manufacturing standpoint, not making small cars like Fords, like not making sedans minus the Mustang and the mustangs like to get into a Mustang with like, you know, without a radio. It's like 45 grand or something. And so that was interesting. And then dovetails Edo, he talked about some of the trends that we talk about spiffy about millennials and their changing behaviors. And you know, they prefer to live in cities. They prefer to have experiences over owning things like, and in some cases, you know, we have, you know, millennial, you know, you're 17 and you don't have a driver's license. You know, I know you and I talk like that was like the first thing to get your freedom at 16 was to get your driver's license and get out of here, get out of your house. Karl: [09:19] And so, um, it's, uh, all those things swirling together, um, make it difficult for dealers. Right. Um, and, and so it was interesting to see that. Um, he had some interesting data and I know we talked about this offline, about the cost of ownership for like, say a baby boomer versus a millennial and it's like 20 cents a mile higher, right? And so they do it in cost per mile. Uh, and like if you're like 50 or 60, it's like 50 cents a mile to own a car. And for a millennial it's like 75 or 77 cents. And it swirls into, you know, higher insurance rates because you're younger, a higher interest rates because you have less credit history or some smaller incomes. And that you live in an urban environment. So then just things like parking fees and that sort of stuff get higher and you're using your ma, your car less if you do own a picture in an urban environment. Karl: [10:12] So all of those things come in. And then it, it really pulls people out of buying cars new, which makes the used car market bigger, which is relevant to the car rental agencies piss a bunch of them, have a model where they just make money selling their cars on the secondary market. Um, and so there's a lot of discussion about how do you sell cars? Do you sell them direct? Like enterprise has their own used car sales lots so you can drive up and by car from enterprise today. Um, or do you go through auctions, um, traditional auctions that our dealer to dealer, um, which would then put you into like a, you know, a local used car guy, um, or some of the newer platforms where you're like a Carvana where you're selling it, um, online to someone. And so it was, uh, he had, he had a lot of insights about that. Karl: [11:00] He felt like the Oems, we're going to survive. Um, he thought the dealer networks, we're sort of at risk. Um, and he felt like the auctions had to really evolve. Ppas. There's a lot of, a lot of people chipping away at the edges of the traditional auction business. Um, it was interesting. It's interesting to sorta hear the side talk among people depending on who they were. Um, you know, again, we're sort of side participant vendors in that market, but the people were pretty, it was interesting to hear that. Yep. Cool. And then now when we had Chris on the show, one of the big topics he talked about is, so if we have this change in ownership model from individual ownership to more business ownership, uh, and um, you know, who's going to take care of all, all these vehicles, this is obviously near and dear to our heart. Karl: [11:43] Um, so he kind of talked about fleet management as a service. A, is that something that was talked about at the show or were there a lot of vendors there for that? Uh, there were couple of vendors. I mean there's us and a, and a couple others. Um, it was absolutely a topic of people that visited us. I would say 75, 80% of the people who came to talk to us, we're looking to do that. Again, it's, it's primarily the new players to the market because the business sounds interesting until you own cars and they're split up all over. You know, I've got, I'm a distributed, you know, mobility network provider in Los Angeles. I own 200 cars in there into 10 lots across La. Oh Wow. I have a lot of things to do all over, uh, you know, an 18 million person city. And so they're looking for people to go out there and deal with the cars. Karl: [12:31] I mean, one of the things that was interesting, we've, we saw a, um, a digital, um, key exchange system, right? So it's highly secure, sort of designed to be in, in the most dangerous of locations and, and really, you know, to, to withstand sort of vandalism, that sort of thing. You know, you can show a bar code and it, it's, it's a gps or a cell phone enabled. And so it communicates it. And that was super interesting and they were across the, across the way from us in the trade show area and had, they had a lot of traffic and then people coming to us asking, you know, can you know, what are the services you can do? And, and when they talk, when we, you know, we said, hey, we do, you know, fleet fleet maintenance, we can do preventative maintenance, oil change, tire rotation, um, car washing, all that sort of stuff. Karl: [13:17] They, they got pretty excited about it because they're seeing that that's a problem, right? Because as soon as you start moving the vehicles, then they get dirty and the more successful you are, the more maintenance you need and all those sorts of things. So it was, it was, um, it was an exciting validation of our model. Yeah. Um, so there seems to be this lifecycle where people kind of start dabblin…
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