Michael Ward: Daniel, I wonder if you can walk me through that slide 11 that you have in your handout, just on what you’re doing as far as the floorplan swap, the layers and the impact of higher interest rates? Because I think that’s unique relative to the rest of the group.
Daniel McHenry: It’s Daniel. Let me just pull up slide 11. You’re correct. We’ve got layers of interest rate swaps all the way out to 2031. What that’s enabled us to do is to fix a big proportion of our interest. You can see the layers in the deck and the rates that we’ve fixed them in at. And the rate out to 2031 is at 0.67%. So I think that’s going to help with €“ a differentiator for us versus our competitors.
Michael Ward: As interest rates go up on the floor plan, the number that we see, the 9.6%, whatever it was in the quarter, we won’t see that increase at the same rate that we see others? Do these swap cost offset or the benefits?
Daniel McHenry: That is correct, Mike. 70% of our debt is at a fixed rate. So, we will not see the same increase as our competitors.
Michael Ward: So that’s netted out on that.
Operator: Our next question comes from David Whiston from Morningstar.
David Whiston: You mentioned the really tight Toyota Lexus supply. And I’m just curious if you think that the worst of their production stoppages from either COVID absenteeism or more like more easier to predict maybe the chip shortage, but is there still €“ are you much more confident about 2023 product allocation from them? Or is there still little to no visibility from the factory on that?
Daryl Kenningham: We’re more optimistic, David, with Toyota. They’re telling us they have more optimism in their plans. I think the thing that Toyota is really fighting is they have such a pent up demand for their brand with customers. And if you look at our presales, typically, presales and pipeline orders are typically kind of luxury brand kind of things, except for our Toyota stores. And we have significant numbers of presales even in our Toyota stores. So I expect they’ll have a higher production this year, but I also expect much of that’ll get will get soaked up by some of these presales that are still out there.
David Whiston: On new vehicle affordability, there’s a lot of attention given to poor used vehicle affordability, but all the automakers CEOs don’t seem too concerned about the high price of new vehicles. What about you guys at the consumer level? Are you at all concerned?
Daryl Kenningham: When you bundle everything, interest rates plus the average selling price, I think it’s certainly something to think about. The cost of vehicle ownership is probably down a bit, given the gas prices are down versus a year ago, quite a bit in some parts of the country. And we’re seeing a little more support in terms of incentives from the OEMs. So I think maybe publicly some of them are saying they’re not worried about it. But internally, we’re seeing more support. I saw an announcement this morning from one of the OEMs on some interest rate support, as a matter of fact, on some of their vehicles. And I would expect you would continue to see that, especially in those brands that have built inventory.
Operator: Our next question comes from Rajat Gupta from J.P. Morgan.
Rajat Gupta: Can you give us a bit of a view into January and how that started, particularly on both new and used GPUs? And anything you’ve seen in terms of impact on demand for your brands from the fairly sizable price cuts on Teslas? And I have a follow-up.
Daryl Kenningham: On January, tough for us to comment on January, Rajat. What was the second half of your question? You cut out on our speaker.
Rajat Gupta: Any impact of demand for your brand from the sizeable price cuts on the Teslas?
Daryl Kenningham: Not that we can tell.
