Roger Penske: Hi, David.
David Whiston: Hey, everyone. A couple of questions. First, I think Shelley, you were talking earlier about the example of customer booking a new X5, you could get — sell them one of our loaner as a use. I guess my question on that would be, how quickly can you then replenish that loaner?
Roger Penske: Well, I think that’s what we are seeing today. Everybody is looking at our used cars and I said, look, we were hampered by not being able to turn loaners. We turn loaners typically in 90 days to 120 days.
David Whiston: Yeah.
Roger Penske: Now that supply is coming we are going to suck up some of that availability in the loaner cars. So it’s all going to be done by based on availability. But in the premium luxury side, it’s really key because I can turn that 21,000 loaners 3 times a year, that’s 20 — really that’s 21,000 more used cars. But I think we fill the pipeline based on the individual OEM. Maybe that’s not what you want, but that’s kind of what my thoughts are.
David Whiston: I mean, okay, let’s…
Tony Facione: And our loaner cars were up about 10% at least from what they were.
Shelley Hulgrave: Yeah.
Roger Penske: 7,300 million so it’s a normal [ph].
Tony Facione: So that’s a big change and that’s going to help drive more of the used vehicle turn for the business.
Roger Penske: Think about it, David, you have an MSRP and you say we depreciate the vehicles at 2% per month, some higher, some lower than say, 2%, so you get 6% off of invoice, and typically, the new car programs, whether it’s financing or whatever it is, go along on this vehicle that’s coming out of loaners, lot of them has a certain limited number of miles. So we get newer car rates, we have a depreciated vehicle, we take a customer that didn’t want to step up maybe to the X5 what have you, we can give an X3, it’s a loaner car with a lower cost base.
Shelley Hulgrave: And the OEMs want us to have these service loaners. So we are incentivized to have them.
Tony Facione: We are also starting to see a return of CPO business, too, because of the CPO business, certified preowned used sales are up year-over-year because of — because we are having more availability.
Roger Penske: We got our other impact we have had is lease returns.
Tony Facione: Right.
Roger Penske: We hadn’t been a lot of leasing. So leasing went down to 21%, I think, overall, right? In the premium luxury side, we were high 55% in some months.
Tony Facione: Right. And we were 27% leasing this…
Roger Penske: Quarter.
Tony Facione: … this quarter.
Shelley Hulgrave: Right.
David Whiston: I am sorry, what was your leasing penetration this quarter?
Tony Facione: 27% leasing this past quarter. That’s up from 24% a year ago, David.
David Whiston: You said that was up from 2020, Tony?
Tony Facione: From 2021.
David Whiston: 2021. And then going back to the EV discussion from a few minutes ago. What is your team’s opinion on especially next year once a lot of OEMs get access to the Tesla Supercharger network, and over time, we get more non-Tesla charging outlets out there in the U.S.? Do you think that’s enough to get EV demand moving or do we also need a lot more affordable models or is it still just way too early for EVs?
Rich Shearing: Well, I think you have hit on a couple of different things. I think the price points right now are still substantially higher with certain models than compared to ICE. And so when you combine that with the interest rate environment we are in, that’s problematic. So that’s one thing that hurts the demand for EVs. Roger talked about the infrastructure. So you have got the charging network that’s out there from a public standpoint, you got about 20% success rate of the charger being successful when you pull into it, which is pretty alarming when you think about it. So that reduces the confidence, still got the range anxiety. And then I think as it relates to all these other OEMs signing up on Tesla’s charging network, I am interested to see how that plays out with the Tesla owners today, because obviously, that was a network that was exclusive to them at some — at one point.
Now it’s been opened up to everybody else. I don’t know off the top of my head how many additional chargers Tesla is installing on a monthly basis as to whether or not they will keep up with this additional brands and other OEM EVs that have access to that network now. But if I am a Tesla owner, that would upset me a little bit. I had this proprietary network to the vehicle that I purchased that gave me some assurances that charging was going to be more convenient. Now I have got to compete with all these other OEMs on the same network. So I think it’s going to be a while before we get to a critical mass where the charging infrastructure really supports mass adoption of the vehicles.
Shelley Hulgrave: And David, if it helps, you heard Randall’s penetration numbers on EVs in the U.K. and it almost gives us a preview of what it’s like in the U.S. And over in the U.K., I can tell you they still have the same range anxiety, they still have the broken chargers. So even despite a much higher EV penetration, there’s still that range anxiety and those issues with the infrastructure. So it may help next year, but I don’t think it’s also a problem.
David Whiston: Okay. Thanks for all the detail.
Tony Facione: David, thanks.
Roger Penske: Thanks.
Operator: And we have no other questions. I will turn the conference back over to Mr. Penske for closing remarks.
Roger Penske: All right. Thanks everybody for joining us. We will see you at the end of the next quarter. Have a great day.
Operator: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.
