VADA Pres. Don Hall on EV competition: ‘Let the franchise system prevail’

Dealers in Virginia are finding ways to adapt to the current economic conditions and making the best of a bad situation. They are creative in their inventory approach, using their skills and knowledge to stay afloat. However, increasing EV competition means dealers must start planning for the future if they haven’t already. Joining us on CBT Now is Don Hall, the President and CEO of the Virginia Automobile Dealers Association, to give us an update on Virginia’s franchised dealer community.

“Dealers are like cats; they have nine lives, and they always land on their feet. They are adaptable, and they will continue until we get out of this scenario,” Hall said on the matter.

As EV competition increases and adoption becomes more mainstream, auto dealers in Virginia have to jump through more hoops to sell cars. Some dealers believe they are unfairly being used as guinea pigs by the manufacturers.

Hall added, “Virginia auto dealers are not anti EV or anti-progress. What I tend to be anti is programs like what Ford has pushed out that they just put out a blanket requirement for all people. They don’t take into account how to sell to customers or each individual dealership.”

Auto dealerships are pushing back against electric vehicle requirements, saying that the technology is changing too rapidly to make long-term commitments. The conditions, which would mandate a certain number of electric vehicle charging stations be installed at dealerships, are part of a larger plan to increase the number of EVs on the road. But dealers say that the timeline is too aggressive and that the costs of installing charging stations could be prohibitive.

“We embrace technology, and we understand you’re competing with Tesla,” said Hall, “but let’s do this as a partnership, not being treated as stepchildren.” The manufacturers need to listen to what the dealerships have to say on this.

The EV competition is heating up, and Ford is in the game. “I’m not saying we shouldn’t do these things,” Hall said of the EV push. “I’m just saying we need to take our time and research everything involved before we have smaller dealerships shuck money at something they may not be able to afford or have the capital to do so. EVs are not the final solution—they’re just an option for the future.”

It’s a valid point: with so many unknowns, it’s hard for dealers to justify switching to EVs on a large scale. For now, it seems like a cautious approach is the best way forward, in Hall’s opinion.

The State of Virginia is addressing the franchise system in 2023, stating that it works best for consumers, dealers, and OEMs over the agency model. Virginia is creating laws banning manufacturers from selling vehicles directly to consumers and making dealerships pick-up stations. They aim to ensure that ownership of those vehicles lies with the dealership instead of the manufacturer. This makes sure the car isn’t consigned to these dealers. Manufacturers will be banned from negotiating directly with consumers on services like extended warranties or GAP insurance.

“That is the dealers’ rights to offer those items. Dealers made these companies what they are today, and the state is protecting them. They won’t let them be just a delivery agent.” Hall stated. “Let the franchise system prevail, and we will deliver EVs, we’ll deliver autonomous vehicles, and we will deliver a great buying experience but let the entrepreneurs do it.”

As the end of the year approaches, dealers need to be aware of the bigger picture and not just focus on the month ahead. With profits up for the year as a whole, it’s essential to focus on the customer experience and give them the best car buying experience possible. Selling above MSRP is a dangerous game right now, so it’s crucial to be mindful of that. By getting involved and appealing to their associations, dealers can help address these concerns and make the last quarter of the year, and years to come, a strong one.