Thank you so much for joining us on another edition of CBT News. On today’s show, we welcome back Mr. Cody Lusk, President and CEO of AIADA.
Jim Fitzpatrick: Welcome back to the show, Cody.
Cody Lusk: Hey. Great to be here. Happy new year, Jim.
Jim Fitzpatrick: Yes. Happy new year to you and all of your staff there at AIADA. We appreciate you taking the time out of your busy schedule. And you must have a busy schedule these days in Washington. I don’t know … It must be like trying to hold a tiger by the tail, right?
Cody Lusk: Well, it’s kind of an interesting time. You have a new Congress that’s in and they’re figuring out where the restrooms are, and getting their committee assignments, and all kinds of stuff. But then, you know, with the shutdown on the administration side it’s been … it’s kind of a strange dynamic. You know, we’re hoping that there’s a resolution to that and we can kind of get back to regular order from our perspective.
Jim Fitzpatrick: Boy, that’s for sure. Let’s kind of do a rewind of 2018. What were some of the wins and some of the challenges that you had as an association and maybe some of the things that you’re dragging into 2019 to get accomplished?
Cody Lusk: Well, I think the industry had a big win with the tax bill getting passed. And then minus the border adjustment tax, which could have had a real devastating effect.
Jim Fitzpatrick: Yeah, that’s true.
Cody Lusk: The industry came together and got the auto guidance rescinded that CFPB had put in several years ago that, you know, NADA had really battled long and hard for. And that was a great victory for the industry.
Cody Lusk: You know, then we encountered some headwinds on the trade agenda. And we were able to play some pretty solid defense for the time being. It did get steel and aluminum tariffs in, but we testified as part of this 232 investigation as to autos and whether there should be tariffs on automobiles. And we’ve been able to hold that off for the time being.
Cody Lusk: But that report, you know, the due date is mid-February of this year. So we’re heading into 2019 with some pretty big things out there that we’re going to have to battle.
Jim Fitzpatrick: Yeah, that’s for sure. So let’s kind of jump into 2019. What, in addition to that, what are some of the other items that you’re looking at down the road?
Cody Lusk: Well really like I said, the big thing is the 232 investigation that’s going to come out, at the latest, mid-February. It’s hard to tell if the shutdown’s going to have an impact on that report. But, you know, if the President can determine that … he puts in 25% tariffs on auto imports, that’s really going to send the industry reeling.
Cody Lusk: You have sort of as a subset to that 232, you’ve got the U.S., Mexico, Canada Free Trade Agreement that has to somehow get through a democratic controlled House of Representatives.
Cody Lusk: Then you’ve got negotiations kicking off with the U.S. and Japan, the U.S. and Europe, and again, all the 232 tariff implications are all over the top of that. So it’s going to be a busy, busy trade year.
Jim Fitzpatrick: Yeah. And everything you just mentioned impacts your constituents and members in a very big way, doesn’t it?
Cody Lusk: Yeah. You look at what’s going on in the market right now. And the affordability … what the prices are for new cars and even in used cars. But what any slight increase could do to upset this market, much less what a 25% tariff would do, would be devastating to our industry at this time.
Jim Fitzpatrick: That’s right. And we all … We’re already looking at rates that could be, again, on the incline. What kind of an impact will that have in 2019 with auto sales?
Cody Lusk: Well, I think what you’re looking at … and we had one of our dealers, Steve Gates, who testified before Congress several months ago, made this point. And it was really an interesting point that I hadn’t thought of, but it rings so true. You have a whole generation of auto buyer that has never really been impacted by interest rates.
Jim Fitzpatrick: That’s true. I haven’t thought about it.
Cody Lusk: Lease a vehicle, go in and get another vehicle, higher vehicle or better vehicle at basically the same rate. And now that’s, with the rates going up, they are not really understanding, hey, why can I not … Why am I going to lease a vehicle that’s the same or a little bit better and I’ve got to pay much more higher prices?
Cody Lusk: So I think you’re seeing the interest rates, even though they’re historically low, they’re still impacting buyers in a way that they haven’t for basically a decade.
Jim Fitzpatrick: Yes. Speaking about this new generation of millennials and Generation Z, what kind of an impact do you think, moving forward, will rideshare companies really have in our industry? We hear a lot about it, but do you think it’s something that dealers need to be concerned about at a high level?
Cody Lusk: You know, I think there’s all kinds of things that are going to be changing. You look, you know, just over 10 years ago that we got the iPhone. And I don’t think any of us saw what that was going to become.
Cody Lusk: I think it’s an issue that dealers are going to look at, I don’t think that it … you know, I think … You even look at what’s going on with powertrains and other things. There’s going to be evolution. There’s always been evolution. And dealers have evolved for 100 years.
Cody Lusk: So I think there’s going to be changes. There’s going to be technology, there’s going to be ride share in certain areas that certainly become more and more popular. But I don’t think in any way in the near term. I think the good dealers are already focusing on what they need to do to make their businesses better every single day.
Jim Fitzpatrick: That’s for sure. So with the president and chairman of Nissan now behind bars, and it looks as though some changes being made in the U.S. among the executives at Nissan here in America. Any comments on that? I know that obviously these are going to effect … These decisions may effect some of your members.
Cody Lusk: You know, I … you hate to see what’s happening to a company in general, but I think … You know, the dealers are pretty used to some pretty frequent changes going on at Nissan in the U.S. So that’s been kind of a revolving door for awhile.
Cody Lusk: You look at what does that mean for the larger global alliance that they had. I don’t know, but I’m not sure how that’s going to impact the product or what they bring to the U.S. or give their dealers to sell here.
Jim Fitzpatrick: Yeah. For sure. What are some of the things that you’ve got planned out at NADA?
Cody Lusk: Well, what we really have is … at the tail end of NADA, we have our annual meeting and luncheon. And this is where we have our sort of changing of the guard. And we install a new chairman.
Cody Lusk: We’ve got Brad Strong, who you’ve talked to, who’s a Porsche, Audi, Volkswagen dealer out of Salt Lake City. He’s going to be handing over the gavel to Howard Hakes who’s a Southern California Toyota dealer.
Cody Lusk: And that will be taking place out at San Francisco on Sunday at our luncheon. We invite everybody to attend. We’ve also got Bob Carter, Executive Vice President of Toyota, he’s going to provide the keynote there. And kind of give some insight on where they’re headed and a look ahead to 2019 from their perspective.
Cody Lusk: So it should be a great time. I know that Howard is really coming in … He’s a very, very involved, very energetic guy. And his message is going to be the real need, with all the problems you and I’ve discussed, the real need for dealer involvement in the coming year and, you know, we need to get … We’re a force together and we need to make sure we stay that way and are committed.
Jim Fitzpatrick: So it’s don’t ask what your association can do for you this year, ask what you can do for your association, right?
Cody Lusk: Yeah, we always like to spread that message.
Jim Fitzpatrick: So let me ask you this question. I appreciate all the time today, but what do you see as the greatest challenges that dealers are faced with today, from your perspective?
Cody Lusk: I think the uncertainty in the marketplace. And the uncertainty about what the future is going to bring. And I think there’s a lot of messaging incorrectly or, you know, that sort of implies, “Hey, if you’re a single point dealer or you have one franchise, you’re not going to make it. Or you’ve got to be a giant multi-faceted dealer.”
Cody Lusk: You know, this industry is made up of all shapes and sizes.
Jim Fitzpatrick: Right.
Cody Lusk: All different markets across the U.S. And those dealers that serve their customers and their markets are always going to be successful. And I think the uncertainty cloud … you know, to hear it be told last year, even the past few years, at this point in time you were going to have autonomous vehicles driving all over, greener, and there wasn’t going to be a dealer left in America, nobody wanted to buy a car.
Cody Lusk: Well that’s not the case. And you are seeing the industry evolve as it’s always evolved.
Jim Fitzpatrick: Right.
Cody Lusk: And dealers that meet the needs of their customers and evolve are going to be the ones that make it. And those are the ones who have always made it.
Jim Fitzpatrick: Yeah. Boy that’s for sure. No question about it. Well Cody Lusk, President at the AIADA, thank you very much for taking the time out of your extremely busy schedule there in D.C. to spend some time with us here on CBT. We look forward to meeting with you out at NADA next week. And I think it’s going to be a great event that you’ve got planned there.
Cody Lusk: Yeah. Thanks for having me. I appreciate it. We’ll see you out in San Francisco.
Jim Fitzpatrick: You got it. Take care.
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