How NAMAD dealers are adapting to current auto industry hurdles — Fernando Varela, Chairman

As we know, auto dealers have shown remarkable resilience and adaptability as the industry continues to evolve. Today on Inside Automotive, we’re checking in with the National Association of Minority Automobile Dealers to find out what their efforts are focused on today and how their dealer members are navigating change. We’re pleased to welcome back Fernando Varela, Chairman of NAMAD and the CEO and President of the Varela Group.

According to NAMAD data, there has been an increase in minority dealerships over the last year. This is partly due to more manufacturers working with minority dealers, which are considered good opportunities by many who want to get into the auto industry.

Automotive dealerships are selling for high prices, which creates a challenge for minorities trying to get into the business. Upfront cash and requirements from manufacturers make it more difficult. Manufacturers are working on adding upfront percentages to help, but it is still a challenge.

Regarding inventory, Varela says there’s not much change.” We are in a similar position to other dealers around us. We are beginning to see some vehicle lines coming into the dealerships. It may not be what people are looking for, but it is slowly coming back. Smaller dealerships and minorities do not always get first pick with inventory.”

The current economy has significantly impacted clients, especially in terms of interest rates. Many clients are used to 0% interest rates on new cars, but in recent months, rates have increased to 5-6%. This makes it difficult for many people to afford a new car, and they often back away from the purchase.

Where does leasing fit? Is it becoming more and more popular as a choice? According to Varela, it is in some places. Texas has never really been a state for leasing for Varela. Although rates are still an issue with leasing, leasing also needs to cope with vehicle value and other issues.

As Ford prepares to release more EVs, they’ve mandated that all of their dealerships upgrade their stores to be able to accommodate them. This has caused some consternation among dealers, who have to spend considerable money on the upgrades with no guarantee that they’ll sell any EVs.

Some dealers support the move, believing it’s necessary to stay ahead of the curve and keep up with the competition. Others are more hesitant, feeling that the cost of the upgrades could outweigh any potential benefits. Many are also concerned that the technology will become outdated quickly, leaving them with expensive equipment that needs to be replaced.

It’s a difficult decision for dealerships but one that will need to be made soon. It remains to be seen how successful EVs will be in the market, but dealerships must be prepared for their arrival.

“We’re assessing what’s best for us and our association. There are many factors to consider. And we have to look to legislation as well to see how these dealerships are going to be protected,” Varela commented.

As the world around us changes, businesses must adapt to survive. This is especially true in the case of car dealerships. In recent years, there has been a shift away from traditional methods of buying and selling cars. For example, the rise of direct-to-consumer sales by car manufacturers has been a major disruptor in the industry. However, dealerships are nothing if not adaptable.

The bottom line is that, while the car-buying landscape is changing, dealerships are changing with it. Dealers will be here to continue to sell inventory given by the manufacturers.

The NAMAD conference is just around the corner, and attendees can expect an informative and exciting event. With over 700 people registered, this year’s conference is sure to be the biggest yet.

Attendees will have the opportunity to learn about the latest EV concerns, by-sales issues, and manufacturer candidates. In addition, dealers will be on hand to offer advice and assistance with the challenges many auto retail professionals face now.

At the end of the conference, Varela will be stepping down, and dealer Damian Mills will take over. Varela’s term was initially planned for two years with the option for longer. Due to the pandemic, President Damon Lester asked Varela to stay on longer. “Mr. Lester has been an excellent president to work with during these past few years,” he said.