It is shaping up to be a very busy year for car dealers and OEMs alike. Today on Inside Automotive, we’re pleased to welcome back Dave Kelleher, President of David Auto Group to share his perspective on the state of automotive today and his thoughts on direct sales from Stellantis.
Recently, Stellantis has shown interest in pursuing a direct sales model that has many of its franchised dealers nervous. Kelleher is one of the dealers.
“I think the leaders in this industry on the OEM side, that are having these thoughts are pretty far off base,” says Kelleher.
He goes on to explain that he’s not only concerned for himself and his business, he’s also concerned that the OEMs are getting in over their heads. On the other end of the spectrum, there is Subaru of America CEO Tom Doll. Kelleher explains that Tom Doll is highly respected by the Subaru dealer network. Doll understands that if his partners make money, then they will become better partners to Subaru.
EV manufacturers, most notably Tesla, thrive off of a direct sales model. However, Kelleher points out that Tesla is not trying to maintain a 12-14% market share. The company is aiming to maintain less than 1%. Stellantis on the other hand wants a larger market share. However, Stellantis and other OEMs are underestimating the entrepreneurial weight that auto dealers carry. OEMs need auto dealers to carry out sales in the most effective way possible.
In fact, Kelleher believes that OEMs should take a step back and focus on building trust with their dealer partners. He also believes that OEMs should not interfere with the way dealers set their prices. Even though Kelleher himself does not sell cars over MSRP, he doesn’t think it’s the OEMs’ place to get involved.
Although, Kelleher is not seeing consumers push back on price in the current market despite increased MSRPs. One of Kelleher’s biggest concerns, he adds, is that OEMs will start overproducing which will lead to equity problems, devalued vehicles, and negative residuals.
However, auto dealers excel at adapting their businesses to current market conditions. That is exactly what Kelleher is doing. He plans to build a big fixed ops center off-site of the dealership to improve the service experience and ramp up his used car business.
Did you enjoy this interview with David Kelleher? Please share your thoughts, comments, or questions regarding this topic by submitting a letter to the editor here, or connect with us at firstname.lastname@example.org.