As affordability concerns, policy shifts, and consumer preferences evolve, dealers are working to adapt in real time. In today’s episode of Inside Automotive, Doug Eroh, president and GM of Longo Toyota and the president of Penske Motor Group, discusses his dealership’s sales performance and how his team is staying ahead in a shifting market.
Longo Toyota, the world’s largest Toyota dealership based in California, sells over 25,000 new and used vehicles annually. Despite ongoing challenges, such as auto tariffs, Eroh confirms that the dealership is on track to hit that milestone again this year.
Currently, Longo is up 10% year-over-year in new car sales volume. While there’s been a slight pullback in used-vehicle sales, performance remains flat year-over-year. Eroh notes that vehicle availability for the upcoming summer is looking better than it did last year, which should support continued momentum.
Given Longo’s California location, Eroh celebrates the rollback of the EV mandate, calling it a win for both consumers and dealers. While the dealership performs well in EV sales and lease penetration, it was nowhere near accomplishing the mandate’s 35% target.
"The best thing we can do is control the controllables. We can't control tariffs, interest rates, or these macroeconomic things. The best thing we can do is continue to get better at all the processes and the things that we do in our business, and most importantly, continue to provide an exceptional guest experience."
On the topic of the EV tax credit, Eroh says the incentive’s removal won’t impact his dealership much, as Toyota and Lexus vehicles didn’t qualify under the program. However, he believes the most significant change is that the tax credit will no longer apply to leased vehicles, which will dramatically reshape demand, as roughly 70% of EVs in the U.S. are leased.
Still, Eroh and his team remain committed to selling every type of powertrain. At Longo, hybrids are in the highest demand, accounting for roughly 58% of the volume, or approximately 700 vehicles sold per month.
He anticipates that most dealerships will experience a brisk sales surge over the next 60–90 days, before the EV tax credit expires at the end of September. In fact, Longo has already experienced a surge in EV volume during the first half of July, outpacing the numbers from June.
Eroh believes EV adoption will continue to grow, but in a more organic way as the product range continues to improve and better meet customers’ needs. More buyers are examining the total cost of ownership, including fuel and insurance. With gas at around $4.75 per gallon and auto insurance rates higher than the national average in California, many customers are opting for hybrid models.
In response to the growing affordability crisis, Longo Toyota is working to boost leasing penetration, aiming to return to pre-COVID levels of 25–30% for Toyota models and 60% for Lexus. Eroh is hopeful that interest rates will begin to come down in the second half of 2025.
As for tariffs, Eroh believes it’s too early to understand their long-term impact on the industry fully. However, in the short term, the situation has actually benefited the business. Many dealers saw a sales surge in March and April, though he acknowledges much of the activity involved pull-ahead purchases, and the effects may be felt in the months ahead. For now, business is currently normalizing and returning to pre-March trends.
