RADA President Brad McAreavy discusses New York’s 2035 EV mandate

McAreavy says that the car business is thriving, but inventory shortages are still an issue. Compared to a year ago, dealers have experienced strong demand, but the last few months have flattened slightly. As the economy continues to waver, many retailers are concerned about the potential for a recession. However, some remain optimistic.

McAreavy stated, “Anytime the word recession comes up, we all get a little scared.” He went on to say that interest rates are more concerning to most consumers right now, as higher rates can make affording large purchases more difficult. While it is difficult to predict the economy’s future, McAreavy believes that the auto industry will continue to do well even if a recession occurs.

Previously, consumers were unwilling to order vehicles or wait a couple of months to receive them. Now, many say they don’t mind waiting a month and will pay the sticker price. McAreavy attributes this change to the inventory shortages consumers are facing. With limited options, consumers are forced to comply with these conditions.

The switch to electric vehicles has been a hot topic, with many states and cities looking to make the transition in the next few years. New York has been working on a mandate since 2005, and dealers are confident they will be able to meet the 2035 deadline.

“We want to be a part of that solution,” said McAreavy. “We are training employees and buying what we need to fit this market.”

McAreavy also discussed how the state has kept direct-to-consumer sales at bay. Tesla came to New York in 2010 and was granted five selling licenses. Since then, the company has tried to expand its presence in the state but has been met with resistance from lawmakers. McAreavy explains that dealers have shown legislators that the direct-to-consumer selling model does not help consumers or the state. However, that hasn’t stopped legacy automakers like Ford from trying to enter the market with the model.

He says that the state has been working with legislators on this issue for the past eight years and has successfully kept direct-to-consumer sales from becoming a reality in New York.

Regarding current inventory levels, many experts have argued that too much inventory is a recipe for disaster, while others have said that a certain inventory level is necessary to meet consumer demand. Consumers are looking for quality over quantity, and McAreavy says the sweet spot for inventory levels is somewhere in the middle.

“I think right now there is an opportunity for manufacturers to really take a step back and see that if they can make a quality vehicle and get it to the consumers, we won’t have a need for excess inventory,” said McAreavy. “I will say in order to be successful and to sell cars; they do need to be available.”

Ford has created new requirements for their dealerships regarding electric vehicles, and the response has been mixed. Some dealers feel they need to invest to stay ahead of the curve, while others are struggling with the timeline Ford has given them.

Many dealers agree that they must invest in electric vehicle infrastructure, equipment, and training. Still, they are hesitant to do so without a timeline from Ford about returns on their investments. Electric vehicles are still a new technology, and consumer demand is not yet known. The government and manufacturers have set a goal for electric vehicles, but it is unclear if consumers will follow suit.

McAreavy says that the most challenging part for dealers is the transition period from internal combustion engines to electric vehicles. He thinks that within the next 15 years, sales of zero-emission vehicles will increase, but dealers still have many questions about how to stay ahead and move forward. In the meantime, the association is continuing to work on getting dealers ready for the EV market.