While politics may often appear irrelevant to car dealers, retailers must stay informed on the conversations taking place in Washington, D.C. as even small decisions could have far-reaching effects on the automotive industry. On this episode of Inside Automotive, CBT News anchor Jim Fitzpatrick is joined by Cody Lusk, president and CEO of the American International Automobile Dealers Association, to learn from his birds-eye perspective on the nation’s capital.
The potential fallout of political gridlock can impact car dealers as much as any business, but the government’s decisions on electric vehicle policy is of special importance to the automotive industry. The Environmental Protection Agency (EPA) plans to require 67% of all vehicle sales to be electric by 2035, a rule which House Republicans are attempting to forestall. While retailers mostly agree that the internal combustion engine’s days are numbered, they are more concerned that demand, affordability, infrastructure and availability will not scale in time to meet the EPA’s guidelines. “…it’s going to be tough to get to the numbers…by the timeline the governments in a lot of these states are pushing,” states Lusk.
Car dealers are also worried about the franchise system’s safety, as OEMs often seem poised to replace third-party retailers with their own in-house sales departments. Automotive industry executives often have better access to state and federal politicians than local businesses and have had a hand in influencing the rules in their favor. However, Lusk believes the last few years have shed light on the strengths dealerships bring to the table in addition to the weaknesses associated with direct sales models. Storeowners have shown they are skilled at reaching buyers, even during difficult times such as the COVID pandemic.
The adeptness of car dealers at customer service is plainly reflected in the inexplicably high rate of sales over the last few years, numbers which should be impossible given the economic headwinds. Meanwhile, automakers with their own sales programs have struggled to build a consumer base from scratch, lacking the experience of dealers. “Outside of Tesla, the ones that have [used direct sales] aren’t doing so well…Rivian is kind of hanging in there, but you look at somebody like Lucid who spent a billion dollars to sell a thousand vehicles that’s not a recipe for success,” he remarks.
For car dealers looking to support their fellow storeowners, Lusk encourages them to engage with their communities. The role retailers play in supporting local commerce, charity and education is vital not just to the economy but to society itself. He notes that many retailers are hesitant to discuss their good deeds in public, even though doing so attracts the support of consumers, government officials and OEM executives. “[If you] are having a groundbreaking on a new facility, invite your member of congress, invite your staff,” comments Lusk. “[Dealers] are investing millions of dollars in their facilities, in their communities, and people need to understand the value that they bring.”
