NADA Chairman Doesn't Seem to Like Traditional Auto Dealers Much

Unless you happen to be the primary stakeholder in Amazon, 2020 probably hasn’t’ been the kind of year you’re likely to miss. However, there is no shortage of lobbyist groups and trade organizations willing to praise it as a triumphant time for modernity. This includes the National Automobile Dealers Association (NADA) Chairman Rhett Ricart, who believes digitizing the industry is the best pathway forward. While he hasn’t forgotten that pandemic-related lockdowns closed showrooms and factories, resulting in extremely lean inventories and weak sales, he claims it has accelerated everyone’s willingness to utilize online sales formats.

But there’s little reason to assume such a move would be better for dealerships from our vantage point. Haggle-free, direct pricing and ordering over the internet removes a lot of what the showroom does. This new model runs the risk of obliterating smaller storefronts and relegating the rest into glorified service centers doubling as a delivery hub.

Having been inside them ourselves, we don’t have an abundance of love for automotive dealerships. They’re just businesses aggressively trying to turn a profit and are frequently (and sadly) under-informed on the vehicles on the lot. That said, manufacturers often bully them into making changes for the privilege of selling those products. Right now, OEMs are warning them that they had better be prepared to accommodate electric vehicles people still aren’t buying in large quantities (Tesla excluded) and digital sales.

Speaking with Automotive News this week, NADA’s Ricart explained the situation — citing a July survey that claimed 82 percent said the digital process introduced during COVID lockdowns would not be leaving once restrictions lifted. He said that at-home test drives, in addition to pickup and delivery services, would remain the norm.

From AN:

Ricart cautioned, however, that some automakers were “showing signs of regression to old, bad behaviors” that could curtail the progress dealers have made. As the digital retailing experience evolves, automakers will need to rethink their “mausoleum mandates,” he said, referring to the “costly and ever-changing” image programs that define how dealer facilities should look.

“The biggest obstacles to success in 2021 aren’t corruption, obstruction and destruction,” he said. “The biggest obstacle is regression.”

While it sounds a lot like Ricart (who owns a sizable auto group in Ohio, himself) is telling dealers to toe the line with the long-term desires of manufacturers and government, he claims it’s actually consumers spurring the trend.

“Customers are telling us how they want to buy cars. All you’ve got to do is listen. If we just do what they ask, it makes it so much easier. That will be the challenge next year,” he told the outlet. “Manufacturers think they’re going to tell customers what to do. They think they’re going to present a product and tell customers how they’re going to buy it, then they’re going to go ahead and they’re going to tell dealers how to take care of customers. Don’t do that.”

“The biggest challenge for us is a regression. We’ve got such a great thing going right now, a great thing going for customers. Just don’t regress. We know the formula, and it’s right in front of us. Let’s just keep using it.”

This, Ricart claimed, would be the best way to contend with changing customer trends and the likelihood of prolonged government restrictions (even after there’s a COVID-19 vaccine, apparently). But cautioned that states probably couldn’t go too wild on lockdowns, as it would eventually start eating into their tax revenues.

Frankly, the interview didn’t make it sound like he was terribly interested in supporting dealerships — especially those hoping to retain traditional models of doing business. However, he did state that OEMs were demanding too much from showrooms, adding that this would become increasingly unimportant as more customers did their dealings over the internet.

“The manufacturers have a franchise, and they have the right to say, ‘Hey, do you want to sell my vehicle? This is what you need to do to have it, OK?’ They have that right,” Ricart said. “It’s their product. But what’s happened is that they’re always historically slow to react to things, and they’ve got to understand that this COVID has put this digital world on hyperspeed. And they’re just kind of saying, ‘Well, we’re going to look and see because we still like our big showroom on the freeway that everybody can see.'”

“We’re telling them people don’t care how big your showroom is, and how big your showroom is is not a reflection on the quality of your car. It’s not a reflection on the quality of the dealer. It’s not a reflection on anything other than a big showroom. Customers are going to be more price-conscious because we’re going to be more transparent. Dealers have to be able to right-size their business model to be able to meet what our customers are asking for. That’s all. That’s all we’re asking manufacturers.”

Right-sizing dealerships may be necessary if North America fails to see an economic rebound next year. But that will mean shrinking storefronts in many instances — presumably resulting in fewer jobs. We also have a hard time accepting that it’s the dealerships that are steadfast in embracing these new digital trends. Practically every automaker in the world has been toying with the idea of vehicle subscriptions and moving toward new sales models where they’re less dependent upon brick-and-mortar stores. It certainly seems like OEMs are the ones spearheading the digital initiative NADA is supporting. Then again, maybe Ricart knows something we don’t.

[Image: LM Photos/Shutterstock]