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

Matt Posky
by Matt Posky
nada chairman doesnt 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]

Comments
Join the conversation
4 of 20 comments
  • Probert Probert on Nov 23, 2020

    Shocking. Saying dealers should respond to consumer desires by listening to them? Some kind of commie or something!!! The purchase and sale process involved in buying a car dips back into the 20th century, with a nod to the 21st. Somewhere in that mess, fax machines and photocopies are used - I found it curious and sort of amusing, many wouldn't. As far as being able to test drive etc - no reason not to offer that, but for the sale - a few clicks and it should be done FFS.

    • Spookiness Spookiness on Nov 24, 2020

      I haven't bought a car at a dealer since 2014, but are they still using dot-matrix printers in the finance office that print out the bill of sale on triplicate carbon copies?

  • Tele Vision Tele Vision on Nov 23, 2020

    Buy older car. Buy tools. Fix older car when it breaks. Learn things. Enjoy saving both money and environment. As stated before we have a 2000 Sierra 4X4; a 2007 CTS-V; a 2010 F-150 4X4; and a 2013 Equinox AWD. The Equinox has only required intake and exhaust solenoids ( actually just exhaust but I replaced both of them, for obvious reasons ) but the the rest have required some parts and effort. All four vehicles' combined sale value wouldn't buy a new Tacoma but I doubt that I've spent more than CDN$2000 on parts over the life of ownership of all four - and that includes headers for the Cadillac.

    • CKNSLS Sierra SLT CKNSLS Sierra SLT on Nov 24, 2020

      Tele Vision- What ever works for you. We buy new cars and trade them in just before 100,000 miles. I guess this is good for guys like yourself so you can buy and wrench on them. Personally-I have what I consider more important things to do than spending evenings or weekends wrenching on cars.

  • Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
  • Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
  • ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
  • ToolGuy Presented for discussion: https://xroads.virginia.edu/~Hyper2/thoreau/civil.html
  • Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?
Next