#AutoDealerships

Car dealers have been polled for the fourth-quarter Cox Automotive Dealer Sentiment Index (CADSI) and they’re still incredibly optimistic, despite losing some of their earlier confidence that new-vehicle sales would be relatively healthy.

The dealer optimism – especially among franchised entities – seems to be wholly tied to profitability here. New vehicle sales dropped in 2019 and absolutely cratered in 2020 due to the nation’s response to the pandemic. In spite of there being plenty of talking heads in the news media telling you not to stress about the economy, inflation has created pricing increases across the board and automobiles are at the tippy top of that list. With inventories remaining relatively lean due to production slowdowns, staggering dealer markups have become the norm. Basically, stores just seem happy that they can charge more per car while they’re in short supply. But they’re also starting to have concerns about the long-term viability of the market and are are feeling the pinch of rising operating costs.

The National Automobile Dealers Association (NADA) has elected Mike Alford as its chairman for 2022. The decision was announced shortly after the group’s board adjourned on Tuesday.

Alford — who heads Marine Chevrolet Cadillac in Jacksonville, North Carolina — currently serves as NADA vice chairman and will be taking over for Paul Walser next year. Geoffrey Pohanka was chosen as the vice-chair, setting him up as a strong contender for the top position in 2023.

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.

With large hunks of the nation still under varying degrees of pandemic-related restrictions and accompanying panic, auto dealerships haven’t been awash with customers. Many that did reopen have been forced to follow distancing guidelines, frequently limiting the number of people allowed on the premises. Hoping to avoid closing permanently and relinquishing ownership to the bank, they’ve come up with some interesting solutions to keep their clientele interested.

Virtual test drives aren’t exactly new, but they have become an increasingly popular avenue for dealerships hoping to drum up business in 2020. While we’ve seen salespeople giving tours of new product as they hit the lot for years, on-board video is typically reserved for independent review purposes. That’s largely because nobody really expects a fair assessment from the person selling the vehicle. However, with in-person test drives becoming quite difficult, showrooms want to exercise every option they have to draw in customers.

In what might be the most blindingly obvious statement ever to be made in this august publication, the second quarter of 2020 was an absolute disaster for vehicle sales. Under the withering gaze of a global pandemic, the nation’s car dealers were awash in red ink — and the bitter tears of various dealer principals.

Demand and supply have cratered, producing a bewildering simultaneous mix of good deals in some segments as stores try to keep the lights on while shortages of a few key models hold the pricing line on others. Pile on the vanishing rental market you have an automotive industry the likes of which few have ever seen.

Like every other business in the United States, auto dealers are attempting to implement changes that would allow them to operate safely amid the coronavirus outbreak. Undoubtedly petrified by the massive hit the Chinese car market took after COVID-19 reared its ugly head in Wuhan, they also hope to remain open while other business stay closed.

On Tuesday, the National Automobile Dealers Association (NADA) and Alliance for Automotive Innovation (AAI) issued a formal letter requesting that President Trump consider dealerships and service centers as “essential operations when federal, state, and local officials impose certain requirements due to the coronavirus outbreak.” While we’ve already seen dealerships embrace new tactics to comply with public health initiatives, it’s assumed they’ll be shutting down just, like most automakers plan to. However, retailers worry their diminutive cash reserves (in relation to manufacturers) won’t see them through a prolonged shutdown while the broader industry wonders who will repair automobiles during the pandemic.

When it comes to buying new cars, I don’t have much patience. When I bought my Focus RS in 2016, I spent less than an hour doing the whole deal, including actually deciding what car I wanted to buy. Got a blank check approval from my bank, spitballed some ideas with my older brother and my good friend Bozi, and then put down a deposit on a car at a dealership about a thousand miles away. But there was one time when I tried to have patience, and was sorely disappointed.

Eleven years ago, I put down a $5,000 deposit and placed an order for a BMW 135i with my local BMW dealer. It was the launch year for the ill-fated 1 Series in the states, and I wanted to have one of the very first Ones to hit our shores. I ordered a very stripped down version — black, stick shift, cloth seats, no roof. After about 12 weeks, the dealer called to let me know that my car had arrived. Well, a car had arrived… but certainly not mine.

This example was an automatic. But that wasn’t the only thing they got wrong. They added somewhere in the neighborhood of $5k to the sticker, including nearly every option, even a red leather interior. Imagine my disappointment and frustration with the dealer, who had recycled sales people a couple of times since my order and couldn’t seem to track down anything about it, not even the original order sheet.

I asked for my money back, which they reluctantly gave me, and I ended up buying a Pontiac G8 GT instead — not a bad trade. But not everybody who goes through the ordering process is so fortunate. Click the jump for a question from our friend Andy about his experience in ordering his own custom German whip.

When I was a lad, there were two family-owned and operated dealerships within walking distance of my home. Upon reaching driving age, one had already closed while the other began adding storefronts in different towns. It now has three locations, ensuring a meaty inheritance and lifelong job security for several members of my graduating class.

It’s the nature of the free market and a familiar story. According to an assessment from the National Automobile Dealers Association, singular showrooms have gone from 7,514 strong to just 4,904 between 2008 and 2018. That’s a 35-percent decline, whereas the number of dealers with 10 or more stores increased 62 percent over the same period.