Great piece on one of the most powerful interest groups in politics. https://t.co/JSOv933vvC
— Adam Smith (@asmith83) May 30, 2023
Could not happen to a more deserving bunch, says everyone who does not owe a car dealer their living. Alex Sammon, for Slate, “Want to Stare Into the Republican Soul in 2023?”:
The party was on at a gathering of unsung Republican heavyweights, and I was in search of the armadillo racing. The booze was flowing: Open bars numbered in the double digits, plus metal bathtubs teemed with beer on ice. Cover bands played and DJs spun. There was line dancing and trick ropers, twirling lassos and mechanical bulls, bucking riders and stilt-walkers…
This was opening night of the NADA Show, the annual convention of the National Automobile Dealers Association, one of the most powerful trade organizations representing one of the richest professions in America, and there was much to celebrate.
The years since COVID hit had been some of the industry’s best ever. Supply-chain issues had sent prices skyrocketing. New car prices were up; used car prices were up even more. “This has been an unexpected bonanza for new car dealers,” George Hoffer, professor emeritus of transportation economics at Virginia Commonwealth University, told Time late last year. Only a few months prior, the research firm Haig Partners clocked average gross profit for dealers at 180 percent over 2019 levels.
Really, the past hundred years had been great. Auto dealers are one of the five most common professions among the top 0.1 percent of American earners. Car dealers, gas station owners, and building contractors, it turns out, make up the majority of the country’s 140,000 Americans who earn more than $1.58 million per year.* Crunching numbers from the U.S. Census Bureau, data scientist and author Seth Stephens-Davidowitz found that over 20 percent of car dealerships in the U.S. have an owner banking more than $1.5 million per year.
And car dealers are not only one of the richest demographics in the United States. They’re also one of the most organized political factions—a conservative imperium giving millions of dollars to politicians at local, state, and national levels. They lobby through NADA, the organization staging the weekend’s festivities, and donate to Republicans at a rate of 6-to-1. Through those efforts, they’ve managed to write and rewrite laws to protect dealers and sponsor sympathetic politicians in all 50 states. All of which meant that this year, presidential hopeful Nikki Haley and Fox News darling Greg Gutfeld, among others, had made the pilgrimage to kiss the key ring.
But just as times are strange for Republicans, they are for car dealers too, and the event this year had a decadent and desperate energy…
Now car dealers are one of the most important secular forces in American conservatism, having taken a huge swath of the political system hostage. They spent a record $7 million on federal lobbying in 2022, far more than the National Rifle Association, and $25 million in 2020 just on federal elections, mostly to Republicans. The NADA PAC kicked in another $5 million. That’s a small percentage of the operation: Dealers mainline money to state- and local-level GOPs as well. They often play an outsize role in communities, buying up local ad space, sponsoring local sports teams, and strengthening a social network that can be very useful to political campaigns. “There’s a dealer in every district, which is why their power is so diffuse. They’re not concentrated in any one place; they’re spread out everywhere, all over the country,” Crane said. Although dealers are maligned as parasites, their relationship to the GOP is pure symbiosis: Republicans need their money and networks, and dealers need politicians to protect them from repealing the laws that keep the money coming in.
The dealers need that protection now more than ever. Recent legislation from the Biden administration, namely the Bipartisan Infrastructure bill and the Inflation Reduction Act, has directly and indirectly thrown many billions of dollars at incentivizing people to buy electric cars. And the White House is counting on that to propel its climate strategy. The EV revolution could be ushered in, potentially at a handsome premium, by the dealers themselves. This was, in fact, the weekend’s theme: “NADA is all in on EVs,” read the event’s promo material. “Getting all charged up” read the programming packet tucked into my complimentary NADA-branded backpack.
One major problem with this plan is a certain company called Tesla. When the electric car manufacturer started up, it refused to use dealers at all, opting instead for a direct-sales model. Buyers could check out the cars in showrooms at malls and then buy online, a heady workaround of those dealer protections. Online sales minimized interactions with oleaginous salesmen and added price transparency, which did away with the haggling. Tesla, meanwhile, ended up making more money by not having to sell its cars to dealers, who would then mark them up. Other EV startups—Lucid, Rivian—went the same way, and soon enough, legacy manufacturers started flirting with direct internet sales too. “We have all this inventory sitting around in dealers,” Ford CEO Jim Farley said in a 2022 investor presentation. “Get rid of all of it … go 100 percent online.” (He later walked back that statement.)…
“There’s a lot of resistance [to EVs],” Buzz told me, “because of the compensation plan. We’re asking them to make about a quarter of the income they used to make. So there’s lots of pushback, especially if they’re staunch conservatives.”
In other words, even if the dealers’ lobby were able to contain the Tesla contagion, legacy-brand EVs sold through dealerships still posed a problem. This was partially because of virtual showrooms—companies were creating their own sales floors online, and setting transparent, no-haggle prices. But more importantly, dealers make the majority of their money on servicing cars and financing them. Actually selling the cars is not that remunerative. State laws give dealers exclusive rights over warranty service, which manufacturers are forced to pay dealers to provide. (Dealers make even more selling semi-pointless add-ons like “extended warranty” coverage.) Compared with traditional cars, EVs have far fewer component parts; they don’t need constant servicing or oil changes. That means that electric vehicles generate 40 percent less aftermarket revenue. Not to mention, EV technicians are harder to come by and thus more expensive to hire than regular mechanics, which further eats into dealer profit. And because EVs are a new technology, and expensive, buyers tend to be more skeptical about them and slower to pony up the cash to drive off in one, which means more time dedicated to each sale, more time dedicated to learning about what’s under the hood, and thus, lower margins for salesmen too. More work, less pay—bad, bad, bad…
Once more unto the breach. On the final day of the convention, I hauled myself out of bed for Deion Sanders, the former NFL star turned college football coach. Despite having just blotted the line on a $30 million contract at the University of Colorado, Sanders had booked the 9 a.m. Sunday slot for a motivational number. I thought for sure that attendance would be limited after the night’s exuberance, but there everyone was, bright and early, ready for “the church of Deion.”
Sanders, more polished than his keynote predecessors, hit the right notes of flattery and ideology that the dealers were looking for. He sympathized with the challenges of running a family business dogged by disappointing progeny, and told the crowd that he ranks his kids every month, to combat the malign forces of youth softness. He knew the names of some cars when presented with the obligatory question of what new make he wanted to buy. His atavism came with the weekend’s most polish.
“We’ve got a soft country right now!” he intoned. Everyone cheered. “We gotta get back to the basics,” he said. “You all are providers, leaders, and conduits of change.” Later: “We cannot change; we gotta get back to the basics.”
“Applaud yourself,” Sanders instructed, and the dealers did…
Afterward, another man in a suit in the audience strode over to me and began his own impromptu presentation. “This stuff is crazy, what they’re saying. It’s crazy. Claiming 10 percent of the fleet will be electric by 2030? Never gonna happen…
“They’re toys; they’re not cars. And there’s nothing clean about clean energy—we know that,” he said.
I told him I was writing about the convention and about the electric vehicle transition.
“Ask any Tesla owner if they have a second car, and if it’s a Tesla,” he directed me. “Ask what they take on road trips.” He told me tales—grim tales—of Ford dealers who, rather than sell EVs and meet the company’s requirements for doing so, had instead decided to give up selling Fords of all types altogether. “I can get you in touch with plenty of dealers who feel that way,” he said.
So there it was: Dealers stand between many electric cars and most American car buyers, but they aren’t just going to lay down and let some zero-emissions playthings roll them over. Some, I heard over and over, would rather not deal than deal with someone else’s dictates.
Never mind that the Environmental Protection Agency was preparing regulation such that two-thirds of all new cars sold by 2032 would be all-electric. Never mind that the Federal Trade Commission had singled out the industry for a crackdown. Dealers had stared down the government before and were making more money than ever. They took hostages—they did not become them. They would self-sabotage if they had to. A recent Sierra Club survey would find that two-thirds of car dealerships did not currently have an EV for sale; almost half of those dealers said they were refusing to offer them. They had 100 years of practice and accumulated power, all leading to this moment. Dealers have the best diesel-powered federal advocacy in the country—and Republican foot soldiers hard at work to ensure that the future will not come.
Much, much more at the link!
They face a 75% cut in income because they are parasitic middlemen facing the prospect of being dislodged from their hosts!
They can continue to distribute and service cars; the market price will just go down. https://t.co/jHj2rY71xP— Alexander Popemobile (@J_K_Chesterton) May 31, 2023
Coastal elites just don’t understand that real Americans really like haggling with a middle aged former star high school quarterback over the second most expensive thing they will ever buy https://t.co/ucgoULhkxs
— emboldened by psilocybin (@canderaid) May 31, 2023
Baud
I bought an EV from a dealer. Everything went smoothly.
Unfortunately, Musk has proven himself to be at least as bad if not worse than anyone else in the car business.
Goku (aka Amerikan Baka)
I feel sorry for his kids. Imagine ranking your kids every month
eclare
This is a great post, Anne Laurie!
And I also hate haggling with dealers. Luckily I don’t do it often, my 2018 CR-V has just under 9,000 miles.
eclare
@Goku (aka Amerikan Baka):
I can’t. Unless maybe it’s on some chore basis, like who has the cleanest bedroom. I am guessing that is not what he does.
Baud
@Goku (aka Amerikan Baka):
I rank commenters.
bbleh
See it just goes to show you, spend millions to buy politicians to pass laws guaranteeing you an outsized income as a low-value middleman, and then … they don’t stay bought! Damn ingrates …!
bbleh
@Baud: Do rank commenters make rank comments? Cuz some of the comments around here …
NotMax
@Goku (aka Amerikan Baka)
Trade one to another household for a pair of twins to be named later.
//
Frankensteinbeck
@Baud:
And I enjoy my status as the second best commenter, while applauding the highest ranked commenter, Baud, who justly earns that rank every single month!
EDIT – Was that enough, or should I throw in something about your fresh breath and stylish collection of lawn flamingos?
Skepticat
SOUL? Surely you jest.
Baud
@Frankensteinbeck:
Out of fairness, I have implemented the Balloon Juice version of the Riley Rule.
Omnes Omnibus
@Baud: Like the WeRateDogs people? I’ve never seen them give any dog less then 11/10.
Baud
@Omnes Omnibus:
No dog is below an 11/10.
NotMax
@Baud
Welcome to the
MonkeyBaudy House.:)
Omnes Omnibus
@Baud: It is known.
Goku (aka Amerikan Baka)
@Baud:
Where do I rank Baud and would pledging to be an Electoral College elector for your 2024 presidential campaign get me a higher rank? //
Omnes Omnibus
@Goku (aka Amerikan Baka): I don’t know. Where do you rank Baud?
Baud
@Goku (aka Amerikan Baka):
Nice try, Fani Willis.
Goku (aka Amerikan Baka)
@Omnes Omnibus:
Why, #1 of course!
@Baud:
Drat! Foiled again!
Goku (aka Amerikan Baka)
@eclare:
I don’t think so either : (
@NotMax:
heh
Layer8Problem
@Baud:
Judge Smails: “How do you measure yourself with other commenters?”
Ty Webb: “By height.”
Nukular Biskits
I don’t haggle.
I learned a VERY expensive lesson over 30 years ago when I bought my first car, a 1987 Buick Regal T-Type. I loved that car but paid WAY too much for it.
I’m still driving (when I have to) my 2002 Ford F150 XLT I bought brand new for $22,000. I did my research, I knew the MSRP and kickbacks, walked into the dealers, asked for out-the-door bottom line price. If they wanted to haggle, I walked out and went somewhere else.
Jay
Omnes Omnibus
@Goku (aka Amerikan Baka): So now you have offended every commenter who isn’t Baud. Or proved to them that you don’t know what you are talking about. Or both.
Matt McIrvin
@Baud: I’ve been to dealers who had electric cars on the lot and would energetically tell you not to buy them. I think the manufacturer was forcing them to put them on the lot.
Dan B
We’ve leased Nissan Leafs for seven years. We’re hoping to buy but my partner is in love with Teslas. I’m opposed for 1. Elon, 2. Self driving issues – car takes over and accelerates, brakes, changes lanes and you cannot override. Sigh. Auto dealers electing Republicans who’d love to make us invisible and worse. I don’t have words
The maintenance has been rotating tires and body repairs from three accidents. One was my partner’s fault the other two were other drivers hitting us.
Goku (aka Amerikan Baka)
@Omnes Omnibus:
Well, I was using the “//”, so I’m covered
Omnes Omnibus
@Goku (aka Amerikan Baka): If you say so….
pacem appellant
You know that thing that sounds crazy that car salesmen do, where they allegedly turn the heat up when negotiating the price? I thought it was an urban legend, but no, it’s totally true. They did this to me and my wife–with our two small children in tow. What they didn’t realize is that while I wither in the heat, my wife turns into a fierce warrior. So I did all the car stuff, and she did all the price negotiation.
No lesson to be learned here, other than that these people are monsters and they deserve every bad thing coming to them.
Also, I love my Nissan Leaf (it’s my third one). I might be a shitty haggler, but the car is good and Nissan was always happy to sell me a car–any car.
Goku (aka Amerikan Baka)
@Dan B:
Have your partner browse the r/realtesla subreddit. It’s full of horror stories of the horrible build quality of Teslas too
Goku (aka Amerikan Baka)
@Omnes Omnibus:
Buddy, I was just joking
Omnes Omnibus
@Goku (aka Amerikan Baka): Buddy? Come on, man.
Frankensteinbeck
@Goku (aka Amerikan Baka):
So you’re saying Baud isn’t #1??? Now I’m offended! Soooo offended! Can’t you hear my bellows of rage rippling across the surface of the planet? That black cloud with the purple lightning seething on the horizon, that is my fury that you would so denigrate Baud, our one true virtual president!
Nukular Biskits
@pacem appellant:
Did you buy a Leaf or are you leasing it?
Miss Bianca
@Jay: Aww, made me look!
Obvious Russian Troll
@pacem appellant:
Turn the heat up? My wife would have–and I’m only exaggerating slightly here–ripped their throats out. She does not handle excess heat well.
At one dealer, though, the receptionist ran up to us and the sales guy all out of breath. Somebody else was going to buy the car we were looking at! We needed to hurry and make a decision!
We pretty much ignored that, as we really needed a car at the time, but wound up buying somewhere else. Almost twenty years later I still roll my eyes at that.
Gvg
@Goku (aka Amerikan Baka): I wonder if he really does, or just tells the marks he does. He is a polished speaker who tells them what they want to hear. “Congratulate yourself”.
In fact I would check to see if he even has kids.
Matt McIrvin
@pacem appellant: The place where I got the most energetic anti-pitch was a Nissan dealer. My wife was actually the one looking for a car, but car dealers being car dealers they no doubt saw me as the main buyer, and at one point I started looking at a Leaf and the guy freaked out. He seemed really scared that I wanted to buy that thing.
rikyrah
Thanks for this post.
Eyeroller
@Matt McIrvin:
We bought a Leaf from the local Nissan dealership and they were happy to sell it and were to a some extent even promoting them. So that makes me feel a bit positive toward them. However, I’m about to trade it for a hybrid because I have to go from two cars to one and I am still not comfortable having a BEV as my only vehicle.
Sister Machine Gun of Quiet Harmony
So car dealership owners, gas station owners, and contractors are all millionaires. I am in the wrong business.
Chris T.
We bought an EV to replace my PHEV after it got totaled on the freeway (me in the middle of a 5-car pileup on a busy California freeway; fortunately I was uninjured, though at least one other person was not). One dealer never got back to us at all, the other let me go in and order the car I wanted, which then took about six months to arrive. Easy sale for them. So what if they don’t make any money on service? All they had to do was take down my specs, place the order, and let me pick up the car once it came in. These things were in demand (well, -ish, but very low supply hence the long wait) and I paid the stinkin’ MSRP, so they got plenty for it.
(And yes, we have a dangerous, fire-prone gasoline-powered vehicle as backup.)
Doug R
I guess car dealers may have to pivot to being honest mechanics….I’ll come in again.
But seriously, with EVs having WAY less service, they could install a field of EV chargers but a lot of car dealers around here have bought huge tracts of land out in the boonies in car dealer ghettos.
TS
Every industry has had major changes in the past 100 years despite the best efforts of many to stop the change. No idea why car dealers think they are above it all. My closest association was with the printing industry & all those people who not only lost a large % of their income many saw their jobs disappear, never to return.
JaneE
Car dealers can offer their brand’s EV’s or not. Direct buying exists and is another option.
You might well have a hybrid or ICE engined vehicle as a road trip or backup for trips with time constraints that would make charging on the road a problem.
That’s now. Improvements in battery and charging tech may change that in a decade or two.
One way or another the old style car dealership model is going to change. When is the question.
cain
@Dan B:
I am a former Tesla owner. It’s a great car and very safe. I would never trust any car to drive itself. Don’t use the feature.
As a software engineer we all know how flawed it is and do anywhere we use software is suspect especially in assisted technologies in the medical field.
cain
@pacem appellant: that’s me. Damn anxiety. my wife would kill them.
The entire dealer thing is male dominated set up and is quite formulaic.
cain
@Sister Machine Gun of Quiet Harmony:
It’s all a rip off. The whole thing is a misogynistic system that .. ugh. Just ick. Hate even entering a dealership.
I loved the experience of buying a Tesla.
Ruckus
@TS:
I started working in a machine shop just over 60 yrs ago and of course there was nothing electronic about any of it. Electric motors yes, but no electronics. When I closed that business in 1994 I had 4 machines that that ran on electronics. One would run for approximately 12-20 hrs completely unmonitored. Another one could run for days with no intervention whatsoever. Now it wasn’t cheap, it cost $256,000. Took me less than 5 minutes to decide to purchase it. I bought the first one in what is known as a job shop and had several business magazine articles written about it and my shop. The difference was immense and changed what I could do and that I could do projects that never would have been in any way reasonable possible prior.
gene108
@Chris T.:
Gasoline powered vehicles catching fire aren’t nearly as bad as BEV’s catching fire.
LI, NA, K and other Column I elements from the periodic table are extremely reactive under the right conditions and can burn very hot, including exothermic reactions with water.
Fire departments need to be given special fire retardants to deal with BEV fires.
Chris T.
@gene108: I’m being a bit sarcastic here, as gas-powered vehicle fires are far more common than BEV fires. It’s true that a BEV fire is harder to put out, though. (Right now the main problem seems to be the electrolytes, rather than the lithium itself.)
(If we’d had battery-powered vehicles for 100 years and someone were trying to introduce gasoline as a new fuel today, the stories of “gasoline fires” would be all over the place. Ironically enough, my own BEV uses LG Chem batteries that are suspected of manufacturing flaws and there’s a recall for which I’m waiting to hear from the dealer. Rather than replacing the batteries, the recall involves adding software to the battery control module to attempt to detect whether the manufacturing flaw affects your particular car.)
(Here’s a related YouTube video.)
cain
Anybody seeing this about Jack Dorsey effectively giving RFK Jr a presidential endorsement?
Meh. Another reason not to get on blue sky .. fucking tech bros.
pacem appellant
@Nukular Biskits:
I leased the first three. Then I bought out my lease on the third one. It’s mine now, just paid off the loan on it, too.
pacem appellant
@Obvious Russian Troll: It must work at least some of the time else they wouldn’t even try it. But that’s terrible. I used to only buy cars from third parties because I couldn’t stand the haggle–just isn’t my nature. But once I knew I was switching to EVs, I had to endure the dealships. Nissan wasn’t so bad, much better than Toyota, but at the risk of making the worst pun of my life, YMMV.
pacem appellant
@Matt McIrvin: Curious, what state? I live here in the Bay Area of California, and buying an EV from Nissan was easy. Though that dealership closed recently and merged with one the next town over, so maybe the didn’t sell enough ICE vehicles to make ends meet.
pacem appellant
@cain: They kept looking to me to negotiate, since I picked out the car, but I looked at them like the melty person I was with two kids to wraggle, and pointed to my wife. They didn’t stand a chance. Idiots.
Misterpuff
@Goku (aka Amerikan Baka):
AP Poll or Coaches Poll?
Does the lowest ranked kid get relegated?
Questions, I have questions!
Betsy
Remember! You can cut out these Republcian parasites altogether by making life choices that reduce your dependence on cars. One car per household may be a realistic goal for many. Or buying cars half as frequently, and keeping the ones you have going longer, by using feet or pedals for the less-than-one-or-two-mile trips that make up a huge fraction of most household travel.
If you can’t realistically reduce your car usage, then voice your support for safe (separated/protected) bike lanes and better pedestrian crossings, etc. so that many others can shift away from their car usage as a realistic choice.
Just think — you can stick it to Saudi dictators, oil barons, republican car dealers, air pollution, heart disease, AND auto loan lenders — while making the world easier for seniors, kids, and others who can’t drive.
All at the same time! it’s a win-win-win-win situation.
Matt McIrvin
@pacem appellant: Massachusetts. The dealer is one we’ve had other issues with (in particular, in their communications with us they were NEVER able to acknowledge that my wife’s car was hers rather than mine, despite being repeatedly corrected and assuring us that they’d update their contact information).
Another Scott
I got a 2023 Kia Niro PHEV at the end of April, to replace my 2004 Jetta TDI wagon. I was dreading haggling enough to consider using a buying service – until I read the reviews… Instead, I looked at Edmunds and it said that I should expect to pay list price. That seemed fair to me, given the times, and the heartburn of trying to squeeze another few hundred dollars out of them wasn’t worth it to me.
Drove out to the dealer, said that we were interested in the blue one, they brought it out. We drove it. I said I was thinking list price was fair, the salesman said write it down and sign and he’d check with the manager, came back and said we had a deal. We saw the finance guy, turned down the extra warranties, etc., and wrote the big check. Took maybe 2 hours total, including lessons on all the computers and setting up all the accounts.
They said that they would bring it to our home that evening after finishing charging it and the final cleanup. No charge.
I was impressed with how painless it was.
I’m dreading the process of replacing J’s 2000 Corolla as the Toyota dealers seem to be adding $5000 to the sticker and I assume won’t be as willing to drop it…
The Kia is quite impressive. It’s rated for 33 miles all-electric range and I’m getting closer to 40, so I only need to charge it every other day. I don’t drive like a manic, so YMMV.
Cheers,
Scott.
Another Scott
@Another Scott: Er, maniac, either.
Cheers,
Scott.
VOR
I’ve bought my last couple vehicles through buying services, one via Costco and one via another service. It saves a TON of haggling but dealers don’t give up easy. One dealer tried to pawn off a vehicle from the prior model year even though the purchase agreement clearly specified the current model year. They still have a bunch of services they can sell and bundle into the financing. Another dealership wanted me to deviate from the agreed deal (at below MSRP) and claimed they could offer a better deal.
There was a state election a few years ago where the Republican candidate was supported by a blizzard of direct mail pieces. Most of them were attack ads, claiming his Dem opponent’s election would lead to an apocalypse. (slight exaggeration, but not much). These mailings came from a variety of organizations which all mysteriously shared an address with the state auto dealer’s association.
JustRuss
@VOR: I used the Costco service once to buy a Honda, and I was pretty happy with it. The sales guy still tried to tack on some extras, but wasn’t a jerk about it. Which was good, as I was nursing a hangover at the time and my wife was fed up with our old car breaking down and was determined we were getting a new car THIS WEEKEND!