The challenges facing franchised dealers these days are as big as they are diverse.
Regulatory pressure from Washington, D.C. A vehicle recall process that can be frustratingly sluggish.
Technological changes that impact the retail model, vehicle ownership and the vehicles themselves.
But if there’s one thing dealers have in their arsenal it’s this: resiliency.
That was clear when talking with the man who is set to lead the nation’s franchised auto dealer body in 2017: Mark Scarpelli, who is president of Raymond Chevrolet and Raymond Kia in Antioch, Ill., and co-owner of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, Ill.
Scarpelli, who is the 2017 chairman of the National Automobile Dealers Association, shared four top priorities for his tenure leading NADA and the 16,500-plus new-car franchised dealers.
He said in a December interivew with Auto Remarketing that he will emphasize how the dealer franchise system benefits the consumer, and work to keep vehicles affordable through advocacy of dealer issues in Washington, D.C.
Scarpelli is prioritizing working with automakers, while also bringing in the next generation of dealers into NADA involvement.
A lot of that work involves keeping the consumer as a top priority.
“At the end of the day, they pay our wages. We want to make sure that our services are something that they want and desire, and that our automobiles — whether they be new, financed or leased — are affordable to them,” Scarpelli said in the phone interview. “We want to make sure that system is intact for them going forward.”
The job of being an auto dealer isn’t necessarily an easy one. There are hurdles to clear, left and right. One of the most talked-about is the regulatory environment the industry faces.
“Some of the well-intended regulations and laws and initiatives from D.C. are just that. But there are some unintended consequences that we live and we breathe every day, and we deal with,” Scarpelli said.
Regulations around auto financing and initiatives from the Consumer Financial Protection Bureau regarding indirect financing are examples of the hurdles, he said.
Dealers also have to maneuver through recalls and changing fuel-economy regulations.
“At the end of the day, I’ll just gravitate back to what I said earlier, it’s all about affordability for American families and we want to make sure that affordability for cars is within reach of Americans,” he said.
“Another opportunity for us, as auto dealers, is our fleet — meaning the cars and trucks on the road owned by American consumers — is one of the oldest fleets in a very, very long time. That being said, the turnover, if you will, of older cars to newer cars and trucks … there’s an opportunity there. And there’s new people coming into the market, meaning new drivers and people that want to upgrade their older automobile.”
The recall process
Another thorn in the side of car dealers and the consumers they serve has been the flood of recalls and the lengthiness it sometimes takes for a fix.
“At the end of the day, car dealers are there to sell, service automobiles and to please the public,” Scarpelli said. “And in our case, as an automobile dealer, trust me, we will service and fix recalled vehicles 100 percent of the time, every day until the end of time. One of the roadblocks that currently exists is the parts availability for some recalls.
“Many times, recalls are announced to consumers the same time that we, the automobile dealer, find out. So, we end up getting up a black eye, if you will, that we don’t have the parts or we’re not up to speed for the recall — meaning that if we had availability of parts, we could fix them right away,” he said.
“And we have no interest in not fixing them right away. Consumer safety and getting that car back to where it was originally designed to be is our primary interest, period,” Scarpelli said.
“The solution, really, is to have safety regulators recognize that not all recalls present an imminent threat to safety, and for some of our dealers to acknowledge that recalls need to be fixed right away and should be fixed before the sale of the automobile. So that’s how I think we can get there.”
Response to online shifts
Think about the way a consumer might shop for a car today. Instead of driving to six to eight dealerships, he said, the shopper is able to compare stores online.
But while they can narrow down their choices through a smartphone, tablet or laptop, “there’s still a large part of the American buying public that still loves to go and touch and drive and feel that new automobile,” Scarpelli said.
“Whether it starts online or looking on dealers’ lots, at the end of the day, it’s still an emotional purchase,” he said. “Meaning that, you’re excited about the new color or that it’s got eight cylinders versus six cylinders or it’s got the rear-seat, child-seat warning — which is a cool option, by the way — or the backup camera. Those things can’t be demonstrated online or in a list of options. People still need to come into an automobile dealership and touch and feel that stuff, which is the benefit of our large dealer network that we have in America.”
But given how vastly the car business has changed — be it autonomous cars, ride-sharing, digital car-buying or evolving ownership models — how can dealers work with the changing pieces?
“Automobile dealers are very resilient,” he said. “I’ve been in the business since I was 22; I’m 52, now. The evolution and the change that has happened in our business is mind-blowing. What I was doing five years ago until today is not the same activity. We don’t have that crystal ball but what we are good at is being resilient and willing to change. It looks real exciting to me as an automobile dealer, and I would say that for most automobile dealers.”
He pointed to the “The Dealership of Tomorrow: 2025” study that was commissioned by NADA and conducted by consultant Glenn Mercer.
“In our world, we don’t feel as though the dealer franchise network will change significantly, meaning the actual physical plant of the dealership. It’s still a place and it’s the best network to buy your car, to fix your car, to do warranty repairs. It’s still the No. 1 source in America,” Scarpelli said.
“And when you think about it, there’s over 16,500 retail outlets where a consumer, if they buy their car in Chicago, Illinois, and they’re driving through Topeka, Kansas, and they have an issue, they can probably get that car serviced through the wide network that sprawls America. So we feel that is never going to change,” he said.
“There are some underlying things that may change, such as buying habits, consumer preferences, regulatory issues that come up. But, you know what, we don’t feel that the industry is going to change that much,” he said.
And if change does come, there are some fundamentals Scarpelli sees as evergreen.
“Cars are still going to still going to need to be purchased. They’re still going to needed to be fixed,” he said. “The network that is on the ground right now is that 16,500 dealer-strong network to sell and to service that automobile. It’s a pretty great network that we’ve put together over the years.”