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EV shift the talk of the town at NADA – Automotive News

by Oct 21, 2022Blog0 comments

LAS VEGAS — As the automotive retail community gathered at the Las Vegas Convention Center last week for the first in-person NADA Show since the start of the pandemic, one topic was inescapable: electric vehicles.
From Ford Motor Co. prominently parking an F-150 Lightning at its display to a photography booth vendor using a Porsche Taycan at its stand to the National Automobile Dealers Association setting up what it referred to as Electric Avenue — which included three brand-new EVs and the out-of-production Mitsubishi i-MiEV — electrification was seemingly everywhere show attendees looked.
While the recurring phrase of the show was “dealers are all-in on EVs,” many are still grappling with questions about the business of selling battery-electric vehicles, from the investment required to prepare facilities to pricing and profit margins.
Automakers insisting on setting the prices — and with a smaller gap between invoice and sticker — smacks of a pivot to more of an agency model, in which the manufacturer sells the vehicle and the retailer delivers it.
Dealers shouldn’t have to accept smaller profits or a business model change just because the powertrain is different, said Mike Sullivan, president of LAcarGuy dealerships in the Los Angeles area. Margins on EVs at his stores are not discernibly lower, he said.
“I’m not going to settle for smaller margins under the guise that they’ll pay my flooring or increase my co-op advertising,” Sullivan said during a panel discussion on EVs at the Automotive News Retail Forum: NADA. “I think that leads to a very dangerous place if we go from 13 to 6 percent. I suspect that the next call would be, ‘I bet we could get him to go for 5.75 or 5 [percent].’ ”
The concern is not theoretical, as brands including Mercedes-Benz and Mini have asked dealers to accept lower margins on EVs.
But against a proliferation of new, EV-only brands, it’s imperative that retailers and manufacturers team up, said Inder Dosanjh, chairman of the Cadillac National Dealer Council and CEO of Dosanjh Family Auto Group, which includes four Cadillac stores in the San Francisco Bay Area.
“There has to be adjustments,” he said during the panel. “We have to work with the manufacturers at this point. It can’t be them and us.”
A healthy dealership network, said Dosanjh, is the advantage traditional brands have over EV specialists that use direct sales, such as Tesla, Lucid and Rivian.
While many consumers have a good impression of the Tesla brand, they don’t necessarily prefer its consumer experience, said Mike Dovorany, vice president of automotive and mobility at Escalent, a market research company. He conducted a massive survey of likely future EV buyers about their ideal approach to buying and servicing vehicles.
“We actually took the elements of the Tesla approach and we sort of de-badged them,” Dovorany said during an NADA Live session.
A major takeaway? The dealership model is a good one for mainstream consumers buying their first EV.
Consumers overwhelmingly said they like going to a dealership, having a human to interact with and not having to schedule service only through their phones, according to Escalent’s research.
It “really had us kind of raise our hand and say, ‘Hey, I know there’s a lot of discussion about moving towards this sort of more Tesla-like approach, but when we talk to the consumers … they’re telling us that’s not their ideal’ ” experience, Dovorany said.
Dealers don’t need to panic about EVs, said retail analyst Glenn Mercer, but they better get ready to sell them.
Mercer, president of GM Automotive in Shaker Heights, Ohio, presented his latest “Dealership of Tomorrow” report in a workshop at the NADA Show.
The goal of the report was to stimulate long-term planning among dealers, and that’s especially important when it comes to EVs, he said.
Some dealers have been selling EVs for years, thanks to nameplates such as the Nissan Leaf and Chevrolet Bolt. Others are taking their first steps now to do so with waves of fresh EVs inbound.
As part of Automotive News‘ 2022 Dealer Outlook Survey, respondents were asked whether they were currently selling or preparing their dealership to sell EVs. The vast majority of the 196 dealers and dealership managers who answered the survey, 80 percent, said yes.
Installing charging infrastructure; training and hiring technicians to maintain and repair EVs; and purchasing and installing service department equipment for EVs were the most commonly cited preparations.
Expressway Toyota in Boston is upgrading its first charging system, which can charge one vehicle at a time, to a free-standing charger from ChargePoint, said Robert Boch, dealer principal. It will offer a quicker charge and two cables, he said.
Boch said the Toyota bZ4X electric crossover should arrive at his dealership in late May or early June. If he ends up selling 10 bZ4Xs per month, “that would be pretty good,” he said. “That would represent, in today’s environment, maybe 5 percent of our new-car sales.”
Randy Hoffman, COO at Ed Morse Automotive Group, of Delray Beach, Fla., said the group has signed on for EVs at each of its dealerships. Ed Morse has about 30 franchised dealerships in Florida, Illinois, Oklahoma, Missouri, Texas and Iowa.
“That’s an expensive endeavor,” Hoffman said. “My concern with EV is that the technology is improving so rapidly that what we’re investing today may be antiquated within just a few years.”
Melissa Burden and Jim Henry contributed to this report.
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