Hello everyone. We just had our wonderful annual convention. It certainly uplifted my spirits to see everyone in person. Lots of great information was received, and I hope you have taken the time to contemplate how it can benefit you at your respective dealerships.

I apologize for taking us away from the positive reflection of the annual convention to some more sobering thoughts we should acknowledge and appreciate to protect our life’s work.

Motor vehicle dealers face significant challenges moving forward. There is certainly an ongoing attack on the franchise model with manufacturers attempting direct sales. Not only do we face this challenge from several new electric vehicle manufacturers, but we are also confronted with actions from our long-standing traditional manufacturers. They disguise their efforts to engage in direct sales by controlling every aspect of the retail process under the misguided narrative of bringing customers to our dealerships.

Likewise, there is a movement of changing a traditional revenue stream that dealers receive, the “holdback,” to no holdback. We see an attempt to replace holdback with incentives based upon unreliable customer retail and service surveys, sales quotas and unreasonable and unnecessary facility requirements. As you are aware, your Association is working diligently to combat these types of improper practices.

Dealers withstand the unwarranted public perception that they oppose the sale of electric vehicles. The National Automobile Dealer Association (“NADA”) is working diligently to combat this false narrative, but dealers can also be part of changing this incorrect impression. We all know that it is only through the dealer body that electric vehicles can genuinely reach the everyday consumer. New motor vehicle dealers are an integral part of providing the infrastructure needed to charge and service electric vehicles. Only dealers have the skills and experience to accomplish this effort in the retail space instead of manufacturers who do not understand the local customer who has been coming to your dealership for years.

A more short-term challenge requiring our immediate attention is the possible aggressive action we will see from the new national administration. We have already learned of statements made by Biden administration officials expressing their desire to eliminate dealer margin and prohibit, or strictly limit, the sale of voluntary protection products.

I encourage all dealers to review the NADA guides on fair credit compliance and voluntary protection products. These provide practical and essential guidelines, but I do warn of the danger of simply using a form without legal guidance. These policies need to be modified to fit your individual business. Simply having a form policy in place, which likely never will be read or followed, is worse than having no policy at all. Using these forms as a basis and then carefully making them applicable to your business is crucial and can provide guidance and protection.