- Age: 63
- Dealership: Extreme Dodge-Chrysler-Jeep-Ram, Jackson, Mich.
- Dealer since: 1976
- Quote: "Some manufacturers have looked at a survey we commissioned to see the impact of stair-steps on consumers. We had some great response where we showed that it actually eroded their brand. And they changed the way they did stair-step programs and eliminated [them]."
Wes Lutz, the incoming chairman of the National Automobile Dealers Association, wants to continue the battle against stair-step incentives. He also is concerned that the drive toward autonomous vehicles is not taking consumers' concerns, and wallets, into consideration.
Lutz owns Extreme Dodge-Chrysler-Jeep-Ram in Jackson, Mich. He has been a Chrysler dealer since 1976 and dropped his Hyundai franchise nine years ago.
As NADA vice chairman, he represented Michigan's new-car dealers on the board and led the regulatory affairs committee. He also served on the board in 2001-04.
Lutz, 63, is a past president of the Michigan Automobile Dealers Association. He is a graduate of the University of Michigan and has a pilot's license and flies his own plane.
He spoke with Staff Reporter Eric Kulisch about his agenda for the year and issues facing retailers.
Q: What are your priorities for NADA this year?
A: We're going to continue focusing on the stair-step program. Mark Scarpelli has done a great job highlighting that and the problems it creates.
At the beginning of the month, you have a different perspective on how tight you are going to work a deal, and toward the end of the month, if you're not going to hit your [vehicle sales target] number, sometimes, we'll actually lose money on a vehicle to hit our number. It's really unfair to the consumer because we'd like to treat every consumer exactly the same, and we just think there are better ways to motivate dealers to sell more vehicles, that's a little more transparent to the consumer.
What progress has been made on stair-steps?
Some manufacturers have looked at a survey we commissioned to see the impact of stair-steps on consumers. We had some great response where we showed that it actually eroded their brand. And they changed the way they did stair-step programs and eliminated [them]. We'll just continue to point out the negatives. The OEMs are creative, and hopefully, they'll come up with a program that's more fair to the consumer.
Do stair-steps complicate things for dealerships that want to have a no-haggle, one-price sales approach?
It absolutely creates a problem for a one-price store because you have to make a decision on Day One if you're going to give all the money away, or upfront, or if you think you can hit the number.
We need to make our business plans at the beginning of the month. We need to know what a vehicle costs before we can price it. And when the number is moving during the month, we just can't treat every customer the same.
New cars are very tough to make money on. So, when your cost structure is changing and you're betting on a payment from the factory that you don't qualify for because you didn't do the volume at the end of the month, we go backwards.
All we ask is to know the price on a vehicle so we can price accordingly right out the chute and, for the first customer or the last customer, we're working off the same number.
What's your view of autonomous vehicles and how they'll impact retail points?
It's amazing as an industry, how dealers have moved into almost [having] to be an advocate for consumers.
Silicon Valley is putting so much pressure on us to have autonomous vehicles. I mean, some [forecasting] models say autonomous vehicles are going to be on the road in four years.
And we're not seeing where the consumers are looking for the level of autonomous vehicles and the ride-sharing that the government and people in Silicon Valley seem to be advocating.
People are saying to me, they love having safety features that helps them be better drivers. But I don't talk to anybody who buys a car who says, "I want to get in the back seat and let the car drive itself."
I just think we're jumping the gun on this thing. Why don't we ask the consumer if that's what they want to do?
So what do you do if I've got someone in a six-year loan? What do you tell them, "Oh, in four years, you're done driving"?
I don't think experts see the evolution happening that fast, but I take your point that some early-stage autonomous vehicles may be on the streets soon.
I just want to make sure that somebody is listening to the consumer's wants and needs, not just a business model that someone wants to push.
Everybody likes autonomous features. Everybody likes the lane detection, the parking and adaptive cruise control that will stop you before you run into the back of someone. They like being helped. They just don't want to be replaced.
We just want to make sure we don't price autonomous vehicles out of the range of consumers because all these things are going to cost something.
If the government makes them mandatory and the price of the car goes up, all people are going to do is hold onto their older car longer. So we want to make sure consumers have choices that they can afford.
We lose car deals to a competitive car dealer for $10 a month. The autonomous features, the estimates I'm seeing to be Level 4 — you're looking at $4,000 to $5,000 a vehicle. And if you just do the standard rule of thumb, $1,000 financed is $20 a month.
If we push $5,000 onto the cost of the vehicle, it raises the price by $100 a month in a typical payment. And that's going to price autonomous vehicles out of the reach of many consumers. So, it's going to have an adverse effect because people are going to say to dealers, "Listen, I'm just going to fix my old car and drive it longer."
So at NADA, we're very concerned about the affordability of the vehicles going forward.
I hear that price concern with regard to corporate average fuel economy standards and emissions technology, too.
It really doesn't matter what the cause of the increase is. It's the effect that it has on the consumer. We just need to make sure that the government and the manufacturers are listening to what the public wants.
What impact on the business do you see from the tax-bill changes, including lower corporate tax rates?
With the 21 percent tax rate, I'm predicting [dealers] will leave more money in the business. You're willing to pay that 21 percent and leave more for working capital in the company.
Every one of my employees got a bump in their take-home pay.
We'll have to see how it all shakes out.
- Age: 63
- Dealership: Extreme Dodge-Chrysler-Jeep-Ram, Jackson, Mich.
- Dealer since: 1976
- Quote: "Some manufacturers have looked at a survey we commissioned to see the impact of stair-steps on consumers. We had some great response where we showed that it actually eroded their brand. And they changed the way they did stair-step programs and eliminated [them]."
You can reach Eric Kulisch at ekulisch@crain.com
