- Age: 53
- Dealerships: Raymond Chevrolet and Raymond Kia in Antioch, Ill.; Ray Chevrolet and Ray Chrysler-Dodge-Jeep-Ram in Fox Lake, Ill.
- Dealer since: 1990
- Quote: "We're not dinosaurs. What we were doing five years ago isn't what we're doing today. We have evolved, too. ... We evolve every day. We're fighters."
Outgoing National Automobile Dealers Association Chairman Mark Scarpelli will remember his tenure as 14 months in which the organization gained a greater ally in the White House and dealers banded together in times of need.
Now, Scarpelli says, is as great a time as ever to be an auto dealer, as sales remain healthy and NADA has a more prominent "seat at the table" to influence regulatory issues under the Trump administration.
Scarpelli, 53, whose father started Raymond Auto Group in Antioch, Ill., in 1971, also noted dealers' resilience and willingness to help their communities as memories he will keep.
Scarpelli, a dealer since 1990, spoke with Staff Reporter Michael Wayland about auto sales, the Trump administration and NADA's humanitarian efforts.
Q: How did your tenure go as NADA chairman?
A: I don't want to sound corny, but it has been one of my greatest chapters — both professionally and personally. As an automobile dealer, to be able to walk in the path of other great automobile dealers before me and help our industry out the way that I've been able to, along with a great NADA team, has been something I could have never fathomed.
What made you most proud?
I've been involved with NADA, as a director and now as current chairman, for almost eight years and I can tell you the depth and knowledge, and the professionalism, of the NADA professionals and staff is bar none No. 1. They truly are interested in dealers and dealership businesses and how the industry is going. They really have a vested interest in it. To be able to work with those folks is just unbelievable.
I will also tell you the current administration is there for businesses. We had a seat at the table with the previous administration — not to make a political statement by any means — but the previous administration, as far as business went, we didn't have quite a voice like we have now in regard to talking about smart tax reform, [autonomous vehicle] legislation, all of those things. We do have a seat at the table.
How much interaction have you had with the Trump administration?
Six or seven months ago, we were actually in the Roosevelt Room in the White House for a meeting with Gary Cohn, the economic director, and Vice President [Mike] Pence stopped in our meeting for five minutes. When I tell you, "we have a seat at the table," we really have a seat at the table. We've had subsequent meetings about all different kinds of things with the administration — everything from NHTSA issues to Department of Transportation and tax reform. We've had quite the gamut to give suggestions and give fresh ideas. [Editor's note: Cohn resigned as director of the National Economic Council on March 6.]
Did a lot of the discussions revolve around the Consumer Financial Protection Bureau?
The CFPB directive and initiative was a cornerstone of the previous administration and we, as NADA and auto dealers, still embrace and endorse fair credit, making sure credit is available to all consumers. We're quite pleased with our efforts to make the CFPB aware of real-life issues that occur in car dealerships. So, we're very pleased with the outcome and that it's somewhat off the table.
What do you think about the Trump administration's tax reform?
Tax reform is good for the car-buying public as well as business owners, including small business owners such as the majority of car dealers in America. If you put more money into people's pockets, they're more free to save, go on trips, buy new homes and new automobiles — everybody wins in that case.
In our world, as automobile dealers, I'll give you an example. There was a directive on the table with the new tax reform about interest deductibility. Interest deductibility, in car dealers' world, is our lifeline. Many dealers have anywhere from $12 million to $80 million in new automobiles sitting on their lots to show our customers. Along with that big inventory comes an interest bill every month.
There was a directive by members of Congress to not be able to deduct that interest floorplan on a monthly basis. We, along with other business leaders from other industries, talked to the administration about deductibility and what it would mean for jobs, stocking of inventory. And they listened, and they did not make this part of tax reform.
Therefore, letting businesses be able to conduct interest deductibility was a win for everybody, and the administration saw it that way. That's one example of working together across all lines, and having some smart tax reform.
How was the auto industry in 2017 for dealers? How does 2018 look?
Surely, we're not at levels where we were a couple of years ago as far as automobile sales. The term has been used in the press and in public of a plateau. If this is a plateau, I'll take this plateau all day long.
Our forecast and others' are still in the realm of 16.7 million or north of 16.7 million. It's a great time to be in the car business. There still is much, much pent-up demand.
As sales slow, what are the biggest concerns facing dealers?
There are a couple of things. You've heard the expression, "too fast, too soon," or "get caught speeding," however you want to characterize it. We had such a monumental, fast pace a few years back and we've plateaued a little bit. So, you've got a couple of risks here for sure.
You've got to make sure, as an automobile dealer, your expenses are in line and you're doing what you need to do to make sure your fixed operations — meaning service, parts and body shop — are solid. You have to make sure you're concentrating on all areas of your business.
You know, in the car dealership world, it's not just car sales. You've got five or six business units — new-car sales, used-car sales, service, body shop, parts, finance and insurance — under one roof at a car dealership.
My best advice is to make sure each department is running on all cylinders and that your expenses are in line to keep up with customer demands and volume.
Will the rise in incentive spending continue? Are dealers being pressured by the companies to increase incentives?
The incentive levels vary mainly on stocking levels for inventories around the country. If the vehicle is turning faster than it can be produced or it has a little days' supply, the incentive level will probably be a lot less on that particular vehicle versus one where we might have 120 days' supply on it. That never changed. That's always moving. The other thing is there are many car companies that have emphasis on SUVs, or trucks, or a certain sedan. They will always rely on incentives for customers to buy a particular vehicle. It's a battle. These companies want to be No. 1 in certain areas.
How did the used-car market impact dealers in 2017? What is expected in 2018?
With all the new cars and trucks that are being sold, the flow of used cars and trucks has been pretty steady. But a new car or truck is not for everybody. There are affordability issues.
One of my mantras over this past year has been vehicle affordability. The average price of a new automobile today is $34,000. I have customers that walk into my showroom and say, "My first house wasn't $34,000." So, you get the spectrum there. There are many people who walk in and will consider a new but will change their decision to a nearly new. Demand for used cars and trucks is real strong, very, very strong.
Has NADA done enough to protect the franchised dealer model?
We as an organization represent over 16,500 automobile dealers coast to coast. Those are rooftops in small-town America and big metro areas. We, as automobile dealers, collectively, employ over 1.1 million. That's more than manufacturing in the automobile world.
We are quite the grass-roots force in America. In many cases, we are the largest tax base in our towns and we're the first ones to raise our hands to support the Little League teams and senior centers and other things that are noteworthy causes.
The franchised system itself has never been stronger. We do need to keep telling our story to the American public and what it means for employment, tax base. And, frankly, consumers are realizing the importance of the U.S. car dealer.
NADA supports the states in their causes and their endeavors with making sure that legislation is conducive to do business, and to protect the franchised model.
Did you make progress on stair-step programs during your tenure?
You asked me earlier about what was rewarding for me, and what did I think of my year. That was one of my most passionate directives that I wanted to talk about and move the conversation forward. I believe that we, as NADA, have made a difference.
The conversation started, and with many manufacturers, we went into our survey meetings … and presented manufacturers with statistical data and some verbatim and some survey data. A few of the manufacturers stood up and took notice. I can tell you, some unnamed manufacturers changed some of their programs, tweaked some of their programs, because they realized, too, that at the end of the day, it not only puts auto dealers into a bad light, it also puts the brand in a bad light in some cases.
I think we're moving the ball. I will tell you the conversation needs to continue, and I believe NADA will continue forward with it. I surely will. It's their business but I think we've made a pretty good awareness of the issue of stair-steps.
What advice would you give the incoming chairman?
My advice to auto dealers and NADA is to continue to be diligent and be on the offense, not on the defense. We've been able to direct and guide our business of late in quite a different way than we have in the last eight years. We have a seat at the table and now's the time to make sure that we're out there talking about auto dealers and being the voice of car dealers nationwide.
Anything else?
One other thing: I am especially proud of NADA's humanitarian efforts in this past year. We had our NADA emergency relief fund distribute [more than $1 million] to natural disasters.
Wildfires in California, flooding in Texas, hurricanes in Florida — you name it. We had the kitchen sink thrown at us as car dealers. I had the privilege, an overwhelming event, to be in Houston, where we visited four or five car dealerships and made direct donations to dealership employees who were affected by this. These folks, some of them lost everything. Their belongings were out in the street.
For us, as an organization, and for us, as car dealers, to raise our hand and say, "I want to help" — it shows the goodness and willingness of the American automobile dealer. We want to be involved and we're going to help.
- Age: 53
- Dealerships: Raymond Chevrolet and Raymond Kia in Antioch, Ill.; Ray Chevrolet and Ray Chrysler-Dodge-Jeep-Ram in Fox Lake, Ill.
- Dealer since: 1990
- Quote: "We're not dinosaurs. What we were doing five years ago isn't what we're doing today. We have evolved, too. ... We evolve every day. We're fighters."
