Dealers cautious as Biden's term begins

Dealers are anticipating the Biden administration will affect their businesses in 2021, with a majority bracing for a negative impact, according to Automotive News' 2021 Dealer Outlook Survey of more than 180 dealership executives.

Some respondents said their primary concerns under President Joe Biden include the possibility of higher taxes and fuel prices, uncertain fiscal policy, tougher financial regulation and more oversight from federal agencies.

Others, such as Michelle Primm of Cascade Auto Group, are taking a more neutral stance as they wait and see how the new president's first year unfolds.

"In terms of the new administration and the new Congress, we are mostly focused on the exact same thing we always are, which is working to make sure our officials understand our business model and understand how important auto retailing is to thousands of local communities," said Primm, managing partner of the group's Audi-Mazda-Subaru dealership in Cuyahoga Falls, Ohio.

Biden, a Democrat, has touted a $2 trillion "Build Back Better" agenda, which includes modernizing infrastructure and shaping future transportation, energy and climate policy. The plan calls for building hundreds of thousands of electric vehicle charging stations nationwide, swapping the government's fleet of roughly 645,000 vehicles with electric models and other measures to ultimately create a million new jobs in the auto industry.

Tax policy also is expected to change, including an increase in corporate taxes and an imposition of "commonsense tax reforms" on America's wealthiest.

Meanwhile, regulation through the Consumer Financial Protection Bureau could be strengthened, likely providing more transparency to consumers. Biden's pick to head the bureau — Federal Trade Commission member Rohit Chopra — has been an advocate of regulation by enforcement and an outspoken critic of some dealership practices related to customer financing.

"Our philosophy has always been you give us the rules to play by, and we'll play by them, and we'll make the best of it," said Richard Kay, dealer principal of Richard Kay Superstore, which sells Chevrolet, Cadillac, Buick and GMC vehicles in Anderson, S.C.

"I don't have time to really sit back and worry about what may or may not happen," he told Automotive News. "We'll just play with the cards that we're dealt and move on from there."

Regulatory issues such as Biden's tougher approach to fuel-efficiency standards won't directly affect Kay's business in 2021, he said. But coronavirus-related actions that result in temporary closures or plant shutdowns would have a "huge impact," as vehicle inventory levels remain constrained.

Kay said his dealership has about 25 percent of the inventory it normally would have this time of year. "That's going to be our biggest obstacle," he said.

While respondents had mixed views on whether the industry needs more stimulus from the federal government to aid recovery during the pandemic, most said they'd like to see more direct relief payments to consumers — a strategy that has benefited vehicle sales.

"It seems as soon as customers get their stimulus money, the dealership traffic picks up," one survey respondent said.

Martin Roy, chairman of Chevrolet dealership Roy Motors in Opelousas, La., said although he's concerned by some of the president's recent actions — such as revoking a permit for the under-construction Keystone XL pipeline — he thinks more federal support is needed to cushion the pandemic's effect.

"I hate to see the government so involved with everyday life … but right now, everything seems to be so negative," he said. "If the government can help individuals, especially those that are unemployed, it's going to put a little pause to the impact."

The president's plan to build out charging infrastructure could speed the adoption of EVs in the U.S. Biden also has said he supports consumer incentives for EV purchases, but several dealers said they'd prefer to let the market dictate the pace.

"It's a great idea to improve on infrastructure for electric charging … because obviously it's going to become a larger part of our industry," Kay said. "But let's face it: If we doubled the number of electric vehicles in the market next month, it would still be a minuscule percentage of the total."

Jason Motts, president of Abeloff Auto Group, which sells Buick, GMC, Kia and Nissan vehicles in northeast Pennsylvania, said one concern with the president's plan is whether there will be "an unnatural level of support" for EVs and alternative-fuel vehicles.

"If there is a renewed focus and support behind tax credits, et cetera, for EVs, I believe it will distort their true demand in the market," Motts said.

Survey respondents also had varying opinions on whether the National Automobile Dealers Association should end its political contributions to Republican lawmakers who objected to certifying Biden's victory on Jan. 6 — the day a violent mob stormed the U.S. Capitol.

NADA had donated more than $900,000 to some of those Republicans, according to data from the Center for Responsive Politics.

Several dealership executives said the association's job is to consider the best interests of its members — that includes backing those in Congress who support issues that are important to franchised dealers and to improving the business climate.

"We need to support the members of Congress that will support us," Roy, of Roy Motors, said. "We need to support them as much as we possibly can, and we need to win others that are not supporting us."