Car dealers wary of Joe Biden's direction on autos

Despite another year of record-high profitability, undeterred by new-vehicle inventory constraints and global supply chain woes, dealers are hesitant to praise the Biden administration, including its plan to boost U.S. sales of electric vehicles.

In fact, a majority of dealers say the transition to the current White House leadership negatively affected their businesses in 2021, according to Automotive News' 2022 Dealer Outlook Survey of 196 dealers and dealership managers.

Respondents cited soaring inflation, high gasoline prices, government regulation and a rush to EVs ahead of market demand as main drivers of their discontent during President Joe Biden's first year in office.

As 2022 progresses, Biden is faced with multiple crises, from Russia's deadly invasion of Ukraine to skyrocketing prices on consumer goods and lingering effects of the COVID-19 pandemic, including supply chain bottlenecks.

"If it hadn't been for the chip shortage, I think the Biden administration would have already put the auto industry into a recession," one survey respondent wrote.

"I believe he has had a negative effect, and it will continue to be a 'wait and see' with many tax issues looming over us," another said.

A majority of respondents also said they don't support Biden's goal for half of all new vehicles sold in the U.S. in 2030 to be zero-emission, which includes battery-electrics, plug-in hybrids and fuel cells.

Major automakers including the Detroit 3, Toyota Motor North America and Volkswagen Group of America announced their support of that goal, but some dealership executives are doubtful.

One respondent said the 50 percent goal is too aggressive and, instead, expects the market will only be at 20 percent by 2030. Others said the goal isn't feasible and to just let automakers decide what to produce and consumers decide what to buy.

"I can appreciate wanting to go green and do things like that but, in my opinion, they're almost trying to force the electrification process," Paul Tracy, owner of Auto Wholesale, a used-car dealership in Wilmington, N.C., told Automotive News.

"I think the biggest problem is they're trying to put the cart before the horse," he said. "The infrastructure is not there, and there's no system of how people with electric vehicles are going to help take care of the roads."

Lee Wilson, COO of Timbrook Automotive, which sells Chevrolet, Ford, Honda, Nissan and other brands throughout Maryland, Pennsylvania, West Virginia and Virginia, said Biden is disrupting the industry.

"An entire industry is being turned upside down in a short period of time. It's extremely hard for us to adapt to something that new very quickly and be profitable," said Wilson, citing major expenses such as acquiring new tools and equipment for EVs as well as revamping stores and installing EV chargers.

Wilson said the federal government should provide infrastructure for EVs, while automakers should help dealers attract and retain skilled labor.

"Training our people is a huge issue for us because it's hard for us to get employees, and then we have to get employees that are willing to work on these EVs," he explained.

Kjell Bergh, CEO of Borton Volvo Cars in Golden Valley, Minn., and a retailer for EV-only brand Polestar, said the Biden administration has positively affected his business, citing the president's persistent focus on a green economy.

"We've been slow to adapt to electric vehicles, but once we get close to the tipping point, change happens extremely fast," said Bergh, noting Volvo's commitment to be fully electric by 2030.

"There has now been a very, very rapid increase in interest on electric vehicles, so we've most certainly benefited from that," he said. "I think that needs to be acknowledged, regardless of whatever political persuasion you might subscribe to."

Survey respondents were mixed on whether the federal government should provide incentives and other funding to accelerate the adoption of EVs and the deployment of charging infrastructure.

The bipartisan infrastructure law enacted last year unleashed $550 billion of new spending, including $7.5 billion to help build a national network of EV charging stations. But the future of Biden's Build Back Better legislation — the centerpiece of his economic and climate plans — remains cloudy.

The package includes a controversial EV tax credit with a bonus incentive for union-made electric vehicles. Most respondents said they don't support the provision, though some said they would if the union assembly requirement was removed.

Biden has continued to press Congress to take action on clean-energy legislation, including investments and tax credits that he said can lower the price of EVs.

"There is no doubt that incentives for the purchase of an EV and the infrastructure of charging stations will speed up the country moving to the EV world," said Doug Jones, president of Faulkner Subaru Harrisburg in Pennsylvania.

The initial cost of EVs and the installation of chargers is "substantial and will be a hindrance," Jones said, but "if the federal government can offset some of the expense, consumers and dealerships will get on board much quicker."

Tracy, of Auto Wholesale, said the current $7,500 EV tax credit for consumers is "a little too high" and would prefer to see a level of up to $5,000 instead.

As for a $4,500 bonus for union-made EVs, "I just think it's overkill," he said.