NADA chair: ‘The biggest obstacle is regression'

Rhett Ricart, chairman of the National Automobile Dealers Association, has a message for dealers and automakers as they prepare their business models for a post-pandemic world: Listen to your customers.

While dealers have been on a "roller coaster of unpredictability" this year — propelled by closed showrooms, government-ordered lockdowns, factory shutdowns and tight inventory — Ricart said the crisis also has pushed the digital world into "hyperdrive," accelerating consumer and dealer adoption of online vehicle sales.

"Digital retailing won't work for every customer and every transaction, but it should be in a dealer's wheelhouse for every potential customer interaction," he said last week during an Automotive Press Association webinar.

Ricart cited a July NADA dealer survey that found 82 percent said the digital process is here to stay. They also said home test drives and home delivery of new vehicles as well as pickup and delivery for service appointments will remain part of their business practices post-COVID.

Ricart cautioned, however, that some automakers were "showing signs of regression to old, bad behaviors" that could curtail the progress dealers have made. As the digital retailing experience evolves, automakers will need to rethink their "mausoleum mandates," he said, referring to the "costly and ever-changing" image programs that define how dealer facilities should look.

"The biggest obstacles to success in 2021 aren't corruption, obstruction and destruction," he said. "The biggest obstacle is regression."

Ricart, 64, is CEO of Ricart Automotive Group in Columbus, Ohio, which sells Ford, Genesis, Hyundai, Kia, Mazda, Mitsubishi and Nissan vehicles. He spoke with Staff Reporter Audrey LaForest about the ongoing challenges dealers face. Here are edited excerpts.

Q: In a post-pandemic world, what will be the No. 1 challenge for franchised dealers?

A: Customers are telling us how they want to buy cars. All you've got to do is listen. If we just do what they ask, it makes it so much easier. That will be the challenge next year.

Manufacturers think they're going to tell customers what to do. They think they're going to present a product and tell customers how they're going to buy it, then they're going to go ahead and they're going to tell dealers how to take care of customers. Don't do that.

The biggest challenge for us is a regression. We've got such a great thing going right now, a great thing going for customers. Just don't regress. We know the formula, and it's right in front of us. Let's just keep using it.

COVID-19 cases are rising again. Are dealers worried about showrooms being shut down?

The importance of transportation is so critical. The other major thing, which people forget about, is in the state of Ohio, the amount of tax revenue generated by new-car dealerships is so large that we have our own line item on the budget. That's how much money we bring in — billions of dollars in sales tax. So when they lock down car dealerships, the state is locking down their revenue source, and that's probably not going to happen. So you've got to be careful when you do these lockdowns.

Lockdowns on restaurants are one thing because you can order out. But automobile dealerships, it's a double whammy for our government and for our people's safety, so I don't think that's going to happen. And if it does happen, it's going to be for a very short period of time.

Are dealers feeling more confident now that many have put more energy and effort into digital retailing services?

Yes. We've also learned how to keep our facilities safer. Dealerships have been extraordinarily sensitive to this and have protocols way beyond what anybody else could even imagine.

Dealers are concerned about it, but I don't know whether it's keeping them up at night that much. I think they're concerned, and they're doing everything possible and then some for the safety of the people.

And then, what else can you do? If the governor decides to close it down, he's going to close it down. But as I said before, it's a double-edged sword. Don't cut your nose off to spite your face.

What about dealership image programs vs. the growing trend of digital retailing?

The manufacturers have a franchise, and they have the right to say, "Hey, do you want to sell my vehicle? This is what you need to do to have it, OK?" They have that right. It's their product. But what's happened is that they're always historically slow to react to things, and they've got to understand that this COVID has put this digital world on hyperspeed. And they're just kind of saying, "Well, we're going to look and see because we still like our big showroom on the freeway that everybody can see."

We're telling them people don't care how big your showroom is, and how big your showroom is is not a reflection on the quality of your car. It's not a reflection on the quality of the dealer. It's not a reflection on anything other than a big showroom. Customers are going to be more price-conscious because we're going to be more transparent. Dealers have to be able to right-size their business model to be able to meet what our customers are asking for. That's all. That's all we're asking manufacturers.