Adapt & Adopt

By. Chairman Chris Poulos

Adapt and adopt – Classic tenants for auto dealers in a dynamic industry, and even truer today as we face significant new challenges. As I have said before auto dealers are a resilient bunch. We find our way through these things – supply disruptions, inflation, rising interest rates, a pandemic, you name it – we adapt and adopt.

Houston area year-over-year auto sales are up more than 30% through August, and I feel like supply is starting to loosen up a little bit. There now seems to be a little light at the end of the tunnel. However, I say that in a cautiously optimistic tone because it can change on a dime. It’s not just chips anymore. It’s supply chain shortages of any kind that can derail market improvements. We were very fortunate to have recently averted a nationwide rail strike that would have been devastating to the auto industry.

As we continue to recover, a major new challenge facing dealerships is a wave of electrification. This one is different because there are a lot of unknowns with EVs. I think every manufacturer is taking a different approach and, in the end, we are all going to have some requirements to be EV certified that will raise some costs and change operations.

I predict a decision deadline for auto dealers on how they participate in the future of this industry – and there are some divergent opinions on that. I believe even the manufacturers don’t truly know the adoption rates for EVs and they are making assumptions about their business case, availability and feasibility of their egregious goals. But, I don’t think any of them are getting rid of the ICE [Internal Combustion Engine] business and will actually go to all EVs. They may be saying with words “we’re not turning back,” but they are keeping the ICE opportunity moving just in case the adoption rates aren’t what they thought they would be.

The manufacturers are looking to increase their sales but I think the adoption rates are going to vary regionally. I think the West and Northeast will adopt them faster, where the Southern border states may be a little slower to react. So, it’s hard to see how this will play out but, in the end, the manufacturers will make it play out in their favor.

In keeping with an industry that is quickly going electric, HADA recently announced Evolve Houston (Evolve) as the presenting sponsor of the Houston Auto Show for the next three years. Evolve is a nonprofit organization that focuses on advancing electric mobility across the Greater Houston region.

Evolve has already been participating in the Auto Show since 2020 with an annual EV showroom that focused on EV education and showcasing electric cars from a variety of manufacturers. With this sponsorship, the event will now feature a larger EV showroom and a robust, all-electric ride and drive experience to highlight how fun, tech-advanced, and different, driving electric can be. The 40^th annual Houston Auto Show, held at NRG Center in conjunction with the Houston Boat Show, is January 25-29, 2023. Also, save the date for the return of Preview Night – Jan. 24^th!

To wrap up, I would like to point out another challenge to dealers: online sales. Manufacturers are absolutely wanting to expand their online presence and expand the ability to purchase a vehicle online. We have to be diligent as an auto dealer body to make sure the OEMs are not encroaching on the franchise system. We need to be sure they don’t marginalize us on what we do on a day-to-day basis. With the elections in November, I remind dealers that we really need to be focused on those candidates that are willing to support dealers, and you know who they are. Get out and vote!