It’s never a dull moment in the auto retail industry and so far this summer, there have been a lot of new developments to the stories we’ve been watching closely. To get an expert pulse on these events, we turn to Cody Lusk, President and CEO of AIADA. Today, we’ll discuss the popular, ongoing industry topics that are currently making headlines like tariffs, trade, and Tesla. Take a look.
[Previously aired 7/9/19]
VIDEO TRANSCRIPT:
Jim Fitzpatrick: Hi everyone, I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News. Today I’m very excited to have on with us Mr. Cody Lusk. You know him as the President and CEO of the AIADA. You’ve seen him on CBT News a number of times.
Jim Fitzpatrick: Cody, welcome back to CBT.
Cody Lusk: Great to be here, Jim, thank you.
Jim Fitzpatrick: Great. So let’s kind of dive right in here. Right now, a lot of dealers’ heads are spinning out there, going “Are there tariffs? Are there no tariffs? Is he putting them on? Is he taking them off? What is the deal? Kind of give us an update on where the tariffs stand right now with regard to China and Mexico and other countries, for that matter.
Cody Lusk: Well, I mean, we have good reason because it seems like every other day there’s kind of a new tariff threat that comes out. Most recently, we were upset with what was going on at the border and we were going to put tariffs on Mexican goods including, coming from Mexico including autos. So that sort of sent everybody into a brief tailspin. That’s in addition to the 232 investigation, which is ongoing, which right now the clock is ticking until a November timeline, which something may happen, may not.
Cody Lusk: You’ve got the ongoing negotiations with Japan and the EU, which are kind of just sitting there. The President’s in Japan this weekend, is going to be meeting with President Xi of China tomorrow. So, hopefully, they’ll get some of that resolved. You’ve got the USMCA up for ratification hopefully soon. You’ve got all kinds of stuff going on, and it changes by the tweet.
Jim Fitzpatrick: By the tweet, that’s exactly right. If you wanted your dealers and your constituents to focus on one or two things that’s a top priority with regard to this, what would that be?
Cody Lusk: Well, the over-arching threat is still the 232 auto investigation where, believe it or not, the government, the commerce department decided that dealers, their products, the parts are somehow threats to national security, therefore, deserving of some sort of an import tariff. That’s the one that we still are all fighting against. The industry’s united against that. The President decided he was going to delay any implementation of any tariffs, he said, for 190 days; this was a month or so ago. That keeps the clock ticking until November, but he could change his mind at any time. He could impose tariffs tomorrow. He could kick the can down the road additionally. He could start a whole new investigation.
Cody Lusk: The cloud of uncertainty is really hanging over the heads of the auto sector, and we met several weeks ago with a lot of different manufacturers. And even though the tariffs haven’t been imposed, just the threat is creating this uncertainty in this business climate and the economy that’s not really going as great as it once was, that’s causing some real concern amongst the automakers.
Jim Fitzpatrick: Yeah. We spoke to one dealer just recently, and he said that he’s not worried about the tariffs because he thinks because it’s an election year that Trump just doesn’t need that extra added aggravation, that he called it, hovering over him with getting consumers upset over the increase. Do you see that to be a reality?
Cody Lusk: Well, I think there’s no question that he has to have a strong economy to win reelection. He’s based his whole presidency essentially on how well he can run, manage our economy, and if he does something that would really… If things are slowing up anyway, again, it’s cyclical. You can’t keep growing at this rate forever. It may slow up a little bit, but if he does something that would drastically impact in a negative way, or it would be perceived that would be impact in a negative way, I could see him holding off from doing that. So, I think that’s what we have a sort of a what we’re hopeful that it works in our favor as that this could be so detrimental to the economy there’s no way he can do it.
Jim Fitzpatrick: Sure. What do you say to the dealers that are listening to us that say “Cody, we’re 17 million SAAR. The economy is in fact going strong from my perspective as a dealer, seeing people on the showrooms and such. Our service centers are loaded up, so things are going good. This is the good stuff. Let the President do what he needs to do.”
Cody Lusk: Well, we want to keep that going, and we think that things are going well. We want our dealers to continue to do well. We want to keep this economy going, but what analysis have shown us is if you put these tariffs on, it’s going to dramatically negatively impact our economy in a huge way. Honestly, Jim Lentz of Toyota and others have claimed “This will steer us right into the next recession.”
Cody Lusk: So, we’re trying to prevent that. We like what the President has done from an economic standpoint on certain things, but we just don’t like the idea of the tariffs. We think the tariffs will be detrimental. A lot of people say he’s just, “Cody, stand down. He’s just using this as leverage,” and there’s some truth to that, to be honest, but we just don’t want to get to the end of the day where it looks like we might not be getting what we want and we do something that’s going to hurt our own economy. We want a negotiated solution to whatever problems we think that there are. Yeah.
Jim Fitzpatrick: Let’s switch gears a little bit. Tesla recently won their court case in the state of Virginia against the Virginia Auto Dealers Association that they were trying to hold back and say “Hey, unless you’re going to sell your products to a franchise dealer network, it’s a no-go.” But it seems they lost that cause and now they’ll be Teslas being sold in Virginia by Tesla corporate. What’s your take on that and any concerns dealers should have?
Cody Lusk: Well, obviously, we support our state associations. They do great work, and I haven’t talked to Don Hall or the great people at the ADA about this, but we’ll be meeting in a couple of weeks. We have our state convention where all the state and metro association heads come in and I’m sure this will be a talking point. There’s nothing much you can do if a judge rules that he’s not going to uphold the state law. So where do you do from there? So, like I said, I defer to Don and the other state guys to do with the best of their abilities when it comes to those issues.
Jim Fitzpatrick: Talk to us about the current state of EVs and whether or not OEM investments are matching the consumer demands out there.
Cody Lusk: Well, I think that’s a tricky one because we’ve seen a lot of the OEMs really invest heavily and I think want to look like they’re trying to do what they can in that sector. You’ve seen more and more EVs come to market. Now, does the consumer purchasing match up to that? We’ll see what happens. In certain segments of the country, California and the D.C. area and others, that’s more popular. Where I’m from in West Texas, not so much, and so it’s going to be hard to see if demand ever catches up.
Cody Lusk: I mean, you’re still talking right now I think 0.6% of the market is EV sales. So, despite all the hype and with gas prices being where they are, at least, and for foreseeable future really, it’s hard to see consumers really changing over until you get all kinds of market segments, pickup trucks that… Who knows if somebody’s going to buy an electric pickup truck and what the price point may be. I mean, you’re talking really, really down the road, but it’s, I think everybody’s worried about what happens if they don’t or aren’t investing in that. They don’t want to get left behind if anything takes off.
Jim Fitzpatrick: That’s exactly right. I agree with you. Well, Cody Lusk, President and CEO of the AIADA, thank you very much for joining us on CBT News. It’s always a pleasure, and your information here to dealers is very enlightening. So I appreciate it, and hopefully we can have you back and talking more about these issues.
Cody Lusk: Yeah. Thanks, Jim, I appreciate it, appreciate all you guys do for the industry.
Jim Fitzpatrick: Thank you.
CBT Automotive Network, the number one most watched network in retail automotive. This has been a JBF Business Media Production.
