NADA Updates on the FTC Cars Rule and More with Mike Stanton

Unknown: 0:02

you're listening to the asotu con sessions by Effectv, live from asotu con 2024

‍Kyle Mountsier: 0:09

All right. This is Kyle mountsier, and I am here on the asotu con podcast stage, last podcast of today. I don't know when this gets released, but last podcast of today, in collaboration with Effectv, and sitting across from me is Mike Stanton, President, CEO nada Mike, thanks so much for being with you. Thanks

Mike Stanton: 0:27

for having us. Kyle, yeah,

Kyle Mountsier: 0:28

this is great. And we get to have a good amount of conversations, and it's always filled with like, whoa. You hit me with a lot of information. So I'm excited about our conversation. The last time we talked, actually, I think, was, we were at the Washington the Washington Dealers Association Auto Show, and that was it was the day that the stay was made on, I think it's a stay, right? That's what we call it on the cars rule. Can you give us an update, like, have, has there been continued development, or is it really just like continuing to pursue the same conversation, you know, on Capitol Hill, with legislators? Yeah,

Mike Stanton: 1:09

stay as a technical term, really, for just a pause. So the FTC paused its own rule based on the actions that nada took with the Texas Automobile Dealers Association in challenging the FTCs. They're calling it the cars rule. It's better referred to as a vehicle shopping rule. And first I wanted to, and we were talking ahead of time dealers. So many dealers, the vast majority, 95 plus percent, are doing things the right way with customers, and they're getting better every day, evidenced by the, you know, the attendance you got here at your conference, they're going to learn and they're going to get better. They take care of their customers. So this rule is a massive overreach, and it paints the whole industry with a broad brush, and then the NADA and our dealer board just thinks it's completely unacceptable. You don't like to have to go out and challenge legally the FTC, but we've done just that, but our advice is for dealers to prepare for this. It's not the safeguards rule. It is the vehicle shopping rule, and we are ready to put out a guide in about two weeks to help dealers prepare. And there are vendors out there that are doing the same thing. So don't ignore this. We expect a final decision around late, probably late summer, early fall, so I would say hope for the best. But Hope's not a strategy. Prepare for the worst on this, because there's probably going to be some form of change in how we're going to have to do business going forward, and we want to make sure we're prepared for it. Because the thing is, with the rule, attempts to address all of this is already illegal, right? Yep, and what they've done is they put the whole industry in the same bucket. They changed the process for how we sell vehicles. And the kicker is it's$50,000 per plus it's 51 and change per infraction. So that could add up very, very quickly. It could decimate a dealership. So pay attention. Look for more guidance coming out from nada in the next couple weeks

Kyle Mountsier: 3:10

well. And the way I see it is because it's illegal already, and really what it does is enable, enable this massive finding. It's really a hunting license, right? Is what it is, what it enables. It says like, all right, pull, pull the trigger and go right is kind of the way that, you know, the people that with, with, with the heavy hammer, will come after it. And what, what it really shows me is that, as an industry, right? Yes, nada is obviously in the offices with these people lobbying for the correct read of the industry, but as an industry, we've probably done ourselves a disservice at being in our local politicians offices, being in our communities and really sharing what we actually do as an industry and how we're Caring for customers. As you're saying, 95% are operating completely legally. How do we, you know, in this next, like, let's call it four to five months. How do we can, like, work to rewrite that story quickly. Where we're at,

Mike Stanton: 4:15

well, you mentioned the words hunting license. I mean the hunters of the FTC, and they're not qualified to hunt they think they understand our business, and they don't. They haven't taken the time to go out and do the work. They base this rule on 100,000 complaints, and that sounds like a lot of complaints. That's the numerator. We've got 42 million transactions out there between franchise dealers, independent dealers, with service operations. That's where the FTC has oversight. You take 100,000 into 42 million, and you're talking about less than one quarter of 1% and they want to change the way we do business. And to your point, we need to let the legislators know exactly what we're doing. That's what nada does. We've got. We're challenging this rule from a legal perspective, but we're also supportive of an F. See, it's called the FTC redo act. Just go back to the drawing board and do it all over again. There's all kinds of procedural they broke, broke their own rules, pulling this together. So there's that. And we're also supporting appropriations rider that riders that would effectively defund the FTC from going ahead and and and hunting. To use your words, yeah, so

Kyle Mountsier: 5:20

there's a lot of work being done, but we got to

Mike Stanton: 5:22

tell the story, and you've so too. You all have done a great job helping to amplify that as well. So thank you. We'll continue

Kyle Mountsier: 5:28

to do it. I want to shift just a little bit, because if I didn't ask about EVs with the president of nada sitting on the stage of your remiss, right? It's a conversation that has its ebbs and flows right where we see great boosts in overall, EV purchase volumes, then retractions. We see consumers adopting and then pulling back from adoption. We see even OEMs leaning really far in mid last mid to late last year, and then pulling back this year. Where's the narrative right now? And why does it matter to both dealers and consumers?

Mike Stanton: 6:05

Well, you just said it, consumers are the most important we want to make, make our customers happy. We don't want to shove, shove things down their throats that they don't want. The government's trying to do that, and that doesn't make sense. You got to look back, though. You got to look back a couple years, about three, four years ago, the manufacturers, who they're the regulated entity, they build them, we sell them, right? They agreed that 40% by 2030, seemed reasonable, but that included hybrids, all hybrids, and they, the White House said, if you want to get the goodies that were involved in the inflation Reduction Act, we need you to commit to 50% they went along with that, I would say, begrudgingly. Went along with that. And then it was months later, the EPA comes out with a rule that says, throw the hybrids out of the picture. We want 67 fully battery electric by 2032 67% and that's when the wheels kind of came off for the manufacturers, and they started to challenge the rule. From an nada perspective, three years ago, dealers were being blamed by consumer groups and environmentalists for not wanting to sell EVs. You're not even stocking EVs. Well, Kyle, our manufacturers weren't even making EVs back then. Yeah. So nada went on a campaign. We are all in. We're making the investments. We're not against electrification. We got $6 billion worth of inventory sitting on our lots right now, right another 6 billion invested in infrastructure to repair our sales and service facilities, you know, to sell electric vehicles to customers. It's not against. It's not just right. We've been all in and then you hey, you're going too far, too fast with the 67% and now we're in the highly skeptical range. We don't believe based on the

Kyle Mountsier: 7:47

that was not to get us off the stage music. If you're listening on the pod, we apologize for the interruption. Mike. You were saying like we're not all, we're not against, we're in absolutely right timing listening to the customers for when they're ready for it, yeah, and making it sure the political landscape, the OEMs and the customers can meet. We're

Mike Stanton: 8:07

just we're taught. We talk to 1000s of consumers every day, and we see things in real time. We're highly skeptical that we can get to these numbers. So what's nada doing about it? You know, we're telling our story again on Capitol Hill. We're supporting congressional review acts that would challenge the rule, and we're supporting any type of rider that would defund the EPA from putting this into effect, because we just don't believe that we can get there. These are unrealistic objectives. Now we know that anything from a legislative perspective is that gets to Biden's desk, and we do think we'll get bipartisan support on some of these things are going to get vetoed, but let's, let's put, put him on, on the record, and then let's see what happens between now and, you know, the next election. And it's about the things we all know about, right? Yep, it's affordability, it's charging, you know, it's, it's a whole range anxiety, the infrastructure. I mean, you talk to a dealer, not one dealer I've talked to, and I've talked to a lot, has said that they think this is doable on this time frame. Yeah,

Kyle Mountsier: 9:06

I just think so well, and they're seeing it on the front lines, whether or not consumers are actually adopting it.

Mike Stanton: 9:10

Yeah, the early adopters, they're there. They're a different, different buyer than the mass market. It's just going to take more time. Yeah,

Kyle Mountsier: 9:17

absolutely, before we end, I want to make sure that we talk a little bit about the show, because depending on when this actually gets released, there'll be a lot more energy around the show, between booths, Booth opportunities for vendors getting open tickets and announcements happening. It may seem like a long time, but there's a big build up to the show. What are you excited about this year?

Mike Stanton: 9:38

Oh gosh, Las Vegas was so good. I mean, anybody that thought our industry would go virtual just doesn't know our industry, right? We are a people industry. We're here not just to hear from speakers, but to learn from each other and to check out what the vendors are offering. I mean, they're iterating every day. We couldn't do what we do without without the vendor community. So, I mean, Vegas was a record. Record on a number of different levels. We're very excited about New Orleans. I mean, your attendance is up considerably. We expect ours to continue to go on that record, record track. So we're very, very excited about it. The exhibit floor is always sold out. We have a waiting list of 50 to 100 companies every year. We want to keep it tight so that it's good for, you know, for for the vendors that make the investment, and for the dealers too. So we're just, yeah, we're super excited about,

Kyle Mountsier: 10:26

I heard a couple things about the opening welcome reception that I think are going to be a little bit nuts, so I'm excited about the show.

Mike Stanton: 10:32

Yeah, yeah. We're not ready to fully disclose that. We'll see, we'll see how it goes. That's

Kyle Mountsier: 10:36

awesome. Well, Mike, thank you so much for joining us, and congratulations on every all the work that you're doing. Thank you so much for just caring for the industry so well. Yeah, thank you. Kyle,

Unknown: 10:47

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