Noise Vibration and Harshness

Seeing the World Through the Eyes of Car Dealers

Dealer’s choice

The Shimmering Sage of the Showroom, this magazine’s old friend, Sheldon Sandler — a former Wall Street CPA turned broker of huge car dealership sales — recently invited us to a fancy golf club in affluent Princeton, New Jersey, where his company, Bel Air Partners, hosted a conference on the future of the dealership. Attendees were prosperous car dealers, respected industry analysts, and even the president of a major auto company’s finance arm. So yeah, I went.

As someone who does most of his thinking about cars and the industries that make and support them from behind the wheel of a car, a day spent with Sandler and friends was going to be an education of sorts for me. Car dealers live where the rubber meets the bank account and the consumer credit dyno cum merry-go-round; they ought to know exactly what’s going on with the car market.

And they do, barring the fact that except for the certainty of more SUVs, no one really knows where it’s headed or when it will get there — especially given today’s mad dash to autonomous cars. Add to this the profound sense of moment in the air, seeing as the presidential election was only a few weeks past and the Trumpazoic Era was just beginning. The perception of radical change, of history being imminently made, hung over the room. The crowd (older, rich, white, overwhelmingly male, and fundamentally Republican) was a little bit excited, some more boisterously so than others.

Because attendees signed up for a symposium and not a media opportunity, I won’t identify anyone by name. This is not to imply there was anything shameful going on, just some folks thinking out loud about how they were going to be making more money in the years to come.

I did detect fear about the coming American order, but more typical was self-congratulatory joy in the belief that money is about to rain down.1

The first speaker walked attendees through the driverless future. He made the case for autonomous cars; they’re safer, greener, less congestion, and they enhance car-sharing possibilities. He spoke of their inevitability. Lost sales due to increased car-sharing and the potential death of irrational car lust — a great sales driver — when actual driving is taken out of the equation? He appeared unconcerned. Shorter life cycles for vehicles — shared cars will be driven around the clock with annual mileage some five or more times higher than today’s average of 12,000 to 15,000 — should keep sales buoyant, he said.

But how can he really know, I wonder? What’s more, I can personally think of a lot of reasons to go slow on autonomous cars. Do we really want to invest all of our capital, human and otherwise, into this particular technological arms race when there are so many more pressing problems facing the nation and the world? Have the pros and cons really been assessed? Just because we can, must we?

The answer, of course, is yes. The auto, tech, telecom, and e-commerce industries support autonomy, and the federal government is gleefully along for the uncharted, driverless ride. Like it or not, you might as well get used to it. Sit back, relax, and leave the driving to them.

Considerable discussion concerned the value of dealerships past, present, and future. Should they sell now, when profits are high and money is still out there buying businesses like theirs? Should they milk it for a while longer and wait until sales slow? Or should they wait until such time as the whole time-honored sales and distribution model of dealerships is torpedoed by new technology and the bottom starts falling out?

You’d think the answer would be obvious — sell now — but it’s not. Especially if you’re only looking a few years out, as many of these guys are, owing to their advanced ages. They like selling cars. And because they’re more concerned about what they’ll make over the next three years than what happens 10 years from now. They worry about estate taxes, which could hinder their ability to maintain control of their holdings should their offspring be forced to pay estate tax on the dealerships they’ll be getting bequeathed. On this score, Trump gives them hope.

Take for example the slightly younger, investment sharpshooter sort of guy who had bought a lot of high-end dealerships that were going under in a wealthy summer community and spruced them up bigly. Initially, he explained, he bought them because the underlying real estate seemed so valuable. Then he realized he could make real money with them where his less deep-pocketed predecessors couldn’t. The way he figures it, even if it all goes to hell in five years, he’ll have made a nice profit and still have the real estate, which with any luck will be even more valuable.

The promise of Trump also gave a few attendees the thought to speak out about the evils of regulation and the urgent need to roll back all manner of them, while keeping entities like the Consumer Financial Protection Bureau out of their hair. A dubious sidebar discussion about the shortcomings of electric cars (no one outside of the oil industry has suggested that they are a net energy negative), plus silly talk about their subsidies and global warming not being real were hardly unexpected. Nor was the strong criticism of federal rules and automaker policies designed to help members of minority communities become dealer principals. “I’m all for increasing minority dealership ownership,” one dealer said. He was just against forcing car companies to prop up insufficiently experienced and undercapitalized individuals when there were so many qualified (read: white) dealers like the investment sharpshooter out there.

So, in the end, this day in Princeton felt pretty much like what I imagine it’s like to be at any gathering of Trump-leaning, high-income individuals: some crankiness about injustices past but lots of hope. I did detect notes of cringing fear about the coming American order in a few remarks, but more typical was self-congratulatory joy, owing to the belief that money is about to rain down. But will it be a light shower or a deluge? That’s what they want to know. One dealer raised his hand to observe that if indeed the maximum tax rate fell to 15 percent, as he’d heard, their dealerships ought to necessarily be worth more money, as there were more profits to be made and kept. Or will there be? Like the rest of us who have been promised lower taxes, car dealers are going to find out.