Car-dealer leader: Don't believe Auto 2.0 hype
The chairman of the National Automobile Dealers Association wants to pump the brakes on the Auto 2.0 hype.
Wes Lutz, who also owns Extreme Chrysler Dodge Jeep Ram in Jackson, warned the automotive industry and the press against sweeping promises made by automakers and companies about driverless cars, electric vehicles and ride-hailing apps at an Automotive Press Association event in Detroit Tuesday.
"We are not only living in exciting times, but also in an era that rewards bold
predictions more than gritty reality, especially when reality isn’t that exciting," Lutz said. "I don’t think it’s a bridge too far to expect reporting on our industry to always be rooted in the reality and facts as we know them today — not the spin that gets Wall Street all jazzed up."
Lutz set out to debunk three main narratives: that ride-hailing services will replace personal-vehicle ownership; that autonomous vehicles will make roads safer; and that dealers are holding up the move to electric vehicles.
"I want to sell anything my customers want to buy. Period," Lutz said of supposed dealer push-back on EV sales. "In fact, there is nothing I would want to do more than sell every American a new electric vehicle."
Aside from selling new vehicles, Lutz said it's still in a dealer's financial interest to sell EVs, challenging the accusation that auto dealers won't make money on servicing them.
He said most of his service revenue comes from tires, brakes, suspensions, alignments and electrical systems.
"And the last time I checked, you know what EVs have? Tires, brakes, suspensions, alignments and electrical systems," Lutz said.
When it comes to ride-hailing, he says the numbers don't add up.
The average cost of these services in the 20 largest metro areas in the U.S. is more than twice as much as owning a personal vehicle, according to a recent study released by the AAA Foundation for Traffic safety.
The study found that if a person wanted to rely on Uber or Lyft instead of owning a car, the average cost in 20 U.S. urban areas would be $20,118 annually. That's compared to the $10,049 annual cost to own and operate a new vehicle.
"This study shows exactly the opposite of what we are being force-fed. It shows that ride-hailing is substantially more expensive than personal ownership, even of a new car," Lutz said in his remarks. "If Uber and Lyft are dramatically more expensive than personal vehicle ownership, then people aren’t going to stop buying cars, and the auto industry isn’t doomed."
The NADA chairman also sought to bring perspective to the potential safety impact of autonomous vehicles, pointing to a statistic that automakers often use to back up the claim that computers will be better drivers than humans.
Of the 37,000 people who died on U.S. roads last year, 94 percent of those fatal crashes were caused by humans. However, Americans drove more than 3.2 trillion miles in 2017, meaning there were roughly 90 million miles driven for every roadway fatality.
Lutz's comments come at a moment of upheaval for the industry and for new car dealers. Car sales began to hit a plateau last year after seven years of year-over-year growth, this year a mix of factors from rising interest rates to tariffs imposed by the Trump administration on steel and aluminum threaten to drive car prices higher.
Meantime, interest rates are already on the rise, up to 5.8 percent in September according to Edmunds. And average transaction prices have elevated 2 percent to $35,742, according to Cox Automotive.
"Consumers are stretched at this point. Budgets are tight," Lutz told reporters. "Leasing alleviated that for a while, but those residual values and the interest rates are affecting the leases, too, so it’s a huge concern for us."