The tried-and-true methods of selling cars are trusted because they work well, as their continued high performance in the marketplace indicates.
The auto industry is undergoing significant, exciting changes. Over the next two years, manufacturers are expected to bring more than 30 new electric vehicle models to market with autonomous vehicles likely to follow soon after.
It’s not just on the product side that things are in flux. Innovations in retail have streamlined the complicated buying process, making changes to the financing, trade-ins, titling, registration, insurance and other parts of car and truck buying.
To the consumer, this is progress. To others, it’s an excuse to once again drag out the tired, old trope that the day of the local dealership is passed. That’s a bunch of snake oil. The truth is that the auto retail and the dealership model is remarkably resilient, growing in popularity among millennials and Gen Z.
A recent piece in the highly respected MarketWatch claimed direct sales through companies like Tesla and Carvana represent the future of auto retail. Assertions like these are merely intuitive, lacking real-world evidence and ignoring what those purchasing cars and trucks have experienced.
Carvana, which sells used cars, is in the crosshairs of federal and state government regulators over a variety of issues involving customers and the buying process. Search “Carvana complaints” on the internet and you’ll find an overwhelming number of unhappy customers nationwide. With its stock down more than 80% since August and its business model called into question, Wall Street is rethinking its support for this one-time market disruptor.
Ironically, Carvana is just the kind of middleman between seller and buyer the proponents of change decry. Tesla, which does not allow negotiation pricing, increased prices on its base model by 37% since it launched, a steep premium for a fixed price on a vehicle already too expensive for most working-class car buyers to consider. Meanwhile, Tesla customers often wait three weeks or longer for simple service and repairs, in part because there is no dealership competition in the Tesla network.
That might be okay for high-income Tesla owners who have alternatives when it comes to personal transportation but for consumers in the mass market, a three-week wait for service is a non-starter. To say Tesla’s sales model embodies the future of car buying is comical.
The traditional franchised dealership model works. Sale prices may be up because of microchip supply constraints that crimped supply and sales by two million vehicles since 2019, and reduced manufacturer incentives but they are nothing like Tesla’s premium.
On the service side, customers benefit when locally owned and operated dealerships compete. In the direct sales model, if the nearest Chevrolet franchise can’t fit you in today, you can almost certainly find another that can.
Don’t overlook the fact virtually all dealerships sell both online and in the showroom, and are increasingly embracing the one-price model. It creates massive efficiencies at the sales level. One large dealership group based in Minneapolis sells on a one-price model and is coming close to getting customers in and out of the dealership in less than 30 minutes. They believe they can bring it down to 15 or less.
The proof is in the data. Escalent, a Detroit-based research firm put together a massive study of Electric Vehicle “intenders” — customers who are interested in purchasing a new EV in the next two years. Escalent asked which sales model consumers prefer — the direct model or the franchised model.
Only 20% of the 30,000 respondents preferred the direct sales model employed by Tesla. Amazingly, the number was even less among millennials and generation Z, where 94% of respondents under 35 are satisfied with dealerships.
Local dealerships have changed dramatically in the last 30 years. Young and first-time car buyers know that firsthand. The ones who don’t are those still hung up on 40-year-old stereotypes, which scarcely exist anywhere anymore.
Changes that produce greater efficiencies, increase productivity, or add to the economies of scale are to be welcome. There are ways traditional franchisers can and have improved the way they do business. Just because something is new doesn’t make it better. Likewise, the tried-and-true methods of production and sale are trusted because they work well, as their performance in the marketplace indicates.
President Joe Biden wants half of all cars sold in the U.S. to be electric within 10 years. Without new mines, China will maintain grip on battery supply.
President Joe Biden announced plans Thursday to push auto sales to be 50 percent electric by 2030 with new regulations, as part of the administration’s effort to promote cleaner energy.
“There [is] a vision of the future that is now beginning to happen,” Biden said at the White House. “A future of the automobile industry that is electric. Battery electric, plug-in, hybrid electric, fuel cell electric, it’s electric and there’s no turning back.”
That future however, may also feature swelling American reliance on one of its greatest overseas adversaries: China.
Less than five percent of all new cars on the U.S. market were purely electric vehicles and less than four percent were plug-in hybrids as of June, according to the Energy Department’s Argonne National Laboratory. Not only will the government-manufactured shift to up that number by 12 times require massive state subsidies for a slow-growing industry, as Biden promised, but it will exacerbate American dependence on Chinese mineral production to make the car batteries needed.
According to the New York Times, China makes “70 to 80 percent of the world’s battery chemicals, battery anodes and battery cells,” and dominates the market for electric motor magnets.
“China controls the cards in the battery supply chain,” Vivas Kumar, the former Tesla manager of battery materials, told the paper in February.
Meanwhile, the Unites States lags behind when it comes to even mining its own minerals such as lithium and cobalt, let alone processing them at home. While both are more common components of electric cars, the Chinese also remain dominant in the extraction and refinement of the 17 rare earth minerals, some of which are in the batteries too.
“The Middle East has oil, and China has rare earth,” said former Chinese Communist Party Leader Deng Xiaoping in 1992, as Beijing ramped up production to play the long game — which is now bearing fruit. Since then, China has outpaced the United States as the world’s largest producer of rare minerals, raising production by 500 percent, according to the Wyoming Mining Association.
“The [electric vehicle] industry can’t exist without China, and there is no plan to displace China as the supplier of these minerals,” former Trump administration EPA transition team member and founder of “JunkScience” Steve Milloy told The Federalist, adding that Biden’s latest initiative orders more dependency on Chinese imports.
Milloy is skeptical the electric vehicle industry will even take off with a 50 percent share of the car market altogether. He argues their high price and inefficiency will lead consumers to embrace their use far more slowly than the 2030 timeline suggests, if not reject them entirely.
The Biden administration is not blind to the dominance of Chinese mining. At his electric vehicle announcement Thursday, the president acknowledged the United States was in competition with China and its stranglehold on the world’s battery supply.
“Right now, China’s leading the race,” Biden said. The electric car market has also grownfar more and far faster in China than in the U.S., according to the Pew Research Center.
“And here’s the deal,” the president continued, “our national labs in America, our universities, our automakers, led in the development of this technology. We lead in developing this technology, and there’s no reason why we can’t reclaim that leadership and lead again.”
Biden said nothing about mining however, as the administration fills with radical environmental leftists who aim to lock up natural resources on federal land. The dramatic increase in battery demand that would accompany making 50 percent of new cars electric is a big win for Beijing.
The United States could reclaim its mineral dominance if it tapped into its own vast riches, unreachable by the cascade of burdensome regulation standing in the way of development. The short 6-minute video from Kite & Key Media sums up the entire debacle below:
Even if the lower 48 are kept off limits, Alaskan minerals could be mined to erase American dependence on Chinese supply, with lawmakers in the Republican state welcoming development.
“Experts predict a nearly 500 percent increase in mineral demand created by the push to decarbonize the world. Alaska is the place to find a responsible way to meet this demand,” wrote Alaskan Republican Gov. Mike Dunleavy in the Wall Street Journal three months ago. “No major mining accident has occurred in Alaska, yet the U.S. continues to sources its minerals from the Congo, South Africa and China while Washington regulators deny permits to projects on state of Alaska lands designed for mining.”
China, meanwhile, has made no secret of its plans to exploit American dependence on its mineral operations. The Wall Street Journal reported on a 2019 Beijing-funded report on rare-earth policy, which wrote, “China will not rule out using rare earth exports as leverage to deal with” a U.S.-China trade war.
With other nations, China already has weaponized its supply-chain power. In 2010, the country blocked rare-earth mineral exports to Japan, a developed but resource-poor country which relied heavily on the Chinese products.
Federalist Senior Contributor Helen Raleigh, an author and expert on Chinese affairs, chronicled the Japanese response, in which the government sought to diversify its source of minerals and drive innovation to encourage entrepreneurs to find substitute material.
In an interview, Raleigh emphasized that, while China is the world’s supplier of rare-earth minerals, it is not home to the most reserves, and the United States could find alternative production with an open look inward at its own supply which is mined far more cleanly and safely.
“Chinese dominance is in production and processing, not the world’s largest deposits,” Raleigh said.
While the Biden administration began to take steps in April to secure domestic supply for rare-earth minerals, Raleigh said the plans so far lacked “teeth” because “they focus on short-term optics,” such as initiatives to make 50 percent of the U.S. auto fleet electric within 10 years.
“We shouldn’t be so short-sighted,” Raleigh said, considering the Chinese plotted their dominance in the mineral arena decades ago.
In May, Reuters reported Biden was looking to Brazil, Canada, and Australia as potential sources for rare-earth minerals, as opposed to expanding America’s own mines to tap into its own reserves with its own labor.
Milloy said the issue with that proposal, aside from generating jobs abroad which could be available at home, is that neither country is a known host to resources as vast as those in the United States.
“We can’t just demand that Australia, Canada, [and] Brazil produce these for us,” Milloy said.
By Peter Roff • MY Journal Courier
Last month, the Environmental Protection Agency proposed new regulations that could dramatically ramp up the use of ethanol, a corn-based bio-fuel that can be blended into gasoline. That news was music to the ears of Iowa corn farmers.
But the rest of the country isn’t so pleased. A recent poll finds that more than 80 percent of voters are concerned the new policy will raise prices at the pump. And more than two-thirds think the ethanol expansion will harm their engines.
Americans are right to be alarmed. Ethanol is an expensive, environmentally hazardous fuel. The EPA’s new policy is a flagrant attempt by the Trump administration to buy the support of farmers — at huge expense to American consumers.
The EPA’s plan would lift restrictions on gasoline containing 15 percent ethanol, a blend known as E15. At the moment, the sale of E15 is banned during the summer because the fuel generates more ozone than is permitted by the Clean Air Act.
But recently, President Trump instructed the Environmental Protection Agency to begin the process of legalizing year-round E15 sales.
The president found an E15 ally in Iowa senator Chuck Grassley, chairman of the powerful Senate Finance Committee.
In many cases, E15 is dangerous. Roughly three-quarters of the cars on the road today weren’t built to use E15, and could be seriously damaged if forced to run on the fuel.
E15 might even harm engines that have just rolled off the line. Many prominent automotive brands — including BMW, Mercedes, Mitsubishi, Mazda and Volvo — have model-year 2018 cars that aren’t equipped to handle the fuel. Some automakers have warned drivers that filling up with E15 could be grounds for voiding their vehicles’ warranties.
The fuel is also useless for motorcycles and boats, as well as lawnmowers and other outdoor equipment.
Pushing more E15 into the market will inevitably lead to costly engine damage for Americans who mistakenly assume that this government-mandated fuel is actually safe to use.
This isn’t the only way in which E15 is a bad deal for consumers. Since ethanol contains only a third of the energy of gasoline, motorists who fill up with E15 can expect to get far fewer miles to the gallon — forcing them to fill up more often.
Ethanol was developed to be a clean-burning alternative to other fossil fuels. But ironically, it actually poses a grave threat to the environment. Over a 30-year period, the net emissions from ethanol are 28 percent higher than emissions from gasoline, according to the Clean Air Task Force. One Princeton University researcher warns ethanol’s true emissions are even higher. He estimates bio-fuels emit twice as much carbon dioxide into the atmosphere as gasoline over three decades.
Ethanol proponents often argue the bio-fuel is necessary for America’s energy independence. But today, Americans already have an abundant supply of domestic, clean, low-cost fuel. Thanks to improved drilling techniques such as fracking, the country is producing historic levels of both oil and natural gas. Natural gas in particular burns far cleaner than coal, propane or gasoline. Major automakers are already designing vehicles to run on the fuel.
The president seems intent on forcing consumers to buy a costly, inefficient, environmentally damaging fuel unsuitable for most vehicles. It’s no wonder that the policy has raised a red flag with so many voters. Their concerns are more than justified. Americans deserve an energy policy that serves the country’s needs — and not the narrow interests of corn-growers.
Peter Roff is a senior fellow at Frontiers of Freedom. He wrote this for InsideSources.com.
One of Barack Obama’s proudest boasts was his claim he’d “saved” the American auto industry during the first year of his presidency. Maybe. He certainly did a lot, some of which might have actually been helpful, to keep the doors open at General Motors and to bridge the sale of Chrysler to Fiat, but it’s not clear he did much to help Ford or any of the foreign manufacturers who build so many vehicles here in the U.S.
What he and his cohort didn’t want to talk about, then or now, is all the policies they advocated that had helped put U.S.-owned manufacturers in the fix they found themselves in. This is particularly true in the environmental arena, where rules governing the corporate average fuel economy standards did so much to compel the production of cars people didn’t want.
Requiring the auto companies to build more cars that got more miles to the gallon may seem like a good idea. In fact, it may Continue reading
by Maggie Thurber • Daily Signal
NOT A BAN? Senate Bill 342 won’t be an outright ban on red light and speed cameras, but the effect of the provisions in the bill will, effectively, end their use.
Ohio Gov. John Kasich will sign a bill to limit how municipalities can use red light and speed cameras, said his spokesman, Rob Nichols.
“We don’t have the bill yet, so I don’t have a sense of timing,” he wrote in an email. “But the governor will sign it.” Continue reading
In science, the results of a properly conducted study or experiment can always be reproduced. Though many cite the Insurance Institute for Highway Safety (IIHS) studies on red light cameras as definitive, a new peer-reviewed journal article finds the conclusions did not hold up when subjected to re-analysis. In the latest issue of Health Behavior and Policy Review, University of South Florida (USF) Professors Barbara Langland-Orban, Etienne E. Pracht and John T. Large examine the 2011 IIHS report that claimed automated ticketing machines saved lives nationwide. Continue reading