For more than two decades, Ted Smith has led the Florida Automobile Dealers Association (FADA), one of the largest organizations of its type in the nation, serving the interests of new, franchised automobile and truck dealers.
Florida Politics spoke with Smith about the FADA’s reach, changes in the auto-buying industry, supply chain issues, the emergence of electric vehicles, and what his group is prioritizing for the 2023 Legislative Session.
— Who do you represent and how big is the footprint of the industry in Florida?
The Florida Automobile Dealers Association represents more than 850 local, hometown new car dealers in Florida. Our industry has total sales and service revenues of $103 billion annually. This translates to $6.2 billion in state sales tax — accounting for 16% of Florida’s total sales tax collected, the single largest source in the state.
Florida’s new car dealers employ more than 80,000 individuals in Florida. These are viable high-wage positions earning an average of $84,903 annually.
Our members throughout Florida also make substantial real estate investments in their local communities and are known for their local, philanthropic contributions to charities.
— There has been a lot of news about supply chain shortages — especially with the chip shortage when you’re talking about car manufacturers — what are you seeing in Florida today?
We are seeing new car and truck inventories returning more every day. This translates into improvements in availability and helps spur the price competition that our dealers are historically known for. However, we are concerned that some automakers are withholding cars and not properly allocating them to our dealers. They appear to want to control pricing and delivery, which have always been functions provided by franchised dealers.
— There has been a lot of change in the car-buying industry in recent years, how have franchise dealers adapted to this changing climate?
Yes, we have seen quite an evolution with the push to discontinue internal combustion engines and the race to create new electric vehicles. Florida’s franchised dealers have adapted seamlessly to these new demands. We are excitedly selling the new EV inventory we are receiving. And this will increase as customers grow more confident in EVs. Our dealers and their employees are trained and ready. Additionally, we are partnering to install charging stations and have fully embraced digital sales and marketing.
Honestly, consumers have the best of both worlds now. Customers can still walk our lots, test drive our cars and talk face-to-face with our experts. But if you want to purchase your car online and have it delivered to your door without ever stepping foot onto the lot, our dealers have you covered.
— How else do auto dealers contribute to Florida?
Our new car dealers are trusted partners in their communities. Every year we invest millions of dollars into food pantries, schools, scholarships, parks, gardens, playgrounds and disaster relief. You can’t go to a local ballgame without finding a hometown dealership sponsoring a team. While we’re immensely proud of the economic impact our dealers have, we are just as proud of the way they support our local communities.
— What legislation can we expect to see come out of the 2023 Session regarding the auto dealer industry?
Among the auto dealers, there is real concern about how legacy manufacturers, those who depend on our dealer network to market their cars/trucks, are now trying to operate like the new electric vehicle companies, Tesla, Lucid and Rivian, by replicating their direct-to-consumer sales tactics.
These new EV companies function as both the manufacturer and dealer; and unlike some states, FADA has not tried to prevent their presence in the marketplace because they have never depended on a dealer network.
Instead, we believe that consumers benefit from our two-tiered franchise system that encourages competition among dealers. Franchised dealers offer every advantage of the direct sellers, such as at-home purchase and delivery, with all the advantages of local representation to make sure that customer needs are addressed in person.
Legacy manufacturers (a manufacturer that uses franchised dealers) are prohibited from owning a dealership directly and we just want to ensure that this prohibition applies to their subsidiaries and common entities, and to their potential entry as direct sellers online. This would threaten the historically competitive marketplace that franchise dealers have invested heavily in for the benefit of the consumer. While pricing has been higher following COVID and the supply chain challenges, with proper allocation of cars to our dealers the competition that we are known for will return.
Direct sellers without a dealer network are different because they must include in their pricing all of the marketing costs that our franchised dealers have absorbed for their manufacturers. Clarifying that Florida law prohibits legacy manufacturers from engaging in direct-to-consumer sales will protect the competitive nature of Florida’s retail automotive market.