Business View Magazine June 2023

49 BUSINESS VIEW MAGAZINE VOLUME 10, ISSUE 6 MISSOURI AUTO DEALERS ASSOCIAT ION Instead, the challenges they face have more to do with vehicle affordability and direct-to-consumer (D2C) sales of electric vehicles (EVs), according to Smith. With the median household income being under $75,000 in Missouri and the average price for a new car normalizing at around $56,000, there’s a real concern that consumer spending won’t be directed toward auto retailing. “Used cars have gone up in price since the pandemic because of demand,” Smith reports. “Those are still priced about $10,000 higher than they were in 2019 in our state. Interest rate hikes, and the prime continuing to go up, are all huge concerns of ours. It’s going to impact the car-buying consumer’s decision on whether they want to make that purchase now or wait until the economy stabilizes two, maybe three years down the road. We’re mid-south Midwest, and we have a very conservative economy. When it comes to large, durable goods, a Missourian thinks of purchasing differently. Maybe they don’t have that knee-jerk reaction that some other parts of the country do. There’s a deliberate analysis that motivates these larger purchases.” On the EV side, the association has been steadfast in trying to prohibit D2C in an attempt to protect the franchise model against new entrants that sell without using independent dealers.” “Our franchise laws are very clear on who can and can’t sell,” Smith remarks. “We’ve had some well-documented battles with Tesla over the last decade, and we still have some concerns about their business model. It’s a unique provision that allows them to sell directly, and the other manufacturers don’t have it.” As the era of the pure internal combustion engine slowly but surely comes to a close, EVs have become the “bright, shiny object” du jour for car manufacturers. “They’ve invested billions of dollars in advertising these vehicles and they’re looking for alternative ways to sell them outside of the dealership 9, IS UE 12 model. Manufacturers will say, This is a different propulsion system, therefore it’s a different car. But I would argue that propulsion systems have been changing the automobile for the last 75 years. You had the big-block V8 engines in the 30s and 40s. Then you had the small-block V8s in the 60s and 70s. With the oil embargo in the 70s, we moved to V4s and smaller power plants. Then onto hybrids. Now you’ve got all-electric. At the end of the day, this propulsion system that’s changed over the last several decades has always been sold through a dealer. And we still think that’s the absolute best way that a manufacturer can sell their product—through a third party representative which, in our case, would be the auto dealers in the state of Missouri.” MADA has tracked solid, steady growth when