Working With Trump Administration on New NADA Chairman's Agenda

Mark Scarpelli, a second-generation dealer and former General Motors field representative, becomes the 2017 chairman of the National Automobile Dealers Assn. this weekend at the trade group’s annual convention in New Orleans.

Scarpelli is president of Raymond Chevrolet and Raymond Kia in Antioch, IL, near Chicago and co-owner (with brother Raymond Scarpelli, Jr.) of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, IL.

Under four rooftops, the family business employs more than 300 people, sold some 10,900 new and used units (including 3,896 fleet) in 2016, and posted nearly $328 million in total revenue. Scarpelli’s father, Raymond Sr., who first opened a Chevrolet-Oldsmobile dealership in Antioch in 1964, is chairman of the company.

In a space increasingly marked by dealer consolidations and mega groups, Scarpelli is proud to be a relatively small dealer.

“Not to sound corny by any means, but we are the epitome of the small-town dealer,” Scarpelli says. “When my father started, a big month would be 50 to 60 cars, all in. When my brother and I started to work at Antioch, we’d be at 80 to 100. Now we sell 650 to 700 a month at all the locations. In our world, we know what small is; we’ve come from it.”

After graduating from Northwood University’s automotive program and before becoming a dealer, he worked as a GM district manager. Duties included visiting dealers and allocating cars to them.

Scarpelli says the driving factor behind his business is personal involvement. “A member of the family is always at one of the stores,” he says. “Our stores have our business flavor, our business ethics, and we are involved in every facet of the business. We’re here for our customers; they are No.1 in our mind.”

Scarpelli’s Chevrolet franchises have won the “GM Mark of Excellence Award” each year since 2011. He served as chairman of the Chicago Auto Trade Assn. in 2008, where he personally demonstrated the importance of grassroots dealer advocacy.

That year, former Illinois Governor Rod Blagojevich proposed a gross receipts tax where “goods-producing” companies, including manufacturers, wholesalers and retailers would pay a 0.85% tax rate on their total revenue. 

“The GRT was a stealthy tax,” says Dave Sloan, CATA president. “It’s passed along as a good or service is passed from one business to another, from the steel mill to the manufacturer to the dealer. So at the end of the line, a dealer just has a more expensive product to sell to the consumer with very little way of recovering it other than a high price.”

After several trips to the state capital in Springfield to meet with legislators, Scarpelli and his CATA colleagues, along with the Illinois Chamber of Commerce and the Illinois Retail Merchants Assn., were able to make their case and the measure was defeated.

“We lobbied effectively with state legislators and we effectively killed it,” Scarpelli says. “We were very proud of that. It was not good for the consumer, and it would have decimated our business. We work on less than a 2.2% margin, so we don’t have that kind of room.”

WardsAuto spoke to Scarpelli about his plans for the NADA in 2017. The following is an edited transcript.

WardsAuto: NADA celebrates its 100^th anniversary this year. What are some of the highlights and where do you see the organization going?

Scarpelli: We were and still are the voice of the American car dealer. For 100 years we have gained strength and stood up for what is right for our industry and for what made sense for consumers. No doubt, we have had challenges. Going forward, we have an opportunity with the new (Trump) administration. They’ve been active and public about limiting regulations. So we’re hopeful; only time will tell.

Over the years we’ve talked quite a lot about federal agencies that have wanted to regulate and get involved with our business because they can do it better, apparently. We’re on the ground and in the field, and we know what works. We talk (with automakers) about incentive programs and facility requirements. We listen to dealers through dealer councils.

We’ve got a lot on our plate and there’s a lot coming – online purchasing, data aggregation, autonomous cars.

WardsAuto: Do you think Donald Trump the businessman understands dealers’ needs and concerns?

Scarpelli: He’s obviously a businessperson and knows business well. Whether it be vehicle distribution, manufacturing, selling or the regulations that we deal with every day on the dealership level, it’s going to take some interaction and (education) with the administration from NADA as well as with dealers through the grassroots network that we have up on the Hill.

We’re hopeful that things can change, based on what they have said publicly. The regulations that are laid upon auto dealers today cost dealers on an annual basis north of $100,000. It’s a regulatory burden that we deal with yearly, and that’s on the federal level, let alone from states.  

WardsAuto: Has NADA made any inroads with the Trump team yet?

Scarpelli: Absolutely. NADA was involved before and after the election with the Trump transition team. We’ve been conversing on different issues. We’re very hopeful. We know we’re going to have some wins and there may be a couple steps backwards.

But we feel we have a businessperson in the Oval Office and we’re hopeful we’ll get some clarity and common sense going forward.  

WardsAuto: What do you hope, Elaine Chao, Trump’s pick as Transportation Secretary, will accomplish?

Scarpelli:.She has been a friend and advocate for clarity in our industry. She “gets” business, and our business in particular. She supports access to affordable personal mobility for the American economy, which is exactly what we at NADA have urged in Washington over the years.

We’re going to try to steer clear of policies that add to the cost of buying and financing vehicles. We feel she will play a critical role in determining whether automobile retailing stays affordable.

WardsAuto: What are NADA’s legislative priorities in 2017?

Scarpelli: We’re going to hit this fast and hard. We’re talking about the Consumer Financial Protection Bureau.

There’s definitely an opportunity to have some clarity and some limitations put on the agency. We want to make sure financing is affordable for customers and that they have 100% access to that.

With CAFE regulations, we all want to make sure our environment is safe for the next generation. On the other hand, we want to make sure some of the mandates put forward don’t make new automobiles unaffordable for customers. Those items could add thousands of dollars to the price of a new automobile. In that case, you might push a consumer into a not-so-environmentally friendly used car.

We’re all very concerned about a border adjustment tax imposed on all imported goods. There are many parts in automobiles that are produced elsewhere. Not only do you have to worry about the car being produced somewhere else, but also the bumper cover or the instrument cluster. That could fall into a border adjustment tax situation that we’ll definitely be talking about.  

WardsAuto: Talk about the highlights and lowlights of your recent Dealer Attitude Surveys.

Scarpelli: We hold 46 OEM meetings on a yearly basis, reaching across most manufacturers, and we have many NADA directors who serve on dealer councils. We have an opportunity to sit with the manufacturers, talk about these results and help guide their business, if they’re willing.

Many of them are very interested to see what’s going on in the field and how dealers are responding to facility or incentive programs, or how they are handling recalls. Seven hundred and fifty OEM executives attended these meetings.

Incentive programs are the No.1 point of pain, bar none. Many dealers feel they are way too complicated and there are many hoops a customer or dealer needs to jump through.

WardsAuto: Are you making any progress in getting automakers to understand what’s best for dealers?

Scarpelli: Bottom line, it’s the manufacturers’ business and whatever they feel is the right direction to move their business, it’s their prerogative. We have been very effective and engaged with OEMs through the years and have had some wins.