NADA President Says Automaker Pricing ‘Schemes’ Fuel Consumer Distrust of Car Dealers

DETROIT – Some automaker incentive programs cause undesirable pricing discrepancies in the marketplace and fuel consumer distrust of car dealers, Peter Welch, president of the National Automobile Dealers Assn., tells an audience that includes several auto executives.

“In a world where customers crave fairness and transparency in price, why do some manufacturers still deploy unfair marketing strategies that produce huge variations in price between various customers?” he says in a speech at the Automotive News World Congress held here in conjunction with the North American International Auto Show.

Welch also calls for a rollback of what he calls excessive government regulations and extols the prospect of a Donald Trump presidency. That begins Jan. 20.

Welch names pricing culprits (without calling out any particular automaker) as unfair stair-step incentive programs, indiscriminate price tag coupons, “and other schemes that are too complicated, not consumer friendly and that are not available to all dealers regardless of their size or location.”

It leads to multi-tier pricing that “has always, and will always, cause our customers to be skeptical of what dealers tell them. Simply put, these types of programs are trust killers.”

Meanwhile, Welch blames excessive government mandates over the past 20 years as “the single biggest driver of vehicle price increases.” The current average transaction price of a new U.S. vehicle is about $35,000.

He takes aim at ambitious government fuel mandates that force automakers to make technology-laden vehicles with sticker prices that could force some budget-minded consumers out of the market.

Welch warns of “demand destruction” and sees an opportunity for the Republican-majority in Congress and the incoming Republican president to avoid that by undoing some over-reaching regulations.

“Unless we as an industry, working with policy makers at all levels of government, start looking through the lens of customer affordability, we risk imposing a new ‘luxury tax’ on the vehicles our members sell, which, in turn, will depress the SAAR, reduce fleet turnover, and deprive large swaths of Americans of the opportunity to obtain and benefit from the ownership of a new car or truck,” he says.  

“That’s what I mean by ‘demand destruction.’”

In a post-speech Q&A, Welch says dealers look forward to Trump as president. “They’re entrepreneurs. They see an entrepreneur in the White House. They’re happy with that.”

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