Car dealers and electric vehicles: At a blowout party for unsung GOP heavyweights, the men were drunk—and anxious.
Share
Comment
The party was on at a gathering of unsung Republican heavyweights, and I was in search of the armadillo racing. The booze was flowing: Open bars numbered in the double digits, plus metal bathtubs teemed with beer on ice. Cover bands played and DJs spun. There was line dancing and trick ropers, twirling lassos and mechanical bulls, bucking riders and stilt-walkers.
And there were car dealers—thousands of them. So many gray blazers atop so many pairs of jeans, so many corporate logos embossed on so many fleece vests. So many, many men. This year’s blowout was in Dallas and the invite called for “Western duds,” so there were omni gallon hats and dinner-plate belt buckles too.
This was opening night of the NADA Show, the annual convention of the National Automobile Dealers Association, one of the most powerful trade organizations representing one of the richest professions in America, and there was much to celebrate.
The years since COVID hit had been some of the industry’s best ever. Supply-chain issues had sent prices skyrocketing. New car prices were up; used car prices were up even more. “This has been an unexpected bonanza for new car dealers,” George Hoffer, professor emeritus of transportation economics at Virginia Commonwealth University, told Time late last year. Only a few months prior, the research firm Haig Partners clocked average gross profit for dealers at 180 percent over 2019 levels.
Really, the past hundred years had been great. Auto dealers are one of the five most common professions among the top 0.1 percent of American earners. Car dealers, gas station owners, and building contractors, it turns out, make up the majority of the country’s 140,000 Americans who earn more than $1.58 million per year.* Crunching numbers from the U.S. Census Bureau, data scientist and author Seth Stephens-Davidowitz found that over 20 percent of car dealerships in the U.S. have an owner banking more than $1.5 million per year.
Advertisement
And car dealers are not only one of the richest demographics in the United States. They’re also one of the most organized political factions—a conservative imperium giving millions of dollars to politicians at local, state, and national levels. They lobby through NADA, the organization staging the weekend’s festivities, and donate to Republicans at a rate of 6-to-1. Through those efforts, they’ve managed to write and rewrite laws to protect dealers and sponsor sympathetic politicians in all 50 states. All of which meant that this year, presidential hopeful Nikki Haley and Fox News darling Greg Gutfeld, among others, had made the pilgrimage to kiss the key ring.
But just as times are strange for Republicans, they are for car dealers too, and the event this year had a decadent and desperate energy. Opening night featured a concert by country star Brad Paisley. He was set to take the stage in mere minutes, and I still hadn’t found the armadillos. I’d sidled through the “speak-easy,” happened upon the blackjack tables, and even run smack into a male dancer standing atop a saddle swinging 4 feet off the ground. But the small mammal racetrack eluded me.
Get on the list.
Slate’s evening news & politics newsletter.
<div class="slate-notification--error"> Please enable javascript to sign up for newsletters. </div>
Email address:
Send me updates about Slate special offers.
By signing up, you agree to our Privacy Policy and Terms.
Sign Up
I pushed through crowded hallways, my path lit by the luminous logo of prodigious subprime lender Ally Bank. I rounded a corner, past a room full of ax throwers, and finally came face-to-face with a donkey. He was freighted on both sides by coolers full of beer. Dealers lined up to take pictures with him. I asked an event staffer where the armadillos were. They’d been canceled at the last minute, she told me: The beer burro was the live-animal entertainment replacement. Cheers burst in from the main hall; Paisley hit the stage.
I retreated to a side room, where a man named Andrew—bald, besotted—told me it was his seventh NADA convention. So far this one was tame compared with last year’s in Las Vegas, he said, chewing on a pork slider from a nearby buffet table and swallowing the finer syllables of his words. “You know why they couldn’t have it in Vegas this year?” he asked. “Too many divorces.” Behind him, two men in vests went up and down on a seesaw in the shape of a mustache, each sitting atop one curl of the handlebar.
Advertisement
I asked Andrew what he thought of these halcyon days. “The last two years, cars have basically sold themselves,” he said with a sigh. “There’s a fucking reckoning coming.”
In many ways, you can’t understand U.S. conservatism without understanding the car dealer—that middlemensch of American capitalism, selling a product he doesn’t make at a fat-enough markup to become fabulously rich and politically powerful. And dealers who have lodged themselves in the middle of Republican politics find themselves at a crossroads, just like the party they patronize. Underneath the froth, and the humidity, there was anxiety in the air. I journeyed to the NADA convention to hear the dealers’ vision of the future. What I found is a stark prescription for what Republicans want now.
When the first car dealership opened in 1898, in Detroit, it was seen as a convenience for cash-strapped manufacturers, who were overwhelmed just by producing the cars. They needed a means to reach customers without having to build their own sales networks. A class of middlemen sprang up. Car dealers quickly became pioneers of influence, concocting new and astonishing breakthroughs in the very American alchemy of converting riches to political sway.
As the automobile industry flourished, so did the dealership model—but the American entrance into World War I threatened to interrupt that ascent. So, in 1917, a group of 30 Chicago dealers went before Congress to argue that cars shouldn’t be classified as luxuries by the tax code. The luxury distinction would have allowed car-manufacturing facilities to be converted to use for wartime production. That would have been fine for manufacturers, which would have continued making money manufacturing, but disastrous for car dealers, who couldn’t just sell tanks.
<img class="lazyloaded" loading="lazy" src="https://compote.slate.com/images/48f78620-3bf5-476f-95b0-b83f68435116.jpeg?crop=4800,3758,x0,y0" alt="Two couples look through the windows of two cars in an old-timey car showroom with high ceilings and chandeliers." width="4800" height="3758" />
The showroom of a National Motor Vehicle Company dealership in the late 1910s. Photo by Underwood Archives/Getty Images
Advertisement
The dealers won the argument and then some, leaving Washington with a 40 percent cut in the “luxury tax,” which was then being levied on car sales. With that, the National Automobile Dealers Association was born.
That first taste of triumph only whetted the appetite. By the 1930s, with another war effort in the works, dealers went state by state. “At that time, there was lots of attention being paid to small business as having inherent virtue and the need to protect mom-and-pop shops,” Daniel Crane, a professor at the University of Michigan Law School, told me. “They embraced that story, and were extremely successful at getting legislatures in all 50 states to strictly regulate how cars were sold.” In 17 states, it is outright illegal for car manufacturers to sell cars at all.
The “mom-and-pop” facade of the postwar period gave way to multibillion-dollar, intergenerational dealership empires. As of 2021, the top 10 dealership groups in the U.S. had annual revenues around $100 billion, more than any company that actually makes cars.* The NADA became one of the most influential lobbying entities in Washington, with 16,000 dues-paying businesses spanning 32,500 franchises. Soon enough, a stop at the annual NADA convention became routine for presidential hopefuls and even presidents. Lyndon B. Johnson, Ronald Reagan, and Hillary Clinton all attended ahead of presidential runs; Bill Clinton and both Bushes came after they left the White House.
By the time car salesmen had won their reputation as the very least scrupulous of business practitioners, dealers had secured such an astounding array of political protections via their lobbying outfit that no countervailing force—economists, car manufacturers, civil rights groups, environmentalists, or the Koch brothers—has been able to thwart them. A survey done in 2016 by one of their own trade publications found that 87 percent of Americans disliked the experience of buying a car at a dealership. So what? You don’t have to be well liked if you’re powerful.
Advertisement
Now car dealers are one of the most important secular forces in American conservatism, having taken a huge swath of the political system hostage. They spent a record $7 million on federal lobbying in 2022, far more than the National Rifle Association, and $25 million in 2020 just on federal elections, mostly to Republicans. The NADA PAC kicked in another $5 million. That’s a small percentage of the operation: Dealers mainline money to state- and local-level GOPs as well. They often play an outsize role in communities, buying up local ad space, sponsoring local sports teams, and strengthening a social network that can be very useful to political campaigns. “There’s a dealer in every district, which is why their power is so diffuse. They’re not concentrated in any one place; they’re spread out everywhere, all over the country,” Crane said. Although dealers are maligned as parasites, their relationship to the GOP is pure symbiosis: Republicans need their money and networks, and dealers need politicians to protect them from repealing the laws that keep the money coming in.
The first lesson of NADA? Don’t mention Tesla.
The dealers need that protection now more than ever. Recent legislation from the Biden administration, namely the Bipartisan Infrastructure bill and the Inflation Reduction Act, has directly and indirectly thrown many billions of dollars at incentivizing people to buy electric cars. And the White House is counting on that to propel its climate strategy. The EV revolution could be ushered in, potentially at a handsome premium, by the dealers themselves. This was, in fact, the weekend’s theme: “NADA is all in on EVs,” read the event’s promo material. “Getting all charged up” read the programming packet tucked into my complimentary NADA-branded backpack.
One major problem with this plan is a certain company called Tesla. When the electric car manufacturer started up, it refused to use dealers at all, opting instead for a direct-sales model. Buyers could check out the cars in showrooms at malls and then buy online, a heady workaround of those dealer protections. Online sales minimized interactions with oleaginous salesmen and added price transparency, which did away with the haggling. Tesla, meanwhile, ended up making more money by not having to sell its cars to dealers, who would then mark them up. Other EV startups—Lucid, Rivian—went the same way, and soon enough, legacy manufacturers started flirting with direct internet sales too. “We have all this inventory sitting around in dealers,” Ford CEO Jim Farley said in a 2022 investor presentation. “Get rid of all of it … go 100 percent online.” (He later walked back that statement.)
Advertisement
The dealers, of course, fought back and are fighting still. They’re in court in California, Texas, Colorado, Mississippi, and Florida, among other places, to keep laws on the books that prevent cars from being sold by manufacturers or that prevent manufacturers from servicing their own cars or otherwise encroaching on their business model. After years of litigation, Michigan, the birthplace of the dealership, recently agreed to let Tesla sell and service cars in-state. Half of states have loosened dealer protections more (red states, ostensibly “pro-business,” tend to have the most binding restrictions), but dealers are still making record profits. Even Florida Gov. Ron DeSantis, despite launching his presidential bid with Tesla’s Elon Musk, has raised millions from dealers and given no indication he’d veto two restrictive, dealer-sponsored bills passing through the Florida Legislature. (These bills would make it illegal for car manufacturers to set transparent prices and allow buyers to order EVs from legacy manufacturers online.)
