My sales managers are already hearing questions from customers about Chinese EVs: Are they coming here? Should I wait to buy?
Most coverage of the Chinese auto fight treats it like a Washington story. But dealers are going to feel the effects on their lots long before this makes it through a Senate floor vote.
I’ve spent my whole career on the retail side of this business. My family has operated dealerships throughout Ohio, Florida, Michigan, Arizona, and Montana for nearly 80 years and 4 generations. I look at this issue the way most dealers do: What could it mean for my floor plan, my trade-in values and the franchise investment my family has spent decades building?
Start with residual values. Dealers across the country have spent the last few years rebuilding used-vehicle margins after a wild ride through inflated pricing and market corrections. Now imagine a wave of state-subsidized vehicles entering the market at prices domestic and import brands can’t profitably match. We’ve already seen versions of that play out in Europe and Mexico, where Chinese brands have reached double-digit market share in a relatively short period. When new-vehicle prices get undercut that aggressively, used values feel it too. That can hit your used-car department, your customers’ trade-in equity and, if the shift happens quickly enough, the curtailment schedule on your floor plan. For a dealer carrying inventory, it can become a cash-flow issue very quickly.
Then there’s the franchise model itself. Many new entrants into the EV space over the past decade, foreign and domestic, have preferred direct-to-consumer sales over the franchise system dealers like me have invested in for generations. Dealers should at least be prepared for the possibility that Chinese automakers would favor that model as well. If a subsidized, vertically integrated manufacturer can sell directly to consumers and bypass dealer margin, the implications go well beyond one brand’s dealer body. It puts more pressure on the franchise system and on the state franchise laws dealers have spent decades defending.
There is also the service side. Today’s connected vehicles run on manufacturer-linked software and raise practical questions about where vehicle data goes and who can access it. Federal restrictions on Chinese-linked vehicle software and hardware add another layer dealers need to understand. Any store with inventory, parts or supplier exposure tied to those technologies could find itself dealing with compliance issues that have little to do with running a service drive. Fixed-ops managers should be asking now whether any vendor or supplier in their parts pipeline has exposure here.
Dealers don’t need to become policy experts, but we also shouldn’t treat this as somebody else’s fight. For dealers, the practical response is pretty straightforward. Make sure your sales staff has a clear answer when customers ask about Chinese EVs. Have a conversation with your fixed-ops team about what connected-vehicle restrictions could eventually mean for service and parts sourcing. It’s also worth asking your F&I team whether the residual-value assumptions in current lease and financing products account for this kind of disruption. And whether you’re an AIADA member or not, take five minutes at NoChinaAutos.com to tell your representatives why this matters to your store.
I’ve built my career believing that competition makes this industry better, and I still believe that. But competition works when everyone plays by the same basic rules. For dealers, this isn’t a Washington story we’re watching from the sidelines. It’s a Tuesday morning problem, and for a lot of us, it’s already showing up in the numbers.
Learn more about AIADA’s campaign against Chinese auto brands at NoChinaAutos.com.
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