CEO Roundtable: Auto dealers see signs for strong industry in region

LOVELAND — Auto dealers in Northern Colorado believe a strong economy and population growth in the region, and president-elect Donald Trump’s promises to lower corporate taxes and ease regulations on businesses, are positive signals for their industry.

But they also believe that increasing interest rates could be negative going forward, putting a damper on new-car sales and pricing some customers out of buying a new or used car.

Dealers participating in BizWest’s Automotive Industry CEO Roundtable Wednesday morning at Hub International Insurance Services in Loveland, said they will wait and see what Trump’s administration might do with standards governing the manufacturing incentives for buying electric vehicles. They also are bracing for changes in the industry as technology has advanced to electric and self-driving cars.

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Government regulations

“We’ve been suffering burdensome regulations for years that have made the environment difficult to run a business,” said Bob Ghent, owner of Ghent Motors in Greeley. “I’m hoping for relief.”

As an example, Ghent said rules put in by the Consumer Financial Protection Bureau led to financing difficulty for some consumers.”

Bo Penney, general sales manager of Co’s BMW Center in Loveland, said Trump is an unknown.

“We’ll be in limbo for a little bit, but I am optimistic. He might bring benefits.”

Interest rates

“There is a direct correlation with sales and interest rates, said John Carroll, president of Ed Carroll Motor Co. Inc. in Fort Collins.

“The average consumer buys on monthly payment, not cost of car,” Carroll said. “… But I don’t see them (interest rates) getting out of control.”

Penney said higher interest rates create “disgruntled buyers.” He said when interest rates increase, there tends to be fewer new-car sales and more pre-owned sales.

Electric vehicles

As electric vehicles are becoming more reliable, with larger ranges between charges, dealers agreed that they are more suited to urban areas rather than the sprawling countryside of many parts of Colorado, Wyoming and Nebraska.

“People here want the vehicle that can take them to the mountains,” Ghent said. While charging stations are more prevalent than ever before, there still isn’t enough demand to justify building out a network.

“There needs to be standardization of the stations. What works for a Tesla doesn’t work with other cars,” Ghent said.

Yale King, a partner in the King Auto Group that has dealerships in Longmont and Loveland, said the electric-car movement is coming on.

“Ford has made a big investment in electric-car technology and manufacturing,” he said.

Carroll predicts that by 2020, 50 percent of offerings will be full-electric cars.

“The concern is overcapacity. … We don’t know the ceiling,” Carroll said.” He pointed out that there is technology to embed charging sensors under the surface of roads.

King marvels at the technology.

“Rocket technology being used by Tesla will have a substantial impact,” King said. “It’s incredible. They can build roads with sensors for smart cars, and the communication systems now are good enough to run a business out of your car.”

What the Trump administration does with incentives for buyers of electric cars will have an impact on manufacturing of electric cars and their price. Ghent said it’s a difficult time for manufacturers because they make plans five years out.

Self-driving cars

Sitting in the back seat while the car’s computer steers is an intriguing concept.

“It is a cool thing,” Ghent said. “But adopting self-driving cars will be a slow process. It took a long time for the industry to embrace cruise control.”

He said self-driven cars raise a lot of questions, from safety to who will be responsible for insurance coverage.

Dealership trends

Several dealers in Northern Colorado are renovating and expanding their dealerships, generally initiated by manufacturers of luxury brands.

“There’s an arms race going on,” Carroll said. Manufacturers want their dealers to invest in upgrades that drive up overhead, and they want to have control over those renovations.

“The irony is that buyers discover you through your virtual showroom online, and customers generally go to one dealership,” Carroll said.

After the roundtable, Ghent said auto dealers have been able to cope with changes in the industry pertaining to use of the Internet to shop for cars, consolidation of car companies and manufacturing changes.

“We adapt to the environment we are dealt,” he said.

Participants: John Carroll, president, Ed Carroll Motor Co. Inc.; Bo Penney, general manager, Co’s BMW; Bob Ghent, owner, Ghent Motors; Yale King, partner, King Auto Group. Moderator: Christopher Wood, co-publisher/editor, BizWest Media.

Sponsors: Hub International Insurance Services: Russ Henniger, Jim Sampson; EKS&H: Chris Otto, Drew Maddox, Josh White, Lucky Heggs.