DIRECT SALES THREAT: REAL, BUT LIMITED • OEM enthusiasm for direct-to-consumer models like “agency sales” has cooled, largely due to the financial burden of holding inventory. • Recent moves by brands like Volkswagen and Afeela (the Honda/Sony joint venture) may test the franchise model. Still, he believes most OEMs will stick with dealers due to logistical and economic realities. “With all due respect to the OEMs, I think they will quickly realize that trying to build brand new consumers is not their forte,” he said, “and they will quickly pivot to starting to push these vehicles through the dealer base.” ELECTRIFICATION: NEUTRAL FOR DEALERS … FOR NOW • Full battery electric vehicle (BEV) adoption has plateaued around 8%, and hybrids are gaining more traction — a trend we have seen in Virginia. Tesla provides half of those sales, but is a brand under duress. • Technological breakthroughs — like solid-state batteries that can be charged as quickly as filling a gas tank, plus longer range — could reignite consumer interest. • And so, dealers should prepare for a slow but inevitable shift to EVs (whether BEV or hybrid), as future generations care less about powertrain, so long as the vehicle has “utility and convenience for the consumer [and] there will be implications strategically to how you think about your business as a result.” TARIFFS AND CHINESE COMPETITION • 100% tariffs on Chinese imports (supported by both political parties) are a short-term protection strategy. “We need to hopefully encourage the legacy automakers, both here and in Korea and Japan, to have a strategy to compete against the Chinese,” he said. • The longer-term threat comes from China’s ability to produce high-quality vehicles at 70% of legacy automaker costs, as much as five times faster. China has systematically built dominance in the EV supply chain, from mining, materials and manufacturing. • He also warned dealers not to dismiss the quality of Chinese vehicles as “cheap,” as their vehicles are increasingly high quality, low-cost, and designed and built quickly. • Greenfield urged dealers to stay open-minded: Chinese brands could soon seek U.S. dealer partners, mirroring how Toyota and Hyundai entered the market decades ago. 100% 70% 4 Years 9 Months 5x Advantage CHINA LEGACY OEM CHINA LEGACY OEM COST OF PRODUCTION DESIGN TO PRODUCTION 30% Advantage vada.com 15
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