Inside Automotive with Jim Fitzpatrick, powered by CBT News

Andy Gelcher Reveals How Chevrolet Dealers Are Thriving Despite Market Headwinds

• Jim Fitzpatrick • Season 1 • Episode 16

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Chevrolet National Dealer Council Chairman Andy Gelcher discusses how dealerships are navigating today's challenging automotive landscape while maintaining strong performance. Despite uncertainty around EV tax credits and shifting consumer preferences, Mohawk Chevrolet has increased new car sales by nearly 40% and used car sales by nearly 30% compared to last year.

• EV sales increasing 25% at Mohawk Chevrolet, partly driven by customers rushing to use the $7,500 federal tax credit before it expires
• Strategic focus on more affordable EVs under $40,000 to maintain momentum after tax credits end
• Used car sourcing succeeding through service drive exchanges (20-30 vehicles monthly) and digital tools like Kelley Blue Book's Instant Cash Offer
• GM's Car Bravo program providing competitive advantage by allowing dealers to offer special financing on non-GM certified pre-owned vehicles
• Mobile service growing but still developing, with capacity for significant expansion beyond current 6-7 appointments weekly
• Tariff concerns and "buy American" sentiment having less impact than initially expected as manufacturers absorb most costs
• Customer experience remaining the central focus across all dealership touchpoints

Our success comes from focusing on exceptional customer experiences at every interaction point – whether in our showroom, service drive, or delivering vehicles to homes states away.


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Announcer:

You're watching Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Hey everyone, Jim Fitzpatrick, Welcome into another edition of Inside Automotive right here at CBT Automotive Network. The Chevrolet National Dealer Council plays a critical role in shaping the dialogue between General Motors and its dealers, from balancing EV inventory to ensuring the financial health of the dealer network. Today we're getting an update on how the dealer network is navigating today's headwinds. Here now is Andy , who's president of Mohawk Chevrolet and chairman of the Chevrolet National Dealer Council. Thank you, Andy, for joining us once again here on the show.

Andy Guelcher:

Certainly Jim.

Jim Fitzpatrick:

Sure. So how are things, first and foremost, at Mohawk Chevrolet.

Andy Guelcher:

Things are good. Things are good at Mohawk Chevrolet here in upstate New York. It's been a pretty good year thus far and I think we've got some tailwinds here going into year end, so pretty positive and optimistic about how we're going to finish here.

Jim Fitzpatrick:

Are you ahead or behind? This time last year?

Andy Guelcher:

Uh, ahead substantially. This time, like oh yeah about uh, just shy of 40 percent in new car sales and just shy of 30 percent in used car sales, and our fixed operations is following suit, obviously. So, uh, it's been a very, very good year.

Jim Fitzpatrick:

That's great.

Jim Fitzpatrick:

That's great to hear. So let's, let's jump right in here. What, what are the biggest pressures that Chevy dealers are facing right now? What kind of calls are you getting and what kind of things are you guys discussing?

Andy Guelcher:

There's a lot of uncertainty around the federal credit going away and kind of what the cadence for the factory building is going to be of EVs and then distribution of EVs and how that's going to pair with the different states where the regulations still exist to some extent, with state-level credits, and in balancing all of that.

Andy Guelcher:

I think there's a lot of questions there. I know that Chevrolet is working very, very hard to try and get to a point where they're able to communicate with the general dealer body about what the strategy is going to be and how we're going to go forward. But I can tell you this the investments that have been made, Jim, at the OEM level, are so incredibly substantial that, regardless of federal support, we're going to march on. We're going to keep going and I think there's some great products in the pipeline and great products that we currently have on the ground. So there's going to be some speed bumps, I think a little bit, but I think we'll figure out how to get to where we need to go and I think it's going to be just fine.

Jim Fitzpatrick:

Okay, and how are EV sales at your particular dealership?

Andy Guelcher:

So we're up. We're up about 25%, okay, and a lot of that has to do, I believe, with the credit going away. And I think people are kind of rushing in to take advantage of a substantial savings. It really truly is so. You're getting some more adoption in the market. I think it's not all organic, it's a lot of. It is driven by the 7,500. But again we're going to see what happens at the end of September when that goes away.

Jim Fitzpatrick:

Right, yeah, that'll be the determining factor there. As a dealer, do you look to replace those vehicles one for one, thinking that, well, we're not going to have the $7,500, or do you then dial back the EV orders?

Andy Guelcher:

So we're being strategic about the price point, that we're trying to replace it with what we found for us in our market. Our sweet spot is that sub 40 price point An affordable EV that really solves for a lot of the issues that still exist from an affordability standpoint and really can help drive a little bit of incremental volume on top of that. So we're trying to be very conscientious in replacing it with the correct price point vehicle, which we're finding is at the lower end of that spectrum.

Jim Fitzpatrick:

Right, right, and as we know, you know the crossover, I should say the hybrid EVs are doing much better than a full EV, right? I mean, that seems to be kind of the bridge that's going to get us to an all EV environment one day, if that ever truly happens, right?

Andy Guelcher:

yeah, yeah. I think that your biggest problem is is still the infrastructure in. In most states, you simply do not have the infrastructure right to be able to charge all these cars at the scale that the oems would like to sell them at right that will come together eventually.

Andy Guelcher:

It's just going to take some time, but I I will tell you a lot of the people that I speak to, a lot of the dealers I speak to, they're not considering two to three years from now. Regardless of infrastructure, these leases are coming back. So theres going to be a large percentage of the used vehicle market that's gonna be EV- whether you like it or not, when it's going to somewhere, these cars will end up somewhere and I think there's opportunity baked in there a little bit, because I think you have very soft residual values for all the aforementioned reasons that we just discussed and I think there's going to be opportunity for some great affordable options in that used EV space in the next two to three years.

Jim Fitzpatrick:

Sure Is it difficult to put the right number on a trade if it's an EV today, not really knowing what kind of a role the loss of the tax credit, whether it be unused or new, will play. I mean, you could be four grand high or four grand low in the car, either way, right.

Andy Guelcher:

Yeah, I think you've got to be very, you've got to be cautious, but certainly, I would say, cautiously optimistic. It shouldn't be a deal. Prevention mechanism.

Jim Fitzpatrick:

Right.

Andy Guelcher:

You got to still figure out how to put that deal together, but it is absolutely at the forefront of every conversation we have when we're discussing our used car inventories and EVs within them.

Jim Fitzpatrick:

So, yeah, yeah, and then you don't want to turn around and have 60% of your used car inventory EVs when in reality, reality you're not selling out.

Andy Guelcher:

Probably not the strategy we're looking to deploy right now, absolutely.

Jim Fitzpatrick:

So talk to us about used cars. Obviously, every every dealer out there is struggling with. How do we get you know? How do we source used cars? What are you doing to source used cars, and is it working?

Andy Guelcher:

So we have a few different tactics that we utilize. Some we do pretty well and some we, you know could get improve at. But some of the things that we do well is we have a good service drive exchange process. I know many dealers do that, um, and we're pulling about 20 to 30 a month out of our service drive and I think there's upside there.

Jim Fitzpatrick:

Wow, 20 to 30. That sounds pretty good.

Andy Guelcher:

Yeah, it's, it's. I would say we're average there.

Andy Guelcher:

We're about average based on our RO accounts. So we do a pretty good job with Kelly Blue Book, the instant cash offer tool and acquiring stuff off the street, and again, we're really trying to get to a point where we are actively engaging customers, similar to a way a CarMax or a Carvana would do with the right level of digital advertising. And that's really the campaign. We're not trying to sell you a car, we just want to buy your car. We want to make it as easy as possible. That's becoming harder and harder to do because the tools are becoming more prevalent for dealers and many dealers are getting better at it. So I think the competitive advantage becomes what programs does your OEM have to support, either certified or some type of certified sales on your lot?

Andy Guelcher:

In our case, it's Car Bravo that General Motors has, and one of the biggest competitive advantages within that program is the fact that we're able to advertise subsidized rates on non-GM product. For example, if the Toyota dealer down the street does not have a CPO program on Camry, but we have that within the Car Bravo program and I can say, hey, Toyota Camry, 3.9% for 60 months, or whatever the case may be. I now am engaging a shopper that would have probably never considered my store, certainly never considered Chevrolet, but now I have a crack at that person to maybe buy this car and then they can be in my data set and my remarketing cadence, and now I can put them in my CDP and maybe have a shot at retaining them for the long term.

Andy Guelcher:

So those programs become very, very important as we go into what's going to be a smaller used car market.

Jim Fitzpatrick:

Yeah, and that's that's available through the Bravo program.

Andy Guelcher:

Car Bravo, yeah, they're doing a very, very good job with that

Jim Fitzpatrick:

Yeah, that's, that's fantastic. Do you guys offer a switching gears a little bit? Do you guys offer mobile service on uh for in your fixed ops department?

Andy Guelcher:

We do, we do, and there's a lot of dealers that have had a really good amount of success with that and we believe in it. Um, we offer it to almost every customer who would be eligible for that mobile service. We can deploy the van and we can do tires and brakes and pretty much everything, except for heavy-duty stuff. And the take rate isn't there yet. We're doing, I would say, six to seven a week out of one van, and I really think that our capacity there is much higher.

Andy Guelcher:

So we believe in it, we think it's going to be a real thing and we're putting the resources behind it now to build it for later. But there's dealers out there that are doing unbelievable with it, which tells you that. Ok, the market is there.

Jim Fitzpatrick:

Yeah, I've spoken to a number of them that they've got 30, 35, 40, 43. The last one was 43 mobile units on the road, which just blows me away that that has grown to that extent and so many people are having their vehicles worked on right at their home or office, although I will tell you, those are Ford dealers and Ford, as you know, has made some real inroads and pushed that mobile service in a big way. Is that the case with GM and Chevy?

Andy Guelcher:

It is. They're really trying to get a push on this and to get dealers to understand this, but I think there's so many examples currently, Jim, of you know. We talk about meeting the customer where they're at, whether it's sourcing a used car or mobile service.

Andy Guelcher:

The better that we're able to do that as dealers, the more effective that we'll become and the more profitable we will be. So I think that we're there a little bit behind the curve as it relates to Ford, because Ford had a pretty good head start on this and is doing, for all intents and purposes, a pretty good job. But I think we'll get there and I think it's going to be a great product eventually, once we settle on this.

Jim Fitzpatrick:

So yeah, for sure, for sure, before your tenure runs out as chairman, what are some of the things that you want to get accomplished heading up the council? Is there anything on your to-do list that you feel passionate about ?.

Andy Guelcher:

I feel passionate about a lot of stuff, Jim, but there's a couple of things I would say.

Andy Guelcher:

There's some legacy programs that exist within General Motors and I think that they can tend to cause some frustration amongst the dealer body and certainly some frustration amongst customers, which is what we're always trying to solve for.

Andy Guelcher:

So some of the things we're focused on are some of those programs and trying to really make them more user friendly and certainly more customer friendly as it relates to us ultimately servicing and selling cars.

Andy Guelcher:

And I think, as we boil those down to what they're supposed to be, we really are starting to see where the opportunities lie and we're kind of focused on OK, what can we take away from this to really make it the essence of a customer service-based program that is solely for selling and servicing vehicles and getting to there as quickly as possible for both the dealer and the customer.

Andy Guelcher:

And we're really starting to make some inroads there, because you get these programs that for years and years and years you add on, and add on, and add on and you know the new leadership comes in and they want to make it a little better, and they want to make it a little bit better, but you forget about all the underpinnings that were already there so they become these huge expansive programs with all kinds of support and resources and we ultimately are forgetting about the customer who the program was built for to begin with, so focused on. A few initiatives like that really feel like we're making good in-roads um Scott Bell and the team team at Chevrolet are really taking the push and embracing this with us. So it's going very well and I'm very happy with the progress we've made thus far.

Jim Fitzpatrick:

Oh, that's great, that's great. So my brother-in-law just bought a Chevy Tahoe because he felt as though he didn't want to get involved in paying those high tariffs. So at some of the competing non- you know American made manufacturers won't name the name or name the brand. But are you getting some of that now where customers are coming in thinking that I better buy American, I better, you know, nothing more than nothing more American than Chevrolet and Apple Pie, right? So are you benefiting from that right now, even though that it might not be, you know, totally a hundred percent, uh, accurate in some cases.

Andy Guelcher:

but yeah, you know, I think that the I think every OEM was prepared for the eventuality that this is going to consume the masses and they're, this is all they're going to be looking for. And there was advertising, you know, programs set and ready to deploy on July 4th, and and I I think it's really fizzled out a little bit.

Andy Guelcher:

I think, that you know, ultimately the OEMs are eating the majority of the tariffs and there's really no pass-through to the customer, there's very little pass-through to the dealer. So I think that you know it's a sensitive kind of subject and I think we've got to watch it as we go, but right now I would tell you it's starting to fizzle out a little bit.

Andy Guelcher:

I think that this tax credit is going to maybe reinvigorate some of it, but it's not as prevalent as I think everybody would be, or was led or would be led to believe.

Jim Fitzpatrick:

Yeah, I agree and the dealers that I'm talking to are saying the same thing that the whole conversation about tariffs has kind of subsided a little bit in showrooms. And it's not. You know, a couple of months ago they were walking in wanting to know what's the deal with tariffs and how much more is it going to cost, and there was a little bit of a panic in their voice, but not as much today. And, as you know, we've interviewed Bernie Moreno here and he said to me a few months ago in an interview that we're going to look back on the tariffs. It's just going to be a blip on the radar, and a year from now and this is going back a couple of months we won't even be talking about it, and maybe he's right about that, you know.

Andy Guelcher:

I tend to agree with him. Yeah, I think there's a lot of positive tailwinds coming from it. I think we're just starting to realize all the economic things that are happening around it that are a benefit as opposed to a negative, you know. So I think there's a lot of good things that are going to come from it and will continue to come from it, and I think we are going to look back on this and say, hey, you know, this really wasn't as big as everybody thought it was going to be.

Jim Fitzpatrick:

That's great. So your new car sales are doing good. Used car fixed operations, f&I PVR is strong. Is there anything that keeps you up at night about the industry or the store?

Andy Guelcher:

You know I sleep pretty well door. You know I sleep pretty well, jim, overall. But there's what keeps me up really is there's so much opportunity. Really, in all of the departments there's always something you could be doing better. There's always somebody out there who's doing it better than you are.

Andy Guelcher:

And what it boils down to for us is how are we zeroed in on the customer experience and interaction on every stop of the train? Whether we're doing mobile service, whether you're coming into my service drive, whether you're coming into my showroom, whether we're delivering a car to your house four states away, how can we make every stop on that train exceptional? And I think the better we get at that and the better, the more rather we focus on that, the better we will become as an organization. So we are really really zeroed in on customer experience.

Jim Fitzpatrick:

Wow, that's awesome, the very customer focused. Andy , president of Mohawk Chevrolet, chairman of the Chevrolet National Dealer Council and member of the GM Dealer Executive Board, I might add. So that's pretty big time, right, wow.

Andy Guelcher:

Many leather-bound books in my office.

Jim Fitzpatrick:

That's right. All right, man. Thanks so much for spending some time with us and giving us an update. Really appreciate it.

Andy Guelcher:

Thank you, Jim, I appreciate it Take care.

Jim Fitzpatrick:

Thanks for watching Inside Automotive with Jim Fitzpatrick.