Inside Automotive with Jim Fitzpatrick, powered by CBT News

Election, Inventory, And EV Reality Check

• Jim Fitzpatrick • Season 1 • Episode 27

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We unpack how policy, pricing, and supply shape dealer performance, from tariffs and rates to EV credits and the tech talent gap. Tom Maoli shares blunt insights on inventory discipline, service-led profit, and why hybrids may outpace EVs in the near term.

• Political shifts in New Jersey and business impact
• Tight inventory strategy and margin discipline
• Service demand surge driven by aging fleets
• Inflation pressure, tariffs, and interest rates
• China tariffs, AI chips, and tech supply chains
• Moving beyond SAR to just-in-time practices
• EV credit changes, adoption ceiling, hybrid momentum
• Local market penetration and retention in fixed ops
• Technician shortage and training pipeline priorities
• Leasing’s cautious return and OEM risk management


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SPEAKER_00:

Jim Fitzpatrick. Hey everyone, Jim Fitzpatrick. Thanks so much for joining me on another edition of Inside Automotive right here at the CBT Automotive Network. Today we're joined by Tom Maioli, president and CEO of Celebrity Motor Car, a dealer who's never afraid to share his perspective, especially when it comes to how policy and politics impact our great industry. So today we are learning how his uh operations are performing in today's crazy market and how his uh team has handled the recent EV tax credit changes. So, Tom, thank you so much for joining us on the show once again.

SPEAKER_01:

Always good to see you.

SPEAKER_00:

You, as I mentioned before we got going, you are in uh in the middle of one heck of a uh of a gubernatorial race there. And uh I know that you're you're pulling for the uh the GOP guy and uh the Republican. Uh talk to us a little bit about that.

SPEAKER_01:

You know, listen, Jack's a great guy. He's a friend of mine. I'm I'm uh uh on his finance committee. We uh we've done a lot of fundraisers. I'm gonna actually see him this evening at a fundraiser in New Jersey. And uh, you know, we had a good conversation yesterday uh because he kind of got punched in the stomach with this whole opioids thing, you know, in his past life supporting opioids, which they say that he his advertising company took on a campaign for opioids. But you know, listen, I had the conversation with him yesterday. Opioids are legal, he didn't do anything illegal, right? What's bad about the opioids is the addiction part of it, but but they are legal, they have a purpose in it. You know, my 90-year-old mother fell and broke four ribs, she's not opioids. So it has a purpose and a and a place in the marketplace. So, so what she's what she's insinuating that he's a murderer and he killed people and children is absolutely bizarre. And I think it's gonna go against her.

SPEAKER_00:

Yeah, yeah, for sure, for sure. And uh, and things, you know, it's a it would be a total shift from the previous administration and the pre previous governor's uh viewpoint on business and such there in uh with Murphy there in in New Jersey, right?

SPEAKER_01:

Yes, absolutely. Listen, if Jack gets in, the world's gonna change. You know, we're back to a uh a Republican state which is pro-business, bringing corporations back to New Jersey, not chasing them out, bringing tax dollars back, and getting rid of the red tape regulations. That's really what slows business down.

SPEAKER_00:

Right, right. No question about it. So let's let's talk a little bit about your operations today. How are sales? What is inventory looking like uh where you where you stand right now?

SPEAKER_01:

You know, listen, inventory is still thin out there, you know, Jim. It's it's really interesting. The manufacturers are holding back, they're not producing, which is keeping margins up. Um, and sales are good. You know, we're listening we're off about 10%, 8 to 10% from last year, you know, on a on a on a profitability standpoint, but sales are still out there, people need cars. Um service departments are busting at the seams um because they're you know, we're long into people that have been holding on to these cars since COVID and repairing them and gluing them together. And we're gonna come in, we're gonna come into a cycle, and I think it's coming soon, probably in the next 12 months, where inventories are going to have to boost or else used car prices are gonna go out the roof because you can't keep repairing. There, you you know, there's only so much that you could do. Brakes, tires, you know, that kind of stuff, maintenance stuff you do. But when you start getting 150,000 miles, 180,000 miles on an engine of transmission, you know, we're looking at the end of the lifecycle.

SPEAKER_00:

Yeah, yeah, for sure. I just interviewed, had an interview with Cox Automotive, and they mentioned that in their new study, the uh transaction price has now exceeded$50,000, the average transaction price. Affordability is still at the at the forefront of everybody's minds, right? Consumers, dealers, OEM executives, and such. This is a this is a reality that we we're gonna have to face somewhere along the line, right?

SPEAKER_01:

Yeah, listen, I you know, I don't know what the Federal Reserve is looking at and what the government's looking at, and I'm a big, you know, I'm a Trump supporter and a friend of his, but I gotta tell you, I think inflation is out of control. I don't think we're at 2%. I think you're seeing grocery prices and housing prices and all of you know consumer prices going up on a quarterly basis. I do not see 2% inflation. I think we're more in the six and sevens, and and consumers are really hurting.

SPEAKER_00:

Yeah, yeah, for sure. Now, when you say that, um, you know, what are you feeling? That's that's kind of a shock for me to hear you say that because you I know that you are a Trump supporter, you've been a big fan of his policies. What does that mean moving forward? What if you had his ear right now and you said, hey, we need to do X, Y, and Z to get this under control, what would it be from your perspective?

SPEAKER_01:

Well, listen, I you know, he put the tariffs in place, and I think the tariffs were a great idea. I think what's happening though is it's causing some inflationary pressure on the consumer, yeah. Uh, you know, and and running up the prices of vehicles, especially in our business, but uh all across the board, you know, it's hurting the consumer. And I think he thinks that he's going to offset this by interest rates. He's pushing the Fed very hard to get interest rates down. And if he can get those interest rates back in the fours or three and a half percent range, he'll offset a lot of the tariff cost with the with the interest rates and and how and how deals are financed. The problem we're faced with right now is that's not happening. So the consumer is really hurting right now. And and I think he may have to step back and pull back on tariffs if he can't get these interest rates down. You know, the Fed is a is is is its own agency. It's really not run by the you know by the president of the United States, but he's pushing them hard.

SPEAKER_00:

Right, right. Yeah, that that that he is. He wants to put somebody new in there, that's for sure. And I would imagine, like the other appointees that he's had, it would be one of his guys or a girl, gals that would that would uh read off the same sheet of music to say, look, we got to lower rates, right? Payment. Yeah. Payment. Absolutely. That's for sure. As we sit here today, the president just came out and said, Hey, China, 100% tariffs. Um, when you hear that, obviously it's a concern of yours. What what's your thinking on that? Is it just to get China's attention? Is there teeth in that? What's the deal?

SPEAKER_01:

You know, listen, it's an intention getter. He wants to get them to the table and he wants to get them to negotiate. They gotta China's gotta start playing ball with us. I mean, it's not just on the automotive side, it's on the technology side. You know, this whole this whole AI boom right now is you know, China's trying to do their own thing, and and to realistically, they have to come to the table and they gotta buy American products. And I think that's gonna happen. It's happening, you know, there's cracks in the ice, it's happening now. Licenses, licensings are being issued for for good uh technology companies to sell their products into China. China's boycotting them, but I think they can only boycott them so long. You know, you talk at a company like NVIDIA, you know, their chips are are second to none. So you could boycott all you want, but you if you want quality and you want the best of the best in the industry, you're gonna have to buy NVIDIA chips.

SPEAKER_00:

Yeah, yeah, no question. So, you know, when I talk to dealers around the country, they they have a similar report that you have, which is services is just killing it. They're selling the cars that they're selling. The profitability wasn't what it was, obviously, four or five years ago per car, they understand that. But at the same time, it doesn't seem like we we're talking at all about chasing this 17.5 million SAR anymore. If we do 16 million vehicles and we make money at it and we got a strong fixed ops department, we're good. We're okay. Rather than trying to do this race to the bottom with a three or four month supply of vehicles behind the dealership to you know to try to get them out just to chase 17.5 million SAR, they're like, don't worry about that. Let's just make money in our operation.

SPEAKER_01:

No, correct. And that listen, that's that's where the industry has changed and you know, it's just post-COVID, you know, change, but I think we're gonna stick here. You know, it's it's very interesting because back in the late 80s, early 90s, I I wasn't in the car business, I was in the logistics business. And you know, the world was talking about just-in-time inventory. Yeah, you know, I service technology companies like Motorola and Cisco, and they were talking about just in time inventory, having just enough. You know, finally the car business caught up to it, and here we are. We're just at we're in just-in-time inventory, and I think it's gonna stay this way.

SPEAKER_00:

That's right, that's right. Switching gears a little bit on the EV tax credit, obviously ended uh September 30th. What impact did that have in your business? What impact do you think it will have moving forward? Obviously, we hit 12% EVs uh sales uh last month, which I guess was good news because everybody said, Well, wait a minute, 12% of the market wants an EV? Maybe we miscalculated here. But what's your take on that?

SPEAKER_01:

You know, listen, I think EVs, as I I've been saying, they'll have a place in the marketplace. I think they're reaching their saturation point at 12, maybe 15% of the marketplace. You know, we don't deal in EVs, we don't take EVs on trade. Our consumers don't want them here in New Jersey in the Northeast. Um, and you know, listen, I think it was it was brilliant what they did. They made the you know, Sean Duffy, uh, you know, head of the National Transportation uh uh Secretary of Transportation basically crushed this EV credit. Sean's another friend of mine. I speak to him often. And you know, he's he's not for EVs. He he the infrastructure is not there, and it works in certain cities, and I don't think you're gonna see the government pushing it for a long time, like they did, like the Biden administration did. And I think I think they're gonna let the river take its course, and I think it's reached its saturation, and I think you're gonna see some pullback. Well, you have companies like you know, um Mercedes pulling out of the marketplace, Lex is pulling out of the marketplace for EVs going to hybrids. So what that does is, you know, we have to get rid of the inventories, we're discounting them, and they're moving it. So it looks like the numbers are up, but the reality of it is is they're gonna come back down. And I think ultimately it helps Tesla because Tesla is going to be the largest player in the game. Before Tesla had all this competition, but all that competition's going away, and and it'll it's ultimately gonna help Tesla.

SPEAKER_00:

Yeah, yeah, they they probably will come out the winner, that's for sure. Um imagine that Elon Musk getting a little richer than than your than hear it is. That's what he needs, right?

unknown:

Exactly.

SPEAKER_00:

So um as we as we close out the last you know quarter of 2025, what are you most focused on for your operation to say, look, in order to hit the numbers that we want to hit, this is what my team really has to hone in on and focus on. What is that?

SPEAKER_01:

Well, listen, it's you know, it's market saturation. Right now the game is is market penetration in your PMA, in your area, because what you want is you want the people to come back and and and service their vehicles. You don't want to be selling outside the marketplace because we don't have the inventory. If I start selling cars into New York City and you know, upstate New York, you know, it just doesn't work because those people aren't gonna come back and service the vehicles. So we want to hold on to them, we want to keep our margins tight, and we want to sell in the zip codes that people are gonna come back and service their vehicles. And I think all dealers are are looking at that really seriously. I think, you know, the old days when the where the broker business and they were selling cars into you know other areas just to get volume, I think those days are over.

SPEAKER_00:

Yeah, yeah, for sure. I know your daughter runs the Ford store, she's crushing it. Um Jim Farley just came out recently and said he's got 6,000 service bays without technicians. Um that that's a reality, right? What where do you where do you guys stand on that and what can the industry do to change that?

SPEAKER_01:

You know, listen, I think the manufacturers have to continue to push hard with training programs. You know, it's a phenomenon because the next generation, you know, you know, when I grew up, there was trade schools. You could go and get automotive training and you know and learn how to fix a car. Today, these, you know, these j the next generation doesn't want to do that. They're working on computers and they're making a lot more money than they can working on cars. So I, you know, it's a struggle. And, you know, I think when you look at uh brands like Ford and General Motors, you know, because the consumer doesn't have the pocketbook to be able to pay the rates that they can in a luxury brand, it's gonna get harder and harder.

SPEAKER_00:

Yeah, I would agree. I would agree. Last question leasing. Is it back to pre-COVID levels? I mean, you guys were doing a boatload of leasing there in in Jersey. What where does that stand? And how come OEMs aren't doing more subvented programs to combat the high price of a new car?

SPEAKER_01:

Well, listen, you know, leasing is coming back. Not, it's not, it'll never, it's not what it was. I'm not saying it'll never be, but it's not what it was. It's gonna take a long time. The reason the manufacturers aren't doing combating that with leasing programs is because they, you know, they got stuck with so many vehicles that they leased out, came back with high mileage on it, they had to run through the auctions and take major losses, and they don't have to do that anymore. Used car prices are up. You take, you know, cars that come back in, well, you know, you you you can turn them and make a profit on them and clean them up and and recon them in the in the shop and make money on them. So the manufacturer's gotten smart. Yes, leasing is important because it brings down the pricing, but you know, the manufacturer would rather sell a vehicle.

SPEAKER_00:

Yeah, yeah, for sure. Wow. Crazy, crazy. Tom Maoli, the president and CEO of Celebrity Motor Car. Man, it's always great catching up. You got such great information for our dealer body out there that listens to us each morning, and uh, we always get great comments whenever you're on. So thank you so much. I hope your guy wins, by the way.

SPEAKER_01:

So we'll keep you posted.

SPEAKER_00:

Thanks so much.

SPEAKER_01:

Thank you.

SPEAKER_00:

Thanks for watching Inside Automotive with Jim Fitzpatrick.