Inside Automotive with Jim Fitzpatrick, powered by CBT News

Andy Wright on Dealer Profitability and OEM Incentives

• Jim Fitzpatrick • Season 1 • Episode 61

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As dealers confront mounting pressure from OEM incentive structures and online pricing transparency, Andy Wright, managing partner at Vinart Dealerships, shares his perspective on how the industry can protect profitability and restore consumer trust. On this episode of Inside Automotive, Wright reflects on Vinart’s 2025 performance and explains why he remains cautiously optimistic about 2026 amid shifting market dynamics.

Wright examines the challenges tied to stair-step incentive programs, describing how unpredictability complicates planning and undermines both dealer margins and the customer experience. He outlines a collaborative, objective-based alternative that brings dealers into the conversation earlier and aligns OEM goals with retail realities. The discussion also addresses conditional pricing on third-party marketplaces and the need for industry-led standards to prevent consumer confusion. Finally, Wright weighs in on growing direct-to-consumer efforts, including recent developments involving Scout Motors, and reinforces his belief in the long-term strength of the franchise model.

Topics covered:

  • The impact of stair-step programs on dealer profitability
  • Dealer–OEM collaboration as a path to sustainable incentives
  • Pricing transparency challenges on third-party listing platforms
  • Industry self-regulation versus government intervention
  • Direct-to-consumer tensions and the future of the franchise model

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Jim Fitzpatrick:

Welcome to Inside Automotive with Jim Fitzpatrick. Hey everyone, Jim Fitzpatrick. Welcome into another edition of Inside Automotive right here at cbtnews.com. Two issues that continue to be pain points for dealers across the industry are stair-step programs and the lack of pricing transparency on third-party listing sites. And I have got just the guy to talk to us about both of these issues. You've seen him here before, you've seen him on other platforms as well. He's very passionate about these two different areas of our industry. I'm speaking of Mr. Andy Wright, who's the managing partner of VinArt Dealerships. And uh Andy, thank you so much for joining us on the show. As we were joking before we got recording, Happy New Year.

SPEAKER_01:

So yes, indeed. Happy New Year, Jim. Great to be with you again, and uh great to be with you as always. Thank you very much.

Jim Fitzpatrick:

How did VinArt finish 2025?

SPEAKER_01:

Uh we had a very good year. I was very pleased with how things uh ended up. Obviously, we saw uh b business begin to tail off a little bit in the fourth quarter, so uh that was a little bit uh disappointing. Yeah, but overall, the uh the first half of the year was very strong and sort of carried the day for all of 2025. But I'm very optimistic about 2026. I have to tell you, I think there's a lot of things that are coming together that I think are gonna benefit uh both franchise dealers and consumers and manufacturers. So from that standpoint, I think it's a win-win for all stakeholders. Good. And that's what we need to continue to pursue, and that's what I'm so passionate about pursuing is win-win situations for all stakeholders.

Jim Fitzpatrick:

Fantastic. Great, great. Let's uh let's dive right into this. I know this is something we've talked about before. You've talked about this on other platforms in the industry, uh, because I know it's near and dear to your heart. Uh, and of course I'm talking about the stair-step programs uh that that impact profitability, that impact uh CSI scores, you know, that get, you know, that that have really a major play in the trust between the dealer and the the uh consumer, specifically the the desk manager or andor the salesperson and the consumer. Because right away they're like, wait a minute, how come I can't get the same price that is down the road? And you know, well, that guy's on the stair step quicker than I am. And I mean, that was a game that I was playing, you know, when we started the industry, I guess started in the industry, you know, uh 40 years ago. So uh so but it's still alive and well, and I know that you feel you know pretty passionate about this. So so talk to us about this. What what uh where does it stand today? What's your take on these uh crazy stair step programs that that OEMs love for us to chase?

SPEAKER_01:

Sure. So I think you know, at the end of the day, it boils down to how do we pursue solutions that again, as I said when we started the conversation, amount to win-wins for you know everybody involved here, right? Uh obviously our our manufacturer OEM friends have a goal and an objective in mind uh when they pursue the implementation or the or the deployment of stair-step programs. Right. Um and and obviously dealers have uh a goal in mind as well when we open the doors of our dealerships every day and attempt attempt to serve the market areas that we operate in, right? Uh our goals are we want to operate uh a successful business that continues to grow profitably uh with uh good CSI and the ability uh to pay our people well and uh to keep them satisfied so they continue to satisfy our customers. You know, the old adage of uh, you know, happy employees equal happy customers, I I agree with that. I think it's hard to dispute that fact. Uh but when everybody is walking into a casino every month, uh not knowing uh how they're going to fare at the end of the month because of an objective that is established by uh uh an outside uh party that is controlling it, uh that makes things very difficult. So, you know, again, I I want to be clear here that while I'm critical of stair-step programs, my ultimate goal here is to lead to a situation where we can uh have higher level levels of collaboration and understanding. Uh again, like I said, uh there's a there's a goal of manufacturers and there's a goal of dealers. And I think that if we can uh seek to understand each other first and then uh develop win-win solutions through uh higher levels of collaboration because at the end of the day, our we're not going anywhere. Our relationship is what it is. We're we're we're in this together. Why not figure out a way to come together, find solutions that work for everyone so that we can achieve our mutual goals? And that's what this is all about. But stair steps uh have uh have and continue to decimate dealer profitability, they continue to compromise the customer experience, and they are not good for short, medium, or long-term brand building. So uh, short of the uh, you know, sort of sugar rush, if you will, of short-term uh lift in unit sales, I really don't see how these things are positive for our industry. So that's why I'm so vocal about it and uh I'm so passionate about it.

Jim Fitzpatrick:

Yeah, no question about it. Um let me ask you this. You're you're president of an OEM uh for a week, and and the the topic comes up in the conference room of this OEM. What do we do about stair step programs? Because that damn Andy Wright is getting on us and we got to do something about it. But what you're an OEM president. What is a solution from your perspective, or what do you recommend a solution to be on this particular topic from the OEM level to achieve the goals that they want to achieve among their dealer body?

SPEAKER_01:

Sure. Well, so first and foremost, I think it it starts with uh going to uh the dealer council and saying that uh this is our goal, this is our objective, and this is our budget. Okay. We are inclined to utilize stair step programs to achieve our goal. If dealers don't like it, what would be a proposed alternative that we could consider and ultimately, you know, hopefully try uh to get to where we want to get to without compromising uh dealers or decimating profitability or compromising customer experience? And I think that if if um you know our manufacturer friends would seek out the advice and the collaboration of the retail network, the people that are doing this every day on the front lines, opening the stores early at 7 a.m. in a lot of instances closing the doors, as you well know, Jim, from your time in retail at midnight, you know, doing the types of things that we have to do to deliver cars and service our customers, uh I think they would be surprised what they would get out of it. But it it has to uh be rooted in a foundation of trust, of collaboration, and of transparency. So um I don't think that there's anything wrong with that. There might be uh, you know, people out there that disagree with me, both dealers and and OEM uh representatives, but that's my feeling on the matter. I I again I think it all starts with uh mutual understanding and how do we seek win-win solutions.

Jim Fitzpatrick:

Right. What about a um what about if a if an OEM said, okay, we'll do away with the stair step program, and we will simply pay a quarterly bonus if you hit your quarterly objective on new cars that are RDR'd. What is that the same thing just under a different program? Or how would you feel about something like that?

SPEAKER_01:

Yeah, I mean listen, I think objective-based programs when when there's clear uh when when there's there's clear understanding and explanation of how j how objectives are formulated, uh I think that that again that builds trust. That builds understanding. I think when uh dealers are walking into their dealership every month on the first of the month, again, not knowing where they need to be by the end of the month, they can't plan accordingly for advertising. Right. They can't plan accordingly for inventory, they can't plan accordingly for uh sales incentives or spiffs. You know, this is not just, you know, we don't just walk in on day one and throw stuff against the wall and see what sticks. I think, you know, most uh most quality operators try to plan and control as many of the variables as they can, and they try to do it as far in advance as they can, at least quarterly, if not at the beginning of the year for the entire year. So, you know, I I know there are some OEMs that are out there that don't necessarily operate objective-based programs, but they establish objectives at the beginning of the year for the year for their dealers. Right. And that gives us that gives dealers the ability to go out and plan accordingly for everything that I just mentioned marketing, inventory, you name it. So I don't think there's anything wrong with that. But I I do think the you know, the short-term thinking that revolves around a lot of these stair-step programs and a lot of objectives that get set uh are uh they cause a lot of problems. And um, that contributes to situations that are not good for our industry.

Jim Fitzpatrick:

Right. I I agree. I agree. And in fact, some OEMs uh have have taken the the course of saying we don't we don't do stair-step programs, right? Correct. Yeah. And and it doesn't.

SPEAKER_01:

I mean, Toyota's not doing stair-step programs. I think they I think they know what they're doing. Honda's not doing stair-step programs. Yep. Uh you know, Subaru, to my knowledge, does not do stair-step programs. I mean, there's some I I think there are some stories throughout the industry right now of consistency, of uh slow and steady growth that have been very profitable for all parties involved and very good for customer satisfaction. That's a good thing overall in NetNet.

Jim Fitzpatrick:

Boy, I I agree. Couldn't agree more. Yeah. All right. So the next thing I've got on my list here is um, you know, the notion that uh third party is something we've talked about before. We've talked about third-party classified listing sites and what specifically you're seeing out there. I know that uh this is again something that's very uh near and dear to your heart. So talk to us about that.

SPEAKER_01:

Yeah, so that concern largely revolves around the used car market and some of the behaviors that unfortunately some of my dealer colleagues continue to engage in that that I believe are not good for our industry, that are uh deceptive in nature. And of course, I'm talking about uh you know advertising prices for used cars that are inclusive of things like discounts or credits for uh customers that trade vehicles in, or they have to trade a vehicle in to realize a discount. They have to finance with the dealership to realize a discount.

Jim Fitzpatrick:

Right.

SPEAKER_01:

And what's happening is that uh, you know, the third-party listing sites, the big ones, uh, and of course I'm referring to you know, the cars.coms, the auto traders, the car gurus, uh car faxes of the world, you know, they're allowing dealers to advertise these deceptive prices, and then the price that the uh consumer sees online is not the price that they actually will pay for the vehicle when they show up in the dealership, unless they are, again, trading a car in or financing military uh incentive. Yeah. Yeah. I mean, you know, basically anything that is conditional. Right. You know, I I just I I think there I think the industry needs to come together on a standard uh that basically says that you know, we're we're not going to uh advertise prices that are chock full of conditional incentives that are not uh, frankly, accurately illustrative of of what any you know Joe consumer off the street can buy the car for. Right?

Jim Fitzpatrick:

That's right.

SPEAKER_01:

And uh, you know, the problem is that you know there are there are some out there that say, well, the government needs to step in, and that's where the Cars Act was was being bandied about. And I don't think that the government needs to step in. I I'm not one of these people that thinks the government needs to step in and be the ultimate arbiter of this stuff. I think that our industry is is filled with enough smart people and enough strong leaders that we can police this situation on our own. And it starts with the third-party listing companies. Listen, they they maintain these platforms, they profess to be the champions of transparency, which is fine. Yeah. Okay. And then they got into the business of deal rating, which of course changed everything because once they got in the business of deal rating, which is largely based on price, right, they have incentivized the type of behavior that I'm speaking of that is not good for our industry and flies directly in the face of everything they profess to stand for.

Jim Fitzpatrick:

That's right.

SPEAKER_01:

So as far as I'm concerned, look, you can't have it both ways. Okay, if you're going to be the champions of transparency and you're going to be in the business of doing things like deal rating, you have to back it up with uh credentials and with actions that are consistent with both of those things. And they are not doing that. And that's not that's unfortunate, that's regretful. You know, hopefully, uh, you know, I'm I'm you know, I have a lot of respect for a lot of the people that are running these companies. Yeah, I don't agree with some of the with some of the decisions that they've made. Sure. But I think they have an opportunity to really uh put a flag in the ground here and assume a uh a mantle of leadership here that will be good for the industry, will be good for dealers, and will be good for consumers. And I'm just waiting for somebody to step up and do that, Jim. But uh unfortunately I've been talking about this for now for for the better part of two or three years, and I really haven't seen anybody step up and do that, and that's disappointing.

Jim Fitzpatrick:

Yeah. So at the Vinart dealerships today, are A, are you using these third-party listing sites? And if you are, how do you how are how are you currently listing your vehicles?

SPEAKER_01:

Yeah, so we we are using them. I mean, the bottom line is that they uh they spend a tremendous amount of money on uh paid search advertising, you know, cloud uh paid search uh uh Google advertising and things like that. So when it comes to uh the decision that I've made in terms of how I'm gonna advertise my used cars, you know, I can choose to compete against them in paid search, or I could choose to be on their platforms, uh, let them spend the money for paid search, and then do everything I can to position my cars in the best possible uh light on their platforms. But it's hard and it's frustrating because I'm still competing against people that are not doing it the right way. And then to put dual on top of the fire, Jim, a lot of these third-party listing companies own the software systems that we use to appraise and market and merchandise our vehicles. So the added element of frustration for me results from the fact that I'm using data in these systems that these companies manage via these third-party platforms, and the data's been compromised. So that's kind of the the additional level of uh you know, just craziness, if you ask me.

Jim Fitzpatrick:

Frustration. Yeah.

SPEAKER_01:

Yeah, I mean, this is you know, this is crazy. So let's let's get our act together here, guys, and and let's uh let's do let's do right by the industry, let's do right by consumers, and let's level the playing field and uh be fair and transparent. That's all I'm advocating for.

Jim Fitzpatrick:

Yeah, have you heard from any of the leaders or the leadership at any of these third party sites? Uh is there have they given you their take on this or their opinion? Or are they coming back saying, hey, if they do it, we have to do it. Otherwise, we're not gonna be able to compete. Isn't this something that would take all of them to sit down at the same table and say, okay, let's let's put the standards in place?

SPEAKER_01:

I mean, I yeah, I've heard I've heard from pretty much uh I've heard from uh people from cars.com. You know, Alex Vetter's been been been great to to talk to. Obviously, he's retiring now, and uh and they have a new CEO coming in. But Brian Kramer, who who works at Cars.com, right, uh is is very much on board with what I'm talking about. I've I've talked to people from Auto Trader, I've talked to people from Car Gour's. I've basically talked to uh people uh at very high levels of of all companies except Carfax, which is surprising. But listen, they all kind of are saying the same thing, which really I think falls short of where we need to be. They're all saying, well, when we find out about something, we address it. Okay. So they're taking a reactive posture here, Jim, which is fine. But at the end of the day, what I'm advocating for is they need to take a proactive posture. Yeah. And they need to draw a line in the stand, whether it's in the form of codes of conduct, um, you know, ethics, whatever you want to call it.

Jim Fitzpatrick:

Sure, look at all the social sites that have got that. But if you say this or that or political or whatever, boop, you're off. Correct, correct.

SPEAKER_01:

So, you know, I just I I I I kind of think the well, we're handling it when it's brought to our attention is a little wishy-washy, yeah, to be honest with you. And listen, I I get why. I mean, most of these companies are publicly traded, they have uh stockholders they need to answer to, yeah, and they're worried about you know their quarterly revenue numbers. And when they boot somebody off the platform, it costs them revenue. I get that.

Jim Fitzpatrick:

That's right.

SPEAKER_01:

But I, you know, my response to that is look, I mean, if they could drive and deliver better value for guys like me that are trying to do it the right way, I'd pay more to be on their platforms because then you know the consumers are gonna it builds trust. And at the end of the day, Jim, if you're gonna be strong, if you're gonna be formidable in retail, you have to trade in trust first and foremost. Okay. And if if if you can't do that, then it's it's difficult to really grow your business and position yourself as a formidable retailer and a formidable uh source of truth, or however you want to characterize it. So I just I don't I don't buy into that argument uh also that you know if they start booting people off the platform, it's gonna cost them money. It might in the short term, but I think long term and medium term, I think it's gonna be good for their business and good for their reputation.

Jim Fitzpatrick:

Yeah, very good, very good point, which is a perfect segue to my next question. And that is I wanted to get your take on the idea or the the the fact that uh Scout Motors has now received a dealer's license from the state of Colorado. Today it's Colorado. The rest, uh, you know, the the in the future it's gonna be state after state, I'm sure. But uh, you know, you're a Porsche dealer. Give us give us your your take on that because I think at the same time that we're talking about this trust between the consumer and the dealer, both on the stair step program as well as when somebody's shopping for a vehicle online, third-party websites, you know, there is that lack of trust still that consumers have with their dealers. And also, it seems to be one of the elements that uh an OEM will point to and they say, we want to sell our products directly to consumers because we're not gonna play in that space that dealers play in, where there's kind of they're eating each other up, you know, and it's a race to the bottom line. We don't do that. They don't do it at Tesla, they don't do it at Rivian. So what what is your take on that? Is there some validity to that? And and and what's what's your overall feeling when you hear that your the apparent company there, uh Volkswagen, has now become a competitor in Colorado?

SPEAKER_01:

Yeah, I well, I mean, first and foremost, I think, you know, the entire situation is unfortunate because uh uh, you know, I don't really care what the narrative is that they're putting out there or they're trying to advance. The bottom line is that the franchise dealer model has been the single best delivery mechanism for retail automotive in the history of the world, in the history of mankind. And I think that's indisputable. I think that uh, you know, NADA recently published a study that uh pointed to all of the positive, the positives, the merits of the franchise system, what it means for consumers, what it means for local economies. Yep. Um and you know, you can just point to any number of things uh in my mind that contribute to uh the franchise system being the best delivery mechanism for retail automotive, like I said, right? Uh okay. So with that being said, though, uh the scout situation, listen, uh there's the there's the affiliation rule, right? At the end of the day, we have the you know, the i i this is not going it and and should not, I'm not an attorney, but I think it's pretty clear cut here. Um when uh a manufacturer is attempting to go direct to consumers, okay, and they already operate a franchised dealer network, they would be in violation of the affiliation rule. That's why Tesla has not been subjected to the affiliation rule, nor has Lucid, right? But I I just don't see how uh the court system can allow this to go forward when it's a clear-cut violation of the affiliation rule. Okay, it's no different than what you know Honda's attempting to do with a Fila. I mean, there are literally going to be a Fila vehicles rolling down the assembly line at Honda Plants in Ohio. So how that is not a uh a clear-cut violation of the affiliation rule, right? Um I I I I just I can't imagine that that's not going to be the case. So how do you how do they even defend that? That's crazy. Yeah, I mean, listen, I you know, I I think uh you know NADA is is geared up here uh to defend the rights and the interests of franchise dealers, and rightfully so.

Jim Fitzpatrick:

That's right.

SPEAKER_01:

If uh you know we want to have a conversation about pursuing changes to laws and things like that, then let's have that conversation. But I think it's unfortunate that uh some brands have uh made the decision to try to circumvent dealers when many of them have really strong relationships with their dealer networks and their retail partners, and uh, we could be the solution to uh delivering these new products to the marketplace, but we have to be given that opportunity. So uh again, I think we should attack the problem rather than each other. And if there are uh opportunities to uh to seek win-win solutions and outcomes. Through mutual understanding of one another. What's wrong with that? So that's the what that's my preference for how I'd like to see it play out. But I think scouts uh and and VW groups' uh actions uh on this matter are unfortunate and um I think are gonna go down in in court personally. But I could be wrong.

Jim Fitzpatrick:

That's right. That's right. Andy Wright, one of the strongest voices and a dealer advocate. I love having you on the show. It is great. It's great catching up as well. So he's the managing partner of VenArt Dealerships, fighting the good fight for dealers really all across the country on topics like these. So thank you so much for uh joining us here on CBT News. Very much good to be with you, Jim. Thank you. Thank you. Thanks for watching Inside Automotive with Jim Fitzpatrick