Laura Perrotta on Affordability, Direct Sales, and Industry Challenges

On this episode of Inside Automotive, Laura Perrotta, President of the New Jersey Coalition of Automotive Retailers (NJ CAR), examines the growing pressures facing franchised dealers—from illegal broker activity and FTC pricing scrutiny to emerging threats to the franchise model itself.

Perrotta explains how unlicensed brokers continue operating in New Jersey despite long-standing prohibitions, creating uneven competition for licensed dealers navigating strict compliance and facility requirements. She also discusses concerns around FTC enforcement, arguing that transparency standards should apply consistently across all vehicle sellers. Beyond regulation, the conversation explores direct-to-consumer sales models, affordability concerns, and how dealers are positioning themselves for long-term sustainability.

Key discussion points include:

•  Why illegal broker activity remains a growing issue in New Jersey 
•  How stair-step incentive structures may contribute to market pressure 
•  The impact of FTC pricing enforcement and dealer compliance expectations 
•  NJ CAR’s “Local Matters” campaign supporting the franchise model 
•  Concerns about direct-sales expansion and evolving state policy 
•  Why affordability and technician development remain top industry priorities 

Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

For more content, visit CBTNews.com and follow us on your favorite podcast platform.

Transcript

Welcome And What’s Ahead

SPEAKER_00 0:07

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick 0:13

Joining us now is Miss Laura Perata, who is the president of NJ Car, which is New Jersey Coalition of Automotive Retailers. Thank you, Laura, so much for taking the time out of your schedule to join us on the show once again.

SPEAKER_02 0:25

Oh, thanks for having me. Really appreciate your time.

New Jersey’s Illegal Broker Problem

Jim Fitzpatrick 0:28

Sure. So there's a lot to catch up on since the last time that we spoke. And uh man, we got everything from FTC warnings to broker activity there in your state that I know you're very passionate about, the Chinese vehicles, the man, you name it. It's just it's it's going crazy. And especially this wacky economy that we're in. But uh so let's let's kind of start in the beginning and talk a little bit about first and foremost what's happening there in New Jersey with regard to the broker activity. And so what tell the rest of the country what what problems you're having there and where that stands today.

SPEAKER_02 1:02

Oh, I really appreciate the opportunity to talk about this in particular. So brokering, unfortunately, has been problematic in the state of New Jersey for decades. Um, it is really bubbling up right now in particular. Um, and you know, it it just uh is putting tons of pressure on the dealers who um are really trying to avoid the brokers and uh you know do things by the books in the state of New Jersey. Brokering is illegal. You're not allowed to um utilize a broker for a fee in the state of New Jersey. And so um, but at the same time, there's tremendous pressure from the manufacturers to hit certain targets through stair step programs, which um are not legal in the state of New Jersey either. And um so it unfortunately what it does from the dealer's perspective is that destroys the brand. You know, we have um brokers making deliveries out of their driveways when we have, meanwhile, down the street, one of our Kia dealers is building a$20 million facility.

Jim Fitzpatrick 2:01

It's crazy.

SPEAKER_02 2:01

You know, so it's just very um very problematic overall.

Jim Fitzpatrick 2:05

Yeah, no question about it. And when you say you're not allowed to use a broker, you mean the consumer is not allowed or the dealer is not allowed, or both.

SPEAKER_02 2:12

How our regulation is structured, it's the dealer who's not allowed to take a fee to offer a fee to utilize broker services.

Jim Fitzpatrick 2:20

And the reality is that some of these brokers, if I understand this correctly, are actually working in tandem or maybe sometimes even in the showroom of the dealerships. Is that happening?

SPEAKER_02 2:32

You know, it's it's kind of all over the place, really. Um some of these folks are really fly by night um businesses that are kind of cropping up and then moving, which makes them hard to target. Sure. Um they're completely unlicensed, um, which is to sell new vehicles, which is very problematic. Um, so I mean, from our perspective, we really are hopeful that our new MVC head is going to pursue going into the brokers and actually um uh you know levying fines and saying, where's your new car vehicle license that you're selling these new vehicles cars, new vehicles with?

Jim Fitzpatrick 3:06

Yeah.

SPEAKER_02 3:07

So that's where we see a big problem.

Jim Fitzpatrick 3:08

Yeah. And then there's been a number of uh OEMs that have actually issued letters to dealers saying, hey, enough's enough. We're not gonna put up with this kind of behavior, right?

SPEAKER_02 3:18

Yes, and that that is helpful.

Jim Fitzpatrick 3:20

Yeah.

SPEAKER_02 3:20

Um, you know, we've probably got five or six OEMs who have sent letters to the dealers, um, and just put everyone on notice that, you know, we're gonna follow the law here, which is positive.

Jim Fitzpatrick 3:31

Yeah, yeah. Well, that's good. That's good. And then uh I've spoken to a number of your your uh dealers there, New Jersey dealers that are very passionate about this and very and saying, hey, we all got to play on a level playing field, and enough is enough, and this is not cool. It's not cool for the for the uh for the dealer community, it's not cool for the consumers who in many cases uh are not being treated properly. And uh, and and then there's also some fraud cases out there against from the consumer to these to these brokers, so to speak. And that's that's a scary situation, right?

FTC Scrutiny And Transparent Pricing

SPEAKER_02 4:03

Yeah, there are no consumer protections built into the system. You're utilizing brokers, and um, you're charging them for a fee for something that they don't need to be paying for. They can go right into the dealership and work with whoever they're comfortable with and um get a good deal on the vehicle and not have to pay the broker fee on top of that. Um, so it's it's just it's so problematic. And um, you know, what one thing that really is getting a lot of the dealers up and on an up roar in New Jersey is why, you know, the FTC is really uh analyzing dealership transactions right now, but then that the brokers are really not following any advertising rules whatsoever. And um, they are just rampantly kind of not following the rules of the road, where the dealers are held to the every degree of perfection and they can do whatever they want um out in the broker world and not be regulated or analyzed. So it's not.

Jim Fitzpatrick 4:55

I didn't think I did not think about that. And uh, and you're right, the FTC is after, you know, after they sent down 97 letters and it's got everybody uh, you know, very, very concerned in the industry. I think there's a lot more questions than there are answers right now. And uh I know this is gonna sound like a a cheap plug here, but uh, as you may know, CBT News has just announced that we're gonna be holding a one-day uh summit down in Washington, D.C., along with Bert Senator Brand Moreno and some people from the FTC and NADA and some other state associations as well to try to figure all of this out. Because there's as I said, there's a lot of questions out there among dealers that are saying, well, I could be compliant on the federal side, but not in my state, or maybe on the state side, but not with some of the federal um uh you know regulations that are out there. So uh so we will be having that conference, um, which certainly we would love to have you at and and your dealers. So if the dealers that are out there listening, it's gonna be June 16th, as I said, at Washington, D.C. But talk to me about that. I mean, there this is a real situation that dealers need to pay attention to. Uh obviously, we've seen already some millions of dollars placed in fines because of this uh FTC regulation.

SPEAKER_02 6:06

Uh no, absolutely. And I know our dealers are waiting with bated breath for the um frequently asked questions to be answered by the FTC so that they're very clear on what they need to do going forward to make sure everything is um done well and right. Um so I know that that's something we're all waiting on. But yeah, no, I transparency is what it's all about, right? We need to have transparency for the public, um for the consumers, so that they they know exactly um the price of the vehicle when they're purchasing it.

Jim Fitzpatrick 6:34

Yeah, for sure. And everybody in that situation, it's kind of similar to the situation with the brokers where everybody has got to be reading off the same sheet of music on this because you can't have rogue dealers saying, well, I'm gonna advertise one number and it doesn't include the doc fee or it doesn't include, or it includes some kind of crazy incentives that nobody qualifies for, you know, or rebates or what have you. And uh, but it's important that everybody uh plays nice on this. Otherwise, you're gonna have uh these rogue dealers out there that are getting more share, more of their fair share of the business because they're advertising these cars at numbers that uh are not legit, right?

SPEAKER_02 7:11

Absolutely. You know, it's um we can't have fine print anymore. Everything has to be clear, everything has to be transparent. And I think we've heard that loud and clear from the FTC that um, you know, you really want to be transparent with everyone in your advertising so that there's no gray error, there are no questions.

Selling The Value Of Franchise Dealers

Jim Fitzpatrick 7:27

That's right. That's right. Talk to us about this uh the NJA car you guys are launching a PR campaign focused on the value of the franchise system. Uh talk to us about that.

SPEAKER_02 7:37

Yeah, this is something that we're very excited about. You know, we see such value every day from the stories our dealers have, you know, about the charitable work they're doing, about um the number of employees they have, about um the folks that are staying with them. That's a real dealership family at all these different locations. So we just think there's such a positive story to tell for the dealers that um we're we're putting our money where our mouth is, and we're we've hired a firm called Moxie Strategies, and they're just brilliant. And they're going to be helping us um paint the picture for the legislators here in New Jersey and for the consumers at large about the value of the dealership as far as our tagline is local matters. Um, we want to talk about how these 538 dealerships in New Jersey are here, brick and mortar. We are supporting roughly 70,000 jobs across the state. And um, we've been here for many a generation. You know, our organization started in 1918. Wow. And uh we're gonna be here long into the future. I just had a dealer in in my um office today, fourth generation dealership. Um they started in 1912 in Cape May. Isn't that amazing?

Jim Fitzpatrick 8:44

Wow, 1912. That's incredible. Wow, incredible. So and this comes certainly in light of the fact that uh Scout is looking to bypass the franchise system and sell their vehicles directly to consumers. Um, are they able to do that in New Jersey?

SPEAKER_02 9:02

So we have um we had an exception for Tesla to have four locations, uh stores, if you will. Um and now we do also have through a settlement agreement with Tesla some galleries as well. Okay. Um and that is where we have fears that folks like Scout might be able to come in on the heels of that um settlement agreement. So yeah, it is concerning for us. And um, we're very worried, you know, about both Scout and then also, you know, the Chinese new entrance and just what it could do to our market here in New Jersey.

Chinese Vehicles And Fair Competition

Jim Fitzpatrick 9:34

That's right. That's right. What do you what's your take on the on the Chinese? Do you think there's any guardrails that could be set up to allow the Chinese to come in with their vehicles, much the way we saw the Japanese come in in the late 60s, early 70s with their products?

SPEAKER_02 9:50

I don't know. I do personally, and I, you know, I haven't taken a poll in my dealers or anything, but personally, I think it's a whole nother ball of wax from my perspective because um China's really, you know, funded their whole electric vehicle program and their vehicles. Yeah. I just think it's it's not um really uh even playing field when you have such a situation that's so much government investment. Then I have serious concerns about the labor and their labor um approach to building these vehicles at such a low cost as well. You know, they have all the critical mineral minerals at their fingertips. Yeah. Um, I've read articles where they're working the the workers seven days a week. I mean, I just don't think that this is something that's fair to the automakers who have been here for many a generation in the United States, and to follow the rules. And and we have strict rules and we're following them, but that does make our products more expensive, and that's the reality.

Jim Fitzpatrick 10:42

Right, right. Um obviously with the affordability situation out there, uh, the idea, you know, we've heard so much now about the Chinese vehicles been on 60 Minutes, it's been on all these different, you know, CNBC and Bloomberg and everything's like, hey, these cars are only 35 grand and they're loaded with technology and luxuries and unbelievable. In fact, the president of Ford, Jim Farley, came out and said, I'm driving one, you know, just to kind of figure out what this is all about, which I I I completely understand. You got to know the competition better than your own product sometimes. But um, having said that, is that is that a I mean, it it seems as though we keep going, you know, if you look back just right before COVID, we were at, I think, like, you know,$35,000 for the average price. Now we're at$50,000. You know, if you take the same six years and and the same trajectory, you know, we're gonna we're gonna be looking at$80,000 for a new car pretty soon. Um, is there any kind of an opportunity that you could see, or any kind of a world that you could see where the Chinese could come in and lend their know-how or their technology to say, you know, we could build these cars a lot cheaper, maybe even along with a US partner, a US manufacturer?

SPEAKER_02 11:50

Yeah, I I just don't know. Right now, I all I see is destruction in the wake for the US automakers. And maybe I'm not being um open-minded enough or optimistic enough here, but uh, you know, I I don't know. I mean, I'm sure we could learn from what they've done with the tech technology I hear in these Chinese vehicles is is very, very good. Yeah. Um, but you know, I I don't know of what the path forward would that would be that it would be safe. Right. I mean, someone smarter than me will probably figure it out. I guess Canada might be a good test case to see how things play out there in Canada.

Jim Fitzpatrick 12:22

You're right. You're exactly right. Yeah.

SPEAKER_02 12:24

Let them go first. We'll figure it out. Or we've learned from their mistakes. Um I I don't know. It's I I just think it it could be catastrophic. You know, seriously. I think about, I mean, I've been reading an article the other day that some of the autos are like$17,000. I do think that I hope that the US automakers get serious about making more affordable models. You know, hopefully maybe uh a little less um uh, you know, you don't have to have everything in the kitchen sink in them, maybe just get something that's a little bit more affordable for Americans. That would be amazing.

Jim Fitzpatrick 12:57

That's right. I was at an event uh not long ago where Bernie Moreno, Senator Bernie Moreno talked about that. He said, sometimes we that these vehicles are so high tech that are you even using half the technology that's in these vehicles, you know? And or do you need 47 different airbags? You know, do you do like all everything that we're putting in here? It's like, do you really need all of those things? He's got a very good point there because with everything that you're doing, you're adding that much more to the cost of the average car out there, you know? And it's uh maybe there's time to say, hey, wait a minute, what what's going on here? You know, it's crazy. Yeah, right?

SPEAKER_02 13:31

Absolutely. Something has to be done. I can't remember which manufacturer you probably know. I saw an article about they were building a secret truck, uh pickup truck that's that's a with a Ford, yeah,$30,000 model um truck. That that will be something. I mean, that I can't imagine the demand for something like that. That would be amazing.

Jim Fitzpatrick 13:48

I know. It's and it's interesting too because it to me, I'm like, wait a minute, wait a second. All of a sudden there's a threat of Chinese vehicles. Oh, we have a truck here for$30,000. We forgot. We forgot it sought back. They didn't even hit the those Chinese didn't even hit the shore yet, and all of a sudden you got a truck for 30 grand. But I think competition is good. This is what comes out into a, you know, into a uh a market like that we've got here in the US, which is a free market, as free as we we, I mean I I say free loosely, but uh, but it is a free market. And uh and I think that's great. I think that I commend Ford for coming out and saying, hey, we're gonna lead on this, you know, and uh we we do have cars. Now, granted, Ford will not make as much on a$30,000 uh pickup truck as they do on a$70,000 F-150 sitting on a showroom floor ready to go. But at least they are listening to the consumers out there saying, Look, 50 grand for the price of a new car. Come on. What are we doing? You know, this is nuts, right?

SPEAKER_02 14:44

What if we could bring sedans back? Wouldn't that be amazing?

Jim Fitzpatrick 14:47

I mean, it would just be like a miracle. So quick to do away with all of those, right?

SPEAKER_02 14:52

Yeah, no, absolutely. Well, that's because I love my giant car, but that's me.

Jim Fitzpatrick 14:57

Well, Laura, that's because then you know we're all gonna be driving EVs by 2035. I mean, that was the plan. Come on. That's you know, absolutely. Not so fast, the consumer said, and the dealers. Now, I will say this, so and by the way, some of them, I'm not gonna name them, but some of them happen to be in New Jersey, because I often ask this question. If Trump says and he has mentioned, you know, well, I'd kind of be open to the idea. I mean, you you know, Trump, you you never know what which where he's going on certain issues. But on the Chinese vehicles, he said, I'm open to the idea to hear something. And I asked this question to many dealers. If it was allowed that Chinese could sell cars here, would you want to be a franchise dealer? And many, many, many of them have said, absolutely, I would definitely be, you know, a franchise dealer. So it's kind of a one of these, you know, no, I don't think they should come. Okay, they're gonna come. Okay, I want to be a dealer. You're like, wait a second.

SPEAKER_02 15:47

You don't want to be left in the dust. You've got to get out of the train if it's going, right?

Jim Fitzpatrick 15:50

That's exactly right. And they're always dealers, you know? They're saying if somebody wants to buy a car, I want to be the one to sell to them, you know.

SPEAKER_02 15:57

Exactly. Exactly. And I could be totally wrong. Maybe, maybe they'll be the next Toyota. You never know.

Jim Fitzpatrick 16:03

You just never know. I think the key there is gonna be for them to find an American partner that says, okay, let's build a factory here, let's do this thing together, let's legitimize it. I mean, listen, our history with with uh the Chinese is is our auto history is very, very rich. You know, there's uh GM has sold in the last 20 years 50 million vehicles in China. Okay. 50 million. So you know, there the the the whole Chinese auto manufacturing thing's been going on for a long time. Ford sold a little over five million in China. So that there's I I just think there's too much there, there's too much history there on the automotive front for something to not be cooking in the background that we don't know about yet, you know.

SPEAKER_02 16:49

We'll see. I'll hope it will work out. Again, Canada can be our test case. I'm just glad it's not us.

Technician Training Pipeline And Grants

Jim Fitzpatrick 16:54

All eyes are on Canada. And those people are so nice that they're probably gonna make it nice and easy for everybody. So, what what else is on NJ Carr's to-do list for the balance of the year?

SPEAKER_02 17:05

Oh gosh, you know, we're we're still working on our technician training too. That's been a lot of focus for us. We um we're going after another grant, we're um into our fourth or fifth class now. I'm trying to keep track, and we're we're placing graduates at dealerships, which is just amazing. Yeah, we're really, you know, the the policymakers are loving what we're being able to do. The New Jersey Department of Labor is really happy with our progress, and our dealers are really excited about this pipeline we're creating. So um just feel we're really on the right path here for something exciting and new and free to the students, which is huge. Sure.

Jim Fitzpatrick 17:41

You know, what that that is fantastic and much needed. I mean, NADA every year comes out and says we need like 70,000 technicians over the course of the last neck next couple of years, rather. And uh so man, that I commend you for for launching that and and and managing that. And that that's that's awesome. Um, and in terms what are you hearing back from your dealers right now in terms of uh the some of the headwinds that we see? Business good, business not so good? Where does it stand right now?

SPEAKER_02 18:06

You know, January and February were pretty rough, obviously, because of the weather here. I mean, with the snowstorms and the cold, that was miserable.

SPEAKER_00 18:13

Yep.

SPEAKER_02 18:13

Um, we did see a little bump up with tax returns, which we were hoping for, which is good. And um, you know, I'd say like most redealers are saying it's okay. You know, it's not gangbusters, but it could be worse, and it's okay. And I'll I'll take it's okay right now with all the headminds we have, which are a lot.

Jim Fitzpatrick 18:31

Yeah, yeah. Yeah, no question about it. I mean, it is amazing how this economy, you turn around and you know, have all of these problems, and then the stock market continues to go up, and you know, and it's just like, what is going on? And then of course they added, I think, 192,000 jobs in uh in in uh April, and it just it's it's all over the place. You just try to, you try it just when you try to figure it out. You go up, they're gonna, you know, the the the economy pivots in this way that you didn't expect. It's crazy.

SPEAKER_02 18:57

Yeah, it's it's you just try and not get whiplash and keep up with what's going on every day. It's a new headline and a new a new headwind, but then also, but we know the dealers are forever optimistic, and that's what I love about them.

Market Headwinds And Closing Invite

Jim Fitzpatrick 19:10

That's right. That's right. Well, once again, I'd like to invite you personally and all of your dealers uh to our uh leadership conference in Washington, D.C. June 6th. For those that are listening, make a make a calendar uh on that, uh, or I should say a note on your calendar. Uh love to have everybody. We're really going to try to bring all the parties, the stakeholders holders together on this very issue of the FTC and the role and the impact that it's having in retail automotive. Try to figure some things out, give answers to dealers that they've been looking for. So I appreciate that. Laura Parada, president of NJ Car, knocking the cover off the ball. You're doing a great job. I talk to your colleagues, and they're they're oftentimes they'll refer to you and go, Well, kind of like what Laura's doing in in New Jersey. I'm like, she's knocked, she's doing a great job.

SPEAKER_02 19:53

Thank you. Well, I appreciate all that you do for the industry, seriously. And it's just an honor to get to spend a little time with you.

Jim Fitzpatrick 19:59

Absolutely. Well, thank you for those kind comments. And uh thanks so much. Hope to see you at the event. So thanks.

SPEAKER_02 20:05

Okay, thank you. Have a great day.

Jim Fitzpatrick 20:06

You too.

SPEAKER_00 20:11

Thanks for watching Inside Automotive with Jim Fitzpatrick.