Sen. Bernie Moreno on the Pressures Facing Auto Dealers Today

U.S. Senator Bernie Moreno, a former car dealer, joins Inside Automotive to discuss the economic, regulatory, and geopolitical pressures shaping today’s retail automotive landscape. Drawing on both industry and policy experience, Moreno offers perspective on how global conflict, affordability challenges, and evolving regulations are impacting dealers and consumers alike.

The conversation explores the short-term effects of rising fuel prices tied to global instability, as well as longer-term risks such as potential memory chip shortages driven by AI demand. Moreno also outlines his views on trade policy, interest rates, and electrification, emphasizing the need for market-driven solutions and regulatory balance. As dealerships navigate increasing scrutiny and shifting consumer expectations, he highlights the importance of operational discipline, customer experience, and adaptability in maintaining profitability and long-term success.

Key discussion points:

•  The impact of global conflict and fuel price volatility on dealers 
•  Emerging supply chain risks tied to memory chip demand 
•  Trade policy, tariffs, and U.S. manufacturing priorities 
•  Interest rates, financing, and affordability challenges 
•  Regulatory pressures, including FTC oversight of dealership practices 
•  Market-driven approach to EV adoption and vehicle mix

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Transcript

Why Dealers Feel Squeezed

SPEAKER_00 0:07

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick 0:12

Hey everyone, Jim Fitzpatrick. Welcome into a special edition of Inside Automotive right here at cbtnews.com. Dealers are feeling squeezed from just about every direction right now. Higher gas prices, ongoing affordability challenges, and increasing regulatory pressures are all making it tougher to run a dealership today, with added uncertainty driven by the ongoing war in Iran. So what solutions are actually on the table in Washington, D.C. Joining me now, you've seen him here before, to talk us through all of this and maybe put our minds at ease a little bit is U.S. Senator and former car dealer, Mr. Bernie Moreno. So, Senator, thank you so much for taking the time out of what I would imagine is a very busy schedule right now in D.C. So thanks so much for taking some time with us.

SPEAKER_02 0:54

No, happy to do it. Obviously, uh semi-dysfunctional and chaotic here. Yes. Being generous with the semi, by the way. But uh no, happy to be here.

Iran Conflict Outlook And Gas Prices

Jim Fitzpatrick 1:02

Great, great. So uh let's start in the beginning right now. Obviously, there's some uncertainty created by this war in Iran. I think it's uh uh day 26 or something. Uh what what what do you have to uh say uh to today's or to our dealers today to maybe put their mind at ease? Is this gonna be a long, drawn-out war or something that you see ending shortly?

SPEAKER_02 1:24

No, these hostilities will be over very, very quickly. We've basically accomplished most of the mission, which of course is to make sure Iran can never hurt America with their nuclear program. We've wiped out their Navy, we've wiped out their Air Force, we've wiped out both most of their ballistic missile program. Their ability to enrich uranium is done. By the way, uh Iran said they didn't have intermediate uh missile capability, and yet it turns out they did. We saw that when they fired a weapon uh uh over to Diego Garcia. So obviously they're they were a major threat. It had to happen. But here's the uh the good news I think this will be over very, very quickly, and as quickly as gas prices went up, they'll come back down. And just remind everybody we're still lower than we were during the Biden administration, and we think we're gonna drive gas prices down even more once uh the hostilities are over.

Jim Fitzpatrick 2:13

Okay. It could you put some idea of a time frame when you say over soon? Is that as soon like a couple of weeks or a couple of months, or what what would you think that would be?

SPEAKER_02 2:24

Well, I look I I'm a former car dealer, so everything happens at the end of the month. That's right. So but I think it's very, very soon. Uh look, this has been 26 days. Yeah. And in 26 days, our militaries operated brilliantly.

Jim Fitzpatrick 2:37

Yeah.

SPEAKER_02 2:37

Uh I un uh unfortunately can't reveal uh what I've been told in confidential settings, but I can just assure everybody watching uh this was absolutely necessary. If we had not taken this action, uh the world economy would be in complete collapse right now because of the capabilities that Iran had. Uh we had to stop that. It's been 47 years that have been uh killing Americans, it had to stop. Uh fortunately President Trump had the courage to do it, and we had the military that was capable of doing what they're doing. And let's just pray for our men and women in uniform, get this over with quickly, no more casualties.

Oil Markets And Strait Risks

Jim Fitzpatrick 3:09

Sure, sure. And I guess a lot is predicated on the opening of the straits of harbour, right? I mean that's that's where a lot of the obviously the holdup is on the oil, and uh as soon as we see that, that would I would imagine um instantly bring down gas prices.

Memory Chip Shortage Warning

Tariffs And USMCA Certainty

SPEAKER_02 3:23

Yeah, absolutely. Look, by the way, we don't get any oil from that part of the world. Uh we actually are a net oil exporter. But of course, as the people on uh watching this know, this is a world oil market. But again, there's a momentary blip. I'm I'm worried about a couple other things that are gonna hit the industry. Uh there's a memory shortage coming. Does that sound familiar? Uh and so we we had the uh CEO of Micron in yesterday at the banking committee hearing to talk about what he can do to make certain that we have all the memory chips available so that we don't see semiconductor chip 2.0. But instead of being a semiconductor chip, it's about a memory chip. Okay. Uh they're being sucked up by hyperscalers and AI. So we're working on that proactively, which is something that this place isn't used to doing. Right. Uh, but we're gonna work on that and a couple other things we can talk about as well.

Jim Fitzpatrick 4:12

Sure, sure. And of course, uh at the forefront of a lot of OEM's uh executives today, as well as dealers, is uh the situation with tariffs. Uh any update on that?

Rates, Tax Deductions, And China Ban

SPEAKER_02 4:23

I think in tariffs, well, they've been basically institutionalized. I think everybody understands the rules of the road. I think we have to get USMCA renegotiated. I'm a big believer that it's gonna include more U.S. content. But but I think for the most part, other than uh just uh more certainty on USMCA, tariffs are now understood. They're predictable, we know where everybody is, people have made adjustments. I was with a manufacturer just yesterday that a year and a half ago, listen to this, it blew my mind, they were at 35% of their cars sold in America, made in America, and just in a year, a little over a year, they're now at 55%. So we've been able to get a lot of people. Yeah, in one year, by the way. So I think more of that is positive. Uh, we have a new Fed chairman coming. I met with him today, Kevin Walsh. I think you're gonna see interest rates drop. That will have a huge impact on car dealers and car buyers, by the way. The interest deductibility that we put into the working families tax cut. That's people are now seeing that. We're gonna work hard to get lease interest deductible as well. That's another top priority. And most importantly, Jim, uh, we want to pass legislation to hermetically seal, let me say it that way, the United States market from Chinese automobiles permanently.

Jim Fitzpatrick 5:39

That was that was my next question on here. You must be reading my notes. And that was because we saw uh Canada fall and they're selling now 49,000 vehicles, and I guess dealers are lining up to get franchises. My next question was going to be will we will we ever see Chinese vehicles here in the U.S. But I guess you answer that. The answer is no.

EVs Should Be Market Driven

SPEAKER_02 5:57

Well when we get our when we get our bill across the finish line, the answer will be no forever. Uh look, if being stupid was a crime, what Canada did would be a first-degree stupidity charge. Yeah. I mean, you don't allow somebody who's built an industry not to compete. We're all for competition. Yeah. This is an industry built to destroy. And once they destroy the Western auto uh industry, which they would, of course, uh would be Armageddon for the U.S. economy. You're talking about six, seven, eight percent of our GDP. So we're gonna hermetically seal our our market. Uh where they're gonna encourage uh through negotiations and trade deals, uh, Canada and Mexico to do the same thing. And of course, Europe should follow, Latin America should follow. So we basically isolate the Chinese and force them to build an auto industry for domestic consumption, not for destruction of the uh the uh Western auto industry. I think we can get there, uh, but that's our top priority this year. It's similar to what we did last year, getting rid of the California uh carve out for emission standards that was wreaking havoc in the auto industry. Uh, but this will be even more of a long-term success. So we hope to get that across the finish line.

Jim Fitzpatrick 7:03

Sure. I've spoken to the number a number of OEM executives here in the last month, and they're actually uh a little bit bullish on EVs in terms of uh building EVs again. They see that organically, of course, on a on a market uh where consumers want them rather than it being forced by the government, although they're feeling pretty good about EV sales in the future. Have you heard that as well?

SPEAKER_02 7:25

Customers should buy whatever car they want, Jim. I am not for any particular type of vehicle. Uh uh there's an EV need if you live in a certain circumstance, there's a combustion uh need if you live in a different circumstance, and there's a hybrid uh for everything else. Uh my point has always been not an anti-EV stance, because that's silly. Why would I be against a certain train? My point of view is let the market decide. And the marketplace is voting with their pocketbooks as they do. Uh by the way, right now, green cars are becoming more popular. Who knew? Yeah, but is it because of government mandated green cars? It's because people get to choose whatever car they want to buy with their own money.

Jim Fitzpatrick 8:04

Right.

SPEAKER_02 8:04

Uh that's the that's the way for the market to develop.

Jim Fitzpatrick 8:07

Sure. Now you've probably heard that uh the FTC has sent out some 97 letters to dealer groups out there saying, hey, you got to sit up and fly right. You know, when you advertise these vehicles, you need to advertise everything that that customer is going to be getting, and there's got to be price transparency. Um, as a former dealer yourself, I mean you're on the front lines, you know what we've got to deal with in this industry. What's your take on that? Are we you think we're gonna be seeing some hefty fines coming down from the FTC for those dealers that don't comply?

Cutting Costs To Improve Affordability

SPEAKER_02 8:37

Well, first of all, I'd just say that we have an amazing FTC chairman and Andrew Ferguson. And what I've encouraged is dialogue, and we're working on that, NADA, a meeting with them later this afternoon. They met with FTC staff yesterday. Here's what I'd say we have to once and for all shed the final vestiges of what I would call the 80s car business. Now, this these are sophisticated operators with very sophisticated businesses doing, for the most part, 98, 99 percent a great job. Right. All of us, the rest of the industry should be all for cleaning it all up. And look, I competed with dealers that weren't uh ethical and were doing the wrong thing. It's the worst thing, right? Because you have a relationship you build with the customer, that's right, and then they see an ad for a car that you know that car doesn't exist, that price doesn't exist, the trading value doesn't exist, but you lose credibility with that client. So we got rid of the FTC cars rule. That was a Biden era lunacy policy. But what we have to get to in land is a place where the industry says the good players, the strong industry players say, let's clean this up once and for all, and I hope to accomplish that this year as well.

Jim Fitzpatrick 9:46

Sure, sure. Um last and and but not least on my list is affordability. It's obviously a really a crisis out there right now, just not not just in the automobile industry, but but really groceries, I mean you name it, everything is up. Um although the price of a new car is now over$50,000. Um where do you where do you think we can get some relief on that?

SPEAKER_02 10:07

Well, the average price of a car is up because more people are buying more expensive cars, but model by model, actually cars are the price of cars are down, right? Which is good news.

SPEAKER_00 10:15

Yeah.

SPEAKER_02 10:16

Uh we have to do our part getting rid of some of these silly regulations. I had a good conversation with a European maker. He compared what we're doing here in the US with what Europe is doing, and the they've priced out a lot of ability to make affordable cars in Europe because of regulations. So we want to clean that up. I think that's number one. Number two is things like making the interest payments tax deductible on finance and then adding leasing is important. I think car companies have a role to play here, Jim. We don't need 97 versions of the same car with 75,000 color combinations. They can simplify that a little bit. Uh but ultimately we've got rid of all look at the EV losses.$60 billion in counting. What's the effect on the price of car of that kind of loss?

Jim Fitzpatrick 10:59

Yeah, very good.

SPEAKER_02 11:00

All that's gone. All this EV subsidies are gone. The the greenhouse gas targets that were completely unattainable are gone. So I think the car industry is gonna start looking at ways to figure out how to become more efficient. AI will make the industry more productive, but we have to avoid shocks, and that's why we're working on this memory situation so that we don't have a shock to the system like we saw during COVID with semiconductor chips. So we've got to be proactive, uh, but obviously need the car companies to be more efficient, make certain that they're more responsive to their clients, and now that they can make the cars people want, make them and uh do what they can to make those things more affordable.

What Dealers Should Focus On Now

Jim Fitzpatrick 11:37

Sure, sure. Um, if you were a dealer today, what would you be telling your teams, your GMs, and your managers to be focused on for the balance of this year?

Final Thanks And Sign Off

SPEAKER_02 11:47

Focus always, only on the variables you control. You control the culture within your dealership, you control how you interact with your clients, you can control protecting your brand. That's why this FTC thing matters. You don't want to be somebody who's on the wrong side of that because in the court of public opinion you'll lose. Uh make certain that you watch your assets, right? Asset management is really, really important. Just do the basics really, really well. Look, car dealers are the greatest entrepreneurs in America, and that's why this industry has thrived. And I just encourage them to keep doing that, turn off the distractions. You know, when when uh the uh financial crisis hit in 2008, 2009, I used to have a TV in my office. First thing I did was rip that thing out of there. Uh I can't control that. Focus on the showroom, keep your eyes on your team, keep your eyes on the showroom, and uh do what you know you you do best, which is take care of business every single day.

Jim Fitzpatrick 12:42

Yep, that's great advice. From the great state of Ohio, U.S. Senator Bernie Moreno, thank you so much for stopping by. I know you're a very busy young man these days, so and thanks for fighting the good fight for dealers there in D.C. Very much appreciate all the time you've given us.

SPEAKER_02 12:56

Thank you, Jim. Thanks.