Peter Cooper on Affordability, FTC Scrutiny, and Dealer Survival

Dealers are facing an unprecedented mix of challenges, from tariffs and affordability concerns to FTC scrutiny, inventory shortages, AI adoption, and the potential entry of Chinese automakers into the U.S. market. In this episode of Inside Automotive, Peter Cooper, President and CEO of Lexus of Lehigh Valley, shares how his dealership is navigating today’s uncertainty while staying focused on long-term stability.

Cooper discusses the impact of ongoing inventory disruptions, the growing affordability crisis facing consumers, and why dealers need to stop waiting for conditions to normalize. He also explains his store’s decade-long commitment to one-price selling, weighs in on FTC pricing enforcement, and offers his perspective on hybrids, acquisitions, and the future competitive landscape.

Key discussion points:

•  How inventory shortages have affected Lexus sales and operations 
•  Why vehicle affordability is the industry's biggest long-term challenge 
•  The benefits of one-price selling and transparent dealership pricing 
•  Cooper’s perspective on Chinese automakers entering the U.S. market 
•  Growing consumer demand for hybrid vehicles over full EVs 
•  Why dealers should build operations around uncertainty rather than wait for stability 

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 Market Reality Check

Jim Fitzpatrick 0:07

Welcome to Inside Automotive with Jim Fitzpatrick. The auto market is facing a mix of economic pressure and shifting consumer behavior. At the same time, the luxury segment is showing signs of resilience. So joining us now to share what he sees on the ground and also on the horizon is uh Peter Cooper. You've seen him here before with me on CBT News. He's the president and CEO of Lexus of Lehigh Valley. Peter, thank you so much for joining us on the show.

Peter Cooper 0:33

Jim, as always, great to see you and thanks for having me on.

Jim Fitzpatrick 0:36

Yeah, fantastic. So a lot's happening out there. Don't need to tell you between war, inflation, gas prices, you know, we've talked about this before. While dealers are very resilient, we've we've seen it all. Okay, these are some concerning times right now, although it seems as though the industry keeps kind of moving along. So from your perspective, talk talk to us about that.

Peter Cooper 0:57

Look, I I said it to you before we got on the air. I think if I step back from what I've seen and witnessed on your program, the topics over the last six months to a year have gone from government intervention, whether it's tariffs or the FTC, we have the electrification issues, we have China, we have AI, we have used car acquisition, we have affordability, we have supply chain issues. And oh, by the way, maybe we're gonna get a little downturn in the market here. So the amount of problems, the challenges that we're we're facing, we it's unprecedented. That's right.

Jim Fitzpatrick 1:35

That's right.

Peter Cooper 1:36

And and I can't say there's gonna be more here. And we're just trying in an industry that doesn't move too quick to adapt. Uh that's the dealer's biggest challenge is how do we face all of these things and all of them at once?

Jim Fitzpatrick 1:48

Yeah, that's right. That's right. There's no question about it. Has that have you felt the impact at your store here in the last couple of months since the war broke out in Iran in terms of gas prices or or any of that? Is there any concern on behalf of your customers that said, hey, you know what, 100,000 bucks for a for a new Lexus? Maybe I'll hold off right now.

Supply Gaps And The Affordability Cliff

Peter Cooper 2:06

For us specifically, it's been more of a supply issue, having the right products at the right time. They went through some uh issues in the first quarter of not getting our core model, which was the NX, because Toyota was switching over the platform to the RAV4.

Jim Fitzpatrick 2:21

Okay.

Peter Cooper 2:21

We didn't we don't have the new ES coming online this month, so that's five months without that. So it's been more of that. And of course, it's an every time gas fuel prices go up. People run out, get rid of their gas guzzlers. I gotta get an electric vehicle, I get something else. Yeah. But I think this is just a temporary blip. I think the bigger overarching thing is the long-term affordability in the marketplace.

Jim Fitzpatrick 2:44

Yeah, yeah, for sure, for sure. That that you're right, that is a real concern. There's no question about it. Everybody seems to be um trying to do the best that they can. It seems uh Ford's working on a $30,000 uh EV truck uh uh to compete against what might be, we might see the Chinese vehicles coming into the U.S. Um, as many people that watch uh my show know that uh I'm all for the Chinese coming in. Let them come in, couple hundred thousand vehicles, make sure they can sell to a franchise network, get a promise out of them that they'll build a uh, you know, a a uh uh uh what do you call a factory here in the U.S. But uh let's see what happens. Uh Jim Farley said, I'm driving one right now because I gotta figure out what the Chinese vehicles are all about. And I'm as he says, I'm completely impressed with them. Um but uh so so you know this is a uh also at the core of this is an affordability issue, right? I mean, we have $50,000 for the price of a car, families are not they it's not sustainable, right?

Peter Cooper 3:42

Clearly not sustainable, and layer on top of it, what's it do with our fixed stops?

Jim Fitzpatrick 3:46

Yeah.

unknown 3:47

Right?

Peter Cooper 3:47

Right now, if you're in the presence.

Jim Fitzpatrick 3:49

Yeah.

Peter Cooper 3:49

So I think it's enormous challenges.

Fixed Ops And Customer Retention

Jim Fitzpatrick 3:51

Yeah, there's no question about it. Um I would imagine though, fixed ops is doing pretty decent because people have to hold on to car the car that they're in, so now they're now they're spending the money to maintain that vehicle, put the new tires, get the get the stuff done on the car. Are you seeing that?

Peter Cooper 4:07

I'm not sure. Okay. I mean, I I think I think we're still right at the point. Once we get out of warranty, people are really inclined just to maintain.

Jim Fitzpatrick 4:15

Yeah.

Peter Cooper 4:16

Um, and the issue is if something is marginal, they'll put off a repair.

Jim Fitzpatrick 4:21

Okay.

Peter Cooper 4:21

Um, so I don't think so. And I think you know, one of the challenges dealers still have that's not related to affordable. We can't get people in under warranty. They don't want to come back to a dealer.

Speaker 3 4:31

Yeah.

Peter Cooper 4:32

So they're not looking to come back here for a repair.

Jim Fitzpatrick 4:34

Sure.

Peter Cooper 4:35

And again, that's that's a challenge. I think they're interrelated to how we've treated the customer, what the processes look like. It's really not been in the best interest of the customer, certainly consumer-centric. Layer on top of it, what happened with the FTC, they're not doing it because we were, you know, we were Boy Scouts. You know, so we have to really look at all these things. What's our behavior cost creating in the industry?

Jim Fitzpatrick 4:58

That's

FTC Pressure And Price Transparency

Jim Fitzpatrick 4:59

right. That's right. Um, I mentioned to you before we got recording that we just announced uh that in in uh uh CBT News is going to hold a summit on this very issue of uh uh pricing transparency because of the FTC. We're gonna bring all of the parties together on this. But what's your take on it? When you heard about uh the FTC jumping in and saying, hey, here's 97 letters, we're gonna send to dealer groups out there, large and small, you better sit up and fly right. If that number that you're advertising out there doesn't have your dock fee in it, or it's got some Mickey Mouse kind of rebate that nobody really qualifies for, we're coming after you. And uh and some of these fines are are very, very hefty that they're talking about. So where do you stand on that? What does the industry need to do?

Peter Cooper 5:41

Well, again, it's um I think we're challenged right now in the industry, or it's an ongoing challenge. As you know, we've been a negotiation free store transfer and pricing for 10 years. Um it's really just not fair to the customers.

Jim Fitzpatrick 5:56

I think we're just to be clear, the negotiation free means you set one price on the car, that's the price, it's advertised that way, somebody comes in, it's kind of like CarMax or V or Carvana or what have you, it goes, that's the price. You like it, you buy it, you don't like it, you don't buy it.

Peter Cooper 6:09

That's it. It's that simple. Right. Rum. It's that simple. And I think it's where we've gotten into negotiations and what we negotiate more on that can cause some of these problems.

Speaker 3 6:20

Sure.

Peter Cooper 6:20

So I think I think that's that's a really big issue. So it's a culture thing, and lay on top of it, you have all of these dealers who are my age or older say I got to get out in the next couple, three years, and they're just focused on that net. Um so how do we sell it a good and multiple of that net? So it's really it's a confluence of issues that really presents enormous challenges that we have to be really mindful of.

Jim Fitzpatrick 6:45

Yeah, yeah, there's no there's no question about it. I happen to be a proponent of what you're doing there, the one price selling. I I was uh one of the uh people with AutoNation early on, back in the in the 90s, believe it or not, when they first got started. And it was a it was a concept that at the time I'm like, wait a minute, who's gonna want to buy a car and not have to negotiate on it, you know? But lo and behold, you know, they won me over and I was like, wow, this is incredible. We're literally selling hundreds of cars, you know, and not negotiating a nickel on them. Obviously, the same way CarMax does and and the other some of the other retailers, but uh it's a great way to go, right? You get a better uh employee uh because a lot of times employees don't like to negotiate either. And you get a better customer, one that's gonna come back to you and and uh for their second, third, and fourth purchases. Um have you found that to be the case?

Peter Cooper 7:32

So I think to oversimplify it, is everybody we know in America today is working hard to earn their money.

Speaker 3 7:39

Yeah.

Peter Cooper 7:39

Okay. Everybody in America today says to work really hard to spend their money.

Speaker 3 7:45

Yeah.

Peter Cooper 7:45

So if we make it easier for our employees to do a transaction that you know with a customer, that's that's important for us.

Speaker 3 7:53

Yeah.

Peter Cooper 7:53

It's also important for a customer, they don't want to make it easy for them to buy, and they'll keep coming and keep coming and talk to everybody about it. So that's just our perspective. And and people say, Oh, you're a Lexus dealer, and I have to say, we've had the luxury of this. Okay. So yes, it's an enormous luxury. But the whole thing is, what's the experience that you would want as a customer? And we look at fixed ops, you know. I can make an appointment for nine o'clock to Winwood dealership on a Thursday, and I get there, and okay, I'm gonna wait, and they're not taking my car in at nine, then I'm gonna come out and say, Oh, by the way, uh Jim, you need to spend another four or five hundred dollars, and it's just nothing about it that's easy or simple for a customer. That's right. So we just have to look it all the way around. I I want to buy something. No, here, read the fine print. Come on. Come on, guys.

Jim Fitzpatrick 8:42

It's it's crazy.

Peter Cooper 8:43

Who wants to do that?

Jim Fitzpatrick 8:44

That's right. That's right. And everybody's got to come to the table on this because as you know, Peter, you get a rogue GM or a rogue sales manager, I should say, that puts those cars out there and doesn't, you know, fly right. He's not, he or she is not getting the fine. The dealer that they work for will be.

Peter Cooper 8:59

So again, it's it's a system that's broken. The dealer's paying that GM on his net. That's right. So it does it doesn't make for the best behavior.

Jim Fitzpatrick 9:08

That's right. Yeah, good, very good point. Very good point. So I I'll ask for the for the people that are watching right now, under a one-price structure, do you and you don't have to answer this if you don't want to, because I'm putting you on the spot. But do you pay your salespeople based on the gross, or do you just pay them like a unit bonus?

Peter Cooper 9:23

Or no, no. We see we the gross we control, actually, we don't even control it. Yeah, the marketplace controls the gross. Yeah. You know, you can go out there and find out what you can buy any car for competitively. Right. So the marketplace is is so why would we pay somebody to get an extra $100 or $200? Sure. So you you mentioned it. Today, I don't know how many people really want to go to work of younger people in an incentive-based platform. They would know they've got good, stable work, good benefits, good work-life balance. So if you look at people who do want to, and I so appreciate it, want to work on an incentive, is it 15% of the populace, 20%? So our ability to even attract capital gets reduced.

Speaker 3 10:06

Yeah.

Peter Cooper 10:07

So all of it's interrelated.

Jim Fitzpatrick 10:09

Yeah, yeah.

Peter Cooper 10:09

So no, so we don't we don't pay on on gross.

Jim Fitzpatrick 10:12

Okay, okay. Yeah. So that that would it would seem to me that would work best in a situation like that. Um, in terms of uh you you were mentioning too much before we got uh rolling here that today that you were looking at maybe some other deals. Uh do you look, are you looking right now uh for uh to acquire other brands or other stores?

Peter Cooper 10:31

I I I think the market for the right franchises is real is really overvalued right now.

Speaker 3 10:37

Yeah.

Peter Cooper 10:37

Um so the right opportunity in one of the right franchises for sure, but there's so much stuff out there that you know we see that just doesn't make any sense whatsoever. And we'd rather focus on putting more of an investment in our existing business than just to go get another uh nameplate.

Speaker 2 10:56

Right, right, yeah.

Peter Cooper 10:57

And face all of the challenges because I also think we talk about the industry, but I think unto itself, each manufacturer has its own way of doing businesses, yeah, doing business and its own unique challenges. So if it's really not, you know, right down the middle of the plate, uh it's not for us.

Jim Fitzpatrick 11:13

Yeah,

Chinese Brands And Policy Whiplash

Jim Fitzpatrick 11:14

yeah. Um you you mentioned it uh a moment ago, but uh in terms of other nameplates and other brands, um the Chinese are breathing down our back. Obviously, everybody's concerned about about this. Um where do you where do you stand on that? Should the Chinese be able be allowed to sell cars in the US? Uh and and if not, why? And what where where are you at on this?

Peter Cooper 11:36

I I think I look at it more from what's the benefit to our nation as a whole in terms of trade and how much more dependent we become on another foreign nation. Sure. So I think it's a really it's a fine line. I mean, I've I've traveled extensively, you know, we see these Chinese vehicles, you know, they appear to be really good-looking product, yeah, you know, decent quality.

Speaker 3 11:58

Right.

Peter Cooper 11:59

And again, if it if it can help the domestic manufacturers, and I say domestic, everybody who manufactures in this country perform better and make them more affordable, yeah. I think there should be a ramp up time where we say, okay, guys, we're gonna give you three years, five years, we're gonna hold this at a bay, but you gotta get it together.

Speaker 3 12:17

Yeah.

Peter Cooper 12:17

But I think I think to that point, Jim, you talked about what we've expected of people in this country manufacturing and what the everybody had to go through in terms of ramping up for electrification.

Speaker 2 12:27

Right.

Peter Cooper 12:28

And and the I don't want to say wasted, but the investment they were forced to make was enormous.

Speaker 3 12:32

Unbelievable.

Peter Cooper 12:33

And and hasn't yielded a return. Right. I think this is uniquely different. Affordability will yield a return.

Jim Fitzpatrick 12:39

Yeah. Yeah. Yeah, no question about it. It is interesting to me that that uh the auto industry wants government out of you know, out of the way here, like they did with the EVs, and they said, hey man, what what are you doing? By 2035, for us to be an all EV environment, that's crazy. It's absolutely crazy. Get them off our backs, which Trump did successfully, and we don't have to deal with that any longer. But the notion that all of a sudden Chinese are saying, well, we'd like to come in and sell our cars, whoa, wait a minute, the government steps back in and goes, okay, that we're gonna monitor, okay? Instead of saying it's a free market system, let's let, let's let, in the great words of everybody that said this about EVs, let's let the market decide whether or not they want EVs. Is that a fair statement to say about the Chinese to say, well, let's let the market decide whether or not they want to drive a uh a Chinese vehicle versus another brand?

Peter Cooper 13:28

I think the challenge is a little more nuanced than that.

Jim Fitzpatrick 13:33

That's for sure.

Peter Cooper 13:34

No, yeah, you you you know you mentioned it.

Jim Fitzpatrick 13:36

I mean, I know I simplified it very much. No, no, no, no, no, but it's good.

Peter Cooper 13:40

It's good. I think this goes back to the government intervention thing.

Speaker 3 13:43

Right.

Peter Cooper 13:44

Because what happens, we have a change in administration and we will.

Speaker 3 13:47

Yeah.

Peter Cooper 13:47

And somebody swings the opposite way.

Speaker 3 13:49

Yeah.

Peter Cooper 13:50

And say, no, no, okay, no, yes, doesn't last for a period of time. And I think those are the bigger questions and challenges that we face. That's right. So how I see it today could be uniquely different than how it's gonna be in three years.

Speaker 2 14:03

That's right. Yeah, good point.

Peter Cooper 14:04

And by the way, you change administration, you get an executive order, and it throws all of that down the drain.

Speaker 2 14:09

That's right.

Peter Cooper 14:10

So I I don't I I can't I can't see enough to make a good assessment.

Jim Fitzpatrick 14:14

If in the event uh uh Trump said, you know, okay, I'm I'm we're we're gonna put together a deal with uh the Chinese, we're gonna let X number of vehicles in or what have you, um, would you be uh uh a hand raiser to say I'd be interested in an open point on a BYD franchise?

Peter Cooper 14:32

Yeah, I w who wouldn't? I mean that would be Well that's what I've been saying. Who wouldn't? I I I don't know that that's you know, in saying that, yeah, it is it's we we all we all would we all have a number, right? We'd all you know change our standards or monitor for a little bit. People said, no, no, I wouldn't. No, no, we would. There's prop there's profit in there, so I don't think it's a good idea. Would I take advantage of the profit? Probably.

Speaker 3 14:56

Yeah.

Peter Cooper 14:57

So I I I think that but I think the nuance of it, of where government is today, if you know this administration said yes, the next administration said not a good idea, and you go out and make these huge investments like many dealers did around electrification. I know. I know and you can throw that you can throw it down the toilet in a couple years.

Jim Fitzpatrick 15:16

That's right. That's

Hybrids As The Practical Bridge

Jim Fitzpatrick 15:19

right. Now Toyota got it right, you know, with through all of this electrification and and all of the demands and what have you, and they said we're pumping the brakes, we're, you know, yeah, we have an EV, but we're really doing a hybrid model. That that's what we're putting our money and our time and our research into. That paid off in a big way, obviously. Um are you finding that that consumers are coming in and going, yeah, want to talk to you about a hybrid Lexus? Um, and you know, I'm I'm totally open to that. Is that I mean totally got it?

Peter Cooper 15:47

No, I think I think it's a good majority of people would prefer that today.

Jim Fitzpatrick 15:50

Yeah, yeah, exactly.

Peter Cooper 15:52

So yeah.

Jim Fitzpatrick 15:52

And that's a bridge.

Peter Cooper 15:53

And I think it's go ahead as as as their technology, their cost to produce these vehicles is gonna get closer and closer uh to an to uh just a regular gas vehicle, they're gonna be able to produce these for the same number.

Speaker 2 16:06

Right, right.

Peter Cooper 16:07

And so I see the whole market shifting there. But it was a great shift over time. It wasn't here's a mandate, and in three years you need to be here.

Jim Fitzpatrick 16:14

Yeah. Yeah, for sure. Um

Forecasting Chaos And What We Control

Jim Fitzpatrick 16:17

let's let's talk about um looking forward. What uh here we are in uh May uh of 2026, I might add, um, which is amazing. I don't know where all these years are flying by here, but uh they are. Um what how do you feel about the balance of the year with all that we're looking at right now on a uh out there in the landscape, you know, whether it be wars or prices or affordability or all this crap that dealers have to deal with and everybody's got to deal with, I guess, it's at some level. But um, how do you feel about the balance of the year?

Peter Cooper 16:47

But I think your question is a question we all struggle with. Like, how do we navigate through this? And I'd like to say, yeah, we'll we'll finish out flat or we'll finish a little bit up. Who knows? I mean, you just don't know. I mean, if you look last week over the last two days, there's another threat of tariffs on the Europeans. I mean, who knows what's going to come.

Speaker 2 17:06

Right.

Peter Cooper 17:07

So I don't have a good crystal ball here. I'd I'd be pleased if we just didn't move backwards, but I who knows?

Speaker 3 17:15

Yeah.

Peter Cooper 17:16

Who knows?

Speaker 3 17:16

I know.

Peter Cooper 17:17

Everybody feels like and and I know you want me to deliver you a very optimistic message. I can't do that.

Jim Fitzpatrick 17:24

That's why I love having you on, because you tell me the way it is rather than the way that maybe I would like to hear it uh to be.

Peter Cooper 17:30

I just want to be realistic, right? And I think that what what dealers can be doing is looking for now to the end of the year and just say, okay, we're gonna deal with chaos. There's nothing that's gonna level out here, and just lean into the chaos and how do we adjust to these all of these different challenges we're facing.

Jim Fitzpatrick 17:45

That's right, that's right.

Peter Cooper 17:45

And new ones.

Jim Fitzpatrick 17:46

That's right. In the great, in the words, uh in the great words of a good friend of mine, uh, you know, um uh which is Mr. Mike Maroney, he often says, here's what we do. We worry about the things we have control over, and we don't worry about the things we don't have control over, which kind of is is great advice, right?

Peter Cooper 18:04

Yeah, and I think in that is you know it's really what can I control is my human capitalist strategy.

Jim Fitzpatrick 18:09

That's right.

Peter Cooper 18:10

You know, everybody thinks they got the latest, greatest AI tool. So how do is that we employ people to analyze and assess AI because the tool today probably won't be that great in September.

Speaker 2 18:20

Right.

Peter Cooper 18:20

And how do how do we adjust to those things?

Speaker 2 18:22

That's right. That's right.

Peter Cooper 18:23

Um, so we just have those are things we can control, and I think we have to look at that really seriously.

Speaker 2 18:27

Yeah, agreed, agreed.

Jim Fitzpatrick 18:28

Peter Cooper, the president CEO of Lexus of Lehigh Valley, knocking the cover off the ball every day, and uh just keep your head down, right? That's all it is. Keep your head down in just one car at a time.

Peter Cooper 18:40

You know, you know, the whole point is like all of these anxieties we all have, but not a lot we can do with them.

Speaker 2 18:46

Yeah.

Peter Cooper 18:47

But we still got to do our homework every day. We've got to do it every day.

Speaker 2 18:50

That's right.

Peter Cooper 18:51

So as always, I'm thrilled to visit with you. I thank you for having me on. Well, and look forward to seeing you in Washington.

Jim Fitzpatrick 18:57

Like, likewise. Great. I hope that

Summit Invite And Closing Thoughts

Jim Fitzpatrick 18:59

you can make it. It's June 16th for those of you that are listening. We want to bring together all of the great minds in this industry to help figure this FTC thing out so that uh we don't have dealers going, oh my god, I just got fined five million dollars because uh you know we we priced it wrong or what have you. So uh so, Peter, thank you so much. Really appreciate it.

Peter Cooper 19:16

I'd stay healthy, man. Me too. Okay. Thanks for watching Inside Automotive with Jim Fitzpatrick