Fair Pricing, FTC Scrutiny, and the Future of Dealer Marketing

John Fitzpatrick, President and CEO of Force Marketing, joins Inside Automotive to discuss the growing compliance challenges facing dealerships and the industry's response to increased FTC scrutiny.

As dealers navigate evolving expectations around pricing transparency, advertising disclosures, and digital marketing practices, compliance has become a critical business priority. Fitzpatrick shares insights from conversations with dealers across the country, highlighting the risks associated with noncompliant pricing, social media activity, and vehicle advertising. He also previews CBT News' upcoming Fair Pricing and Compliance Leadership Summit in Washington, D.C., where industry leaders will gather to address some of the most pressing regulatory questions facing automotive retail today. The conversation also explores marketing accountability, lead generation challenges, and overlooked opportunities in fixed operations and service retention.

Key discussion points:

• Why FTC warning letters are creating urgency around dealership compliance
 • Pricing transparency challenges across websites, third-party listings, and social media
 • Compliance concerns surrounding vehicles advertised while in transit
 • The importance of top-down leadership in managing regulatory risk
 • How dealers should rethink marketing spend amid declining lead volume
 • Why fixed ops and service retention remain major growth opportunities

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

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

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

Why The Summit Matters Now

Jim Fitzpatrick 0:06

Welcome to Inside Automotive with Jim Fitzpatrick. Hey everyone, Jim Fitzpatrick. Thanks so much for joining me this morning on another edition of Inside Automotive. Uh kind of a special edition of Inside Automotive. We've got Mr. John Fitzpatrick here, president and CEO of Force Marketing. You've seen him here before on CBT News. Uh we're going to be discussing, obviously, our fair pricing and compliance uh leadership summit that CBT News is putting on June 16th. We're in June. It's this month. Book your reservations now. Sign up for this. Uh John is uh and Force Marketing is a platinum sponsor, and truth be known, this whole thing came about from John calling me one day, going, hey, you know, Pops, you gotta CBT News needs to lead on this. I totally agreed with him, as did Bridget, and we said, let's move forward on it. So um, so John, I'm you know, welcome to the show. Welcome back to the show. It's always great having you on. Um, you were passionate about this early on because I think it really started with maybe some of the phone calls or conversations you were having with your clients

FTC Letters And Dealer Anxiety

Jim Fitzpatrick 1:08

on this.

John Fitzpatrick 1:08

Yeah, so I I was sharing with you that 100% of our client success team uh phone calls uh in the last uh two months have had a topic of discussion in and around uh these letters sent to dealers and what should they do. Right. And if we go back 45 days ago or or or maybe not even quite that much, I was sharing with you that, hey, this feedback's overwhelming. This concern is high. Yeah. And um, you know, we sort of sit at the crossroads of of helping our dealer partners figure this out. Sure. And you've got your third-party listing sites, uh, and you've got pricing all all around, you know, sort of the third parties, you've got their websites, and then you've got the advertising agencies and the technology companies helping to, you know, boost their ability to earn more than their fair share of a hyper-local marketplace by putting that same price in front of the right people. And so we're all in this, and you've got dealers who, you know, a lot of the dealers now have got 10, 15, 20, 30 stores. Yeah. And they're going, hang on a second. The corporate offices are going, we're very concerned here. We've got GMs that really handle a lot of their stores, and uh, you know, they're coming to you know, agency and tech partners and data partners like us, and they're saying, you know, we're good, right? Everything's everything's fine. You've got me on this. Well, we do to an extent, right? I mean, we're all in this thing together. We've got to figure out how to put process together that that that the dealer groups uh can manage and keep them out of harm's way when it comes to regulation like this. Um, do we all think that ultimately this is best for the consumer? Um, yes, of course, right? And like Bernie said, in fact, when we were JD Power, yes, Senator Moreno, he said, uh, hey, you know, treat it as if you know you were advertising to your mom. You know, what would your mom want to see? Right. How transparent would you be with the pricing with your mom? Sure. Right? And and and generally speaking, we want to be that way, right? However, that's not always the case.

Jim Fitzpatrick 3:02

That's right. Because um, if the street, if the dealership down the road is not selling a car to your mom, they don't care what they don't necessarily care to be, you know, to be the spot on the number. They'll they'll discount the car if they have to online to get that lead or to get that customer.

John Fitzpatrick 3:21

And in some competitive, all marketplaces are competitive, but there's certain markets that are very competitive. Yeah. And and they will constantly be vying for, you know, those folks that are in market, and a lot of time, especially in this economy driven by affordability. Yeah, uh, you know, folks right now, at least what we're seeing in the data, they're not so much looking for the car they want, they're looking for a payment they can afford. Right. And so now that even more draws attention to this topic of, okay, I was drawn towards that payment, Mr. Dealer, that you had on the site, Mr. or Mrs. Dealer that you had on your site. Right. But then I got to your store, and that's actually not the payment that I can get put in on this particular car. Right. Okay, let's unpack that. And then the FTC saying, hey, other dealers, why don't you go ahead and tell us which who are the bad actors? Yeah, well, if you don't like it, basically. We got a problem that's that could potentially brew here. Yeah. And so I love that you you guys are taking the bull by the horns as you always do. You're tip of the spear with all of these big topics in auto. And you're like, you know what, let's get everybody together. Yeah. Let's go to DC and let's have some conversation around this. And we're not gonna have all the answers, but we can come up with some. That's right. And I love Iron Sharpens Iron. You get the best thinkers together in space. Auto's always done this. Yeah. Whether it was an inventory crisis, whether it was COVID, whatever the case has been, when you get the leaders in a room, right? You don't need more than a day and we can figure some things out. Yeah. And I love that you guys are doing this. So we're huge supporters of this.

Jim Fitzpatrick 4:41

So when your clients call you, what are you telling them right now as the agency of record of like 1,500 rooftops? What you must be getting a lot of phone calls.

John Fitzpatrick 4:51

Yeah, well, we're sitting on a lot of meetings. We're sitting on a lot of Zoom calls, we're having a lot of discussions with legal teams uh that that the dealer group has. We're sitting on conversations with the mandates that maybe the head of marketing or the CMO is saying, okay, all general managers, service advisors, everyone that has any control in the touch point of down to a coupon. Yeah. That might be at a mailpiece or an email campaign or on Facebook. Sure. Uh, you know, here are the guidelines, here's the new process we have in place, right? Uh, and we have to make sure everybody abides by them. So it's turning the agencies a little bit into um in some cases, police officers. And we don't really want to be police officers. Um we love police officers. But it's you know, we we we we are finding ourselves in conversations where we're saying, hey, um that uh

Pricing Across Every Digital Touchpoint

John Fitzpatrick 5:38

that price is not uh approved in the process. And uh it's it's it's it's causing some comp you know some concerns and some conversations, but they're the right ones that need to that need to be had.

Jim Fitzpatrick 5:49

Um well I think it and this is this is a and this is an issue that clearly um can only come from the top down in order for it to be successful, right? The dealer principal, him or herself has got to lay down the law and say, this is the way we're going to to uh drive our business forward. This is the way we're gonna act on on the topic of pricing. And unless that happens, you're gonna have those middle managers that say, well, they're looking on both sides, we got to hit this number, we want to hit our stair step, we want to hit our monthly bonus, maybe even the dealer is coming down on them, going, you better hit that 200 mark that I put out there. And uh, because I don't want to be low man on the totem pole in my district for my brand. Okay, well, how do you how do you reconcile that, right? And we're gonna be talking a lot about that at the event, but this these are the questions that dealers have because you can't, as a dealer, you can't come down on your team and say, hey, we want to hit those numbers, we want to hit those numbers. All right, well, boss, you also told us that we got to advertise these cars with the dock fee in there, okay? Our competition's not doing that. We got to take out all of those incentives that we were putting in there, the military, the loyalty, the first-time buyer, all those things that we know that not everybody qualifies for, okay. So it's kind of you're you're kind of tying the hands behind the back of that management team in that store to some degree if everybody in the market isn't playing and reading off the same sheet of music.

John Fitzpatrick 7:11

Yeah.

Jim Fitzpatrick 7:12

It's gonna take some time.

John Fitzpatrick 7:13

Yes, it is. And we're gonna have to work together to figure this out. Um, and the larger the group, the more the liability. Right. Right. And and the other, the other, there's other areas, right? Like the vehicles in transit is becoming a major, major topic here where there's a lot of concern. Yes. Right. Especially coming out of COVID, yeah, where all we could really do was advertise the vehicle that was coming to the lot. That's right. There weren't there's some cases there were no vehicles on the lot. I know. And so we've we've built all this, we've built into the infrastructure of these stores that, yeah, if it's coming, let's go ahead and start advertising that vehicle. Um, and you know, the the the sort of the new regulations um, you know, put forth have a lot of concern around, okay, hang on a second. Can we be doing that? Because it's not actually here. That's right. What is the actual price of that vehicle? Yeah, you know, because things are moving in such in such a great way. You know what it's bringing to life, quite honestly, is we've lived in an omnichannel world for so long. Yeah. And a lot of people are realizing, wow, we are the consumer goes through a variety of different touch points on their journey. Oh, yeah. So pricing is a lot of different places. Yeah, it's not just on your site. That's right. And the third parties, um, you know, I I'm very eager to see the updates in that category because um there's a that there's an area right there um that they need to bring um a lot of attention to detail to their dealers. Oh, that's for sure. Uh, in the pricing of all of these uh third-party listing sites. Yeah. Um and um and then just uh across across the whole customer journey again, you know, the the the price is out there, the the d details of the vehicle are out there, yeah. It needs to get fine-tuned. That's right. And um that's the era that we're in. So let's fine-tune them.

Jim Fitzpatrick 8:57

Yeah, there's no question about it. And it's interesting, we're gonna have uh a social media expert on there, somebody that uh sells a lot of cars through social media, and she will be talking about this very issue because as we see so many salespeople now turn to social media to help drive traffic to them at the dealership, they're also sharing prices in many cases, too. Hey, we've got so much off this and that, and we've got that you can buy this car for sixty thousand dollars. Well, that that's that's a touch point, and that's you're responsible now for all of your salespeople that would be talking price in social media.

John Fitzpatrick 9:30

Which prior to these letters, we were asking all of our people in our stores to you have your own network, right? You have your own voice on social media. Yeah, of course your neighbor's gonna want to do business with you versus somebody that they don't know. That's right. But it's on you to push out that information. Yeah, right? Okay, so you got 50 people in the in in the dealership, whether they're on sales or whether they're in service, pushing out information to their community. Right. And we've now said, okay, stop that, right? Because if you got the wrong price, or if you're on Facebook Marketplace and you're listing a monthly payment, but the person views that as no, the car is actually a thousand dollars, not the payment is a thousand dollars or whatever the case might be. Now we've got complexities, now we've got liabilities to the tune of $70, $80 million, depending on the size of the group. So it there's reason for concern. Yeah. I know I agree than what you're doing, bringing everybody together, saying, let's have open dialogue about this. Let's figure out who's getting it right, and let's figure out those that are in in the spot that that you know you know are a little bit more liable. And let's come together as a community, as an organ, you know, as a as a um, you know, industry, and and let's figure this thing out.

Jim Fitzpatrick 10:36

Yeah.

John Fitzpatrick 10:37

And and um, and so I'm I'm very much looking forward to to June 16th.

Jim Fitzpatrick 10:40

Yeah, and it'll be great having Senator Bernie Marino there. I know that's somebody that's that you know very well very well, and uh, and uh we're working on getting somebody from the FTC to be there as well. One of the reasons that we held it in DC um to hope hopefully we'll get these elected officials, which we have already confirmed. But uh so we're very excited about that. And uh and yeah, I've we've heard so many different great comments from people uh that that echo yours that say, man, the timing's right on this. We all got to get together on it. Uh NADA representatives will be there, who by the way, um have done a pretty good job uh so far on this. NADA has is has led the way as well. Um I although I still I think even they are saying, hey, we got to get more clarity on this from the FTC in terms of what this means. So we'll have two um officials there from NADA speaking on the panels as well. So uh so yeah, we're very excited about it. Very excited about it. Let's switch gears a little bit and talk about business before I let you

Lead Volume Drops And Dealer Stress

Jim Fitzpatrick 11:36

go. And um how is business around town? I get mixed uh answers when I ask that question from dealers all over the country, large and small, public and private cap companies. Yeah. So uh what what what what are you feeling out there? What what's the what's the sentiment of the phone?

John Fitzpatrick 11:49

By and large, leads are off about 15%. 15%. And when you look at 15%, and that's on average, you have some that are doing a little bit better, and you got some that are gonna they're being doing a little worse. Sure. Um when the market's off in terms of lead volume, 15%, that's gonna cause some stress at dealerships, folks that are you know paid on the bottom line, certainly like a general manager. Yeah. Um, and just it that it starts to create a a season of you know, uh, is the marketing as effective as it as it should be or once was, right?

Jim Fitzpatrick 12:19

Let's just in all the right places. Everything has the right places, is it the right offer?

John Fitzpatrick 12:25

You know, it's do we have the right creative? Is the timing right? Is the media mix right? And so it's hyper focused on the media expense in a dealership and where every dollar's going to be.

Jim Fitzpatrick 12:35

But it has nothing to do with the fact that we're at war and gas is now almost double. All of it's got nothing to do with it.

John Fitzpatrick 12:41

Yeah, all of those things are in the hearts and minds of the consumer, right? And there's pause and there's concern, it's the second biggest purchase that they have in their lifetime. Right. And and the average vehicle is over fifty thousand dollars, and you know, the average uh payment, you know, is is over well over five hundred, in some cases seven hundred. Yeah um so you've got all of those factors. But by and large, there's definitely a tense feeling inside of dealerships of they want to maintain pace and profitability, sure, and all of those are under attack. Sure. And there are less buyers right now than there were a year ago. Right. That is just a fact.

Jim Fitzpatrick 13:17

Yeah.

John Fitzpatrick 13:17

Okay. And so, yes, you should always be fine-tuning the marketing. Um, and yes, you should always be doing marketing that's only data driven, right? We got to take the feelings out of it. Yeah, we just we've always preached that though.

Jim Fitzpatrick 13:29

I like watching my my logo on the the 11 o'clock news and the local news or sponsoring the weather. Doesn't that work anymore?

John Fitzpatrick 13:37

For the last few years, maybe that should have worked for you. But if can those dollars be better allocated elsewhere because you can see the ROI of that dollar? Sure. And if the answer is yes, I would put it into the ROI-driven categories. Right. I would take it out of areas that you cannot draw attention, actual ROI to return on ad spend. Right. But look, we've been preaching that forever. Yeah. So I think this just a heightened attention to detail and marketing, which as our company, Force Marketing, and our family of brands, GSM and WeDrive, we welcome that discussion. That's an area where we can really dig in and help dealers when they're fine-tuning and they have a strong emphasis on what's working and what's not. Right. Now you're talking our language. Right. Right. When it gets to the area where we're getting, no, we're allocating, you know, you know, general managers and and and folks in the market to kind of start to have a slush fund to do other things, that's always been an area that causes us concern. Uh, because if you can't measure it, then it's very, very hard to have a

Data Driven Marketing And Measurable ROI

John Fitzpatrick 14:36

data-driven conversation, a strategy conversation on how to beat your competitor and how to win more than your fair share of market share. Sure. And so we're we're now in an era where we're moving back to every dollar is under a microscope. I quite honestly feel like that is a great place for us to be. Okay. So I think for our business, yeah, we will continue to excel against our competitors that aren't as focused in a data-driven, very strategic approach. Um and that's what dealers need, resoundingly. That's right.

Jim Fitzpatrick 15:05

You've been uh you know at at force and doing this and working with dealers for now two decades. Yeah. So you've seen, you know, uh the Great Recession, um, you've seen COVID, you've seen uh the the shortage of uh uh the chip shortage, uh I should say. Uh you've seen the industry all over the map, right? Yep. Um so this is just these times are concerning, but not that bad, right? I mean we're still gonna do north of 16 million vehicles uh at at this latest.

John Fitzpatrick 15:34

I think I sent you the CNBC clip was like 15.9 to 16.1. Yeah. You know, uh Senator Moreno said that at JD Power. He's been very good at predicting things. I'm joking with him. Like, you're like quite a predictor of these days in terms of how things are panning out. And uh and and he laughed, but he's he's been pretty pretty accurate. He was last year. He looks like he will be again this year, halfway through it. So if you're at 16 million, that's a healthy number. Yeah, it is. That's a healthy number. But dealers can make money at 16 million. And um, right, do we want to be at 17? Sure, but we're not at 14 or 15 or 13, like economists said last year. Oh, tariffs hit, we're gonna go down to 13, never happened. I know. And so 16

Service Retention And Profit Opportunity

John Fitzpatrick 16:09

is a very healthy number. Yeah. I still think there's a massive opportunity in service.

Jim Fitzpatrick 16:15

Yeah, of course.

John Fitzpatrick 16:16

And the fact that 80% of your profits come from there, but only 5 to 10% of your marketing budget goes there is wildly out of maximum. It's been that way forever. I was gonna say we need to allocate more into earning the the folks that come in uh that buy a car to then service a car. Losing 60 to 70 percent of the business to the third parties is is something we've got to do a better job of as an industry. That's right. Um, you know, when we have the conversations about retention, customer pay is usually the focus. Yeah. Warranty, although recall, there's a big opportunity there, and we've got a great recall solution with great data that's very, very effective on the recall side of things. But oftentimes it's yes, we want to improve retention, and we want to improve more specifically customer pay. And those are areas that we have a solution for. And so that becomes a more driving area of focus, which is good.

Jim Fitzpatrick 17:02

Yeah, yeah. It's great. So the this FTC situation is uh one

June 16 Event Details And Signup

Jim Fitzpatrick 17:06

more thing we got to figure out, you know, as we always do in this industry. We're very resilient. I hate to use that word because it's used so many times in describing dealers, but we are, and and dealers will get through it, they'll figure this out. Hopefully, uh the conference will help them to do that a little bit better. And uh so folks, uh Mark on your calendar is June 16th at the uh Salamander Hotel in Washington, D.C. We're bringing in all the stakeholders into this, including Senator Bernie Marino and others from DC, NADA officials, vendors, dealers, uh compliance officers, attorneys, you name it, they're all gonna be there. And uh we hope you are too. So uh so John, thank you first and foremost for being one of the platinum sponsors and and throwing this idea into our court. Yep. You know, you and I and the ball and running with it.

John Fitzpatrick 17:53

And you're being a little humble here, but the fact that you're almost sold out is a big deal. And I think you I I think, and I know you're trying to work like we want to make not turn anybody away, but they need to be signing up immediately if they you know if they if they want to consider this. Uh I love the fact that it's one day. Yeah, I've already seen, at least with my team, we're coming in the day before, staying a day later because other dealers are like, hey, can we stay and have a conversation? Yeah, we're already gonna be there with our lead, sure with our lead dogs on the leadership team, and we want to have a deeper conversation because you're our partner. Yes, that's fantastic. Let's do that. And so um I love that it's already taken that sort of shape. Um, and again, kudos to the CBT team for for jumping in and and leading.

Jim Fitzpatrick 18:32

Uh currently over 200 rooftops uh represented that will be there, and uh we're excited about that. Amazing. When we came up with this just uh what I think is um about a month ago. Yep. And we said, let's kick it into you know into high gear, do what we gotta do, we put it out there, and man, we just we've got now 20 great speakers, and you know, just uh this whole thing's moving forward, and uh we're excited to lead this. So uh thanks for your support of that. We appreciate it. And uh folks, the you gotta you gotta get on. We're gonna show the information right here as how to do that. There's a link right below the video that you're watching, so you can click it and register. But John Fitzpatrick from Force, thank you so much for joining us. Appreciate it. It's always great catching up. Yeah, sure.

John Fitzpatrick 19:13

Thanks for watching Inside Automotive with Jim Fitzpatrick.