Car dealerships fuel local economies across the country, and their role is critical; within the New York metropolitan area, new car dealerships are the fourth-largest retail employer after supermarkets, clothing stores, and pharmacies. While dealerships in the 914 area employ only about 1% of the county’s workforce, they represent the largest category of taxable sales in Westchester County, ranking ahead of restaurants, department stores, and other major retail sectors. “There’s a lot at stake that this industry stays healthy,” says Mark Schienberg, president & CEO of the Greater New York Automobile Dealers Association (GYNADA), which represents franchised new car dealers in the New York metro region.
A quick look back: Dealerships have been around for over a hundred years, first cropping up in the 1920s as showrooms to display the latest models of Fords and Chryslers. Back then, manufacturers would find people knowledgeable about cars—say, someone who ran a service station or used car lot—and ask them to represent their brand in that area. That’s how franchise dealerships as we know them today first became established. As more Americans could afford cars of their own, showrooms evolved into lots packed with vehicles, with colorful signage beckoning customers to come in and take a test drive.
Today, it takes a big investment to run a dealership, including real estate, inventory, service equipment, employee salaries, and ongoing training. Manufacturers specify showroom aesthetics and customer amenities. There’s a lot more to see under the hood than just sales. “Most people just don’t know the depth of what goes into running operations like these,” says Schienberg. Typical dealerships have specialists in financing, insurance, titling, service, even someone dedicated to educating the consumer about a specific model, right down to phone syncing, he notes.
The shift towards customer relations
It used to be that dealers did some advertising, waited for customers to come in, then told them about a car and how much it would cost. Some haggling might ensue, and that was it. From the customer perspective, it wasn’t pleasant—not just pressure to buy, but murky pricing that made it difficult to determine a good or bad deal.
“The internet has completely changed how customers shop,” says Joseph Pepe, CEO of Pepe Auto Group, which has seven locations for luxury brands including Audi, Cadillac, Porsche, and Mercedes-Benz. “Today, people arrive at the dealership having already done their research. They know the vehicles, pricing, and often have a shortlist in mind.” Technology has made the process more efficient, so building trust and creating lasting relationships is what matters most, according to Pepe. Schienberg echoes that sentiment, noting that savvy dealers have shifted their approach from simply selling cars to cultivating long-term relationships, so customers keep coming back, notes Schienberg. “For 58 years, we’ve lived by a simple motto,” says Pepe. “We treat people how we would like to be treated.”
“We need to create a workforce where women feel valued.”
—Eleanor Gulla
Real people run dealerships
Eleanor Gulla, managing partner of Larchmont Chrysler Jeep Dodge Ram, is a second-generation car pro who leans heavily into customer service. (Her dad founded his first dealership in Larchmont in the ’50s.) “We focus on what they’re looking for and on developing a rapport so we can help,” she says. Because of this, they get a lot of referrals and repeat customers.
Sean Coughlin, president and CEO of The Premier Collection, which sells Volvo, Lincoln, Mazda, Volkswagen and Subaru, also got started in the business by partnering with his dad. He, too, agrees that customer experience is paramount. “When you’re buying a new car, even the least expensive one can be $35,000,” he points out. “It’s not too much for a customer to expect to walk into a clean, modern facility with good coffee and snacks for what might be a two-or three-hour experience.” Transparent, frictionless sales and service experiences are always his goal. “No matter which of our franchises you come into, the basic principles of what we do don’t change much.”
“Supporting our community is a core part of who we are.”
—Joseph Pepe
Challenges just keep coming
Federal government tariffs have affected dealerships, especially those that sell luxury brands or those built outside the U.S. Even when vehicles are assembled here, many of their parts come from around the world, so tariffs can result in price increases on car sales and repairs. The Federal Trade Commission has also put pressure on dealerships to protect consumers from misleading advertising around manufacturer’s incentives. In the past, some dealers might advertise legitimate incentives, such as discounts for current brand owners, recent college graduates, or military members, without making it clear who truly qualified. Coughlin says he believes most dealers do strive to advertise honestly but sees government enforcement as a good thing.
Dealers are also affected by other decisions out of D.C. and Albany. For instance, a $7,500 rebate program for buyers was contributing to a strong uptick in sales of EVs year over year. When that program was cut, sales of EVs plummeted, and dealerships were left holding the bag. “If gas prices go up, that changes the kinds of vehicles people consider buying. High insurance prices impact younger buyers especially, because they may be able to afford the car but can’t insure it,” explains Schienberg. “It’s a business that gets impacted by everything.”
Regulatory requirements from manufacturers, banks, and New York State further complicate matters, and then there are direct-to-consumer online retail platforms such as Carvana. Last but not least, direct sales of vehicles—like Tesla or Rivian—are also disrupting the traditional car dealership business model. They don’t have to make the brick-and-mortar investment that franchise new car dealers do and can bypass some of the rules and regulations that traditional dealerships face. Many consumers, especially younger ones, seem to like the direct sales experience better.
But as the saying goes, caveat emptor—let the buyer beware. A direct sales experience might appear to be more seamless, but once the car is yours, so are any problems. “One of the major complaints that I hear from Tesla or Rivian buyers is that they have to wait weeks for an appointment to get their car fixed,” says Gulla. “Customers sometimes forget that dealerships really do provide an important service.” Even so, to remain competitive, most dealerships have added software to their website to allow consumers to build their own cars and research financing options on their own if they choose.
A decade of change
The final factor to consider is the consolidation of dealerships over the past ten years or so. As many business owners aged into retirement without anyone to take the reins, their dealerships were often acquired by other local dealers who wanted to expand their reach. During the pandemic, supply chain issues limited the number of new vehicles available just as people were avoiding public transportation and moving to areas where they needed a car. Low inventory in the face of higher demand drove prices up. Service departments stayed busy as people ensured their vehicles were functioning reliably. Dealerships registered some of their most profitable years on record; reliable cash flow from car sales and service needs, as well as valuable real estate, made dealerships a pretty good bet for private equity and other types of investors, who increase efficiency by sharing technology, marketing, and operations across multiple locations and grow the business accordingly. The wave of consolidation into bigger groups puts competitive pressure on the smaller operations, which can’t invest as much in things like operations technology and marketing.
Still, many family-owned dealerships argue that their local roots and personal relationships still give them a powerful and unique advantage in an industry where customers are hyper focused on trust. “When your car isn’t working, you want to be able to talk to somebody,” Gulla says. “Computer-generated programs just can’t serve you the same way.”
“The pace of change is one of the biggest challenges,” offers Pepe. “Customer expectations continue to evolve, technology is advancing quickly, and the industry is constantly adapting. Our focus is on staying agile while continuing to invest in our people, processes, and customer experience.”
The New Mechanics
Diagnosing and repairing technologically complex vehicles requires significant and ongoing training, which is likely what fueled rebranding mechanics as auto technicians. After learning the basics through high school vocational training or an institution such as Lincoln Tech, a career path typically starts with working as a porter at a dealership, responsible for moving and tracking cars around the lot quickly and safely. From there, the progression includes joining the service team that performs oil changes and safety inspections, under the direction of a senior tech. At that point, dealership leaders may be ready invest in a year-long training program offered by one of their manufacturers and pay an entry level salary during the course of study. The goal is to work up to becoming a master technician, who can earn well into six figures.
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