This was opening night of the NADA Show, the annual convention of the National Automobile Dealers Association, one of the most powerful trade organizations representing one of the richest professions in America, and there was much to celebrate.
The years since COVID hit had been some of the industrys best ever. Supply-chain issues had sent prices skyrocketing. New car prices were up; used car prices were up even more. This has been an unexpected bonanza for new car dealers, George Hoffer, professor emeritus of transportation economics at Virginia Commonwealth University, told Time late last year. Only a few months prior, the research firm Haig Partners clocked average gross profit for dealers at 180 percent over 2019 levels.
Really, the past hundred years had been great. Auto dealers are one of the five most common professions among the top 0.1 percent of American earners. Car dealers, gas station owners, and building contractors, it turns out, make up the majority of the countrys 140,000 Americans who earn more than $1.58 million per year.* Crunching numbers from the U.S. Census Bureau, data scientist and author Seth Stephens-Davidowitz found that over 20 percent of car dealerships in the U.S. have an owner banking more than $1.5 million per year.
And car dealers are not only one of the richest demographics in the United States. Theyre also one of the most organized political factionsa conservative imperium giving millions of dollars to politicians at local, state, and national levels. They lobby through NADA, the organization staging the weekends festivities, and donate to Republicans at a rate of 6-to-1. Through those efforts, theyve managed to write and rewrite laws to protect dealers and sponsor sympathetic politicians in all 50 states. All of which meant that this year, presidential hopeful Nikki Haley and Fox News darling Greg Gutfeld, among others, had made the pilgrimage to kiss the key ring. ... As the automobile industry flourished, so did the dealership modelbut the American entrance into World War I threatened to interrupt that ascent. So, in 1917, a group of 30 Chicago dealers went before Congress to argue that cars shouldnt be classified as luxuries by the tax code. The luxury distinction would have allowed car-manufacturing facilities to be converted to use for wartime production. That would have been fine for manufacturers, which would have continued making money manufacturing, but disastrous for car dealers, who couldnt just sell tanks.
The dealers won the argument and then some, leaving Washington with a 40 percent cut in the luxury tax, which was then being levied on car sales. With that, the National Automobile Dealers Association was born. That first taste of triumph only whetted the appetite. By the 1930s, with another war effort in the works, dealers went state by state. At that time, there was lots of attention being paid to small business as having inherent virtue and the need to protect mom-and-pop shops, Daniel Crane, a professor at the University of Michigan Law School, told me. They embraced that story, and were extremely successful at getting legislatures in all 50 states to strictly regulate how cars were sold. In 17 states, it is outright illegal for car manufacturers to sell cars at all.
The mom-and-pop facade of the postwar period gave way to multibillion-dollar, intergenerational dealership empires. As of 2021, the top 10 dealership groups in the U.S. had annual revenues around $100 billion, more than any company that actually makes cars.* The NADA became one of the most influential lobbying entities in Washington, with 16,000 dues-paying businesses spanning 32,500 franchises. Soon enough, a stop at the annual NADA convention became routine for presidential hopefuls and even presidents. Lyndon B. Johnson, Ronald Reagan, and Hillary Clinton all attended ahead of presidential runs; Bill Clinton and both Bushes came after they left the White House.
By the time car salesmen had won their reputation as the very least scrupulous of business practitioners, dealers had secured such an astounding array of political protections via their lobbying outfit that no countervailing forceeconomists, car manufacturers, civil rights groups, environmentalists, or the Koch brothershas been able to thwart them. A survey done in 2016 by one of their own trade publications found that 87 percent of Americans disliked the experience of buying a car at a dealership. So what? You dont have to be well liked if youre powerful.
Now car dealers are one of the most important secular forces in American conservatism, having taken a huge swath of the political system hostage. They spent a record $7 million on federal lobbying in 2022, far more than the National Rifle Association, and $25 million in 2020 just on federal elections, mostly to Republicans. The NADA PAC kicked in another $5 million. Thats a small percentage of the operation: Dealers mainline money to state- and local-level GOPs as well. They often play an outsize role in communities, buying up local ad space, sponsoring local sports teams, and strengthening a social network that can be very useful to political campaigns. Theres a dealer in every district, which is why their power is so diffuse. Theyre not concentrated in any one place; theyre spread out everywhere, all over the country, Crane said. Although dealers are maligned as parasites, their relationship to the GOP is pure symbiosis: Republicans need their money and networks, and dealers need politicians to protect them from repealing the laws that keep the money coming in.