Jim Fitzpatrick: 0:09

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick: 0:14

Hey everyone. Jim Fitzpatrick, Thanks so much for joining me this morning on another edition of Inside Automotive right here at CBT News. It's kind of a special edition of Inside Automotive this morning. Joining us now is Tom Castriota, who is the 2025 NADA chairman and owner of Castriota Chevrolet, to share some of the key wins dealers are seeing right now and what should be top of mind as the industry moves forward. Thanks so much, Tom, for joining us on the show today.

Tom Castriota: 0:40

Thank you, Jim. It's a pleasure and I'm grateful also to have been selected by our board to be this year's chairman. It was a very short comment. This was not my plan. I've represented Florida to the NADA board. I came on in 2016. So, but I'm honored and grateful that the board has supported me in this endeavor.

Jim Fitzpatrick: 1:03

But thank you. So let's let's start here, in the beginning of this conversation, that we're having. Congratulations, first and foremost, on getting the California mandate rolled back and being a part of that effort. Talk to me about that.

Tom Castriota: 1:19

Well, as you know, for the last three or four years NADA has pretty much maneuvered, I'll say, through the back door. There was a lot of consternation, as you know, with what was going on with the ZEV rule. The OEMs were certainly in a panic in the last two years that they weren't going to make that 35 percent, particularly those six or seven states that were going to do I'm saying model year 26, which is already here or seven states that were going to do, I'm saying model year 26, which is already here, and of course next year, the other six or seven that had committed under that Zev rule to go 35% for the model year.

Tom Castriota: 1:53

And I think the manufacturers really started to realize about 18 months ago. Two years ago they weren't going to do it and there was, I will say, a panic, but from NADA's position we've been going through it back then would have been the biden administration going through the white house, going to the regulators, uh and and those that had influence within the administration, that this wasn't going to be attainable and, as coursey, subsequent, when president trump was elected, that kind of turned the wheels a little bit faster. And subsequently, you know, two weeks ago, mike Stanton and I were invited to the White House to witness the signing of the president, signing those three CRA acts.

Jim Fitzpatrick: 2:31

Yeah, we're showing that picture right now of you, Mike, you and Mike standing there in the White House Talk to me about that experience. That's pretty cool.

Tom Castriota: 2:40

It's. You know in all the years that I've been doing a lot of speaking and traveling, as well as you know, with the United States Marine Corps that was an honor.

Tom Castriota: 2:49

Uh, and it's kind of a surreal environment. Mike and I had to leave our board meeting out in California and and attend, but to watch the president sign that and just be within feet from him. He's a remarkable man. He certainly is a man that, uh, that has his opinion and wants to drive it, but it was an honor to be there and invited and watch the signing.

Jim Fitzpatrick: 3:09

Yes, yes, yes, I'd be remiss if we didn't talk about, or if we talked about, Trump and we didn't bring up, the tariffs. What's your take on the current tariff situation that has got our industry turned upside down?

Tom Castriota: 3:25

Again. Being aware of where we are when I say we, nada as an association, we have extensive conversations with the administration, past and now, currently, particularly, as you know, with the president's administration, sure, as well as the regulators, the Commerce Department, the US trade negotiators with Treasury and a point you know where NADA, though Department, the US trade negotiators with Treasury. In a point you know, we're NADA, though, as Jim is this we're asking for the bridge. We support the president's two philosophies that, if that's the right word to use, I mean his goal is one of two things. One is let's bring strategic industry back to the United States. That would help us in some global conflict if we ever face that again. So that's one. Two, we support that as well, as we also support how do we rebuild the US economy through the industry base, and so, with that, we support that. But having said that, now, how do the tariffs affect us? We all know that it affects us in price of the car, right tariffs effect is.

Tom Castriota: 4:23

We all know that it affects us in price of the car Right. So what we have done as an association, through the administration and with the alliance and the OEMs, is ask the president and his administration give us a bridge, give the industry a bridge, whether it's one year, two years, whatever the industry is committed to do, and if they do it, then the tariff goes away or some modification of what would be. As we talk about, the tariffs increase in prices. And if they don't accomplish what the president wants in this time period, then the president has the right to go ahead and enforce that tariff.

Tom Castriota: 4:53

So again the short answer is we're asking for a bridge.

Jim Fitzpatrick: 4:56

Okay, okay, makes sense. It comes at a time, as you know, tom, we talked a little bit about it before we started recording today, affordability and um, and the impact that that may have in what is already a very high, average sell price and sticker price for an automobile being almost 49, 000 right now, and, uh, something's got to give in that realm. Um, to your point earlier you said we'll never get back to 16 or 17 million, sar. If you know, the average price of a car is hovering around 50 million dollars. I, I mean $50,000. Talk to me about that.

Tom Castriota: 5:28

Well, this is again, Jim, when I speak to the associations, whether I'm international or within the states is that you take the average consumer. If my memory's correct, the average household in this country is about $65,000 of income. That average household can't afford where we are today on that average number, whether you want to use $48,000 or $50,000. You know that payment, based on my memory, if we use 7, 7.5% as a number in the average term around 72, we're between $800 and $900. That average household can't afford that new car.

Jim Fitzpatrick: 6:06

That's right.

Tom Castriota: 6:07

So, as I look at it, as well as I believe with our economics advisors at NADA is you know that 50%. If we want to use that number, they can't help the industry get to 16, 17, 18 million. And that gets back to your question or comment about affordability. So ultimately, I do agree with the president, as he said a couple of days back that if the Fed could lower even 100 basis points on the federal debt, that's $300 billion. Well, if the Fed does lower that 100 basis points, think that we could go from, if we use a seven as a great credit rating, that takes it down to six. You know you're saving $'re saving 30, 40 a month there, sure?

Tom Castriota: 6:51

So again, you know, to answer the question is it's about affordability. And if we can't, we collectively, the industry, the oems, where they want to take it out of the oems right down on the sales side as an incentive, no, we're not going to drive those big numbers again, as we saw. You know I really hate to say the term pre-COVID, but right now I think this industry today is in that low 15. You know, again, kind of add to your answer, your question too, I think June's going to be that high 14, 15 million. I think the economy has reached its peak today, based on where I think the average consumer what they can afford. Jim.

Jim Fitzpatrick: 7:29

Yeah, yeah, and that's troubling. There are some dealers that I've spoken to over the last few years that have made the comment to me that and I'm paraphrasing here that maybe the industry doesn't need to sell 16 or 17 million vehicles. Maybe we need to make more money on the vehicles that we're selling to consumers today, rather than a race to the bottom. We're selling to consumers today rather than a race to the bottom. Maybe we can. If you look at 2022, which was kind of the high watermark during COVID or just after COVID, I think we sold 13 or 14 million vehicles. However, dealers are making a lot more money per vehicle. What's your take on that kind of a structure that says maybe we can sell less cars, don't race to the 17 million, let's make a little more money. Uh, keep, keep inventories tighter to that 45 day, maybe 60 day inventory, rather than a five-month supply of cars sitting behind a dealership. What do you think they're correct in their their way?

Tom Castriota: 8:26

I think the dealer might feel comfortable with that, but I will tell you the oems aren't comfortable with that. I mean if you take some of the statistics that you hear from, let's say, the UAW's position, that the capacity is at 50 percent.

Jim Fitzpatrick: 8:38

Right.

Tom Castriota: 8:39

I don't think the OEM wants to get down to capacity of 30 percent to get at a 40-day supply of cars.

Jim Fitzpatrick: 8:44

Yeah.

Tom Castriota: 8:45

I just don't see it in my opinion that the OEMs collectively want to get that production schedule. I think, based on where the president wants to go, let's utilize everything we have here that takes your capacity at 70, 80, or 90 percent, and that certainly isn't 13 million cars for the OEMs.

Jim Fitzpatrick: 9:05

Right, right, yeah, they're not going to buy into that, are they? In terms of the EV structure that we see now, and especially with the mandates being rolled back, where's your head on the EV market right now? What is it you're thinking in terms of the future for EVs? Do you think we're going to wake up in 20 years and 80% of the vehicles will be EVs the way that many people in the industry thought that that would be the case?

Tom Castriota: 9:33

I think what we thought and what the OEMs thought weren't on the same page three or four years ago, I believe. So you know. There's two ways to answer that question. Let's first start with this. The dealers are behind the EVs. The dealers have committed to help the infrastructure within their dealership to meet whatever capacity that the OEMs and the government establishes.

Tom Castriota: 9:56

So, the dealers have invested, as you know, billions of dollars, so that's not going away. The question is back to what the president believes, and I believe this is where we are as an association as well.

Tom Castriota: 10:10

Oems build and sell what the consumer wants right and at some point, if it gets a 50% whether that's five years or ten years well then the manufacturers will go with it and, as you already know, in our industry hybrids are certainly driving more demand than the EV side. That's right, you know. Ultimately the dealers are behind where the OEMs go and where the consumers. But we certainly can't go back to what we had under what would have been the old Zeb rule. If you're going to say the word or old, that 35% this year to be Zeb, it's not going to work.

Jim Fitzpatrick: 10:43

No, no, not at all, Not at all. Well, here we sit in the month of June the latter part of June in 2025, and you're halfway through your chairmanship. There You've got a huge win. Talk to me about some of the other things that's on your to-do list for the association.

Tom Castriota: 11:02

Well, that's a big bucket list. So first let me tell you about the travel side. I didn't realize what the chairman of NADA represents, not only within our state associations as the voice of NADA and the dealers, but also the voice to the OEMs, but also internationally. I mean, I've been to London to talk to the English dealers to the Great Britain. I've been to Italy a couple of weeks back talked to the Italian dealers. As a matter of fact, mike Stanton and I went together.

Tom Castriota: 11:30

I've been to China. We were invited when I say we, several of us on the board, have been to China to see and analyze the GM situation, the Chinese manufacturing drive, chinese cars and kind of looking forward, I'm taking a group of dealers to Brazil to talk to the Brazilian dealers about what they're facing, particularly with the Chinese. And then I'm off to Australia to talk to the Australian dealers and, be very candid, my wife is going to Wales. She's going to talk about women issues within the auto industry. And then in September I'm off to Hungary to talk to the European dealers. Wow, in September I'm off to Hungary to talk to the European dealers, wow. So it's become what I think past chairmen have faced, that they're pulled in many directions, to be the voice of NADA and why NADA is so successful representing the franchise dealers in the United States.

Jim Fitzpatrick: 12:24

That's right and you know you mentioned all these countries that you're going to be visiting and speaking at. We really are in a global environment now, not just in other industries, but certainly here in automotive. Let's talk for a second about the Chinese. I mean Michael Dunn, who, as you know, is one of the leading, or I should say a thought leader on this very topic. He headed up, I think, Ford and GM in China at different intervals, headed up, I think, Ford and GM in China at different intervals, and he says that we are on an island in North America with regard to Chinese vehicles and that the rest of the world is selling and driving very inexpensive Chinese vehicles and EVs in many cases. What's your take on that? Do you think that we're going to wake up one day and see China coming in here in a very big way with a very affordable car? And if you look at the BYD product, it's a very good car and that would be a big part of the auto market one day here in the US.

Tom Castriota: 13:26

All right. So let me give you the short term answer to that, jim, and let's look at the United States as an industry and where we are today with the current administration. So this is Tom Castro's answer. It's not necessarily NADA. It's very candid we as an organization and the board of 65 directors, we still haven't really collectively come to what is our policy to the issue of China. Let's face it. Any dealer would say, hey, if I can get another franchise to sell, I want it.

Tom Castriota: 13:57

But let's look at the effect of what we're seeing globally, or what I've seen when I visited those other countries and, as I've indicated, where else I'm heading with some of NADA staff and dealers, is that we look at the two ways, the way the president is. The president says one is you know, china economically underwrites everything that's getting manufactured, whether it's automobiles or you want to say it's dishwashers or appliances. And we know that within the China, at least what I see from my knowledge I can't say the average dealer sees it this way is that you know, of those 150 to 200 auto manufacturers of China, beyond BYD and maybe Greeley, nobody's making money because they're underwritten by either the central government or the regional government. So what they're finding globally is, quite frankly, china's dumping that inventory because it's all underwritten to continue their growth.

Jim Fitzpatrick: 14:51

Right.

Tom Castriota: 14:53

So where we are today is where we support a policy that, where the president is, from the strategic side, china is still a threat because of the data information in the computers On the other side, we as an association, and more as Tom Castro, understands that what I see from other countries is what it could do to devastate your internal manufacturing because of we can use the term dumping, right, that's the concern I believe that the administration has. So Tom Castro's opinion is you know, right now they're not on fair playground. You couldn't put Ford and GM to say, well, let's compete with the Chinese, when the Chinese government is underwriting, whether it's 50%, 25% Well, that's not fair.

Tom Castriota: 15:36

So, until there's some balance there, jim. I believe where the administration is today is keep them out until there's some balance. And the short answer is any dealer say boy, I'd love to sell BYD, or I'd love to sell a $16,000, $17,000 car.

Jim Fitzpatrick: 15:50

Right, right. Yeah, that's for sure, and many of the dealers that I've spoken to have said just that. That if the vehicles do come in, they'd love to add that Chinese brand to their lineup of dealerships that they've got. But I hear what you're saying about it's kind of a false situation there with the building of those vehicles. Everyone says that you know the Chinese government is subsidizing that in a very big way.

Tom Castriota: 16:19

And to add further, the other concern is let's hypothetically say, today to day, byd or some Chinese manufacturer comes in, what does that happen to our current OEMs that I'll just use make up an example. So a dealer has five or six different franchises and now he's selling in Chinese cars and he's got all this volume that's substantially lower than the other OEMs that he's selling. Now he's just devastated his own basic background, or what he's established to be successful, right, basic background, or what he's established to be successful, right. So you know where's that balance, jim? And I don't think it's today. It's not fair where that we're not facing we, when I say our industry, is not facing a fair production that is being underwritten by the federal, by in this case the Chinese government, sure, sure.

Jim Fitzpatrick: 17:08

The next thing on your to-do list I'm sure is and I know you're probably already working on it in a very big way and that is the direct sales to consumer situation that dealers are concerned about, obviously. Now we see Volkswagen jumping in and saying, hey, we're going to bring the Scout in and we're going to sell our vehicles directly to the consumers. And you know this is something that has really really got a lot of VW, porsche, audi stores very upset, as well, as, you know, every other new car franchise dealer out there, to say how can this happen? And you know what is your, what's your take on that, what's your vision for that situation?

Tom Castriota: 17:47

Well, so you know again, there's a Tom Castro to answer and there's an NAD answer. So let's look at it from NADA's perspective, because you realize, when you're representing roughly 17,000 plus rooftops in this country, plus the heavy duty truck industry with the ATDs, is we support the franchise system when I say we NADA supports the franchise system.

Jim Fitzpatrick: 18:10

Okay.

Tom Castriota: 18:10

And that's one of the reasons NADA's mission when it started in 1917 was to support the state and metro association. So let's start with that. So to protect the franchise system. As you know, each state has some form of a franchise law. Nada supports that franchise system and through that system we will support the states when they confront. In this case, let's use Scout as the example. As many dealers know, there's three states currently that have filed suit within state courts, that being California, washington and Florida that have filed against Scout and Volkswagen that it's counter to the franchise laws of that particular state. Well, nada, in that position, has supported those states and that's what I believe our mission is, through NADA, to take our expertise between the legislative process, our government policy, understanding franchise laws, that we now can support those states as they pursue their legal rights to support their franchise law. And the same thing is with, as you know, with Honda and Sony and their potential of going public with going indirect.

Jim Fitzpatrick: 19:21

That's right.

Tom Castriota: 19:22

You know where NADA again is. All we can be is of the voice of the dealers and the voice of the states and associations. So from an nda standpoint, we'll send the letter off, or already have, but to honda and sony is that? Please be aware that your established system that is selling cars works. It's the franchise system that made you successful here. But please be aware that you may run counter to state franchise laws right and that's all, nada is.

Tom Castriota: 19:49

From that standpoint, all we are is a voice to any manufacturer. We don't tell a manufacturer what to do, as you know, all we are again, is the voice of the manufacturer, the dealer. So so back to the really the answer, the question. We will support the state associations as they go forward. If the next step, using Honda and Sony as the example, if they decide to kind of pursue the same course that Volkswagen has, I am sure some of the states will again file against Honda and Sony that they are an established WM and gone counter to franchise laws.

Jim Fitzpatrick: 20:21

What are some of the things that, now that you've got the taking care of the California EV mandate and that's been rolled back, what are some of the things that you feel are concerning for dealers today that you want them to focus on for not just the balance of 2025, but beyond?

Tom Castriota: 20:39

That's a good question too, because let me kind of build where I see where NADA is going and I'll be very candid with Rob Cochran following me as the next chair, and it looks like Sandy Angelo is going to be our second woman chair in 2027. So here's how I see it. Talking with Rob and Sandy and our executive committee is that AI is going to be very influential on how we go the future. So how do we use AI? I don't think anybody today really knows.

Jim Fitzpatrick: 21:10

Right.

Tom Castriota: 21:11

But, as you know, talking to the suppliers and OEMs, everybody's aware of it they're all trying to figure where it fits in. We, as an association, how do we use AI in an effective way for our dealers, as we can train them through our academy. So I think to answer part of that question is where's AI play into our future? Another critical part is our dealer attitude survey and why I say that? Because the survey has been very vital to be the dealer's voice to the manufacturer. And my goal this year and I believe, going forward with what would be our next future chairs is how do we continue to use that dealer attitude survey to influence the OEMs? That it's the dealer's perspective, it's not NADA's perspective, it's the dealer's. Again, all that survey is is the voice of the dealers that we convey back to that OEM.

Tom Castriota: 22:06

And I will be very candid and it's an opportunity and maybe the only way self-serving for the dealer attitude survey I can tell the dealers that fill that out or the executive managers. In my experience now of being involved with the industry relations side of this, the manufacturers take it very seriously, some more than others, but they all want to know where they stand and how can they get better and that's what's important. And so when I tell dealers that please fill this out and write your comments, because my experience is the manufacturers take it seriously Now how they react to it. You know, jim, that's a whole nother answer. That maybe I don't have, but I will tell you that that dealer attitude survey is what has helped drive a lot of OEMs' decision as they go forward.

Tom Castriota: 22:52

That's right so back to answer your question is where are we? I think we continue to use the dealer attitude survey as our voice of NADA to reinforce to the OEMs. It's a franchise system and this is how we collectively when I say we, dealers and the OEMs can work together, going forward.

Jim Fitzpatrick: 23:10

That's right. That's right. And in addition to that because I think that that's very, very important and I always participated in that when I was a dealer principal In addition to that, the muscle that the NADA has among its members. It plays such a vital role. Dealers play such a vital role in local markets around the country. What else would you like to see your members do that can help you at the national level, at NADA, to get some of these things done?

Tom Castriota: 23:40

Well, let's use the CRA as an example. When Congress, let's start with the House. When the House brought the bill up and that was a lot of support through our legislative team, we made, probably and I was part of it, I bet you we visited 100 legislators in a two-day period when it was finally at that point of getting out of committee. So just knocking on those doors of those legislators, of getting out of committee, so just knocking on those doors of those legislators. I mean to think about it. We had, I think, 35 or 36 Democrats supported that, and I can remember talking to several Democrats, not necessarily from Florida, but in particular some other parts of the country, who said I have to support this.

Tom Castriota: 24:21

My constituents don't. So use my words, not necessarily his words or her words. Is my populace. They don't drive EV. Use my words, not necessarily his words or her words. Is my populace. They don't drive EV cars, they drive trucks. And if I'm going to support EVs I probably won't get reelected. So without those visits, jim, that's helped stimulate and turn a lot of tides within the congressional side. But now, to add to the rest of this, the end of my part of this story is at the same time when we knew that it got out. Guess what we did three or four weeks ago before the Senate we went back and hit the Senate.

Tom Castriota: 24:54

So a whole group when I say a whole group, so excuse me when I use that term about 18 of the dealers out of the board. What did we do? We went in and visit senators, those that were on the board that were kind of saying, oh, I don't know really what I want to do yet, but you know, again, nada and the dealers we went and visited our senators yeah, that, I believe, contributed to it. It necessarily wasn't saying, oh, that was the thing, but we contributed by visiting for those senators and representatives that we know personally.

Jim Fitzpatrick: 25:23

That's right. And now you know, NADA has got some people on their side. That's in the Senate, beginning with Senator Bernie Moreno, who used to be a car dealer, as you know, and does just tremendous work on dealers behalf. And now you've got, you know, you've got him, I'm sure, on your speed dial right now, because he gets what we're trying to do here in this great industry. You've got Lee Zeldin, who's made a huge impact and been a friend of dealers, and also Sean Duffy and so many others that I think are in lockstep with what your goals are at NADA, right.

Tom Castriota: 25:56

That is correct.

Tom Castriota: 25:57

And you just said it correctly the EPA, the current Secretary of the Treasury Commerce. They're all very much behind us, and you mentioned a name that has been extremely influential and that's Bernie Marino out of Ohio. Yeah for sure. I don't think he's got a guy that can carry that flag as much as he has for our industry, I agree, and he's just as critical link to get our success, jim, and also, as you know, where he's trying to go, where we are in the future, when we're talking about what's left of the excuse my term left of the $7,500 tax credit for EVs.

Jim Fitzpatrick: 26:29

Yeah, yeah, for sure. Tom Castriota, 2025 NADA chairman, I want to thank you so much for joining me on the show this morning, very much appreciated. I know that our dealer viewers will get a lot out of your visit with us here today and love to do a follow-up with you to see how the year is moving along.

Tom Castriota: 26:45

And anytime Jim give me a call, we'll talk anytime you want.

Jim Fitzpatrick: 26:48

Sounds good. Thanks so much Thank you.

Tom Castriota: 26:50

Yes, sir, thank you Thanks.

Jim Fitzpatrick: 26:52

Thanks for watching Inside Automotive with Jim Fitzpatrick.