On June 19-21, Team ARB attended the Maine Automobile Dealers Association convention in Bar Harbor. Despite the CDK cyber-attack, the annual gathering of industry professionals managed to stay both positive and productive. Discussions centered around certain aspects of employment that Maine dealers need to be aware of, as well as an economic outlook, and a review of legislative and other legal activity that has either been undertaken or is on the horizon.
Aging Workforce
One of the topics looked at some of the challenges and opportunities Maine dealers are facing with an aging workforce. Based on changing financial dynamics, longer life expectancies, and talent shortages, the number of employees aged 55 or higher is only expected to grow, and dealers that are able to leverage their more experienced employees and use them to train and complement the next generation will be better positioned for future success.
Economic Update
The economic update covered some of the macroeconomic factors that have been, and are likely to, impact the dealership industry. Some of the challenges include geopolitical factors and trade tensions (e.g. tariffs), cooling consumer spending, and relatively higher interest rates. These are largely offset by positive aspects like slowing inflation, strong corporate and household balance sheets, and an expectation that interest rates will drop within the next twelve months as inflation continues to cool. In looking at the dealership industry specifically, it was noted incentive spending increased nearly 70% year-over-year and inventories continue to grow, although both of these are still below pre-pandemic levels. The overall sentiment remained positive, but we continue to look to expense control and inventory management to help dealers maximize profits.
Legislative and Legal Review
The final session of the meeting focused on various Maine bills and legislative actions that had taken place over the last year. There were a number of bills dealing with familiar topics, such as “right to repair” and consumer privacy, which are expected to continue to evolve and resurface in future legislative sessions. Regarding Maine EV mandate rules, legislation was passed requiring legislative approval, rather than leaving the rulemaking to a small appointed body. Another significant item to Maine dealers was a change in the way sales tax will be treated for vehicle leases. Beginning January 2025, sales tax on leases will be collected monthly as payments are made, rather than upfront as is the current practice in Maine. This aligns Maine rules with the standard used throughout most of the country. There will be a transition window where requests for a sales tax refund can be submitted for taxes already collected.
New DOL Overtime Thresholds
Also discussed were the new DOL overtime thresholds for the “white-collar” exemption, which go into effect July 1, 2024. This does not impact any federal or state dealership-specific exemptions, but this would apply for those employees relying on the white-collar exemption to overtime rules. These rules are currently subject to various challenges, but the recommendation was to prepare to comply as of the stated effective date.
Looking Ahead
Overall, the MADA Annual Meeting proved to be a valuable and productive exchange of information and a great opportunity to catch up with people in the industry. Maine’s auto dealers are a sturdy and inspiring bunch, and Team ARB looks forward to seeing everyone again at the 2025 Annual Meeting. Until then, if you have any questions about financial issues affecting the industry, please don’t hesitate to contact us. We’re in this together.
Matthew Marcoullier is a director at ARB. He focuses primarily on financial accounting and consulting services for auto dealerships, commercial businesses, and closely-held businesses. Matt previously served as a Senior Auditor for the State of Maine Department of Audit.
