Trump win leaves many in retail technology eager for what’s coming
By: Mark Hollmer, November 14, 2024
The automotive retail technology business is expecting more fertile ground on which to grow after former President Donald Trump returns to the White House, entrepreneurs, investors and industry executives told Automotive News.
Trump was reelected by a broad electoral and popular vote margin Nov. 5.
Some say deregulation, tax cuts and other business-friendly incentives considered likely in a second Trump administration could leave dealerships in a better financial position and willing to spend money to grow their businesses.
“Across the board, their optimism in the last week [after the election] and their belief in the future is significantly up,” said John Fitzpatrick, CEO of Force Marketing, a company that provides data-driven marketing for more than 1,300 new-vehicle franchise dealerships. “They believe that by and large, the Trump policies will be better for their businesses and they are optimistic about reinvesting into those businesses in a way that will advance their communication to their customers and their connectivity.”
Chase Fraser, managing director of venture capital firm FM Capital, said a Trump administration definitely will be good for startups in auto retail and elsewhere.
“Trump understands entrepreneurialism because he did that in his career … so I feel like this administration is going to be very pro-small business,” Fraser said. “This is … a good thing for the startup ecosystem.”
But dealership profits remain relatively high, something Fraser said can be a bigger driver for business rather than who is president.
“Dealers selling a lot of cars … they’re going to experiment with more retail technology,” Frazer said. “If they’re selling fewer cars and they’re less profitable, they’re going to buy less.”
Trump optimism tempered with tariff worries, uncertainty
Steve Greenfield, general partner of Automotive Ventures, said a Trump administration could get initial public offerings flowing again, letting older technology companies in auto retail and other sectors hit the public markets after delays that have continued since the COVID pandemic. That, in turn, will give investors return on their money and free them up to fund new startups, assuming market gains in the wake of Trump’s election continue.
“You’re going to see a crashing of the gates,” Greenfield said. “The spigots will open. The investments will flow.”
Dealerships also are financially healthy overall and Trump’s policies should improve that dynamic in ways that will benefit retail technology companies, Greenfield said.
“Taxes are going to come down for businesses in general, which means dealers should be more profitable than ever, which means they should have more money to be spending on vendors,” he said.
At the same time, Greenfield said major tariffs or tax cuts could bring that optimism to a screeching halt.
“Many economists leading up to the election said that the combination of really high tariffs and lowering taxes may mean that we go into a pretty dramatic recession,” Greenfield said. “If that all happens — including the mass deportation of illegal [immigrants] in the U.S. — it would mean that we have a pretty dramatic down step in just the health of the economy in general, none of which is good for startups.”
Jim Roche, CEO of WarrCloud, a startup focused on a warranty processing platform, said tariffs are a real risk for dealerships and, by default, the companies that serve them.
“Tariffs can bring higher inflation, which has a dampening effect on the economy. They can drive up interest rates, which has a dampening effect on the automotive industry and all of those things can have a dampening effect on automotive technology,” he said.
Too early to define Trump election impacts
It is too early to definitively gauge how Trump will help dealership technology manufacturers, Roche said, but they have positive expectations.
“I sense no pessimism or concern at this point because the tech community is made of entrepreneurs,” Roche said. “Entrepreneurs are resilient and adaptable, regardless of the circumstances. No matter where things go, we will adapt.”
Devin Daly, CEO of Impel, maker of an AI-centered digital marketing platform for dealerships, said uncertainty will remain until after Trump takes office in January and his agenda becomes clearer.
Trump’s policies could be a bellwether of growth, he said, or lead to “potential retrenchment or a slowdown of sales.”
Either scenario could be an opportunity for companies such as Impel, Daly said, because his AI-driven technology “allows you to scale up and down relatively seamlessly.”
Fitzpatrick said tariffs are a potential concern, but he doesn’t expect them to be a major obstacle.
“We’ll see a lot of the details that come out of how those tariffs will be sort of mandated and brought out,” Fitzpatrick said. “But I think at least for an auto technology company based in the U.S. where we have competitors that entered the business from around the globe, maybe that gives us a higher chance of winning the opportunity to partner with the dealers.”
Cox Automotive spokesperson Mark Schirmer said the auto industry will succeed regardless of where Trump administration policies land.
“A second Trump term may bring new directions and priorities, but nothing we have not dealt with before,” Schirmer said. “The auto industry is much bigger than a single administration and our team is more focused on economic conditions and consumer sentiment,” both of which he said have been trending higher since before the election.
