International automotive tariffs may be grabbing headlines, but Delaware’s family-owned car dealerships appear to be considering tariffs as just another bump in the road.
It’s a bump many would rather not have to hit, but leaders like Milford’s Charlie Burton say it’s just one of the many road hazards of operating local franchises for the world’s largest automotive manufacturers.
“If you own a dealership, you’ve got to roll with the punches, and tariffs are something that affects all of us,” said Charlie Burton, president and owner of i.g. Burton & Company and a spokesperson for the Delaware Automotive and Truck Dealers’ Association (DATDA).
The impending tariffs will be a very large shock for dealers in Delaware. Tariffs of 25% are being imposed on light vehicles assembled outside the United States – about half of last year’s total volume and added tariffs on steel and other critical materials will raise production costs of vehicles made in the U.S.
Investment bank Goldman Sachs predicts average new cars will cost consumers an additional $5,000 to $15,000 each due to the tariffs, adding that availability may also be temporarily affected. For example, Stellantis, which now owns 14 brands including Chrysler, Dodge, Fiat, Jeep, Maserati and Ram Trucks, has paused production at one assembly plant in Canada and another in Mexico.
Isaac Willis of Willis Automotive says that while the future is unknown when it comes to the tariffs and other major international concerns, “Dealers are resilient people.”
Meanwhile, Jim Ursomarso, vice president of Union Park Automotive Group, told DBT, “We’re just waiting to see what happens.”
According to DATDA, there are presently 53 car dealers in the state, most with franchises that focus on multiple auto brands. Hertrich, for example, has franchises for 19 different brands, while i.g. Burton has several locations for car and truck brands throughout the state, along with a dealership for Blue Bird school buses. Total sales of all Delaware dealerships were $4.1 billion in 2024 with the average dealership in the First State having 71 employees, DATDA reports.
Ivy are some of the people that keep dealerships like i.g. Burton Chevrolet running. | DBT PHOTO BY KATIE TABELING
The car dealerships in Delaware are in turn part of a huge national network. According to the National Automotive Dealers Association (NADA), a total 16,936 franchised dealers in the U.S. sold 15.5 million light-duty vehicles – cars and passenger trucks – in 2023 with sales clocking in at $1.2 trillion. About half of those vehicles were imported.
In Delaware, the term “family of dealerships” is an apt one, as most of the branded auto franchises operated in Delaware are family-owned. The community of dealer owners also consider themselves a family with more common interests than disputes.
For example, Burton is the fifth generation of Burtons to sell cars, following in the footsteps of his great-great grandfather who began selling automobiles at the family’s general store in Millsboro in 1908. Today, i.g. Burton operates 13 franchises in Delaware and Maryland.
The Hertrich dealership, which has 24 locations across four states, opened its first dealership in Seaford in 1963 but dates its family automotive heritage to 1903 when Frederick Hertrich came to the U.S. from Germany as a Buick engineer.
Other dealerships tell similar tales – the Willis dealership in Smyrna dates back 74 years and the Ursomarso family opened its first Union Park Auto Group location in Wilmington in 1955. Today, that dealership includes Hondas, Buicks, Jaguars, Volvos and other cars on the lot.
Inside the world of franchises
“In many ways, owning a franchise from an auto manufacturer is a lot like having a franchise for a fast-food restaurant or a real estate business,” Ursomarso said, nothing that the franchise is much more-expensive and usually more-regulated.
Automotive manufacturers grant franchise rights to dealerships through an “open point” application when they expand into an area where they do not have adequate representation. Dealers first submit applications to secure the rights to sell and service vehicles in that area. When a dealer is chosen, an agreement outlines the terms, including the dealership’s responsibilities, the manufacturer’s obligations and the exclusive territory granted to the dealer.
As a small state that has long been settled, there are not a lot of open “points” in Delaware for expansion among traditional manufacturers. Of course, a new auto manufacturer or a traditional one launching a new brand will also be looking for dealers interested in selling their cars.
The more common route, now that Delaware’s car buying opportunities are established, is for an existing dealer buying a franchise from another existing dealership. Burton would know – he has 12,000 cars across 13 lots now, ever since it acquired the Dover Toyota dealership last spring.
“Once you agree to buy an existing dealership, you have to first strike a deal with the dealer,” Burton said. “Then the manufacturer will do due diligence, getting all the skinny on you. They have to make sure you’re well capitalized and have a good line of credit.”
Once the basic needs of the deal are met, Burton added that there may be special “asks” to handle.
“For example, we bought a dealership in Glen Burnie, and the facility was not up to their standards, nor ours. So, the manufacturer said we had to agree to build a new facility in three to five years. But once you get the dealership, you have a lot more leverage,” he said.
State regulators help guarantee that the manufacturer’s agreement is honored and, once
it’s granted, it’s difficult to lose one. Moreover, as Willis, notes, “Dealers are constantly in daily communications with our manufacturers.”
Of course, selling new cars is just one of multiple lines of businesses in which most dealers operate. There are also secondary businesses which also involve the manufacturer, like routine warranty service and sales of new and replacement parts. Other secondary businesses, such as used car sales and collision repairs, may not involve a manufacturer at all. Some dealerships help arrange financing through auto loans with partner financial institutions.
“We arrange financing for most cars and most dealers have good relations with their local banks and credit unions,” Ursomarso says. “The rates are comparable, and the dealership takes care of the paperwork.”
One issue that car dealerships in Delaware don’t have to worry about is the cost of recalls. More cars are getting recalled for many reasons, including stricter federal standards and complex technology, resulting in millions of costs to the auto manufacturers to repair them.
Ultimately, the biggest investment for the dealerships is inventory. If that dealership is lucrative, it also demands good cash flow and lines of credit to maintain the day-to-day operations with the staff. That is also a reason why dealers may invest in multiple brand franchises and establish multiple locations – economy of scale is at work here.
“I have 13 stores, but I have one centralized office to manage all of them.” Burton said. “If I open a new store, I don’t have to add additional overhead, just the employees to run that franchise.”
With those savings in mind, i.g. Burton still touts a workforce of 525 employees.
Although it may be difficult obtaining approval and financing for a franchise, once a dealership is in business, the manufacturer can’t easily take that franchise back as most states have laws protecting the dealer’s investment. Non-performance and negligence, however, can cause loss of a dealership. That is why those constant customer surveys are taken – by the manufacturer, not the dealer – to compile a customer satisfaction index, the car companies’ way of guaranteeing the value of the brand is being maintained.
Bumps in the road
When it comes to economic issues, it’s not that Delaware dealers are insensitive to tariffs. With the rollercoaster of tariffs imposed, economists at Cox Automotive recently expect a $6,000 increase to the cost of imported cars due to the 25% tariff on non-U.S. assembled vehicles as well as a $3,600 increase to vehicles assembled in the U.S. due to the tariff on automotive parts.
Ursomarso told DBT that customers have already walked through their doors concerning tariffs and future pricing, which encouraged them to shop earlier than they may have otherwise wanted. He added that the impending sticker shock is not a pleasant experience for the dealer, either, who finds themselves having to raise prices on those coveted new cars and most likely used cars, as well.
But compared to other headaches dealers are facing, tariffs could be temporary ones. A more existential threat is direct customer sales by manufacturers without even having a salesroom or dealership such as sales for the new Tesla model that some other companies, even traditional manufacturers, are testing.
“Of course, we do online sales every day,” said Union Parks’ Ursomarso. “But most people still want to drive the car before they decide to buy. They want to see how the car handles and see if the seating works for their family. While most people start online, they then come to see us.”
He added that visiting a dealership in person is beneficial for those who want the security
of factory-authorized services, too.
Burton said he decided to test the “no-dealer” concept head on.
“When Rivian announced five years ago that they were taking a $1,000 down payment,” he says, “I put my money down. I wanted to see what the internet experience would be like. Three years ago, I got a call my vehicle was ready. To be truthful, it wasn’t a bad experience. But the problem with internet sales is that I don’t have a local dealer when I need one, especially for parts and services.”
Another bump in the road for Delaware dealers is the Zero Emission Vehicle (ZEV) mandate. In March 2022, Governor Carney announced Delaware was joining with 16 other states in adopting California’s emission mandates regulations. That essentially mandates all new cars registered in Delaware in 2035 will be only electric, or zero-emission vehicles. Under ZEV, beginning with the 2026 model year, 35% is the target number that car manufacturers need to deliver in Delaware to meet ZEV requirements.
While DATDA did not actively get involved in the public debate that ensued about ZEV, DATDA president Chip Sheridan of Sheridan Ford told the Delaware Business Times in 2023 that he had not met a dealer in favor of ZEV.
Both Burton and Ursomarso emphasized that it’s not the electric vehicles they dislike altogether, rather the mandate, stating that plug-in vehicles simply do not meet everyone’s needs, especially those who live in apartment housing who may lack the charging infrastructure to power up their cars.
