William Underriner, owner of a family dealership in Billings, MT, becomes chairman of the country’s largest car dealer trade group in February.
He is the elected 2012 head of the National Automobile Dealers Assn., representing 16,000 franchised stores. He takes the helm from outgoing chairman Stephen Wade at NADA’s annual convention in Las Vegas.
Underriner, 59, is president of Underriner Motors, with Honda, Hyundai, Buick and Volvo franchises. His business sold 1,400 new and used vehicles and had total annual sales of $35 million in 2011.
Underriner will head NADA in the wake of a tumultuous period during which auto sales dropped from nearly 17 million in 2005 to 10.6 million in 2009; General Motors and Chrysler went into bankruptcy; and thousands of dealers lost their franchises in a painful consolidation process.
Today, the auto industry in general and GM and Chrysler in particular are in much better shape. But dealers still face many issues.
They must grapple with the implications of financial-reform legislation for their finance-and-insurance operations.
They are contending with auto makers that want them to spend millions of dollars on facility upgrades. NADA has commissioned a study to see if such investments will result in a sufficient return on investment.
Dealers also question the wisdom of the federal government’s proposed corporate average fuel economy mandate of 54.5 mpg (4.32 L/100 km) by 2025.
WardsAuto spoke to Underriner about these and other issues.
WardsAuto:What will your priorities be during your chairmanship?
Underriner:My focus in 2012 will be meeting with the auto makers to discuss the findings of the NADA facilities study. Also, we’ll be working with Congress and federal agencies on issues, especially fuel-economy rules. To me, the proposed 54.5 mpg by 2025 is a stretch.
I also really feel there is a lack of next-generation dealers coming into our association, so my objective is to put a next-generation dealer on every NADA committee.
Finally, we need more dealer participation in NADA. More than 90% of dealers are members, but only 20% to 25% participate in our programs. I’d like to increase that.
WardsAuto:Will you actively lobby to have the proposed 54.5 mpg standard lowered?
Underriner:We want to make sure cars in 2025 are affordable for the average American. To get to the proposed standard by 2025 is going to add nearly $3,000 to cost of an automobile, and that’s according to the Obama administration itself.
I’m also worried if they’ll be the vehicles people want to buy. I live in Montana, and 60% of our sales every month here are trucks.
How are we going to make a truck, or any vehicle that someone in Montana wants, that’s going to be affordable and the right size for that consumer? I’m worried you’re going to get the jalopy effect, where people hang on to their cars forever and those vehicles will get even worse gas mileage than the new ones.
WardsAuto:Is there hope at this point to get the Environmental Protection Agency to revise its numbers? Would it even entertain that option?
Underriner:We’re going to go the legislative route and work with manufacturers and other organizations that have the same kind of thinking and see what we can do.
WardsAuto:Light-vehicle sales increased to 12.7 million units in 2011. WardsAuto is projecting 14 million units in 2012. But there are now 17,550 franchised dealers compared with 21,200 in 2007. Can the industry grow with fewer dealers?
Underriner: I really think sales will increase due to pent-up demand and the fact that the average car on the road today is 11 years old. We were probably over-dealered. But the dealers themselves should have shaken that out, not the bankruptcy courts. It would have had the same effect. Instead of dealers having their dealerships taken away, maybe they should have sold them and come out with some money instead of being left empty-handed.
WardsAuto:What do you expect the results of the NADA’s factory-image study to reveal?
Underriner: We're hoping to learn the answer to the all-important question of whether a factory-image program sells enough cars to justify the millions of dollars you put into a new facility.
We hired Glenn Mercer to do an independent study and we’ll release the results at the convention. Don’t get me wrong; I don’t think new cars should be sold out of a gas station. Facilities should be clean and inviting, but they don’t have to be the Taj Mahals that some manufacturers want us to build these days.
Would the manufacturers build a billion-dollar plant without knowing if it’s going to produce one more car or improve productivity?
WardsAuto:How do you hope to put your stamp on the NADA convention in February?
Underriner:I hope to visit as many dealers as possible and hear what’s on their minds; what they like about the NADA; what they don’t like; what we can do for them that we’re not doing now.
WardsAuto: Will NADA endorse a U.S. presidential candidate?
Underriner:NADA doesn’t endorse presidential candidates. We get involved in Senate and Congressional races through our PAC, the Dealer Election Action Committee. We encourage our dealer members to get involved because they’re the ones who see these people when they come home on the weekends.
WardsAuto:How does NADA regard the policies of the Obama administration?
Underriner:We would like to see the president slow down a little bit on CAFE. Other than that, we support the administration in a lot of things they do.
WardsAuto:How will the NADA help its members wade through new issues and regulations arising from the recent Dodd-Frank consumer-finance reform legislation and the like?
Underriner:It’s important to know that every auto loan will be guarded by the Consumer Financial Protection Bureau that was established as part of Dodd-Frank, and we feel that’s good legislation.
We want to make sure the consumer is educated, and that when they leave the showroom with dealer financing, they feel good knowing exactly what they did and did not buy. Ninety-nine percent of our dealers are doing this already.
WardsAuto:Would you welcome franchises that sell Chinese or Indian cars into the NADA? Do you expect this to happen soon?
Underriner:We welcome membership from any and all new-vehicle dealers, no matter where their products are manufactured.
We’re not privy to any Indian or Chinese plans to market their vehicles here in the near future. I'm sure it will happen at some point. When it does, NADA is there to represent dealers who represent them.
WardsAuto: Are there any problem areas in current franchise agreements with auto makers that you would like to address in your new term?
Underriner: We hope to continue to monitor manufacturers’ changes to these agreements and to help educate dealers about the modifications that adversely affect their interests or otherwise don’t work well in the marketplace.
Some companies ask us what we think about their franchise agreements and in some cases our input has resulted in a franchise agreement being revised.
WardsAuto:What were the most valuable lessons or experiences you received in your prior roles at the NADA?
Underriner:As treasurer and chairman of the Finance Committee, I learned a lot about what goes on with the day-to-day operations. On the Dealership Operations committee, I learned what the dealers thought about our programs and how to make them more viable.
When I was first assigned to chair Dealership Operations, along with our staff and committee we started NADA University, which has been a great way for dealers to get information.
WardsAuto:Final thoughts?
Underriner:This year is going to be the greatest time in a long time to be an auto dealer. I reach out to every auto dealer in the country, all 17,500 strong, and say if I can be of help to any one of them, please don’t hesitate to call.
