Dealers attending the 2007 National Automobile Dealers Assn. convention in Las Vegas last month voiced their concerns at meetings with auto executives, walked the expo floor (called the biggest department store for auto retailers), listened to inspirational speakers — and then hit the casinos at the end of the day.
Here is our report on convention highlights:
Facing Tough Times, Dealers Shall Overcome — Yet Again
Today's challenging times are nothing new for the automotive industry.
Auto makers and dealers have faced tough times in the past and managed to overcome them, outgoing 2006 National Automobile Dealers Assn. Chairman William Bradshaw tells attendees at the annual NADA conference.
“We can overcome them the same way,” he says, “by combining optimistic attitude with resilience of the automobile maker and innovation by NADA.”
Bradshaw recalls the 1930s, when America was in the midst of the Great Depression, as an example of difficult times the industry survived.
Bradshaw makes his remarks as he presents Jenny Wegner, owner of Wegner Auto Co. of Pierre, SD, with NADA's Century Award. Wegner's great-grandfather H.J. Wegner founded Wegner Auto in 1907.
Much like Wegner Auto, Bradshaw says the industry continues to shine a century later.
“After 100 years, our franchises are alive and well and stronger than ever, and we're ready to tackle the next 100 years,” he says.
— By Emily Prawdzik Genoff
Would-Be Dealership Slasher Says “Just Doing the Math”
Shrinking dealership ranks, always a hot topic at National Automobile Dealers Assn. conventions, gets even hotter at this year's gathering as one finance expert suggests cuts for troubled brands should be as much as 40%-50%.
While the issue has been delicately discussed at past NADA conventions, always with a certain vagueness as to how many dealerships should be shuttered, Stephen Girsky breaks with tradition by offering a specific percentage — and a high one at that.
“If you look at dealership reductions running about 4%-5% a year, you have a long way to go if you need to cut 40%-50%,” Girsky, president of Centerbridge Industrial Partners LLC, says at a J.D. Power and Associates conference held in conjunction with the NADA convention.
Too many same-brand stores competing for fewer customers are causing problems with throughput, or the number of customers per dealership, he says.
“If you are telling me (higher) throughput is not the answer, what is? I'm just doing the math,” Girsky says.
Domestic auto makers such asMotor Co. have indicated that as they streamline their operations, dealership ranks should be trimmed accordingly.
Girsky, who served as a special financial advisor toCorp. in 2005-2006, sees dealership consolidation occurring in three likely ways:
- Auto makers “buying back shingles.”
- Investment firms such as his buying and then merging dealer points.
- Dealer groups acquiring weaker competitors and closing their operations.
But not everyone agrees with Girsky's assessment.
Troy Clarke, president of GM's North American operations, tells the conference that while the auto maker “over-dealered” in some parts of the country, “we've chosen not to take a heavy hand with that. We don't see the upside of laying out mandates.”
Ten years ago, there were about 25,000 dealer points. Today, there are 21,500, NADA data shows.
Clarke says much of recent dealership consolidation is the consequence of “interaction among dealers,” with one buying out the other. “There is more to do, but we're satisfied with the progress made so far.”
GM is happy with that arrangement, partly because it saves the auto maker the high expense of buying and closing stores, Clarke says.
Asked when GM plans to get aggressive in trimming dealerships, Clarke says, “I don't know. Not tomorrow. We know how much it costs because we did it with Oldsmobile. If I had a couple of billion dollars for (cutting dealerships), I'd rather put the money into product.”
— By Steve Finlay
Talking Under the Influence?
Analyst Steve Girsky's call for a 40%-50% reduction in America's dealer network raises a lot of eyebrows at the highest levels.
“That would be wrong,” says Cisco Codina,group vice-president-North America marketing.
Such a move would leave vast areas of the country under-serviced, he warns.
Plain-talkingchief Tom LaSorda is characteristically blunt.
“I don't know what Steve was drinking before he said that,” LaSorda jokes. But he agrees a reduction of some kind is warranted.
“The dealer count is too high; the throughput is too low,” he says.
LaSorda offers no hint of how many of's 3,766 dealerships will be cut, but says, the dealer body will be involved in the process.
“We'll do it in a collaborative way.”
— By Eric Mayne
Chrysler Group Dealers Vent; Auto Maker Confesses Sins
Chrysler Group confesses its sins — again — but all still is not forgiven, as evidenced by a meeting where top executives faced some tough questions.
“They did, of course, want to make their points,” Michael Manley, Chrysler's vice president-sales strategy and dealer relations, says of dealers. “From that sense, (the meeting) was certainly direct. But I think it was upbeat.”
The 90-minute session focuses on dealer-relationship issues. Some Chrysler dealers are effusive in their praise for President and CEO Tom LaSorda, who has been a lightning rod for criticism after the company failed to reconcile its production with last year's sales rate. As a result, inventories swelled beyond manageable levels.
LaSorda earns high marks for candor from Gary Barbara of Gary Barbara's #1 Autoland in Philadelphia. “He really comes across,” says Barbara, who also describes the meeting's tenor as “positive.”
But Mike Kinsch of Norwood Park Dodge in Chicago is not a member of the Tom LaSorda fan club.
“All we've heard is lip service,” Kinsch says of Chrysler's stated aim of repairing relationships with its dealer network. The auto maker needs to “get back to a regular, grassroots, let's-roll-up-our-sleeves and sell cars kind of thing,” he suggests, adding new product launches are out of step with reality.
In particular, he points to the new Dodge Avenger midsize car, which arrives in dealerships en masse this spring as an '08 model.
“My new-car market will be dead, on that car, in six months' time,” Kinsch says. “Stick a fork in it, it's done. Forget invoice. Forget everything. We will lose a G-note a car because they were out in the market so quickly.
“They're killing us,” he claims. “They're depreciating so fast, it's killing us.”
Jim Arrigo, newly named head of the Chrysler dealer council, disagrees.
“I don't think it's a big problem,” Arrigo says. “It's all product (regardless of the model-year.)”
Manley notes the Dodge Caliber launched last spring as an '07 and its residual value “came out where we expected it to be.”
Caliber was the product that garnered the most product questions, Manley adds. Dealers want more of them. “From our perspective, it's a nice problem to have,” Manley says. “First we have to try and improve the line rate that we've got.”In keeping with a newly adopted policy to monitor dealer orders, Manley says executives meet weekly to “make sure they fill our dealers' orders in a timely fashion.”
Dealer profitability is the biggest issue facing Chrysler retailers, Arrigo maintains.
“It goes without saying that when things are good and everybody's making a lot of money everybody's very happy,” Arrigo says. “When things aren't good, things are little bit crazy. Tom LaSorda made it very plain that he's here to make a change.”
LaSorda tells reporters in an earlier roundtable discussion that Chrysler dealers are far off the goals the auto maker has set for their profitability.
“It's encouraging that (Chrysler knows) they're a long way away,” Arrigo adds. “If they say we're close, then you know somebody's not telling the truth. It's going to take time. Any kind of change is going to take time.”
Meanwhile, the specter of last year's shadow inventory continues to haunt Chrysler. Referring to Chrysler's inventory of unsold vehicles — a stockpile that only came to light after Ward's found discrepancies between the auto maker's monthly sales, inventory and production totals — one Midwest dealer wonders if the “sales bank” will ever go away.
To start the year, however, the sales bank was less than 10% of its mid-2006 level of 100,000 units.
Says Kinsch: “The product is fine. It's dealer relationship stuff. We need to attack that.”
— By Eric Mayne
Many Ford Dealers Remain Confident Despite Hard Times
Ford Motor Co. dealers get their first look at the auto maker's new CEO Alan Mulally during a convention franchise meeting.
While many dealers exit the meeting tight-lipped, others express confidence in Ford's new leadership team.
“Alan brings a fresh perspective and energy,” Sam Pack, a major Ford dealer in the Dallas-Ft. Worth area, says. “It's obvious he has a passion for this business. If you're going to be involved and successful, you have to have that necessary drive.”
Pack is encouraged that Mulally appears to have the support of Ford's board of directors. “Otherwise, he wouldn't be here,” he says.
Pack believes the auto maker needs to stabilize its management and says Mulally needs to “get the team around him that he feels comfortable with. He's got to change the culture there.”
When asked if he sees the team changing, he says, “I don't have a feel for that. They have made major decisions regarding realignment, and it looks like the business team is in place.
“Dealers have confidence in the team and we have a great relationship with Cisco (Codina, group vice-president-North America marketing).”
Despite media grousing about the auto maker's product lineup, dealers say they are happy with it.
Bert Boeckmann, owner of one of Ford's largest dealerships, Galpin Motors, in North Hills, CA, says, “The end answer is the product, and it's the product that wins. In years past, we played not to lose instead of playing to win. I see a reversal of that.”
Longtime Ford dealer Bill Smith of Russell and Smith Ford in Houston, says the new products will be winners.
Meanwhile, Pack says the biggest issue is perception. “Candidly, the product is much stronger than what it appears to be,” he says.
During the franchise meeting, Ford addressed its dealership reduction plan briefly. “They mentioned it,” Smith says. “But that really is it. It is a voluntary program, so dealers have to make the first effort.”
Smith is confident in the brand, noting he just spent $16 million in upgrading his Ford property.
“We're saying grace for what we have,” he says.
— By Cliff Banks
Cadillac Dealers Upbeat; Buick Dealers Subdued
Corp. expects its Cadillac retailers to drive a 5% hike in the luxury brand's sales this year.
The auto maker bases its expectation on marketplace reaction to the revamped Escalade lineup and the buzz surrounding the pending launch of the redesigned-for-'08 CTS sport sedan.
Jim Taylor, the brand's general manager, says the time is right for GM's luxury marque to make a move in the marketplace.
Momentum “means a lot,” he tells Ward's after addressing Cadillac retailers at the convention.
GM's luxury marque had a lackluster 2006. Sales declined 3.4% to just over 227,000 units, according to Ward's data, but market share held steady at 1.4%.
Taylor suggests the revamped Escalade is helping force the pendulum back in Cadillac's favor.
In the last three months, according to Ward's, sales of all Escalade models — the fullsize SUV, stretched ESV and EXT sport/utility truck nearly have doubled vs. like-2005.
“The general direction of General Motors has improved over the past year,” adds dealer Diana Pfeiffer of Anchorage-based Alaska Sales and Service, whose market is mainly trucks. “It's got exciting, excellent-quality products.”
This wasn't always the case, Taylor admits. As a result, competitive brands such as Lexus andhave overwhelmed Cadillac in key luxury-vehicle markets such as California.
Cadillac's challenge is to first ensure it offers “bulletproof” products that meet the performance expectations of luxury-vehicle buyers, Taylor tells Ward's. Then it must aggressively market those products to improve the brand's image.
To this end, Cadillac will pursue a strategy that includes product placements, though Taylor also admits the results of such devices are “very hard to track.”
Buoyed by the dramatic debut last month of the new CTS, dealers seem unfazed about the impact of a 5% sales hike target.
“Dealers who are doing the right thing know that General Motors is on track,” says George Lynn, owner of Roth Cadillac in Erie, PA — the brand's oldest Cadillac dealership.
“General Motors seems focused on dealer profitability,” he says. “And they know that the right way to do that is to give us the right cars to sell and the right tools to sell them. “The new CTS is going to be spectacular. It's a world-class sedan. They got that car right.”
Meanwhile, confidence among Buick dealers — who caucused just before their Cadillac counterparts — seems more subdued.
“It's a work in progress,” says Robert Brogden, owner of Robert Brogden Pontiac Buick GMC in Olathe, KS. “They're genuinely trying to get into a position for a strong future.”
Other dealers worry the brand's demographic is still too old. And they heard nothing to counter that fear here.
Adds Steve Middlebrooks, president of Hayward Allen Cadillac Buick Pontiac GMC in Athens, GA: “The biggest thing that I saw was the advertising direction. From the standpoint of Buick, it was hitting hard on quality, which they certainly should.”
In the latest reliability rankings from J.D. Power and Associates, Buick ranked in the top five. But its performance was below the industry average in Power's 2006 initial quality study.
Meanwhile, Middlebrooks is heartened by consumer reaction to the GMC Acadia cross/utility vehicle — a key GM product that shares its platform with the Saturn Outlook and Buick Enclave.
“I talked to my son this morning and we sold another one,” he says. “I mean, they're selling, bam, bam, bam.”
On the subject of component sharing, Taylor confirms the close product-development strategy evolving between Cadillac and Saab. Cooperation between the two brands is “more yes than no,” he tells Ward's.
But sharing will not be done unilaterally, Taylor adds. Decisions to share platforms and components between Cadillac and Saab will be made on a case-by-case basis.
— By Eric Mayne
VW Dealers Call New Bonus Plan “Horrible,” “Terrible”
Expect Volkswagen of America Inc. to amend a contentious new dealer bonus plan.
However, dealers breathe a sigh of relief that product promised to them during the tenure of Wolfgang Bernhard is still in the pipeline. Bernhard was replaced as brand chief Jan. 1 by former Audi boss Martin Winterkorn.
During the question-and-answer session following the presentation of VW's plan, grim-faced dealers stormed out of the room one by one. They used words such as “horrible” and “terrible” to describe the program, designed to reward superior sales performance, high standards for customer service and exemplary facility management.
“There are a lot of disgruntled people,” one dealer says.
Another complains: “They're not listening.”
But apparently VW is listening. An insider tells Ward's the auto maker is fine-tuning the plan, which:
- Offers increased incentives based on three new levels of performance.
- Rewards dealers who can demonstrate they employ proven customer-service processes.
- Pays a bonus for maintaining facilities that properly represent the brand.
Despite the uproar, Adrian Hallmark, executive vice-president, insists VW's program is fair. The change is simply a shift from “one system to another,” he says.
“But in the transition, you get some people that immediately benefit from the change,” Hallmark tells Ward's in an exclusive interview immediately after VW's dealer meeting.
Dealers claim the smaller stores get shortchanged.
Says Hallmark: “We're going to reward people as we have in the past. If they've invested in the franchise, they get a bonus. If they can demonstrate they've got good customer processes, not the (customer satisfaction index) scores, but just the five simple steps to look after customers, they get a bonus for that. And according to their sales performance, they get different levels of bonus.
“The only difference, compared with what we've done in the past, is how we've set the sales targets.”
In addition, VW is setting up a flying squad of staffers dedicated to helping dealers meet the auto maker's expectations.
“We've got eight people dedicated that will go out and help them fix their problems, or tell us where we've got problems that are causing them to underperform.”
Count Connecticut-based Langan Volkswagen among the contented dealers. “It's all positive,” Glen Langan says, describing what he heard.
Mike Sullivan of Volkswagen Santa Monica, the nation's second-largest VW retailer, is unfazed by the proposed changes.
“Product is the pillar,” he says. “The cars that we thought were approved under Wolfgang Bernhard are still approved.”
Among the products considered critical to VW's success are the Tiguan small cross/utility vehicle, scheduled for introduction as an '08 model, and a 4-door car with dramatic coupe-like styling expected in about 18 months, dealers say.
Before these products arrive, however, VW will introduce a new line of diesel-powered vehicles. The auto maker's diesel program currently is on hiatus as it strives to meet tough new U.S. emissions standards.
— By Eric Mayne
Dealers and Auto Makers Do a Delicate and Daily Dance
John Bergstrom is among a minority of dealers (16%) who, in a National Automobile Dealers Assn. survey, predict profitable days in the future.
“Business is pretty good right now for us, and I believe profits will be better,” says Bergstrom. “I'm one of those optimists.”
He's also one of those persistent types. He opened a Chevrolet store in Neenah, WI, 25 years ago after finally persuading General Motors Corp. to give him a franchise. GM had twice turned him down, saying he didn't have enough money.
Now he presides over Bergstrom Corp., the largest dealership group in Wisconsin, with 23 stores in 12 cities. It is No.35 on the Ward's Megadealer 100.
Bergstrom employs 1,200 people, or as he calls them, “teammates.” Their pay plans are determined by how well their individual dealerships score in customer satisfaction surveys.
“If a store is not performing well, its CSI (customer satisfaction index) usually is not where it should be,” Bergstrom says.
Bergstrom is one of four dealer panelists speaking at a J.D. Power and Associates conference held as part of this year's NADA convention.
The other panelists, from heavy-hitter dealer groups as well:
- Earl J. Hesterberg, a former Ford Motor Co. executive who now is president and CEO of Houston-based Group 1, a 94-store public company that ranks No.5 on the Ward's Megadealer 100.
- Susan Scarola, one month on the job as CEO for New Jersey-based DCH Auto Group Inc., a 25-store operation whose founder, Shau-wai Lam was Ward's Dealer of the Year in 2005.
- Tony Schnurr, senior vice president of the 41-store Larry H. Miller Management Co. based in Sandy, UT, and No.10 on the Ward's Megadealer 100.
Hesterberg says Group 1 is “very decentralized,” with the home office trying to create a unified environment while leaving individual stores with a “degree of autonomy.” But there's a limit: “You can't have 15 different ways of accounting.”
Although many independently owned dealerships are named for and reflect the personality of the owners, Hesterberg says, “It is dangerous to be a personality-driven business vs. a process-driven business.”
He says dealership people tend to be “entrepreneurial personalities.” There are drawbacks to that, he says. “I didn't realize what ADD (attention deficit disorder) was before I started in this business.”
After easing off acquisitions for awhile, Group 1 is “getting aggressive again,” says Hesterberg. Last year, the chain acquired stores with $732 million in combined annual revenue, while selling off some under-performing stores.
The company has moredealerships than any other franchise. It has a handful of domestic brands, some of which have been a challenge, he says.
Getting people to work as managers of under-performing domestic stores can be a challenge too, says Hesterberg. “One way to train future managers is to have them work at one of our domestic-brand stores, but often times they don't want to go there.”
Similarly, Bergstrom says it can be difficult formulating a compensation plan for an employee doing a great job at a domestic store that is feeling the fallout of the auto maker's hard times. “It is a lot easier at a Lexus store.”
In a publicly owned company, growth is important because that is what shareholders pay for, says Hesterberg. “Stockholders are in our minds every day. When you have brands that are significantly shrinking, it gets difficult.”
Schnurr says his boss, Larry Miller, started in the business in 1979 when he purchased a smalldealership in suburban Salt Lake City. The firm now has revenues of more than $1.2 billion a year.
The Miller operation also promotes autonomy at individual stores. “Every entity stands on the entrepreneurial spirit of its general manager,” says Schnurr. “Every general manager earns the right to be left alone.”
He says job descriptions for every position within the company say the employee will protect the legal and financial well being of the firm and “be a teacher.”
The Miller group also runs a dealership academy for employees who are deemed as winning prospects, Schnurr says.
DCH's Scarola says it is important for dealerships to brand themselves, adding that brand management is more than running an ad campaign.
Her firm stresses the values of founder Shau-wai Lam. Those include “honesty, integrity, the highest ethical standards and doing the right thing,” she says.
DCH strives for high customer satisfaction scores as well as high employee satisfaction scores, according to Scarola.
It is a “struggle as we get larger” to balance the need for individual entrepreneurial spirit with the need for business processes, she says.
There is also a delicate balance between the needs of auto makers and dealers, Scarola adds.
“It is a dance between what we need and what the factory needs, and we're dancing every day.”
— By Steve Finlay
Worried Import Dealers Assn. Leaders Rallying the Troops
Fearing potential legislation restricting free trade, the American International Automobile Dealers Assn. is rallying the troops.
“A boxer once said, ‘Everyone has a great game plan until you get punched in the face,’” says AIADA President Cody Lusk. “We're about to get punched and kicked.”
At an annual meeting during the National Automobile Dealers Assn. convention, AIADA leaders urge foreign-brand dealers to prepare to fight in light of what is perceived as disturbing trade-protectionism signals from leaders of the new Democrat-controlled U.S. Congress.
“Now is the time for Washington to hear from the real U.S. auto industry, encompassing all of America's brands, from Acura to Volvo,” Lusk tells the gathering.
No specific legislation against free trade has been introduced — yet, says AIADA board member Joseph O'Brien of Peoria, IL, who owns 18 dealerships (four domestic brands and eight foreign brands) in five states.
“But we are watching for something that could be detrimental,” he tells Ward's. “The leadership of the new Congress has shown signs that there will be protectionism for the Big Three.”
John Hawkins, the new AIADA chairman and a California dealer, tells the gathering: “There are real and dangerous threats lurking. The time to act is now. I hope you will join me in standing up as one united voice on behalf of this great industry.”
Don Beyer, outgoing association chairman, appeals to everyone, saying: “We are here to work with Republicans and Democrats, with libertarians, contrarians, abolitionists, conservatives and progressives of all stripes, across all aisles, to keep moving our industry — and communities — forward.”
Although preaching to the choir, AIADA leaders tell their members how much they and foreign auto makers have contributed to the American economy.
That includes investing $36 billion in U.S. plants and other automotive facilities, and employing 2 million Americans — 500,000 of them at dealerships.
“The good news is we have the facts on our side,” Lusk says. “The bad news is in Washington, many times the facts do not matter. In Congress, the facts often get lost or tossed out for the sake of politics or votes.”
Combined U.S. market share for foreign auto makers has reached 46%. Some see that as a dangerous erosion of the American auto industry. Lusk sees it as earning the right for a greater say.
“As the old ‘Made in Detroit’ slogan gets tossed into the ring, we understand more clearly than ever that Detroit is no longer the sole voice on behalf of the U.S. auto industry,” he says.
Lusk accuses some Congress members of drawing a battle line separating domestic auto makers “from so-called ‘foreign' manufacturers.”
He singles out U.S. Rep. John Dingell (D-MI) as someone to worry about.
Dingell is the new chairman of the House Energy and Commerce committee. His district includes much of the home base of the American auto industry.
Dingell voices the possible need for federal policies “to maintain and strengthen the U.S. industrial base.” He says currency manipulation, market closings and unfair competition “simply have to be addressed.”
To Lusk, statements like that show “trade will clearly be in the crosshairs of this Congress, and we must remain vigilant in showcasing its benefits before our lawmakers.”
Troy Clarke, president of General Motors Corp.'s North American operations, says GM is lobbying, too, claiming foreign competitors hold an unfair advantage due to unilateral trade restrictions and currency manipulation.
“An uneven playing field in the U.S. is definitely a challenge for GM, and not one we face anywhere else in the world,” Clarke says. “We're not whining about it, but we're talking to anyone who will listen.”
Much of the AIADA meeting, in a ballroom of the Las Vegas Hilton Hotel, evokes patriotism, with images of the Washington Monument, U.S. Capitol and waving American flags appearing on jumbo video screens.
— By Steve Finlay
Association Honors a Late, Great Dealer
The American International Automobile Dealers Assn. at its annual NADA meeting honored one of its former chairmen, David Mungenast.
The late, great dealer died in September of cancer at age 71. He was a motorcycle repairman and Hollywood stuntman who became an originalmotorcycle dealer in the U.S., then a Honda, Acura, Toyota, Lexus and Dodge auto dealer in metro St. Louis.
Friends and family remember him as kind, considerate, honest and filled with integrity.
“Dave would say, ‘I'm just a motorcycle dealer who got lucky,’ but we all knew that was not true,” Lusk says.
From now on, AIADA's top achievement award will be known as the David Mungenast Lifetime Achievement Award.
Alabama Dealer Becomes First Woman to Win TIME Award
Alabama dealer Tracy Shields Jones is named TIME Magazine's Quality Dealer of the Year, making her the first woman to win the award.
Shields Jones, president of Century Automotive Group in Huntsville, AL, manages six franchises.
Other finalists for the award included David L. Cox of Noblesville, IN; Peggy A. Proko of Nashua, NH; Lisa J. Schomp of Littleton, CO; and David C. Wintrode of Manahawkin, NJ.
Shields Jones says she considers herself fortunate to work in a “great community.”
“I'm able to come to work every day with 130 people who care about me, and I care about them,” she said. “It's been a great life and a great career.”
Shields Jones' husband, George, is general manager of the dealership. The couple have three children.
— By Emily Prawdzik Genoff
Generous Dealers Help Kids, Troops, Old Folks and Dogs
One honored auto dealer raises money for a domestic abuse center and an animal rescue shelter.
Another dealer aids local service troops overseas and their families, while also helping an autism organization.
Another, who has led the way for other women dealership owners, supports various causes for Latinos, children, college students and the elderly.
They are among 10 dealers (including two brothers) who are this year's winners of Ford Motor Co.'s seventh annual Salute to Dealers, honoring commitment to community and support to worthy causes.
“These dealers' efforts to improve the lives of those in their communities are inspiring,” says Edsel Ford II, a member of Ford's board of directors. “They give of their time and money to hundreds of causes and set an example for others to do the same. We are very proud of them.”
Nominees this year were 71 dealers from 26 states and two countries. Eligible are dealer principals representing all Ford brands — Ford, Lincoln, Mercury, Jaguar, Volvo,, Land Rover and Aston Martin.
Winners were honored at a Friday night reception at the 2007 National Automobile Dealers Assn.'s convention here. Portraits of each will join those of previous winners on display at Ford world headquarters in Dearborn, MI.
This year's honorees are:
- Randy and Michael Chapman, Chapman Auto Group, Philadelphia, PA, brothers who carry on the legacy of their father in business and community work, including causes that benefit children with special needs and breast cancer research.
- Raymond J. Ciccolo, Boston Volvo Village, Boston, MA, a humanitarian who focuses his support on the underprivileged at home and abroad, as well as on adoption and people with intellectual disabilities.
- Irma B. Elder, Elder Automotive Group, Troy, MI, and Tampa, FL, a beloved community activist who has paved the way for other women dealership owners while lending support to many causes that benefit Latinos, children, college students and the elderly.
- Marie J. Fritts, Fritts Ford, Riverside, CA, who carries on her late husband's anti-drug campaign as well as donating countless hours and resources to an animal shelter, law enforcement and health care for the local at-risk population.
- Marty Giles, Northstar Ford Lincoln, Fort McMurray, AB, Canada, whose commitment to his community extends to youth, recreation, health care and leadership development.
- Tim Razzari, Razzari Ford/Mazda, Merced, CA, a passionate community activist who puts his business and people skills to work raising money for a domestic abuse center, animal rescue, elementary school education and countless other organizations.
- Paul Rusnak, RUSNAK Auto Group, Pasadena, CA, a long-time community supporter who helps make the wishes of sick children come true as well as contributes to the local children's hospital, AIDS services, music performance groups and more.
- Bruce Schindler, Bob Davidson Ford, Baltimore, MD, whose dealership provides materials and financial support to local troops overseas and their families, while he also supports an autism organization and a local school.
- David C. Wintrode, Causeway Ford & Mercury, Manahawkin, NJ, who is dedicated to improving the lives of future generations through his work to promote literacy and enhance educational programs and opportunities.
A panel of judges picked honorees based on activities, length of participation and personal motivation.
This year's judges are:
- Edsel Ford II.
- Ford Motor Co. Vice President Sue Cischke.
- Steve Finlay, editor, Ward's Dealer Business.
- David Sedgwick, editor, Automotive News.
- Marc Stertz, executive director, NADA Publications.
— By Steve Finlay
Outspoken Auto Maker CEO Is an Unlikely Dealer Advocate
Steve Wilhite is a dealer advocate and, at a conference that's part of the National Automobile Dealers Assn. convention, he defends dealers by calling for higher profit margins and slamming auto makers for treating dealers badly at times.
It's typical stuff heard from dealers at the annual NADA gatherings.
But Wilhite is not a dealer. AsMotor America's chief operating officer, he's in the camp of what dealers call “the factory,” a collective and sometimes pejorative term for auto makers. His decidedly pro-dealer comments at a J.D. Power and Associates roundtable are not the kind usually voiced by auto executives.
Citing a J.D. Power survey, he says 25% of customers leave a dealership without buying due to mistreatment.
Many auto executives would nail dealers for that, but not Wilhite. He blames an industry pecking order in which auto makers abuse dealers and dealers, in turn, take it out on customers.
“Do we treat you the way you treat customers?” he asks conference attendees. “Do we transfer our cost reductions to you? When we miss sales targets, do we increase training and marketing, or just increase production and incentives?”
If dealerships manipulate customers to buy vehicles they are not particularly interested in that are lingering on the lot, Wilhite blames the auto makers for pushing slow-sellers on dealers in the first place.
“We put all sorts of financial and institutional pressure on you to act this way,” he tells dealers. “We say we want you to sell the value of products, then we go and slap a $2,000 to $3,000 rebate on a car. If we're not selling the value story to you, how can we expect you to sell it to your customers?”
He also raps auto makers for periodically keeping dealers in the dark about upcoming deals and programs that might ease their inventory costs.
“The prevailing attitude is ‘buyer beware,’” he says. “Unfortunately, it's also ‘dealer beware,’ because if you buy today and miss out on a deal tomorrow, too bad.”
Although dealers are selling complex, big-ticket items, they are earning profit margins less than if they sold sofas, says Wilhite, who has been critical of his own company.
Exclusivedealers earned 1.9% net profit on vehicle sales last year, while those dueled with other franchises earned 1.6%. He says the goal is for dealers to reach a 2.5% margin by 2008, with Hyundai executives' bonus pay tied to that target.
Among ways to nudge up margins is to cut dealer marketing costs and divert the savings to gross profits, says Wilhite, a former marketing executive forNorth America Inc. and Volkswagen of America, where he led the development of the “Drivers Wanted” ad campaign and the launch of the new Beetle.
He praises Jim Press, head of Toyota Motor North America Inc., for giving dealers their due at every opportunity.
“Jim Press is not capable of starting a speech or a memo without praising dealers,” Wilhite says. “Is it a coincidence that Toyota is where it is today?”
— By Steve Finlay
Car Buyers Want “More and More”
Convention keynote speaker Richard Colliver, American's executive vice-president-automobile sales, tells dealers there is growing consumer interest in new technology.
And this technology must “enhance the driving experience,” he tells Ward's.
“If it's performance or suspension and handling, something like Super-Handling All-Wheel Drive (SH-AWD); the sound system; advanced navigation system; you want the car to be more comfortable for that individual,” Colliver says. “Our research shows (car buyers) are asking for more and more.”
Safety features also have “come way up the list on consideration by consumers,” he adds. Prospective buyers are interested in side airbags and “even pedestrian safety,” he says, referring to features such as the energy-absorbing hood on the Acura MDX midsize CUV.
Colliver also uses his address to remind dealers and auto makers that they are “partners,” who need each other to prosper.
“Too often we're distracted by tactics, instead of focused on values,” he says.
“We square off like opponents when we should join hands. A partnership is defined as two or more people in the same business sharing its profits and risks. But in this industry, we share more than just profit and risk, don't we? We share the single-most important element of our business: the customer.”
— By Eric Mayne