Special Coverage

NADA Convention & Exposition

Having profitability issues in your dealership? “Just pick up the phone and call,” is the message Dale Willey, the incoming National Automobile Dealers Assn. chairman has for the group’s members.

The number he wants you to call, 888-672-5155, is to NADA’s Lifeline to Profits center. The Lifeline is in its third or fourth iteration, depending on who’s counting. It tends to get reincarnated when dealers find their profitability disappearing. The most recent version was in 1991.

Willey and outgoing NADA Chairman William Bradshaw brought it back to life last summer as a way to help dealers find ways to make more money. Dealer profitability is down across the country, with some estimates pegging more than 30% of dealers as being unprofitable.

According to NADA numbers, dealerships net profit before taxes was down 9.1% through October and total gross sales were down 8%.

The Midwest is among the hardest hit. According to one dealer involved in Wisconsin’s state association, more than 70% of the state’s dealers were losing money as of August –domestic and import alike.

“Profitability is the No.1 problem dealers have today,” Willey says. “Calling our Lifeline to Profits number should be their first step.”

Willey speaks from experience. In 1978, he was a young dealer whose fixed operations department was struggling. He had just joined his first NADA Twenty Group and several dealers in the group told him to call NADA.

Willey called and talked to Jack O’Neill, who died a year ago. “All he was concerned about was helping dealers make money,” Willey says.

O’Neill sent Charlie Gates, a consultant, to Willey’s store in Kansas. Gates stood around and watched and asked a few questions for a week. Then he sat Willey down with his service manager and implemented a time management system for the department.

“That was in April,” Willey says. “In May, we made more than enough money to pay for Gates coming out. That’s what got me hooked into NADA.”

Much of the current program is free for NADA members, according to Kevin Fossett, NADA Twenty Group marketing manager.

The first step is the hotline, which is manned by NADA Dealer Academy instructors and Twenty Group consultants.

“The initial phone call is somewhat like grief counseling,” Fossett says. “Many times, dealers just need someone to talk to.”

Dealers are asked to send in their financial statements. The consultants look at them and call the dealers back with suggestions. Often, the solutions are simple and quick, Fossett says, but sometimes the calls are more involved.

One dealer recently spent more than four hours on the hotline twice in one week. Between August 21 and December 31, dealers placed 435 calls to the hotline. Several have sent subsequent e-mails to NADA claiming the service helped to save their businesses.

If more help is needed beyond the phone calls, NADA offers an in-dealership consulting service for a nominal fee.

A third aspect to the Lifeline program is periodic workshops put on by the local and state dealer associations. The seminars, conducted by NADA Twenty Group consultants, last for two and a half days and are free. NADA has done 25 workshops since August.

“The phone calls and workshops have revealed the real problem dealers have today is with cash flow,” Fossett says. “And the solution is in the used-car and service departments.”

Willey admits that some dealers are skeptical about the value of the program because the phone consultations and workshops are free. “They think if it doesn’t cost anything, it may not be worth it,” Willey says.

To counter that argument, Willey says two dealers in his Twenty Group went to the seminar last fall and their first word after returning was “Wow!”

“They had no idea there was so much opportunity within the framework of business we’re doing, Willey says.

NADA is holding an abbreviated version of the workshop during its convention in Las Vegas, cramming two and a half days into three 1-hour sessions. The first, on Saturday, focuses on cash management. The second is on Sunday and will help dealers with their variable operations, while the third, on Monday, will discuss fixed operations.

Fossett suggests dealers bring their financial statements to the workshops and that they come prepared to work.

“These will be hands-on sessions,” he says. “This is for dealers and managers willing to take a candid look at their businesses and who want to make the improvements.”

cbanks@wardsauto.com