Dealer Group Grapples With Surprise Resignation

Despite a well-publicized controversy surrounding the creation of a new political action committee, American International Automobile Dealers Assn. President Marianne McInerney’s abrupt resignation this week to pursue other opportunities caught the group’s board members off guard.

“We were surprised,” Don Hicks, chairman of the association, tells Ward’s, disputing speculation McInerney was fired. “We had hoped she would stay. Remember, we recently negotiated a new 3-year contract with her.”

According to Hicks, in her three years at the helm, McInerney breathed new life into the organization, which represents more than 11,000 import dealers.

AIADA Chairman Don Hicks

“Before Marianne, AIADA had become a really sleepy organization,” he says. Other problems included poor communication with its dealer members and poor management of finances, which resulted in more expenses than revenue.

“All that changed under Marianne,” says Hicks. “Including getting the revenues to exceed our expenses.”

When asked what kind of person he would look for to replace McInerney, Hicks says, “I’m looking for another Marianne McInerney, or at least a reasonable facsimile of her.”

AIADA’s board is forming an executive search committee this week and will use Washington D.C. search firms that specialize in trade association leadership, according to Hicks.

Hicks, talking with Ward’s as he was taking care of last-minute details at a new Porsche dealership he is opening in Colorado on March 11, admits it is important to keep the association on track, and that he hopes to have a new president in place by the association’s annual Automotive Congress in late May.

“Everyone on the staff told us they are staying and that they plan on putting on the best congress,” he says.

McInerney’s resignation is the latest in a string of challenges for the AIADA, beginning with former President Walter Huzienga’s lawsuit resulting from the trade association not renewing his contract three years ago – a lawsuit recently decided in favor of the AIADA.

Last August, then-chairman Jim Evans resigned both from AIADA and his position of market president for AutoNation Inc., thrusting Hicks into the role several months earlier than planned. As a result, Hicks will have served as chairman for an unprecedented 17 months. (See related story: Evans Resigns From AIADA)

While dealing with all of the challenges thrown at him as AIADA chairman, Hicks still is actively involved in his Aurora, CO-based Shortline Automotive Inc., which sells Subarus, Suzukis, Hyundais, Kias and Porsches – once the new store opens.

The PAC issue has been particularly challenging.

McInerney became a polarizing figure when the association began plans for a new PAC late last summer, a move that ultimately split AIADA’s leadership.

The National Automobile Dealers Assn., which operates the Dealer Election Action Committee, argues that another PAC could put dealers at risk legally with potential campaign finance law violations.

Another concern is that a second trade association-run PAC could weaken dealer political strength by dividing resources and efforts. While dealers can give to as many PACs as they desire, they can designate only one PAC that is able to solicit funds from them.

AIADA claims that is a non-issue because more than 80% of its members do not contribute to the DEAC or to the independent Automotive Free International Trade Political Action Committee (AFIT PAC), a PAC which has been closely associated with AIADA in the due its support for free trade.

The import dealer group’s board voted twice to implement the PAC – “overwhelmingly,” Hicks says. The board voted 14-4 last November in favor of the PAC and again in favor 12-7 earlier this year.

A former chairman of the association, who asked not to be named, admitted during the recent NADA convention that he finds the situation frustrating, especially after spending several years devoted to the group’s success.

According to Hicks, many of the dealers opposed to the PAC are associates with the AFIT PAC. The issue, as Hicks and other AIADA members see it, is that AFIT PAC focuses only on free-trade issues.

“While free-trade still is the foundation for us, our dealers have told us they want to focus on other issues that are also important,” Hicks says. The issues include elimination of the estate, or so-called “death” tax, and the 25% “chicken” tariff on pick up trucks imported into the U.S.

AIADA was formed in 1970 by Volkswagen dealers to lobby for the elimination of the 25% tariff that President Lyndon Johnson levied in 1963 on various imported products, including light-duty pickup trucks, to retaliate against Europe for obstructing U.S. exports of frozen chickens.

The only tariff remaining from that dispute is the one imposed on the pickup trucks. The tariff, still at 25%, is almost 10 times the average tariff imposed by the U.S.

AIADA sent a delegation to Thailand in January to participate in the sixth round of negotiations on a free-trade agreement with that country. The purpose of the trip was to educate Thais on the efforts made by import auto dealers to repeal the tariff.

Complete elimination of the death tax has been a top priority for AIADA for several years. The association was instrumental in 2001 in securing passage of a bill that repealed the tax until 2010. But it is scheduled for reinstatement in 2011.

The 55% tax was levied on all estates valued at $675,000 or more once the owner died. The tax was especially burdensome for small businesses, including automotive dealerships.

The House of Representatives passed a bill last year that completely eliminates the tax, but the bill has not made it to the Senate floor yet, because it likely cannot get the 60 votes necessary to avoid a filibuster.

But there are rumors the tax may actually be voted on by the Senate as early as May, possibly around the time of AIADA’s annual Automotive Congress.

AIADA is feeling the pressure because President Bush likely will sign a bill if it is passed. And with the congressional elections this year and the possibility of the new Congress being unsympathetic to its issues, AIADA clearly is focused on delivering for its members. (See related story: Full Court Press for AIADA)

The staff and board want to keep momentum while increasing lobbying its efforts. One key initiative is AIADA’s Adopt-A-Candidate program, in which the group is helping dealers organize events for candidates in key battleground states.

Hicks also is concerned about guarding against potential backlash against import auto makers and their dealers as the domestic franchises continue to have challenges. He cautioned members in February to be wary of efforts to increase trade protectionism in the U.S.

Meanwhile, Hicks says he does not think McInerney’s resignation will result in any of the departed board members returning.

“I doubt it,” he says. “You’re either for the PAC or you’re not. The terms were up for many of the board members who left, except for Bradley Hoffman (who was slated to be chairman in 2007). It just made their decision easier.”

Kelly Martin, director-member services, is running the staff until McInerney’s replacement is found. Also, four members of the executive committee will rotate turns in the office, ensuring at least one member is on site at all times.

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