Dealers, Auto Makers Win as 1

Sitting at the airport in snowy Kansas City waiting to board an airplane, I thought of what I would talk about with dealers at the National Automobile Dealers Assn. convention in San Francisco.

The convention is always one of my most anticipated and exciting times of the year. I have a chance to spend hours visiting with dealers But I begin by attending the J.D. Power and Associates International Automotive Roundtable.

There, I listen to experts discuss the health of individual franchises and offer projections for the next 24 months.

They expose me to the global picture, reminding me that what's going on in India, China, Brazil and elsewhere will affect the North American market sooner than later.

From an operations standpoint, I felt the questions and discussions would center on the recent interest rate reductions and whether this might offer enough relief to realistically make a difference in new-vehicle department profits this year.

I wasn't sure what type of strategic discussions I would be involved in, but I felt fairly certain they would (and did) include the hot topic in many markets regarding consolidation and the reduction of domestic brand dealerships.

Yes, each of these topics was discussed. But there were others that got my mind working.

For example, a panel of mega dealers discussed the challenges of attracting and retaining qualified personnel.

The comment was made that, as an industry, our sales personnel and managers' earnings today are comparable to their earnings 20 years ago.

As important as the pay component is, a person's quality of life may be equally important. It has to be taken into consideration. We must find a way to provide a balance so people want to enter our business.

Some of the most interesting conversations centered on the impact of the Internet on our business and the potential changes in store for us. These changes will potentially impact our physical facilities, our staffing requirements, the way we order vehicles.

Speaking of staffing, one very successful dealer said his Internet department is located almost 200 miles from his physical location and it works well.

I'm not sure I can comprehend all the possibilities the Internet component offers us, but I can tell you it's exciting to watch dealers who are breaking the traditional retail mold and trying different options.

As expected, inventory levels and associated costs were a hot topic. This inventory conversation is not exclusively a domestic conversation and concern anymore.

In fact, I spoke with many dealers with both domestic and high-volume import franchises who noted their greatest increase in floor plan cost came from their import stores in 2007, not the domestics.

I remind you of a good goal as it relates to inventory management: six annual dollar inventory turns for the domestic industry and nine for import and high-line franchises. A 60-days' supply of the right vehicles is our goal.

My personal conference highlight was hearing a presentation by Jim Press, Chrysler's vice chairman and co-president. I have respected him for years. After hearing him at the conference, my respect was taken to a new level.

After providing an industry update and insight into the “Genesis Project,” he took questions from the audience. During this Q&A, he made a comment that I know was sincere: “Chrysler's success will be zero until you, the dealers, are successful.”

Dealer profitability was the theme for this year's NADA. Having an icon of the industry acknowledge that the manufacturers' success is dependent on dealer profitability and viability reassures me and verifies my faith.

Even though there is genuine need for concern in the short term, as an industry we are collectively headed for better times.

Good selling!

Tony Noland is the president and CEO of NCM Associates, Inc. He is at [email protected].

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