On Everyone's Mind

ORLANDO, FL — Auto dealer H. Carter Myers III has attended many National Automobile Dealer Assn. annual conventions over the years, but he experiences a first-time feeling at this year's gathering here.

“I was at a General Motors (Corp.) franchise meeting (a private to-and-fro between auto executives and dealers) and for the first time I felt more sorry for GM than for dealers,” says Myers, who sells five GM lines as well as six other manufacturers' vehicles in Charlottesville, VA.

Myers, a former NADA chairman, says “on everyone's mind” is whether ailing GM and Ford Motor Co. will get well again. “There is somewhat of a nervousness over the health of the domestics and how it will affect profitability in a highly competitive marketplace.”

That nervousness extends to import-brand dealers. Some of them are worried about retaliatory trade measures stemming from the domestic manufacturers' troubles.

“Things are looking grim for domestics because of unfortunate decisions out of Detroit,” says Don Hicks, chairman of the American International Automobile Dealers Assn. “And now some people are using the ‘T’ word again: tariffs…We can't let anyone convince the public that protectionism helps anybody.”

Although the mood of domestic-brand dealers at this year's convention is hardly jubilant, it isn't funereal either, as some people had anticipated.

“I was expecting a lot more uncertainty than there appears to be,” says an NADA spokesman. “Maybe the outlook is better than I thought because the manufacturers are really touting upcoming product.”

Touting that and their sweeping get-well-soon plans.

It is not business as usual, Mark Fields, Ford vice president and president-the Americas, repeatedly tells Ford dealers and others at a convention-related conference.

“It is time to play offense. It is time to take back our future,” says Fields, a chief architect of “Way Forward,” a plan to “right-size” the company in part by cutting jobs, closing some factories and looking at the possibility of streamlining the dealership network.

Jack Kain, NADA's 2005 chairman, says: “Any right-sizing should only be driven by market forces. Most people who analyze our industry tend to look at the state of the economy and overlook the ingenuity of the dealer.”

Having a road-map to recovery is a first step forward, says Jack Quirk, a 53-year dealer based in Bangor, ME, whose 10-franchise stores now are run by five of his seven sons.

“Dealers want to see a plan,” says Quirk. “But the press seems more concerned than dealers about GM and Ford. We're all selling cars. Even though there are some concerns, dealers' confidence in the economy goes a long way.”

Several dealers attending Ford's closed-door franchise meeting say they liked what they heard, despite predictions the session might get contentious.

“It was very positive, although I think they were expecting more negative questions and more ranting and raving because some dealers are having profitability issues,” says Kain, a Ford dealer in Versailles, KY.

Ford dealers at the meeting heard of company plans to introduce nine new vehicles in 14 months.

“Profit is always a concern but I'm encouraged by the new product coming up,” says Howard Kuperman, dealer principal of Phil's Ford Lincoln Mercury in Port Jervis, NJ. “The new management team is very inspiring to dealers.”

“We want the right product on the right lot at the right time,” says Al Giombetti, a Ford vice president and president-Ford, Lincoln, Mercury marketing and sales.

He acknowledges that “profitability is not where we want it,” for both for the company and dealers. “When I was a young pup field representative calling on dealers, I learned that if dealers are successful, we're successful.”

Also raised at Ford's franchise meeting is a proposal to offer longer manufacturer warranties such as Kia's 10-year/100,000 mile plan.

Ford executives don't commit to that, says Kain, who dislikes the idea because “it devolves the product; a customer ends up buying a warranty rather than a desirable vehicle.”

The last time the NADA convention convened in Orlando was in 2000, a time when Ford and GM were experimenting with owning and operating their own dealerships in certain markets.

In a surprise move, a corps of contrite GM top executives traveled to the Orlando convention, announced the dealership-ownership idea was a mistake and scuttled it. It was a sublime moment for GM dealers.

Ford dealers had to wait a year for their moment of satisfaction. Ford tried running its own dealerships in three markets. It worked badly. Ford pulled the plug in 2001.

Those store wars aren't entirely forgotten at this year's NADA gathering.

“Manufacturers need to do what they do best — design and build exciting product — and let us do what we do best — sell and service cars and trucks and take care of our customers,” says 2006 NADA Chairman William Bradshaw.

Bradshaw, a South Carolina dealer, notes the nation's 21,500 new-vehicle dealers employ more than 1 million people, tally more than $700 billion in annual sales and account for more than 20% of the retail sector's economy.

NADA's new chairman urges more dealers to get involved in promoting their industry, especially at governmental levels.

“I know many of you are involved,” he says. “You wouldn't be here otherwise. But we need to reach those who are not. The more dealers that get involved, the stronger our industry will be.”

As an example, he cites the California New Motor Dealers Assn. for doing “what had never been done before” — reaching a compromise with consumer advocates of a so-called “Car Buyer's Bill of Rights,” proposed legislation that “could have unduly restricted dealer financing and hurt every dealer and ultimately consumers,” says Bradshaw.

This year's convention draws about 26,000 dealership principals and managers as well as assorted industry players. Myers describes the 4-day event as a “mecca” for those wanting to keep up with a fast-paced industry.

Activities include educational workshops, some with colorful names such as “Morons Misfits and Moochers: Six Steps to Stop or Correct Poor Performance.”

The convention's vast centerpiece is 380,000 sq.-ft. of floor space occupied by 620 exhibitors at “booths” ranging from simple stands to double-decker setups (a new trend).

Exhibition offerings range from car wash systems to thank-you cookies for auto buyers (both intending to foster customer satisfaction), from lot security systems to sales-tracking software systems.

Advertising and marketing companies lead the pack of exhibitors. There are about 170 of them, followed next by about 90 Internet-related firms. Also a presence are customer relationship management computer systems, with about 70 exhibitors.

Many exhibitors try to lure dealers with incentives that include i-Pod prize drawings, neck massages and Playboy Playmates signing autographs.

General session speakers include keynoter Tom Purves, chairman and CEO of BMW of North America LCC; Frank Abagnale, con-artist turned FBI instructor (whose youthful indiscretions were the basis of the movie “Catch Me If You Can”) and Colin Powell, a retired army general and former Secretary of State.

Purves points to progress dealers have made in customer satisfaction.

“Customers with current dealership experiences give much higher trust and satisfaction ratings than people who have not shopped recently,” he says.

He also says dealership jobs represent a growth industry, one in which the offerings “are more sophisticated and better paying than those available in the so-called service economy.”

Powell speaks of the importance of trust and leadership at both the highest levels of government and at local dealerships.

“Leadership is leadership whether leading a battalion or a dealership,” he says. “It is conveying a sense of purpose, inspiring people and letting them know that what they do is important.

“Followers get the work done. Great leaders give them the skills, training and resources to get the work done; to accomplish the mission and feel they are part of something important.”

Dealers give him a standing ovation.

“It was an amazing speech,” says one attendee. “Dealers aren't the type that like to sit very long for a speech. They like to be walking around, like they do at their dealerships. Yet they sat for this speech for more than an hour and you could hear a pin drop.”

In contrast, it might be hard to hear a bomb drop in trainer Paul Cummings' lively workshop session on closing skills, “46 Exercises to Become a Lean, Mean Closing Machine.”

High-voltage Cummings rallies dealers to get out of their seats, pump their fists and yell slogans of success.

“You want people to say ‘wow’ rather than ‘whoa’ at your dealership,” says Cummings, perspiring after his workshop workout. “You've got to hand it to Walt Disney in the way he built Disney World here. He got people to say ‘wow.’

Ford Mulls Right-Sizing Dealer Network

ORLANDO, FL — Ford Motor Co. is looking into possibly streamlining its large dealer network, similar to what the auto maker is doing within the company, a top executive says at a conference here in conjunction with the 2006 National Automobile Dealers Assn.'s annual convention.

“We are looking at coverage to make sure we are right-sized,” says Mark Fields, Ford's executive vice president-the Americas.

Ford's 3,800 dealers, in markets ranging from urban to rural, sell about 2.8 million vehicle annually in the U.S. In contrast, 1,250 Toyota dealers sell about 1.9 million units.

Fields says Ford's top 1,200 stores enjoy the highest throughput in the industry.

“In some areas, we are under-represented, and in some we are over-represented,” he says, identifying the West and South as growing regions that potentially could use more stores.

He repeatedly tells a J.D. Power & Associates roundtable that these days at Ford, “it is not business as usual,” a mantra that extends to dealers, he says.

Ford plans massive plant closings and job eliminations as part of its “Way Forward” retrenchment program. But Fields says it is not about cost cutting and retreating to smaller markets.

Rather, it is about being innovative across-the-board in the spirit of founder Henry Ford. “Our goal is to take back our future and create new opportunities for Ford, as well as for our dealers and suppliers,” he says.

“I am not about to announce a new innovative mandate for our dealers or dictate how you run your individual businesses. We've done that in the past, and quite frankly, it was presumptive, arrogant and didn't work out well.

“But we are committed to working even more closely together, and it will be important that we innovate together and challenge each other.”

Fields tells dealers they are “very important business partners,” who will play a pivotal role in the road to recovery and promises to “communicate and operate through straight talk.”

He admits to past miscues with dealers (such as Ford's aborted effort of a few years ago to own stores in some markets), mistakes that prompt one conference attendee to say the perception is that the auto maker is deaf to its retailers.

“If the perception is Ford doesn't listen to dealers, we need to change that,” says Fields. “It's tied to the arrogance of the Big Three in the past. We don't always need to agree, but we do need to listen.”

Ford dealers at the conference offered Fields a warm reception. Bert Boeckmann, owner of Galpin Ford in North Hills, CA, says Ford needs to demonstrate that it is “an American car company that builds cars that look American.”

Fields' call for finding the Way Forward is well put, Boeckmann says. “If they can do what they say, we'll win.”
— Steve Finlay

What Would Arnold Palmer Do?

By Steve Finlay

Some of the things heard around the 2006 National Automobile Dealers Assn. convention in Orlando:

Got a problem? I'll solve it

Tom Addis, a 31-year Ford dealer in Coeur d'Alene, ID, and chairman of Ford's national dealer council, says it boils down to this:

“There isn't a problem in your dealership that can't be solved if you are selling vehicles.”

He loves selling those. “Arnold Palmer once said, ‘I love playing golf and it's thrilling to get paid to do what I love,’” says Addis. “Well, I feel the same way about being a dealer.”

Hold on, I've got another call

Al Giombetti, a Ford Motor Co. executive in charge of Ford, Lincoln and Mercury marketing and sales, says that, because “it is better to over-communicate,” he has provided his cell-phone number to 4,400 dealers.

Asked if giving out his number like that has caused a lot of calls, Giombetti says: “I have a lot of regulars.”

Half empty or half full?

Don Hicks, chairman of the American International Automobile Dealers Assn., recalls this boyhood conversation with his dealer father:

“Dad, how many people work for us?”

“About half.”

Hicks also remembers this advice from another dealer:

“Never throw a factory representative out of a dealership, but if you do, it feels great.”

Hasn't come to that — yet

Addressing dealers at a J.D. Power and Associates conference associated with the NADA convention, Arkansas Gov. Mike Huckabee offers this about the benefits of automotive retailing:

“When you sell cars, it is to provide the health-care benefits of the people who make them. The car is a gift for selling it.”

Hey, we're dealers! Now what

Ira Levy, a dealership CPA from New York, has this theory on the origin of 20 Groups, those benchmarking sessions in which dealers compare performances and exchange best-practice ideas:

“You wonder if it goes years back when a bunch of used-car dealers got lucky by getting new-car franchises, then called each other up and said: ‘What do we do now?’”

And they couldn't find Orlando on a map

Annette Sykora, the 89th annual NADA convention's chairperson (and the first woman so named), notes that back at the group's first convention in 1917 “Russia was ruled by a czar (well, not for long), Woodrow Wilson was in the White House and the roads were awful.

“Either the early dealers were optimists or geniuses who knew the auto would change America.”