This Year's Red-Hot Issue

“Factory-Dealer Relations Better? This could be the year — and convention — to strengthen the ties.”

That was the headline of our Jan. 2002 “Road to NADA” story on last February's convention.

The opportunity to create a new era of harmony between dealers and their OEMs certainly was the theme coming out of last year's convention.

Jim Press, chief operating officer for Toyota Motor Sales U.S.A. Inc., in his keynote speech urged “all manufacturers to work with NADA as a constructive partner to improve dealer relations.”

Carter Myers, NADA's chairman in 2002, told Ward's a year ago, “With the OEM retail strategies ending and with what seems to be the right leadership at the OEM level, we have a real opportunity to improve the relationship this year.”

Bill Lovejoy, General Motors Corp. group vice president for sales and marketing, called last February's NADA convention meeting with GM dealers “the best” he had ever attended.

Fast-forward to now, and it appears those comments were right on target. According to the most recent J.D. Power and Associates survey of dealer attitudes, dealers are happier now with manufacturers than at any time in the past 16 years.

After six straight years of declining satisfaction, the Dealer Satisfaction Index increased 15 points in 2002 — the biggest single-year increase in the history of the index.

One problem with the survey, though — it was completed just before Ford Motor Co. proposed controversial changes to its Blue Oval certification program. The changes would eliminate much of the profit Ford dealers received from the program. (See story on page 7.)

And those proposed changes, if enacted, could undue much of the progress Ford has made with its dealer relations the last two years, warns Myers.

He says he was “feeling pretty good about this year” until Ford announced the Blue Oval cutbacks in November. “If we can get by this issue, then we can call it a good year. A lot hinges on what Ford ultimately decides to do with Blue Oval.”

It could make for an interesting and volatile Ford dealer franchise meeting at the February convention in San Francisco.

Bill Ford Jr.'s keynote address on February 1 could be the big convention news this year. So far, he's still on the agenda. He abruptly canceled his schedule speech at the 2000 NADA convention. Some NADA directors speculated it had to do with the heat dealers were at the time giving Ford because of its ill-fated, and now dead, effort to run dealerships.

Despite the Blue Oval setbacks with Ford retailers, dealers overall appear happier these days, according to surveys.

“Aggressive incentives have kept vehicles moving off dealer lots more quickly than would normally be expected in a slowing economy, making profitability one of the key drivers of the satisfaction increase,” says Chris Denove, partner at J.D. Power.

Although profitability was a factor in this year's increase, dealer expectations of future profitability proved to be more critical. “The real key to this year's study is how optimistic dealers are about the future,” says Denove.

There are still big issues, though. An uncertain economy, the probable war with Iraq and the question of whether the aggressive incentives have pulled sales forward from 2003 are on the minds of most car dealers today and will probably dominate conversations at this year's convention.

One of the dominant speakers will be Rudy Giuliani, former mayor of New York and 9/11 hero.

He will offer his insights on the current world situation and on effective leadership at the 86th annual convention's general session on Feb. 3.