Saturday, December 15, 2012

Bowl System Needs a Good Flushing


Though I love college football (and have since my first Husker game against Oklahoma when I was ten years old), it is not a topic I have been compelled to comment on in this space. This article in the December 11, 2012 edition of the USA Today changed that.

In 1970, when I attended that Husker game, there were 11 bowl games. This year there are 35 bowl games. The proliferation of bowl games caused the NCAA to introduce a new phrase into the American lexicon - "bowl eligibility".

Under current regulations, in order for this to occur, a team must have a winning record, which may include one win against a Division I FCS scholarship-awarding opponent, or win their conference, and the team must not be on probation. This came in response to teams with sub-winning records accepting invitations to play in bowl games.

Most bowl games operate under the laws of tax-exempt charitable organizations. Some may actually benefit a charitable cause. But most benefit a small group of people who are squeezing the host city and the participating schools and their conferences for everything they can wring out of them.

As the USA Today article points out, the Outback Bowl in Tampa pays their game's president and chief executive officer, Jim McVay, more than $750,000 per year! I am sure Mr. McVay is a talented man and does a very good job but he's making over three quarters of a million dollars to oversee a football game for a tax-exempt charitable organization!!! Does anyone else think there might be a bit of abuse of the American tax code here?

The Outback Bowl is, by no means, the only bowl game that is doing this. Mr. McVay just happens to be the highest paid in a group of overpaid bowl game presidents. John Junker, CEO of the Fiesta Bowl, was fired in 2011 after the Arizona Republic exposed his abuse of power. Among Junker's (recipient of almost $600,000 in 2010) sins, he tried to convince investigators there was a legitimate business purpose for the $1,241 he'd charged to the bowl for a visit to a high-end Phoenix strip club on September 12, 2008. The Fiesta Bowl also footed the $33,188 bill for Junker's 50th birthday party, a four-day bash in Pebble Beach. Happy birthday Mr. Junker!!

If you have been wondering why we could not get a playoff system in college football rather than a beauty contest to crown the national champion before now, look no further than the bowl system. The college presidents have always been protective of the cash that they get from the bowls (in addition to the holiday season, all-expenses paid, balmy climate venue vacation that the bowl games afford them and their huge entourage).

I am looking forward to the college football playoff system in 2014 and crowning a real national champion. I am hoping that event will land a blow to the bowl system, their overpaid executives and the abuse of the "non-profit tax exempt" status they enjoy!

Tuesday, December 11, 2012

Could We Get Some Conclusive Evidence Please?


You remember the more than a dozen Jefferson North assembly line workers who were fired after they were filmed drinking and smoking pot during their breaks by the Detroit Fox affiliate. If not, see the video above.

Well now Chrysler says it was forced to reinstate the 13 workers who were fired. It seems that "the workers followed the grievance procedure process outlined in the collective bargaining agreement between Chrysler and the United Auto Workers" according to Scott Garberding, vice president of manufacturing at Chrysler.

Understandably, Chrysler does not agree with nor are they happy about the decision. According to Garberdings entry on a company blog, "After more than two years, an arbitrator decided in the workers' favor, citing insufficient conclusive evidence to uphold the dismissals."

I invite you to watch the video and see if you can find any "conclusive evidence to uphold the dismissals". I suppose they were drinking Red Bull and smoking ginseng!

Remember this as you watch the union members storm the Michigan state capitol this week protesting a new law that allows workers the option of not joining a union!

December 2012 SDADA Column

We all remember all the bloody details of the financial meltdown of 2008. No one in our industry went unaffected. I have read several books on the characters, causes, and effects of the financial crisis. Neil Barofsky, in his book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, looks at how our government tried to fix the problems leading to and caused by the financial catastrophe.

In Bailout, Barofsky, who was the first Special Inspector General for the TARP, takes a peek behind the curtain of Tim Geithner's Treasury Department. What he reveals in neither surprising nor pretty.

Barofsky, a self-admitted life-long Democrat, was appointed by George W. Bush and served under Barack Obama as the watchdog for the disbursement of the $700 billion in TARP funds. He exposes Geithner as the Wall Street apologist that he is. He turned the $700 billion TARP bailout fund into a slush fund for the Wall Street banks and made every effort to remove all accountability. Geithner worked hand-in-hand with Wall Street executives to game the system and funnel millions of taxpayer dollars into the pockets of Wall Street executives.

The further we dug into the way TARP was being administered, the more obvious it became that Treasury applied a consistent double standard. In the late fall of 2009, as I began receiving the results of two of our most important audits, the contradiction couldn’t have been more glaring. When providing the largest financial institutions with bailout money, Treasury made almost no effort to hold them accountable, and the bounteous terms delivered by the government seemed to border on being corrupt. For those institutions, no effort was spared, with government officials often defending their generosity by kneeling at the altar of the “sanctity of contracts.” Meanwhile, an entirely different set of rules applied for home- owners and businesses that were most assuredly small enough to fail. 
More than two thousand of these small businesses that weren’t “too small to fail” were automobile dealerships. Except they did not fail, their businesses were stolen from them in a conspiracy between the Treasury Department, the Automotive Task Force and the manufacturers. Barofsky discusses how GM and Chrysler used bankruptcy to skirt protections that auto dealers receive under state law. That left more than 100,000 dealer employees scrambling for new jobs, pensions and health care.

Barofsky writes that Obama’s “auto team had pressured the companies to close the dealerships” more rapidly and in greater numbers than the firms had wished. He concludes that “relatively little thought had gone into Treasury’s determination that the dealership closings had to be immediate.” He reports that after “interviewing many of the same experts Treasury had consulted,” his group of auditors “found remarkably little support for the auto team’s determination that the viability of GM and Chrysler depended on their closing so many dealerships so quickly.”

It is now 2-3 years later and manufacturers, dealers and customers have moved on. But what about those who lost their stores because of Geithner’s Treasury Department and the Automotive Task Force. Get over it right? Not really.

Some of these stores had been in the family for two or three generations. Many dealers were completely devastated financially when they had viable businesses stolen from them - because bureaucrats who had never crated a job in their lives decided that it was best. It is a very sad statement on where we are as a country and what kind of power we have allowed our government to seize.

This is a very enlightening read if you want to learn more about the TARP funds or if you were disaffected in any way by the massive bailout of our country's financial system. Barofsky takes complicated and often boring financial material understandable.

Be forewarned though, this will stoke your cynicism of our federal government.

NADA Convention Fast Approaching

I hope you’re planning to attend the 96th annual NADA convention (Feb. 8-11, 2013) in Orlando. More than 500 companies are expected to exhibit on the expo floor.

Former Secretary of Defense Robert M. Gates joins a lineup of industry and inspirational keynote speakers. Gates served as the 22nd Secretary of Defense from 2006-2011 under both President Barack Obama and former President George W. Bush. The only secretary of defense in U.S. history to be asked to remain in that office by a newly-elected president, Gates has served eight U.S. presidents.

Industry keynote speakers at the convention include John Krafcik, president and CEO of Hyundai Motor America; NADA Chairman Bill Underriner and incoming NADA Chairman David Westcott.

Captain Mark Kelly, former NASA astronaut, space shuttle commander of Endeavour’s final mission and husband of former Congresswoman Gabrielle Giffords, will deliver an inspirational address.

NADA University is offering 58 different workshops for new-car and new-truck dealers and their managers, including 27 new speakers and 20 new workshop topics.

If you are planning to attend, be sure to make your DEAC contribution at the Eagle Club level so you can enjoy the benefits of the DEAC suite, a private VIP hospitality suite accessible only to those members who contribute at least $250 to DEAC. The DEAC hospitality suite offer many amenities that allow contributors to enjoy their time while attending the NADA convention. The DEAC suite provide contributors a place to relax, catch up with friends and grab a bite to eat, all just steps away from workshops and the exposition floor.

You can easily get $250 of value from this one benefit alone!

Happy Holidays!

Let me take this opportunity to wish all of you a Merry Christmas and a very happy and prosperous 2013.


Thursday, December 6, 2012

Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street by Neil Barofsky

In Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, Neil Barofsky, the first Special Inspector General for the TARP, takes a peek behind the curtain of Tim Geithner's Treasury Department. What he reveals in neither surprising nor pretty.

Barofsky, a self-admitted life-long Democrat, was appointed by George W. Bush and served under Barack Obama as the watchdog for the disbursement of the $700 billion in TARP funds. He exposes Geithner as the Wall Street apologist that he is. He turned the the $700 billion TARP bailout fund into a slush fund for the Wall Street banks and made every effort to remove all accountability. Geithner worked hand-in-hand with Wall Street executives to game the system and funnel millions of taxpayer dollars into the pockets of Wall Street executives.

From the book:
The further we dug into the way TARP was being administered, the more obvious it became that Treasury applied a consistent double standard. In the late fall of 2009, as I began receiving the results of two of our most important audits, the contradiction couldn’t have been more glaring. When providing the largest financial institutions with bailout money, Treasury made almost no effort to hold them accountable, and the bounteous terms delivered by the government seemed to border on being corrupt. For those institutions, no effort was spared, with government officials often defending their generosity by kneeling at the altar of the “sanctity of contracts.” Meanwhile, an entirely different set of rules applied for home- owners and businesses that were most assuredly small enough to fail. 

More than two thousand of these small businesses that weren't "too small to fail" were automobile dealerships. Except they did not fail, their businesses were stolen from them in a conspiracy between the Treasury Department, the Automotive Task Force and the manufacturers. Barofsky discusses how GM and Chrysler used bankruptcy to skirt protections that auto dealers receive under state law. That left more than 100,000 dealer employees scrambling for new jobs, pensions and health care.

Barofsky writes that Obama’s “auto team had pressured the companies to close the dealerships” more rapidly and in greater numbers than the firms had wished. He concludes that “relatively little thought had gone into Treasury’s determination that the dealership closings had to be immediate.” He reports that after “interviewing many of the same experts Treasury had consulted,” his group of auditors “found remarkably little support for the auto team’s determination that the viability of GM and Chrysler depended on their closing so many dealerships so quickly.”

It is now 2-3 years later and manufacturers, dealers and customers have moved on. But what about those who lost their stores because of Geitner's Treasury Department and the Automotive Task Force. Get over it right? Not really.

Some of these stores had been in the family for two or three generations. Many dealers were completely devastated financially when they had viable businesses stolen from them - because bureaucrats who had never created a job in their lives decided that it was best. It is a very sad statement on where we are as a country and what kind of power we have allowed our government to seize.

This is a very enlightening read if you want to learn more about the TARP funds or if you were disaffected in any way by the massive bailout of our country's financial system. Barofsky takes complicated and often boring financial material understandable.

Be forewarned though, this will stoke your cynicism of our federal government.

Monday, November 26, 2012

November 2012 SDADA Column



The latest assault on the franchise system comes from Ford as they place their Lincoln dealers squarely in the crosshairs. Lincoln has informed their dealers that they plan to eliminate the holdback payment which has been a standard practice for the franchise several decades. Ford indicated they made the decision in part because other luxury OEMs like Audi and BMW do not pay their dealers holdback.

Ford also says that Lincoln dealers will have an opportunity to earn additional Dealer Cash payments if they meet a variety of available programs (jump through all their “hoops”). Ford has made the programs needlessly complex. Ford will have four Dealer Cash programs for their dealers:
Lincoln Commitment Program - Phase 1: Pays 2.75% of Invoice for Lincoln dealers who meet signage, training and customer initiative requirements - e.g. washing customer service cars.
Lincoln Commitment Program - Phase 2: Pays an additional 1% of Invoice for Lincoln dealers who meet additional training requirements and manage to provide 70+% of their Internet Leads with a quality response within 12 hours.
Lincoln CPOV Incentive - Pays 2% of all new Lincolns Invoiced per quarter if a dealer meets Lincoln's CPOV sales target.
Lincoln CPOV Incentive - Pays a flat fee for each CPOV vehicle based on some other (not reported) criteria.
The “frosting on the cake” is that Lincoln's going to raise the invoice price of their vehicles 1% to pay for their new programs but MSRP pricing will remain the same.  There goes another percent of the ever shrinking Dealer Margin.

Ford indicated they've been working with their Dealer Council concerning these changes. I would love to hear the view of Dealer Council representatives who think these changes are good for the Lincoln brand or the franchise.

NADA has sent Ford a letter regarding this matter urging them to reconsider. NADA's Task Force on Facility Image Programs and Multi-Tier Pricing has taken this issue up on their agenda as well.

Do you think the other manufacturers are watching this issue closely? Do you think any of them would love to eliminate dealer holdback? Perhaps we should start a pool on which manufacturer follows suit and when it will happen. Keep an eye on this.

National Automobile Dealers Charitable Foundation Helps Victims of Hurricane Sandy

The National Automobile Dealers Association has pledged $1 million to jump-start a national fund-raising campaign for the Emergency Relief Fund of the association’s charitable foundation. The Emergency Relief Fund provides assistance to dealership employees that are affected by natural disasters.

The SDADA board of directors voted to contribute $2,500 to the Emergency Relief Fund at the November meeting in Huron. Trace Beck generously volunteered to match the $2,500 SDADA contribution.

Beck Motors and Wegner Auto had employees benefit from the NADACF Emergency Relief Fund last summer when Pierre was flooded by the Missouri River.

Since 1992, the Emergency Relief Fund has provided nearly $5 million to more than 7,700 dealership employees.
If you are looking for ways to help the victims of Hurricane Sandy, the NADACF is a great tool for that purpose. I urge you to consider contributing. Please contact me if you have questions.


Friday, November 16, 2012

Your Actual Mileage May Vary!

It is fair to say that fuel consumption is a significant factor when Americans are on the hunt for their next vehicle. Recognizing this, automakers go to great lengths to tout fuel consumption in an effort to convince car buyers to buy their product. Competition is fierce, especially in a $4/gallon fuel environment. Little wonder then that car buyers are incensed over news on November 2, South Korean automakers Hyundai Motor America and Kia Motors America announced that they had overstated the fuel economy on nearly a million late model vehicles.

In June, acting as the poster boy for fuel efficiency, Hyundai petitioned the U.S. government to declare August “National Fuel Efficiency Month.” Hyundai North American CEO John Krafcik made this comment, “As America’s most fuel-efficient car company, we want to inspire people and show them how fuel efficiency can help their wallets and the planet at the same time, no matter what kind of car they drive”.

There is no shortage of hand-wringing among the automotive press. They are quick to fawn over these fuel consumption figures (without verifying them in many cases I might add), and then among the first to chastise the automakers when the truth comes out.

Apparently this is a case of asking for forgiveness rather than permission:


“I sincerely apologize to all affected Hyundai and Kia customers, and I regret these errors occurred,” said Dr. W. C. Yang, chief technology officer of Hyundai/Kia research and development. “Following up on the EPA’s audit results, we have taken immediate action to make the necessary rating changes and process corrections.” 
Hyundai said “procedural errors at the automakers’ joint testing operations in Korea led to incorrect fuel economy ratings for select vehicle lines.” 
“Given the importance of fuel efficiency to all of us, we’re extremely sorry about these errors,” said John Krafcik, president and CEO of Hyundai Motor America. “When we say to Hyundai owners, ‘We’ve got your back,’ that’s an assurance we don’t take lightly. We’re going to make this right for everyone, and we’ll be more driven than ever to ensure our vehicles deliver outstanding fuel economy.”
Hyundai blames procedural errors for the problem. Really? Anyone who took sixth grade math can divide the miles driven by the fuel used. It didn't take Hyundai/Kia owners long to figure out that they weren't getting the fuel mileage the manufacturers claimed they would! Is it possible that Hyundai/Kia stretched the truth?

From the Detroit Free Press:
Sung Hwan Cho, president of Hyundai's U.S. technical center in Michigan, said the EPA requires a complex series of tests that are very sensitive and can have variations that are open to interpretation. The companies did the tests as they were making a large number of changes in their cars designed to improve mileage. The changes, such as direct fuel injection into the cylinders around the pistons, further complicated the tests, Cho said.
Who the hell verifies these "EPA Fuel Economy" figures anyway? These inflated mileages were discovered during an audit by the Environmental Protection Agency. One would think that, since the EPA has their name on them, they would require some proof of the claim.

How would the consumer press have reacted is this would have been Chevrolet or Ford rather than Hyundai or Kia? How about the main stream media? Do you think this would have been in the news for one night and then fallen out of the news cycle? Just wondering...


Sunday, November 11, 2012

Time to Refocus

If you are a regular visitor to this spot, you know that I have been rather critical of General Motors' Essential Brand Elements (EBE) program here. I believe the program is unreasonable and unfair.

It is unreasonable because it is an overreach by General Motors into the dealership. It attempts to strip the dealer brand from the dealership and require interior elements that may not be useful or realistic for some dealers. It forces the same system on all dealers, large or small, rural or metro.

It is unfair because unless a dealer complies with these requirements, he is at a $500-700 per vehicle disadvantage. Dealers operate in a world where customers will move on to a different store for $50. Yet, GM representatives have the gall to suggest that it is an "optional" program. It's as optional as sails are on a sail boat!

Recently, my post regarding a visit from my GM Zone Manager to discuss the exceptions to the program that I requested caught the attention of GM executives. Apparently they did not like the fact that I found the visit to be a masquerade and told me so here.

This development has caused me great distress. These posts are intended to communicate updates to my family, my friends and the dealers that I represent in my NADA Director position. I believe my reach grew as these people felt the story I told to be unfair and they saw fit to forward it on. But I am not surprised at who has read it because it is published in a very public space.

I NEVER wanted the discussion to be about MY store. I only referenced my store because it was a personal experience that I could draw upon. I wanted to call attention to a program that I believe is unreasonable and unfair to all dealers, but especially so to small and most medium sized dealers - those that I represent. I thought my experience was very typical (as I found in visiting with other dealers) and thought it would give some specific examples of how unreasonable the program was.

So I will not be discussing my store's plight against EBE here any longer. I will gladly share any experiences from my fellow dealers (anonymously if they'd prefer). I will continue to post articles (from inside and out of the automobile trade press). I will continue to be a vocal critic of EBE and an advocate for my fellow small and medium size dealers.

Does this mean GM has won? I don't believe so. It only means that this spotlight will not be on my store or my desk any more and I will keep it sharply focused where it belongs - on the GM's unfair and unreasonable EBE program.

Thursday, October 25, 2012

EBE Makes News Outside of Automotive Press

Marc Heitz Chevrolet
Earlier this week, Automotive News covered the plight of Marc Heitz Chevrolet  in Norman, OK and their loss of $1 million of EBE funds annually. It is an interesting story (be sure to check out the comments at the bottom of the Automotive News article).

Last night, Lars Larson, a nationally syndicated talk show host, interviewed Chad Baker. Baker is the co-owner and General Sales Manager at Marc Heitz Chevy. It is a compelling interview that is significant because Larson is completely outside the traditional automotive industry media and he introduces the dilemma to the general public.

You can hear the interview here.

You may have seen where NADA Chairman, Bill Underiner, made some pretty strong comments at an Automotive Press Association event this week. He criticized manufacturers for "intrusion" into dealers' operations. Bill's comments were "spot on" and much appreciated by this dealer.

Meanwhile, Automotive News Europe poses a legitimate question about what the dealership of the future will actually look like. Does it look like an EBE store? Or does that matter?

Update 10/26/2012: Here is more coverage of this issue. Be sure to check out the comments at the bottom.

Tuesday, October 23, 2012

October 2012 SDADA Column


You may recall that I told of my visit to the General Motors Renaissance Center headquarters back in August as a member of NADA's Task Force on Facility Image Programs and Multi-Tier Pricing in the space. One of the results of that meeting was a commitment by General Motors to consult with small and rural dealers on the EBE program.

Mark Reuss commented that he wanted to help dealers "do what they COULD do" on a timeline that “worked for them”. I specifically asked if that meant some flexibility going forward. I did not get a straight answer on that question.

So shortly after I returned from Detroit, I called my GM Regional manager and asked him to schedule a visit to my store. I got a call back a few weeks later from my Zone Manager who scheduled a visit to my store in mid-October.

The Zone Manager came to visit my store recently. After introductions, he lusted over my desk for a couple of minutes (more on that later). I found him to be a very pleasant gentleman and we had a very cordial conversation as we learned a bit more about each other.

Eventually, the discussion turned to my facility and the EBE program. I gave him a bit of my background with the EBE program told him of the exceptions that I had asked for.

The short story here is that he had no authority, had no discretion, had no flexibility and was no help in getting relief from the EBE program. I could revisit all my discussion points that I visited with him about (they can be found here and here and here). But the bottom line is that it was a waste of time for both of us.

The irony of whole visit was the fact that he was smitten by my desk. When we discussed "customer touch points" and the fact that the EBE program disallowed the customer from seeing the desk in my office, he was stumped. After he thought about, he realized that the office was a customer touch point and there was no way that a customer could see the desk if my office was in compliance with EBE standards.

He took photos and is going to go through the motions of submitting (again) my requests but we both know that it is an exercise in futility. The requests go to the same group that rejected them before.

So I am much more skeptical about our visit to Detroit now. I feel like the whole notion about GM placing people in the field was more of an appeasement than an actual effort to help RCC dealers.

I will reiterate a point that I made after the Detroit trip: the NADA task force must hold GM accountable for the commitments they made.

I am not done with this. Stay tuned for developments...

NADA Issues Dealer Guidance on Counterfeit Air Bags

The National Highway Traffic Safety Administration (NHTSA) announced in early October a consumer advisory on counterfeit air bags.

Federal investigators have determined that thousands of counterfeit bags have been bought and installed in U.S. motor vehicles over the past three years.

NHTSA also has determined that in the event of a frontal collision, these counterfeit bags are unlikely to deploy properly or may deploy in a manner that can harm vehicle occupants. See below for an NADA dealer Q&A document.

Vehicles with counterfeit air bags installed are believed to constitute less than 0.1% of the total in-use fleet. Nonetheless, dealers should be prepared to respond to inquiries from the public on this matter.

NHTSA is urging concerned owners to start by visiting www.safercar.gov/Air+Bags to determine if they are at risk.

In addition to the NADA guidance, dealers should expect to receive communications directly from the auto manufacturers they represent, addressing how to detect and manage counterfeit air bags.

It's important to note that unlike a safety recall campaign, customers should expect to pay to have their air bags diagnosed, and if necessary, replaced.

Service Advisors Overtime Exemption Extended Through March

Congressional legislation to prevent a government shutdown includes an extension of a federal overtime exemption for service advisors through March.

Since the late 1970s, the U.S. Department of Labor (DOL) has held that the frontline employee-salespersons in the service department remain exempt from federal time-and-a-half pay requirements. In 2011, DOL attempted to reverse this policy. Congress intervened and temporarily stopped the Department from enforcing the change.

The Congressional ban was included in a funding measure that was set to expire at the end of September. Under the new continuing resolution that extends government spending through March 2013, DOL is prevented from enacting the new policy for service salespeople.

Friday, October 19, 2012

More of the Same...

You may recall that I told of my visit to the General Motors Renaissance Center headquarters back in August as a member of NADA's Task Force on Facility Image Programs and Multi-Tier Pricing in the space. One of the results of that meeting was a commitment by General Motors to consult with small and rural dealers on the EBE program.

Mark Reuss commented that he wanted to help dealers "do what they COULD do" on a timeline that “worked for them”. I specifically asked if that meant some flexibility going forward. I did not get a straight answer on that question.

So shortly after I returned from Detroit, I called my GM Regional manager and asked him to schedule a visit to my store. I got a call back a few weeks later from my Zone Manager who scheduled a visit to my store in mid-October.

The Zone Manager came to visit my store recently. After introductions, he lusted over my desk for a couple of minutes (more on that later). I found him to be a very pleasant gentleman and we had a very cordial conversation as we learned a bit more about each other.

Eventually, the discussion turned to my facility and the EBE program. I gave him a bit of my background with the EBE program told him of the exceptions that I had asked for.

The short story here is that he had no authority, had no discretion, had no flexibility and was no help in getting relief from the EBE program. I could revisit all my discussion points that I visited with him about (they can be found here and here and here). But the bottom line is that it was a waste of time for both of us.

The irony of whole visit was the fact that he was smitten by my desk. When we discussed "customer touch points" and the fact that the EBE program disallowed the customer from seeing the desk in my office, he was stumped. After he thought about, he realized that the office was a customer touch point and there was no way that a customer could see the desk if my office was in compliance with EBE standards.

He took photos and is going to go through the motions of submitting (again) my requests but we both know that it is an exercise in futility. The requests go to the same group that rejected them before.

So I am much more skeptical about our visit to Detroit now. I feel like the whole notion about GM placing people in the field was more of an appeasement than an actual effort to help RCC dealers.

I will reiterate a point that I made after the Detroit trip: the NADA task force must hold GM accountable for the commitments they made.

I am not done with this. Stay tuned for developments...

Monday, October 15, 2012

There's ls Lot Riding on It

Like so many other aspects of your automobile, tires are improved, last longer and offer more safety. Well-maintained tires keep your car safer, help it last longer, and save you money, too. So here are some tips from the National Automobile Dealers Association to keep your tires in good shape and your travels safe:
  • Choose your tires carefully. Too many drivers buy a tire based on initial price or appearance. Tire selection should be based on the correct size recommended for the vehicle and its load recommendations. You should consult with a knowledgeable tire or automobile dealer about selecting the proper tire for your typical driving patterns.
  • Buy a tire gauge and keep it handy in your car at all times. It will inform you if you need to add more air to your tires. You can find them at any automotive retailer or supply store.
  • Check your tire pressure at least once per month, and especially before a long trip. Remember, under inflation is a tire's No. 1 enemy, because it can cause damage that may lead to tire failure. However, over inflation can cause uneven wear plus handling and stopping problems. Use the manufacturer's recommended air pressure listed on the sticker of your vehicle's door jamb or owner's manual as a guide. Always check the pressure of your tires when they are cool or cold. Driving heats up tires, making readings incorrect.
  • During wet weather, slow down. As your speed decreases, the tire footprint (the amount of the tire's tread contacting the road surface) increases, providing better traction. You also reduce the risk of hydroplaning should you run into water puddled on the road.
  • Rotate your tires every 6,000 miles. If your tires show uneven wear, ask your automotive service professional to check for and correct any misalignment, imbalance or other mechanical problem involved before rotation.
  • Check your vehicle alignment periodically. It's especially important to have an automotive professional check your alignment if you notice your vehicle is pulling to one side when you're driving.
  • Inspect and measure your tire tread. You can do this yourself by placing a penny in the tread groove and if you can see the top of Lincoln's head, then it is time to replace your tires.
  • Check the tire sidewalls to make sure there are no gouges, cuts, bulges or other irregularities.
  • Make sure you do not overload your vehicle because it can create excessive heat inside your tires. An over-loaded vehicle puts stress on tires that can cause damage and lead to tire failure. Check the manufacturer's load recommendation, which can be found on the vehicle information placard inside the driver's side door post, or in the vehicle owners' manual.
Have your tire balance checked periodically. An unbalanced tire and wheel assembly may result in irregular wear.

If you are one of the 85% of Americans who don't regularly check tire pressure, you should consider nitrogen. We take in nitrogen with every breath. Air is composed of:

1% Water Vapor and Other Gases – Escapes up to 250 times faster than Nitrogen
21% Oxygen – Escapes 3-4 times faster than Nitrogen
78% Nitrogen – The largest molecule in air, dry, non-flammable.

Because of their large size, nitrogen molecules are the least permeable and stay in your tire longer. It's not about the nitrogen. It's about reducing oxygen, water vapor and other gases.

By reducing the percentage of oxygen, water vapor and other gases in your tires from 22% to 7% or lower, your tires will maintain proper pressure longer than if you use “plain old air.” For example, with 95% nitrogen in your tires, they retain optimal pressure three to four times longer.

Remember that by checking your tires regularly, you will keep your travels safe, enjoyable and affordable.

Friday, October 12, 2012

Open Letter to SDHSAA

I sent this letter to the South Dakota High School Activities Association about 3 1/2 years ago. I did not even get an acknowledgement from them. Instead, they chose to make hand checking a "point of emphasis" for about the tenth year in a row. I guess they thought I'd go away if they ignored me.

To whom it may concern:
I have announced boys and girls basketball games at Chamberlain High School since 1991. I have also been a fan and a parent of a high school basketball going back even further.
I have announced and observed over six hundred high school basketball games over the past 22 years. Most of those were viewed from the scorer's table.

I have seen different "points of emphasis" passed down by the South Dakota High School Activities Association. The enforcement of most of these campaigns typically falls on the officials. In most cases, the officials emphasize the rule in question, they get a bunch of negative feedback from the crowds and eventually the "point of emphasis" goes away.

While I understand the sentiment behind most of these efforts, (to make the game easier to officiate in some way) I am always skeptical of these campaigns because I do not believe the game is "broken" and needs to be fixed.

For some time now, I have felt that players need to do a better job of “checking in” to the ball game. The manner in which most players report falls between plopping down near the scorers table and slapping the table.
In order to make the official scorer’s job easier, players should be required to report their number and the number of the player for whom they are replacing. The scorer is responsible for tracking the quarters each player plays. Additionally, each facility should have a prominent "X" on the floor in front of the official scorer so players know to whom they are to report.
Coaches could spend five minutes at the beginning of the season discussing the proper way to check in to a game. After that, if a player does not properly report to the scorer’s table, he or she will not be acknowledged until he or she does so.
Both the official scorer and the scoreboard operator would benefit from this practice. It is not unusual for four or five players to be reporting in to the game while an official is calling a foul. The scorer could note the players entering the game prior to the chaos of foul reporting and substitution. Sometimes a player is sitting close to a coach discussing strategy as he or she awaits a break and the official scorer or scoreboard operator doesn't know he or she wants to enter the game because the player either did not report or did a poor job of reporting to the scorer.
I strongly encourage the SDHSAA to consider this issue as a "point of emphasis". I believe it would improve the flow of the game at the scorers table. I encourage the SDHSAA to canvas scorers and scoreboard operators to see if they feel their responsibilities would be easier. I feel certain those officials would agree.
Respectfully yours,
Doug Knust
I wish everyone could see the process up close. It would be very simple to fix this. If a player did not check in correctly, he or she would not enter the game until they did.

It's pretty easy to be cynical when it comes to the SDHSAA. I have seen some pretty damn dumb rules come from them. But this letter was written sincerely and with a desire to improve the process. I thought it would at least be deserving of a reply.

I guess not. They were too busy looking for socks that were too long or a head band that was the wrong color!

Friday, October 5, 2012

Limited, Not by Our Abilities, But by Our Vision


"The only way you can predict the future is to build it." -Alan Kay

I am a pretty fortunate guy. I have the opportunity to work with quite a few young people in our community in various programs. As I do so, I can’t help but wonder, what reasons do we give them to stay in the Chamberlain-Oacoma area after they complete their education here. What will keep them from moving to Mitchell, Sioux Falls or Rapid City? What will entice them to come home to raise their family in the community where they grew up.

The Chamberlain Area Event and Fine Arts Center is a reason. It is a very strong statement that we believe in ourselves, our community and, most importantly our future and our youth.

Currently, the Chamberlain National Guard Armory hosts most school or communities' events of any size. It is a sixty year old facility that, when built, was a state-of-the-art facility. It has received some upgrades over the years but, in the near future, many more upgrades are going to be needed to allow us to use that facility for all the functions it is being used for today. Uncomfortable temperatures, inadequate parking and treacherous sidewalks prevent people from attending events at the armory throughout the year. As a community, we deserve so much more than what the Armory can now offer.

We currently have a window of opportunity that is unprecedented. Interest rates are at historically low levels - the lowest in my lifetime. Given these current interest rates and price of materials for construction, this is the lowest price tag we’ll be looking at for this project. Waiting five or 10 years could increase the cost of the project astronomically.

Chamberlain-Oacoma is where east meets west in South Dakota. This facility allows us to capitalize on the unique geographical advantage our communities enjoy. There is no facility like it in our area. This event center could become home to trade shows, outdoor shows, community plays, traveling concert or speakers series and much more. Even traditionally outdoor events could find a home indoors!

This is a $13.18 million project. The Chamberlain School District support includes $1 million savings, $4 million in capital outlay certificates and $550,000 federal impact aid funds. The Barger Foundation has committed $1.35 million over 10 years. The proposed bond redemption is $5.28 million. One million dollars will be raised from private entities. The City of Chamberlain and the City of Oacoma may also participate financially. The private funding will not target local businesses who will support the project through their support of the bond redemption.


The the 90 cent levy for the new high school will be paid off on November first of this year (one week before the election). The 2012 taxes (payable in April and October of 2013) will reflect the 90 cent levy reduction. If the bond passes, an 88 cent levy will be reflected on the 2013 tax liability (payable in April and October of 2014 and ongoing).

It is important to note that the current levy will not be in addition to an existing one, but rather will replace it at a lower value. There is not a question of whether or not our taxpayers can afford this because they have for the past twenty years. This levy only impacts private, commercial and agricultural property owners.

Click to enlarge
Another important note is that the levy most probably will decrease. As the bond terms get shorter, the district can refinance at lower rates. As our tax base continues to grow, the tax liability is spread out over that larger base, reducing the tax liability on everyone.

The attached image shows how the levy affects individual property owners or you can use this tax calculator. For just pennies a day, our community can take control of its future.

Everyone knows that working together, we get more done. Sometimes it is difficult to put personal interests or biases aside, but as Helen Keller said, "Alone we can do so little; together we can do so much."

This issue requires a 60% majority plus one vote to pass. If you support this project, it is not enough to just vote "Yes". You need to get involved and become an advocate. You need to talk to your circle of influence, your network and let them know what's at stake. You must explain that their taxes are not going to go up and that this is a bargain in this interest rate environment.

The Chamberlain Area Event and Fine Arts Center is opportunity for our community to seize control of our future. It is a state-of-the-art facility that will serve our communities' needs for fifty plus years. I urge you to vote yes on election day!


Update: Here is KDLT's October 19 story on the Event Center.


Thursday, September 27, 2012

Don't Buy the Whole Cow if You Just Want a Glass of Milk!

So you think you know what car you want. Now you have to decide whether to buy the car or lease it. For some, there is no dilemma because they either don't think leasing is right for them or they don't understand leasing. Either of those may be true, but you owe it to yourself to learn more about leasing before eliminating the leasing option.

Used vehicle prices have been very strong for the past eighteen months as I noted here. Manufacturers have used the shortage of late model used cars to their advantage in offering lease payments on relatively short leases (less than 30 months) knowing that the vehicles will come back off lease into a strong used car market. So the residual values (what the car is worth at the end of the lease) are higher which means a lower lease payments.

Here are some factors to consider as you make your next vehicle decision:


Leasing Advantages

  • Lower Monthly Payments - because you only pay for the portion of the car or truck that you actually use, your monthly lease payments can be up to 60% lower than for a purchase loan for the same car and same term. You get more car for your money. 
  • No (or low) Down Payment - when the lease begins, you'll just have to pay the first month's payment, title, taxes, registration, banking fees, and a security deposit. Some promotional lease deals require a down payment to get to the advertised payment. But because car leases require little or no down payment, your cash is freed up for other things. 
  • Warranty throughout Ownership - because the lease term is shorter than a purchase term, your vehicle is likely covered during the entire time you drive it.
  • New Vehicle More Often - drive a new vehicle every two to four years, depending on the term length of your lease.
  • Lower Tax Bite - you don't pay sales tax on the entire value of a leased vehicle as you would if you purchased. You're only taxed on the portion of the value that you use during your lease.
  • No Used-Car Hassles - the headaches of  negotiating a trade value or selling a used car are eliminated. When your lease ends, you simply turn it back to the leasing company and walk away.
  • Gap Coverage Included - Most car leases automatically include free "gap" protection in case your vehicle is totaled in an accident or stolen, which pays off your vehicle even if insurance doesn't cover the full loss. Loans do not generally come with automatic gap protection.
  • Option to Buy - you have the first option to purchase your leased vehicle at the end of the lease at a price that is determined at the time you lease the vehicle.
  • Reduce the Risk of Car Ownership - South Dakota has a damage disclosure law which requires that you disclose any damage to your vehicle exceeding $5,000 at the time you sell it. This typically diminished the value of the car significantly. Some states consider SD Damage Disclosure a "Salvage" brand on the title when the vehicle is titled in their state. If you are leasing the vehicle, though you are responsible for carrying insurance and repairing the vehicle, you are not liable for any diminution of value.

Leasing Disadvantages

  • Early Termination Cost - if you must terminate your lease before the end of your contract, the cost is usually very high, much higher than might be expected. However, cost can be minimized by making the right termination choices. But because the leases are so short (under 30 months). Most people end their lease on schedule and do not end early, which avoids all early termination costs.
  • Little or No Ownership Equity - because monthly lease payments are so low, you typically do not build ownership or trade-in value in your leased vehicle. It is possible, however, that the market value of a vehicle at lease-end is higher than the purchase option price specified in the lease contract — which means you may have some equity trade value. You could end up with a few thousand dollars of unexpected equity.
  • Excessive Mileage Charges - here in the Midwest, we tend to drive more miles annually than people do in other parts of the country. If you exceed the mileage allowance in your lease contract, you will be charged for the extra miles at a specified per-mile rate, usually a reasonable $0.20 per mile. A large mileage excess could result in a hefty charge, even at a reasonable per-mile rate. You can reduce your exposure and build the excess miles into the payment if you "buy" the extra miles you expect to drive at the time of lease signing. You avoid the higher end-of-lease charge this way. But be assured on one thing - you pay for those miles whether you lease or buy. The lease can offer a tidier way to incur those charges.
  • Excessive Wear-and-Tear Charges - If you return a leased vehicle at lease-end with excessive dents, scratches, or unrepaired accident damage, you will be charged — because those damages reduce the vehicle's value. Most lease companies clearly specify what is considered "excessive" so that you'll know if you should get it repaired before returning your vehicle. Get the repairs done yourself before you return the vehicle and avoid being charged.
  • If you have the option to buy the car at the end of the lease (as is often the case), you'll have to make that decision as soon as the lease ends, whereas if you owned the car you could decide exactly when to sell it.
Leasing isn't the right choice for everyone, but if you can take care of a vehicle properly, and can adhere to the mileage restrictions, it may be the best choice for you!

12/4/2012 UPDATE: Five myths about leasing a car
3/7/2013 UPDATE: Kiplinger: Smart reasons to lease your next car

Wednesday, September 26, 2012

September 2012 SDADA Column


An adjective used to describe people who are environmentally aware (flower child, tree-hugger), open-minded, left-winged, socially aware and active, queer or queer-positive, anti-oppressive/discriminatory (racial, sexual, gender, class, age, etc.) with an organic and natural emphasis on living, who will usually refrain from consuming or using anything containing animals and animal by-products (for health and/or environmental reasons), as well as limit consumption of what he or she does consume, as granola people are usually concerned about wasting resources. Usually buy only fair-trade goods and refrain from buying from large corporations, as most exploit the environment as well as their workers, which goes against granola core values. The choice of not removing body hair (see amazon) and drug use are not characteristics that define granola people, and people, regardless of granola status, may or may not partake in said activities. This definition is sometimes confused with hippy.
-- Definition of a "Granola" according to Urbandictionary.com.

The "granolas" got a big win last month and almost no one noticed. The main stream media was so wound up about the Republican Convention and hurricane Isaac that they totally missed this one.

The Obama administration enacted the new corporate average fuel economy standards. Automakers will be forced to double the fuel efficiency of their vehicles to a fleet average of 54.5 miles per gallon by 2025.
Please don't get me wrong. Like most other car dealers I know, I am all for increased fuel economy and less dependence on foreign oil. But I want, and need, to be able to sell vehicles that my customers want to buy.

South Dakota is truck country. Our customers are farmers, ranchers, outdoors men and small business people for whom their vehicle is more than just a means of transportation. It is a tool with which they go about doing their work. They cannot get the job done in some bubble-shaped plug-in hybrid.

Not only will these new standards reduce the availability of trucks (if not eliminate them completely), you can expect the average price of vehicles to go up by $3,000 to $5,500 per vehicle as well. If the consumer cannot afford the new vehicles, they will not buy the vehicles and all the "fuel savings" is lost anyway.

The "granolas" will tell you that people will save that money in fuel. One problem, banks don't lend on fuel savings. They lend on equity and payment to income data. In 27 years, I have never had a bank contract buyer as me how much to factor into the equation for customers’ fuel savings. So if the customer can't buy the vehicle, he cannot save the fuel cost!

This will also cause a loss of jobs in the automobile manufacturing segment as customers are eliminated from the market. But then the Obama administration has never shown a great deal of regard for jobs.

The "granolas" will tell you that some thirteen automakers agreed to these new standards. Well, let's see, who those might be? Should we start guessing with those who do not have an entry in the full-size truck or SUV market?

So the "granolas" push us toward smaller (less safe), more expensive and less utilitarian vehicles.

I wonder if the "granolas" have ever considered where the electricity for those plug-in hybrids comes from. 54% of the electricity in our country is produced by coal - but then they want to rid us of that as well!



NADA Launches National Ad Campaign Against Stair-Step Incentive Programs

As most of you know, NADA Chairman Bill Underiner appointed me to the Industry Relations Task Force on Facility Image Programs and Multi-Tier Pricing. Our Task Force has found that a legal challenge against the manufacturers on the stairi-step pricing issue may be a tall mountain to climb. So we have chosen to mount a public relations effort against the manufacturers on this issue.  
To that end, we kicked off a national print ad campaign in September detailing the many negative aspects of manufacturer stair-step incentive programs.

The full-page ad, “Stair-Step Incentive Programs are Bad for the Auto Industry,” below, began running in Automotive News.

The ad points out that “stair-step programs create too many negatives to justify their use.”

Stair-step programs “harm brand credibility; hurt dealers of all sizes; undermine relationships between dealers and their customers; have an adverse affect on CSI scores; and destroy consumer confidence in dealers -- and in manufacturers’ brands.”

Thursday, September 13, 2012

Why Didn't Anyone Ask That Before?

What is anti-colonialism and what does it have to do with the 2012 American Presidential election? Dinesh D'Souza's Obama's America: Unmaking the American Dream explores that and so much more about our 44th president.

D'Souza is a political commentator, public intellectual and author who is currently the President of The King's College in New York City. He served as a policy advisor to President Ronald Reagan. He has done a magnificent job or researching and documenting this book.

It builds on his previous book, The Roots of Obama’s Rage (which I also thought was a very interesting read), upon which the movie 2016: Obama's America, the movie, is based.

D'Souza believes that another four years will allow Obama to finish the job he has started in his first term, that is to further diminish America's economy and her role in the world. He suggests Obama's ideology is global justice which, to him, means a redistribution of wealth and power away from America and towards the rest of the world.

But it is the building of the story and the documentation - with literally a tsunami of evidence - that is so compelling. D'Souza is a brilliant guy and that seems so evident as you read this book.

I wish everyone would read this, consider the questions and decide for themselves. Whether you like Obama or not, whether you'll vote for him or not, this books vets him as he should have been vetted prior to his election in 2008.

Tuesday, September 4, 2012

The Granolas' Big Win

An adjective used to describe people who are environmentally aware (flower child, tree-hugger), open-minded, left-winged, socially aware and active, queer or queer-positive, anti-oppressive/discriminatory (racial, sexual, gender, class, age, etc.) with an organic and natural emphasis on living, who will usually refrain from consuming or using anything containing animals and animal by-products (for health and/or environmental reasons), as well as limit consumption of what he or she does consume, as granola people are usually concerned about wasting resources. Usually buy only fair-trade goods and refrain from buying from large corporations, as most exploit the environment as well as their workers, which goes against granola core values. The choice of not removing body hair (see amazon) and drug use are not characteristics that define granola people, and people, regardless of granola status, may or may not partake in said activities. This definition is sometimes confused with hippy.
-- Definition of a "Granola" according to Urbandictionary.com.

The "granolas" got a big win last week and almost no one noticed. The main stream media was so wound up about the Republican Convention and hurricane Isaac that they totally missed this one.

The Obama administration enacted the new corporate average fuel economy standards. Automakers will be forced to double the fuel efficiency of their vehicles to a fleet average of 54.5 miles per gallon by 2025.

Please don't get me wrong. I, like most other car dealers I know, am all for increased fuel economy and less dependence on foreign oil. But I want, and need, to be able to sell vehicles that my customers want to buy.

South Dakota is truck country. My customers are farmers, ranchers, outdoors men and small business people for whom their vehicle is more than just a means of transportation. It is a tool with which they go about doing their work. They cannot get the job done in some bubble-shaped plug-in hybrid.

Not only will these new standards reduce the availability of trucks (if not eliminate them completely), you can expect the average price of vehicles to go up by $3,000 to $5,500 per vehicle as well. If the consumer cannot afford the new vehicles, they will not buy the vehicles and all the "fuel savings" is lost anyway.

The "granolas" will tell you that people will save that money in fuel. One problem, banks don't lend on fuel savings. They lend on equity and payment to income data. In 27 years, I have never had a bank contract buyer as me how much to factor into the equation for customers fuel savings. So if the customer can't buy the vehicle, he cannot save the fuel cost!

This will also cause a loss of jobs in the automobile manufacturing segment as customers are eliminated from the market. But then the Obama administration has never shown a great deal of regard for jobs.

The "granolas" will tell you that some thirteen automakers agreed to these new standards. Well, let's see, who those might be? Should we start guessing with those who do not have an entry in the full-size truck or SUV market?

So the "granolas" push us toward smaller (less safe), more expensive and less utilitarian vehicles.

I wonder if the "granolas" have ever considered where the electricity for those plug-in hybrids comes from. 54% of the electricity in our country is produced by coal - but then they want to rid us of that as well!

Sunday, August 26, 2012

The Willpower Instinct


The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do To Get More of It is an excellent self-help book based on solid research. The author, Kelly McGonigal, a health psychologist and lecturer at Stanford University, has thoughtfully interpreted into highly understandable and relevant strategies for improving well-being.

The book is a guide for improving your self-control. I learned many good strategies for increasing willpower and how to recognize when I am having a willpower challenge.

Each chapter makes use of fascinating paradoxes to dispel common misconceptions about self-control. The book explains, through science and real world examples, why people act against their long term interest. Then it goes to the next level and provides many different strategies to overcome the most common willpower challenges.

The Willpower Instinct is based on the award winning class which Ms. McGonigal teaches at Sanford University. Her writing style is very conversational and entertaining. She has a keen sense of humor which shows up throughout the book. While she is a college professor, the book was written for the general public in easy to understand language.

McGonigal provides the insight you need to understand--and more importantly, have compassion for--your personal challenges, along with the techniques, tools, and perspective makeovers you need to gain more of that seemingly elusive self-control.

The result is a refreshing understanding of how our brain works and how to train our willpower without stress in order to achieve a better way of living.

Friday, August 24, 2012

August 2012 SDADA Column


Automotive News recently reported that Chrysler has eradicated dealer incentives for customer satisfaction and eliminating penalties for dealers who don't build stores that meet the company's requirements. The automaker is leaving the customer experience and satisfaction up to the dealer.

General Motors tells its dealers that it is focused on the “customer experience” and that EBE is intended to give the customer the best possible experience. The experience is not about what color tile is on the floor, what hangs from your walls or what your receptionist desk looks like (or if you have one). The experience is about the time and care that each customer gets, both during and after the sale.

I learned a long time ago that you cannot pay people to care. GM can’t pay dealers to care and dealers can’t pay employees to care. We must hire people who have pride in their work and have the “people skills” necessary to carry out business as we intend.

I believe that you are much more concerned about providing the customer with a great experience if you sit next to your customers at your kids’ ballgames or at church or at a community function. The culture or a small rural store is much different than at a large store where customers can be (but aren’t necessarily) disposable. In a rural area, if you screw up the customer experience, that news is at the local coffee shop before your customer makes it home.

There does not seem to be anything wrong with the customer experience that GM customers are getting in the dealerships across South Dakota. They continue to reinforce dealership personnel with repeat business. According to the South Dakota Automobile Dealers Association, total market share for GM in South Dakota dealerships from January 2011 through June 2012 was 28.6% which is 68% more market share than GM’s national 18.0% YTD through July 2012. If the customer experience was poor, these customers would migrate to a different brand.

In the above referenced Automotive News article, Peter Grady, Chrysler's vice president for network development and fleet was quoted: "I believe the nature of the dealer is that the only thing better than making $1 million this year is making $2 million, and the only thing that's better than making $10 million is making $15 million," Grady said. "I think a dealer is inherently a competitive animal that wants to always strive to always be in some kind of a competition to make more money."

For anyone who has spent any time in a car dealership, Grady’s comment is obvious. Dealers don't need carrots and sticks from the factory; the marketplace provides all the incentives and disincentives needed. Programs like EBE and SFE are simply artificial carrots and sticks that cloud up the real processes. Multi-tier pricing destroys the credibility of the pricing model in the customer’s eyes.

Get rid of these programs and just focus on building world class vehicles. That has much more influence on the customer experience than any facility anywhere!

NADA Retains Search Firm to Identify Candidates for President

As you may have heard, NADA President Phil Brady recently accepted an executive position with Phillips 66. His resignation was effective August 10. Phil is a good man and has built an outstanding staff at NADA. Our organization will miss him.

NADA has formed a search committee to identify candidates for consideration as NADA’s next president. Former NADA Chairman John McEleney will lead the search committee. After a round of meetings over the past couple of weeks, NADA has hired a search firm to assist with the process. I would expect NADA to announce its next president by the end of the year.

The search committee includes NADA’s current Chairman Bill Underriner; Vice Chairman David Westcott; past chairmen and current NADA board members Stephen Wade, Ed Tonkin and Annette Sykora; other board members Don Chalmers and Forrest McConnell; Kyle Treadway, past chairman of the American Truck Dealers; and Loy Todd, chairman of the Automotive Trade Association Executives. The NADA executive committee named NADA’s chief operating officer and chief financial officer, Joe Cowden, as interim president.

NADA Convention Registration Now Open with ‘Early-Bird’ Special

Online registration and housing for the NADA Convention and Expo is now open. NADA members (dealers and managers) who register by Sept. 14 will receive a $100 discount off the onsite registration rate. The 96th annual NADA convention will be held in Orlando, Fla., at the Orange County Convention Center from Feb. 8-11, 2013. The ATD Convention and Expo will once again run concurrently with NADA.

With several conferences scheduled in Orlando next February, expect hotel rooms to sell out fast. “Convention attendees should register early to avoid missing out on booking the hotel of their choice. Keynote speakers include John Krafcik, president and CEO of Hyundai Motor America; inspirational speaker Mark Kelly, former NASA astronaut and space shuttle commander of Endeavour’s final mission; NADA Chairman Bill Underriner; and incoming NADA Chairman David Westcott.


Wednesday, August 22, 2012

Who Do I Scream at...

...when the driverless car cuts me off!!??

Anthony Levandowski, Google's autonomous car project manager, spoke to NADA Board of Directors at our summer board meeting in Napa, CA in June. He told us that Google is ready to team up with a major automobile manufacturer.

He told us that Google has tested the vehicle over 250,000 miles and there have been only two mishaps, both of which occurred when the vehicle was being driven manually! He think the next major hurdle will be convincing governments and consumers that autonomous cars are safer than having a human being in control.

Google claims that up to 90 percent of all crashes are caused by human error. Levandowski was motivated to start this project when his wife and son were in a severe car accident caused by driver error. He suggested that the technology could be on the market within three years and could be in wide use in 5-6 years.


Nevada passed a law in June 2011 concerning the operation of driverless cars in Nevada, which went into effect on March 1, 2012. It is speculated that Nevada was targeted as the first state because of the Las Vegas Auto Show.

Levandowski explained (in as simple a terms as possible!) that the car uses video cameras, radar sensors and a laser range finder to “see” other traffic, as well as detailed maps to navigate the road ahead. This is all made possible by Google’s data centers, which can process the enormous amounts of information gathered by our cars when mapping their terrain. The process is explained deeper here.

When asked why a Toyota Prius was used as the prototype, Levandowski suggested that was what they had. The technology is compatible with any make and brand. Google is not interested in marketing vehicles, he said, only bringing the technology to the marketplace.

The emotions in the room as Levandowski made his presentation were very interesting, ranging from heads shaking in disbelief, obvious skepticism at the whole notion of a driverless vehicle and relief when he suggested that Google was not interested in selling vehicles. After feeling each of these emotions and more, I settled at excitement.

It is exciting to see the technology advance and it is very exciting to think we can help make our nation's highways safer. After the presentation, he invited us outside where he had the vehicle. I got the two photos above with my phone.

Monday, August 20, 2012

I'll Have a Carrot with That Stick

The only carrots that interest me are the number you get in a diamond. -Mae West

Automotive News recently reported that Chrysler has eradicated dealer incentives for customer satisfaction and eliminating penalties for dealers who don't build stores that meet the company's requirements. The automaker is leaving the customer experience and satisfaction up to the dealer.

General Motors tells its dealers that it is focused on the “customer experience” and that EBE is intended to give the customer the best possible experience. The experience is not about what color tile is on the floor, what hangs from your walls or what your receptionist desk looks like (or if you have one). The experience is about the time and care that each customer gets, both during and after the sale.

I learned a long time ago that you cannot pay people to care. GM can’t pay dealers to care and dealers can’t pay employees to care. We must hire people who have pride in their work and have the “people skills” necessary to carry out business as we intend.

I believe that you are much more concerned about providing the customer with a great experience if you sit next to your customers at your kids’ ballgames or at church or at a community function. The culture of a small rural store is much different than at a large store where customers can be (but aren’t necessarily) disposable. In a rural area, if you screw up the customer experience, that news is at the local coffee shop before your customer makes it home.

There does not seem to be anything wrong with the customer experience that GM customers are getting in the dealerships across South Dakota. They continue to reinforce dealership personnel with repeat business. According to the South Dakota Automobile Dealers Association, total market share for GM in South Dakota dealerships from January 2011 through June 2012 was 28.6% which is 68% more market share than GM’s national 18.0% YTD through July 2012. If the customer experience was poor, these customers would migrate to a different brand.

In the above referenced Automotive News article, Peter Grady, Chrysler's vice president for network development and fleet was quoted: "I believe the nature of the dealer is that the only thing better than making $1 million this year is making $2 million, and the only thing that's better than making $10 million is making $15 million," Grady said. "I think a dealer is inherently a competitive animal that wants to always strive to always be in some kind of a competition to make more money."

For anyone who has spent any time in a car dealership, Grady’s comment is obvious. Dealers don't need carrots and sticks from the factory; the marketplace provides all the incentives and disincentives needed. Programs like EBE and SFE are simply artificial carrots and sticks that cloud up the real processes. Multi-tier pricing destroys the credibility of the pricing model in the customer’s eyes.

Get rid of these programs and just focus on building world class vehicles. That has much more influence on the customer experience than any facility anywhere!