February 2012 SDADA Column

I am just back from the convention in Las Vegas. It was truly a great convention. You’ve heard of the idiom of someone wearing their heart on their sleeve – well, that’s the automotive industry. Dealers were there in huge numbers tipping off their view that the automobile industry is well on the way to recovery.

Workshops were well attended, the Expo floor was buzzing and there were great comments about the general sessions. I saw several South Dakota dealers at the convention and I know there were several others there that I did not see. I hope all of you had a great convention.

However, I believe one of the primary functions of the NADA convention is to stay close to those issues that threaten dealers and to fight for those of them who cannot stand up to fight for themselves. We, as dealers, have a great many serious challenges barreling toward us. So, despite the jovial the mood at the Convention, we must be vigilant.

On a personal note, I was really moved by Aron Ralston, who had to amputate his right arm with a knife to free himself from a boulder after a hiking accident. His autobiography “Between a Rock and a Hard Place” was the subject of the film “127 Hours.” I highly recommend both.

I really enjoyed former President George W. Bush’s speech as well. He told several humorous anecdotes about himself, even poking fun at his tendency to mangle certain phrases. But it was his compassion, sincerity and his love for our country that really struck me. It will be interesting to see how the historians treat “W” in 20-30 years.

Facility Image Programs Study Released

Glenn Mercer’s report on facility image programs was released shortly after the convention opened. You can find an executive summary and the full report on the first page at nada.org.

I found Mercer’s methodology to be sound and the report is written in a manner that makes it interesting to read. (I took it to bed one night thinking it would put me right to sleep and ended up reading the entire report in about 45 minutes.) His conclusions can be boiled down to three primary issues.

He believes that it is incumbent upon OEMs to provide dealers with more persuasive business cases for investment in facilities. The cost of these programs is needlessly high and he recommends individual OEMs and their dealers to work together to tackle cost issues and he encourages OEMs to revisit again how they “tier” their programs to make them more affordable for the smallest rural stores. And finally, he recommend to both OEMs and dealers alike to jointly tackle the issue of whether the dealerships we are building today are going to be the successful dealerships of tomorrow.

Whether you have recently done a facility upgrade, are currently engaged in one, are considering one or have no plans for one, I encourage you to read at least the executive summary. It is a very in-depth analysis of a topic that very directly affects every new car dealer.

Arizona Repeals California Fuel Economy Rules

You’ve probably seen the photos of an angry looking Arizona governor Jan Brewer having a “discussion” with President Obama recently (would have loved to have been a fly on the Air Force One wing for that “discussion”). She recently has taken on the public workers union in her state with a package of legislation that is more extensive than similar efforts in Wisconsin last fall.

NADA praised the Arizona governor’s move last month to repeal its adoption of California’s fuel economy program, which duplicates existing federal mandates, calling it “a victory for consumers.” Arizona is the first state to repeal adoption of California’s fuel economy law. “These duplicative rules would have made it more expensive for working men and women to find affordable transportation,” NADA said in a statement to the press. “Duplicative state-based fuel economy programs like those in California hurt consumers by limiting vehicle choice without providing commensurate environmental benefits. With two distinct federal standards already imposed by the Environmental Protection Agency and the Department of Transportation, these rules were unnecessary. Auto dealers in Arizona and across the nation support fuel economy increases under a single, national fuel economy standard.”

Mark Your Calendar: NADA-Google Learning Hub Series at No Charge to Members!

NADA University and Google are presenting a series of four webinars, offered at no charge to NADA and ATD members only. The first webinar, “The Smartphone Revolution,” is activated on-demand for members in Learning Hub, in the Internet category. Next up is “The Google+ Project for Dealers,” to be presented live on February 29. Other dates and topics to be announced later.

November 2011 SDADA Column

Do you think you could sell a full-size pickup that got 50 miles per gallon? How much could you sell a truck like for? Could you get $75,000? $90,000? Would South Dakota farmers and ranchers be lining up to buy that truck?

I believe most dealers just want to be able to sell their customers a vehicle that fits their needs at the best price possible. The Obama administration has estimated the proposed 54.5 mpg by 2025 mandate will add an additional cost of between $3,100 and $3,600 to the price of a new vehicle (that is in today’s dollars). I wonder if that additional cost will be the same on a full-size pickup as it is on a compact car.

It seems like just yesterday we were talking about the new fuel economy standards for Model Years 2012-2016. But the Obama administration, driven to act by California, is particularly motivated to get the next round of standards done three years before they are required to do so.

This latest proposal – 54.5 mpg by 2025 – is raising some eyebrows. Most automakers have, in principle, agreed to the plan. But it’s far from the finish line. And if a growing number of members of Congress have their way, the administration’s efforts could be put on hold.

Last month, NADA applauded the bipartisan efforts of Congress members who sent a letter to the chairmen of the powerful House appropriations committee and the House appropriations subcommittee asking them to give the Environmental Protection Agency a one-year “time out” from their work on fuel economy standards for 2017-2025 and prevent California from implementing its “patchwork” fuel economy regulations. Members of Congress asked for support of an amendment by U.S. Reps. Steve Austria, R-Ohio, and John Carter, R-Texas. That letter and recent oversight hearings featuring several prominent House members, including Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, have ramped up pressure on the administration to justify its cost assessment of its proposed fuel economy rule.

NADA thinks it’s entirely too early to be talking about fuel economy proposals that won’t even be acted on until 2015. We’re backing a more practical approach that will allow us to learn from the current standards and see how consumers in the marketplace react to them. That’s why we support the Austria-Carter amendment, which seeks to ensure the impact of these rules on jobs, consumer choice and vehicle costs are properly evaluated. The amendment would also achieve one of NADA’s top regulatory priorities by temporarily returning rulemaking authority to the National Highway Traffic Safety Administration (NHTSA), the only agency required by law to consider the economic and safety impact of fuel economy increases.

Since this issue could severely affect our ability to provide our customers with the cars and trucks they need and can afford, our goal is to have regulators address legitimate questions about cost and affordability. With the help of Congress, we just might get that chance.

Take a Look at What’s New on NADA University

Have you browsed through Learning Hub and Resource Toolbox lately? NADA University is constantly enriching both centers with new content. Newly added online courses in Learning Hub include “Creating a Special Finance Operation” in the “Sales/Leasing/Finance” category, and “Overcoming Obsolescence” and “Unlocking Frozen Capital” in the “Parts” category. “Phone Fundamentals: Use Them or Lose Customers” is coming this month to NADA U’s new “Fundamentals” category. In Resource Toolbox, there’s a wealth of new entries under “Industry Information,” including NADA 20 Group’s Dealership Performance 2011 vs. 2010 and a SEMA study on “Influence of Accessories on New Vehicle Sales.” There’s also a new “Tip of the Week” category focusing on building strong customer and workplace relationships. Our new Driven Management Guide, A Dealer Guide to Federal Excise Tax Compliance, is also coming soon.

Watch New ‘Dealer Pain Points’ on NADAuniversityblog.com

NADA University continues to add to the popular “Dealer Pain Points” series. Look for these new videos and accompanying information: “Supersize Service Sales,” “Process Makes Perfect,” “Are You the Best-Kept Secret in Town?” and “Magic of Disappearing Profits.” All of these videos are in the “Service” category. In “Parts,” find “The High-Wire Act in Parts,” “Hide and Seek: A Costly Game,” and “Bermuda Triangle Swallows Parts Profits.”