March 2012 SDADA Column

I recently had my General Motors EBE facility site visit. I don't know how many of you have gone through the process of ponying up $10,000 to have someone from Gensler come to your store and point out all the ways your store is hindering your business. Although I found the representative from Gensler to be  a very pleasant gentleman, it was a painful process for me.

If you want all the gory details, check out my blog at http://harrykss.blogspot.com/2012/02/searching-for-right-shade-of-gray_29.html. The abridged version goes like this:


My store is fifteen years old. It was built to GM's "Image 2000" specifications. I have made some significant improvements since it was built. The interior has been repainted twice and exterior has been repainted once. I still regularly get comments about what a nice facility it is.

I went into this process hoping to make the best of it. I was prepared to make a modest investment in my store. I am not opposed to building the large blue entry portal on the front of my building. I see some benefit in that. I'm not certain that GM needs to specify every last detail of how it is built but I won't give a lot of push back on that.

I paid extra money for the blue window frames (or mullions) that General Motors wants me to now replace. The 3500+ square feet of gray tile they specified when we built is in good conditional and fully functional yet it is neither the right shade nor size and thus GM wants to tear it up. They want me to take the photo of my family down off my office wall (because customers can see into my office). Naturally, they want me to buy a bunch of overpriced furniture that I think is just plain ugly (though I'm sure it looks good somewhere)! There are a dozen other similar changes they want in my store.

If I don’t comply with these standards, I will be at a $500/vehicle disadvantage to any dealer who does comply. This program is not really about facility upgrades at all. If it were, the payouts would be tied to the cost of doing the upgrades themselves and not to the number of vehicles purchased from GM during the program. As you know, this pricing scheme violates South Dakota franchise laws which prohibit multi-tier pricing. If we do not enforce our laws, then we deserve just exactly what we get.

Again, I refer you to my blog entry at the address above. I would be interested to hear from you on this topic. Please give me a call or send me an email.

EPA Underestimated Emissions Control Costs for Model Year 2004-2010 Heavy-Duty Trucks

NADA and ATD have called into question the EPA’s cost analysis of emissions control requirements for model year (MY) 2004-2010 commercial trucks. The mandates resulted in substantially higher prices for commercial vehicles, depressed sales and delayed the environmental benefits that the EPA originally sought.

According to NADA/ATD, until now, few studies have ever compared the EPA’s cost predictions to the actual cost of meeting its motor vehicle emissions mandates. The study, which looks back at the 2004-2010 medium- and heavy-duty truck emissions mandates, reveals that the EPA underestimated actual compliance costs on average by a factor of two to five. It shows what can happen when a regulatory proposal – based on far in-advance predictions – seeks to set mandates far in the future. Importantly, the study documents the real-world market disruptions that can occur as a result.

The lessons learned from this report apply directly to the proposed MY 2017-2025 fuel economy regulations for light-duty vehicles. That rulemaking, combined with previous Obama administration fuel economy mandates, will raise the average price of a vehicle by $3,000, according to EPA and National Highway Traffic Safety Administration estimates. When faced with unreasonable federal regulatory mandates that increase motor vehicle costs, buyers of light-duty vehicles – similar to what commercial truck buyers experienced – will seek out less expensive alternatives in the marketplace.

Take Advantage of These NADA Member Benefits

All Legal/Regulatory Webinars to be Provided at No Charge to Members

I hope you will take advantage of this NADA member benefit. NADA University is offering all legal and regulatory webinars, live and on-demand, as a member benefit (complimentary) beginning in March 2012. It includes all past legal/regulatory webinars whose information is current. In addition, dealers may extend their no-cost member benefit to their CPAs, attorneys and other contracted professionals who work with them on compliance matters. Dealers can simply add those professionals as sponsored users within the dealership’s NADA U accounts, automatically providing complimentary access to member benefits. The legal/regulatory webinars are provided in addition to other NADA U member benefits: 10 Learning Hub programs, Driven guides, NADAPerks, MarketINSIGHT webinars and all resources in the Industry Information section of Resource Toolbox.

On-Demand: NADA-Google Learning Hub Series Offered 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 two webinars, “The Smartphone Revolution” and “The Google + Project for Dealers” are activated on-demand for members in NADA University, Learning Hub, in the Internet category. Other dates and topics will be announced—watch this space.

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.