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!

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.

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.

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.

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!

How You Can Drive a Newer, Nicer Car for Less Money

Would you like to drive a newer, nicer car for less money? Of course you would. Virtually everyone would. What's the catch you ask? There is no catch. Let me explain...

People tend to think of car payments when I pose the question above. While there is no question that car payments are a big component of your transportation costs, there are a few other very important factors.

In addition to car payments, your monthly transportation costs include insurance, fuel costs and maintenance and repair. I would like to challenge you to think beyond car payments and instead focus on all your monthly transportation costs. Let's examine each of the four components.

Car payments - As I mentioned, this is what people typically think about when we talk about transportation costs. Traditionally, a new car means a higher payment. Depending on your current loan terms, a newer, nicer car could mean lower car payments. The current loan environment is perhaps the best we have ever had in the auto industry. At Harry K's, we shop about a dozen financial institutions in order to get you the very best possible rate and terms. We use our volume credit buying strength to your advantage.

Insurance - People often think a newer, nicer vehicle means higher insurance costs. While that may be true in some cases, it is not always true. New and late model used vehicles have many safety features that may actually reduce your insurance costs. If the insurance payment does go up, often the increase is minimal. We have resources available to us that will help you determine what your insurance costs will be.

Fuel Costs - Over the past several years, roller coaster gasoline prices have made everyone more sensitive to fuel economy. Almost every new or late model vehicle will get better fuel economy that an older model of the same type. We have a special calculator that will help you determine how much a newer vehicle will save you in monthly fuel costs.

Maintenance & Repair - Obviously, a newer, nicer car should save you maintenance and repair costs. We also have a program that can help you lower or eliminate these costs.

So your monthly transportation costs are a total of these four factors. If you reduce your costs in one of these areas, it can increase by that same amount on another of the areas and your overall monthly transportation cost remains the same. For example, if you buy a vehicle that gets better fuel economy and will save you $15/month (remember we have a special calculator that will help you determine this) your car payment can increase by $15/month and your overall transportation costs remain the same.

I'd love to show you more exact data that deals with your specific information. Call Harry K Chevrolet at 800-888-0544 or Harry K Ford at 800-888-1419.

I Have a Procedural Matter!

“Law is not a profession at all, but rather a business service station and repair ship.”. ~Adlai Stevenson

After the NADA task force meeting, there is very little I can report. There is this stupid issue of "attorney-client privilege". As much as I would like to share what happened today, there is too much riding on it! But I will suggest that things are moving forward!

From Inside the Ivory Tower

A lot of people have expressed an interest in the outcome of my visit to General Motors headquarters as part of the NADA delegation. So this is my account of that visit though there are certain specific aspects of our conversation that I do not feel are appropriate to discuss in this public forum.

The other members of the delegation had all been there before so I was the “wide-eyed rookie” in the group. After receiving our guest passes and proceeding through security, we proceeded to the 38th floor of GM's Renaissance Center headquarters. Kurt McNeil, VP of Sales at General Motors met us in the waiting area. Mark Reuss, President of General Motors North America joined us when we arrived in the conference room and Alan Batey, General Motors’ Chief Marketing Officer, came in about five minutes later.

Chairman Bill Underiner started the meeting by framing the discussion. After a completely worthless discussion about the so-called "voluntary" nature of the Essential Brand Elements facility image program, we pitched the idea of an EBE “Lite” that would entail just the exterior elements. Two members of the NADA delegation made a very strong case for such a concept.

Generally, there was very good, open exchange. The GM executives expressed a genuine concern about legal ramifications of changing the rules of the program or starting a new program at this point in the process. Reuss was particularly distressed about this.

I spoke on behalf of small and rural dealers. I expressed my concern about how the program does not scale well for low volume dealers. I talked about the lack of transparency in the exception process and how it breeds mistrust among the dealers. I stressed that this issue is a HUGE concern for small dealers.

One of the dealers made a great point about how resources that were committed to facilities could not be used for advertising, training and other aspects of marketing new GM vehicles.

GM committed to have a representative in every store that is contacted by the Regional Consulting Center (RCC). Most of these stores have not had a visit from a GM representative in a long, long time. They committed to a dialogue in these stores on an expedited time line. Reuss commented that he wanted to help dealers "do what they COULD do" on a timeline that “worked for them”.

Reuss displayed some real frustration and consternation about the relationship the GM has with its dealers, especially small dealers. He expressed a genuine desire to rebuild relationships with the dealer network. He asked for suggestions for these types of communiqués with the dealers. He did not seem to feel that he had an efficient method by which he could communicate with dealers.

I believe that GM, specifically Reuss, now has additional insight as to how the program is perceived and how it affects dealers. They have a big job ahead of them.

Did we get the commitment from GM that we sought entering the meeting? No. We did not get the scaled down version of EBE that was limited to the exterior elements.

Was the meeting a failure? That remains to be seen. If Reuss and company are sincere in their comments, we may have taken the first step in mending the severely damaged relationship between GM and their small and rural dealers. We will not know that for some time.

I really wanted to come home with some real news for my fellow dealers. Instead, I feel like we have a rather obscure, abstract “fix”. We did get an agreement from General Motors that they would change their process and that they would put people in the field.

So I will take the high ground here and accentuate the positive. I do think Reuss, Batey and McNeil listened to us. I think they want to make the program work for ALL dealers and that they will try to find a way to do that. I think the NADA task force will have to hold GM accountable for the commitments they made.

The entire task force has a meeting with outside legal counsel this Thursday. Stay tuned for details...

July 2012 SDADA Column

Contrary to that 60's Jerry Ragovoy song “Time is on My Side” (performed by the Rolling Stones), as a General Motors dealer enrolled in EBE, time is not on my side.

A recent article in Automotive News about Norman Braman’s law suit against General Motors and their EBE program only emphasizes that the timetable for NADA's task force on facility issues and multi-tier pricing needs to be sooner rather than later with regard to the facilities issue. While the article suggests that the Braman suit could be a test case on the legality of manufacturer facility programs that reward participating dealerships with volume-based incentives, the issue will be settled for GM dealers long before this case comes to trial (if it ever does) 15 months from now. I assume General Motors knows that and is procrastinating the litigation of this issue as long as they can.

General Motors has been the focus of most of the comments in this space with regard to facilities programs. While I recognize that other manufacturers have facilities programs, GM’s EBE is, by most accounts, the most egregious and casts the longest shadow in our state. The feeling at NADA is that most of the other manufacturers are standing on the sidelines watching how EBE unfolds and will then follow in GM’s footprints.

Meanwhile, the NADA task force needs to firmly apply the "pedal to the metal" as GM dealers are facing very difficult decisions on their facilities each day. They do not have time to wait for the outcome of Braman's suit.
(By the way, is Braman's real full name "Billionaire megadealer Norman Braman"? It seems that is the case if you were to read Automotive News. Just wondering...)

The task force will have a couple of very significant meetings the first week of August. The GM dealers on the task force will be meeting in Detroit with Mark Reuss who is the President of General Motors North America. I look forward to the opportunity to visit with Mr. Reuss about the small dealers’ perspective.

Later that week, we will meet with our outside counsel in Washington on both the facility programs and multi-tier pricing issues. I hope we can make some progress at these meetings. Stay tuned for details!

Report: Employment at New-Car Dealerships Up 4.6% in 2011

Even though, according to one small business expert, if you've got a business - you didn't build that and somebody else made that happen, car dealerships are setting the pace across South Dakota and America when it comes to new hiring around the country. It seems that this hiring in dealerships is happening despite what our government is doing rather than because of what they are doing. I think most dealers are very nervous about what happens in the beltway.

There were 933,500 workers employed at U.S. new-car and -truck dealerships in 2011, a 4.6 percent increase from the previous year, said Paul Taylor, NADA chief economist. The findings were released as part of NADA Data 2012, the association’s latest state-of-the-industry report on dealership financial trends. The increase in the number of employees occurred as the number of dealerships, which had declined in recent years, continued to stabilize. In the first quarter of 2012, there was an increase of 66 dealerships on a net basis. “The arrival of new brands and new dealerships is a sign that even more vigorous competition is on the way in the U.S. vehicle marketplace,” Taylor said. “As new brands enter the U.S. market, the net dealership count may increase in future years of strong economic growth.”

In 2011, the average new-car dealership employed 53 workers and had an annual payroll of $2.6 million. Dealerships also provided an average 14.5 percent of total retail payroll in their states in 2011. Taylor also noted that “franchised dealers are major employers as well as significant contributors to their communities’ economies, tax bases and civic and charitable organizations.”

Wow! Really Mr. President?!

You didn't get there on your own. I'm always struck by people who think, well, it must be because I was just so smart. - Barrack Obama 7/13/2012

Time is Not on My Side

Contrary to that 60's Jerry Ragovoy song (performed by the Rolling Stones), as a General Motors dealer enrolled in EBE, time is not on my side.

This article in Automotive News only emphasizes that timetable for NADA's task force on facility issues and multi-tier pricing needs to be sooner rather than later with regard to the facilities issue.

While the article suggests that the Norman Braman suit could be a test case on the legality of manufacturer facility programs that reward participating dealerships with volume-based incentives, the issue will be settled for GM dealers long before this case comes to trial (if it ever does) 15 months from now. I assume General Motors knows that and is procrastinating the litigation of this issue as long as they can.

Meanwhile, the NADA task force needs to firmly apply the "pedal to the metal" as dealers are facing very difficult decisions on their facilities each day. They do not have time to wait for the outcome of Braman's suit.

(By the way, is Braman's real full name "Billionaire megadealer Norman Braman"? It seems that is the case if you were to read Automotive News. Just wondering...)