AADA was privileged to attend NADA100, the 100th anniversary convention of the USA’s National Automobile Dealers Association, late January in New Orleans.
NADA is one of the most powerful advocacy groups in the USA and they achieve this thanks to almost total buy-in from American Dealers. NADA’s membership of 19,000 represents about 95 per cent of all retail automotive Dealers in the country. They fiercely, steadfastly, advocate for the Dealer.
What NADA and its members realise, and what AADA wants Australian Dealers to understand, is that advocacy is most effective when a united organisation represents the entire industry to the lawmakers – the politicians. It’s all well and good to battle with regulatory authorities, but donating to politicians’ campaigns, communicating with them and laying out the issues of concern are the most compelling ways to effect the legislative and policy change we all desire.
AADA encourages all Dealers to communicate with their local member, illustrating their concerns and explaining how and why change would impact their businesses, the auto industry and the wider community.
NADA believes and practices the theory that the collective – one strong voice – is far greater than countless individual voices or no voice at all. US Dealers understand that too. The NADA PAC (formerly the Dealers Election Action Committee) contributes funds to support pro-Dealer congressional candidates of both major political parties.
The NADA Foundation is all about charity, further underlining US Dealers’ commitment to the community and adding to the association’s status and power.
Commitment to community means NADA has stood by the financially-challenged city of New Orleans, refusing to move the convention away from its regular rotation there, and even contributing US$4 million to the city to help it rebuild in the wake of Hurricane Katrina in 2005.
If you really want to make a difference you need to be involved and the Americans show us the way. You can’t make change unless you get involved. Don’t wait for a select few to go and do it or you’ll be waiting a long time.
Look after your backyard
A look at the detailed NADA Convention agenda this year showed that, while the macro-external forces shaping the national debate in the United States must be attended to, franchised new car Dealers in America and all over the world succeed, as always, by adroitly managing the complex details that our business throws up, and doing so with a relentless focus on performance.
That also was one theme in a brilliant keynote address delivered by Mark Fields, President and CEO of Ford Motor Company. He spoke about that great company’s resilience and determination to lead the industry into the next decade with product innovation and new business models.
The clear message from the Convention is that American Dealers are getting on with business with their usual determination and ingenuity. Contrary to what you might think from the output of the 24/7 news cycle, these gritty and clever entrepreneurs are determined to ‘make America great again’ one business at a time – political challenges notwithstanding.
That’s a solid concept for us to embrace.
Roger Penske, Chairman of the transport giant, Penske Corporation, also delivered an outstanding session. His company employs 50,000 people around the world and he spoke about the vital need to reduce turnover rates of employees. He said his biggest fear is paying for the continual training of new staff in order to keep pace with rapidly-evolving technology.
Incoming NADA Chairman, Mark Scarpelli, spoke proudly about how his father’s family business grew from a good month of 50 to 60 sales to 650 to 700 per month across various locations today.
“In our world we know what small is; we’ve come from it.” he said.
Mr Scarpelli also drove home the importance of grass roots Dealer advocacy. In 2008, during his time as Chairman of the Chicago Auto Trade Association (CATA), he – along with other CATA officials and members of the Illinois Chamber of Commerce and the Illinois Retail Merchants Association – successfully lobbied the state government to defeat a proposed gross receipts tax that would have imposed a 0.85 per cent tax rate on the total revenue of ‘goods-producing’ companies, including manufacturers, wholesalers and retailers.
“We lobbied effectively with state legislators and we effectively killed it,” Mr Scarpelli said at the Convention.
“We were very proud of that. It was not good for the consumer and it would have decimated our business. We work on less than a 2.2 per cent margin so we don’t have that kind of room.”
AADA International Relations Dinner
Our visit also gave us an opportunity to meet with key NADA office-bearers and cement the good relationships between our organisations. For the third consecutive year AADA hosted the International Relations Dinner, attended by the outgoing NADA Chairman, Jeff Carlson, and his wife, Nancy.
Mr Carlson made an excellent speech and impressed everyone by going around and individually meeting all who attended. That he chose our event in preference to Ford’s cocktail party – one of the biggest events at the Convention – says something about the esteem in which AADA is held.
Past NADA Chairs, Bill Fox and Jack Kain, came along as well, as did key executives from the Brazilian, Canadian, Chinese, French and Italian dealer associations. It was a highly successful evening and is fast becoming one of the highlights of the NADA Convention.
AADA National Dealer Convention Director, Patrick Tessier, was enormously impressed by the size and scope of the NADA Expo, describing it as a barometer of where the industry is placed at any given time.
“What I remember, walking into the exhibit 15 years ago, was it was full of sub-prime lenders,” he said. “You won’t find one in there today. This year it’s all got to with CRM companies. When we had that dot-com revolution in 2003, it was dot-com everywhere. Things come and go, but it was a tremendous expo and enjoyed by everybody.”
Interestingly, the NADA schedule included a workshop run by Randy Henrick and Associates.
Mr Henrick is a lawyer who operates as an auto Dealer compliance consultant. His company helps US Dealers set up and embed practical compliance policies that ensure Dealer employees operate inside the myriad regulations now governing the auto business in the States.
It provided a glimpse into a possible future world for us.
So while we cannot ignore the potential impact of the Vital Six regulatory challenges or the 20 additional issues on our so-called ‘long list’, we need to focus on what’s deliverable and practical. We must maintain and, indeed, ramp up our work with government legislators and regulators to ensure they understand our business – but at the same time you all know that we need to get on with running the stores, no matter what.
That was the key take-out from NADA 2017.
Online vehicle sales
Key automotive executives spoke about the surge in online vehicle sales, with manufacturers in some cases competing directly with dealerships. It has got to the point that experts are now predicting we are only a couple of years away from the entire vehicle sales transaction being able to be performed online.
This has the potential to undermine the investment Dealers make in their facilities, which is a troubling development and one with which we must come to grips.
Cox Automotive Chief Operating Officer, Mark O’Neill, spoke at the Automotive News Retail Forum that kicked off the Convention and predicted that nearly 10 per cent of vehicle transactions could be online by the end of 2019.
“Once you figure out it’s a good thing, it takes off like crazy,” he said.
“By the end of 2017 we are going to be leaving that slow growth, bumpy, experiment-with-it phase and we’re going to start with the very rapid part of growth.”
This challenge is one that other industries have faced. Some have adapted; some have not. The challenge for our industry is not to fall by the wayside, like book and video stores have with the rise of Amazon and online streaming, but to adopt the technology ourselves to ensure we continue to have a strong business model going forward.
These issues and the quality of the program and Expo are what make the NADA Convention such an informative and exciting event. We take so much out of our yearly pilgrimage, as do the Dealers who accompany us on our Study Tour. We look forward to next year’s event, and hope you can join us.