The National Automobile Dealers Association has invited H. Wayne Huizenga, chairman and co-CEO of Republic Industries Inc., to attend its June 16-17 board meeting in Colorado Springs, Colo.
Although this is the first time a public dealership group's chief executive will address the board, it is not likely to be the last. NADA is asking Republic Industries and other public dealership chains how it can serve their companies.
Also addressing the board will be Ron Zarrella, group vice president of North American sales, service and marketing for General Motors.
The invitations are part of NADA's effort to redefine and reinvent itself in the rapidly changing retail environment.
But NADA is not soliciting just from Republic, CarMax, and the other public dealership chains that already have group memberships with NADA. The organization also is surveying members and state association executives on what they need from NADA to keep pace with the retail revolution.
'The dealer body is no longer homogeneous. We have to serve them (the big chains) as best as we can - provided that it doesn't hurt another segment of the dealer body,' explains Frank McCarthy, NADA president. 'We have to be smart enough to come up with different services that combined will serve all the dealers. We want all of them to be under the tent.'
The rise of public dealership groups and dealerships that are part-owned by automakers has created an unprecedented challenge for NADA, which is used to serving dealerships with average annual sales of $21.6 million. Now, NADA must serve the new players without offending existing members.
Last year, NADA added special board seats for women and minority dealers to ensure their interests would be represented. The association has not decided if it will do the same for public dealership groups.
However, in 1997 the NADA board did change its bylaws to allow executives of publicly held dealerships to become NADA directors. The board now has two standards - one for public dealerships and one for privately owned stores. NADA still requires board members to have a 15 percent stake in their dealerships if privately held. For a public chain, the board member must be named the executive manager on the dealer agreement.
Still, there could be problems.
'The big vs. little issue could
become adversarial,' says Walter Huizenga, president of the American International Automobile Dealers Association and a former NADA lobbyist. 'NADA will have to define products and services that appeal to them without jeopardizing the other members.'
Walter Huizenga is familiar with membership challenges. The pending merger of Chrysler Corp. and Daimler-Benz AG has forced AIADA to rethink its own mission, reviving talk of a possible AIADA affiliation with NADA.
Turmoil created by dealership buyouts and manufacturer plans to reduce the number of dealerships has divided the dealer population into haves and have-nots. Companies as large as Republic Indus-tries and Car-Max are big enough to hire their own lobbyists, research teams and professional trainers. They can offer employees an attractive retirement plan. It could be difficult for NADA to develop services that meet the needs of large corporate dealership chains.
Two issues where dealers large and small could be on a collision course are factory-owned dealerships and Internet sales. NADA may find it tough to remain on neutral ground.
Two years ago, NADA created a computer task force to educate dealers - primarily from small to mid-sized dealerships - so they become smarter shoppers for computer systems, and ensure competition among vendors in a field where two suppliers have been dominant. The task force is now a standing committee.
Large dealership groups have the financial clout to invest in state-of-the-art technology at volume discounts. So the big players have a significant advantage as the Internet plays a greater role in dealership sales and more dealers use computers to improve customer service and streamline their operations.
Only weeks ago, Republic Industries disclosed its strategy to dominate the U.S. market using the Internet. If the company succeeds it could obliterate traditional dealer sales territories and likely spark lawsuits.
The dealerships bought out by General Motors and Ford Motor Co. could become another conundrum when it comes to industry relations. If a dispute develops between an independent franchise dealership and the Ford Retail Network, NADA might have trouble taking sides.
Some dealers already are worried.
Tom Gibson, chairman of Asbury Automotive Group of Conshohocken, Pa., a private chain counted among the industry consolidators, is concerned the joint-venture stores could throw a wrench into Asbury's growth plans. 'What happens when a manufacturer and a retailer are trying to acquire the same dealer?' he asks.
McCarthy admits the debut of factory-owned dealerships could be a potential flash point, but says he is impressed that, in some cases, dealers are initiating the buyouts. He also points out that dealers - not automaker executives - will run the joint-venture operations.
McCarthy says NADA will closely monitor the stores that are partially owned by the factories to see if automakers favor them over independent franchised dealers. The association will not support favoritism, he says.
The vast majority of dealers appear to have few complaints about NADA and its services. Eighty-six percent of the dealers nationwide are members. That percentage has been stable over the last five years. NADA's share of the dealer population has slowly climbed since McCarthy joined the organization 30 years ago. It was then about 70 percent.
A membership survey from 1996 suggests that NADA should be more responsive to dealer-manufacturer disputes. Among the top concerns, manufacturer relations ranked second behind dealership profitability/overhead cost.
The association last year launched an industry relations symposium designed to offer an additional forum on manufacturer relations. But often, mainstream dealers are unaware of NADA's limitations in negotiating with the factories. 'This is not a labor union. We cannot do collective bargaining,' McCarthy says.
A few board members and some state association executives also have grumbled about NADA's legislative efforts. A couple state association executives, who asked not to be named, think NADA should have been able to get Congress to agree to a luxury tax phase-out sooner than 1996 and they are growing impatient with unsuccessful lobbying efforts for a national title branding law.
Late last year, the muttering sparked a memorandum from Tom Greene, NADA's chief lobbyist, that listed the organization's legislative accomplishments during the 105th Congress. The memo went to NADA directors plus state and metro association executives.
'Often NADA is successful in pursuing or opposing an issue, but is hesitant to publicize the success,' Greene wrote. 'Much of the legislative process occurs behind the scenes. In some cases, publicizing a success can backfire by drawing attention to a sensitive issue, and in other cases the member of Congress who helped us achieve our goal doesn't want public credit for a variety of reasons.'
NADA seems to have enjoyed greater success when it comes to regulatory issues, primarily because of a recent string of victories negotiating changes in tax rules that cost individual dealers hundreds of thousands of dollars. Most notable was NADA's compromise with federal tax officials concerning LIFO - the last-in, first-out inventory method - over a technical error that affected a large share of the dealers nationally. The win had a more tangible impact on the average dealer, and was a more obvious victory than the behind-the-scenes politicking NADA does on Capitol Hill.
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McCarthy says NADA intends to rely more heavily on the state and local association executives for help with legislation in the future, since they are closer to the constituents of congressmen and senators. NADA could consider an increase in spending for lobbying efforts. The association would not disclose the size of its current legislative budget.
McCarthy also will try to keep NADA members better informed about what it accomplishes on Capitol Hill. In the last year, for example, the association has used a fax newsletter and e-mail to update its members on late-breaking events.
Still, NADA board members, and McCarthy, believe rank-and-file members could have a better understanding of all the association does on their behalf.
Says McCarthy: 'We are developing a long-range strategy for communicating with the dealers so they know what's going on. We need to know where we are going as an association.'