You don't always know what's down the road. When Jack Kain took over as 2005 chairman of the National Automobile Dealers Association, he thought dealer-factory relations and the public image of dealers would occupy most of his time. But that was before hurricanes destroyed many dealerships and automakers resorted to employee-discount incentives, demanding his attention. Kain, 76, owns Jack Kain Ford in Versailles, Ky.
He spoke with Executive Editor Edward Lapham about his tenure.
Let's start with value pricing and the employee-discount pricing that some automakers used to clear out inventory last summer. A lot of dealers have complained about that. They say it takes away their ability to deal and make a deal.
It was a mixed blessing. It moved a lot of old inventory we had. And it really helped us in that area, getting rid of vehicles we just had around too long. We just about sold out of new product. But what we did, we sold so far ahead, no doubt about it. And it's affecting us to this day. It's taken all the marketing away from the dealer.
Have you as chairman of NADA, or has the NADA board, had any conversations with the automakers about this type of pricing?
Pricing is the one area that we can't get into with the factories. But, sure, we've let them know that if the customer is being hurt -- especially when you get into negative equity, things of that nature -- being able to finance them when they're trying to get the MSRP too close to the transaction price, we need some room there to take care of customers who have a heavy debt on their unit.
This past year has been an abnormal year for the auto industry and for the country. When you came to Detroit to speak to the Automotive Press Association, you talked about Hurricane Katrina and the need for consumers to watch out for flood-damaged cars.
One of the good things that may come out of it, though, will be a uniform title bill. We've tried before, but it was always killed. We think now we've got the right people who realize that it is a consumer bill and not just a dealer bill. I feel the insurance companies are not against it like they once were.
Also, we've seen sort of the mop-up of the whole flap about the finance reserve. Do you think that's over and gone?
No, I think it's on the front burner, and it's going to be on for the foreseeable future. We are working hard to educate the consumer.
How many dealers were unprofitable in 2005?
About 25 percent of the dealers are unprofitable.
The National Association of Minority Automobile Dealers thinks there's a large number of minority dealers, dealer development dealers, who folded in 2005.
One of the problems is that the public companies are buying the good points, so a development dealer doesn't get the best market area. Sometimes he's getting into a dying market. And it's just impossible for them today.
Has NADA looked at that situation and what needs to be done?
We now have 20 Groups just for minority dealers. And they are taking advantage of it. We're helping them become better dealers. We're helping them in communications with the manufacturers. We're helping them in all kinds of areas. Of course, more progress is needed. Diversity is definitely needed. It makes for a stronger, better industry. But we have got to put these people in locations where they can survive.
One of the things you told us you wanted to do was improve the relationship with the factory. Has that happened in a measurable way?
I think so. I can certainly call the factory and the factory will call back now, they will come to meetings now. We're getting information from them that we never got before.
Has your communication with, or the way you deal with, the big dealership groups or the public companies changed in the past year?
I think it has, because they only sell from individual dealerships in individual communities and they all have the same problems that we have. The economy has something to do with it because they are sending their people to the 20 Groups. We also have a lot of clout that they don't have. We have clout with manufacturers, and we have clout in Congress. Our Dealers Election Action Committee is one of the three largest PACs.
Do big dealer groups or public dealer groups have their own 20 Groups?
No, we don't have separate 20 Groups. We're expanding our 20 Group program to where we have managers now. And then we have truck dealers now, which we didn't have before. We're specializing for the individual departments that need help. They are sending a lot of management people through our dealer academy.
You mentioned legislative clout. There's no question that DEAC, NADA's political action committee, is a force to be reckoned with. Does it hurt or help that AIADA feels it needs its own political action committee?
It hurts. It just creates confusion with the dealers. I just think we could work things out and let DEAC be the one and not cause confusion among dealers. We're going to try to convince them that NADA has done a great job for all these years. Why change?
Have you had conversations with AIADA?
Yes, we have, and we plan to have more in the future. I think they're bored -- I don't want to get into anything -- I think they're bored. We're better off staying with what we have with DEAC flying the flag for the dealers.
Has the legislative agenda changed at all? There has been progress on title branding. Is there anything else?
Data security is a big thing. Of course there is the estate tax. Then there is the automotive service information right-to-repair bill. We're not for the right to repair.
The aftermarket guys think they have everybody in Congress as co-sponsors and that they're going to win that legislation.
The right-to-repair legislation is unnecessary.
Auto manufacturers already provide the service information and all the diagnostic information, and the tools are available in the marketplace. It's an attempt by the aftermarket people to obtain all the proprietary original-equipment specifications for little or no cost. It would be a way to manufacture knockoff parts without r&d expenses or licensing fees.
What do your guys on the Hill tell you? Are you going to win that one?
We're working hard on it. It's a top priority.
There's always the issue of fuel economy. We're for CAFE as long as it doesn't affect product availability, price or product safety. We like to let the marketplace decide.
Of what accomplishment this past year are you proudest?
The image of the dealer has been improved. I feel that communications with our manufacturers have improved. On dealer financing, we are finally convincing the customer and the public that the dealership is the place to not only buy but to finance their car.
What about the relief effort after the hurricanes?
NADA was able to get almost $4 million in donations from dealers around the country.
(NADA President) Phil Brady and I were able to take it down and give it to employees of the dealerships.
We felt the dealers could take care of themselves through insurance and other programs. But we wanted to keep that employee with the dealership. And to see them with tears in their eyes coming up and handing them $5,000 or $1,500 -- and some of them we even were able to go back and give them another -- that was tremendous.
It was dealers taking care of dealers.
I have no disappointments whatsoever.
You may e-mail Edward Lapham at [email protected]