William Bradshaw, the incoming chairman of the National Automobile Dealers Association, has made it his mission to educate consumers about F&I issues. Last year, Bradshaw helped organize a program called AWARE, a Web site that informs consumers about dealership finance practices.
Bradshaw, 55, is the president of Bradshaw Automotive Group. His stores sell Buick, Cadillac, Chevrolet, Hummer, Saturn, Honda, Acura, Infiniti and Hyundai vehicles. He has been an auto dealer since 1979.
In December, Bradshaw chatted with Editor David Sedgwick.
Have you figured out what your priorities are going to be yet?
One of my priorities is to continue to improve the dealers' relations with the manufacturers. I think we've had a lot of progress in the last five years. We reached that low point in 1999. I think all the manufacturers have made some great strides and improvements since that time.
Did NADA's dealer satisfaction survey show improving relations between dealers and the factories?
They showed a steady improvement over the last five years. Just about all manufacturers have been willing to meet with us and give us a chance to share those survey reports.
That gives you a bargaining chip, because dealers are paying attention.
If 50 percent of the dealers answer the surveys, you've got a pretty strong message to take (to the factories). And the factories are listening. Five or six years ago, we were struggling to get some manufacturers to schedule those meetings. Now, most manufacturers are calling us saying they want to get that report. So I think it's been a great tool that's helped us with the manufacturers.
Another big issue in the last few years has been (the need) to improve our image in the marketplace. Dealers are not always properly represented in the media. They've had some instances with F&I - this "dealer reserve" issue - and we've been beat up a little bit in the press over that.
The majority of our dealers are doing business the right way. They've improved their operations. They've improved their level of service to their customers. They are involved in their communities, and they make a lot of contributions to different charities in their communities.
Consumer groups continue to try to squeeze the dealer reserve. That's still a hot-button topic.
It won't go away.
Exactly. Do you foresee a day when all dealers accept a flat fee instead of a percentage on the loan? And how do you feel about that?
I feel strongly against it. I don't think (a cap on consumer loan interest rates) is the correct solution. I don't think it's in the best interest of the consumer. The system is not broken. They are pushing to get something fixed that doesn't need fixing. We financed consumers who in some instances would not get financed otherwise.
The finance process is negotiable. It is very competitive. We've got all of the dealerships in our market to compete with, and we've got all the lenders to compete with.
Interest rates are published in the newspaper every day. We have the factory rates that we're able to provide to consumers.
So there's a lot of value in the way we deliver credit to our customers. And for that, the dealers deserve a profit. Profit is not a dirty word. You can't stay in business and hire, train and keep good people and keep nice facilities and do all the things you need to do to deliver that kind of service experience if you're not making some money.
If we lock in to a flat cap, I think more customers will be hurt. Our best solution is to educate the consumer.
On the subject of F&I, you launched a Web-based consumer information program called AWARE, or Americans Well-informed on Automobile Retailing Economics. It's an Internet site (autofinancing101.org) where consumers can learn more about financing. How is it doing?
It's more than just a Web site. It's a consumer education program. It's a coalition between NADA and some of the major lenders, along with AIADA and NAMAD.
GMAC is in it. Ford Motor Credit, Toyota, Honda and Wells Fargo are some of the participants. We want to capture all the F&I data that we had produced at NADA. Our Time magazine insert (a consumer education advertorial published in Time) is available through the Web site.
GMAC, Ford, DaimlerChrysler and all the other manufacturers and lenders have (contributed). We take the best of everything that we can find out there and put it in one place on this Web site.
It's in all of our best interests - the industry and individual dealers - to educate the consumer. A better-educated consumer is (good) for all of us.
A few years ago, GM and Ford wanted to create big networks of company-owned stores. Then they backed away. Are relations between dealers and the factories getting better?
(We) voiced strong opposition to those programs, and the manufacturers listened. They changed their direction. They saw the error of their ways. Since then, we've seen a very steady improvement.
The manufacturers have worked hard to recover from what went on at that time. They have opened the door to dialogue on a regular basis.
Do you know any manufacturers that want to own their own stores?
No. It's a dead issue. It is never right to put the manufacturer in competition with the dealership.
Is there a legislative agenda for NADA that you favor?
Jack Kain (NADA's outgoing chairman) addressed the issue of salvaged vehicles - flood-damaged vehicles. Fifty different states decide what is a "totaled" vehicle and what is a salvaged vehicle.
Jack put the spotlight on this issue again. And we finally got some momentum in Congress to get a national solution. It is a huge problem. I think Louisiana just passed a bill in the state that said those vehicles will have to be destroyed.
That's one issue. The estate tax definitely will continue to be on our agenda. We felt real good about the progress we had made this year. Then Hurricane Katrina hit the Gulf Coast, and all bets were off. So we packed up. (The estate tax) will come up again next year.
Data security will continue to be (a hot issue). Dealers have unknowingly given some of the computer vendors (access) to their dealership records. There is some concern about that.
Are you pushing a legislative solution, or are you just trying to make dealers aware of it?
We have not currently (proposed) legislation. We're advising the dealers to review the contracts and make people more aware of it.
You also are worried about the "right of repair," a proposal that was introduced in the House last year. It would give independent repair shops access to automakers' vehicle specs and data. Are you against that?
We think it's really an attempt by aftermarket parts manufacturers to get our original design specifications. Then they'll be able to make knockoff parts without spending the money.
We are totally against it. And we will fight it with everything we've got. It's not right. Again, they are trying to solve a problem that doesn't exist. Auto manufacturers already supply a lot of this information to the market.
A lot of that information is available for a fee. It's paid for. And it's fair that (independent repair shops) have to pay for it. But the people pushing this bill want more data. The big money that is pushing this is not the independent service shops - it's the big parts suppliers like PEP Boys and NAPA parts.
Are there any other issues?
We'll constantly have to watch CAFE. We obviously (favor) energy conservation, but we want people to have choices. We don't want to mandate people out of the cars and trucks that they want. Changes need to be made gradually enough that manufacturers have some reasonable chance to respond.
Some automakers use the "top box" system to rate their dealers' consumer satisfaction ratings. On those forms, the dealer gets good reviews only if the customer gives the dealer the highest possible rating. Most dealers hate it. Are automakers backing away from "top box" ratings?
Several have backed away. I'd say that only a minority of the manufacturers use it. A lot of manufacturers also worked very hard to shorten their surveys. In many cases, some of the surveys have been cut in half. Tremendous progress has been made.
Has NADA ever proposed a model consumer satisfaction questionnaire as a standard for automakers to use?
(Because of federal antitrust regulations,) we cannot offer a common survey. Each manufacturer has to make that decision on its own.
But NADA is working on a follow-up questionnaire (to be administered one day after the consumer purchases a vehicle). It's very short. It's a two-and-a-half-minute survey with the customer. The questionnaire asks: "Will you buy from us again? On a scale of 1 to 10, were you satisfied with your experience? And on a scale of 1 to 10, would you recommend us to your friends?"
This survey allows the dealer to find out if he's got a problem and fix it. And it's Web-based. As soon as you get a complaint, your service manager or your sales manager gets an e-mail, and you get instant feedback.
The American International Automobile Dealers Association wants to launch its own PAC group. Are they going to compete with NADA for political contributions? And are you concerned about that?
Very much so. I feel very strongly that this is not in the best interests of the dealers. This formation of a second PAC by AIADA is going to create confusion, it's going to create conflict, and it's going to create potential legal exposure for them and us with the Federal Election Commission.
We think ultimately it might weaken our voice in Congress. We need to be a community working together, not doing something divisive. We are going to work hard to make sure our dealers understand what they can and can't do. We don't want anybody to have a legal compliance problem.
There is still time to reverse course, but I've got no indication they plan to do that.
You may e-mail David Sedgwick at [email protected]