Bill Underriner, who takes over as chairman of NADA at the convention in Las Vegas, plans to tackle today's issues and tomorrow's.
He will be charged with following up on a report that the National Automobile Dealers Association commissioned from former McKinsey & Co. partner Glenn Mercer on whether investments in the automakers' facility image programs provide an adequate payback for dealers. NADA will release results of its study on Saturday, Feb. 4.
In Las Vegas, Underriner will present to the NADA board a report from the long-range planning committee he has led, including recommendations that could reshape the annual convention. And he wants NADA to continue to challenge the proposed corporate average fuel economy rules that would mandate vehicles get an average 54.5 mpg by the 2025 model year.
Underriner, 60, started in the auto business as sales manager at his father-in-law's Buick store in Billings, Mont., and has made Underriner Motors a four-franchise operation with two stores. He was interviewed in Detroit on Jan. 10 by Industry Editor James B. Treece.
Q: What tops your agenda as chairman?
A: The thing I want to concentrate on is CAFE. I think that's going to be very detrimental to our business if we cannot supply the public with the cars that they want to buy and make those cars affordable for the public to buy.
I'm afraid this thing is going to get out of hand. The price is going to go up at least $3,000 a car [according to the Obama administration's estimate]. The price of the car is going to be very, very expensive -- without putting on some extra costs for meeting fuel economy.
I believe in fuel economy. I wish all cars could get 80 mpg. But it's not going to happen without some really good technology.
And the thing I worry about the most: In Montana, we sell a little over 60 percent trucks. Are these vehicles going to be the vehicles we need for the ranchers and farmers?
The latest CAFE deal cuts some slack for trucks.
It does, somewhat. But still, to me personally, it's still a factor.
Almost all the automakers have signed off on the latest deal with the understanding that it precludes California from setting up its own rules and that there will be a review at midpoint. It seems like the ribbon's tied on this. Why is NADA getting in now?
We've been in for a while. We didn't just jump in. We were very surprised in the summer when they had the press conference in Washington, D.C., and all the manufacturers came together.
That happened very fast.
It was like overnight! Just personally speaking, I'm not sure that the manufacturers really understood what they did.
What do you want to see happen?
What I'd like to see is that the federal government becomes more rational on this issue -- take some time and study it. And do some research, rather than just throw out a number and say we're going to get there by 2025.
Now that's not my only issue.
I'm chairing the long-range planning committee for NADA. One of the topics we're discussing there is the next-generation dealer. What does the next generation want in NADA? And how should NADA look for the next generation?
It seems like we go to these meetings and we don't see any of the younger dealers in these meetings. I'm very concerned about what is the role for the next generation to come into our business. I've put a next-generation dealer on every one of my committees, to try to bring them into the fold.
In many organizations, there are complaints that younger folks aren't as involved as they used to be. Is it worse than it was 15 years ago?
I think it might be a little worse than it was, but NADA is not unique. I sit on some boards in my community, and it seems like it's always a challenge. We look around the room and say, "Gosh, where are the young people?"
But I'm trying to find a way to get these people involved. I had no pushback from anybody I called to ask to serve on a committee. They were asking, "What's the time restraint?" But there was no pushback at all and every one of them said, "Yeah, I'll serve."
Have you had some of those long-range planning meetings?
We've had two. One was this past summer -- just a general meeting to get together.
There are actually three topics that go along with this. One is the next gen. One is the convention. And one is communications.
We've done the first one this past year, in December, which was the convention. What does the convention need to look like in the next five or 10 years? What we do today, is it relevant to the next five or 10 years? How can we attract more people? Are the workshops going to look the same?
We've talked to dealers. We've hired Freeman, which does our convention, to talk to the vendors. We want to talk to the OEMs, to the people who come to the convention, to find out what they like and don't like.
I think in Orlando in 2013, you'll see us implement some of the things that we're going to find from our studies. I'm really looking forward to that.
I've heard that you might even think about moving the date.
In 2016, we're going to be in April -- in Las Vegas.
And we're looking at places to hold the convention. If we change the date of the convention and take it later in the year, we're going to have some more places we can go. The reason we stick with our core cities is weather. We're looking at maybe not weekends, maybe weekends. We're not saying we are [going to make those changes], but ...
We're not blowing it up, but we're sure going to make a dent.
What about communications?
David Westcott, who's the incoming vice chairman, will take over this committee when I become chairman. This is David's call, but the next thing I'd want to tackle is communications. How do we communicate with our members? What's the best way? How do dealers like to be communicated to? Some pick up the phone when they want to do something and some text. We've got that all over the board.
So after CAFE and long-range planning, your next priority is the facilities issue. Where do you stand on that?
I believe a new car should not be sold out of a garage. I believe in a clean, well-maintained, somewhat modern facility. Now, modern can mean a lot. I don't mean like museum modern, but where a customer can come in and feel comfortable purchasing a car. Because really, they're not there for the facility. They're there for the experience.
As long as that experience is what it should be -- a great experience for that customer -- I don't think you see a lot of customers that won't come to a dealership because it's got a certain front on it or it doesn't have a front on it, or whatever that might be.
The key issue for the report is the return on investment.
For many customers, entry to a dealership is through that dealership's Web site. So do you need a wonderful entryway? Or do you need a really good vehicle-delivery area, where the new technology in cars is explained?
I think you're right about the new way that people get to the dealership. First of all, I think you need the best Web site you can produce, because that's really your front door. That's where people are going to come and look at you.
Where they're going to spend the most time is in the service department. Because people like to make sure that their car is running well, there are intervals that the manufacturers have to service those cars. You're going to see the customer back there more than you're going to see the customer up front.
So I really think throughout the whole dealership, you've got to put some money to make sure it's friendly -- not only when you come in the front door, but when you come in the side door to the service department.
The facilities report won't address exactly where to spend the money, but I think smart dealers know exactly where to spend the money. When I built my new store, I built a LEED-certified store and I put as much emphasis on the front door as I did the service door and the parts door.
Which programs upset dealers most?
The ones that bother me are the ones that have an unlevel playing field for a dealer that's here and another dealer across town.
Where this person over here is getting something that that person over there is not, because this person went out and built a new facility.
That person has a great facility but it's five years old and doesn't look or have the feel and the shape of the facility that the particular manufacturers want.
So this guy sold a car to a customer for, say, 20 years now. And all of a sudden, the playing field is not level. The customer thinks he's been getting a great deal from this guy all along, but he goes across town and the car is less expensive over there. What's he going to think about the dealer -- even if he's a friend of the dealer? How does that work? That's what I call the unfair playing field that some of these facilities programs have.
Another issue for some dealers is that they just finished a new facility three years ago in line with what was requested, and now the manufacturer wants something different.
Here's what happens, I think. We've got the new head of the car company, and he comes out and has a facility program, based on his idea of what a facility program is. And he leaves and another guy comes along, and he has another idea of what a facility program should look like.
These are billions of dollars we're messing with. I don't think there's a car company in the world who's going to go out and spend a billion dollars on a plant, that wouldn't have a business plan that told them that they were going to make X amount of dollars by building a new plant.
How can a manufacturer go to a dealer and say, "We need you to spend millions of dollars," and not have a business plan that says we're going to give you X amount of dollars return on your budget?
The study also looks at hotels and restaurants.
Take McDonald's. If they want you to upgrade your facility, they'll pay for it. There's a table or some sort of formula that they come up with. They say, "You're going to increase your business X amount and we're going to help you do that."
And if you don't succeed and don't meet that formula over the years, they don't make you pay the loan back. If you do succeed, you pay the loan back.
Now, could that be done in the car business? I don't think it ever would be, but it could happen.
But it helps to be aware of what other industries that operate under a franchise system do.
Yes. We looked at hotels, also. In the East, you're not going to find Marriotts that look the same way they do in the West. You're not going to find that cookie-cutter look.
I really feel a facility should look the way the community looks. You've got to blend into the community.
McDonald's does that, too.
They do. You don't see a McDonald's looking like every other McDonald's. I think we've got a lot of places we can learn from about facilities.
We're excited to roll it out at the convention. We've had an arm's length away from this. Glenn's gone out and done, I don't know, 70 or 80 interviews, and we've stayed away from that. We'll see what happens.
It's going to be very closely watched.
And some manufacturers are holding off until they see it.
What does NADA do well, and what does it need to do better?
I think what we do very, very well is that we have lots of programs to help our dealers get connected and to be abreast of what's happening in our industry.
I think we do that fantastically with NADA University and through our different programs: 20 groups, Dealer Academy, resource toolbox, the learning hub, with NADA Guides, with our 401(k) program.
I think we do a lot of things that the dealers can use to make their business better. And I think we can improve on those things.
That's what we're about: improving the dealer. Make that dealer more profitable. To make that return on investment so that dealer can survive. Because in the last three years, you know, it's been pretty tough.
We really, at NADA, take to heart helping dealers. We had a program called Lifeline a few years back, when things went to heck in September 2008, where we were helping dealers survive the recession, and we did a really darn good job of that.
And we continue to.