Stephen Wade had some notable accomplishments during his year as chairman of the National Automobile Dealers Association, but he admits there is more work to do.
A study examining automakers' dealership facility requirements was commissioned on his watch. He also oversaw NADA's effort to raise public awareness about the cost implications of a proposal to hike corporate average fuel economy standards to 54.5 mpg by the 2025 model year.
But the industry, he said, is undergoing tremendous change as dealers and manufacturers rebound from the recession. The Internet is revolutionizing the way customers shop for vehicles, used cars are hard to come by and dealers now sell more cars, Wade said.
Wade, 69, who has domestic and import-brand franchises at dealerships in Utah and California, spoke with Staff Reporter Christina Rogers about his term and the industry's outlook moving forward.
Q: Last year was a strong sales year for the industry. How would you summarize your term?
A: It was a strong year, but it was a year of recovery. We started the year with a sense of optimism, despite the economic uncertainties. Dealers showed their grit, their resilience and we ended on a high note: 12.8 million in sales. I'm pleased on how it turned out with all the calamities -- an earthquake, tsunami and everything that took place.
When we talk about progress, for me, the thing I'm most pleased about is the facility study that we commissioned. That would be the highlight of my accomplishments at NADA. We wanted an objective study that was based on fact, not emotions or opinions. I believe that's what we have. It's clear to everyone that we were seeking a common-sense solution with that study.
We traveled prior to the convention and visited with major OEMs. They were very receptive to it. I'm hoping this study restores civility between the dealers and the manufacturers, and we come together on this issue that has been contentious.
I traveled the United States this year, visiting with all types of dealer groups. It didn't matter the location, the dealership size or the brand. This was the No. 1 topic that came up. There was wide frustration over facility image programs.
Why is dealers' frustration hitting a high point now?
There has been more pressure on them compared to several years ago. In all fairness to the OEMs, there is reason for that. Some of them sat for a long time without requiring things. You've got a lot of facilities that aren't where they should be. The question or concern is: Does one size fit all? Should a franchise or facility in Alaska be identical to the one in the bayou or in Maine? What is best? And what is practical? We're trying to get our arms around that.
Where else did you make progress?
We worked on a number of issues. We did a good job raising the public's awareness on why the consumer is important in the debate over fuel economy standards. Some have typified us as being against the 54.5 mpg improvements by 2025. That is not the case. I love the sound of that. I mean 60 mpg, even 70 or 80 sounds better to me. We'd like those kinds of things, but I think we were left with asking the tough questions about the proposal. We're not opposing that proposal. But the federal government, we don't think, has provided satisfactory answers.
What's left for the incoming chairman to do?
He's got his hands full. There is so much change going on. We've been involved in aggressive, long-term planning exercises. He's focusing on the NADA convention of the future ... how it will attract and develop the next generation of dealers. Fuel economy will remain a hot issue this coming year. We need to stay on the Federal Trade Commission's action as it relates to dealer financing. We're not against change. We just want to make sure the initiatives are based on sound policy decisions, so he'll continue to monitor the Consumer Financial Protection Bureau. That was a real stress last year.
Weren't dealers exempt from the FTC's new regulations?
Yes they were. But the banks we deal with were not. They came back and tried to tie our hands even more, even though we were exempt. We won some of the battles, but I don't know if we've won the war.
As the industry has been transformed in recent years, how has NADA's membership changed?
The past 10 consecutive years we've had more than 90 percent of the country's dealers as members of NADA. That's both domestic and international. Through all the turmoil, the upheavals, the recession, automaker bankruptcies, dealership closures, more than 90 percent of the nation's dealers have stayed with or rejoined NADA. I think that's remarkable.
But we still have to worry about the mix here -- big and small. We do have a good mix across the country of rural and suburban dealers. We're trying to get more megadealers and public companies involved. Then, there is this emphasis on the next generation dealers.
We had a free fall for a while there. We were losing thousands of dealers. We lost maybe 400 over the last year. We think the bloodletting has stopped, but now it's about stabilizing ourselves, streamlining, bringing our dealer groups together and trying to keep ourselves at the 90 percent level or better.
What have dealers said about how the business is changing?
We're requiring less and less brick and mortar. There is more emphasis on different areas. We're at a point in time when we don't have enough used cars. We're working with tax issues -- state tax, payroll tax, LIFO. Look at how we've shifted from trucks to cars. We were once building big, big facilities with room for big trucks. The average dealer now is selling mostly cars. And our service departments seem to be getting smaller. My service business doesn't appear to be growing. We don't get the warranty work we used to get. There are a lot of changes moving forward.
NADA has cut staff. How many people work for NADA now and is the association hiring?
The approximate number now is 320. It's fluid. But yes, we are hiring. As things get back to normal, we'll get back to normal and we'll be able to do some of the things that we've had to set aside. We've been so focused on trying to get from point A to B. Our numbers were dissolving by the thousands and we didn't know where we were going. Through all the strife and turmoil, it's just so gratifying to see things change, so we can get to where we want to be. I guess the question is: What is the new normal? But we're optimistic and we think we're headed in the right direction.