When David Westcott became chairman of the National Automobile Dealers Association a year ago, two-tier pricing and dealership facility guidelines topped his agenda.
Then the Consumer Financial Protection Bureau set its sights on the dealer reserve, the interest rate markup on vehicle loans that dealerships arrange for customers. Westcott and new NADA President Peter Welch had another battle to fight.
"That became priority No. 1," said Westcott, who owns David Westcott Buick-GMC in Burlington, N.C. "The others didn't go away, but that was first and foremost one of our major things we had to work on."
Westcott, 67, spoke with Staff Reporter Amy Wilson.
Q. How do you view your accomplishments?
A. With all the challenges that still exist in the economy, it was a great year for our industry. It was great working with Peter Welch in his first year as president. Certainly we had a lot of issues, CFPB being one of them that we're working on and will continue to work on. One of the other topics we've been working on hard is our dealer data study and trying to protect dealer data that's in their systems.
Where are you with the CFPB?
We continue to talk to them. We continue to talk to Congress and explain that CFPB has given no transparency whatsoever or data on their accusations of disparate impact or discrimination. Members of Congress [are] somewhat amazed there's been no transparency and no indication by the CFPB of what their data is and how they're determining discrimination of protected classes.
[The CFPB is] trying to push toward flat fees, and they have not looked at the consequences for consumers. Is it frustrating? Certainly. All it's going to do is hurt the consumers they're trying to protect.
They recently came out and made one of the lenders sign a consent decree, and that's pretty disturbing. They're trying to change a $783 billion dollar industry that works, and change it based on their policies, not on data.
Where does this issue stand as an ongoing priority of NADA?
Forrest McConnell, the next chairman, has been heavily involved on it this year. I certainly can't speak for him, but it will continue to be the No. 1 issue at this point.
What developed on two-tier pricing and stair steps?
Those are still issues. We meet with manufacturers, and we constantly are talking with them about two-tier pricing. We're not suggesting that money go away. We're just saying be fair and equitable about it.
Where does the facilities issue stand today?
Some of those [programs] have already been concluded. Some manufacturers listened to some of those studies we did and did change them. Others have not. It's still an issue we'll continue to want to talk about, but a lot of manufacturers already made up their minds, and their image programs have already been instituted in some fashion.
Some dealers really did need to improve their facilities, but one size doesn't fit all. It doesn't make sense to have one dealer in a large town spend $4 million and another in a small town have to spend $4 million. The return on investment is just not there. Some you win and some you lose. Like two-tier pricing, you don't know which manufacturer may modify it because of what we've presented to them.
Since you put it that way, how do you think NADA and the dealers came out on that issue? Is this one that you lost?
No, I don't think it's a loss. Some manufacturers were receptive and did change their programs, and some didn't. It wasn't a win or loss. We made some great headway.
Did factory-dealer relations get better during the year?
We visit the manufacturers two to three times a year, present views and try to have a good working relationship with them. One of the highlights is that Peter and I were asked to meet with the GM board of directors, which to our knowledge was the first time dealers have met with the board of directors of any manufacturer. We had a good meeting.
Tesla was a big issue in 2013 with regard to franchise laws and whether they can challenge dealer protections on a federal level. Where does that stand?
Certainly the issue of states' rights was an issue all year long with Tesla. It's a great car. I've had the pleasure of meeting with [Tesla CEO] Elon [Musk] two or three times. He's a very interesting individual who's done a great job.
We're advocating it's up to states themselves to determine who should sell cars and what the rules and regulations are relative to that. Now on a federal level, certainly we would have involvement. He's threatened that. That would be a pretty strong task for anybody to come up with federal legislation to try to override all the franchise laws in the states. I realize he can shoot space rockets around the world, but that one might be a tough one for him to be successful with in D.C.
Have you detected any action on Tesla's part to get any legislation rolling?
No, I'm not familiar with anything at all. He and his staff have said once they get volume large enough, they'll need franchised dealers. So the argument may be pretty short-term.
Did the backlash against Hillary Clinton as a convention speaker surprise you?
No. Certainly, it follows in a tradition we've had for a lot of world leaders. Has she been polarizing? Yes, but I'm excited about it. Take the politics out of it: She's been a tremendous person in all her life, so I'm looking forward to her presentation.
We always have some pushback on speakers. Have we had maybe a little bit more this year? Yeah, but relative to the number of dealers, that number is pretty small. I don't find fault with any of the dealers who have had comments. They have their views, and I can respect that. It never hurts to have another viewpoint on certain things, and she is a very major influential person at this point.
Health care is a big issue. Where are you on the Affordable Care Act?
When it was being debated, we were opposed to it, but it's now the law. It's been somewhat ratified by the Supreme Court, so we have to live with it. The rules have changed a lot. Every dealer has their own insurance consultant or agent, and that's what they rely on. Early on, after it became law, we did some seminars on it, trying to explain what it is. It was difficult because multiple times the rules have changed.
We can't give legal advice. Every dealership is so different.
I've been asked whether any dealer will cut [staffing] numbers below 50 so they don't have to follow certain guidelines. I've heard of some who have done that. But if you're in a growth mode as a dealer and a business, you're not going to impede your growth over that.
Everybody has to make their own decisions. We're competitive. Some dealers may elect to just pay the fine and go forward. Some dealers can't do that. They have to be competitive with their employees.
Our employees, that's our biggest asset. Dealers will do a lot to maintain and keep the good employees they have. In most cases, it's going to cost more money to dealers and to the employee. We'll continue to talk about it. Who knows down the road? But it looks like we're stuck with it in some regard for quite a long time.