he traditional automotive franchise system was supposed to have run out of gas by now, replaced with online sales to faceless consumers who never set foot in a bricks-and-mortar store. And supposedly "dinosaur" dealers were to have taken themselves out of the picture. Instead, dealers are entering a new era of auto retailing in a better position than ever. "True, the Internet has changed much of the process, but as long as people need cars, they’ll need dealers to sell and service them," says NADA chairman Bob Maguire. And as long as dealers are around, NADA—with a new president in place—will be there to support them.
A CAPITOL ASSOCIATION
From the start, NADA has focused on dealer interests in Washington. Begun in 1917 with $102.71 to cover phone calls, the fledgling association took as its first task persuading the feds not to slap a 5 percent "luxury" tax on a product that had rapidly become key to the nation’s economy. Ironically, fighting government attempts to tax cars as "luxury" items proved one of many perennial issues for NADA.
Over the next four decades, NADA also kept prodding Congress to address inequities between automakers and dealers, such as "phantom freight" charges. With the help of Capitol Hill allies, NADA got the Dealer’s Day in Court law passed in 1956, allowing dealers to sue automakers for unfair and coercive practices.
More recent legislative battles have included rescuing dealers from the costly morass of Superfund regulations and, in general, ensuring that new laws and regs—like the recently rescinded ergonomics rule—don’t unduly burden dealerships. Last month, for example, NADA celebrated a hard-fought victory when Congress passed a tax measure that phases out the estate tax.
With the symbiotic nature of dealer-automaker relations—and the inherent imbalance of power—this arena has always demanded much of NADA’s time and resources. From fighting for dealer councils in the 1930s to recent battles to protect state franchise laws, NADA has tried to level the often-bumpy playing field between small, independent businesses and large, multinational corporations.
For instance, when automakers tried to include mandatory binding arbitration in franchise agreements, NADA championed legislation banning such clauses. And two years ago GM abandoned its plan to sell cars directly through its GM Retail Holdings program after NADA expressed dealers’ concerns. Similarly, after NADA voiced dealers’ criticisms, Ford modified its controversial Blue Oval program, making it less onerous for dealers.
But NADA also uses another approach to communicate concerns to automakers—its 17-year-old dealer attitude survey. This automaker "report card" has become key in identifying problem areas in the dealer-factory relationship and in influencing policies.
THE NUTS AND BOLTS
Still, beyond all the politics, it’s the everyday business of selling and servicing cars that’s most important to the average dealer. NADA in 1979 started the Dealer Candidate Academy to provide professional training for tomorrow’s dealers.
More recently—in 1998—NADA helped form Automotive Retailing Today (A.R.T.). This coalition of retailers and manufacturers seeks to improve public perception of the industry, and has commissioned opinion polls from Gallup.
The service lane, too, has evolved over the past 20 years from an auxiliary department to a prime source of dealership profits. When new-vehicle sales dried up during the early 1990s recession, the back shop stepped forward to fill the void and, for the first time, earned more than new-vehicle sales.
The aging of the national fleet and greater need for service revealed a shortage of skilled techs who could repair increasingly computerized vehicles. NADA responded by becoming a partner in Automotive Youth Educational Systems (AYES)—founded by GM chairman Jack Smith in 1995 with late NADA president Frank E. McCarthy as a key board member—to recruit and train high school students.
THE CYBERSAVVY SURVIVE
The fact that real-world dealerships continue to coexist with cyberlots shows how necessary the franchise system is to auto retailing. Dot-com upstarts hyped the ability to build and sell cars electronically without any dealership contact—but consumers responded with a yawn. Now, after a few short years, most dealers have their own Web sites and are advertising their new and used inventory, selling parts, even scheduling service online.
This change has been aided by NADA. The association has been at the forefront of helping dealers embrace new technologies. A central part of that effort has been the launch of the DriversSeat.com Web portal, where dealers can advertise their inventory on the nation’s largest new- and used-vehicle site.
In just 10 years, auto retailing has witnessed, among other things, the onset of the Internet Age and the development of technologies aimed at replacing the internal combustion engine.
Industry analysts underestimated the dealers’ ability to adapt to these changes. As long as dealers continue to respond to the changing needs of consumers, dealers and their association will remain in the vanguard of automotive retailing.
Mary Anne Shreve is a former senior editor of AutoExec.
(This feature appeared in NADA's AutoExec magazine, July 2001.)
The NADA Story
NADA has a rich and exciting history. The following articles appeared in NADA's AutoExec magazine to commemorate the association's 75th anniversary in 1992: