Regs & Recessions: 1968-1992

NADA logoBy Joan Mooney

1968 was a turning point for the nation and in some ways for NADA as well. Frank McCarthy began what would be a 25-year-plus stint as executive vice-president. NADA started its 20 Group program, under the name Performance Analysis Groups, as a test with two groups of 10 dealerships each. NADA's Retirement Trust, NADART, had grown to serve 2,000 dealers and 30,000 employees. Attendance at the Las Vegas convention reached an alltime high of 12,500.

Sometimes NADA's office was a little too much in the thick of things. During the 1968 riots the day Martin Luther King, Jr., was assassinated, employees could see smoke from fires on 14th Street and looters running. The office closed early, but because traffic was jammed, some employees didn't get home until midnight. But no NADA employees were hurt or property damaged.

NADA spent a good deal of time in the late 1960s and 1970s testifying before Congress or federal agencies about various proposals; then, if the proposals became law, NADA staff would work to explain the new laws and regulations to dealers. The TruthinLending law of 1968, designed to inform consumers about the cost of credit, needed a lot of explanation. NADA staff worked so hard that they got two weeks' Christmas bonus.

1970s: a change in public perception

With the increase in imports, trade became an auto issue in Congress and elsewhere. In 1970, the American International Automobile Dealers Association was founded, and from that point on, many people thought NADA represented only domestics. That was never the case. In fact, NADA went on record in 1970 opposing a trade bill that would have imposed quotas if imports reached a certain percent of the market (sound familiar?).

But the 1970 Clean Air Act and the energy crisis had the greatest effects on car sales. By 1974, sales of midsized cars were so poor that NADA ran ads to promote them. NADA supported voluntary energy conservation measures, rather than mandatory ones such as gas taxes and rationing. Nonetheless, CAFE (corporate average fuel economy) standards were set in 1977, and a gasguzzler tax was passed the next year.

In 1978, NADA launched a national campaign to build public support for the auto and counter efforts to restrict auto use. Financed by NADA members and the Big Three, the campaign gave its first annual Freedom of Mobility award to Barry BruceBiggs, author of The War Against the Automobile. In 1979, the Automobility Campaign initiated "You Can If You Plan," an advertising campaign telling consumers there was enough gas to do what they wanted if they planned ahead.

NADA fought the proposal for a Cabinetlevel consumer agency for years, arguing that such responsibilities were already covered by existing government agencies. NADA had some consumer programs of its own: AUTOCAP (Automotive Consumer Action Panels) began as seven pilot programs at the state and local levels in 1973, set up in conjunction with the White House Consumer Affairs Office. The panels of dealers and consumers were set up to mediate consumer complaints against new-car and new-truck dealers.

NADA blazes trails in the 1970s

NADA sought to improve dealership image with the NADA Blazer Program in 1972. Many automakers were encouraging dealers to buy blazers for their employees. Through NADA, dealers could buy hopsack blazers for $26 or doubleknit polyester for $30.

From 1972 to 1975, NADA had a Monterey, Calif., office to help members in the western United States who felt handicapped by the time difference. The three staff members who moved there from Washington also were directed to increase membership and Guide sales in the region. The office closed in 1975 for financial reasons.

By 1975, NADA was starting to outgrow its building. Relocating downtown or renovating was too expensive. The search committee chose the current location in McLean, Va., partly because it is close to the Capital Beltway and the city's two airports. The area was still undeveloped—so much so that soon after the building was built and the staff moved in, a confused deer wandered inside.

Several NADA divisions were added in the 1970s. The American Truck Dealers Division (1970) expanded services to heavy and mediumduty truck dealers. A separate legal department (1971) tracked franchise agreements until the Industry Relations department (mid-1970s) was formed to work with automakers; the legal department then devoted itself to other issues, such as coverage of federal and state regulations. NADA's Legal Defense Fund (1975) provided financial assistance and counsel to individual members involved in actions that could affect all dealers. The Continuing Education division (1978) published management guides for dealers and was renamed Management Education in 1983.

The Dealers Election Action Committee, DEAC (1975), started when William Hancock was NADA president. Explaining the need for the PAC, Hancock spoke about government responses to the energy crisis that would restrict car use. In 1976, the group's first full year, dealers contributed more than $1 million. NADA's legislative staff worked out of a small office on Capitol Hill, above a bar, the Gandy Dancer. When the staff needed a bigger (and classier) location in 1979, NADA bought a new building on First Street, S.E.

1980s: emergency measures, Project 2000

But despite NADA's growth and efforts to help members, by 1979 dealers were in real trouble; a net 600 dealerships closed that year. NADA urged President Carter to decontrol oil prices and sought emergency measures from automakers, such as 30day floorplan assistance and cash incentives to dealers for slowmoving models, to help with cash flow problems caused by bloated inventories and soaring interest rates. In 1980, NADA asked President Carter to take action to stimulate and new-truck sales. Responding to NADA proposals, Carter increased the Small Business Administration loan guarantee fund for car and truck dealers so 95 percent of dealers were eligible. In the second half of 1980, dealers received loans totaling more than $300 million.

In 1981, the NADA Services Corp. was formed as a forprofit separate entity from NADA, which remains nonprofit. Because of this structure, NADA has not raised its dues in more than 10 years and does not plan to raise them in the foreseeable future.

Twentyfive years ago, the convention consisted of a couple of bigname speakers at the opening and closing sessions and a few workshops. Today, the convention is so large that only a few cities have sufficient facilities. Of course, there were mishaps along the way. When the convention was in New Orleans in 1977, a hotel converted to condominiums and never told NADA. Somehow, staff found 300 rooms around the city at the last minute. In 1986, then-Vice-President George Bush was scheduled to speak on Saturday—until the space shuttle exploded; he spoke on Monday instead.

At that same 1986 NADA convention, incoming president Jim Woulfe announced Project 2000, a blueribbon panel to study the future of the franchise system. At its first meeting, the task force—consisting of 11 dealers, one representative of the Automotive Trade Association Executives, and two top NADA staff members—looked at issues such as franchise agreements, customer satisfaction, employee training and retention, dealermanufacturer communication, and computers. The Project 2000 committee continues to meet and issue reports on current trends and future recommendations.

Still loving cars

What do the next 75 years—or even the next 25—hold for NADA? Executive Vice-President McCarthy sees increased emphasis on service and parts than in the past, since more of dealers' profit comes from those departments. Industry relations will become more important as dealers and manufacturers start to have a more cooperative relationship.

1992 NADA president Dick Strauss agrees. "I think you're going to see a closer relationship [with manufacturers]," he says. "It's beginning to happen. . . .It can be improved if you bring dealers in on the strategic planning. If the Saturn experiment turns out to be a good one for the manufacturer and the dealers, all manufacturers could take a look at that."

And government relations is always an important area. "We've made progress, but there's much more progress to be made," McCarthy says, "getting a foothold when they're considering something, making sure we're consulted early in the process, before something's written....

"And we can do it; we've increased our credibility. We have several dealer members who know their House members well. That's very powerful."

Looking back over his 25 years as head of NADA, McCarthy sees one thing that hasn't changed. "We've been through some challenges," he says, "two oil embargoes, a recession....But people's love of the car—that's the strongest thing."

Originally published in NADA's AutoExec magazine, May 1992.