New-Car Dealers Face Both Challenges and Opportunities Ahead

David Westcott — January 2014

COMMENTARY
   David Westcott
Westcott
2013 NADA Chairman

New-car dealers and their nearly 1 million employees across the nation worked hard last year, and we began to see our industry regain momentum. As we closed out 2013 with 15.6 million new-car and light truck sales, we can only hope to ACCELERATE from here.

While other industries struggled within the rebounding economy, ours soared. Auto sales have risen to their highest level since the recession. Last year’s sales increased 8 percent from 2012, and favorable circumstances — available credit, a wide selection of new vehicles and pent-up demand — all helped to bring customers back into our showrooms.

Despite forecasts of new-vehicle sales to surpass more than 16 million units this year, the road back still has many obstacles ahead. The National Automobile Dealers Association is working hard every day to protect and promote our businesses.

We have a major concern with the Consumer Financial Protection Bureau because it appears to be very uninformed on how dealer-assisted financing actually benefits car shoppers. Democrats and Republicans in the House and Senate share this concern, which is why they have called upon the CFPB to allow for greater public participation on this issue.

If the CFPB carefully considers the facts on the ground — as opposed to misinformation circulated by some agenda-driven consumer advocacy groups — it would have a greater appreciation for the fact that the dealer-assisted financing model has been enormously successful in increasing access and reducing the cost of credit for millions of Americans.

Unfortunately, the CFPB has not revealed sufficient information about its statistical methodology for measuring whether disparate impact is present in an indirect auto lender’s portfolio to know how real or speculative its claims are. To this day, we still don’t know, among other things, what factors the CFPB holds constant to isolate a customer’s background as the sole reason for any pricing disparities that may exist among different groups of consumers.

The debate over the franchised dealer network also came to the forefront last year. I’m extremely proud to be a dealer and to help my customers get the vehicles they need and perform service work. The franchise system creates competition, and the primary beneficiary is the customer. That’s why all 50 states have enacted some form of a dealer franchise law.

The franchise system is the gold standard that, without a doubt, makes the U.S. model the most competitive in the world. And that’s because dealers take on what our customers shouldn’t have to — from a complex system of titling and registration, to reams of regulatory paperwork. This is a message we will keep telling to whomever doubts it, and to whoever questions the importance of the franchise system.

We made some headway with our manufacturers last year, too. Last September, we received an invitation to meet with the 14-member board of directors from General Motors Company in Detroit. It marked the first time that NADA has met with an OEM board of directors. As dealers, we work hard every day to establish good relationships with our manufacturers. This meeting was a significant opportunity to open new dialogue and share ideas.

The good news is the economy is recovering and auto sales are helping to lead the way. Our industry and the nearly 1 million dedicated and resilient men and women working at new-car dealerships who helped us get to where we are today deserve a lot of credit.

I had the pleasure of traveling to many different places last year, both internationally and across the U.S. And although the faces changed and dealerships varied, one thing I notice that stayed the same is that our industry has passion.

It was truly an honor to serve all of you this past year.

Have a happy and successful 2014.

Dave Westcott
2013 NADA Chairman