1980s: Emergency measures

1980s: Emergency measures


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1980-1989 Timeline of Events (click to enlarge)

By 1979, with sky-high interest rates and double-digit inflation, car dealers were in real trouble. NADA urged President Carter to decontrol oil prices and sought emergency measures from automakers, such as 30-day floorplan assistance and cash incentives to dealers for slow-moving models to help with cash flow problems caused by bloated inventories.

 

In 1980, NADA asked Carter to take action to stimulate new-car and -truck sales. Responding to NADA proposals, Carter increased the Small Business Administration loan guarantee fund for car and truck dealers so that 95 percent of dealers were eligible.

 

In 1984, NADA conducted its first dealer attitude survey, where dealers rated automakers on such criteria as OEM interaction and policies. The semiannual surveys soon grew in influence, from a curiosity to automaker CEOs meeting directly with dealers and NADA to discuss the results.

 

Regulatory headaches

After one of the most convoluted rulemaking odysseys in modern history, the Federal Trade Commission (FTC) issued a rule requiring dealers to post a sticker on used cars telling customers whether the car came “as is” or with a warranty, along with other information. The first federal version was proposed in 1976, and NADA fought mandated inspections and warranties for five years as “nebulous, ambiguous, and unworkable.” After NADA sued the FTC, a toned-down version of the rule was issued in 1984, without the provisions for mandated inspection and disclosure of condition of more than 50 components and a history of who previously owned the car and how it was used.

 

At the 1986 NADA convention, incoming president Jim Woulfe announced Project 2000, a blue-ribbon panel to study the future of the franchise system. The task force received input from dealers, ATAEs and others to look at franchise agreements, customer satisfaction, employee training and retention, dealer-manufacturer communications, computer technology and data. The Project 2000 committee issued various reports on industry trends to help dealers plan for the future.

 

For the most part, the 1980s saw dealers caught up in the problems facing a wide range of businesses brought about by concern over the disposal and cleanup of hazardous waste, disposition of leaking underground storage tanks, money-laundering rules that required reporting of cash transactions greater than $10,000, and never-­ending tax battles. But most of the Washington activity directed at dealers revolved around defining regulations.