Phillip D. Brady

Phillip D. Brady 

NADA President, 2001-2012


A Transformative Decade for the Country, the Industry and NADA

Phil Brady
Brady
F

rom 2001-2012, I had the honor of serving as president of NADA. My predecessor was the legendary Frank McCarthy, who served an unprecedented 33 years and built NADA into a truly full-service trade association dedicated to promoting and protecting the franchise system. A few months after Frank’s too-early passing in 2001, the NADA headquarters in Tysons, Va., was very appropriately named the Frank E. McCarthy Building.

The next day was September 11.

It tragically brought home the truth of a s tatement by former British Prime Minister Harold Macmillian, who when asked what would characterize his administration, replied: “Events, dear boy, events.” 

 

NADA was hosting its annual Washington Conference on that date some two blocks from the White House when the attacks occurred. As the nation grappled with the horror of the attacks, NADA responded by establishing a Survivors Relief Fund through NADA’s Charitable Foundation (NADCF). Dealers from across the country contributed more than $1.6 million to this scholarship and assistance program for families of 9/11 victims.

 

A much more prosaic, but difficult, challenge also arose for NADA when I received a call from NFL Commissioner Paul Tagliabue. The league had canceled all its games for the weekend following 9/11 but was intent on playing a full schedule. That meant changing the date of the 2002 Super Bowl in New Orleans to the following weekend, which would conflict with the NADA convention. Swapping the dates wouldn’t be easy: The exposition was sold out, and almost 10,000 attendees had registered, many with airline tickets already in hand.  

 

NADA Works with the NFL

To avoid relocating the Super Bowl, there was a strong push for the “weekend swap” by city, state and federal officials. This included a meeting with Sen. John Breaux (D-La.), whose office was chock-full of memorabilia from NFL teams. Despite my mentioning tongue-in-cheek that there didn’t seem to be a model car anywhere, our discussions were very productive. (And, yes, the senator did receive an appropriate auto-industry memento the next day.)

 

As for the growing media interest, it was best summed up by a Times Picayune headline: “Make Way or Pay, Phil.” 

 

Ultimately, our negotiations with the NFL resulted in an agreement being reached to make the switch in recognition of the extraordinary times and the desire we all had to come together as a nation. That desire was well-reflected in the flexibility of the hotels, the airlines, the exhibitors, the guest speakers and, most importantly, the dealer community to make it work. The NFL, for its part, compensated NADA for the costs to make the switch, provided incentives for dealers to attend the rescheduled convention and—during an NFL halftime show—presented a $500,000 check to the NADCF Founder and Chairman Bob Mallon for the Survivors Relief Fund. The convention itself was a success and great credit is due to the leadership of 2001 NADA Chairman Bob Maguire in making it so.  

 

The first decade of the 21stcentury also saw the full-blown advent of the internet. The significance of that “event” was well summarized by an editorial from Automotive News publisher Keith Crain entitled, “Doom Looms for Traditional Dealers.”  NADA sought to assist dealers in meeting the challenges of the internet age by partnering with digital experts, distributing a “web essentials” package to dealers and pursuing many other online initiatives. (By 2008, some 97% of dealers had fully interactive websites, up from just 47% in 1997.)

 

On the legislative front, the beginning of the decade also saw the culmination of a multi-year effort by NADA and the Automotive Trade Association Executives (ATAEs) to protect state dealer franchise laws, which were under attack from mandatory binding arbitration clauses increasingly being included in manufacturer contracts. But thanks to a strong grassroots efforts from dealers and the ATAEs, the “Voluntary Arbitration Act”—which precludes the manufacturers’ use of binding arbitration clauses in disputes to void dealer rights granted under state franchise laws—was enacted in 2002. 

 

Code of Ethics

That year’s NADA Chairman Carter Myers also had as a priority initiative the revising and strengthening of NADA’s Code of Ethics. The revised code was distributed, poster-size, to all NADA members for prominent display to remind dealers, their employees, and to advise customers of the dealership’s commitment to the highest standards of ethical conduct.

 

In 2003 NADA sought to bring focus to an internal dealer issue, fostering diversity within the dealer community at all levels.  An “NADA Ad Hoc Committee on Diversity” was created and that year’s Chairman, Alan Starling, hosted a first-ever Diversity Forum attended by senior manufacturer executives and dealers to explore how NADA (dealers) and automakers could best advance minority dealers and women dealers and dealership managers. A management guide “Diversity as a Business Imperative” was developed and distributed to all members and NADA’s Dealer Academy, 20 Groups and Management Education were all enlisted in the priority initiative working closely with the National Association of Minority Automobile Dealers (NAMAD) and the manufacturers.

 

Dealer Financing

2004 found dealer financing very much in the spotlight fueled by “hidden camera” reports on “60 Minutes” and “Dateline.”  NADA 2004 Chairman Charley Smith responded by seeking to make consumer trust through greater transparency in that important source of consumer financing a hallmark of his tenure.  In coordination with the American Financial Services Association (AFSA) and the Federal Trade Commission (FTC), NADA developed a brochure for dealers to provide to consumers “Understanding Vehicle Financing” and produced a training video “F&I:  Absolute Integrity… 100% of the Time” to help dealers meet the highest business standards.  A Consumer Guide to vehicle financing was also included in a 24 page Time Magazine insert to help educate Times’ readers about the financing process.

 

Returning to the more traditional understanding of “event,” on August 29, 2005, Hurricane Katrina devastated the Gulf Coast and put NADA’s charitable efforts back front and center. Some 4,000 dealership employees were affected, and NADA Chairman Jack Kain led the response effort—raising more than $4 million to help employees rebuild their lives. Just a few weeks following the hurricane, we traveled together to storm-ravaged areas to personally deliver relief checks. One recipient put it well in terms of the devastation we witnessed observing “all the cars are in the water and all the boats are on the land.”  But as Jack Kain wrote following our trip, “We saw firsthand not only the devastation, but also the strong resolve of dealers and their employees to get back to work in just a matter of days. It was truly inspiring.” 

 

The impact of Hurricane Katrina continued well into 2006 for NADA as it required moving the American Truck Dealers’ (ATD) 35th annual Convention to Atlanta from New Orleans. NADA Chairman William Bradshaw led the successful relocation effort along with ATD Chairman Jerry Turnauer. That year, Chairman Bradshaw also oversaw NADA’s celebration of the 100th anniversary of the automotive franchise system. A DVD tracing the history “The First Century: 100 Years of America’s Auto Dealers” was created for presentations to schools, business groups and for dealer showrooms and service lounges. 

 

Another 2006 highlight was Vice President Dick Cheney keynoting NADA’s 31st annual Washington Legislative Conference. In addition to serious reflections on national security, he was expansive in praising the dealer community for their economic contributions to the nation and for their charitable giving particularly citing their efforts following 9/11 and Hurricane Katrina. On a lighter note, he began his remarks by observing that his office was only a couple of blocks from the Capitol Hilton conference location, but in honor of the nation’s car dealers “he drove over”….

 

By 2007, energy issues were in the spotlight. NADA was actively involved in the legislative debate over raising CAFE standards, particularly worked to ensure separate standards for cars and trucks were maintained. That year’s chairman, Dale Willey, also made energy stewardship generally a priority for dealers and their customers. NADA partnered with the Environmental Protection Agency (EPA) on an Energy Star guide, toolkit and recognition program for dealers. NADA also created a green campaign, showcasing eco-friendly dealerships and helping dealers promote fuel-efficient driving through distribution of a brochure, “It’s Easy to be Green.”

 

World Economic Troubles

The “event” in 2008 was the global economic meltdown symbolized by the almost 800-point drop in the stock market on September 29. The accompanying credit crisis hit dealers particularly hard. As Annette Sykora—2008 NADA Chairman and the first woman to lead the association—put it, “Credit is the lifeblood of a dealership, and the events on Wall Street have hit hard on Main Street.” NADA’s response under her leadership was to aggressively petition the administration and the Congress for a broad economic stimulus package for automobile retailing. She also testified before Congress with the Big Three CEOs to support automaker “bridge loans” and to highlight the critical role dealers would play in boosting the economy with vehicle sales comprising 20 percent of all U.S. retail sales. NADA sponsored grassroots fly-Ins to hammer home the point, and in December, President George W. Bush announced a $17.4 billion program to stave off Chrysler and GM bankruptcies.

 

In 2009, John McEleney assumed the still very hot seat of NADA chairman at the convention in New Orleans—the first since Hurricane Katrina. Appropriately, the keynote speakers were presidents George H.W. Bush and Bill Clinton, who had established a Bush-Clinton Relief Fund following Katrina. Both men hailed dealers for their efforts to help the city and encouraged dealers to persevere during the economic crisis. This meshed well with a new convention workshop that said it all: “Tough Times, Tougher Dealers.”

 

Following the convention, John McEleney launched his term by establishing an “NADA Industry Stabilization Task Force” made up of dealers and ATAEs. The Task Force redoubled NADA’s efforts to emphasize the retailing industry’s critical role in the U.S. economy and the need for the Administration and the Congress to act. Those efforts included meetings with the Federal Reserve Board, the Treasury Department, the SBA and with Congressional representatives. Task Force members also met numerous times with President Obama’s own “Automotive Task Force” which early in 2009 oversaw the “structured” bankruptcies of Chrysler and GM and mandated that those manufacturers significantly reduce their dealer network. The primary message in those latter meetings was “dealers equal revenue, not costs.”  In congressional testimony and countless media interviews John McEleney repeated that message asking the question how the reductions of dealers, as independent entrepreneurs and the purchasers of the manufacturer’s products, could possibly make the manufacturers more viable.  

 

'Cash for Clunkers'

NADA also successfully championed a national “Cash for Clunkers” program, which initially received $1 billion for rebates. That funding was gone in almost the first week. NADA and the ATAEs then coordinated in a grassroots campaign to that resulted in another $2 billion being added to the rebate pool. The result: More than 700,000 cleaner, more fuel-efficient cars were put on the road—a win for the economy, the environment and the industry.

 

Also on the legislative front, in June of 2009 NADA endorsed the “Automobile Dealer Economic Rights Restoration Act,” originally sponsored by The Committee to Restore Dealer Rights, an ad hoc group of GM and Chrysler dealers who faced termination of their franchise agreements as part of the GM and Chrysler bankruptcies. That legislation was the subject of many, many Capitol Hill meetings with NADA, the Committee, ATAE’s, NAMAD, GM and Chrysler representatives and the legislation’s congressional sponsors. A compromise version of the legislation was passed at the end of the year providing for enhanced arbitration rights for dealers targeted for termination and, if the termination was allowed to proceed, significantly improved transition terms. 

 

2010 ended the decade with another challenge for dealers as further fallout from the previous year’s Wall Street crash. As part of the “Dodd Frank” Wall Street reform bill, a new Consumer Financial Protection Bureau (CFPB) was to be established with jurisdiction to regulate any business arranging credit. The substantial concern was that such regulation would duplicate the FTC’s regulatory authority, andthreaten the continued availability of dealer-assisted financing adversely impacting dealers and consumers alike. Under the very active leadership of then Chairman Ed Tonkin, that direct threat was eliminated when the Dodd Frank legislation, as ultimately passed, excluded dealers from the CFPB’s jurisdiction. That despite the President, through a personal White House statement, and virtually all the congressional leadership actively opposed NADA efforts to provide for the exclusion. The almost unprecedented grassroots campaign organized by NADA working with the ATEA community included two dealer fly-Ins to Washington, extensive personal contacts with members in their Districts and intensive negotiations during House and Senate consideration of the legislation. All in all, it was once again a testament to the exceptional grassroots strength of the dealer community. One Washington insider put it well: “You tell me what side the dealers are on, and I’ll tell you who wins a legislative fight”.

 

Dealer Closures

The decade included many more “events” than detailed here, including the phasing out of some iconic brands. 2011 and 2012 had their own “events” and those years NADA Chairmen Stephen Wade and Bill Underriner very well managed NADA’s response. And notably 2012 ended with NADA celebrating its 11th consecutive year at over 90% membership participation. Many dealer-manufacturer issues arose throughout the years, and NADA’s aspirational goal with respect to responding to those issues can perhaps best be summed up by a statement then-Toyota Vice President Jim Press made in his 2002 NADA Convention address: “Manufacturers need to focus on what they do best, manufacturing world-class cars and trucks and dealers need to focus on what they do best, providing world-class sales and service experiences for their customers.”

 

The constant themes throughout the decade, and before and since, are that dealers are the best entrepreneurs in the world and are committed to giving back to their communities and their country.  NADA, through its exceptionally committed staff and dealer leadership, has sought to assist and advance those themes in every way possible for now 100 years.