Pohanka: Fuel-Economy Standards

Fuel-Economy Standards

John J. Pohanka

In 1975, because of the energy crisis, Congress was bent on finding ways to force car manufacturers to build fuel-efficient vehicles. At that time, most cars got less then 10 miles per gallon. I was president-elect of NADA and happened to be in Frank McCarthy’s office when he received a call from the head of the House Ways and Means Committee seeking guidance from NADA on this very important issue. Frank had gotten to know him and had gained his respect when Frank worked on Capitol Hill. The committee head said that the House Ways and Means Committee was considering either a tax on fuel­inefficient cars or fuel-economy standards, which would have to be met by the auto manufacturers over a period of time. The manufacturers had told the committee that they were opposed to either approach, and the committee wondered if auto dealers wanted to express their opinion.

Bill Hancock, president of NADA, called a meeting of the executive committee to discuss the subject. The committee decided that NADA should not support taxation. NADA had worked for years to get rid of the excise tax on new-vehicle sales, and with the help of Congressman Arthur Summerfield had succeeded. Besides, the manufacturers would just continue with what they were building, and the consumers would have to pay more for fuel-inefficient cars. The fuel-economy problem would not be solved.

We decided to support the fuel-economy standards, which is what Congress enacted. The manufacturers were incensed. The committee was grateful for our input and our willingness to take a stand, even though it was opposed by our manufacturers, all this being done in the public interest. We did not realize it at the time, but I feel that this was an important turning point in the role of NADA and the destiny of its dealers. The timing couldn’t have been better. That year we created DEAC, NADA’s first political action committee, and embarked upon an ambitious program to make NADA the voice of the industry.

At the end of the year, General Motors, out of the blue, announced sweeping changes in the dealer franchise agreement. They were unfair and unwarranted, and could have become models for the industry. But with the help Walt Huizenga of NADA’s legal staff, we got General Motors to remove the most onerous provisions and not to enforce the other ones. But there was more to come.

The Best Association for the Job

Just before my taking of office as NADA president in 1976 at the convention in Las Vegas, I received a phone call from Pete Estes, president of General Motors. Tom Murphy, chairman of the board of General Motors was to give the keynote address at the convention, to be followed by my address to the dealers. I had developed a good relationship with Pete over the years, but I had never met Tom Murphy. I had heard rumors that Estes and Murphy were often not on the same page and kept their distance from each other. Estes wanted me to know in advance what Murphy was going to say. Apparently Murphy was going to say something that Estes felt that I should know about in advance so as not to be blindsided. Estes sent me a copy of Murphy’s speech, and in it I found the statement “Your association has invited government intervention in our business.” I felt this remark to be unfair and untrue and that I should respond to it in my speech at the convention. I rewrote my speech, calling attention to the fact that auto manufacturers wanted the government to leave them alone and let the market decide things, but Congress wanted answers and I felt that the industry should work with government to find solutions that would be mutually acceptable. I said that “auto manufacturers must recognize the undeniable fact they must rely upon their dealers and the dealer's organization, NADA, to carry the industry’s message to government. Only NADA and its dealers have the clout, credibility and ability to do the job.”

Of course, that is what happened, and over the years the personal relationships established by NADA through its dealers and staff have enabled NADA to protect dealers and their customers. These relationships are not talked about or trumpeted, but they are vital to our success.

Jack Pohanka served as president of the National Automobile Dealers Association (NADA) in 1976. He was a founder and chairman of the National Institute for Service Excellence (ASE), which tests and certifies auto technicians nationally. He also founded and was the first chairman of the National Automobile Technicians Education Foundation, which evaluates and certifies automotive curricula in the country's vocational schools.