Dealer Ops

The Voice of Franchise Dealers NADA Keeps Expanding Services

It’s doubtful that the 30 men who converged on Washington, D.C. in 1917 realized what they were founding. They were in the capital to represent nearly 15,000 automobile dealerships that had popped up in the early 20th century. Their primary goal: Convince lawmakers that automobiles weren’t just for the rich.

World War I had begun and the government had proposed a luxury tax on vehicles rather than items like yachts and other high end luxury items. The men, determined to help the newly emerging industry continue to thrive, recognized the potential danger in this tax. They won that battle and in the process, started an organization that would thrive and become one of the industry leaders.

Over the next 89 years the group would develop into an organization that would represent more than 20,000 new car and truck dealers, both domestic and international, with more than 43,000 separate franchises. 

Goal Accomplished.

2006 National Automobile Dealers Association (NADA) Chairman William Bradshaw, who is also the president of Bradshaw Automotive Group in Greer, S.C., stressed that these men understood that dealers needed ongoing representation in Washington. That fact would be proved over the years as NADA had a hand in laws and issues that would deeply affect dealers.  “Today, the association is universally viewed as the voice of new car and truck dealerships,” Vice President Dick Cheney remarked at the NADA 2006 Legislative Conference on the effect the industry has had on the nation.

“In the hundred years since the first automobile franchises opened, the dealership industry has become one of the powerhouses of the American economy – generating some 20 percent of all retail sales in the country,” Cheney said.
   
Early on, manufacturers knew that the automobile would revolutionize the nation but were unable to establish an effective way of selling the vehicles. Resorting to selling from catalogs or traveling salesman, they eventually stumbled into the franchise system. Dealers would often sell the vehicles in any way possible, including out of their front parlors.

Most of the first dealerships were originally peddling bicycles or making wagons when they recognized the potential for the new invention, the automobile. In the early years of the industry there were hundreds of individual companies struggling to produce cars that had originated in Europe. The first large-scale, production line manufacturing of affordable automobiles was debuted by Ransom Eli Olds at his Oldsmobile factory in 1902. Henry Ford greatly improved the assembly line production of vehicles and implemented it in 1913, enabling vehicles to be sold to individuals across the nation and eventually the world.

Dealers were completely at the mercy of manufacturers. The manufacturer was allowed to break contracts with dealers at any time and regulated everything from advertising to accounting methods. Dealers recognized that they needed to bind together to keep the automakers from getting too powerful. Soon after NADA was formed, dealers would face one of the most trying times of the century, the Great Depression. Over one-third of all dealers failed during the national crisis, and those left standing struggled along until President Roosevelt’s National Industrial Recovery Act of 1934. It authorized the president to regulate businesses in the interests of promoting "fair" competition, supporting prices and wages, creating jobs for unemployed workers, and stimulating the United States economy to recover from the depression.

After the depression, NADA focused on keeping the dirt cheap used vehicle market under control. They developed the NADA Official Used Car Guide to counteract the devaluation that had occurred because of poor new car sales, factory overproduction and dealers’ trade-ins. Today, this is one of the NADA’s most recognized products.

Over the years, the industry has faced obstacles beyond depressions, recessions and wars. During the late 1930s, the FTC focused on the industry as a possible monopoly because of the automakers tendency to flood dealers with cars, as well as jerking their independent territories and saturating the market with small dealerships that would sell multiple brands in one location. Unfortunately, the investigation led to little action and the problems lingered for decades.

Legislation would quickly become one of the organizations biggest priorities. After reducing the luxury tax that originally sent them to D.C., they continued by promoting the 1919 National Motor Vehicle Theft Law, which made it illegal to steal vehicles and take them across state lines. They played an integral part in developing legislation that helped reduce the ability of manufacturer’s right to arbitrarily terminate franchises.

NADA has several issues that they are focusing on this year in the legislative realm. “We’re addressing a number of key legislative issues impacting dealers.  Two of the most important are vehicle total-loss disclosure and estate tax reform,” Bradshaw said. The total-loss disclosure issue focuses on protecting consumers from buying rebuilt, wrecked or stolen vehicles. Bradshaw said that Hurricane Katrina produced a growing concern of flood vehicles re-emerging in the market. NADA has called on insurance companies and state titling agencies to provide VIN based data. Bradshaw said that strides have been made in that arena.

“The National Insurance Crime Bureau now has an online database searchable by VIN number to help consumers learn if their vehicle has been damaged,” Bradshaw said.  

As for the estate tax, or “death” tax, NADA has been a leading advocate for repeal.  “The government shouldn’t take 55 percent of a small business when an owner dies.  More than 50 percent of dealerships are second or third generation, and it’s difficult to keep our businesses in the family,” he said.

This year is a milestone for the NADA. They celebrate the 90th annual NADA convention in Las Vegas.  The convention has evolved from the small debut in 1917, exploding in size and the expanse of products represented. It has offered dealers the chance to see the latest industry products and innovations, and provides a wide variety of educational workshops and programs to enhance their businesses.  “It’s an outstanding networking opportunity for dealers and the entire auto industry.  The 2007 event in Las Vegas will draw more than 600 exhibitors and over 25,000 attendees,” Bradshaw said.

The NADA touts the convention as a way to win new customers, increase company exposure and build new product awareness for vendors. For dealers, it is the place to be if you want to see the latest products and services for dealerships. The products are focused on dealers, with vendors who promise the only products promoted are those used by automobile dealers. The NADA convention offers more than 100 educational workshops, which are also recorded and made available to members.

Bradshaw says that PR and communication are very important aspects of what the NADA does.  “Timely communication with our members, the media and public is a high priority at NADA,” he said.  NADA focuses on positive public relations both in Washington, D.C. and within the dealer’s back yard. They have developed several programs that further the industry including a child passenger safety campaign.  “Our safety campaign generated participation by thousands of dealers coast to coast who hosted seat inspection events at their stores,” Bradshaw said. This program helps dealers reach out to the community and promote child safety. They provide information on how to develop effective child safety seminars as well as provide free information for consumers on how to properly utilize child seats. Public relations, whether it is an advertising campaign or a community event, helps advance dealer image and visibility.

NADA’s Management Education programs provide training to assist NADA member dealers and managers to improve business operations and performance, increase customer satisfaction and understand federal regulations affecting dealerships.  Management Education delivers its training in a variety of ways — through publications (with a library currently comprising more than 115 guides and bulletins), videos, computer-based training, online classes, seminars and workshops.  Timely seminars are presented each fall and spring at locations throughout the country and on the Web.  The Salesperson Certification program offers CD-ROM training and professional certification for dealership sales staff.

Getting individuals interested in the dealership as a career option has prompted the creation of the Automotive Career Month. This program helps young people see the potential in the industry. For dealers in need of qualified staff, as well as students seeking high-quality career opportunities, this can become the opportunity of a lifetime.  More than 104,000 positions are available at new-car dealerships nationwide, according to a 2006 survey by Harris Interactive, sponsored by the industry coalition Automotive Retailing Today.  Dealers across the country host career events during NADA’s Automotive Career Month in October.  These young people receive a "behind-the-scenes" tour of a new car dealership in their community to see first-hand how the business works in all areas of its operation.  They interact directly with dealership employees and view career oriented videos on auto careers.

NADA recently introduced a free consulting service for dealers, general managers and managers designed to enhance operations and the financial stability of their businesses.  Helping dealers develop financial security is a top NADA goal. Without the financial security of dealers, the industry itself would suffer. Since 1957, NADA has offered 401K pension and profit sharing plans. The program, called NADART, has over 120,000 participants. As the industries insider, they tailor group insurance plans for dealers.

“NADA members can get group rates, non-medical coverage, premium waivers during disability and continuance benefits for older participants,” Bradshaw said.
 
The future is the focus point for the NADA. They strive to stay on top of the market and evaluate problems that could be a detriment to the industry as a whole. Their goals haven’t changed too much over the years:  Develop dealership success, and keep the industry moving forward.  With this in mind, they developed a training program to help dealers and future dealers. The Dealer Academy prepares future dealers and managers to ensure a smooth-running profitable dealership through leadership transitions.  It helps dealers analyze the strengths and weaknesses of all areas of dealership operations with the insight of facilitators and peers.  Graduates emerge from the training better prepared to do their job in a more efficient manner.  Ultimately, that helps to strengthen the dealership team and drive profitability. 

The automotive industry has faced difficult times, but throughout the history of the industry, NADA has sponsored laws, developed conventions to connect dealers with the latest industry products and has continually evolved with the industry to serve its members. NADA has been a significant resource for dealers for nearly a century, with the future promising as many innovations as the past.

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