Industry
Profile: N.C. New Car Dealers
When
it comes to the economy, North Carolina's new car
dealers offer a high octane gift, one that keeps
on giving.
Despite a national trend
toward consolidations as well as escalating
competition and costs, North Carolina's $15
billion retail auto industry, which generates
more than 20 percent of the retail sales tax
collected by the state, continues to flourish.
And if projections are on target, nearly 500,000
cars and light-duty trucks will be sold this
year. That's a record for North Carolina, which
ranks ninth nationally in total number of dealers
and employs 18 more workers per dealership than
the national average.
Robert Glaser, executive
vice president of the N.C. Automobile Dealers
Association (NCADA), now in its sixth decade,
concedes that the buffalo hunts for newer,
perhaps glitzier industries will always occur.
Still, franchised new vehicle dealers remain
proven financial and civic stalwarts.
“There's no
separating dealerships and their value to the
overall economy and individual communities,”
he says.
Backing that statement
is a trunkload of evidence – both anecdotal
and statistical, for, as Glaser notes, the
automotive industry is “unbelievably numbers
oriented.” He's not exaggerating. Stats on
everything from automotive ad expenditures (the
average dealership in North Carolina spends
nearly $120,000 a year on advertising) to
dealership census data (statewide, 700 franchised
automobile and truck dealerships employ more than
33,000 workers) to new-car and truck
registrations by state and region are gathered,
sorted and published on a regular basis.
Dealers are also
evaluated with something known as the Consumer
Satisfaction Index or CSI. Car makers query
customers about their treatment by dealers and
their satisfaction with their new car or truck,
and then relay these CSI gradings to the owners
of car stores. A good CSI counts. While
manufacturers have not revoked any franchises on
the basis of low ratings alone, they apparently
have considered them in doling out new ones.
Earl Tindol, president
of Earl Tindol Ford in Gastonia, has been in
business 25 years. When it comes to the question,
“would you recommend this dealership to
another person?” his CSI consistently hovers
around 89 to 90 percent. He employs 100 people, a
number of whom have been there since the
dealership's beginning. Charged by the
manufacturer with selling 1,450 new vehicles a
year, Tindol easily exceeds that number and
generally ranks among the state's top 20 when it
comes to car registrations.
So many requests for
donations or corporate sponsorship – up to
20 each week – come the dealership's way
that an employee committee has been formed to
sift through the petitions. On average, Tindol
Ford gives $100,000 a year to a wide variety of
local causes.
Tindol and his daughter
Natalie, the dealership's general manager, have
over the years served on a slew of boards. Name
an organization — the airport authority,
BB&T, the chamber of commerce, Rotary —
and they've taken a leadership role. In fact, in
1998, Natalie was named Gaston County's business
person of the year.
“We try very hard
to be good community citizens,” states
Tindol, who describes both his store and
philanthropic efforts as “very
typical.”
So why is the industry
still dogged by charges of high-pressure tactics
and low-rent ethics? Glaser offers two theories:
new car dealers are painted by the same brush
used to tar some used car sellers, and distorted
media reports further the stereotype of
fast-talking, high-pressure salesmen.
The results of a Gallup
survey go a long way in disabusing those negative
perceptions, however. Recently, Automotive
Retailing Today, a nonprofit consortium of major
auto manufacturers and franchised new vehicle
dealer associations contracted with the Gallup
Organization to study how consumers, the media
and dealers nationwide view the new-vehicle
buying experience.
The survey queried 1,005
consumers, 100 journalists who cover some aspect
of the automotive industry, and 401 dealership
owners. The most dramatic finding by far was
this: while 76 percent of customers were very
satisfied or extremely satisfied with their
dealership during their last purchase experience,
only eight percent of journalists thought
consumers were very or extremely satisfied.
When asked to rate the
usefulness and reliability of various sources of
information when shopping for a new vehicle, both
consumers and dealers picked “a visit to the
dealership” as the best source, ahead of the
Internet, consumer guides or newspaper or
magazine articles. The media, however, believed
buyers prefer consumer guides.
Gallup also revealed an
interesting paradox when they asked the media
about their own purchase experiences. Sixty-three
percent fell somewhere in the satisfied category,
yet 65 percent said their purchase experience was
different than that of the average consumer.
Yet Bruce Murray, owner
of French Broad Chevrolet in Marshall, allows
that it makes no sense for dealers to not want
the car buying experience to be as agreeable as
possible.
Says he: “Today,
competition is stiff and costs (associated with
running a dealership) are high. So if you want to
protect your business you protect the
consumer,” he says.
Harry Brown, NCADA's
president, adds, “Consumers today are
definitely more educated about the market so
customer service and customer value is definitely
more important.”
Setting the pace
Through its leadership,
the NCADA has been proactive when it comes to
ensuring consumer protections. For example, the
association heard from the N.C. Attorney
General's office and dealers alike about dealer
advertising. The Attorney General's office felt
that the media was full of misleading ads from
dealers; many dealers were angry because there
was no “level playing field” – no
set of standardized advertising guidelines
protecting the “honest guys” from the
charlatans.
The solution: NCADA
sponsored a dealer committee to update and
publish advertising guidelines to guarantee
consumer protection and assist the state's
dealers in meeting federal and state consumer
protection laws on advertising. This effort
involved review by the Attorney General's office
and outside counsel to ensure accuracy.
These new guidelines
were approved by NCADA members at last year's
annual convention. Consequently, notes George
Leggett, an investigator in the Consumer
Protection Section of the Attorney General's
Office, “the number of complaints we're
hearing have definitely dropped.”
He adds: “I've
heard of nothing like this effort elsewhere. Our
office is not in the business of endorsing
industry standards, but we did participate in the
development of these guidelines. Some people
might feel working with an association like this
isn't proper, but what we've learned is we don't
have to be adversarial. To the extent we have
mutual issues it only benefits us to work
together. Based on what I've seen, automobile ads
in North Carolina are now considerably better
than other states in the Southeast.”
The Automotive Consumer
Action Program, or AUTOCAP, is another way
dealers demonstrate their willingness and
commitment to solving consumer related problems.
Begun by the National Automobile Dealers
Association and adopted by NCADA, AUTOCAP is a
free and voluntary mediation program for people
who haven't hired an attorney to resolve problems
associated with a vehicle itself or with service
provided by a participating dealer or
manufacturer.
Diane Turner, NCADA's
assistant vice president, explains that when
mediation is requested a panel comprised of five
consumer representatives and five dealer
representatives meets to review the facts of a
case and recommend a course of action.
“At least 95
percent of our AUTOCAP cases are resolved to
everyone's satisfaction,” states Turner.
“Most complaints come from simple
misunderstandings and poor communications between
the consumers and dealership staff.”
It's not just a high
dealer participation rate and these kinds of
grassroots efforts that cause Alan Marlette,
executive director of the Virginia-based
Automotive Trade Association Executives, to
characterize “Glaser, Turner and the North
Carolina association . . . (as) so very
effective.” He also applauds the NCADA's
funding and ability to quickly mobilize for
effective political action, especially when it
comes to hot button issues such as forays by car
makers into retail markets.
From 1949 to 1999, local
dealerships across the United States declined
from 50,000 to about 20,000. Yet, in the
Southeast at least, car stores remain among the
most successful small businesses. And
manufacturers want a piece of the action.
Analysts have speculated that having cut all the
fat out of the production process, their
attention has turned not only to creating ever
more distinctive brand identities but to cutting
costs from the distribution channel. One way to
accomplish this is to own the store. Already
factory-owned dealerships are present in
Salt Lake City, Oklahoma City, Tulsa and San
Diego.
Last spring, D. Wayne
Thomas, owner of Wayne Thomas Chevrolet in
Asheboro and then the president of NCADA, was
quoted in The Wall Street Journal
as saying, “Right now, manufacturer
ownership of dealerships is probably one of the
greatest concerns to dealers in our state.”
The battle lines were
drawn. The NCADA argued four major points:
u
Strong local retail dealerships maximize the
level of industry competition;
u
Dealerships employ tens of thousands workers and
spawn countless secondary levels of small
business in local communities;
u
Clear franchise legislation will strengthen the
ability of local dealers to provide the best
value to their customers and communities by
preventing the erosion of a dealer's right to
efficiently serve customers;
u
Locally-held dealerships are directly accountable
to the customer.
The relationship between
the manufacturers and those who sell their
vehicles has always been complex. Things have
gotten edgy as vehicle makers have pressured
dealers to spend big bucks upgrading showrooms
and buying new service tools. They grew even
edgier when, like its sister associations in
Florida, Georgia and Texas, the NCADA pushed for
legislation that, with some exceptions, would
prohibit manufacturers from directly or
indirectly ... (owning) any ownership interest in
... any motor-vehicle dealership in this
state.”
The auto makers
countered that no other industry prevents
manufacturers from directly selling their
product, and launched a full-scale, high-priced
lobbying effort.
Last July, after passing
through the Senate and House with ease, the
governor signed the Motor Vehicle Franchise Act
keeping automakers from owning dealerships.
Because he's a dealer, Nelson Cole, a three-term
member of the House, couldn't sponsor or vote on
the legislation. But the Democrat from
Reidsville, whose Oldsmobile Pontiac GMC store
employs 27 people, certainly understands why the
bill passed.
Simply put: money from
the home team talks. “Dealers are local
people, manufacturers aren't. Collectively,
franchised new-vehicle operations generate a lot
of sales tax revenue. They employ lots of people.
Individually, they provide the leaders and
dollars necessary to make communities a better
place to live, work and play,” says Cole,
whose own lengthy list of projects includes the
local soup kitchen and Habitat for Humanity
effort.
The Right Stuff
If, as the saying goes,
one can judge a person by the company they keep,
then it stands to reason that an organization can
be judged by the leaders it elects. That being
the case, the prospects for NCADA as well as the
national association are winning ones.
In January, Harold Wells
of Whiteville will become chairman of the
National Automobile Dealers Association (NADA),
which is headquartered in Virginia. The kid from
Duplin County, whose entrepreneurial spirit led
him from a backyard bicycle shop to the
presidency of Wells Automotive Inc., will be the
fourth North Carolinian to lead NADA.
And despite the fact
that the work ahead of him will consume 75
percent of his time – he will focus on
industry relations, government relations, public
and legal policy, and dealership opportunities
— he relishes the opportunity to “be
the voice of the individual entrepreneur, the
smaller dealer.”
“You can't run an
automotive business like you run a
McDonald's,” he insists. “With a
big-ticket item like a car you need a personal
relationship with the customer. That's what makes
this industry special.”
Wells, a former
president of NCADA who's active in a host of
civic and philanthropic organizations, including
service on the NCCBI Board of Directors, has been
a dealer for 43 years. He moved to Columbus
County as a 24-year-old to set up shop for
himself. At that time there were 16 dealerships;
now there are five. The well-documented decline
in new car stores has hit rural areas the
hardest. A USA Today analysis of U.S. Census
Bureau data found that the number of new car
dealerships outside metro areas fell 17 percent
between 1986 and 1996.
Though troubled by the
consolidation, Wells is a realist. He knows he
can't reverse what's already done; however, he's
determined to encourage “the free enterprise
part of this business (because) that's what makes
America great.”
Case in point, his son
Toby who owns Toby Wells Pontiac Buck GMC in
Southern Pines. Closer to home, Wells helped
found the Columbus County Committee of 100. As
chairman of the group, he's successfully
lobbied to get natural gas lines run to the
central part of the county and has actively
recruited businesses to the Southeast Regional
Industrial Park.
In recognition of these
efforts, the N.C. Economic Development
Association recently named him its volunteer of
the year.
“The plaque may
have my name on it,” he says, “but the
award wasn't a one-man deal. I accepted it on
behalf of all those who've worked so hard on
behalf of the county.”
Harry Brown, president
of NCADA since June, grew up on a farm just 13
miles from Jacksonville where National Dodge VW
Subaru (given the prestigious five-star ranking
by Chrysler), the dealership he owns and heads,
is located. His leadership in the community is
defined not just by the dollars he donates –
easily $10,000 to $20,000 a year – but by
the time he gives. He's president of the Rotary
club and a member of the chamber's legislative
committee which was instrumental in the passage
of a school bond initiative. “I stay so busy
because this is home and home's been good to me.
Megadealers from out-of-state wouldn't feel that
way but local dealers do. We're obligated,
but it's a happy obligation,” says Brown.
|
