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Thursday, March 4, 2010

Perspectives from NADA Orlando 2010

My first NADA convention was 1987, after the record setting 1986 model year. I recall two things in particular. First, the shrimp and crab claws were of extraordinary size. The shrimp in Orlando this year were particularly puny and the crab claws were conspicuously absent. Second, Maryann Keller’s workshop was so over sold that attendees, including myself, stood down the hall just to hear her words. In my mind, she was and still is the preeminent auto analyst around. I recall her stating that in 1986 Toyota made more money on the investment of its cash portfolio than GM made on its’ entire world wide operations. This was a revelation at the time and began to put the international auto in perspective for me. A lot has happened since 1987.
By my best “seat of the pants guesstimate,” Orlando 2010 was about one third the size of “normal” years. I dread the thought of this being the new normal. NADA artfully arranged things to make the convention seem busier than it actually was. But GM had pulled out of the expo and economics kept many vendors away. As there are thousands fewer dealers after the recent bloodletting, and thousands of others are hanging on for dear life, there were a lot fewer attendees. Those who were in attendance seemed to be in good spirits.
There were some excellent workshops this year. Keller was not there but Dale Pollak, Jim Ziegler, and Joe Verde were standing room only as usual. As a consequence, I chose not to take up space in their workshops as I have seen them before. So I attended workshops by Andrew Iorgulescu from OpenLane, Amanda Savage from Manheim, and Lee Harkins from M5 Management.
Iorgulesco and Savage both commented on the fact that the premium units in terms of mileage and color are increasingly being sold “upstream” and never see the brick and mortar auction. As a consequence, the physical auctions are seeing a higher percentage of “dregs” in their consignments. There is a new generation operating dealerships these days. This generation has never known life without television, computers, video games, and cell phones. They are much more likely to be using the Internet to buy inventory than those my age. I expect the trend to increase.
Lee Harkins blew me away with his comprehensive and insightful presentation on Internet marketing for Fixed Operations. His insight on the new reality of how the Internet drives our business was amazing. Were I still a dealer I would say that attending Harkins’ workshop was many times more valuable than the investment to attend the convention. Kudos to NADA for excellent workshops!
Ed Tonkin took over the chairmanship of NADA for the coming year, taking over from John McEleney. I have known John for about 25 years when I was his competitor in Clinton, Iowa. He is truly a knowledgeable and honorable man. What a year to have been NADA chairman. I’m sure he has had his detractors over the last months, but it is easy to be a Monday morning quarterback. NADA wasn’t in a great bargaining position when things “hit the fan.” I expect incoming chairman Ed Tonkin to be more of a “fire breather” if he is anything like his father Ron, NADA chairman from 1989. Dealers need a tough and aggressive advocate! Tonkin inherits an interesting situation. Terminated dealers are no longer NADA members if they no longer have a new vehicle franchise. Yet, they may be embroiled in the reinstatement process through arbitration. A reinstated dealer might compete with a dealer who was not terminated. This puts NADA and Mr. Tonkin in a tough position.
In the meantime, GM CEO Ed Whitacre seemingly embraces the thought of reinstating as many as a thousand dealers. But Steve Girsky, perceived by many as being the father of the dealer terminations when he was a member of the government auto task force, has just been named to the GM board of directors. It will be interesting to see how this all works out.
DealerTrack and RouteOne had great parties. But there was nary a crab claw in sight.

Written for Auto Finance News

David Ruggles is a former dealer-owner and consultant with nearly 40 years’ experience in the auto industry. He has conducted an annual seminar on auto dealership issues and processes in Japan since 1993, and helped develop specialty software focused on pre-owned leasing. A contributing columnist for Wards Dealer Business and Auto Finance News. Member of the International Motor Press Association. He can be reached at ruggles@msn.com.