Notes from NADA

They say there were 21,000 of us this year at the National Automobile Dealers Association’s annual convention. To me, attendance was noticeably down from last year’s record turnout, but I think you can blame that on the storms and blizzards around the country that had airports backed up for days. Nevertheless, the electricity and optimism were both back.

Due to the uncertainty of air travel, my wife Debbie and I elected to drive nine hours from Atlanta to Orlando, Fla. Before we did, we transferred the office phones to our cell phones, allowing Debbie and I to turn our vehicle into a rolling office.

As you may already know, this year marked the last time I serve as a workshop presenter at the event. Hey, leading a workshop is time-consuming, and I’ve served as a speaker at most conventions since 1987. Besides, I’d rather spend my time visiting with old friends and meeting new ones. Hey, isn’t that what the convention is also about? Reuniting with friends.

We arrived Thursday afternoon and checked in at the Rosen Centre. At check-in we were cutting up with desk clerk at the hotel and she asked, “Would you prefer a king bed or two queens?” Debbie jokingly responded, “Actually, we’d prefer the presidential suite.” Well, that joke turned into an upgraded suite with two sitting areas, full kitchen, dining room table, serving bar with bar stools and two bathrooms. And they only charged us the convention rate for a standard room. If that was an omen, we thought, then we were in for a great time.

We were up early Friday to check in and pick up my press credentials in time for my first presentation at 12:15 p.m. that day. They gave me the big room, and the dealers filled it.

Friday night, we did the Cars.com party at the House of Blues. The hospitality was exceptional. And from one end of the room to the other, we bumped into dozens of dealers, managers and industry friends.
I was not scheduled to speak the next day, which was puzzling given that Saturday is usually the big day for workshop attendance. But the NADA’s decision did give Debbie and I time to walk the convention floor and see what’s new.

The first item on our agenda was a meeting with Alex Vetter, Cars.com senior vice president of network sales, at the company’s booth. During our discussion, I was honored to share some quality one-on-one time with Mitch Golub, president and founder of Cars.com. Although I won’t share the details of our conversations, I will say we did discuss issues with RoadLoans.com, the preferred online finance affiliate of Cars.com.

The RoadLoans Ruckus
Those of you whom I’m connected with on Facebook know that I use my page to stir things up. Well, in late January, a dealership manager from the Carolinas sent me a private message after a customer of his found a car on Cars.com.

According to the dealer’s account, when the customer went to the finance tab on the site and filled out the credit application, she was immediately sent an e-mail containing the contact information for a preferred RoadLoans/Cars.com dealership a few miles away, not the dealership offering the vehicle she wanted. She then called RoadLoans to ask about the mix up and they told her to just go to the preferred dealer anyway, as they would be able to help her find a similar car. When she explained to them that she wanted the original car she landed on, she was told that she would need to call and have that dealership sign up with RoadLoans in order to purchase the car.

As soon as I posted about this on Facebook, all hell broke loose. A major dealer group in New York tested it with all 21 of its dealerships, as did dealers in other parts of the country. And, well, RoadLoans was indeed shipping their customers elsewhere if the dealership did not subscribe to the company’s program, even if the dealership paid for the advertisement that caught the attention of the customer.

My phones lit up and the e-mails and private messages started coming in. It wasn’t long before I was on the phone with a senior executive with Cars.com. They were all over it and working on the fix right away.
I put in a call to Chip Perry, president and CEO at AutoTrader.com. He said that, initially, it appeared RoadLoans was not exporting customers to competing dealers. Later, however, dealers were saying RoadLoans was doing the same thing on AutoTrader.com.

One New York dealer tells me he proved it with an AutoTrader.com executive on the line.

Another dealer accused AutoTrader.com of sending customers to a competing dealership if they wanted to use the site’s “Trade-In Marketplace” and the dealer wasn’t subscribed to it — even though customers landed on the dealer’s paid ad.

When I met with the executives at Cars.com, I was genuinely embarrassed because this was never supposed to happen. Usually, when I start something, it is premeditated, well-thought out and researched in advance. Plus, I have the backing of my band of merry men and women, who are ready to hit the keyboard on my signal.

TrueCar experienced the precision of my activist activities last year. This time, however, it was a spontaneous eruption that went viral. Cars.com has always been one of the most dealer-friendly companies in the vendor arena. I like these guys, always have and still do. The one thing that impressed me was how quickly Cars.com jumped into action and the seriousness with which the company handled it.

This was one of those things that got away from them. Well, I was told dealers now have to buy additional service for a secured credit application on Cars.com ads for about $300 a month. I was assured that would eliminate RoadLoans from appearing on your ad. I don’t know about you, but that is not acceptable to me. Why would you have to buy additional services to protect the ad you purchased in the first place? It’s not like you asked for the affiliate lender to appear on your ad or ad’s page in the first place.

I am saying that perhaps this appears to be RoadLoan’s going rogue and biting its host companies in the butt. So if I was a dealer, I would test my ads to see if this is happening. With that said, let me just say I still hold Cars.com in high regard. I believe the company makes every effort to have the dealers’ interests at heart, and I appreciate the hospitality and the spirit of our visit at the NADA convention.

The New Chairman
I had a lengthy conversation with David Westcott, the NADA’s 2013 chairman. We discussed his agenda for this year and the new winds that are blowing through the NADA. I like this guy a lot, and, more than that, I really like the direction in which I see this organization going.

We all want to see the NADA getting back to its core mission of protecting dealers from manufacturer abuse and other threats. In line with my thinking, Westcott’s agenda will focus on unreasonable facility requirements, petty interference and intrusion into the dealers’ business. Stair-step incentives and multilevel, two-tiered pricing will also be on his 2013 agenda, as will the new threat of data piracy on the part of aggregators and rogue vendors.

Personally, I have felt for some time that the NADA was too soft and overly cautious on some of these issues. Well, I can tell you that Peter Welch won’t be backing down. He’s the new president of the NADA, and I predict the association won’t be sitting on the sidelines with their thumb in a warm, dark place any longer, especially on issues negatively impacting dealers.

Look, regardless of what you think about the NADA’s leadership, this is the dealers’ national organization. It’s there to represent you, so get involved — or get re-involved — and make your voice heard. If you don’t, quit your bitching.

I love the NADA and I believe it’s what you, the dealer members, allow it to be. It has done a lot of good things for dealers.

Cheering for Ford
If you caught my column last month, you know I used this space to express my opinions about how General Motors ran off one of their best dealers in the country over facility requirements. I just couldn’t hold back my disgust with what I perceived to be the incompetence of some of the top executives at GM.

Well, during the convention, Ken Czubay, Ford Motor Co.’s vice president of U.S. marketing, sales and service, announced that the company will match dealer investments in facility upgrades dollar for dollar (up to $750,000).

The announcement was greeted with enthusiasm, at least according to the majority of dealers with whom I spoke. Okay, I admit there are some people who would bitch and moan regardless, but every dealer I talked to felt it was more than a fair way to handle it vs. General Motors’ approach.

Here’s Ford working with its dealers while GM elects to beat them up. At least that’s how it appears to me and almost everyone else I’ve asked.
Jim Farley, Ford’s executive vice president of global marketing, sales and service, was quoted as saying, “This is about making sure the customers, when they get in the stores, get in the service department, they have a great, modern experience.”

It’s well known that Farley has long been one of my marketing heroes. I also consider him a friend. So, I was delighted to hear that the matching funds from Ford are available unconditionally for any of Ford’s 3,100 franchised dealers, regardless of size or market. Yes, there are guidelines, but dealers have the freedom to choose where they feel the funds can best be used to improve sales and the customer experience.

And here’s where it gets really good: Dealers have the option of meeting their local community business standards as long as they stay within the guidelines of Ford’s “Trustmark” design program, according to Farley.

Interestingly enough, Ford has expanded the matching funds allowance into technology-enabled sales and marketing. A key part of the facility investment centers on consumer “digital experiences,” including the use of electronic tablets. Farley said, “We’re really getting into digital fitness.”

You’ve got to love this philosophy. Yes, I have spoken to many dealers that have minor issues with Ford, but not the major complaints I hear from some other franchised dealers of other brands. You can’t say this isn’t a considerate and well-thought-out gesture.

Taking on Carfax
Now, I said Ford was good, but I didn’t say it was perfect. See, Ford recently made Carfax the official vehicle history report for its Ford and Lincoln certified pre-owned programs. Well, it’s well known that I personally despise Carfax, which certainly steers my slant on where this article is headed. I am sure what I read was a press release put out by Carfax, but the fact remains that Ford is requiring dealers to use their service, even if they do pay for it. I’m sure it’s built into the program.

My personal opinion, based on my experiences with Carfax, is that the company is overpriced and overrated. Let me add that its reports are often inaccurate, which can be a source of financial problems and hard feelings for dealers and consumers alike. Why Ford or any other manufacturer would get in bed with these people is beyond me.

I view Carfax as pure evil. The misguided perception the manufacturers have is that Carfax increases customer confidence in their products, so they’re requiring their dealers provide a Carfax vehicle history report to every customer.

Well, in other Carfax-related news, a well-known dealer advocate and attorney (and my friend), Lenny Bellavia, is investigating the possibility of filing a massive lawsuit against Carfax for all of the alleged abuses I have been raving, writing, speaking and blogging about.

I have known Bellavia for several years in a social setting, but I am not part of this initiative. I am cheering wildly that someone is even considering taking these alleged villains to the mat. If you don’t know Bellavia, he is famous for representing the disenfranchised Chrysler dealers after the automaker went into bankruptcy. He is legendary for representing dealers in litigations. His firm, Bellavia, Blatt, Andron and Crossett, is headquartered in New York.

I met with him at the NADA convention and he tells me he has more than 150 dealers signed on to pursue the lawsuit. It appears he’ll have enough litigants participating to make a major case to collect for damages related to Carfax’s perceived defamation and abuses of dealers and our customers.  Bellavia’s firm has written letters to dealers nationwide, inviting those with a case to join this class-action suit.

Will CarGurus.com become the next anti-dealer backlash campaign? People are telling me they are worse than TrueCar on TrueCar’s worst day. We know they partnered with at least one of the big lead providers and might even be operating as a phantom advertiser.

I have heard only the bad things about CarGurus.com, but I’d like to hear what you think. But if you think CarGurus.com is bad, wait until you see what Google Cars is planning to do. Have an airplane barf bag close by.

Wrapping It Up
The convention was phenomenal. Manufacturer made their annual sales predictions for 2013, while the NADA is predicting that 15.5 million units will be sold this year by franchised dealers. However, upon adding up all of the manufacturers’ forecasts, I have discovered that we’re looking at a 35 million-unit year with each manufacturer posting 2.5 times their last year’s net profits.

Saturday night was an incredible experience at the NADA convention. The Dealer.com party took us back to the House of Blues and the band Blues Traveler was there to deliver an experience I’ll remember for years.
Sunday night was the Dealertrack party at B.B. Kings, which had more food and drink than I needed. And the crowd was amazing. There had to be more than 2,000 people in attendance, and that was just in one room.
All in all, I presented three NADA workshops to packed rooms, attended four parties as well as multiple press conferences and met with a lot of people.

No cognac this month. I’m actually on a serious diet. But don’t worry. Just keep those calls, e-mails, private messages and Facebook posts coming. I love to hear from you.

Jim Ziegler is the president of Ziegler SuperSystems Inc. E-mail him at [email protected].