David Westcott will take over as chairman of the National Automobile Dealers Association this month at the 2013 NADA Convention and Expo. He is the owner of David Westcott Buick GMC Suzuki in Burlington, N.C., and served as the vice chairman of the NADA in 2012. He also represents North Carolina’s franchised dealers on the NADA’s board of directors.
F&I: What do you think was the hot topic of 2012?
Westcott: Two-tier pricing and mandatory facility upgrades. They are symptoms of a bigger overall problem: manufacturer intrusion into dealers’ businesses. Two-tier pricing is a critical issue, and the NADA will continue its discussions with manufacturers. I recently surveyed our 63-member board of directors, and it is at the top of their list of concerns. But we have to be cautious when talking about it, because we’re not suggesting that incentive payments go away, but that they are fair and equitable to all dealers.
The facilities issue is another major concern. As 2012 NADA Chairman Bill Underriner stated to the Automotive Press Association in Detroit last October, facility image programs have to be flexible. Auto manufacturers that build flexibility into these programs have more success. There are still no answers yet in terms of what the return on investment is for dealers after renovating or building new facilities, which has made it necessary for the NADA to try to gather some of our own data.
We hope to have some conclusions to our study relative to facilities very soon. We are also taking a look at what the dealership of the future will be — not only how it will perform, but how it will look from a brick-and-mortar standpoint and from a selling process standpoint.
F&I: We saw some very positive signs in the third quarter 2012. Where do you think we are in our recovery drive?
Westcott: Low interest rates on auto loans, an aging fleet of vehicles on the road that need to be replaced, declining gasoline prices and exciting new vehicles on display at U.S. auto shows are all positive signs for the industry. The theme of the NADA convention this year is “Momentum.” I’m optimistic by nature, as are most car dealers. We expect to build on the momentum that the industry experienced in 2012, when new-car sales continued to lead a slow but steady economic recovery.
F&I: Is there anything that can threaten that recovery?
Westcott: Federal regulations in the United States continue to restrain economic growth somewhat. Other than that, we see no immediate domestic factors that would disrupt auto sales and economic growth in 2013. We are concerned about slow growth abroad with some countries in recession, including Spain and Japan.
F&I: Subprime seems to be back. How big do you think that market will be for franchised dealers in 2013?
Westcott: Credit availability for car shoppers with a less-than-perfect credit history continues to improve, and that will be an additional source of strength for the light-vehicle market as we move through 2013. Overall, credit is widely available from a variety of lending sources, and we expect low interest rates will be with us throughout 2013.
F&I: Do you think we’ll ever get to a point where a greater share of vehicle sales will be conducted online?
Westcott: Internet car shopping has been around for nearly 20 years, which provides consumers with information like never before and offers more transparency. It’s important to keep in mind that much of the car-buying experience is already being conducted online, from researching and reviewing vehicles, such as comparing different makes and models, prices at competing dealerships and manufacturer incentives. But the Internet doesn’t allow car shoppers to kick the tires, check out the safety features firsthand and take a test drive.
F&I: How will the NADA move forward with Tesla’s operations this year?
Westcott: We met with the top executives at Tesla Motors back in November. It was constructive and positive, and opens the door for ongoing dialogue. We are firm believers in the franchise system. Relying on individual entrepreneurs has proven, historically, to be the best way to sell, service and distribute cars. Tesla has a different business model for its company and the way it sells its vehicles. Every other major manufacturer relies on its dealer network. And there’s a good reason for that — the franchise system is tried and true. It’s the envy of the rest of the world.
F&I: How do you think the industry will look at the end of 2013?
Westcott: We’re returning to a condition of economic strength but with room to grow. We still have not returned to the peak levels experienced from 2000 to 2007, but auto sales have steadily improved since 2008. Paul Taylor, our chief economist, is predicting that one million more new cars and light trucks will be sold in 2013 compared to 2012.