2023 NADA Chairman Plans to Position Dealers for Progress

The National Automobile Dealers Association has been part of Geoffrey Pohanka’s life since childhood. The family dealership was just three blocks from NADA headquarters, and his father, John, served as NADA chairman in 1976.

Now Pohanka, a seasoned industry veteran having worked in the family business since he was 13, will follow in his father’s footsteps and take the reins as NADA’s 2023 chairman.

“Giving back to NADA is in our family history all the way back to the 1950s,” Pohanka says. “It is an honor and a privilege to follow my father’s path and serve as NADA chairman. I think I have what it takes to be a good advocate for dealers. I take the job very seriously and have a real advantage. I’m nine miles from the NADA building and have political contacts in Washington.”

POSITIONED FOR PROGRESS

A deep understanding of the auto business and a broad depth of experience lobbying in Washington, D.C., make Pohanka uniquely poised to advocate for dealerships during challenging times. Over the last three years, dealers have dealt with a pandemic shutting down their businesses; critical inventory shortages; record auto prices; soaring interest rates; plummeting wholesale prices for used vehicles; and a sea of new regulations.

A leader with deep roots in the auto industry is required to help dealers move forward during difficult times. That is what Pohanka brings to the table.

Pohanka chairs the Pohanka Automotive Group in Capitol Heights, Md. He is a third-generation dealer in a company founded by his grandfather in 1919. The automotive group employs 1,700 people at 20 locations in Maryland, Virginia, Texas and Delaware, and sells 15 auto makes.

The auto group made Automotive News’ Top 150 dealership groups list in 2021. And, in an era when family businesses phase out in the second or third generation, Pohanka Auto Group has the fourth and fifth generations ready to carry the torch.

Pohanka also has planted deep roots in auto industry associations. He first served as chairman of the Washington Area New Automobile Dealers Association, or WANADA, in 1998 before ascending to chairman of its Washington, D.C., Auto Show in 2016.

He is no stranger to NADA, either. He served on the NADA board from 2001 to 2009 but left to relocate three of the auto group’s legacy dealerships. He returned to the organization in 2015, serving as chairman of the Industry Relations Committee before being elected vice chairman in 2022, then this year’s chairman.

He says his experience working with the federal government, serving on dealer councils, and partnering with manufacturers will be a plus. “We may not agree on a lot of things, but I will try to find areas of mutual interest.”

FOCUSED ON THE FUTURE

It can be difficult for leaders to home in on what will most benefit those they serve. Not so for Pohanka. He is a man on a mission with a clearly defined plan.

Among the challenges he plans to tackle this year are combating regulations that can harm dealerships, bolstering auto retail’s transition to electric vehicles, and strengthening the relationship between manufacturers and dealers.

“NADA has three functions: consumer relations, manufacturer’s relations and education,” he says. “I will address all three throughout the year. I have started a lot of initiatives and will continue moving on them this year.”

PROTECTING DEALER DATA

Data-sharing principles and protocols top Pohanka’s list. He explains that manufacturers want more data from dealers but stresses that there are issues with how the data is protected. “What data are they getting, and what are they using it for?” he says.

He is aware of one manufacturer that wants unrestricted access to dealership data. “This manufacturer won’t even say what information they are getting and expected dealers to indemnify the manufacturer in a data breach or with data misuse,” he says. “That is clearly wrong.”

In another case, Pohanka says one OEM contract specifically excluded the manufacturer from any liability if it mishandled dealership data.

Agreements like those put dealers at risk, according to Pohanka. Manufacturers employ third parties to collect data from dealership systems. The third parties write scripts, or programs to collect the data, which gives OEMs and third parties access to all dealership data. He says dealers rarely know what information the parties are accessing because they can go anywhere in their systems.

Pohanka hopes to partner with a company to develop a standard application programming interface, or API, which can control the data OEMs access from dealerships. He also wants OEM agreements with a cross indemnification clause to ensure OEMs also take responsibility for data breaches and misuse.

OEM agreements must explain how information will be used and include a provision to destroy data within two years, he says “These changes may not be perfect, but they will be better than before.”

In October, NADA unveiled its Guiding Principles on Evolving Business Models and the Dealer Franchise System, which laid the foundation for an approach to help dealers and OEMs work together to improve the customer experience and ensure business success for all.

“I want to make sure we get ahead of issues versus react and learn from issues that have already happened so we can help shape the future,” he says.

OPPORTUNITIES WITH OTAS

Today’s vehicles are more reliant on smart technologies. The software that controls many vehicle operations needs regular updates to fix bugs and deliver new security protocols. In the past, dealers would have vehicles towed in, then connect them to computers for updates.

Now it’s possible to do over-the-air, or OTA, updates.

However, many dealers are not enthusiastic about the capability. They say that what works great for mobile phones will not work for vehicles, which require complex updates that adhere to stringent regulations. If the OTAs go wrong, they maintain that it poses a risk of injury or death for motorists.

Pohanka explains that there are two types of OTAs: a drivability and warranty repair OTA and a subscription or accessory OTA. Manufacturers are looking at the second type as a new profit center that would allow owners to add capabilities to their vehicles.

“One manufacturer said when their first EVs come out, they will offer a fully loaded version and a stripped version where consumers can add accessories and capabilities through OTAs,” he says. “Some dealers want to block these completely. That is a mistake.”

Dealerships should not interfere with updates that address drivability issues or bugs, he says “They should leave those to the manufacturers. They are not very profitable for dealers, anyway.”

However, Pohanka wants dealers to be part of the revenue stream with OTAs for accessory or subscription sales. “We help OEMs sell those things and should benefit from revenue-sharing.” Same with the allocation-reservation system. We are not against the reservation system for cars to build to order, but they should be run within the franchise system. Our dealers are a competitive advantage to manufacturers.”

FOCUS ON FINANCIAL LITERACY

There are some troubling trends in financial literacy statistics. Financial literacy has declined since 2009 in the U.S. Today, 63% of adults live paycheck to paycheck; three in five adults do not keep a budget; and 45.4% of adults carry credit card debt, finds debt.com.

Pohanka says the trends are alarming and greatly impact the automotive industry. He plans to promote financial literacy as chairman.

“Students need financial literacy programs. With debt and interest rates soaring, this is more important than ever. Financial literacy is a life skill. People need to know how to develop good credit.”

The benefits of financial literacy are well documented. Research from the Financial Industry Regulatory Authority, or FINRA, shows that when financial education is provided in high school, young adults end up with higher credit scores and are less likely to be late on credit cards and car loan payments.

A 2022 FINRA survey found respondents with higher financial literacy (scoring above the median on a seven-question financial literacy quiz) were more likely to make ends meet than those with lower financial literacy. They also spent less than their income, set aside three months’ worth of emergency funds at higher levels, planned for their long-term financial future, and opened retirement accounts.

THE ELECTRIC CAR EVOLUTION

Pohanka drives an electric car and understands its benefits. Still, he has a few concerns as the industry races toward an EV future.

He believes there is a market for EVs. “But dealers need to understand electric cars from the consumer perspective,” he says. “Dealerships need to know how to set up charging infrastructure, how to service these vehicles, and how to educate consumers about them. “

Instead, he says the automotive industry is seeing an EV transition from the inside. The government is pressuring industry stakeholders to move toward an electrified future. Manufacturers are competing to be first in the EV transition. And new regulations will make it more difficult to sell internal combustion engine vehicles.

The National Highway Traffic Safety Administration is asking for a 40% improvement in fuel economy by 2026, which Pohanka says can’t be achieved without wide-scale EV adoption. The Environmental Protection Agency has set CO2 levels at 133 grams per mile by 2026, which he says no ICE vehicle can currently achieve. The government is scheduled to set even stricter emission standards in April.

“The California Air Resources Board has also set regulations that 14 states now follow,” he says. “California requires 35% of new-car sales to be electric by 2026. But right now, the average is 5% nationally.

“How will these standards be met? “I am not sure how the manufacturers will make these numbers. There may not be enough demand for the changes that are being made.”

Even with those concerns, Pohanka wants NADA to drive the change by addressing hot-button issues with EVs.

Cost is the first among them. He says the average electric car costs $66,000, putting them out of reach for many Americans. “With higher interest rates, EV affordability is an issue. According to J.D. Power, only one out of two consumers can qualify for an EV.”

Charging infrastructure also poses problems, he adds. About 40% of people live in an apartment or condo with street parking. “They will need to use the public charging network. You pay more to use a public charging station than you do at home, which will also affect affordability.”

NADA’s role in the transition to EVs, he says, is to “provide as much information to dealers as it can to help them transition as best they can.”

OPPORTUNITIES ON THE ROAD AHEAD

Since 2020, the automotive industry has had some chaotic years. But even with all the turmoil, Pohanka expresses optimism for the industry’s future.

“There are a lot of big opportunities for dealers. Today, dealers have just 35% of the service business and less than 50% of used-car sales. We are going to help dealers move forward and get better through training and 20 Groups to help them grab a greater market share of the service and used car business.”

Pohanka says he’s “bullish about the franchise system,” which he describes as a laboratory where each dealer is an entrepreneur. “Dealers experiment and try innovative technologies and techniques. Some work, and some do not. But they continually grow and make new opportunities for the business. Dealers have some challenges ahead. But in the end, I think dealers will have another good year in 2023.”

POHANKA BY THE NUMBERS

20Number of locations in the Pohanka Automotive Group

52Number of years Pohanka has worked in automotive retail

1919Year Pohanka’s grandfather, Frank S. Pohanka, opened the family’s first dealership

1,700umber of employees in the Pohanka Automotive Group

1976Year Pohanka’s father, John Pohanka, served as NADA chairman