S5E01 - Mastering the Balance of Leadership At Your Dealership
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Concept
NADA
NADA is a group that helps car dealers in the U.S. work together and share important information about selling cars.
Concept
leasing
Leasing means you pay to use a car for some time, like renting it, instead of buying it. After the lease ends, you give the car back.
Term
interest rates
Interest rates are extra money you pay when you borrow money to buy or lease a car. Lower rates mean cheaper payments.
Term
franchise laws
Franchise laws are rules that decide how car companies and their dealers work together to sell cars. They help make sure dealers follow certain rules and protect buyers.
Term
franchise agreement
It's a deal between a car company and a car dealer that says how the dealer can sell and fix the company's cars. It sets rules for things like prices and where the dealer can operate.
Brand
Volkswagen
Volkswagen is a big car company from Germany that makes popular cars and works with many dealers around the world.
Brand
Honda
Honda is a well-known car company from Japan that makes cars and motorcycles and sells them through dealers.
Concept
direct-to-consumer sales
Direct-to-consumer sales mean car companies try to sell cars straight to buyers without using dealers, which can cause problems with dealer rules.
Concept
early adopters
Early adopters are people who buy or use new things before most others do, helping the product become popular.
Concept
government subsidies
Government subsidies are money or help from the government to make certain products, like electric cars, cheaper or easier to buy.
Brand
Rivian
Rivian makes electric cars that are trucks and SUVs, designed for outdoor activities and rough roads.
Brand
Lucid
Lucid makes fancy electric cars that are very fast and can drive a long way on a single charge.
Concept
autonomous vehicles
Autonomous vehicles are cars that can drive on their own without a person controlling them.
Term
body shop
A body shop is where cars get fixed if they have dents or damage to their outside parts.
Term
serp
SERP means the different parts of a car business that fix cars, sell parts, and do other services besides selling new cars.
Term
deal jacket
When you buy a car, the dealer keeps all the important papers in one folder called a deal jacket. It has everything needed to complete the sale and make it official.
Company
ASC (Automotive Service Excellence)
ASC is a group that gives certificates to car mechanics to show they know how to fix cars well.
Concept
competency-based registered service technician apprenticeship program
This program helps people learn how to fix cars by practicing and proving they can do the job well before they become official mechanics.
LIVE
Imagine a customer bought, car company bought,
and a dealer bought, all talking to each other.
What could go wrong?
I heard somebody on the scout team say
buying a car should be like buying a t-shirt on Amazon.
It'll never be that.
It will.
First off,
He's not a t-shirt.
He averaged number of documents.
Right.
In a deal jacket, at a dealership is 150.
This is a highly government regulated transaction.
It's everyone's dream to grow, to be a bigger dealer,
to be a better dealer, or even get your first dealership.
Car buying is about the people.
Everybody wants to know what's a car business like,
and they like to see it under the hood.
Welcome to the Walkaround Podcast.
Well, we are thrilled to have Mike Stanton,
president and CEO of NADA with us on the Walkaround Podcast.
Mike, pleasure to have you.
Thank you for sharing your time with us.
Well, thank you for having me.
We are so glad you're here.
We know you are a very busy man all the time,
but especially this week,
and to take out the time to really talk to Mark and I
and our listeners about what's going on
in the automotive industry and NADA's focal point
is really important.
So thank you again.
So why don't we just jump right in?
Let's do it.
Alrighty.
So just want to kick it off.
Our dealers, you're here.
What are some things right now?
How are dealers feeling right now,
and what indicators are out there
around their pulse around affordability concerns,
interest rate concerns?
What are dealers feeling right now
about the economic concerns that are out there?
Yeah, I would say first off,
the energy on this floor here at NADA,
the show has been unrived.
Healers are generous.
They're an optimistic bunch, no matter what,
but you've mentioned some of the concerns.
One, being affordability.
Certainly there's some issues out there
with some of our manufacturers.
So these things vary on a manufacturer by manufacturer basis,
but with regard to affordability,
that probably comes up more than anything.
And our dealers are looking for more leasing,
interest rates to improve.
These longer term loans have got some of us concerned.
So NADA, our mentality is we wanna create an environment
where dealers can continue to thrive
and continue to get better.
So when it comes to affordability,
we will work through the dealer council.
We collect dealer opinion
through our dealer attitude survey.
We share that information directly
in face-to-face meetings with the manufacturers.
We work with the council with regard to public policy.
We've always supported legislation
that drives down the cost of vehicles.
So again, we're just trying to set up an environment.
We don't work manufacturer by manufacturer.
So for us, and again, it varies so, so much there.
Our focus is in the public policy arena,
and then again, working with the dealer councils.
And the outlook for this year,
do you feel like dealers are positive about the outlook,
even though there are these financial concerns?
Overall, yes.
Do we think we'll get to 16 million?
We do.
We thought we'd be 16-ish last year,
and we got to 16-2.
There were concerns mid-year with the tariffs,
but the manufacturers have generally decided
to absorb those, and they all want their market share.
So they've absorbed those.
They have not passed that on to the dealer,
so those have not been passed on to the consumer.
So we're still thinking that 16 million SAR is very doable.
Again, there are challenges by manufacturer by manufacturer,
for sure.
Mike, you mentioned public policy.
That's always an important aspect of our industry,
and franchise laws, of course, are a big component.
Where do you see franchise laws evolving
over the next few years to continue to help
the dealer body stay relevant?
Are there things that you're focused on in ADA,
things that dealers, maybe some advice that you have
to dealers that they should get involved with
that would help?
Yeah, well, my advice to dealers is to always get engaged.
So we can talk about that hopefully a little later.
ADA's primary mission is to strengthen the franchise system,
and the backbone of the franchise system
are the state franchise laws.
And on the surface, those laws may sound,
well, these are protectionists and it's anti-competition.
Nothing could be further from the truth.
Franchise laws are not as good for dealers.
They're good for consumers,
because dealers are in a position
to advocate for their consumers,
and they're actually good for the manufacturers,
even though some of them forget that at times.
It's, which can be frustrating,
but if you think about the massive investments
that dealers need to make to buy the land,
to adhere to the facility requirements
from the manufacturers,
you're not gonna get that kind of dollar.
You're not gonna get that kind of entrepreneur
to invest in something without some level
of a line of sight on a return.
So that's what franchise laws do.
They will give a dealer an ability
to see a reasonable ROI on their investment,
a lot of which is dictated
by the franchise agreement with the manufacturer.
So at NADA, we support the states.
So there are over 100 state and metro dealer associations
out there that are not affiliated.
We're not a federated organization.
We work together and we support these states.
And how do we do that?
Well, there's a different franchise law in each state.
We keep a compendium of all that information.
We have resources, we have outside counsel
to make sure that we are advising,
we are kind of the glue or the reference manual,
if you will, to help the states
that maybe need to strengthen their franchise law.
We can be the go-between between their law
and another state's law.
And of course, this group of their
called Automotive Trade Association executives,
I'm one of them, and we're always comparing notes
because at the end of the day, the dealer is our customer.
Are there any trends or things that you're focused on
specifically around how franchise laws are evolving
or things you're focused on in the short term?
Well, of course, I mean, we've all read and heard about VW
and Scout, Luluzoni and Honda and their misguided,
foolish attempts to divert resources
from their own dealer partners
and compete directly with their own dealer partners.
So the NADA is in the fight.
On those, and the way we're in the fight
is we have their challenges in both California and Florida,
very strong franchise laws with regard to these situations.
And NADA is supporting both of those challenges
from a financial perspective.
And it could be a game of whack-a-mole, we will see.
But I think Florida and in California,
we have a very good chance to win
and we will keep fighting the fight.
And my assertion is even if these misguided attempts result
in some direct to consumer sales in some states,
they're gonna screw it up.
It's hard enough to make a great car.
It is.
And those that have tried to make a car
and then sell a car at the same time,
with one exception, have failed miserably.
You look at the ones trying to do it now,
the one exception being Tesla,
they write it into orbit, early adopters,
government subsidies, and a pretty darn good product,
but you look at Rivian and Lucid,
they're hemorrhaging money, absolutely hemorrhaging money.
And then you look back to factory retail experiments,
Vroom, the whole, we need a new model to sell EVs.
Now there's talk about autonomous vehicles.
There are numerous examples of people
underestimating the complexity
and just the amount of work it takes to run a dealership.
Both from a sales, finance, body shop, serp, parts.
During COVID, it looked easy, it's naive.
You know, I think we've focused so much
on the transaction aspect of it, right?
Like consumers want an Amazon-like experience
when they are buying a car,
but I think which is what some of these companies
focused on, right?
The experience of that is great,
the website, the opportunity to shop,
but then when it comes to the purchase, the process,
the complications, the service,
like that's where they didn't, I think realize-
I heard somebody on the scout team say
buying a car should be like buying a t-shirt on Amazon.
It'll never be that.
It will, first off-
It's not a t-shirt.
The average number of documents, right,
in a deal jacket at a dealership is 150.
This is a highly government regulated transaction.
And think about buying a house, right?
You know, and we also have to realize consumers,
they, we need to focus as dealers on meeting them
where they want to be met in the process.
They're not all the same.
That's right.
And I've seen some research that we've conducted
not yet ready to publish with a third party.
It's actually the younger consumer
that is more comfortable with their experience
at the dealership.
As long as what they did before they got to the dealership
through their research,
matches what they see when they get started.
That's right.
So it's back till we sell one car at a time.
Everybody's different.
And we need to be able to meet the needs of everybody.
And those needs are very, very different
when you're buying a T-shirt versus buying a car.
And think about, well, just, I mean, Reddit profile,
driving pack, lending, I mean, Lersey, trade in, right?
You know, it's a complex process.
And why not rely on the retailers with the experience
to carry that through versus trying to modernize
just one aspect of it.
Well, and there's a lot of people
that still want to talk to people.
Yeah, we hear that too.
So Mike, wanna just pivot a little bit
and talk to you a little bit about your perspective
on dealer consolidation and how it affects the strength
and dependence and local presence of dealerships.
And what does it mean for NADA?
So I look at it a couple of ways.
Number one, we see a lot of very smart businessmen
acquiring more and more dealerships.
To me, that's reassuring in terms of strength of our model.
That's a good thing.
We also, we're not in this scenario
where the little guy is getting gobbled up by the big guy,
like you would see with a Home Depot and hardware stores.
These are willing sellers to buyers.
And so, and you also see efficiencies and that can be,
but the dealers are so, especially in the rural communities,
we're not seeing a lot of consolidation there
and that's where the relationships matter.
I do worry from a bigger perspective
that we have a grassroots net 18,000 rooftops out there
in every community, good relationships with their lawmakers.
And that is one of our strengths in terms of creating
a public policy environment to help both consumers
and dealers thrive.
As consolidation continues, we as NADA are going to need
to do a better job identifying kind of that next gen
or that next level at the dealership to make sure
that we have, we're a good team of lobbyists at NADA,
but the dealers are our best lobbyists
and we need to make sure that we have that touch
in every community that we have today.
So are you concerned that consolidation is going to lead
to maybe a reduction in the membership
or the strengths of the membership?
Well, no, I mean, we've been at 90, 91% membership
for as long as I've been within a year.
This is for over 20 years now.
Dealers are very, very loyal to the association.
I don't worry about members.
I don't worry about revenue.
I worry about engaging.
And regardless if it's a 50 store rooftop
or a three store rooftop, as long as they're engaged
in what's happening from a legislative perspective
or regulatory perspective, consumer purchase habits, brand.
Yeah, at NADA, we can recite what's good for dealers
backwards and forwards, but the lawmakers want to hear
from their constituents and they want to hear
the actual experience, the story.
So we need, we've got great storytellers
and we just got to make sure we keep our number
of storytellers at or above current level.
And that's just an ongoing challenge.
It's a, you know, it's a top, certainly a top 10 issue
for an ADA and we've got plans to address.
Mike, I have to ask, I hear some people say,
I'll see you at NADA.
Is that nails on a chalkboard for you?
Yes.
I see it in your face.
I saw it in your face.
You made it right when he said that.
Yeah, yeah, I saw it in your face.
I correct.
No, I correct people.
I just want to make sure I am asking the right authority
on whether I should be correcting people.
You know, I'm glad they're here.
I don't really care that much, but it is fun.
It's not NADA, okay.
Well, you know, this week at NADA,
a historic agreement was signed
between the U.S. Department of Labor, NADA,
ASC, which is Automotive Service Excellence,
and the State Workforce Agency.
So launch the first national standardized
competency-based registered service
technician apprenticeship program.
And we all know that that is critically important,
is finding technicians for our dealers
that is a huge opportunity from a workforce perspective.
So...
Yeah, we talked earlier yesterday, in fact,
with a gentleman who, you know,
gave us a great perspective to say like...
Teddings.
Teddings.
Teddings from Fix Ops Roundtable.
It's not that we have a technician shortage.
We are lacking in talent development.
That's true.
And so I think this program helps address that
in terms of the pipeline and the development of technicians.
Can you talk a little bit about this program
and what that looks like?
We've had a lot of stop starts with this.
It's been a problem.
Technician shortages have been a problem forever and ever.
But to see the Department of Labor lean in,
the dealers, NADA,
leaning in with a great organization like ASC,
you know, that's a powerhouse.
And we're very excited.
You know, it's a career.
The folks that get involved into dealership,
no matter what department, if they commit to it
and they work hard, they can do anything.
It's kind of a, it's one of the last great examples
of the American dream, work hard and get,
and as a technician, you can graduate from an apprentice
through tech to master tech.
You can literally write your own career path
and then you can live wherever you want in the country
because no matter which, what dealer I talk to,
they can always hire another technician, two or three.
It's a scalable, repeatable technician pipeline
that they are building.
It's such an exciting program and opportunity
and just congratulations to NADA
and what you all have done.
It's amazing.
Yeah, what else are you looking forward to this year?
What has you excited?
What's your areas that you're really dialed in on?
You know, I think I've got one of the best jobs
in the industry is I get to work with dealers.
They're just a lot of fun.
And you never know what, well,
you never know what dealers are gonna throw at you.
You never know what the country,
what the world is gonna throw at you.
I think that, look, I'm a big believer
in the franchise system.
There's misconceptions out there
that we will continue to fight.
I'm very optimistic that the year's gonna be good.
We had such a great year last year
in terms of public policy wins.
And we've got some things to tackle this year.
I mean, I mentioned direct sales.
We also have something,
and I won't get too policy-walkish on this, I promise,
that there's something called
the Surface Transportation Reauthorization Act.
This renews every five years.
And we've got a long list of things that we want included
in that act that'll be good for dealers,
good for the industry.
And we wanna make sure that we knock the bad things out.
Again, setting that environment
where the dealers can be successful.
We also have to have that mentality
that we have to do better.
We just have to do better
in terms of our customer experience.
And it's a challenging one,
but it's something that we will continue to lean in on.
And then you can't have a discussion
without talking about AI.
But from my perspective,
we need to make sure the dealer is protected
from a compliance perspective,
make sure that we're offering the right things
in terms of education,
but also getting in the middle of AI
when it comes to the car company dealer relationship,
making sure that there are principles around that.
I mean, imagine a customer bot, car company bot,
and a dealer bot all talking to each other.
What could go wrong?
I mean, we don't have that down all that smooth now.
So that and then the vendor to dealer relationship
in that space.
So those are things we need to make sure we stay ahead of,
or at least in terms of AI,
I don't know how you stay ahead of it,
but do our best to make sure
that we're advising dealers properly on keeping them safe,
but also making them more efficient,
what it is, what it isn't.
Oh, all of those things are on our radar.
Well, Mike, you got a big job.
Yeah. We appreciate everything you do.
I will continue correcting people.
Time to say.
Naida.
Naida.
No, LADA.
And thank you for your time, your insights,
and for sharing what you're working on.
Oh, no, the industry.
Thank you for taking the time to talk to me.
Thank you for being here on the convention floor.
And thank you for all you all, J.M. and A.D.S.
for its dealer partner.
Thank you.
Thank you, Mike. We need each other.
Yes, we do.
We do.
All right, thank you.
About this episode
Mike Stanton, president and CEO of NADA, discusses the current challenges and optimism within the dealership industry, focusing on affordability, interest rates, and public policy. He emphasizes the importance of franchise laws in protecting dealers and consumers, and addresses the complexities of car buying compared to simpler retail experiences. Stanton also explores dealer consolidation, its impact on local presence, and the need for continued dealer engagement in advocacy. The conversation highlights the evolving landscape of automotive retail and the critical role dealers play in navigating regulatory and market changes.
Original notes
NADA President & CEO Mike Stanton discusses dealer sentiment around affordability concerns, NADA's work to strengthen the dealer environment, key public policy initiatives and strengthening the franchise system.
In this episode you’ll hear:
- The pulse on dealer economic concerns
- How NADA is addressing technician shortages and training
- Protecting dealers and remaining compliant with Artificial Intelligence
For more information about our guest, visit their LinkedIn.
Episode Breakdown
0:00 - How are dealers feeling this year?
3:42 - Franchise laws are evolving
10:17 - Effects of dealer consolidation
13:17 - How do you pronounce NADA?
13:52 - Addressing technician shortages and training
16:04 - What Mike is excited for this year
16:42 - Protecting Dealers and remaining compliant with AI
Liked this episode? Find our full episode library here.
The Walk Around
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