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FADA
Delegation Visits NADA in USA on a Study Mission - A Report A 7-member delegation led by Binod Agarwal, President, FADA and comprising Jayendra Kachalia, Immediate Past president, Mumbai; Prem Bagga, Council Member, Delhi; Sharath Vijayaraghavan, Council Member, Chennai; Nikunj Sanghi, Council Member, Alwar; Shirish Jadhav, Council Member, Pune; and Gulshan Ahuja, Secretary General, FADA, visited the headquarters of National Automobile Dealers Association (NADA) located in McLean, Virginia, USA from 24th to 28th July 2006 on the latter's invitation. The first delegation of FADA under the leadership of the then President, Vinay Nevatia had visited NADA in 2000 and come back with lots of ideas for strengthening the activities of FADA aimed at improving the profitability and working of automobile dealerships in India. The objective of this visit was to carry forward and deepen the relationship with NADA established in 2000 and to imbibe new ideas that would help improve the working of automobile dealerships in India and make FADA more meaningful to its members. The delegation was welcomed by Phil Brady, President, NADA, who gave an overview of the working and structure of NADA and the automotive scenario in USA in general. Organisational Structure NADA is managed by a Board of 58 directors elected every year. The Board of Directors elected by members in turn, elects Chairman, Vice Chairman, Secretary and Treasurer. The Board also constitutes various Committees, viz., Government Relations Committee, Industry Relations Committee, Membership Committee, Policy & By-Laws Committee, Dealership Operations Committee, Convention Committee, Information Technology Committee, Regulatory Affairs Committee and Executive Committee for smooth conduct of NADA activities. Decisions on organisational matters are taken by Executive Committee and vetted/ratified by Board of Directors, wherever necessary. Executive Committee also manages NADA Retirement Program extending pension, profit sharing and 401 (k) plans to employees of automobile dealerships after their retirement. It also manages NADA Insurance Trust offering dealers, employees and their families, life, accident and long-term care insurance, on payment of reasonable fees. These two schemes are important components of NADA's revenue model. Other related organisations/divisions functioning under the aegis of NADA Board of Directors are: American Truck Dealers, NADA Charitable Foundation, Dealers Election Action Committee, and Legal Defence Fund. NADA Secretariat NADA Board of Directors is supported by a 460-member strong Secretariat headed by Phil Brady, President and comprising 11 teams/departments taking care of various activities of NADA and its associate organisations. Functional responsibilities of these departments, each department being headed by a Vice President, are divided into: Personnel & General Administration, Management of Charitable & Election funds, and Administration of Automotive Trade Association Executives (ATAE) - an umbrella organisation of 90 State & metro level associations; Legal & Regulatory Affairs; Dealership Operations including Conventions, Membership, Dealership Operations, Dealer Academy, 20 Groups and Management Education; Industry Affairs including Industry Relations, Industry Analysis & Economic Data; Legislative Affairs including Grassroots Lobbying and ATAE Legislative Support; Accounting, Finance & Budgeting; Insurance Plans & Programs for Dealers and their Employees; Management of Retirement Fund/Plans for Dealer employees; Technological Services; and Public Affairs including Communications, Public Relations and Publications. NADA Membership
Of the 20,026 NADA members, 1,900 are truck dealers and the rest are passenger car and light motor vehicle dealers. Automotive Scenario in US New Vehicle Sales
The sales of large cars and Crossover Utility Vehicles (CUVs) grew by 32% and 14%, while truck-based SUV sales dropped by 13% in the year 2005. Toyota was in the front of pecking order with a growth of 11 % in the year 2005.
Gross & Net Profit Per New and Used Vehicle Sold by a Dealership in 2005
Gross Sales Margin on a New Vehicle on an average: 10% Department Contribution to Operating Profit of a Dealership in the year 2005:
NADA Dealer Optimism Index remains at relatively strong levels in spite of stagnating sales and shrinking margins on new vehicle sales. Major Activities & Initiatives of NADA 1. Industry Relations Coordinated by Industry Relations Committee and supported by its Industry Affairs Department, NADA represents and communicates dealers' interests to the manufacturers. Meets with car company senior management a minimum of two times per year to discuss the NADA Dealer Attitude Survey results. Holds additional meetings and dialogue sessions with manufacturers throughout the year. Dealer Attitude Survey Conducted in January and July, the Dealer Attitude Survey measures dealer opinion regarding their manufacturer(s) on a variety of topics including franchise value, automaker policies and the helpfulness of its people. Winter 2006 Survey response rate was 40%. NADA's Industry Relations Group conducts approximately 46 special analyses for manufacturers each year, including regional analysis, geographic analysis, historic trend analysis, issue driven analysis and consideration of dealer input analysis. The Survey affords an opportunity to NADA to meet the manufacturers to discuss findings for improving manufacturer-dealer relations. Arising out of the survey findings, 106 meetings were held with manufacturers in the year 2005. 530 representatives were present at these meetings. Representation in Dealer Council Dealer Councils of respective manufacturers have 1 or 2 representatives of NADA. NADA - 24 This is a service provided by NADA to its member dealers to gauge the service experience of their customers. A dealer availing this service makes available online the data of their customers to NADA. An agency appointed by NADA gets in touch with the customers within 24 hours of service to know their experience. Findings are communicated to the dealers concerned for their information and corrective action, if necessary. Industry Analysis Analyses, compiles and brings out national, state and regional statistical information on dealerships, including sales; personnel and vehicles, and economic forecasts and insights. 2. Legislative Affairs Legislative Affairs Department of NADA located in Washington DC in the proximity of Capitol Hill is entrusted with the responsibility of legislative analysis, lobbying and reporting and keeps NADA updated on current legislative issues. The Department works closely with Automotive Trade Association Executives composed of State and metro level associations of automobile dealers for exchange of inputs and information. 3. Legal and Regulatory Affairs Monitors, testifies, and reports on legal and regulatory issues. Develops and provides educational and compliance materials to dealers. Oversees Legal Defence Fund. Since the retail automobile trade including manufacturer-dealer contractual relationship, is regulated by automotive franchise laws enacted by the States, Legal Affairs Group advises dealers on provisions of the law and finer legal points in case of principal-dealer disputes. NADA in some cases also supports its members financially from the Legal Defence Fund and by way of amicus intervention in the litigation. In view of the protection afforded by Motor Vehicle Franchise Laws of various States, cases of termination of dealerships are few and far between. 4. NADA's PAC: Dealers Election Action Committee This is NADA's political action committee. Oversees and administers the Presidents Club, Major Donor programs and political contributions to federal candidates considered supportive of retail automobile trade. 5. NADA Conventions and Expositions NADA Convention & Exposition is organised every year in February. The Convention is a big draw and accounts for a major chunk of NADA's revenue. Attendance at the 2006 Convention held from 11th to 14th February 2006 at Orlando, Florida added up to 25,757. 36 franchise meetings, at which over 15,000 dealers and their managers were present, were organised during the 4-day Convention. About 45 workshops on different topics are held at the annual NADA Convention. Top industry speakers present workshops in six different tracks of study. Simultaneously, an Exposition of garage & office equipment, tools, accessories and peripherals is also organised as a part of the annual convention. The next NADA Convention expected to draw around 40,000 delegates will be held during February 3-6, 2006 at Las Vegas. Since the issues and concerns of truck dealers differ from those of car dealers, a separate ATD Convention is organised in April every year. 6. Public Affairs The Public Affairs Group is responsible for strategic communications, public and media relations, member communications and marketing, as well as print and online publications. It oversees a number of special programs, including the Time Magazine Dealer of the Year Award, the USA Today Dealer Innovation Award, NADA Century Award presented to dealerships that have been in business for at least 100 years, Code of Ethics, and a number of auto safety initiatives (Child Passenger Safety, Booster Seats, etc.), developed in partnership with the National Highway Traffic Safety Administration. 7. Major Print and Online Resources NADA brings out monthly magazine "Auto Exec" that is very popular. NADA also brings out a number of other publications and e-newsletters periodically. 8. Dealer Academy Training Programs The Dealer Candidate Academy (DCA) program is designed for men and women who are expected to become dealership owners and operators. The General Dealership Management (GDM) program is designed to develop qualified managers to assure the continued growth and continuity of a successful dealership. Each of these programs takes place at NADA Headquarters in McLean, VA. Method Each of the Academy's programs (DCA and GDM) is a 12-month training program, combining six weeks of classroom instruction with approximately 45 weeks of work experience in the sponsoring dealership. Following a week of intensive formal training, students go back to their dealerships for an average of eight weeks to complete a structured homework assignment in their normal work environment. When the students meet for their next week of classroom instruction, a portion of the first day of class is devoted to a review of the preceding in-dealership work experience. The remaining days of class are devoted to a new area of dealership management. Benefits
Cost Tuition for the twelve (12) months of instruction is $7,700 (payable in 4 quarters) plus travel, room, and board. All classes are held at the NADA Academy campus in McLean, Virginia. Additionally, a one-time non-refundable application processing fee of $800 is required at the time of application. Training Level NADA Academy imparts management training that is targeted at dealer owners, CEOs and General Managers, while training of technicians is conducted by the State & metro level associations. Management Education Program In addition to the Academy Training Program, one-day to four-day seminars are organised at various locations across the country on different topics pertinent to dealership operations. 9. NADA Group 20 Program Features Group 20 meetings offer NADA members the opportunity to meet with up to twenty-two dealers of non-competing dealerships of similar size and franchise to analyse each other's operations and share best practices. NADA consultants facilitate conversations between participants. Group 20 Programs The NADA 20 Group program currently has over 170 different groups, representing dealers of all sizes and most franchises. 20 Group personnel work with dealers to identify the group that best fits the needs and wants of each dealer, based on franchise, volume, location, and travel preferences (some groups have a more conservative travel policy than other groups). "Free Demo" Potential 20 Group participants are able to experience their first meeting free of charge (excluding travel-related expenses), and with no obligation to join. Initial considerations for placement in a group There are three major items for constituting a possible group: (1) Make - The same franchise; (2) Sales Volume - The dealers selling approximately the same number of new and used vehicles; and (3) Geography - is checked to make sure that a member is not in competition with another member of the group. Number & location of Meetings All 20 Groups meet at least three times a year. Some groups hold a fourth meeting at which a specific department manager is invited to attend. The Group determines the dates and location of all meetings based on mutual convenience. Duration of Meetings All meetings are 12 hours in length. Some groups meet for three half-days, while others meet for a day and a half. Each 20 Group has its own traits, which determine how much time and money members will spend. Regardless of the group's style, all groups have the same goal - to increase the profitability of its members! Cost to a Participating Member Dues for a participating member are $250 per month with a one-time set-up fee of $225. Members pay for meeting expenses including their personal travel and hotel expenses, and a share of the consultant's travel expenses, group meals and other miscellaneous meeting expenses. Benefits to the Participating Member A member receives a monthly financial composite, either printed or electronic version, that compares his store with the other members of his Group 20 and his franchise's performance targets. He also receives a free copy of The Best of Group 20 Ideas, which is published annually and the latest edition of Group's Guides and Expenses Profiles. He/she has continuous access to his/her consultant throughout the year. ATD Group There are separate groups for truck dealers. 10. NADA Official Used-Car Guide The Used Car Guide - a monthly publication - is one of the key and revenue generating activities of NADA. Having a circulation of 30,000 copies out of which 6,000 are paid subscribers, the Guide is intended to assist subscribers in their evaluation of a particular used vehicle during a particular period of time. A monthly publication on ruling used car prices, it is a reference book for used car buyers. Visit to Car Dealerships Visit to two dealerships of Ford and General Motors respectively was an integral part of this study tour. The delegation visited Ted Britt Ford and Dudley Martin Chevrolet located in the State of Virginia to have first hand information on the structure, profile and working of the automobile dealerships in US. Visit and interaction with the CEOs of these dealerships brought forth a few interesting revelations:
Visit to Auto Auction House There are two major auto auction houses, viz. Manhiem and Adesa having a network of auction houses all over the country. Manufacturers buying back vehicles from fleet operators sell those vehicles through these auction houses. The agenda of FADA delegation also included a visit to Adesa Auction House located in Dulles, near Washington DC. Observations:
A Few Facts about US Automobile Retail Trade Dealers are a Political Force New car and truck dealers are uniquely positioned to build long-term grassroots relationships with members of Congress. The National Automobile Dealers Association has over 20,000 franchised dealerships as its members who provide jobs for about 1.1 million people. The average dealership has about 55 employees, and most members of Congress welcome the opportunity to visit a dealership and meet the people whose livelihoods depend on the continued success of franchised dealers. Also, most dealers are committed to civic and charitable causes in their respective communities and elected officials happily participate in widely attended community events. Dealers are an Economic Force
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