He is the owner of David Westcott Buick GMC Suzuki in Burlington, NC, and has been the 2012 vice chairman of NADA and represents North Carolina’s franchised new-car dealers on the association’s board of directors.
He recently spoke with Dealer magazine about his tenure in the new year.
David, what do you see as the three most important issues facing NADA in 2013? And what will your stand on them be?
Two-tier pricing is critical and NADA will continue our discussions with manufacturers on that issue. Recently, I did a survey of our 63 members of our board of directors, who represent dealers nationwide, and their feedback was substantially that two-tier pricing is at the top of their list of concerns.
We have to be cautious talking about two-tier pricing, because we’re not suggesting that incentive payments go away in any regard, but we are suggesting that the incentive program be fair and equitable to all – large and small dealers. That’s critical, because we represent all dealers from the largest to the smallest.
Our second major concern is the facilities issue. It’s a long-term issue that we first brought up a couple of years ago. There are still no answers yet in terms of what the return on investment is for dealers in renovating or building new facilities. This has made it necessary for NADA to try to gather some of our own data to show the manufacturers whether there’s a return on investment or not. 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 exist from a brick and mortar standpoint and from the selling process standpoint.
The third issue we are concerned about is the 54 miles per gallon rule. We want better fuel economy in every vehicle, certainly, but we want to make sure it’s done in a measured way – and we want to make sure consumers are not priced out of the market. New fuel-saving technologies raise the cost of a vehicle. There is no way around it. We want to make sure consumers want the technology and are willing to pay for it. We are looking forward to the mid-term review, set for 2017, so everyone will have a better idea of whether 54 miles per gallon by 2025 is feasible.
I can’t answer for the manufacturers as to what technology they are going to have to implement, but everyone agrees that getting to an average of 54 mpg in vehicles is pretty tough. The hybrids and electrics are part of that, but you’ve got to be a little cautious. For example, I was recently visiting the Hawaiian dealers. They have some very stringent fuel economy rules and ambitious initiatives because the Islands are small and they want the best fuel economy they can get. So they are trying to sell as many electric cars as possible. It started off well, but then the market rapidly became saturated.
Now many Hawaiian dealers have an abundance of electrics and hybrids on their lots, because customers are not buying them. They are just sitting there. We have to be very cautious so that same thing doesn’t occur around the country.
Is price sensitivity the real issue here?
There’s a premium for the hybrids. It’s fine if someone wants to pay that. But it prices a lot of people out of the market.
Another issue that we continually hear about from dealers across the country is profitability. It’s tougher and tougher to actually make money selling new cars. Dealer profitability is very critical.
What do you see as your first challenge as incoming chairman?
The selection process for NADA’s new president is still ongoing. Phil Brady left office last August. I’m sure we’ll come up with a great candidate, certainly by the time of the 2013 NADA Convention.
This association is quite different from a lot of trade associations in Washington, because we are so broad-based and we are such a complex association. We have a tremendous staff here and we provide dealers a wide variety of services: Our NADART 401k plans, NADA Guide, NADA University, 20 groups, Dealer Academy, Legal and Regulatory Affairs, Legislative Department, Public Affairs as well as our Industry Affairs departments are all critical areas for our association. We are not looking to make mass changes no matter who the new president is. It’s not broke. Can we always improve? Absolutely.
Between now and the convention, I’m also getting the committees together from the director’s standpoint and making sure we have good committee assignments for everyone. That’s a very hard task every incoming chairman has. We try to meet the needs of all 63 directors and put them on the right committees.
What kind of year would you forecast for auto dealers in 2013?
Paul Taylor, our chief economist, is very good at that, and he has not committed yet. I think his original forecast for 2012 was $14.2 million cars. He believes new-car sales in 2013 will be slightly better than that. The theme for 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 is experiencing this year, where new-car sales continue to lead a slow but steady economic recovery.
What are your long-range plans for NADA?
With a new president, we’ll look at the five-year strategic plans. We are always looking for better ways to serve our dealer members. We already have a long range strategic task force in place to look at the convention of the future, because that is where we reach out to the largest number of our members at one time.
I had heard you were considering changing the month of the NADA convention.
In 2016, we are moving the date of the convention from February to April, because the dealers wanted to be in Las Vegas, and that was the only date we could get. Las Vegas books up fast, since it’s a popular convention city. So we’ll try something different; we’ll give it a shot and see how it evolves.
Please tell us about your personal history, and how you’ll draw on that for your work at NADA.
I was brought up in Birmingham, MI, a suburb of Detroit. My father was a veterinarian, but my interest was in the automotive industry. After graduating from Wayne State, I went to work for Detroit Diesel, which is part of GM, as a service instructor and later as a sales instructor. After a period of time, I made the transfer to GM’s Pontiac Motor Division, went through training, and became a district sales manager. I was sent from Detroit to Ohio, then Texas, and then South Florida. That was a terrific job and gave me great insight into the wholesale business. From there, I went to work for Jim Moran’s Pontiac dealership in Hollywood, Florida. That was a good experience. Then I owned a daily rental company with eight locations in the South Florida market.
In 1981, I started looking for a dealership and, after a few months, was successful at finding one in Burlington, NC, and bought that. It’s been a good situation in a good state, and a great place to raise our family. I have been blessed to have a great and beautiful wife Debbie for 42 years. She has been my partner in all we have done. We have two great children: Jennifer, who is a financial analyst with a major computer firm and my son Greg, who works with me in the dealership. He and our daughter-in-law Ashley have given us two grandchildren. Langdon is six and Mason is three. They are our highlights. So, I’ve had several different experiences and all of them give me a solid background for my new position.
Who will be tending to your dealership, while you are focused on NADA this year?
My son Gregory is in the business with me and he’s doing a great job. He’s my partner, vice president and general manager. His job covers everything – especially now with my leadership role at NADA.
How did you first get involved with NADA?
Like a lot of dealers that are involved in giving back to their industry, I got involved first with our state association. I was on various committees, and was fortunate to be elected chairman of the North Carolina Auto Dealers in 1995-1996. Working with Bob Glaser, the president of our state association, for these past years has been very rewarding. He has done an outstanding job. At the time, Harold Wells was the NADA director representing North Carolina and he later became NADA Chairman.
When Harold decided to retire from the NADA board, I ran and was elected as the NADA Director for North Carolina. I’ve been actively involved with NADA for the last 10 years. I will be the sixth director from North Carolina to serve as NADA chairman. I have been fortunate to head up quite a few committees at NADA, which has provided me a good sense of the scope and potential of the association. I have a good feel for what we’ve done and what we’ll continue to do. A year ago, I ran for and was elected to vice chairman and, in 2013, chairman. In my view, there couldn’t be a bigger honor in a dealer’s career than to represent 16,000 dealers as NADA chairman in what we consider to be the best industry in the world. It’s exciting.
What is your sense of the relationship between dealers and manufacturers right now?
Let’s face it dealers and manufacturers are not going to agree all the time, but hopefully they’ll agree 95% of the time. The manufacturers that have the best rapport with the dealers are the one that not only talk to their dealers, but also listen to them, get them involved on the ground floor of an issue or an idea.
It’s up to the manufacturers to make up their own minds what they’re going to do, because it is their company, but getting the input from the retailer, the dealer, before the manufacturer makes some big decision is critical – as opposed to the top down approach that some manufacturers take: ‘Here’s an idea and you’ll love it.’ The bottom up approach is a much better way to go.
Are there any OEMs you want to point out as doing a fabulous job in that respect?
I’m not in the business of singling out any particular OEM. But it’s easy enough to know which ones regard their dealers as true partners in the industry. Their dealers will tell you.
In what ways do you see technology changing the industry in the next five years?
Five years is way too long for me to forecast technology. In today’s world it is changing so fast, it is sometimes even difficult to foresee the changes in the next six months. Look back even a few years; customers used to come in to look at new cars to figure out what vehicles they wanted. In today’s world, they know what they want before they come into the showroom. Technology is continuing to change most everything the dealer does – where to advertise, the selection of vehicles, how to deliver cars, etc. It’s really amazing when my three-year-old grandson can use my iPad. Just imagine how that is going to evolve by the time he is five years old!
Technology is changing fast and it’s hard from a dealer’s standpoint to decide which technology solutions you want to go with. But it’s also exciting.
Let’s talk about your leadership style and how that will be manifested at NADA.
When you become chairman of NADA, you’re going to lead the association, but you are not going to micromanage it. My goal was not to come in and make major structural changes, but to improve on what exists. Every department has some situation that I’m going to give my input to, but I’m going to guide and lead, not do the day-to-day management. We have a tremendous staff at NADA, 320 employees. They are talented, they are dedicated and they are quite capable.
Let’s talk about a few other timely issues. What’s your opinion on Tesla Motors bypassing state franchise laws and selling directly to consumers?
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. It’s the envy of the rest of the world. Tesla has a different business model for their company and the way they sell their 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. We support the franchise system.
What is your stand on the right to repair law that has been passed in Massachusetts and similar laws that are being pushed forward in other states?
NADA strongly opposes the so-called “right-to-repair” (R2R) concept. It’s a solution in search of a problem. R2R is based on the mistaken premise that the information necessary to service and repair vehicles is not available to independent, non-dealership service technicians. In fact, automakers and numerous third party vendors (Identifix, ALLDATA, Mitchell 1) already sell this information to dealerships and independent repairers. This is why 75 percent of all non-warranty service is performed by independent repair shops. There is no question that today’s cars and trucks are complicated machines, but the industry has already developed a free process to address any problems related to access to service information and diagnostic tools. It’s important to note that those in favor of R2R are aftermarket parts manufacturers (AutoZone, NAPA, Advanced Auto Parts, CarQuest etc.) – not independent repair shops. These parts manufacturers are attempting to force automakers to turn over proprietary information under the guise that independent mechanics do not have access to the information they need to repair cars.
As a Suzuki dealer, how do you feel about Suzuki declaring bankruptcy in the U.S.?
Suzuki worldwide is a viable company. I believe Suzuki sells a huge percentage of the cars in India, as well as a number of other countries around the world. For whatever reason, Suzuki did not want to make the financial commitment for marketing in the U.S. So, the bankruptcy is occurring, but they are going to retain their ATVs and their marine business, so they’re working through the bankruptcy situation with dealers at this point.
As a Suzuki dealer, I’ll have one less franchise. The car was great and there’s still a fair amount of Suzuki inventory around the country and it will be fully backed by warranty. We’ll still satisfy our customers, because we’ll be a Suzuki parts and service dealer for years down the road. It’s too bad that the bankruptcy occurred. But it’s Suzuki’s decision.
Has NADA been involved with helping dealerships in New Jersey and New York that were hard hit by Hurricane Sandy?
Yes. Our charitable foundation’s Emergency Relief Fund is helping dealership employees that have been affected by Hurricane Sandy. NADA appropriated $1 million to the relief fund and another $500,000 has been contributed by individual dealers, as well as state and metro dealer associations, including $250,000 by the Greater New York Auto Dealers Association. We are working very closely with the state and metro associations in the affected areas to make sure the word gets out about the emergency relief. As of late November, 350 employees have received close to $200,000 in relief assistance, mostly from New York and New Jersey. And that number is growing every day. We expect this to be a long-term process. After Hurricanes Katrina and Ike and Gustav, for example, we continued to receive requests for assistance six months after the storms.
The used car business has been booming this year. How will Hurricane Sandy affect this?
We’ll have to see how the effects of the hurricane impact used car values. I think short term it will spike some prices in certain parts of the country. I don’t think it will affect prices in California, since it happened in New York and New Jersey, but with an estimated 100,000 to 250,000 used cars that have been damaged, it’s certainly going to have an effect in the Northeast.
Also, I think manufacturers are trying to quickly help out the dealers in that area, if they’ve lost new inventory, by giving them replacement inventory. It’s tough; there are still a lot of challenges out there. It was the most powerful storm to hit that area in recent memory.
Anything else you’d like to say to our readers?
I’m honored and excited to serve as the NADA chairman. The NADA story began back 1917, when 30 auto dealers traveled to the nation’s capital, where they successfully convinced Congress that the automobile was a necessity of American life, and thus, prevented the imposition of a luxury tax that would have increased the cost of new vehicles. That’s an important legacy and one that we are proud to continue. NADA is stronger today than ever. We represent nearly 16,000 new car and truck dealers, with 32,500 franchises – both domestic and international. And we are committed to doing whatever we can to help each one of our dealer members succeed.