William Bradshaw - American International Automobile Dealers

Candidates on the Issues 14 | Close-Up on MINI 16 | The End of Arbitration? 22
AutoDealer
The Magazine of the
Volume 2 Number 2
summer 2008
William
Bradshaw
2008 AIADA
Dealer of the Year
Presorted
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AutoDealer
contents
VOLuMe 2 NuMBeR 2
suMMeR 2008
The Magazine of
13
PresiDent
Cody Lusk
Vice PresiDent of Public
AnD inDustry relAtions
Lori McMahon
ProDuction eDitor
Libby Krum
contributing Writers/PhotogrAPhers
Melanie Batenchuk, Marty Bernstein,
Jim Koscs, Mark Odell, Rachel Robinson,
16
14
Design consultAnt
Larnish & Associates
features
A Capitol event: AIADA’s 2nd Annual International
Auto summit and Dealer of the Year Awards PaGe 9
For more information about AIADA,
topics addressed in this issue, or for
additional copies of AutoDealer
AutoDealer, please contact
AIADA Publications at publications@aiada.org
or 1-800-GO-AIADA.
Where Do They stand? Presidential Candidates
Face-Off on the Issues that Matter to Dealers PaGe 14
The Big Time: A series of Happy surprises Helped
Rocket BMW’s MINI Brand to stardom PaGe 16
boArD of Directors
mr. Jim Hudson
Jim Hudson Automotive
Group
Chairman
mr. russ Darrow
The russ Darrow Group
Chairman elect
mr. rick Desilva
Liberty subaru
Vice Chairman
mr. John H. Hawkins
Great metro Autogroup
Immediate Past
Chairman
mr. Fritz Hitchcock
Hitchcock Automotive
resources
secretary/Treasurer
mr. ralph Ghioto Jr.
Century Isuzu Kia
mr. Al Gossett
Gossett motor Cars, Inc.
mr. Don Herring
Don Herring mitsubishi
mr. Brad Hoffman
Hoffman Auto Group
coLuMns
Dealer Involvement
Actions to Advocacy PaGe 5
View from the Hill
under Attack! PaGe 6
Arbitration Act a Threat to Dealers PaGe 22
mr. Jim morrill
Planet subaru
Industry Insider
u.s. Dealers Get smart PaGe 7
earth Day the Fitz Way PaGe 21
mr. ray mungenast
mungenast Automotive
Family
ms. Peggy Proko
Peter’s Auto sales
mr. robert V. rohrman
Bob rohrman Toyota
mr. George Brochick
unitedAuto Group, Inc.
ms. Jenell ross
ross motor Cars
mr. Dave Conant
The CAr Group
mr. Jim smail
smail Auto Group
mr. Allen Courter
Honda Auto Center
of Bellevue
mr. Tim smith
Bob smith BmW
mr. morrie Wagener
morrie’s Imports
From the Chairman’s Desk PaGe 4
Did You Know? PaGe 26
mr. Larry Kull
Burns Kull Automotivve
mr. Jamie Auffenberg
Auffenberg Auto mall
mr. Jack Fitzgerald
Fitzgerald Auto malls
D e Pa rt M e n t s
8
In the News
end the Drift Toward Closing the Door on Trade PaGe 8
Partner Spotlight
Key AutoFinance is Committed to Helping Dealers
PaGe 20
21
Dealer Spotlight PaGe 23
Larry Kull, Burns Kull Automotive
Mike Johnson, Mike Johnson’s Hickory Toyota
Brian smith, Dick smith Automotive Group
everett Hellmuth, Passport Automotive Group
AutoDealer s u mme r 2 0 0 8 | 3
froM the chairMan’s Desk
P
olitics seems to be at the
forefront of my mind lately.
It could be that I just recently
returned from AIADA’s
2008 International Auto Summit in
D.C. It could be the non-stop media
coverage of the fast-approaching
presidential election. Or it could be
the growing realization that in these
tough economic times
legislation will impact
my bottom line more
than ever. Most likely,
it’s all of the above.
And I bet a lot of you
are feeling the same
way.
That’s why this
summer edition of
AutoDealer magazine
has a significant
political bent. A
primary focus of
AIADA is to keep our
membership informed
on what’s happening in Washington,
D.C. We don’t tell you how to react to
legislation or vote in elections; but we
do want you to be equipped with all
the facts.
A good example is the Automobile
Arbitration Fairness Act of 2008. On
page 22 you will find a detailed
explanation about the proposed bill
that would drastically alter the way
car dealers do business in this country.
You can also read more about the
history of vehicle arbitration, and the
complexities involved in the debate
over its place in our stores.
And as always, this issue features
our Government Relations team’s
in-depth analysis of the action in the
Capitol: “View from the Hill.” For
those of us living outside the beltway,
“View from the Hill” is an invaluable
4 | AutoDealer s u m m e r 2008
resource; breaking down knotty
legislation into terms us mere humans
can understand.
But the real story this summer
will continue to be the race for the
White House. Turn to page 14 for a
comprehensive rundown of where each
of the candidates stands on the issues
that make or break car dealers. We took
the time to analyze how
the candidates would treat
topics ranging from the
Death Tax to emissions
rules, and some of their
stances are truly revealing.
As chairman of
AIADA, I don’t ask you
to mirror my political
beliefs. But I do ask that
you make every effort
to be an informed and
active member of this
organization. Informed
dealers are always, always
successful dealers. This
magazine is a great place to start, but
don’t stop there. Contact the folks in
AIADA’s headquarters to find out how
you can influence legislation through
phone calls, interviews, and dealership
visits with your congressman.
It can be tempting to tune out
droning political coverage, but when it
comes to our businesses, can any of us
afford the cost?
jiM huDson
aiaDa chairman
The American International Automobile Dealers Association is the only
national lobbying force in the united
states dedicated exclusively to the
economic and political interests of
America’s international nameplate
automobile dealers. AIADA was
founded in 1970 in order to increase
awareness of the international nameplate automobile industry’s value to
the u.s. economy. The association
serves as an advocate for the industry
before Congress, the White House,
and federal agencies. It focuses its
lobbying efforts on trade and anticompetitive restrictions that limit the
availability of international nameplate automobiles, full repeal of the
Death Tax and other tax measures,
affordable healthcare, energy and
fuel economy policies that constrict
consumer choice, and other industryrelated issues.
aiaDa affinity Partners
Dealer Involvement
Actions to Advocacy
Four Easy Steps to Contact Your Members of Congress
I
n this tech-savvy age, using
the Internet to send a letter
to your members of Congress
can be just as easy as checking
the weather or monitoring
your stock portfolio. But just in case
you’re not a computer whiz, AIADA’s
Legislative Action Network (L.A.N.)
is always on call, making sure your
letter reaches its target and stands out
from the pack. L.A.N.’s website makes
contacting your members of Congress
simple and confusion-free.
E-mail traffic is extremely high
on Capitol Hill. Staffers can read and
answer anywhere from 10 to 150 letters
from constituents per day! But you
won’t have to worry about your letter
getting lost in the shuffle — AIADA
will prepare the appropriate text for
you to send to your legislators.
Tips to Make Your Message
Appealing to Capitol Hill
The more original the letter, the
better. AIADA will always provide
recommended text for you to send, but
that does not mean you can’t add to
it. Take a moment to share a personal
story that fuels the fire in your belly for
the issue you’re writing about.
Name the specific issue. Hill staffers can’t address your specific concerns
if you don’t tell them what they are.
Make sure to include the topic name
(e.g., “arbitration” or “national CAFE
standards” or “free trade”) in the subject line and as part of your text.
Identify the bill number and its
title. Noting the exact bill numbers
and titles (e.g., “H.R. 5312 The Automobile Arbitration Fairness Act of
2008”) will also help staffers identify
how best to respond to your letters.
When you use AIADA’s website
to send a letter to your members of
Congress all the information is at your
fingertips! AD
It’s as easy as
1 – 2 – 3 – 4!
1
Click on L.A.N. action alerts and updates.
This will take you to the Take Action
Center where you can select an issue
to email Congress about. For example,
clicking on “Oppose the Sanchez Bill
H.R. 5312” or “Support and Pass the
U.S.-South Korea Free Trade Agreement”
will take you to a prepared letter on each
issue.
Visit our L.A.N. website at
www.aiada.org/lan
2
3
In Section 1, you will compose your
message. This includes choosing a prewritten introduction prepared by AIADA,
but feel free to type your own personal
experiences with an issue directly below
the introductory text.
4
Section 2 asks for your sender
information to identify the
congressional district in which
you reside. After this step
you will be able to “Preview
Message.” Finally, click
“Submit” to send your letter
to Washington.
AutoDealer s u mme r 2 0 0 8 | 5
v i e w f r o m t h e h i ll
Under Attack!
Dealers Face Danger from Congress on Multiple Fronts
I
t’s not the title of the latest
summer blockbuster to hit
theaters — but it is pretty
hair-raising. It’s what’s happening to your bottom line
thanks to the actions (and inaction)
of Congress and various state governments. International dealers are facing
a variety of challenges this summer,
ranging from shifting fuel rules to the
possible end of arbitration as we know
it. Here are just some of the most urgent issues AIADA’s Government Relations team is tracking, in Washington
and throughout the country.
States Seek to Circumvent
National Fuel Rules
At the end of 2007 Congress passed
and the president signed into law the
Energy Independence and Security Act of
2007. The act set aggressive new Corporate Average Fuel Economy (CAFE)
standards, requiring a fleet-wide average of 35 miles per gallon by model
year 2020. Many in the industry hoped
that the new legislation would squash
California’s and other states’ demands
that they be granted a waiver from
the Environmental Protection Agency
allowing them to regulate tail pipe
emissions within their borders. Shortly
after the Energy Independence Act
was signed into law, the EPA denied
California’s waiver request, noting the
hard-hitting standards that had just
been enacted by Congress. California
promptly filed suit against the EPA.
Since then, the battle between the
EPA and California, along with the
numerous other states, has become the
focal point of the energy debate. In 2008,
two separate pieces of legislation were introduced to overturn the EPA’s decision
to deny California a waiver. As a united
front, AIADA, AIAM, NADA, and the
Auto Alliance have joined forces to aggressively lobby against such legislation.
6 | AutoDealer s u m m e r 2008
Meanwhile, U.S. Transportation
Secretary Mary Peters announced in
April benchmarks geared at ensuring
the industry meets its end goal of 35
mpg by 2020. The secretary proposed
fuel efficiency standards for both
passenger vehicles and light trucks increase 4.5 percent per year over a fiveyear period, ending in 2015. Secretary
Peters calls the proposal to increase
fuel economy for passenger cars from
the current 17.5 mpg to 35.7 mpg by
2015 and for light trucks 23.5 mpg in
2010 to 28.6 mpg in 2015 “historically
ambitious, yet achievable.” These aggressive standards were well received
on Capitol Hill, where many thought
the Department had not done enough
in recent years to move the industry
forward.
Congress Threatens
Trade Deals
The anti-trade sentiment on Capitol Hill and the protectionist language
used by the Democratic presidential
hopefuls has caught the attention
of America’s business sector. House
Speaker Nancy Pelosi’s (D-Calif.)
delay of a vote on the Colombia Free
Trade Agreement has caused particular
concern. The consequences of her actions are as yet unknown; but many
believe they could negatively impact
the passage of the U.S.–South Korea
Free Trade Agreement (KORUS FTA).
Despite a resolution on the beef issue
that many in Congress considered a
sticking point, Democratic leaders on
the Hill say they now want more. First
on their wish list: a fix for autos and
the completion of trade adjustment
assistance legislation before they will
consider the KORUS FTA.
Arbitration Under Attack
Most dealers use pre-dispute arbitration clauses in their sale and lease
AIADA Positions
(Complete position papers available
at www.aiada.org/policyissues.)
• A
IADA firmly believes the best
CAFE standard is a national
standard and not a patchwork
quilt of state regulations, which
would cause administrative
complexity, unnecessary and
wasteful costs, and potential
constraints on vehicle
availability.
• A
IADA is committed to working
for the successful approval of the
KORUS FTA and will push forward to make sure the value
of the agreement and all free
trade is understood and recognized by members of Congress.
• A
IADA believes arbitration is an
affordable, accessible, and efficient means to settle disputes
between dealer and consumers
and therefore, AIADA Opposes
H.R. 5312.
contracts for one simple reason: they
work. Arbitration has been proven to
save time and money for the dealer
and the consumer. But that didn’t
stopped Linda Sanchez (D-Calif.) from
introducing on February 7, 2008, H.R.
5312, the Automobile Arbitration Fairness Act of 2008. The act would nullify
a party’s right to compel arbitration
without the agreement of both parties,
despite the parties’ prior consent to
the arbitration provision in the parties’
agreement. You can learn more about
the arbitration issue by turning to
page 22. AD
industry insider
U.S. Dealers Get Smart
Russ Hill, Smart USA’s Director of Retail Operations, Talks Strategy
A
t just 8.8 feet long
and 5.1 feet wide,
the Smart fortwo is
making a big splash
in U.S. showrooms. A
long-time fixture on Europe’s narrow
streets, the tiny fuel-sipping smart car
has found a niche in America, and
has timed its introduction perfectly to
coincide with skyrocketing gas prices
and a nation-wide “green” movement.
It also doesn’t hurt that the fortwo’s
snub-nosed design and spunky styling
is undeniably cute.
In January 2008, when the fortwo
entered showrooms, more than 30,000
prospective buyers in the U.S. had
already placed their $99 deposits on
it via the Internet. It was that level
of anticipation that convinced Russ
Hill, Smart USA’s director of retail
operations that he was on the verge of
something, well — product size aside
— big. And the excitement wasn’t just
coming from consumers. Dealers also
wanted in. “The dealers have been
excited well before the product came
to the market place,” said Hill, who has
been with Smart USA, part of Penske
Corporation, since July 2006. “That’s
what energized all of us.”
In 2006, after announcing their
intention to bring the Smart car
to American shores, Smart USA
created a website where dealers could
indicate their interest in selling the
fortwo. Between July and November
of that year, 1,400 dealers signed up.
In order to create what Hill calls a
“lean retail operation,” just 68 stores
were eventually established, with the
bulk of dealers already affiliated with
Mercedes-Benz, Smart’s manufacturer.
In order to keep lines of communication open, and extend the dealermanufacturer ‘honeymoon period,’
Hill spends about 80 percent of his
time in the field, where he helps
solve any start-up problems and
absorbs dealer input. As corporate
identity is critical to Smart’s success,
a design theme has been installed in
every dealership. So far, dealers have
embraced the black exterior and crisp
white interior. “It’s unique without
being weird,” says Hill.
Hill admits working for Smart
has its share of surprises. The $99
reservation program, which functioned
as a sort of census, dashed a number
of his preconceptions, including
the expectation that sales would be
concentrated in blue-state cities.
While sales of the car are predictably
strong in New York, Boston, and San
Francisco, customers are also lining
up to buy in Omaha, Albuquerque,
and Knoxville. “That shouldn’t have
surprised us,” said Ken Kettenbeil,
Smart’s director of communications.
“In Canada 50-60 percent of our sales
are in prairie areas.” That’s good news
for Smart, which is already mapping
out a potential dealer expansion.
Another surprise has been the
sustained growth. “We expected
enthusiasm to tail-off and it hasn’t,”
said Hill. “The more exposure, the
more positive growth we’re having.
We were originally going to be very,
Before his promotion to the smart
project, Russ Hill
was the area vice
president for seven
of Penske Automotive Group’s
Northern California dealerships
very conservative with the
number of cars we had in the
marketplace, to keep demand
up. But we realized we didn’t
have to.” And Smart USA isn’t
worried about a downturn
in the economy. They predict that a
return to rational spending will only
improve sales of the fortwo, which has
a base price below $13,000.
With their successful introduction
out of the way, Smart USA is settling
in for a long ride in America. President
Dave Schembri calls the process
of selling the fortwo “discovery
marketing,” acknowledging the steep
learning curve that accompanies such
a unique vehicle. So far, Russ Hill
and all of his dealers are enjoying the
adventure. AD
Smart’s Buyer Profile
Smart USA says the fortwo transcends demographics. However, they have identified four
different groups, all well-educated and Internet savvy, where the head-turning micro car
does well.
1. 1st Time Buyers: 20-somethings with limited driving bubbles who view the car as a hip lifestyle accessory.
2. Metro-Cools: 30-somethings in urban environments who need minimal transportation, are environmentally conscious, and grateful for its ease of parking.
3. Baby Boomers: Looking to spend discretionary income on a fun car that brings
them joy.
4. Active Retirees: Empty-nesters who didn’t need any more transportation than what the Smart offers.
AutoDealer s u mme r 2 0 0 8 | 7
in the news
End the Drift Toward Closing the Door on Trade
It’s Not Too Late to Stop the Move Toward Protectionism
T
here is a disturbing trend
in Congress toward
trade protectionism, as
members seek a shortterm political gain in an
election year by striking an anti-trade
stance. But Congress risks doing longterm damage to our economy and our
reputation for good-faith negotiating.
President George W. Bush in recent
days has reiterated his call for approval of a free trade agreement with
Colombia, which was taken off the
U.S. House’s calendar last month by
Speaker Nancy Pelosi.
LEFT TO RIGHT: Steny Hoyer (D-Md.), Sen. Richard
Durbin (D-Ill.), Senate Majority Leader Harry Reid
(D-Nev.), James Clyburn (D-S.C.), and Speaker of the
House Nancy Pelosi (D-Calif.) spoke to reporters on
April 9, after meeting with President Bush to discuss
a proposed free trade agreement between the United
States and Colombia.
The agreement provides the most
immediate benefits to American exporters. Most Colombian goods already enter the United States without
having to pay tariffs. The appeal of the
deal to Colombians is that a free trade
agreement removes the uncertainty
inherent in the current arrangements,
which must frequently be renewed in
Congress.
Uncertainty carries a cost, and a free
trade agreement would make it more
8 | AutoDealer s u m m e r 2008
comfortable for Colombian companies
to continue to invest in products that
have ready access to the U.S. market.
The free trade agreement would
also signal U.S. support for a steady
ally in a region of South America that
is under pressure from the distinctly
anti-American regime of Venezuelan
President Hugo Chavez.
The trade deal would strengthen
Colombia’s role as an exporter of
flowers rather than illicit narcotics.
It is more than a little disturbing that
the Democratic-controlled House
would attempt to thwart the deal for
no better reason than election-year
pandering, even though nearly three
dozen prominent former officials of
Democratic administrations and former Democratic members of Congress
have signed a letter supporting the
pact.
But it’s not just the trade deal with
Colombia that is at risk. With South
Korea’s announcement last month
that it was removing its restrictions
on American beef imports, the Bush
administration said it would seek approval of a free trade agreement it negotiated with South Korea last June.
Even with the lifting of the beef
restrictions, prominent members of
the Michigan congressional delegation,
including trade subcommittee Chairman Sander Levin, (D-Mich.), are raising objections, primarily because they
want more U.S. auto industry access to
the South Korean market.
The South Korean Free Trade
Agreement does include a reduction
of tariffs and sales taxes on American
cars, a simplification of its tax structure on autos, and the creation of a
working group to hash out continuing
disputes on automotive trade.
Like Colombia, South Korea is a
strategic ally in a part of the world
where such allies are needed. It sits on
the same peninsula as an extremely
hostile North Korea and abuts China.
Even if U.S. automobile exports to
Korea start at a low base, there is room
for automakers to gain market share,
either through exports or manufacturing cars in Korea. GM sold 50,000 vehicles in China in 1996; by 2006 it was
selling a million.
While free trade can cause dislocations in some industries, overall it is a
boon to an economy. Economists for
the Business Roundtable, an organization of corporate chief executives,
estimated that U.S. exports increased
at an annual average rate of 5 percent
between 1995 and 2005, and nearly
one in five U.S. jobs in 2004 were “positively linked” to exports or imports.
About half of U.S. merchandise
imports are materials used for manufacturing in the United States.
If congressional Democrats object
to the trade agreements on economic
grounds, their objections are bad economics. There is no good evidence
that trade agreements play a significant
role in creating wage inequality in the
United States.
If their objections are purely a matter of politics, assuaging their labor
constituents or thwarting George W.
Bush in his final months in office, their
complaints about President Bush’s unilateral actions creating a bad image for
the United States ring hollow. Nothing
builds international goodwill like free
trade.
A round of trade protectionism
played a significant role in worsening
the Great Depression of the 1930s. If,
as is widely believed, the United States
is entering an economic slump, trashing trade agreements will again make
economic matters worse. AD
April 29, 2008, Op-Ed reprinted with
permission from The Detroit News.
A
Capitol
Event
AIADA’s 2nd Annual International Auto Summit and
Dealer of the Year Award Dinner brought dealers,
manufacturers, and legislators to Washington, D.C.
for a meeting of the minds
B Y M a rt Y B e r n s t e i n,
aiaDa contriButinG eDitor
AutoDealer s u mme r 2 0 0 8 | 9
LEFT: William
Bradshaw, 2008
Dealer of the Year,
and AIADA President Cody Lusk
ABOVE: Rana
Foroohar, panel
moderator
H
eld on May 1, AIADA’s 2nd Annual International
Auto Summit drew a broad range of individuals
affiliated with the industry to Washington, D.C.
Dealers from around the country braved a brisk spring day
national legislative branches. We need them
on our side.”
For more on the award dinner, turn to
page 12.
Highlights of the summit, which began
early the next morning, included remarks
from Rep. Melissa Bean and Sen. Jim DeMint
(R-S.C.). At breakfast, Rep. Bean, a fiscal
conservative representing the 8th District
of Illinois, spoke of the critical importance
of small and family-owned businesses to
America. A former business owner herself,
Rep. Bean emphasized how important it is
that legislators learn more about business,
especially family owned businesses, which are
a major factor in growing and improving the
economic health of the United States.
Sen. Jim DeMint was later introduced by
his friend and fellow South Carolinian Jim
Hudson, AIADA’s 2008 chairman. The senator spoke extensively of the positive impact small businesses
have on his state, and how closely linked their vitality is with
the health of the national economy.
Lunch speaker Stu Rothenberg, whose Rothenberg Report
is a daily must read for the political-minded, held his audience captive with an insider’s take on the political process
and a thoughtful analysis of a number of hot races. And, as
in the past, attendees enjoyed a lively manufacturers’ panel
moderated by Newsweek’s Senior Editor, Overseas Editions,
Rana Foroohar. The panel was a distinguished trio of international auto execs from a variety of corporate disciplines:
John Mendel, executive vice president – Automobile Opera-
“I love this business.” —William Bradshaw, AIADA’s 2008 Dealer of the Year
in the nation’s capitol in order to catch up with fellow dealers, get briefed on AIADA’s 2008 agenda, and receive the
inside political scoop directly from elected officials and pundits.
The evening before the Summit, dealers and their families dined at Washington’s Grand Hyatt as part of AIADA’s
Dealer of the Year award dinner. From a pool of five highlyqualified nominees, South Carolinian William Bradshaw
was selected as the Dealer of the Year by the AIADA Board
of Directors, who noted his achievements both within the
industry and his community, and his dedication to AIADA’s
mission of political advocacy. While accepting his award
from AIADA President Cody Lusk and Newsweek Chairman
Rick Smith, Bradshaw recalled how his first dealership was
paid for with a loan on his first home. “I love this business,”
he noted and urged all dealers to become active in the political process in their cities, “Because today’s local politicians
will move up the ladder from local to county to state to even
10 | AutoDealer s u m m e r 2008
tions, American Honda Motor Co.; Irv Miller, group vice
president – Corporate Communications, Toyota Motor Sales,
USA; and Dave Zuchowski, vice president – Sales, Hyundai
Motor America.
In little over an hour the panelists expressed both personal and corporate opinions and
reactions to the major issues
confronting auto dealers and
manufacturers in the United
States today. Topics include
the shifting marketplace, the
growing appeal of small cars,
market weaknesses, emerging competition from India
and China, EPA rulings on
California waivers, the price of
RIGHT: AIADA Chairman Jim
Hudson
oil, Internet marketing and sales, the
threat of protectionism, and how international manufacturers are missing
out on investment tax credits.
While the range of issues was farreaching, panel members managed indepth responses on each subject. Gas
prices were of particular interest to
both the panel and the audience. “This
is how this downturn is different from
other downturns,” said Zuchowski,
speaking of oil prices and environmental concerns. He said that for the
first time in decades, Americans were
actively changing their driving habits,
and that he expects the new behaviors
to stick long after the economy rights
itself. Miller agreed, adding that, “the paradigm has shifted
in energy; consumers are looking for good looking, stylish
vehicles that also happen to be environmentally friendly.”
On trade, Mendel warned the audience that they will see
“more covert protectionist action” from Congress in this
soft economy. Dealers, he said, must be prepared to join
manufacturers in defending their livelihoods from those
who would see America close its doors to trade. He also
noted that the research and development tax credits offered
to domestic manufacturers put international companies at a
competitive disadvantage.
Following the panel, Cody Lusk was joined on stage by
Mike Stanton, president and CEO of the Alliance of International Automobile Manufacturers. Point by point, they broke
down three of the major policy issues their respective associations are tackling: arbitration, trade, and fuel efficiency.
Their clear and direct explanations were appreciated by the
dealers in attendance, who know straight-talk when they
hear it.
After the summit’s conclusion, AIADA’s Legislative Action
Network led dealers to Capitol Hill for pre-arranged meetings with some of their elected representatives. Russ Darrow
from Wisconsin sat down and spoke at length with his congressman, Paul Ryan, about the economy and the presiden-
ABOVE: Honda, Hyundai, and Toyota were
represented on the Manufacturers’ Panel.
LEFT: AIAM’s Mike Stanton discussed emissions.
tial race, among other topics. “As a business owner, I think
every dealer should use their community name and stature
to take advantage of the opportunity to meet with, and win
over their legislators to our collective needs and objectives,”
said Darrow. “Our priorities are always best heard and understood by representatives in a one-on-one conversation,
versus a letter.”
Upon its conclusion, it was evident that the 2008 summit was more than another grip-and-greet meeting. It was a
true conference of some of the international auto industry’s
best and brightest, gathered to address the significant economic, political, and internal issues affecting the automobile business in America today. While it is increasingly clear
that the automobile industry is going through a period of
substantial change, AIADA’s dealers left Washington assured
that they can count on both their advocates on the Hill and
their own entrepreneurial spirits to see them through the
toughest of times. AD
BELOW LEFT: Russ Darrow and his congressman, Paul Ryan
(R-Wisc.)
BELOW RIGHT: Pat Watson, executive vice president of SCADA;
William Bradshaw; Sen. Jim DeMint; and AIADA Chairman Jim
Hudson
AutoDealer s u mme r 2 0 0 8 | 11
AIADA’s Dealer of
the Year Finalists
AIADA’s Dealer of the Year Award, presented by Newsweek, is given annually to a
dealer for his or her outstanding contributions to the community and the international
automobile industry. AIADA presents its Dealer of the Year Award not only to
recognize individual dealers, but to bring attention to the tremendous civic spirit that
characterizes all of America’s international auto dealers.
This year’s five finalists were all truly deserving of the recognition, and stand as role
models for dealers through out the country.
william
illiam Bradshaw
Bradshaw, owner of the
Bradshaw automotive Group in
Greer, s.c.
Bradshaw Automotive’s nine dealerships
serve Asheville, N.C. and upstate S.C., and
include Honda, Acura, and Infiniti franchises.
Bradshaw, who has
spent 37 years in the
car business, is active
in state, local, and
national political
fundraising. “Dealers
must be engaged,”
he tells AIADA. “It’s
up to us to educate
legislators on the
issues that impact our industry.” Bradshaw
serves on the board of the Greenville
Technical College, holds auto-career seminars
for high school students, donates vehicles to a
variety of local fundraisers, and supports the
Greenville Children’s Hospital and Meals on
Wheels, among many other organizations.
Bud Gordon, ceo and owner of
the Gordon automotive Group in
corona, calif.
Gordon Automotive includes Quality Toyota,
Quality Scion, Quality Toyota Truck Center,
and Quality Nissan dealerships. Gordon, who
runs his businesses
with the help of
his five children,
is deeply invested
in the vitality of
the automotive
industry. For years
he has been an
active member
of AIADA, the
National Automobile Dealers Association,
the Toyota National Dealer Council, the
12 | AutoDealer s u m m e r 2008
California Motor Car Dealers Association,
and has served as chairman of the Southern
California Automobile Dealer’s Association.
Gordon founded and serves as president
of the Quality West Wing Foundation,
which includes a replica of the Oval Office
where students can get a hands-on lesson in
American government.
Mark olinyk, president of Mark
automotive in wisconsin rapids,
wisc.
Mark Automotive, which serves all of central
Wisconsin, includes a Toyota Scion and
Suzuki store. Since 1997, Olinyk has been
among the top 100
dealers nationally
in Toyota customer
satisfaction. He
is an eight time
Toyota Motor Sales
President’s Award
winner, an eight
time Toyota Service
Excellence Award
winner, and was Wisconsin’s Dealer of the
Year in 2007. Leading by example, he has
made a point to visit his representative in
D.C. for the past 18 years to advocate for
international dealers and small business
owners. Olinyk was a volunteer firefighter
for 12 years, serves on the Boys & Girls Club
board of directors, and heads a special-needs
scout troop.
Paul rusnak, owner of the rusnak
auto Group in Pasadena, arcadia,
westlake, and Loma Linda, calif.
w
Rusnak Auto’s nine international dealerships
serve all of upstate Southern California,
and include Audi, BMW, Bentley, Jaguar,
Mercedes-Benz, Maybach, Rolls-Royce,
Porsche, and Volvo franchises. Rusnak,
who emigrated to the U.S. from the Slovak
Republic in his early teens, is deeply
dedicated to
sustaining his
family business
and is active in a
number of related
organizations. He is
known throughout
California for his
philanthropy, where,
along with his
children, he supports a staggering number of
charitable organizations, from The Make-AWish Foundation of Greater Los Angeles to
the Aides Service Center of Los Angeles.
Dick swope of the sam swope auto
Group in Louisville, ky.
k
The Sam Swope Auto Group is well-known
for its powerful commitment to customer
satisfaction. In past years it has been
honored by the Better Business Bureau
for marketplace ethics and has received
manufacturer awards from Lexus, Honda,
Infiniti, Mitsubishi, GM, and Saturn. In
2008, Swope was
recognized as one of
the 25 best places to
work in Kentucky
by Modern Think.
Swope co-chairs a
Corporate Capacity
Building Campaign
for the American
Red Cross and the
annual “Ken-Ducky Derby” fund-raising
event to benefit adults with disabilities. He is
also active in the United Methodist Church
and the Boy Scouts of America.
AIADA hears you. “Large-volume dealers always get
the large-volume discounts. What about us?”
AIADA’s partnership with OfficeMax is focused on providing all AIADA members mega dealer
pricing and service.
Mega dealer Bob Rohrman will tell you “you pay what he pays” — if you are buying through the
OfficeMax Automotive Advantage program.
SM
Every AIADA member has access to the pricing leverage of a mega dealer. It’s simple to start — one
phone call. There are no minimums to meet. There is no commitment. If you want to work with the
best, this is the best deal to get you there.
Large-Volume Pricing Leverage — prenegotiated discounts, exclusive member pricing,
in-store promotional pricing, low-price guarantees on a variety of office products…
OfficeMax will give you the best price it can offer any of its dealers
Free Next-day Delivery — in-stock orders are delivered the very next day — free!
No-hassle Returns — you will love OfficeMax’s no-hassle return policy
World-class Customer Service — a personal Account Manager is always available
The OfficeMax Partner Advantage program for automotive dealers is a great way for members
to receive personalized service and save time and money. Contact OfficeMax today —
1-800-248-6343, option 4, or partneradvantage@officemax.com.
SM
“Over 30 years and 26 dealerships ago, I started the Bob Rohrman Auto Group
based on the single proposition that the customer is the most important person
at the dealership. I realized long before research companies created customer
satisfaction surveys that the only way to keep a business thriving was to treat
your customers well. It is what I deliver and what I expect.
I know OfficeMax delivers.
As a Board Member of AIADA, I can tell you that through AIADA’s Member Benefits
Program, you’ll receive the same pricing I do — day in, day out — no matter what
your dealership size. The deal is straight forward. It’s simple to signup, there are no
minimums, no commitments, free next-day delivery and a no-hassle return policy.
And with OfficeMax’s world-class customer service, I know you’ll be treated well.”
– Bob Rohrman
If you are already working with OfficeMax, give the toll free number a call and mention
AIADA’s OfficeMax Automotive Advantage program. OfficeMax will apply the
Automotive Advantage pricing structure to your existing account over the phone.
where Do
theY stanD?
Presidential candidates facef
off
on the issues that Matter to Dealers
john Mccain
Barack obama
14 | AutoDealer s u m m e r 2008
traDe
}
Too often in politics issues take a backseat to pageantry. Thanks to a
24-hour news cycle and the emergence of the Internet as a recognized
news source, voters are more likely to know the juicy detail of a
candidate’s personal tax return than his or her tax policy. But for
dealers, far too much is at stake in the 2008 presidential race to
focus on flash over substance. To help uncover the truth, AIADA did
some digging through the candidates’ websites, speeches, and articles
to find out where they stand on three issues most likely to impact
international dealers: Trade, Taxes, and energy.
In a March 2008 town hall meeting, sen. McCain told voters,
“[F]ree trade is the best thing that can happen to our nation.”
He has criticized his Democratic opponent for his attacks on
NAFTA, and said that trade is especially critical to opening
“closed societies” in the Middle east. McCain supported President Bush’s plan to build a free trade area in the Middle east
by 2013 and has warned against what he sees as an American
shift toward protectionism. McCain has voiced support for free
trade deals with Colombia and south Korea and has said he
would eliminate u.s. farm subsidies and tariffs once elected
president. In a June 3rd speech in Louisiana McCain said, “The
global economy exists and is not going away. Lowering trade barriers to American goods and services creates more and better
jobs, keeps inflation under control, keeps interest rates low, and
makes more goods affordable to more Americans.”
In a February 2008 speech at a GM plant in Wisconsin, sen.
Obama vowed to “not sign another trade agreement unless it has
protections for our environment and protections for American
workers.” Obama has called NAFTA a “bad” deal and has said
he would amend NAFTA so that it will “reflect the principle that
our trade should not just be good for Wall street, but should also
be good for Main street.” Obama also voiced objections to a free
trade agreement with Colombia, a critical south American ally,
and has criticized the u.s.-south Korea Free Trade Agreement,
which he has said is “bad for American workers” and does not
meet acceptable environmental and labor standards.
enerGY
}
}
McCain supports increased use of various biofuels, but opposes
government subsidies, and has said that nuclear power must
play a role in America’s move toward energy independence. He
has also said he would provide tax incentives to companies that
utilize alternative technologies. In May of 2008 McCain led
other GOP senators in calling on the environmental Protection
Agency to waive or roll back the government’s ethanol requirements in order to ease pressure on food prices. He is in favor
of a market-based cap-and-trade system, saying “We must look
at other market-based means to give added assurance that our
policies are an instrument of job creation, economic progress,
and environmental problem solving.”
taxes
McCain would continue President Bush’s 2001 and 2003 tax
cuts, which he initially opposed. McCain advocates cutting
the corporate tax rate to 25 percent from 35 percent and has
proposed a simpler income tax system with two rates and a
generous standard deduction. He would phase out the alternative minimum tax, and was the first candidate to propose suspending the federal gas tax during the summer. He has also
said he would eliminate the Death Tax except on estates over
$10 million, and subject the rest to a 15 percent rate. McCain thinks it should require a 3/5 majority vote in Congress
to raise taxes.
McCain sources: www.johnmccain.com; The Council on Foreign Relations, www.cfr.org; www.taxpolicycenter.org; stump speech on energy Policy, April 23, 2007; “The McCain Record,” 3/13/07,
The Wall Street Journal; McCain, “GOP senators Call for easing of ethanol Rules,” 5/5/2008, CNN.com.
Obama is a champion of ethanol, calling it “the most successful alternative fuel we have ever developed.” Later, he admitted the government may have to change its ethanol policy in
the light of rising food prices. Obama supports a Corporate Average Fuel Efficiency (CAFE) standard increase to 52 mpg by
2026 and a carbon cap-and-trade system. On May 14, 2008
he told the Detroit Free Press, “I don’t think that we need to
give up on manufacturing . . . We need to find new sources of
manufacturing jobs. And I think creating green energy jobs and
helping the auto industry to retool — those are all areas with
enormous promise.”
Once elected, Obama would eliminate capital gains taxation
of start-up businesses, lower taxes on the poor and middle
class, and eradicate President Bush’s tax cuts, including the
Death Tax and capital gains. He voted “no” on repealing the
alternative minimum tax in 2007 and in 2006 voted “no” on
repealing the Death Tax. Obama has also said he would simplify the tax code and filing process by mailing Americans prefilled tax forms to verify and return. In a 2007 primary debate
at Howard university he told voters, “What people really want
is fairness. They want people paying their fair share of taxes.
They want that money allocated fairly.”
Obama sources: www.barackobama.com; The Council on Foreign Relations, www.cfr.org; www.taxpolicycenter.org; www.ontheissues.org/Economic/Barack_Obama_Tax_Reform.htm;“Fuel Efficiency
Differences between Bush Administration and Democrats underscored on earth Day,” 4/22/08, Wired Blog Network; “Obama: state Must Focus on Green energy,” 5/14/2008, Detroit Free Press;
“Obama: Change in ethanol Policy Might be Needed,” 5/4/2008, The Associated Press.
AutoDealer s u mme r 2 0 0 8 | 15
A serIes oF HAPPy surPrIses HeLPeD roCKeT
BmW’s mINI BrAND To sTArDom
the
Big time
aBove: Mini is launching its john cooper
works performance sub-brand for 2009
w
with hardtop and clubman models; 208
horsepower plus suspension and body
tweaks, starting at $29,200.
riGht: Mini of omaha is one of the
newest Mini dealerships and one of nine
standalones. “Part of my offer was that they
[Mini usa] could do anything they wanted
to my building. i took a leap of faith.”
—tim Markel, Mini of omaha.
16 | AutoDealer s u m m e r 2008
Tim Markel was expecting enthusiastic customers
when he opened his MINI of Omaha store in March 2007. But even the
memory of washing cars in his father’s Ford dealership as a teenager
when the original, highly anticipated Mustang arrived could not have
prepared him for what would happen on his opening day.
The local MINI Club staged a gathering to
help support Markel’s opening, and 35 MINI
owners drove from up to 200 miles away, undeterred by all-day snow. “In all my years in this
business, I’ve never seen anything like that,”
Markel said. He credits landing the MINI franchise with nothing less than reviving his love of
the car business. “It’s been a kind of renewal for
me — it’s made things fun again.”
Markel’s dealership, which sells 25-30 new
MINIs a month, is one of the two most recent
MINI stores, bringing the number to 82. Reasonable franchise investments, high retained
gross on each car, and extremely high return
for service (it’s free for the first three years)
have made MINI dealers happy, said MINI
USA Vice President Jim McDowell. The brand
plans to add 13 more dealers through 2010 as
U.S. sales are projected to keep rising past last
year’s 42,045. MINI’s success, here and in other
markets, owes as much to surprise as to iconic
design and fun-to-drive performance.
From Sub-Brand to Sub-Culture
The intensity of customers’ zeal for the little
cars came as a surprise to parent BMW, which
had introduced the new MINI in 2002 as a kind
of entry brand. Much higher-than expected
demand was also a surprise. Annual sales for
the U.S. were initially pegged at 18,000-20,000
but zoomed to 24,590 in that first year. BMW
boosted production at MINI’s British factory to
keep up with global demand, and U.S. sales in
the second year jumped another 50 percent.
As the U.S. auto industry slumped by eight
percent in the first quarter of 2008, MINI
revved up with a 25.9 percent jump to 10,164
sales. The U.S. is MINI’s second-largest market,
behind Great Britain and ahead of Germany.
Introductions of the second-generation
MINI Cooper models last year and the new,
roomier Clubman model this past February were
instrumental in maintaining momentum. About
20 percent of sales this year are expected to come
from the Clubman, which was designed to appeal
to shoppers who had previously ruled out the
MINI for lack of rear-seat and cargo room.
Andrew Cutler, MINI communications manager, said, “50,000 would not be an unreasonable
number” when asked to project MINI sales for
2009. This summer, MINI will add new John Cooper Works (JCW) high-performance variants. A
second-generation convertible is on the way, and
an all-wheel drive crossover is in the pipeline.
A Niche of One
“Nothing really compares directly to the MINI.
They’ve essentially carved out their own niche and
occupy it alone,” said George Kang, senior marketing analyst for Edmunds.com. Kang gave MINI
high marks for maintaining interest and momentum by adding models and options. “Consideration for the brand jumped by 10 percent when
MINI introduced the Clubman,” he said.
Also an enthusiast, Edmunds.com INSIDE
LINE Editor-in-Chief Scott Oldham praised the
car, as well. “We love the MINI, we’re big fans,” he
said. “The MINI feels more expensive than it is,
which you can’t say about a lot of cars.”
Oldham attributed MINI’s success to parent
BMW’s design values. “BMW [with the 3-Series]
can make a broad swath of customers happy with
very different versions of essentially the same
basic car, and they’ve brilliantly applied that philosophy to the MINI,” he said.
Surprising Prices
The base MINI Cooper starts at an $18,700
MSRP, and the MINI Cooper S, which features a
172-horsepower turbocharged engine, starts at
$21,200 MSRP. The S models have accounted for
a bit more than half of sales since 2002. Transaccontinued on page 18
by j i m k o s c s , a i a d a c o n t r i b u t i n g e d i t o r
AutoDealer s u mme r 2 0 0 8 | 17
tion prices, however, skewed higher than MINI had initially
anticipated. Most MINIs typically carry $4,000-$5,000 in
factory options and dealer-added MINI accessories. What’s
more, customers continue to buy accessories long after the
initial vehicle purchase, often when they bring their cars in
for the free service.
“Our MINI accessory business is double our BMW accessory business,” said Chris Turner, vice president of Prestige
MINI in Mahwah, N.J. Prestige was among the first MINI
stores to open, and was also one of two standalones at the
time. (There are now nine, including Markel’s Omaha store.)
Until last year, Prestige was the country’s largest-volume
MINI dealer, with 792 new cars sold in 2007. It now ranks
about fifth. Turner said he expects sales to increase to 1,000
this year.
it wasn’t the Gas
Although MINI is a fuel-stingy car (up to 37 mpg highway for the standard Cooper model), MINI USA and its
dealers are quick to point out that fuel economy was never
the key sales driver. “When we launched, the market was 50
percent SUVs, gas was cheap, and marketing wisdom said
U.S. buyers were not interested in small hatchbacks,” said
MINI communications manager Cutler. (BMW’s own 318ti
hatchback of the mid-1990s was a flop here.)
McDowell said that rising fuel prices this year put MINI
on the radar screen for about 20 percent of customers. “But
if all you need is high fuel economy, there are many other
choices for lower prices,” he said.
Economy-minded customers generally do not shop in the
MINI’s $23,000-$28,000 average transaction neighborhood.
According to Edmunds data from early April, the top three
cars cross-shopped against MINI were BMW’s new 1-Series,
followed by the Volvo C-30 and the smart fourtwo. Turner
said his customers also mention the Audi A3, Mazdaspeed 3,
and VW GTI.
The key to MINI’s success, Turner believes, is the customers’ passion for the cars and the brand. “The excitement in
our showroom comes directly from the customers, and it
starts long before the purchase. By the time customers come
to see us, they’ve already ‘built’ and saved several versions of
their cars on the MINI web site, e-mailed them to friends,
and chatted about them in forums. They’ve talked with other MINI owners and discussed colors and options. It’s viral,
and it’s the customers doing it on their own.” He added that
MINI owners commonly drop into the dealership on a Saturday just to have a cup of coffee and chat with other MINI
owners doing the same.
“eighteen to 80”
Who are MINI’s customers? “If you figure it out, please
let me know,” said David Birkenstock, general sales manager
for Prestige MINI. “Ages 18 to 80,” he added. McDowell said
the wide age range was unexpected, and that demographics
skewed older than MINI had anticipated, as well.
“We recently sold to a young female rookie police officer
who traded in a stick-shift Hummer, and to an 81-year-old
retiree — that gives you an idea of
the range,” Birkenstock said. Similar
scenarios have played out in other
MINI stores. “I’ve never seen such
diverse demographics for any brand,”
said Omaha dealer Markel, who also
sold Fords until 2005. “On the same
day, we had a man buying a MINI
for his college-age daughter and an
82-year-old man buying a MINI con
convertible for himself. What all
the customers have in common
is that they’re in love with these
cars.”
Prestige MINI shaped its busi
business
around
the
customers’
enthuenthu
der the
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“The option that stumps most customers is color choice.” —Chris Turner, Prestige MINI
Traditional Media
Need Not Apply
MINI dealers generally
eschew traditional newspaper
advertising in favor of e-mail and
customer events. Prestige MINI
holds four to six events per year,
and at its 2007 Halloween party,
one couple costumed its MINI
as a cake, completely covered
in real frosting. At Markel’s
Halloween party, a customer
disguised his Porsche Boxster as
a MINI. “You just don’t see that
kind of activity with other brands,” Markel said.
Later this summer, MINI USA will stage its second “MINI
Takes the States” event, with large customer gatherings in
Miami, Boston, Chicago, and Los Angeles. The first “MINI
Takes the States” event in 2006 drew more than 6,000 MINI
enthusiasts for a 15-day, 19-state, cross-country road trip
from Monterey, Calif., to Lime Rock, Conn. Markel called
customers’ enthusiasm for the MINI infectious. “Every time
I drive one, I just laugh,” he said.
Satisfied Customers, High Resale
Automotive media commend the MINI as fun to drive,
although generally criticize some interior features as inconvenient. MINI models have earned a “Recommended” rating
from Consumer Reports magazine. Placed in the magazine’s
“sporty cars” category, the MINI Cooper S scored an impressive third place in overall customer satisfaction, tying with
the Chevrolet Corvette and behind only the Porsche Boxster
and Cayman — iconic company, to be sure.
The MINI Cooper has been the Auto Leasing Guide top
compact for resale value every year it has been on the market
except 2007, when the VW Rabbit topped it. MINI recaptured the slot in 2008. The MINI Cooper is also among Kelley Blue Book’s category winners for best resale value.
McDowell said that resale is often much higher than the
LEFT: Borrowing a name from a
1970s forebear, the new-for-2008
MINI Clubman model adds nine
inches of length and a right-side
“club door” plus rear “barn
doors” for better access to the
roomier rear seat and cargo area.
published projections. Turner of
Prestige MINI agreed, but added,
“It does make used car sales a bit
challenging, because there’s less of a
price differential from new.” MINI
USA puts a humorous spin on the
situation: the price sticker template
on the MINI certified pre-owned cars reads, “The original
owner couldn’t believe it, either.”
What’s Next?
The MINI brand, Cutler said, has the flexibility to go
toward both more performance and even higher economy.
Higher performance is coming in the form of the 208-horsepower JCW performance models for 2009. John Cooper
Works was the British race car builder that turned the original BMC MINI of the 1960s into a racing and rally winner
and has been offering tuner parts through MINI dealers;
MINI integrated JCW as its high-performance sub-brand
earlier this year.
“MINI appeals to higher-educated, higher-income customers who expect high-tech advances. It’s attracted performance-minded customers, so now it may need to consider
a high-economy version, such as a hybrid,” said Kang of
Edmunds.com.
McDowell acknowledged that the brand’s quest for continued growth requires adding yet more variants. “As long as
a vehicle drives like a go-kart, has the wheels out at the corners, and has essential MINI design cues, the family can expand in other directions,” he said. “We’ll never be a volume
car like the Honda Civic, but we will be a growing family of
premium niche vehicles for discerning customers.” AD
AutoDealer s u mme r 2 0 0 8 | 19
s pooltvl ei g
D e paalret rn eI rn v
mhetn t
advertisement
Key AutoFinance Is Committed to Helping Dealers
I
f we all had a nickel for every
time we’ve heard the words
“mortgage,” “housing,” and
“gas” lately, no one would
have to worry about the current business outlook. Without question, the economy is top of mind for
everyone these days, testing consumer
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During these times of economic
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Choose your finance
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Choosing a commercial finance
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20 | AutoDealer s u m m e r 2008
commercial financing partner for
dealers.
“We’re uniquely positioned to not
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that help dealers utilize cash flow more
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AutoFinance.
Key AutoFinance also offers our
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industry knowledge, and customer
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Mitigate the credit crunch and
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Given the current economic conditions, banks and other lenders are less
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come by, so it’s important for dealers
to explore other ways to remain competitive.
When working with Key AutoFinance, AIADA members receive many
benefits in addition to the expert guid-
ance and experience of our relationship managers. By waiving or reducing
certain fees and minimums, dealers
can take advantage of a number of
products and services that can help
them remain competitive.
Using Key’s positive pay services can
go a long way in helping protect the
business you’ve worked hard to build.
Key’s fraud protection services like
positive pay are becoming increasingly popular, with a client base that
has grown 70 percent over last year.
“When daily cash flow is critical, fraud
protection services provide timely reconciliation and a reaction that is quick
enough to avoid potential loss,” said
Strong.
Another product that helps dealers
remain competitive by reducing costs
and saving time is the Key Inventory
Management® system.
The Key Inventory Management
system allows dealers to enter loan requests, pay off floored units as they are
sold, and access monthly billing statements online.
Key AutoFinance is proud to be the
commercial finance partner for AIADA. Key AutoFinance is committed to
providing timely and helpful guidance
for your business and the right tools,
products, and services to help your
business thrive during all economic
times and conditions.
If you would like more information about the benefits of choosing
Key AutoFinance as your commercial
finance partner, contact Gregg
Strong at 1-877-732-2968 or
gregg_strong@keybank.com. AD
Industry insider
Earth Day the Fitz Way
M
Long-Time Dealer Jack Fitzgerald Says It’s Never Too Late to Go Green
aryland dealer
Jack Fitzgerald
isn’t exactly who
you would picture
leading an environmental charge within the auto retail
industry. At first glance, Fitzgerald, 72,
appears to embody the very definition
of “old-school.” He started his retail career selling vacuum cleaners door-todoor in Washington, D.C., and in 1966
founded Fitzgerald’s Colonial Dodge
in North Bethesda, Maryland. Today,
Fitzgerald Auto Malls comprises 20
franchises in 12 locations in Maryland,
Pennsylvania, and Florida.
However, despite what you might
imagine, Fitzgerald is no disciple of
the way things used to be. He is a true
believer in change, and is constantly
on the look out for ways to improve
his business. In 2007, Fitzgerald Auto
Malls became the first dealership
group in America to be recognized as
an Environmental Protection Agency
Green Power Partner for its use of 100
percent renewable power in all of its
locations. In addition, Fitzgerald has
mandated that
all of his stores
purchase energy
efficient appliances and recycle fuel filters,
motor oil, scrap
metal, and tires
— adding up
Jack Fitzgerald is
to four million
widely recognized
pounds of waste
as an environmental
leader within the auto last year.
retail industry.
Fitzgerald
views his environmental initiatives
as not only a moral responsibility to
generations to come, but also as a
method of cutting costs and attracting consumers who share his “green”
philosophy. As Fitzgerald puts it, “At all
of our dealerships, we recognize our
impact on and responsibility for the
environment, to our customers, and to
our associates, and are committed to
creating a cleaner, brighter future.”
So it should come as no surprise
that Earth Day is celebrated at Fitzgerald’s dealerships with the same enthusiasm that most dealers greet Memorial
Day. In fact, this year, Earth Day lasted
a whole week, and included events
ranging from tree plantings to an energy-efficient products expo. At his
Alternative Fuel Vehicle event, Fitzgerald invited manufacturers to one of
his Maryland locations in order to display some of their cutting-edge green
technology. Also in attendance were a
multitude of elected officials, many of
whom admitted to having a lot to learn
about the auto industry. “You get a lot
out of it,” said Maryland State Delegate
Charles Barkley. “Especially on SUVs.
A lot of people don’t know there are
hybrid SUVs out there.”
“Getting elected officials to these
types of events is worth the effort,” said
Fitzgerald. “The industry needs to talk
to these people.” Fitzgerald is a strong
believer in allowing the market to find
its own solutions to environmental
issues, without the intrusion of illconsidered government regulations. In
his brief remarks, the long-time dealer
emphasized the steps the industry has
already made toward a fuel efficient
future, and urged attendees to check
out the electric and hybrid models on
display.
Toyota spokeswoman Martha
Voss, on hand with a fuel cell hybrid concept, was complimentary of
Fitzgerald’s efforts to educate lawmakers. “The biggest obstacle we still face
is helping people understand what
alternative vehicles are already on the
road,” Voss said. “Legislators make
better policy when they are better educated.” AD
Jack Fitzgerald’s
Earth Week, April 14-19
Monday: Tree Planting
Jack and some of his 1,400 employees planted trees and distributed literature about green
gardening, pesticide use, and re-forestation.
 
Tuesday: Healthy Food Day
Customers were treated to a sampling of
organic foods from an array of retailers including Honest Tea and My Organic Market.
 
Wednesday: Energy Saving Products
Mini Expo
Organizations, including the Department of
Energy, exhibited products and services that
are eco-friendly from local and national companies.
 
Thursday: Car Seat Check and Recycling
Learning Station
A kid-friendly event featuring free car seat
inspections, a recycling learning center, and,
a “recycling prize wheel.” To date, Fitzgerald
Auto Malls have inspected over 35,000 car
seats as part of its Child Safety Seat Program.
Friday and Saturday:
Energy Efficient Vehicle Show
Consumers and elected officials learned
about and test-drove the best gas mileage
vehicles on the market.
A variety of
alternative
fuel vehicles
were on display during
Fitzgerald’s
Earth Week.
AutoDealer s u mme r 2 0 0 8 | 21
v i e w f r o m t h e h i ll
Arbitration Act a Threat to Dealers
Banning Arbitration Hurts Dealers and Consumers
H
.R. 5312, the Automobile Arbitration Fairness
Act of 2008, seeks to
ban binding arbitration
requirements from vehicle sale and lease contracts. Because
the act has garnered only little media
attention, AIADA is taking this opportunity to break down the facts and
shed a little light on a bill that has the
potential to seriously impact dealers
across the country.
Background
Arbitration is a non-judicial process
for settling a disputed matter. In the
world of auto sales, arbitration allows
the consumer and dealer to resolve
their issues through an appointed,
unbiased arbitrator without the cost
and bother of processing their claim
through the court system. Arbitration
is intended to offer prompt resolutions
faster and cheaper than an ordinary
court proceeding. In some cases, if a
consumer rejects the arbitration clause
in the sales contract, the dealer may
choose a different method of agreement or stop the sale all together. Of
course, the consumer has the option
to lease or purchase a vehicle through
a dealer that does not require an
arbitration agreement.
Congress passed the Federal Arbitration Act (FAA) in 1947, which made
arbitration provisions enforceable and
overturned a prior existing rule that
courts could not control such agreements.
About the Bill
Introduced by Linda Sanchez (DCalif.) on February 7, 2008, the Automobile Arbitration Fairness Act of 2008,
would amend the FAA to require that
agreements to arbitrate motor vehicle
consumer sales or lease contracts may
be valid and enforceable only if they
were made after the dispute had arisen
— therefore banning pre-dispute arbitration clauses in the auto sector.
Supporters of the bill argue arbitration
is unfair, expensive, and biased in favor
of dealers.
Our Take
AIADA opposes this so-called “fairness act.” Arbitration is an affordable,
accessible, and efficient means to settle
disputes between dealer and consumers. Rather than empowering consumers, the act would diminish chances for
consumers to resolve small claims, as
many lawyers balk at taking cases with-
out a certain level of provable damages, a retainer, and required payment of
a 35 percent contingency fee. If it’s not
cost effective for attorneys, it’s tough
luck for the consumer.
Trial lawyers have plenty of reasons
to support H.R. 5312, and they all have
dollar signs in front of them. “We view
it as unnecessary and remain concerned of the burden it could place on
our already overwhelmed legal system,”
AIADA president Cody Lusk said in a
statement. “Our members make it their
priority to deliver the highest customer
service and ensure every consumer’s
needs are met when selling and servicing a vehicle.”
“Arbitration provides a quick solution to consumer vehicle transaction complaints that stands in sharp
contrast to expensive and drawn out
court proceedings that clog our court
system,” Lusk wrote in a letter to the
chairwoman and ranking member of
the Subcommittee on Commercial and
Administrative Law. “Therefore, we
urge you to reconsider this legislation.”
To find out how you can impact the
passage of H.R. 5312 visit AIADA’s web
page at www.aiada.org. AD
Statistics Don’t Lie — Arbitration Works
•
79% of all arbitrations are resolved in the consumer’s favor.
•
69% of consumers are satisfied with the arbitration process.
•
75% of consumers found the arbitration process fair and just.
•
The arbitration process is typically 75% less expensive than a lawsuit.
•
82% of adults said they would opt for arbitration knowing its cost-
effectiveness.
(Data courtesy of Ernst & Young, Harris Interactive, and Roper Starch.)
22 | AutoDealer s u m m e r 2008
dealer spotlight
Dealers Check In
Larry Kull
Burns Kull Automotive
Marlton, N.J.
Despite the time required to run eight successful southern New Jersey
dealerships, Larry Kull has always made room in his schedule for industry activities. In addition to his recent appointment to AIADA’s board
of directors, he was also elected in March to the Toyota National Dealer
Council, serves on various other dealer councils and advertising boards,
and has chaired the Automotive Free International Trade Political Action Committee (AFIT-PAC). Kull treats his customers like family, and
has made sure that for over 20 years his business cards include his home
phone number.
What first got
you into the auto
retail business?
In 1979 I went to work at
my dad’s Pontiac Honda
Dealership. In 1985 I
acquired an interest
in our second Honda
dealership. I currently
have an interest in all but
one of our dealerships
along with my dad, our partner Ed
Burns, and our dealership managers.
controls and improved
productivity.
When did you first
get involved with
AIADA?
My dad and I began
attending AIADA’s
Washington, D.C.
conferences over 20 years
ago. If we don’t represent
our own interests no one else will do it
for us. AIADA is the only association
that represents the particular interests
of international brand dealers.
Who had the biggest influence
in your career?
My dad. He started as a car salesman
in a Ford store when I was 8 or 9
years old. He rapidly advanced from
salesperson to sales manager and
general manager. Some of his most
memorable bits of advice are “The
speed of the boss is the speed of the
gang” and “Don’t let five percent of
your business dictate what you do with
the other 95 percent.” Advice as good
today as it was 29 years ago.
How does legislation impact
your business?
With the stroke of a pen our Congress
can take away the basic opportunities
we have to maintain and grow our
businesses. There is real risk in the
ever-growing and rarely reversed string
of regulations and taxes. Especially the
Death Tax, which could prevent the
orderly transfer of family dealerships
from one generation to the next.
What is the biggest issue affecting your business?
Pressure on vehicle margins has been
fierce. The Internet and growing
manufacturer expectations have
challenged dealers to seek ways to
run their businesses with tighter
What was your most
memorable sale?
My first one. I spent three hours with
the customers, ordered their new
Firebird, and then convinced them to
take delivery of the car even though it
came in with the wrong color interior.
Mike Johnson
Mike Johnson’s Hickory
Toyota
Hickory, N.C.
Mike Johnson bought his Hickory North
Carolina Toyota store in 1999. A Toyota
President Award Winner, Mike credits
the bulk of his success to his focus on
customer service and his excellent
employees. A University of Tennessee
graduate, Johnson lives in Hickory with
his wife and four boys.
What first got you into the auto
retail business?
I was recruited by a Datsun dealer, Dan
McKinney, in 1983 to sell for him in
Jackson, Miss.
What is the biggest mistake
dealers make?
Allowing their egos and emotions to get in
the way of making sound business decisions.
What is the biggest issue affecting
your business?
Rising health care costs and managing
the negative equity that exists in the
marketplace.
How are you active in your local
community?
I am president of our local Rotary Club,
continued on page 24
AutoDealer s u mme r 2 0 0 8 | 23
dealer spotlight
mike johnson continued
chairman of our Chamber of Commerce
Board, a member of the North Carolina
Auto Dealers Association Board, a
volunteer Hunter Education Instructor,
and active in local schools fundraising, the
Special Olympics, and the Salvation Army.
When did you first get involved
with AIADA?
I’ve been a member since 1999. AIADA
does great things for our industry. Both
state and federal legislation can have a
huge impact on international dealers,
and that is a major concern of mine. We
should all pay close attention to what
legislators are doing.
What was your most memorable
sale?
When I was a sales manager I sold Jerry
Rice his first car prior to him signing
his NFL contract with the San Francisco
49ers. It was a Datsun 240ZX.
What is your personal
dream car?
One of the original military-issued
Hummers.
Any advice for aspiring auto
dealers?
Engage your customer and your associates
and most importantly: Listen, Listen,
Listen!
Brian Smith
Dick Smith Automotive Group
Columbia, S.C.
Brian Smith is a second-generation dealer based out of Columbia, S.C.
Along with his brother, Brian bought his father’s ownership of the Dick
Smith Automotive Group 20 years ago, and has never looked back. Since
then he’s added stores, expanded facilities, and won accolades — but
never lost sight of his core commitment to customer service. Today his
business includes eight stores spread throughout South Carolina and 10
different makes, including Hyundai, Nissan, and Mitsubishi.
What first got you into the
auto retail business?
I was an education major in college
and was working at a summer camp
after graduation while interviewing
for teaching jobs. My dad came up to
the camp and recruited me to work for
him. Best decision I ever made.
In your tenure as an auto dealer, what is the one accomplishment you are most proud of?
I think the economic impact we
have on our employees and their
families. We provide a great living and
benefits for a lot of people.
What makes a great auto
dealer?
Passion. You have got to love this business to be successful.
What is the best part of
your job?
The challenges we face each day. The
thrill of the job is to face whatever
challenges come your way and to be
able to overcome them.
What is the biggest mistake
dealers make?
Chasing volume for volume’s sake. Low
grosses combined with high advertising and floorplan costs is not a very
good business model.
24 | AutoDealer s u m m e r 2008
What is the biggest issue
affecting your business?
Right now the biggest issues we face
are the credit crunch, rising gasoline
prices, and a slowing economy.
When did you first get involved
with AIADA?
In the mid 1980’s. The big issue back
then was the Voluntary Restraint
Agreement put on import manufacturers.
 
How does legislation impact
your business?
It affects our business tremendously.
We have to remain proactive and not
sit idly by and let things happen to us.
What is your personal
dream car?
I’m not really a big car nut, but I am
looking forward to the Nissan GTR.
dealer spotlight
Everett Hellmuth
Passport Automotive Group
Alexandria, Va.
Everett Hellmuth owns and operates five dealerships in Virginia and
Maryland, selling Nissan, Infiniti, and BMW vehicles. He first entered the
automobile business in 1976 with Volvo of Alexandria. In 1991 he bought
his first dealership and changed the name to Passport BMW and Passport
Nissan. He was awarded an Infiniti franchise in fall of 2002. Earlier this
spring in Marlow Heights, Md., Hellmuth opened a brand new, state of
the art BMW store — the largest BMW facility on the East Coast. Hellmuth and his wife Robin still live in Virginia with their four children. He
is actively involved in the community, and has particular interest in local
athletic organizations.
What first got you into the
auto retail business?
During high school I spent my weekends working on cars with a neighbor
who was a car enthusiast. Later, in college, I bought and sold cars as a hobby
and as a way to make some money.
Upon graduating, while waiting to go
to get an MBA, I spent time selling
at a Volvo dealership in Alexandria,
Va. That experience persuaded me to
cancel business school and stay in the
automotive business full time.
When did you buy your
first dealership? 
After working for the same company
fresh out of college for 14 years, I was
hired by a competitor, Martens BMW–
Nissan, who sold to me a year later.
Who had the biggest influence
in your career? 
I have had lots of great mentors, but
one who stands out was Harold Polk,
a Chrysler and Volvo dealer who demonstrated to me that you can excel in
anything if you stay focused and work
hard enough towards that goal. As
far as influencing me regarding my
daily dedication to my employees and
customers, it is Jesus Christ who
taught me how to serve others.   
What is the biggest issue
affecting your business?
The development of alternative fuel
vehicles that will still provide the
safety, reliability, and performance of a
gasoline engine.
What is your personal
dream car?   
It’s difficult to say, as there are so many
great vehicles, but I really like the
BMW Z8.
Any advice for aspiring
auto dealers? 
Find a company to work for that has
high ethical standards, strives for
excellence in customer service, and
is progressive and willing to change,
and learn everything you can from its
management.
AutoDealer s u mme r 2 0 0 8 | 25
Did You Know?
The first massproduced car sold
in the U.S. was the
“Curved Dashboard
Oldsmobile.” It was a
best seller from 1901
to 1904.
OO
The Italian carmaker “Fabbrica Italiana
Automobili Torino” is more commonly
known as “Fiat”.
Rear window brake lights were
put in place after a suggestion
by former U.S. Secretary
of Transportation
Elizabeth Dole.
The first
Grand Prix
race was won
in 1901 with
an average
speed of
46 mph.
Waiting time to get
a permit for a car
on Catalina Island,
OO Ferdinand Porsche
designed the original
Volkswagen Beetle.
Calif., is eight
to
ten years. Most
residents drive golf
carts.
Photo courtesy of egolfcarts.net
The first German car to be built solely outside of Germany was
the BMW Z3.
26 | AutoDealer s u m m e r 2008
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Corona, Calif.
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Wisconsin Rapids,
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louisville, Ky.
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Greer, s.C.