Harold, How did you get in the automobile business?
I have always had a passion for automobiles. The designs always fascinated me. I remember when they quit producing them because of World War II; it just whetted my appetite even more. In 1946, when they started up production again I was fifteen years old and I can precisely remember the sparkling new automobiles coming into my little town again. In college, I continued to feed on my passion for automobiles. I heard about The General Motors Institute in Flint, Michigan and transferred there and eventually finished my education there. While I was studying at GMI, I was hired by a Chevrolet dealer and worked with that dealership for two years until I was drafted into the service. I was assigned as an instructor in an automotive school for two years in Fort Jackson, South Carolina. I believe at that time they called it Wheel Vehicle Maintenance School. I taught classes such as the basic principles of the internal combustion engine and other basics as applied to the army vehicles. After the army, in 1956, I learned about an Oldsmobile, GMC Truck dealership, Braxton Auto Sales, that was operated in the town my sister lived in which was for sale. Lee Braxton had been in business since 1936. I was 24 years old and my brother in law said he would put up some of the money needed to purchase it. I negotiated a deal with the dealer to purchase the entire contents for $10,000. He required no down payment and the payments were $250 per month.
What made you think that, at 24 years old without any real experience, that you could run a dealership?
I never had any doubt about it and I never had anybody tell me I could do it except the Chevrolet dealer who I had worked for. When I talked to GMAC about it, they thought I had lost my mind and a few other people did too. But Mr. Roy gave me good advice and said he had no reservations that I could do it. I never looked back, I just knew I wanted to do it. I was willing to do whatever it took. I never had a plan B, I just had plan A and I stuck to it.
What did you do at the Chevrolet dealership you worked at while at GMI?
I worked on a co-op program. When I first started I was in the service department for two months then I moved around to the office and finally into sales. I was in every department at the dealership. I spent the majority of my time in selling.
Early on what did you see as the key in being a successful dealer?
Number one is credibility. You have got to build a customer base and unless people believe in you and have trust in you it isn't going to work, especially in a small market. Number two is dedication and determination. Then, lastly is being energetic. The individual entrepreneur has to have energy.
What is the difference between what it takes to be a successful dealer today as opposed to when you got started?
My philosophy has been that to succeed you have to keep doing the same things you had to do to get started. It is all about the basic fundamentals. It goes back to credibility. You have to do what you said you would do in the first place. Good work ethics and habits. When I got started at this dealership I did not figure I would stay for long. I figured I would eventually move to where the grass was greener. I fall into the lower one-third size dealers in the country. But the real basic fundamentals of running a business are the same here as it is everywhere else. Along the years I have had opportunities at larger locations but I find business is basically the same in the smaller dealerships as it is in the bigger ones. I have talked to some of the biggest dealers in the country and I find that their problems are the very same as my problems.
What was it that initially drew you to becoming so involved in NADA?
Perhaps it goes back to when I was in a high school play and I was the business manager for our high school class. My job was to go out and sell ads for the program so we could make enough money for a trip to Washington DC. I learned then that if you want the community to work with you, you have got to work with them. We had a good relationship with the businesses in our community so they placed ads in our program and we made money off of it. I think doing that stimulated me in a way that I will never forget.
What do you see as the biggest issues facing dealers today?
There is no doubt that there are a lot of issues facing us today, but we now have the ability to react faster than we have ever been able to. We can collect feedback from our dealers through our surveys very quickly now. We are living in a society that is moving faster and we have got to adjust to it. James Appleberry said something like; "We have had an opportunity at our age to have seen the United States move from an agricultural economy through an industrial economy. Now we have moved into an information and technological economy, all three of those in our lifetime. The thing that is shocking is that the information in the U.S. doubled from the year 1900 to the year 1950. It doubled again from 1950 to 1960. It has doubled about every five years since then. If it continues at the pace we see today, by the year 2020, information will double ever 73 days." We have got to be sharp enough to react faster but at the same time remain calm. I am convinced that NADA is going to do both.
What do you see as the three most critical issues facing you as leader of NADA in the year 2000?
Industry relations, government relations and legal and public affairs. What is also important to me is dealership operations. Dealers have got be schooled and educated more in information technology.
What will be NADA's position and what do you think will be the proper approach for dealers to have towards factory ownership, whether it is the Ford retail networks or Ford valets or General Motors buying dealerships?
Well number one, we have to respect the fact that we live in a free country. Each corporation and each individual has his choice. I walked into a meeting the other day and a friend of mine asked me how I was doing. I said, "Well, I am working too hard", he said, "Well, you know who makes that decision don't you?" We have to remember that each one of us has the opportunity to make our own decision. For me as a small town dealer, how do I compete against the real giants? That is a question I cannot answer. How can a dealer of any size compete against the manufacturer? Look at the mission of NADA. The mission is to be the voice of the dealer and to protect the franchise system. I don't see how we can protect the franchise system when the factory is my competitor up the street. The resolution the board of directors took on October 19th pretty well states where we are. We feel like the policies and the by laws of the committee have got to be parallel to the membership criteria in that resolution. If we lose members, we still stand for the basic purpose that NADA exist for. We face that as it comes. Each individual dealer can make his own decision as to what he does.
Even though NADA still needs to lead the charge, it looks like this my be a war of skirmishes within states as much as anything else, with the state associations really working their own state legislators to enact legislation to keep the factories from doing this.
That is why each state has to make up their mind individually. NADA will be glad to assist where they can but it has to be each individual state associations decision. There is no such thing as NADA walking into the halls of legislation anywhere and telling them what to do. We cannot tell anybody what to do, we can recommend.
What can NADA do to help these states in the battle? What are some specific things along the lines of helping the states to communicate and letting all the states know when one tactic or approach works better than another?
NADA will be as aggressive in this as they possibly can to try to ensure that the franchise system of independently owned and operated dealerships exists. Basically what we can do is assemble the information that takes place in the various states and have this information available so that when one state calls up NADA and says, "what should we do?" we can give examples of what other states have done in order to protect themselves. NADA needs to do whatever they can do to promote and encourage states to enact these laws to protect the franchise system.
Initially, the approach NADA took towards GM appears to have been misunderstood. Last year when I asked Jim Willingham what was the biggest point of contention was between dealers and manufacturers, he said "too many dealers." Obviously the answer is different today. What do you see as some potential problems facing dealers that remain unseen or lurking beneath the surface?
I think the number one thing, particularly with GM right now, is them trying to get into the retail business. Ford has taken a "hold" position. GM is apparently taking a little bit more aggressive stand on it. The Internet is such an unknown. That is one of the big things that is like a cloud over us right now. I don't think anybody has a crystal ball to get a clear vision of where we should go. I think there is an attitude among the manufactures that they would like to see the car being sold over the Internet and delivered directly to the customer, therefore reducing their distribution costs from the time it left the assembly line to the time it reaches the consumer. I have reservations about that being successful. I look at banks today, particularly the larger banks, that are trying to cultivate electronic banking and I see them losing customer base when they go forward with these initiatives. If you look back and see what has taken place with the automobile, it has been an evolutionary process as we have moved forward with the design and improvements. Now, all of a sudden, manufacturers and publicly owned groups are trying to revolutionize the way that people purchase their cars. I really feel like that it is being forced a little bit. This market has got to be driven from the consumer up.
What about the Internet?
It is an education process and we, as dealers, have got to take a strong look at it. I compare it to this; if I am selling trucks and I have got two wheel drive trucks and everybody is buying four wheel drive trucks, I am not going to sell many trucks. The same thing has got to happen in this process.
What is NADA doing to help dealers in relation to the Internet? After all, there's not a dealer in the country who worked their way up through the Internet Department.
The Dealership Academy that the NADA operates in Virginia. We have various committees that operate and our Information Technology Symposium is one way to keep up with what is going on with Internet trade. We do not interpret it as a threat but an opportunity for each dealer.
Is there something for the dealer principal or is it more on how to set up and run the Internet Department?
There are various classes that are held on this through the dealership operations committee and through the information technology committee and you will see that accelerated more and more. It is a work in progress and a dealer has got to get educated. They have got to know what is going on out there.
Getting back to the manufacturers, it almost seems as though they are not that interested in the relationship they have with their dealers.
I think that has improved. Are they doing everything we would like them to do? No. I would say the dialogue has improved this past year. I think they are more willing to listen than they have been. Whether or not actions will prove it over a period of time remains to be seen. I think the dealer attitude surveys are having more of an impact than ever before. I think there is more credibility in those surveys in the eyes of the manufacturers than ever before. When you look at the manufacturer who has good relations and is open for input from their dealer body, they typically gain a bigger share of the market. If you want to sell more cars, you have to have an excellent relationship with your dealers.
How can you have a good relationship with your supplier when they are also your competitor?
You are not going to make me work hard for you if you don't like me and I don't like you. If you want me to do a better job, you and I must have a better relationship. There must be open dialogue!
Do you think Chrysler will benefit by some of the intrusion of Ford and GM into retailing?
I think so. I am a Chrysler dealer also. They will save money on product development and now they have an initiative to help their dealers cut costs. They listen to dealer input. I don't think there is any question that if Ford and GM go stronger into the retail initiative that this would help Chrysler. I understand Ford has lost market share in every market where FRN exist.
Mercedes has new pricing, which does not allow any negotiating. What are the chances that something like that might creep into Chrysler?
I would be very disappointed, but I don't think there is a chance of that happening right now. There is a different product there. If you have got a strong enough product in design and consumer demand, you can force a lot of issues. I have been through the Oldsmobile one-price selling which did not work because we did not have a product that we could force on the market. If you have got a high demand product with a design that is exceptional and that there is a high demand for, you can do that for a while. The competition is going to catch up with you at some point with whatever your superior feature may be. And when they do catch up, people are going to say, "you are not going to tell me what to do, I'll show you." We still cannot get away from the basic fundamentals of the consumer being the ultimate driving force of what we all do.
Automobiles are sold on emotions and excitement. Unless you can get a thrill out of driving that car and seeing it, you are not going to buy it off of a computer screen at home. An essential element of the success of one price selling is that all dealers of that franchise must subscribe to that philosophy.
Some dealers I've recently spoken with are concerned with getting a fair, reasonable and competitive warranty payment process from the manufacturers. Is this something that NADA would get involved in or would want to be involved in?
Of course we have an interest in dealers being treated fairly by the manufacturer. As far as getting to individual pricing policy, that is not really what NADA should get involved in. The overall policy has got to be one that is fair and equitable to the dealer performing that service. There are some things about warranty payment that concerns dealers. Basically if you look at warranty expense, so much of it is driven by the quality of the product. The manufacturer's responsibility is to build a good product. If you build a product that is defective, the dealer should be paid a fair price to correct those problems for the manufacturer. The dealer should not be performing quality control, that has got to come from the manufacturer. If you have got repetitive warranty expense, then somebody has made an error in the design or the assembly of that car.
There have been dealers who have successfully gone to court and had it ruled in their favor in warranty payment matters. But that is expensive and time consuming and what dealer wants to go to court against their supplier? What could NADA do to try and fix this situation?
If the problem gets to be that great then the industry relations committee would review the problem and work with them to try and communicate with the manufacturer. For instance, there have been some cases where things were out of line on some of these factory held stores. It came back to NADA and we made a phone call to the factory and said "listen inequity exists here and we expect you to respond to it", and they did respond. I think if there is inequity in warranty payments and it goes before the dealer council then NADA can assist in analyzing the problem and take a look at it. I don't think that the dealer council and the NADA both would come up with the wrong answer.
Harold, in one word, how would you describe being a dealer today?
Change.
Has there ever been a more challenging time to be a dealer?
I was told in 1956 that it was not a good year to go into the car business. And what if I had listened to them? I think of a dealer as an entrepreneur. Entrepreneurship has been the driving force in American business. Sweat equity. We, as dealers, have in our operations the driving force that makes the retail end of the business work. The entrepreneur adds an invisible value to the process. Profit is not a dirty word. I am afraid some of the factory initiatives are trying to suppress some of the entrepreneur's individual initiative and that is something that should be protected, not suppressed. They are affecting younger dealers right now and may not realize that. My son has been a dealer now for three years at Toby Wells, Pontiac GMC in Pinehurst-Southern Pines. He is 33 years old and I know that when they talk about direct selling and all that they are not drawing the young good dealers into the process. This concerns me greatly.
Has there ever been a more exciting time to be a dealer?
The challenge has always been there. We are prone to look back and say things used to be so good. But as we go forward and then look back we are going to say, "you know the year 2000 wasn't as bad as I thought it was". Yes this is a challenging time but that is what makes it exciting. There will be more challenges in the future.
Has there ever been a better time to be a dealer?
There has never been a more profitable time to be a dealer.