---

'I Told You So,' Says NADA Chief Economist

18 February 1998

'I Told You So,' Says NADA Chief Economist

    WASHINGTON, Feb. 18 -- NADA chief economist Tom Webb used his
annual NADA Convention press conference briefing to dispel some automotive
myths.
    Webb pointed out facts and figures to refute critics who portray new-car
dealers as dinosaurs and claim that 30 percent of new-vehicle costs are tied
up in distribution.  "Dealers are very agile, and they adapt quickly to market
changes," said Webb.  The net number of dealerships declined only slightly
last year, by about 50, disproving conventional "wisdom" that the traditional
franchise system is being decimated by developments in recent automotive
retailing.
    Some of Webb's predictions for 1998:

    -- Dealers will sell slightly fewer units than in 1997 -- 14.6 million vs.
       15.1 million.  Used-vehicle sales will remain flat, at 12 million.
    -- The average used-vehicle transaction price will rise slightly in 1998
       because of dealers' adjustments to vehicle mix.
    -- The service and parts department, which Webb referred to as the "unsung
       success story" of the past 10 years, will have flat sales in 1998, due
       to better-built vehicles that need fewer repairs and less scheduled
       maintenance.
    -- The fastest-growing segment of the service and parts department sales
       will continue to be reconditioning.
    -- Dealers and factories will have to join forces to address the problem
       of the industry's inventory ratio, which has remained at a 60-day
       supply for 20 years.

    The National Automobile Dealers Association represents 19,500 franchised
new-car and -truck dealers holding nearly 40,000 separate franchises, domestic
and import.

SOURCE  National Automobile Dealers Association