6th February, 2023 ยท CEO Message

CEO Message No. 83

2 minutes to read

I returned from Dallas this week where I was attending the 2023 NADA Show, the preeminent conference for all involved in the new car retail industry. Each year the AADA leads a study tour to the event and after a two-year enforced absence, we were happy to take a group of around 80 people on the tour.

One of the highlights of the tour was spending time at the SouthWest Ford Dealership in Weatherford, the business owned by the 2019 NADA Chair, Charlie Gilchrist. The team at SouthWest provided a tour of the various departments, describing the workings of the business with enthusiasm and professionalism. They were proud to be employed in the automotive retail business and shared a common goal to make the business succeed.

In the United States, the notion of being proud of the industry is not unique to that one Dealership we visited. NADA and its Dealers do an incredible job of promoting their industry. They publicise the strong economic contribution Dealers make in terms of jobs, investment, and taxation revenue. They celebrate the support Dealers give to the community through such initiatives as the Time Dealer of the Year award. They spruik the benefits of the franchise model as it exists in the US, underpinned by very strong state-based black letter automotive franchising protections. Dealers also have strong personal relationships with state and federal legislators. At a lunch we asked a former NADA Chair whether he was concerned that the automotive franchising laws may be watered down in the coming years. He mentioned that he had the personal phone number for every legislator representing his state in all jurisdictions.

The evidence is there to be seen. Every state in the Union has protections which: prevent causal termination or non-renewals of Dealers; restrict the number of major facility upgrades; specify rates to be paid for warranty work; in some states prevent OEMs from selling directly.

Some commentators say the Tesla direct, or agency models of this world will inevitably lead to an erosion of the franchising laws. But we are seeing a strengthening of those laws in places like the state of Virginia, where a number of Bills recently passed the state legislature which will prevent OEMs from negotiating directly with consumers or going so far as to declare franchised Dealers’ delivery agents.

It isn’t as simple as Australia replicating the US system. Their automotive franchise laws have been in place for decades and don’t exist anywhere else in the world. They are a product of the US’s unique political culture. However, the lessons about promoting our industry and forming strong localised relationships with parliamentarians are key. It is what the AADA has been trying to achieve with some success in recent times. Our industry has made progress in recent years, and it has been interesting to see countries like Italy mimic some of the franchise laws we fought for and won.

But the work never stops and we need to work harder than ever to promote our industry and demonstrate to policymakers why our industry is so important and why it needs to be front of mind when decisions are being made which could affect it.