Earlier this year, industry group Automotive Trade Association Executives (ATAE) elected Robert Israel as its chairman for 2013. Israel has been president of the Louisiana Automobile Dealers Association since 1983. He spoke to Aftermarket Business World about the organization's activities moving forward.
What are the ATAE's top priorities this year?
I would say if there were a single thing our state association members have as a constant goal, it is to protect the franchise system, and to protect dealers from the overbearance of the manufacturers.
We are very closely connected to NADA. We have political action committees and we work together to ensure that our members are involved in those things. We assist in lobbying the Congress. Every year, there seems to be one or two hot issues, and generally those are about franchises. The last few years we've been talking about facilities programs and two-tier pricing.
What do you see as the top challenges for dealerships heading into this year?
Business is pretty good right now. The biggest issue in the next five years or more will be pressure from the federal government on miles-per-gallon standards. I think maybe dealers feel that where manufacturers have agreed to work on those goals, they may not be attainable and could upset the marketplace.
I heard a news report that strides are being made on fuel efficiency, and that the average nationwide was something like 24.2 miles per gallon. Well, that's a long way from 54 miles per gallon, and you have to include all the cars out there in that average. Remember, more than anything else, cars are lasting longer and longer, and the average car is over 11 years old today. I don't see that reversing.
Everybody is looking for a silver bullet in technology, be we're most afraid that if the manufacturers were able to reach 54 mpg, they will give us a car that's too expensive and not desirable to our customers. It's our job to sell them.
How is the fixed operations landscape changing for dealers?
There are two tracks there. One is the cars that are being built today will require less maintenance and less repair. There's no reason to believe that won't continue, and I think the pressure there will be because with new cars going forward, that warranty income is going to shrink.
I think a very obvious way to work against that is we are concentrating every single day on retention of customers and providing maintenance, where not many years ago we did warranty work and the customer went to independent service centers for repairs after that. Dealers now understand that we have to change that. You have to earn loyalty in different ways today than just giving somebody a good deal on a new car.
The road to the sale has changed, too. It used to be that people would drive down the street, see an attractive dealership with a lot full of pretty new cars, and make a decision to drive in, talk to a salesman, get excited and buy a car. That's not the model today. Now, you go on the Internet, research every vehicle and every option, and you are completely sold on the car you want. You've done everything else but the test drive. The buyer knows whether you have that car or not, or assumes you can get it. So having every single model and every single color option is just less important.
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