Performance Meets Fuel Economy

BMW’s Jack Pitney 10 | 3rd Annual Auto Summit 16 | Hyundai’s Hope on Wheels 21
AutoDealer
The Magazine of the
TM
VOLUME 3 NUMBER 2
SUMMER 2009
Presorted Standard
U.S. Postage
PAID
Merrifield, VA
Permit No. 1502
Performance
Meets Fuel
Economy
The BMW 335d’s luxury is rivaled
only by its fuel economy
AutoDealer
TM
CONTENTS
VOLUME 3 NUMBER 2
SUMMER 2009
The Magazine of the
PRESIDENT
Cody Lusk
DIRECTOR OF PUBLIC RELATIONS
Libby Krum
PRODUCTION EDITOR
Hannah VanderBush
DESIGN CONSULTANT
Larnish & Associates
CONTRIBUTING WRITERS/PHOTOGRAPHERS
Melanie Batenchuk, Marty Bernstein,
Jim Koscs, Rachel Robinson
16
12
FEATURES
Near-Future Shock: Get Ready for 4-Cylinder,
40-MPG Luxury Cars PAGE 12
For more information about AIADA,
topics addressed in this issue, or for
additional copies of AutoDealer, please contact
AIADA Publications at [email protected]
or 1-800-GO-AIADA.
AIADA’s International Auto Summit:
Navigating a New Washington PAGE 16
Cautious Optimism from Nissan PAGE 19
BOARD OF DIRECTORS
Mr. Russ Darrow
The Russ Darrow Group
Chairman
Mr. Rick DeSilva
Liberty Subaru
Chairman Elect
Mr. Jim Smail
Smail Auto Group
Vice Chairman
Mr. Don Herring
Don Herring Mitsubishi
Mr. Greg Kaminsky
Toyota of El Cajon
Mr. Larry Kull
Burns Kull Automotivve
Secretary/Treasurer
Mr. Robert V. Rohrman
Bob Rohrman Toyota
Mr. Allen Courter
Honda Auto Center
of Bellevue
Mr. Jack Fitzgerald
Fitzgerald Auto Malls
Did You Know? PAGE 26
COLUMNS
Dealer Involvement
Dealer Visits Connect Legislators, Dealers
PAGE 5
Mr. Jeff Morrill
Planet Subaru
Mr. Ray Mungenast
Lexus of St. Louis
Mr. Dave Conant
The CAR Group
From the Chairman’s Desk PAGE 4
Mr. Brad Hoffman
Hoffman Auto Group
Mr. Jim Hudson
Jim Hudson Automotive
Group
Immediate Past
Chairman
Mr. George Brochick
Penske Automotive
Group, Inc.
D E PA RT M E N T S
In the News
Stimulating Trade Wars PAGE 6
View from the Hill
Scrappage, Card Check Has Dealers on Edge
Ms. Peggy Proko
Peters Auto Sales
PAGE 7
Ms. Jenell Ross
Ross Motor Cars
21
Mr. George A. Sharpe, Sr.
The Sharpe Collection
23
Mr. Brad Strong
Strong Volkwagen
Industry Insider
One on One with Jack Pitney PAGE 10
Manufacturer Update
Hyundai’s Hope on Wheels Turns 11 PAGE 21
Dealer Spotlight PAGE 23
Emanuel Bugelli, Gateway Mazda
Ed Lewis, Staunton Auto Group
Mr. Morrie Wagener
Morrie’s Imports
Travis Ostrom, I-95 Brunswick Toyota
George Kaminsky, Toyota of El Cajon
AutoDealer S U MME R 2 0 0 9 | 3
FROM THE CHAIRMAN’S DESK
T
his May, international
nameplate dealers, manufacturers, and legislators
gathered in downtown
Washington, D.C., as part
of AIADA’s 3rd Annual International
Auto Summit (see page 16). Thanks
to remarkable participation, especially
from dealers, the summit was a rousing success. Those in attendance heard
from Senators Jeanne Shaheen and
John Ensign, Fred Barnes from FOX
news, and bestselling author and
satirist Christopher
Buckley.
But for many
dealers, the highlight of the summit
was Thursday’s
automaker panel.
Johan de Nysschen
from Audi, John
Mendel from Honda, John Krafcik
from Hyundai, and
Jim Lentz from
Toyota all graciously took questions
from the audience and addressed
some of the challenges facing the international auto industry today. Their
thoughtful participation is a reminder
that as an industry we are more united
than ever. Old divisions are fading
away as we work together to secure the
future for our businesses.
Then, after the panel, AIADA’s most
important work began. Eighty-five
dealers left the summit to spend the
afternoon on Capitol Hill, meeting
with their representatives and senators
in Congress. Here’s just a sampling of
some of the facts dealers shared on
Capitol Hill:
L
U.S. employment of workers in international automotive assemblers
has increased by 52 percent since
4 | AutoDealer S U M M E R 2 0 09
L
L
1995, now totalling 117,256 Americans with a payroll of more than
$6.3 billion.
Total international dealership employment is over 500,000.
Some analysts predict that by 2010,
for the first time ever, more than
half of the vehicles assembled in the
United States will be built by Asian
and European companies.
It would be impossible to overstate
the value of those 85 meetings. Just
think: that means 85 more legislators,
and their staff, who know where dealers stand today than they did just a few
weeks ago.
Similar advocacy efforts have resulted in some good news for our industry.
President Obama recently announced
his new national plan to reduce carbon
emissions and improve fuel efficiency.
The program requires that by 2016 vehicles sold in America cut their tailpipe
emissions by 30 percent. AIADA has
worked strongly over the past months
for an achievable fuel efficiency standard administered and overseen by the
federal government. The president’s
national program is a reminder that
advocacy yields results.
So once again, thank you for your
participation in our Summit. And if
you didn’t make it out to Washington,
take action now. Go to www.aiada.org/
DealerVisits to schedule a dealer visit
today. AD
RU S S DA R ROW
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 health care, labor issues, energy,
fuel economy policies that constrict
consumer choice, and other industryrelated matters.
AIADA Affinity Partners
DEALER INVOLVEMENT
Dealer Visits Connect Legislators, Dealers
BY AIADA STAFF
S
ince its reinstatement in
2007, the Dealer Visit Program (DVP) has been successfully connecting U.S.
representatives and their
local AIADA dealers across the country. The updated program has evolved
into an essential way for dealers to
communicate directly with their legislators, while also providing members
of Congress with a venue to hear firsthand what issues and obstacles their
constituent dealers are facing.
In prior years, the DVP first contacted an AIADA dealer and then
invited his member of Congress to the
dealership. While this method works,
AIADA’s Government Relations and
Grassroots Team has crafted a new approach by inviting the legislators first
and then locating dealers per the representative’s availability. This method
has been coined the “Reverse DVP.”
AIADA invited all 535 members
of Congress to meet with dealers in
their districts at the beginning of the
year. The response to this invitation
has been overwhelmingly positive, and
dealers have already hosted 15 Dealer
Visits in 2009, almost matching the 18
hosted in all of 2008. Members’ offices
are calling AIADA because they want
to meet their dealers and learn more
about auto industry issues.
Dealers are anxious for Capitol
Hill to hear their message, and the
DVP provides AIADA dealers with the
perfect forum through its mini town
hall with dealership employees. Typically, a dozen employees from different
“This was a great opportunity
to bring a legislator to see
our business in action. The
Congresswoman [Rep. Lois
Caps (D-Calif.)] has formed a
real friendship with several of
our employees.”
—Mike Caldwell,
general manager of Toyota Santa
Barbara in Goleta, Calif.
departments gather in the showroom
for a personal Q&A session with their
federal legislator. The representative
will share a little about him or herself
and then open the floor for questions
from the dealer, his management team,
and employees. Questions asked can
range anywhere from hot-button auto
The Dealer Visit between New Hampshire auto
dealers and freshman Sen. Jeanne Shaheen focused
on dealers’ lack of access to credit and the pressure
that banks have been placing on dealers to find
new lenders in just 60 to 90 days. This meeting
forged a valuable relationship between AIADA and
the senator. Sen. Shaheen spearheaded a request
for the Small Business Administration (SBA) to
increase the size standard for working capital loans
and to guarantee 7(a) loans. Her efforts have made
her a champion for small business dealers in New
Hampshire and across the country.
industry issues to
problems happening at the local level.
“The mini town
hall opens the communication lines for
dealers and Congressmen while closing the gap between
Washington, D.C. and Main Street,”
says Rachel Robinson, AIADA’s Vice
President of Government Relations.
This year, the mini town halls have
focused on critical dealer issues like
floorplan financing, card check legislation, cash for clunkers proposals, trade,
taxes, energy, and the environment.
One of the convenient aspects of the
DVP is that the visit can be customized
so that the format and topics reflect
what the dealer or the representative
desires. Sometimes a member may
only have 30 or 45 minutes to visit, so
AIADA can tailor the meeting to his or
her scheduling needs.
Find out how you can Make an
Impact at home by hosting your member of Congress for a Dealer Visit at
your dealership. Contact AIADA at
1-800-GO-AIADA or visit www.aiada.
org/dealervisits to sign up today! AD
Sen. Shaheen visits with
employees and press during
a recent dealer visit.
AutoDealer S U MME R 2 0 0 9 | 5
IN THE NEWS
Stimulating Trade Wars
B Y I N V E S TO R ’ S BU S I N E S S DA I LY
F
ree Trade: If you thought
“buy American” provisions were a thing of
the past, think again.
Canadians are bellowing
and U.S. companies trying to employ
Americans are shutting down. Someone didn’t think this through.
President Obama received much
praise for his efforts to water down
“buy American” provisions and went
out of his way to assure our trading
partners and allies that what remained
would be enforced in a manner consistent with our international trade
obligations.
Concern in Canada and elsewhere
subsided a bit after a clause supported
by the administration was inserted in
the stimulus bill stating that the legislation would not supersede existing
U.S. trade obligations such as Nafta.
During his Feb. 19 trip to Ottawa,
Obama told the Canadians he would
work to avoid protectionism.
But there’s a fly in the ointment,
actually several flies. One is that
Congress has not given up attaching
protectionist legislation to other bills.
6 | AutoDealer S U M M E R 2009
Another is that much of the money allocated to infrastructure projects such
as roads, bridges, and the like is being
spent at the city and state level where
NAFTA rules do not override “buy
American” provisions or sentiment.
The Washington Post cites examples
such as the town of Peru, Ind., which
told a Canadian supplier it was rejecting sewage pumps that were made
near Toronto. John Hayward, president
of Hayward Gordon, the Canadian
pump-maker, says many U.S. towns
have told him they can no longer buy
his products because of stimulus provisions.
Work done on a construction project at Camp Pendleton was literally
pulled out of the ground when someone noticed Canadian pipe fittings had
been used. The fittings were made by a
Toronto-based company that had been
doing business in the U.S. for 60 years.
The company had supplied
plastic pipe to be used in a
new health care facility at
the Marine Base north of
San Diego.
“Many Canadians
believe the issue” of U.S.
protectionism “was settled
when (Obama) came into
Canada back in February
and made assurances that
all is well. But it’s not,” says
Veso Sobot, spokesperson
for IPEX Inc., the company
that sold the pipe. “We’ve
never seen such a wave of
protectionism as at this
moment.”
Other Canadian companies doing business with state and
local governments in the U.S. report
being forced to sign affidavits that all
their materials were made in the U.S.,
or they will not be allowed to do business here.
The Toronto Star last week complained of “a plague of protectionist
measures in the U.S.” Already a number of Ontario communities with a
combined population of around a half
million have retaliated by barring U.S.
companies from their municipal contracts.
Companies on both sides of the
border appear to be drowning in these
“watered-down” buy-American provisions. Duferco Farrell Corp., a SwissRussian partnership that took over a
closed steel plant near Pittsburgh, is on
the verge of shutting down because its
global supply chain does not jibe with
current definitions of “made in USA.”
The plant employs 600 people, but
has had to furlough 80 percent of its
work force. A steel pipe maker literally
down the street recently canceled an
order for Duferco’s steel coils because
part of the production process is outside the U.S. That firm is shifting its
orders to firms with 100 percent U.S.
production to meet the new stimulus
regulations.
Proposals aimed at increasing taxes
by over $200 billion over the next
decade on U.S. companies doing business abroad do not help free trade.
Congress has not helped matters by in
recent weeks attaching buy-American
provisions to a $14 billion clean-water
fund and a $6 billion program to fund
eco-friendly school construction projects.
Congress and the administration
need to revisit the creeping protectionism prompted by the stimulus bill.
Otherwise, the free trade that’s a key
part of any economic recovery is, well,
just a pipe dream.
Read more IBD commentary at
www.IBDeditorials.com. AD
© 2009 Investor’s Business Daily. All rights
reserved. Reprinted with permission.
VIEW FROM THE HILL
Cash for Clunkers Coming to a Dealership Near You
Card Check Still Has Dealers on Edge
C
ongress has been busy,
negotiating a range
of legislation aimed
at tackling America’s
economic malaise.
Many items will have a large impact
on America’s international auto community, including recently-passed ‘cash
for clunkers’ legislation and card check
proposals. As the issues heat up and
Congress heads into its summer voting
season, AIADA is working to keep you
informed on the topics that directly
affect your life outside the beltway.
Cash for Clunkers
So-called ‘cash for clunkers’ legislation
was pushed to the forefront of Capitol
Hill’s collective consciousness on April
30 when President Obama brought up
the issue during a nationwide address.
He stated that he would support a program allowing Americans to trade in
their older and less fuel-efficient cars
for cash to use toward the purchase
of a more fuel-efficient vehicle. In
the following months several legislative proposals emerged, each with a
different focus and a different set of
provisions.
However, following intense discussions regarding gas mileage require-
CASH FOR CLUNKERS |
ments, lease term agreements, and
other legislative items, lawmakers
were able to reach an agreement. “The
Consumer Assistance to Recycle and
Save Act,” introduced by Rep. Betty
Sutton (D-Ohio) and passed by the
House, was placed in the War Supplecontinued on page 8
WHAT TO EXPECT
Cash for clunkers will provide consumers with a cash
incentive to turn in their older cars and in turn buy new cars.
Recently, 38 percent of consumers said they were already
aware of the legislation, while 11 percent were planning to
delay their purchase until cash for clunkers was in effect.
Dealers are optimistic that the program will provide a boost
to the automotive industry. For more information on cash
for clunkers, visit www.cars.gov.
BREAK-DOWN OF CASH FOR CLUNKERS VOUCHER PLAN
Passenger Car
Light-Duty Truck
Large Light-Duty Truck
(6,000-8,500lbs.)
Minimum Fuel Economy
for New Vehicle
22 mpg
(EPA Combined)
18 mpg
(EPA Combined)
15 mpg
(EPA Combined)
$3,500 Voucher
Mileage improvement
of at least 4 mpg
Mileage improvement
of at least 2 mpg
Mileage improvement
of at least 1 mpg
or trade-in of Work Truck
$4,500 Voucher
Mileage improvement
of at least 10 mpg
Mileage improvement
of at least 5 mpg
Mileage improvement
of at least 2 mpg
Work Truck
(8,500-10,000lbs.)
Trade-in must be
pre-2001 Model Year
AutoDealer S U MME R 2 0 0 9 | 7
VIEW FROM THE HILL
continued from page 7
mental Conference Report in an effort
to move it quickly to the President’s
desk for signature. The final language
pared the scrappage provision back to
$1 billion and required an end date of
November 1, 2009, but it appeared the
legislation was on a fast track to final
passage.
One last hurdle remained in the
Senate when Sen. Judd Gregg (R-N.H.)
raised a point of order and tried to
have the cash for clunkers legislation
removed. Sen. Debbie Stabenow (DMich.), who had introduced similar
legislation, worked tirelessly to secure
the votes needed to keep the bill in the
package. The final vote came on June
18 when the Senate voted 60 – 36 to
keep cash for clunkers. At the time
of print, AIADA expects President
Obama to act swiftly to sign the legislation into law.
Card Check Battle Heats Up
Card check legislation looks to be heating up again as Pennsylvania Senator
Arlen Specter left the Republican side
of the aisle to join the Democratic
Party on Capitol Hill. The move was
especially notable because it moved
Senate Democrats within range of
the coveted filibuster-proof 60-vote
majority.
It remains to be seen how Sen.
Specter’s move will affect the card
check debate, but one thing is certain:
the playing field has been altered from
only a few months ago. The Senate’s
main advocate for card check legislation, Sen. Tom Harkin (D-Ia.), has said
he would like his Senate colleagues
to vote on the original version of the
Employee Free Choice Act (EFCA),
unless a compromise is reached that
would draw a filibuster-proof Senate
majority.
Several “compromise” proposals
have been floated in the Senate. One
such proposal would still allow secret
8 | AutoDealer S U M M E R 2009
ballots, but would mandate that elections take place at warp speed, virtually
eliminating an employers’ ability to
educate employees about the union,
respond to the union’s comments, or
discuss unionization in general. Other
proposals include allowing employees
to mail their ballots with a stamp; providing employees with cards that only
allow them to choose between a cardcheck process or secret ballot vote,
and ignoring their will in unionization; and implementing baseball style
arbitration that allows an arbitrator
to pick between two sides’ competing
offers. AIADA believes such a proposal
undermines the concept of collective
bargaining and the ability of employers
and employees to help shape the contract under which they will operate.
AIADA remains committed to
defeating the Employee Free Choice
Act, which would remove the secret
ballot in elections to organize a union,
bind dealers to arbitration over
contracts, and possibly leave a government representative to run their
dealership. AD
CARD CHECK LEGISLATION
ISSUE IN BRIEF
The Employee Free Choice Act (EFCA) concerns business owners because of
its unionization provisions. So-called “card check” mandates would threaten
dealers, manufacturers, and their workers by taking away the secret ballot
election in union organization. It also mandates a binding arbitration process
that would leave businesses open to potential government control. AIADA
opposes this bill for the following reasons:
Protect the Secret Ballot: If EFCA becomes law, workers would be required
to declare their vote publicly. The bill would strip workers of their right to a
secret ballot election.
Allow Timely and Informed Elections: Secret ballot elections are typically held
in 39 days, with 94 percent of elections being held within 56 days. Proposed
“quickie elections” would virtually eliminate an employers’ ability to provide
employees with adequate information
about the union, respond to the union’s
comments, or discuss unionization in
general.
Keep Arbitration Out of the Equation:
Allowing the government into the
workplace to establish employment
contracts through binding arbitration
is something 71 percent of voters and
72 percent of union households believe
would be “unwise” and “risky.”
KeyBank really cares about
my business. I’ve never had that
with any other bank.
GREGG MIDDLEKAUFF, OWNER
Middlekauff Family of Dealerships
Twin Falls, ID
Since 1825, KeyBank has built strong relationships based on trust
and stability and has always met the needs of its depositors.
For over 40 years we have also been able to meet the needs of our
auto dealer customers through our floor plan lending and other
commercial services.
Even with the recent challenges facing the banking industry today,
KeyBank remains a safe, sound and well-capitalized financial
institution that continues to provide auto dealers with dependable
guidance they can count on.
At KeyBank, we greatly value all our relationships and remain
financially strong and ready to meet all your business financing
needs. Be confident in knowing that your money and your
business are safe with KeyBank.
888-288-6539 or visit key.com/KAFdealer
Credit products are subject to credit approval. ©2009 KeyCorp.
INDUSTRY INSIDER
B Y M A RT Y B E R N S T E I N,
AIADA CONTRIBUTING EDITOR
One on One with Jack Pitney
BMW North America’s Vice President of Marketing Talks Shop
E
ven in the halcyon days
of 12 to 15 million yearly
car sales, the relationship between some
manufacturers and their
dealers was tense, and occasionally
even confrontational. Until recently
the two ends of the auto industry have
sometimes shared an illogical, if legal,
relationship.
In contrast, other brands and their
retailers have had a symbiotic relationship of cooperation, harmony, and col-
relationship with its dealer body and
the current focus on certified preowned vehicles.
AIADA: Has your opinion of automotive retailing changed over the years?
JP: Marketing has the “sexy” side of
the business—it’s easy to get the sense
that we’re the ones who are positioning the brand. But there is no more
vital link in the chain in defining what
this brand stands for than dealerships.
When a customer walks through a
BMW dealer’s door or drives up to the
service bay—that is our brand personified. And if we don’t have all our dealer
partners buying into our same vision
then we’re not going to be successful.
And our dealers are very successful.
AIADA: How are you helping BMW
dealers in these difficult economic
times?
JP: We are one of the few brands that
is actually gaining share today. We’re as
happy as we can be, given the economic circumstances. If we are all going
to struggle, we’re going to make sure
we’re doing better than the other guy.
laboration. It may not always be a love
fest, but it is a relationship based on
policies and programs that engender
mutual benefit.
One of the proponents of a strong
alliance is Jack Pitney, vice president
of marketing of BMW North America.
The former head of public relations at
BMW, Pitney made a splash when he
directed the introduction of MINI to
America, almost a decade ago. He has
always recognized the critical importance of MINI’s dealers in the business
plan, once noting that, “We build them
by the hundreds and thousands, but
dealers sell them one at a time.”
Recently, Pitney took the time to sit
down with AIADA and discuss BMW’s
10 | AutoDealer S U M M E R 2009
AIADA: How important is feedback
with your dealers?
JP: It’s valuable to spend time with
our dealers to get the real unvarnished
input on how on we’re doing supporting them. We are in this together, and
we will come through this stronger and
more prosperous. It’s a storm we will
get through together.
AIADA: BMW sales, like most brands,
have fallen this year. What’s selling?
JP: We’ve throttled back production
on the X3, so our share is down on
that, but the X5 share is up, and the
3-series and 5-series are each dominant in their classes right now. For
the 7-series, we’re down only because
we’ve done a good job with the selldown of the old model. But I have to
say we are doing really well, relative to
the competition and looking forward
to introducing new models this year.
AIADA: As new car sales have fallen,
have used cars and certified pre-owned
vehicles taken up the slack for your
dealers?
JP: Modestly. We’ve been far more
progressive in developing that side of
the business than anyone else.
Ask Mike Jackson of AutoNation
or Earl Hesterberg of Group One what
they think about our CPO programs.
We are very much ahead
of our competition and we do outperform the market in residual values.
AIADA: But hasn’t the economic situation and credit issues resulted in lost
residuals of lease cars?
JP: That’s been a phenomenon that’s
affected the entire industry. Look at
the Mannheim index values of their
auction numbers; we continually
outperform the industry by about 4
points, which is good. But, at the same
time, everyone has taken some pretty
serious hits.
AIADA: What are the basic elements
of BMW’s CPO program?
JP: Even before this economic recession, we viewed CPO as another
franchise offering. It’s a true partnership with the dealers to make sure the
majority of coming off-lease cars are
bought by the dealerships themselves
and do not go to auction.
AIADA: Is this really a win-win
situation for you, the dealer, and the
consumer?
JP: It’s a new, fascinating way for
people to experience the brand that’s
a bit more price conscious. And it’s
INDUSTRY INSIDER
ABOVE: BMW’s 7-Series
continues to surpass expectations, despite the economic
climate.
worked really well. The grosses are reasonable now; in fact they are stronger
than new cars.
AIADA: What is the practical side of
CPOs to you and BMW dealers?
JP: We have 150,000 plus vehicles
coming off leases, and all those people
will need another car. If we do our job
correctly, and reach out to those folks
before their lease ends and say, “let’s
build that dream car for you,” I think
we’ll be okay.
AIADA: What is the sales opportunity
and potential of dealers?
JP: Last month we started issuing
monthly press releases just on CPO,
which is a double digit growth this
year. Last year we did a little over
104,000 certified pre-owned vehicle
sales. As a benchmark, that is over
10,000 more vehicles sold than Audi
did all last year. It’s really a sub-unit
brand of BMW—like MINI, BMW,
and BMW CPO. When you cross that
100,000 unit mark, you’ve got a vibrant
business.
AIADA: What sets BMW’s CPO pro-
gram apart from the competition?
JP: Other companies that do not have
a CPO program really suffer from a
value standpoint. By having a strong
partnership with our dealers they are
buying the mass majority of the cars
when they come to term. It minimizes
the number of vehicles that go to
auction, so we are in a much stronger
position than most.
AIADA: What are the basic components of the program?
JP: We call it a full circle program
because it adds value for the consumer.
To the dealer, if they sold the car originally, and it’s been driven for 36,000
miles in three years, and serviced at
the dealership, they know the vehicle.
When it’s sold off-lease from the same
store, it gives more of a reassurance to
the value-oriented buyer.
AIADA: So quality is an issue?
JP: If there were any issues with the
car, the dealer has already fixed them
along the way. Result? We have a
superb quality product for resale as a
certified pre-owned. We’ve been really
out in front on CPOs, and it’s helped
BELOW: The X5 is one of
BMW’s best selling models.
us. The certified pre-owned program
basically replicates the new car program.
AIADA: What’s the “personality profile” of BMW?
JP: We’re not the type to go out and
beat our chest, and say “look what
we’re doing.” Our philosophy is, the
person at the party who tells everyone
how cool he is, really isn’t cool. We
would rather be the quiet and confident person that goes about his business and gets it done. AD
AutoDealer S U MME R 2 0 0 9 | 11
NEAR-FUTURE
SHOCK
GET READY FOR 4-CYLINDER,
40-MPG LUXURY CARS
Hybrids and Diesels will
Preserve Performance under
Tighter CAFE Rules
W
hether measuring by cylinder count,
displacement, or horsepower, luxury
vehicle customers have historically
expected and demanded “more, more,
more” from their cars’ engines. That’s
about to change.
Upcoming fuel economy regulations will soon shift the
focus to a measure that many luxury vehicle customers typically didn’t worry about: miles per gallon. Yet, luxury buyers
will still expect strong performance.
International luxury brands are gearing up to deliver diesels, hybrids, and more four-cylinder models that get up to 40
mpg. Just as important, these new models will preserve the
performance, driving enjoyment, and comfort expected in
the luxury category. The bigger challenge may be more about
marketing. Namely, how do brands manage and even shift
consumer perceptions and expectations for luxury vehicle
performance?
John O’Dell, Edmunds GreenCarAdvisor.com editor,
12 | AutoDealer S U M M E R 2009
doesn’t think the task will be difficult. “Luxury buyers are a
good target group for high-tech alternative propulsion vehicles. They’re more likely to be able to justify the price premium,” he said. “A $1,000-$4,000 premium on a $20,000 vehicle
is a lot, but it’s less of an issue when it’s done to a $40,000 or
higher vehicle. Putting the technology in higher-priced cars
first helps amortize development costs.”
O’Dell believes last year’s $4-$5 gas prices left a lasting
impression on many. “There still is a portion of the populace
that understands that fuel prices are volatile,” he said.
Mike Omotoso, Senior Manager, Global Powertrain Forecasting for J.D. Power & Associates, offers a more cautious
view. “At $2 a gallon, most customers won’t respond [to highMPG models] when the purchase premium is high,”
he said.
Short-Term Forecast: Fewer Cylinders
With just a few exceptions, most vehicles in the luxury
category today use six and eight-cylinder engines, with a
BY JIM KOSCS,
AIADA CONTRIBUTING EDITOR
Lexus calls the HS 250h hybrid “the most
fuel-efficient luxury car for combined mileage in the U.S.” The brand’s first four-cylinder
model, the HS 250h, arrives this fall.
smattering of V-10s and V-12s. Sixes are the most popular
among luxury passenger cars.
Current four-cylinder luxury-brand models are concentrated at the entry segment and include the Audi A3 and A4
and the Acura TSX. The A3, A4 2.0, and the TSX are rated at
30 MPG in highway driving. The A4 models are also available
with a V-6, but Audi of America spokesman Chris Bokich said
that 90 percent are sold with the 211-hp turbocharged four.
Bernie Glaser, general manager, Product Management for
Mercedes-Benz USA, believes customers will not care as much
about cylinder count or even horsepower after they sample
the smooth, high-torque performance of diesels and hybrids.
Marketing for such vehicles, he said, would need to emphasize
driving feel rather than pure numbers.
Fours will likely be seen beyond pure entry-luxury models.
BMW is considering a dual-turbo direct-injection gasoline
four-cylinder engine that could be used in place of some sixes.
Omotoso expects Lexus to stick with hybrids. “They’ve succontinued on page 13
BMW’s dual-turbo 3.0-liter
inline diesel six produces 265
horsepower and a staggering
425 lb.-ft. of torque, yet returns
an EPA-rated 36 mpg in the highway driving.
AutoDealer S U MME R 2 0 0 9 | 13
continued from page 13
cessfully established themselves as a hybrid leader,” he said,
adding that not all the brand’s hybrid models have sold well.
“The RX hybrid sells the best—15,200 last year. But the sedans did less than 1,000 each.” The problem, he explained,
is one of customer expectation. “When people hear ‘hybrid,’
they automatically expect high fuel economy,” he said. “The
Lexus [GS 450h and LS600hL] hybrid sedans are more performance-focused than economy-focused.”
Omotoso expects the German luxury brands to also offer
more hybrids, but said, “They will ultimately produce and
sell more diesels, since that is their field of expertise.”
Following is a brand-by-brand rundown of high-mpg
models available now and due soon.
BMW Diesels Find Mixed Success
BMW this year returned diesels to the U.S. after more than a
20-year absence. Although BMW offers four- and six-cylinder diesels in Europe, it brought only the dual-turbo six here
to offer in the 3-Series sedan and X5 SUV.
The BMW dual-turbo diesel six-cylinder engine is a powerhouse with 265 horsepower and a whopping 425 lb.-ft. of
torque, giving the 335d sedan performance nearly as good
as the 300-hp 335i gasoline model. Yet, the 335d returns an
EPA-estimated 23 mpg city/36 mpg highway vs. 17/26 for
the gas version.
Sales performance, though, has been mixed. “The X5
xDrive35d is doing pretty well,” said BMW North America
spokesman Dave Buchko. “So far this year, it accounts for
nearly 20 percent of all U.S. X5 sales.”
“It’s a compelling proposition. The MSRP is less than the
V-8 model with performance that comes pretty close and
also fuel consumption far better than even the six-cylinder
gasoline models,” Buchko added. The X5 xDrive35d is
priced $5,000 less than the X5 gas V-8 model and returns
over 30 percent better highway fuel economy.
The 335d sedan, however, “is doing less well at this stage,”
Buchko said. Automotive media have praised the 335d’s
performance but have questioned the $2,275 premium over
the gas 335i model (with automatic transmission, which is
standard with the 335d). Currently, a $900 federal tax credit
reduces the gap to $1,375.
Lexus Introduces an “Economy” Hybrid
Lexus was first with luxury hybrid models and this fall
adds another. The HS 250h will be its first dedicated luxury
hybrid—that is, one not based on a current conventional
model. The midsize HS 250h sedan will use a 2.4-liter fourcylinder engine teamed to the Hybrid Synergy Drive system
to generate 187 total system horsepower.
That makes the HS 250h the brand’s first four-cylinder
model. “Because the HS will be the most fuel-efficient luxury
car for combined mileage in the U.S., we don’t think we’ll get
any pushback on offering a four-cylinder,” said spokesperson
Nancy Hubbell. “The advantage of the Lexus Hybrid System
is that it offers power and efficiency, so we think our customers will be thrilled with both.”
The new hybrid model is expected to attract both current Lexus owners and conquests, according to Hubbell. “It’s
in the near-luxury category, so it will be attainable by more
people. And it will feature the latest in technology and luxury
amenities, so it will appeal to people who may not have considered Lexus in the past.”
Although Lexus is touting the first use of “carbon-neutral”
Ecological Plastic in the trunk and elsewhere, luxury is still
this car’s focus. The HS 250h was engineered with special
dampers, seals, and coatings to mitigate noise, vibration, and
harshness (NVH), so performance should be smooth and
refined.
Mercedes Takes Aim at 40 MPG
Mercedes-Benz is placing bets on both clean diesel and
POWER TO THE PEOPLE: Why Diesels are Fun
If some diesel models are not selling as well
as expected, maybe it’s because shoppers are
looking at the wrong numbers.
Automotive Media, for example, points
out that the BMW 335d’s impressive fuel
economy (23/36 mpg) is offset by the car’s
higher price compared to a 335i gas model,
and by the higher cost of diesel fuel.
Also, judged purely by acceleration
numbers, the 335d is “slower” than the 335i
and only marginally quicker than the 328i.
So, why would anyone consider the 335d over
its gasoline siblings?
14 | AutoDealer S U M M E R 2009
One reason might be driving pleasure,
which is, after all, BMW’s calling card.
Shoppers who test-drive these three BMW
models would probably say that the 335d
feels far quicker than the 328i, although the
performance numbers suggest otherwise.
That’s because the 335d’s 425 lb.-ft. of peak
torque (at just 1,750 RPM) is nearly double
that of the 328i, and it is 40-percent greater
than the super-quick 335i.
“The 335d is the sort of car that one
has to experience to truly appreciate, and
our experience has shown that when folks
drive it they are very impressed,” said BMW
spokesman Dave Buchko.
The trick is to get customers past the
numbers and into the driver’s seat.
hybrid technologies. The company offers 50-state diesel
technology in its three larger SUVs, charging a relatively
light $1,000-$1,500 premium over comparable gasoline
versions. Glaser said that through the first quarter, diesels
accounted for 28 percent of Mercedes GL-Class SUV sales
and about one-fifth of ML-Class SUVs.
The brand’s high-mileage diesel story, however, is found
in the E-Class. The current E320 BlueTEC is a 45-state model sold at a $1,500 premium vs. the gasoline E350. It achieves
33 mpg in highway driving. This fall, the new-generation
E-Class will offer the company’s 50-state version of the V-6
diesel powertrain, with about the same fuel economy.
Mercedes made big fuel economy news at the 2009 New
York Auto Show, where its E250 BlueTEC sedan impressed
with a claim of 28/39 mpg in city/highway driving. Although
billed as a “concept” for the New York Auto Show, the E250
BlueTEC is a European E-Class model that can meet stringent U.S. emission regulations.
Glaser told AutoDealer that the car’s New York appearance was to “gauge reaction” from the media and public. He
added that the company is not currently market-testing the
car and doesn’t think American customers are quite ready
for a four-cylinder E-Class.
The engine, however, could find a home in the smaller
C-Class sedans and the new GLK crossover SUV. “Dealers
are interested in getting more fuel-efficient offerings,” Glaser
said.
“With diesel, we don’t think the number of cylinders will
be as important,” he added. “Our current diesel customers
are attracted by the high mileage per gallon and surprised by
the torque and how much fun they are to drive.” Mercedes
personnel have been “shocked” to learn the E250 BlueTEC
has a four-cylinder engine after riding in it, according to
Glaser. “If you don’t tell people, they could think it has a six.”
At the upper end of the spectrum, Mercedes is debuting a hybrid S-Class sedan this fall. The S400 BlueTEC will
achieve about 30 highway mpg vs. 22 mpg for the V-8 S550
model. The car pairs a V-6 engine to a mild hybrid system.
The price will be “not much more” than the S550, according
to Glaser. Notably, the S-Class hybrid will be the world’s first
production car to use a lithium ion battery pack.
Another Mercedes hybrid arriving in the fall, the ML450h
is a “full hybrid” SUV that will achieve about the same 24
mpg highway economy as the ML320 BlueTEC diesel.
Why offer diesels and hybrids? “We’ve never said it has to
be ‘either or,’” said Glaser. “Some of our customers are asking for hybrids, others want diesels. We’re studying the entire
spectrum of alternate propulsion, including pure electric,
range-extenders, fuel cell, and natural gas.”
Omotoso of J.D. Power explained, “Hybrids excel in
improving city mpg; diesels are better on highway and for
towing.”
Audi Adding Diesels; Acura Putting
Them “On Hold”
Audi is adding diesels and has been proactively marketing
Audi showcased its TDI diesel fuel efficiency with 23 vehicles driving
4,900 miles across the U.S. last fall. The A3 TDI model, which arrives in
showrooms in 2010, averaged 47 mpg.
The Acura TSX is a four-cylinder luxury model rated at 30 mpg highway.
Customer demand for more power has been answered by a V6 companion model for 2010.
their benefits. Most recently, the seven-passenger Q7 TDI
SUV arrived offering 25-mpg highway fuel economy from
its 3.0-liter V-6 diesel engine.
Audi performance and luxury on 40 mpg will arrive in
2010, when the company launches a TDI version of the
compact A3. Volkswagen already uses the widely praised
2.0-liter four-cylinder diesel engine in its Golf and Jetta
TDI models.
Acura had planned to by now have introduced its first
diesel, the four-cylinder iDTEC, in the TSX sedan. Those
plans are now “on hold,” confirmed company spokesman
Chris Naughton. “Our CEO, Takeo Fukui, announced that
we would apply the bulk of our resources to expanding
hybrid offerings,” Naughton said.
That is a 180-degree shift from just over a year ago,
when Dick Colliver, Honda and Acura’s executive vice
president of automotive sales, said at the 2008 Chicago
Auto Show that hybrid powertrains were “better suited to
smaller cars” and that larger luxury vehicles were “better
suited for diesel.”
The change in strategy has been attributed to costs of
diesel catalyst technology and diesel fuel. The speed of the
shift demonstrates how quickly parent Honda adapts to
market needs. Acura has not given a timetable for introducing a hybrid model nor announced what hybrid technology it would use. AD
AutoDealer S U MME R 2 0 0 9 | 15
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M A N U FA C T U R E R S , D E A L E R S , A N D L E G I S L A T O R S G A T H E R F O R
AIADA’S 3RD ANNUAL INTERNATIONAL AUTO SUMMIT
F
or the 3rd year in a row, the American International Automobile Dealers Association
flipped its usual practice of bringing legislators to dealerships, and instead brought
the dealers to Washington. On May 13 and
14, more than 200 international nameplate dealers and
manufacturers gathered in downtown D.C. to examine
the industry’s current state, and debate its likely future.
The Summit was themed, “Navigating a New Washington,” and to dealers, there was most certainly a fresh feel
to the city. “We have a new Congress and a new administration,” said 2008 AIADA Chairman Jim Hudson. “That
means new opportunities for dealers to form relationships
in Washington. Any chance to actually spend some time
here and talk to legislators is valuable.” In total, dealers
spent two packed days in Washington, meeting with their
representatives and learning about the new political and
economic realities that have emerged in the past year.
The event was kicked off by a reception, dinner, and
award presentation on Wednesday night (see page 18).
Shau Wai Lam, chairman of DCH Auto Group., was the
recipient of the first ever Dealers Making an Impact Grassroots Advocacy Award. Such advocacy and grassroots
action is gaining importance in these turbulent times. As
AIADA Chairman Russ Darrow explained when introducing the award, “Once a legislator shakes your hand, hears
your story, and meets your employees, then he’s not just a
legislator. He’s a neighbor, a supporter, and most importantly, a friend on Capitol Hill.”
The next morning, dealers gathered for breakfast and
to hear from Senators Jeanne Shaheen (D-N.H.) and John
Ensign (R-Nev.). Sen. Shaheen, who had recently visited a
dealer in Dover, N.H., with AIADA board member Peggy
Proko, spoke passionately about the value small businesses bring to her state. She has this year emerged as one of
the strongest voices in the Senate for improving access to
dealer financing, and assured those in attendance that she
16 | AutoDealer S U M M E R 20099
would continue to work to secure their avenues of credit.
AIADA President Cody Lusk and AIAM President Mike
Stanton then took the stage to give a legislative update, detailing the latest information on legislation that impacts dealers’
bottom lines. They discussed fuel efficiency standards, scrappage, trade, taxes, and the government’s presence as a stakeholder in the domestic auto industry. “At this time, the first
order of business for all dealers must be to invite their legislators to visit them and their employees at their dealerships,”
said Lusk. “Congress is involved in this industry now, and we
need to make certain they understand it.”
For many, the manufacturer panel was the highlight of the
summit. Moderated by Fred Barnes of FOX News, the heads
of the American divisions of Audi, Hyundai, Honda, and
Toyota spoke candidly on the industry, their products, and
the economy. Johan de Nysschen, president, Audi of America;
John Mendel, executive vice president, American Honda Motor Company; John Krafcik, acting president and CEO, Hyundai Motor America; and Jim Lentz, President, Toyota Motor
Sales USA, all took part.
Barnes peppered the panelists with a wide range of questions, touching on topics such as industry restructuring,
pending scrappage legislation, and the impact of dealerships
on automakers’ bottom line. Each executive reinforced the
importance of dealers in ensuring that their companies remain successful. Mendel emphasized his view that dealers are
interconnected, and that the health of the industry overall
requires special attention to even its smallest members. Lentz
agreed, saying, “If dealers can’t make money, brands can’t be
successful.”
On the future of the auto market, the executives spoke
optimistically, while acknowledging the challenges ahead
and the need for automakers to have a long-term strategy.
De Nysschen noted that the industry’s past emphasis on leases
will impact the future of auto sales. “Leasing inflated the car
market, which contributed to the problem. It will take awhile
continued on page 18
LEFT: AIADA President Cody Lusk told
dealers, “Congress
is involved in this
industry now, and we
need to make sure
they understand it.”
RIGHT: AIADA
Chairman-Elect Rick
DeSilva explains his
position on scrappage
legislation to Rep.
Scott Garret of New
Jersey.
RIGHT: Russ Darrow
with NADA Chairman John McEleney.
FAR RIGHT:
Sen. Jeanne Shaheen,
AIADA board member Peggy Proko,
and New Hampshire
Auto Dealers
Association president Pete McNamara pose with a
delegation of New
Hampshire international nameplate
dealers.
LEFT: Fred Barnes and
AIADA’s manufacturer panel
(from left to right) Johan de
Nysschen, president, Audi of
America; John Mendel, executive vice president, American
Honda Motor Company; John
Krafcik, acting president and
CEO, Hyundai Motor America; and Jim Lentz, president,
Toyota Motor Sales USA.
RIGHT: Best-selling author
and political satirist Christopher Buckley kept the crowd
in stitches Wednesday night.
AutoDealer S U MME R 2 0 0 9 | 17
Grassroots Advocacy Award
winner Shau-wai Lam, chairman
of DCH Auto Group.
BYk>YfgYm5ihc8YU`YfFYWY]jYg
5=585Ág:]fgh;fUggfcchg5XjcWUWm5kUfX
O
n the evening of May 13, AIADA awarded its
first ever Dealers Making an Impact Grassroots Advocacy Award to Shau-wai Lam
of Summit, N.J., chairman of DCH Auto
Group. The Grassroots Advocacy Award
was created to recognize a member of AIADA’s grassroots
initiative—the Legislative Action Network (L.A.N.)—who
exhibits dedication in advocating the organization’s mission
to his or her member of Congress.
Lam, a member of AIADA since 1998, was one of the
first individuals to join AIADA’s Legislative Action Network
in 2007, and has remained one of its most active members.
He frequently contacts his members of Congress regarding important legislation and encourages his employees
and colleagues to do the same. He also recently hosted his
district’s representative, Scott Garrett (R-N.J.), for a visit to
DCH Paramus Honda in Paramus, N.J., where he provided a
first-hand account of how national legislation is affecting his
business.
In accepting the award, Lam thanked AIADA for equipping dealers with the tools necessary to stay in touch with
their members of Congress.
Lam originally joined Dah Chong Hong (DCH) Trading Corporation in 1967, where he worked on international
trade issues. The company’s first foray into automobiles took
place in 1977 with the launch of DCH Paramus Honda. In
1979, Lam moved to Los Angeles to launch DCH’s western
region automotive venture, where he went on to oversee the
start-up of DCH Gardena Honda and DCH Tustin Acura,
both top ranking dealerships in their respective franchises.
He was appointed president of DCH in 1988.
Today, as chairman of DCH Auto Group, Lam oversees
27 dealerships in California, New Jersey, New York, and
Connecticut that in 2008 posted sales of over $1.83 billion.
The company is the largest automobile dealer in the state of
New Jersey and holds more J.D. Power and Associates Dealer
of Excellence Awards than any other dealer group in the
country. During his tenure, Lam has been the recipient of
multiple honors, including the 2004 National Association of
Minority Automobile Dealers’ Lifetime Achievement Award,
the 2004 Time Magazine Lifetime Achievement Award, the
2005 Dealer of the Year Award from Ward’s Dealer Business
Magazine, and the 2008 U.S. Department of Commerce Certificate of Appreciation.
Lam believes strongly in giving back to his community.
Under his leadership, DCH Auto Group has established an
annual standard based on profitability to determine its dealerships’ annual charitable contributions. Additionally, he
and his wife are active in supporting several organizations
that provide health, educational, cultural, and community
services.
For information on how you can join AIADA’s Legislative
Action Network (L.A.N.) and make sure your members of
Congress understand the impact that national legislation has
on your dealership, visit www.aiada.org/lan. AD
continued from page 16
to regain earlier levels [of auto sales],” he said. Mendel noted
the swell of new drivers taking to the roads in the next several years as a sign that conditions should begin to improve.
At the close of the summit on Thursday, dealers still had
work ahead of them. More than 85 dealers made their way
to Capitol Hill to visit with their congressmen and senators.
AIADA had arranged that every dealer who was interested in
meeting a legislator had the opportunity—and the response
was overwhelming.
18 | AutoDealer S U M M E R 2009
“The impact dealers can have on the government when
we act as one united body is staggering,” said Russ Darrow, as
he prepared to meet with Sen. Russ Feingold (R-Wisc.). “The
auto retail industry has never faced challenges of the magnitude we face today. Solidifying these dealer-legislator relationships is more crucial than ever, and I am proud to lead an
organization that makes it happen. ” AD
The unique design and marketing
programs behind the quirky little
Cube has received genuine
customer support.
CAUTIOUS OPTIMISM
Nissan and Infiniti’s
Pragmatic Approach to
Selling Cars Has Dealers
Hoping for the Best
BY MARTY
B E R N S T E I N,
AIADA
CONTRIBUTING
EDITOR
B
rian Carolin, the soft
spoken, British senior
vice president of sales
and marketing for
Nissan North America,
Inc., is the embodiment of cautious
optimism when it comes to the future
of Nissan and Infiniti, the brands he is
responsible for. While he understates
his own expectations, it is clear he is
guiding Nissan in the right direction,
and has high hopes for the company’s
future in the United States.
This despite the dire straits the
global auto industry faces. When AIADA recently caught up with Carolin,
analysts and pundits were predicting
disappointing sales for the month of
May, and suggesting that the summer
would bring more distressing news
about the industry’s financial health.
And, of course, Nissan too was showing a loss for the first time since Carlos
Ghosn arrived—not exactly encouraging news.
But Carolin brings frank pragmatism to the Nissan North America head
offices—a trait usually not found in
sales and marketing executives. His
Bachelors in economics, a PhD from
the London School of Economics, and
over 20 years experience in a variety
of senior leadership and management
roles with Nissan have provided him
with a very real understanding of how
businesses, large and small, succeed.
Though he has only been with Nissan
North America for a little over a year,
he has made impressive inroads among
Nissan and Infiniti dealers.
While he acknowledges the chalcontinued on page 20
AutoDealer S U MME R 2 0 0 9 | 19
Long awaited by Infiniti fans,
the 370z Roadster’s recent
introduction in Beverly Hills,
Calif., caused a few heads to turn.
continued from page 19
lenges he faces, including the consumer
credit crunch which was set off by the
Wall Street meltdown, Carolin is upbeat when he considers Nissan’s past
year performance. “We felt pretty good
about our own performance at both
Nissan and Infiniti,” he said. “We grew
from 6.7 to 7.2 share of the market.
Despite an unbelievable year, in which
we saw historical decline in the entire
market, we set a record market share.”
What Does the Future Hold?
With just two months’ sales on-therecord, Carolin is reluctant to gush.
“We’ve started this new fiscal year
pretty well and I’m expecting our performance this May
will be good.” Carolin’s optimism was
confirmed in May
2009 sales reports, as
Nissan, the smallest
of the three brands
from Japan, reported
the lowest drop
in volume for the
month: Honda’s sales
were off 41.5 percent,
Toyota’s 40.7 percent,
Nissan’s designers have includand Nissan’s 33.1
ed the “C” from cube as the
percent.
shape of the vehicle’s rear
window.
Carolin forecasts
the continuation of a flat sales market
at 9.5 million units for the 2009 calendar year, which is in line with most
other auto sales prognosticators. What
remains to be seen this year is whether
or not scrappage legislation will pass
20 | AutoDealer S U M M E R 2009
through Congress. Such legislation has
boosted sales in Germany by up to 20
percent. “Assuming it is passed, it will
obviously stimulate the market and
give us a mid-term boost,” he said.
Attempting to look beyond the current year is a hazy practice, but Carolin stands behind his prediction for
gradual growth. “We expect Nissan to
show some modest growth in 2010, but
certainly not huge, because we believe
this downturn is very severe.”
Gazing even further into the future,
the marketing and sales director remarked about the potential vibrancy
and vitality of specific marketing components, “Every time we look at the car
market here in the U.S., you look at
the fundamentals and they’re all very
strong: there is population growth,
inward immigration, the number of
school children coming up to driving
age is good, the scrappage rate . . . all
these things lead one to believe the
market will get back to the 15 million
mark, but it’s going to take probably
three years to get anywhere near that.”
The Impact of Small Cars
Based on early reaction, Nissan appears
to have a real and much-needed marketing success on its hands with the
new Cube. It’s a vehicle that is, in the
best sense of the word, quirky. Its target
demographic of young males is spoton, and expectations are high.
From the exterior design to interior ambiance, and drive-ability to
handling, they’ve got a winner here.
And one that just might break the grip
Toyota’s Scion has on the market. “It
was a gamble a few years ago when
we introduced the Versa to America,”
said Carolin, “but it has proven to be
extremely strong. That gave us a lot of
confidence to introduce the Cube. At
the moment we don’t have any near
term plans—for 12 months at least—to
introduce another small car. Our focus
is to get the Cube off to a good start,
and I’m pleased to say in this, the first
month of sales (May), we are already
sold out.”
Not only was Cube a sell-out in the
first month, forward production for
the next couple of months has already
been committed to by dealers. That’s
a huge vote of confidence in a market
where caution, not optimism, prevails.
Of course, Nissan hasn’t packed all
of its eggs into one vehicle. This year,
the Japanese automaker has already
introduced the new 370Z coupe and
convertible for the 2009 year. Infiniti is
releasing its stylish new convertible in
mid-June, and will have a new product
for preview this summer at the famed
Pebble Beach Concours D’elegance.
Challenges for Nissan
and Its Retailers
Despite all this good news, Carolin
acknowledges that an ominous cloud
continues to hover over the industry.
“We will continue to work very hard
with our Nissan and Infiniti dealers—it
is a partnership,” he said, when asked to
break down his agenda. “We’ve endeavored to minimize their inventory; at
the end of March of this year, we got
our dealer inventories supply to one of
the lowest in the industry. I know how
much that can help a dealer. Many of
them have exposure to the domestic
brands, so anything we can do to help,
whether through extra sales or minimizing their inventory, is going to help
them survive. We carefully monitor the
health of our network because it is our
life blood.”
Carolin’s approach in this era of
industry upheaval and restructuring goes beyond words—it is action,
focused and oriented with pragmatic
realism. AD
MANUFACTURER UPDATE
Hyundai’s Hope on Wheels Program Turns 11
S
amantha Heim was only
eight years old when she
was diagnosed with cancer
and her life changed forever.
When doctors identified the
strange lump behind her ear as a soft
tissue tumor called rhabdomyosarcoma, Sammy went from cheerleading
practice to Children’s Hospital Orange
County in the space of a week. It happened that fast.
Sammy is now 11 years old and has
been in remission for almost two years.
Happily, Sammy has beaten her cancer,
but there are still many children who
do not. It’s for Sammy, and the thousands of children each year diagnosed
with childhood cancers, that Hyundai
Hope on Wheels rolls on into 2009.
In 1998, a small group of New
England-area Hyundai dealers began
a campaign to raise money for childhood cancer research in conjunction
with The Jimmy Fund at Boston’s
Dana-Farber Cancer Institute. Eleven
years later, and with the leadership of
the Hyundai national dealer council,
their local efforts have grown into
Hyundai Hope on Wheels, an independent nonprofit organization that has
Three year-old Sydney Lubelt adds her
handprint to the Hope on Wheels Santa
Fe with the help of Stan Hurst, general
manager of Capitol Hyundai in Montgomery, Ala.
New Jersey Hyundai dealer Brad Benson, Dr. Linda Granowetter, and Dr. Jennifer Levine
join childhood cancer survivors for the first donation of the 2009 Hope on Wheels Tour at
the New York International Auto Show.
donated more than $12 million to support childhood cancer research across
the U.S. Today Hope on Wheels is the
united effort of more than 780 Hyundai dealers across the country to raise
awareness about childhood cancer and
celebrate the lives of the courageous
children battling the disease.
Every time a Hyundai dealer sells a
car he donates $5 to Hope on Wheels,
which grants the funds to children’s
hospitals across the country. Each
hospital that receives a donation designates one of its pediatric cancer specialists as a Hyundai Scholar, and the
Hope on Wheels donation is directed
to support that doctor’s research.
Pediatric cancer research support
is scarce when compared to the funding directed to adult forms of cancer.
Breast and prostate cancer research
received nearly 20 percent of the National Cancer Institute’s budget in
2007, while all 12 major groups of pediatric cancers combined received less
than three percent.
The 2009 Hyundai Hope on Wheels
Tour will visit 30 children’s hospitals to
donate $1.3 million to support childhood cancer research. At every stop
on the tour, Hope on Wheels hosts its
traditional “Handprint Ceremony,”
inviting children being treated at each
hospital to place their handprints in
colorful paint on the 2009 Hyundai
Santa Fe, the official vehicle of the
Hope on Wheels Tour. Each handprint
commemorates a brave battle with
pediatric cancer and represents the
story of a courageous child fighting a
terrible disease.
These stories have touched thousands of people all over the country,
and none more so than the hundreds
of Hyundai employees who have
watched Hope on Wheels grow.
“All of our Hyundai dealers have
volunteered their time, energy, and
money on behalf of Hope on Wheels
from the start,” said Oscar Leeser, president of the Hope on Wheels Dealer
Board and an El Paso, Texas, Hyundai
dealer.
In April, Hope on Wheels planned
two very special events to recognize
continued on page 22
AutoDealer S U MME R 2 0 0 9 | 21
MANUFACTURER UPDATE
Hope one Wheels National Youth Ambassador Miss Sammy
Heim makes her first handprint of the year at the Hope on
Wheels launch event at Hyundai Motor Manufacturing
Alabama
continued from page 21
the company-wide commitment to the
cause and celebrate the launch of the
2009 Hope on Wheels Tour. Special
ceremonies at Hyundai Motor Manufacturing Alabama (HMMA) and at
the Hyundai booth at the New York
International Auto Show kicked off the
tour and gave some deserving children
a rare, behind-the-scenes glimpse of
two very different parts of the auto
industry.
On April 7th, representatives from
Hyundai and Hope on Wheels joined
11-year-old Sammy Heim, now the
Hyundai Hope on Wheels National
Youth Ambassador, at Hyundai’s U.S.
manufacturing plant in Montgomery,
Alabama. The Hyundai Santa Fe, the
official symbol of Hope on Wheels,
is built right there at HMMA, so the
Hope on Wheels group was able to
greet the 2009 Santa Fe vehicle as it
rolled off the assembly line and had its
very first handprints applied. In addition to tours of the plant, speeches,
and a ceremonial check presentation
commemorating this year’s total donation of $1.3 million, Sammy helped
three-year-old local cancer survivor
Sydney Iubelt of Prattville, Alabama
join in her very first Hope on Wheels
Handprint Ceremony.
After the event at HMMA, the
Hyundai Hope on Wheels crew hit
22 | AutoDealer S U M M E R 2009
Sammy Heim and her family join Hope on Wheels director Zafar
Brooks, HMA’s Andy Cho, HMMA’s Rick Neal, and Alabama Hyundai
dealers Dr. Nick Botta, Stan Hurst, John Mitchell and Bob Butin for the
Hope on Wheels 2009 Kick-Off Celebration Event at Hyundai Motor
Manufacturing Alabama.
the road and headed to New York City
where the first official hospital donation and Handprint Ceremony of 2009
took place on April 9th at the New
York International Auto Show. Hyundai dealer Brad Benson, of New Jersey’s
Benson Hyundai, presented a donation of $100,000 to the Hope & Heroes
program at Morgan Stanley Children’s
Hospital on behalf of Eastern Region
Hyundai dealers. Children who were
treated in the hospital’s pediatric cancer program joined Hope on Wheels
at Hyundai’s booth for a Handprint
Ceremony followed by a preview tour
of the auto show.
Earlier in the day, Hyundai’s president and CEO John Krafcik commended the dealers for their dedication to
Hope on Wheels, even in the face of
tough times in the auto industry.
“Hope on Wheels grew from our
dealers’ personal commitment to fighting pediatric cancer, and it’s incredible
to see how all branches of Hyundai’s
operations have come together to show
their support and celebrate the children, families, and doctors on the front
lines of the battle against this terrible
disease,” Krafcik explained.
Sammy Heim echoes those sentiments in her own way each time she
makes a speech. In her role as national
youth ambassador, she and her family have traveled all over the country
with Hope on Wheels so Sammy can
share her own story of hope with other
children.
“Kids shouldn’t have to go through
what I did and parents shouldn’t have to
go through what my parents did,” says
Sammy, who dreams of being a writer
and animator when she grows up.
Although the five-year survival
rate for pediatric cancer is increasing steadily, one quarter of children
will still pass away five years from the
time of diagnosis. Cancer remains the
number one disease killer of America’s
children, claiming more lives than
cystic fibrosis, muscular dystrophy,
asthma, and AIDS combined. Cancer
affects children differently than it does
adults, so children need specialized
treatments, not just scaled down adult
treatments, and over the past two decades, only one new cancer drug has
been approved for use with children.
Battling pediatric cancer is a marathon, not a sprint. Hyundai Hope on
Wheels is proud to support the battle
against childhood cancers, and proud
that Hyundai dealers are unwavering
in their commitment to this cause. And
the doctors, hospital workers, parents,
and children that have touched our
lives along the way bring us the inspiration to keep on fighting, every day.
Please visit www.hyundaihopeonwheels.org for more information. AD
DEALER SPOTLIGHT
Dealers Check In
Emanuel Bugelli
Gateway Mazda
Aurora, Colo.
As the President of Gateway Mazda, Emanuel Bugelli oversees 40 employees who have helped his business garner Mazda’s Gold Cup Dealer award
and the city of Aurora’s Business of the Year award. He recently hosted
Congressman Mike Coffman (R-Colo.) for a visit to his dealership and
a meeting with his employees as part of AIADA’s Dealer Visit program.
Emanuel is active in his local community, serving for several years as a
member of the Aurora Business Advisory Board, Loan and Grant Board,
and Business Improvement District. He and his wife are also involved
with children’s diabetes research and community education efforts.
What or who first got you into
the auto retail business?
I was 27 years old when I immigrated
to this country from the Island of
Malta. I went to an employment
agency which in turn sent me to an
auto broker to apply for a payroll clerk
position.
The owner
told me, “No
experience.
No job.” I
have never
taken no
easily and
so I offered
to work
for free for
one week to
prove myself
and then
the owner
could interview me again. I was hired
as a payroll clerk and 3.5 years later
was made the general manager. Later,
I worked as a business manager for
a number of franchised dealers until
1974 when I became a partner and
dealer for a Chevrolet franchise in the
San Diego area.
What methods do you use
to attract and retain the
best employees?
As in the past, referral and recommen-
dation from current employees brings
the most reliable and qualified future
employee. We pay a finder’s fee to our
employees for recruiting someone to
come to work for us. My partner and I
interview every employee we hire, from
the lot technician to the managers. We
check references and do background
checks and make sure the person is
not only qualified for the job but
most importantly will fit in with the
dealership’s mission statement, which
includes integrity, pride, hard work,
and doing the common thing uncommonly well.
What are you doing to stay
profitable during this economic
slow-down?
Minimizing expenses, including advertising, flooring, personnel, and reviewing and approving all expenses daily.
We believe in customer satisfaction and
earning and valuing the customer.
How are the up-and-down
gas prices impacting your
business?
The gas prices have affected our ability to appraise the trades. The market
value of the pre-owned inventory,
along with the demand for it, changes
with the gas prices. It becomes difficult
to be aggressive when trading for the
“gas guzzlers.”
Ed Lewis
Staunton Auto Group
Staunton, Virginia
When he answered an ad in the local
newspaper for a car salesman at his local
Chevrolet dealership in 1972, Ed Lewis
was looking for an occupation that would
help him provide a good living for his
family. Today, he is the owner of Staunton
Nissan Subaru Hyundai in Staunton, Va. In
April, he hosted his district Congressman
Bob Goodlatte (R-Va.), who witnessed
the ins and outs of business at his auto
dealership, which has been recognized
as a Nissan Owners 1st Award of Excellence dealer, a Subaru Stellar Performer,
and Hyundai Star Certified Dealer. Ed is
an active member of his local Lions Club
and the Elks Club.
How does legislation impact your
business?
Legislation significantly impacts my business as it can negatively or positively affect all
aspects of what we do. As an auto dealer you
must constantly stay informed about pending legislation and its potential effect on your
business.
What methods do you use to attract
and retain the best employees?
continued on page 24
AutoDealer S U MME R 2 0 0 9 | 23
DEALER SPOTLIGHT
Travis Ostrom
I-95 Brunswick Toyota
Brunswick, Georgia
As a dealer in a midsized market we offer
many benefits including participation in
health insurance, 401K retirement, and a
positive work environment with the ability
to earn a better than average income.
How are you using technology to
improve your business?
Computers and computer programs
have significantly improved the ability to
manage and track all aspects of the auto
business. The internet provides additional
methods of advertising, generating leads,
and serving our customers.
What was your most memorable
sale?
My most memorable sale, for many reasons, was when I sold two of my dealerships that were located in a market 200
miles from my dealerships in the Shenandoah Valley.
When did you first get involved
with AIADA and why?
When I became an auto dealer in 1990 I
became a member and attended my first
AIADA convention in Washington, D.C. I
knew that as a Nissan Dealer I needed the
representation and support provided by
the AIADA in the automotive industry.
What is the biggest mistake you
have made as a dealer?
Being too aggressive at times. We
entrepreneurs have a tendency to be a
little too optimistic; we have to be, otherwise we would not take the risks that
keep innovation coming. However,
when the economy hits a snag, we are
not very well positioned to deal with
those challenges.
How does legislation impact
your business?
Until recently I did not pay much
attention to legislation’s impact on our
business. However, without some of
the current programs that have been
introduced, and those in debate, the
dealership body as a whole would be
shrinking more considerably than it is.
I am not in favor, however, of some of
the government’s involvement with the
manufacturers themselves. I have been
impressed with their immediate action
and help. But as soon as they can exit
these businesses it should be better for
business as a whole. I also adamantly
disagree with the “card check” bill.
Employees have always had the right to
unionize, I do not understand why we
are going to let peer pressure impact
those decisions.
What are you doing to stay
profitable during this economic
slow-down?
We finished our new facility that was
five times the size of our previous facil-
24 | AutoDealer S U M M E R 2009
ity at the exact moment sales began to
drift downward. Thankfully, because of
recent government intervention, consumers have begun to have confidence
in making larger purchases. This has
been a tremendous help.
Over your career, what manufacturers have most impressed
you? Why?
Toyota: because of their unique ability
to see way into the future and make
very valuable decisions on behalf of
consumers and dealers. Honda: they
have been able to keep their reputation
almost unblemished, which means a
very dependable and predictable future
for a business owner.
Any new additions to your business that we can highlight?
We built the MONSTER PIT STOP
which is in line with our mission to
help save our customer’s time. We
change the customer’s oil and rotate
their tires in under seven minutes,
NASCAR style, while the customer
doesn’t even get out of their car.
What is your personal
“dream car”?
A 2001 Ferrari 550 Maranello Barchetta.
Ferrari SpA
continued from page 23
Although today he is President of I-95 Brunswick Toyota, Travis Ostrom
got his start in the automobile business in 1994 when his father, an insurance salesman, refused to offer him a job until he possessed two years
of sales experience. Today, he runs a dealership that has been the recipient of Toyota’s President’s Award for four consecutive years, but he still
finds himself juggling his success as a dealer with the challenges of the
current automotive industry. Rep. Jack Kingston (R-Ga.) recently visited
I-95 Brunswick Toyota, where he spoke with Travis and his 70 employees
regarding federal legislation and its impact on their daily business.
Ferrari SpA
DEALER SPOTLIGHT
Greg Kaminsky
Toyota of El Cajon
El Cajon, Calif.
Greg Kaminsky joined AIADA’s Board of Directors this year, but he has
been involved with the organization since 1994 when he attended his first
convention with his father who founded Toyota of El Cajon. Today, both
Greg and his brother, Gary, carry on the family’s commitment to integrity
and honesty in their business practices. Toyota of El Cajon supports the
local community by sponsoring charities and local events, as well as contributing to Scripps Hospital in the fight against cancer. Greg is a board
member of the local Boys and Girls Club and is actively involved in the
San Diego New Car Dealers Association.
How are you using technology
to improve your business?
We have store wide e-mail capture
and advertising campaigns. We currently have over 10,000 e-mail addresses in our system. As many as four
times a month, Sales and Service will
offer specials to our guests. Using email we also offer our guests Rewards
Dollars in their account via Parts and
Service purchases. The guests can
receive up to 3 percent return. We
have also converted all e-mail guests
to electronic Service Reminders when
due for service. This helps in reducing
mailing costs and promotes a “Greener
Dealership.” We also use an electronic
Contact Management (CRM) system.
This single data base holds all guest
notes and interactions. Associates use
it to document promises made to our
guests, guest service issues, and follow
up phone call documentation.
What are you doing to stay
profitable during this economic
slow-down?
We started strategizing in early 2008 to
anticipate what the market landscape
would look like throughout the year.
The management team devised departmental expense cutting plans in three
stages of escalation, with the third
stage being the most dramatic. As we
all know, as 2008 progressed, it caused
us to enact every stage of the plan. In
each stage of this plan there was a reevaluation of products and services the
store was receiving, as well as serious
consideration of personnel costs. As
a team we renegotiated with suppliers and advertisers and eliminated
some services while condensing duties
of our staff to cover the necessary
reduction in the number of associates.
Everyone has had to make sacrifices
and pull together. We worked very
hard to ensure no expense was exempt
from scrutiny.
How does legislation impact
your business?
Recent legislation in our business has
had significant impacts on our operations. In 2008 the minimum wage
increased to $8.50 per hour, raising
our personnel cost. This also triggered
many of our suppliers and vendors to
raise their cost. In 2009 the sales tax
increases, both statewide and locally,
gave us one of the highest municipal
tax rates in the state. Vehicle Registration fees doubled in 2009, which has
also impacted vehicle sales. Continuing
compliance issues and increased regulations always incur additional expense
to train and implement. AD
AutoDealer S U MME R 2 0 0 9 | 25
Did You Know?
The 1978 Mercedes-Benz S-Klasse was the first
vehicle to feature the modern anti-lock brake system.
Paul Galvin, head of Galvin
Manufacturing Corporation,
invented one of the first
ful car radios in 1929.
He went on to name the
It is estimated that
over 100,000
patents created
the modern automobile.
company “Motorola,”
commercially success-
The Saab GT 750,
introduced at the
New York Motor Show
in 1958, was the first
because its products
vehicle to feature
combined motion and
seatbelts as standard
sound.
equipment.
First seen on
BMW vehicles, the
“Hofmeister kink”
is a low forward bend
where the rear side
windows separate
from the rear glass
and is intended to
highlight the fact that
BMW models have
rear-wheel drive.
The first patent for a hybrid engine was issued in 1909 to Henri Piper,
a German-born inventor and gunmaker in Belgium.
26 | AutoDealer S P R I N G 2 0 0 9
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