NADA’s Chief Economist Paul Taylor predicts sales will reach 13.945 million units this year. According to Autodata, January 2012’s seasonally adjusted annualized rate was 14.2 million – up from 12.7 a year earlier. From any angle, the forecast is clear – sales will be up. These projections make 2012 the third consecutive year of rising new car sales.

As sales rise so does optimism and the optimistic atmosphere evident throughout the halls of NADA 2012 was a welcome change from the more downtrodden mood of the recent past. This wave of positive momentum is evident in the releases and announcements made at NADA for new products, new appointments, mergers, and the growth of mobile and technological solutions. By all accounts the positives far outweighed the negatives at NADA 2012.

Innovation at Its Best

Allstate Insurance Co. and Allstate Dealer Services will have the opportunity to open full-service Allstate agencies inside dealerships. Implementation will bring the insurance agency office to inside the dealership, typically on the showroom floor and operating during the dealership’s hours of business. A licensed insurance professional and a team of support staff employed by the agency owner will be available to assist customers.

According to the company, Allstate and Allstate Dealer Services have tested and modified the program over the last two years, combining the Allstate Exclusive Agency, Good Hands Network Repair Facility and Allstate Dealer Service products with dealer F&I offerings. In addition, they have the ability to integrate Allstate Benefits into the dealer’s employee benefits platform.

Key Appointments

American Auto Guardian Inc.(AAGI), in a recent press release, announced the promotions of Kristen Gruber and Andrew Wilson. Gruber was named vice president of product development. Gruber is a CPCU with more than 20 years of product management and underwriting experience. She joined AAGI in 2007 and has been responsible for the creation of new products and coordinating the related distribution.

Andrew Wilson has been promoted to the sales team as Eastern regional vice president. With 20 years of experience in the automotive industry, Wilson’s career also includes the recruitment, development and leadership of an OEM direct sales force. He joined the AAGI team in January 2012.

In another recent release, Resource Automotive Inc., a unit of The Warranty Group, Inc., announced Steve Barrett has joined the company as executive vice president. He will be responsible for automotive reinsurance. Barrett joined Resource in 1980 as an F&I specialist before moving through the ranks to become the company’s senior vice president reinsurance.

Merger

Allegiance Administrators LLC has been formed as a result of a merger between Dimension Service Corp. (DSC) and National Administrative Service Co. (NASC). The recent announcement is anticipated to provide top-level products and more efficient operations to customers and offer a diverse and flexible portfolio of products.

Mobile Technology

This segment is exploding with faster, better, more interactive apps for those devices we all can’t live without. Here is a quick rundown of a handful of the mobile solutions being promoted at NADA.

An app for the dealer side is DealerTrack’s DealerTrack Mobile. This app utilize the iPhone and/or iPad to create an interactive experience between the dealership and the customer that enhances sales and shortens transaction time. Dealers using this app would have access to the status of credit applications and contracts, credit bureau scores, Red Flags reviews and would be able to perform OFAC checks.

For those still using the Blackberry, RouteOne has made available a free BlackBerry App that can be downloaded from their site. According to RouteOne, dealers using this new app will be able to view and manage deals and leads, access a condensed version of the Deal Manager, Deal Summary and Lead Manager solutions and request and view credit scores instantly.

On the consumer side, Dominion Dealer Solutions introduced the Be Back app and DMEautomotive introduced Driver Connect. Both of these applications are oriented to keep customer loyalty high with features such as 24/7 mobile access to dealership information, appointment scheduling, service history, vehicle recall notifications and maintenance reminders.

For the dealer, the Be Back app enables dealers to monitor and act on a customer’s ability to evaluate his vehicle’s equity, schedule service appointments and shop for new and used inventory. An equity alert shows the consumer the value of his trade-in and alerts the dealer to the consumer’s interest in its equity. The app also enables users to search consolidated, up-to-date, new and used inventory across all a dealer group’s stores with detailed vehicle info and photos.

Driver Connect enables dealers to send targeted customer communications and also integrates the DMS and DMEautomotive Loyalty Program so users can manage and redeem their loyalty points, according to the company. Additional app tools of Driver Connect include Find My Car, Find Local Parking, My Parking Meter, Gas Station Locator and more.

Hardware Upgrade

Reynolds and Reynolds presented the refreshed docuPAD. This interactive F&I selling tool and document processing system, with a screen that is 50 percent larger than before, now sits on top of the F&I desk rather than being flush-mounted into an F&I producers work station. The latest software enhancements to docuPAD include direct integration with the Reynolds ERA and POWER dealership management systems (DMS), thereby eliminating the need for dealers to re-key deal data in the DMS, according to the company.

Distractions

This brief overview would be remiss if it didn’t address a couple distractions within the industry. One quickly became known as the “Taj Mahal” affect. According to a study by Glenn Mercer issued at a press briefing during NADA, dealers are not convinced that the upgrades expected of them to their facilities will result in increased ROI.

Mercer explained, “These programs — intended to encourage dealers to invest in store expansion, modernization and standardization — can place significant financial burdens on dealers, yet there is little hard evidence on the return of investment this spending might yield.”

Jason Stein of Automotive News writes, “In better times, margins — rather than just survival tactics — are on everyone’s mind, which means factory-mandated dealership improvements are a touchy subject…”

Another major distraction, the controversy of TrueCar. This storm continues to brew. Mike Colias for Automotive News shared in his presentation that CEO Earl Hesterberg of Group 1 Automotive, Inc. believes TrueCar.com is harmful to dealers and automakers and questions the online shopping site’s value to the industry.

Several states are probing into whether TrueCar’s business model of guaranteeing online shoppers big discounts from participating dealers violates state franchise laws. Damage to the dealer’s pricing and margins along with the concerns over the security of the data, which TrueCar has access to from the dealer’s computer systems, appear to be the main areas of concern.
As a result of feedback from dealers, TrueCar has stated that they are working on changes to its business model, moving some dealers to a subscription-based rate not related to sales volume.
Looks like 2012 has the making of another interesting year for the automotive industry!

LAS VEGAS — Paul Taylor, chief economist of the National Automobile Dealers Association, said 2012 will be another rebuilding year for the industry, and predicts sales will reach 13.945 million units this year.

Fulfillment of that forecast mark the third consecutive year of rising new-vehicle sales. In 2009, the auto industry sold 10.4 million new cars and trucks, down from 13.2 million units in 2008. In 2010, sales grew to 11.55 million and rose to 12.7 million last year, according to F&I and Showroom magazine. Taylor, however, said the industry is still a ways away from the 16-17 million-unit years realized between 2000 and 2007.

“Those figures were not obtained during normal sales conditions,” Taylor said during his annual press briefing at the NADA Convention and Expo in Las Vegas. “Recent sales are what we would expect from a normal growing economy coming back from recession.”

Taylor listed better credit conditions and more generous manufacturer incentives as reasons for his positive outlook for 2012. He also said the production problems caused by the Japanese earthquake and flooding in Thailand are also behind the industry, which also fueled his prediction.

“With the age of cars and trucks on the road today at an average 11.1 years, many consumers feel they can no longer delay making a purchase of a new or newer vehicle,” said Taylor, whose top five reasons for his optimism were pent-up consumer demand, a return to stabilized credit, an influx of options, gasoline prices and home prices.

New model releases, which have caught the eyes of consumers, are another reason for his optimism.

“Consumers want new cars and light trucks,” Taylor said. “We can see that in strong auto show attendance and sales numbers for January.”

The numbers also show that one- to five-year-old used vehicles are in short supply and selling at higher-than-usual prices. That has resulted in more consumers seeking out new-car purchases.

“Interest rates on new-car loans will remain historically low in 2012 and 2013, due in part to policy decisions by the Federal Reserve Board to keep rates low and the U.S. economy growing,” Taylor said. “As a result, affordable credit will be widely available in with more automaker finance companies offering low-interest and interest-free loans for up to 60 months.”

General Motors, Ford, Chrysler and Volkswagen, heartened by the boost in consumer confidence, have been quick to launch new products that compete with those offered by other automakers. The excitement over styling, fuel efficiency and other options has driven more consumers to the showrooms, Taylor pointed out.

“The interest in new cars also reflects the lack of used cars with low mileage,” Taylor said. “During the recession, five million cars didn’t come into the marketplace as trade-ins.”

Gasoline prices also could hurt or help sales in 2012. In 2011, gasoline prices averaged $3.51, up 72 cents per gallon from 2010’s average, according to industry sources. This year, analysts predict another boost in prices that could bring gasoline prices to $4.13 a gallon. Taylor, however, said better weather conditions this winter offers some hope that prices won’t rise too high this year. If they do, however, Taylor expects consumers to once again turn to fuel-efficient vehicles.

“Many consumers think if they’re going to buy SUVs or other light duty trucks, they had better do it now, with gas reasonably affordable,” said Taylor, who noted that future fuel-related regulations could also prod consumers to buy those vehicles now.

Although real estate prices and values are still falling in some states, Taylor said home prices appears to be stabilizing overall. This should help to boost consumer confidence this year, he said.

“Stabilizing home prices will support stronger car and light truck sales over this year,” Taylor said.

Auto dealers are facing unprecedented pressure to invest in their facilities and want to quantify the return on that investment, Stephen Wade, chairman of the National Automobile Dealers Association said Thursday.

The NADA has commissioned an independent study to gather data on what dealers get for the millions they spend when automakers demand cookie-cutter dealerships across the country, reported The Detroit News.

The study, by independent consultant Glen Mercer, former partner of McKinsey and Co., started a few months ago. Results are expected in December.

“There is a real need for less financial pressure, not more,” Wade said at an Automotive Press Association event in Detroit.

“And the timing is bad with the most pressure to invest at a time when dealers are least able to afford it,” he said.

A big concern is factory-mandated “image” programs, he said, that set dealership standards, usually by brand, that dealers must meet.

It can cost millions to incorporate specific colors and materials for showrooms, display areas, lounges and service bays, as well as signs and overall appearance.

Wade said the demands often are “enough to convince people to leave the business, rather than make the investment.”

Ford Motor Co., for example, has implemented new standards to denote Lincoln as a premium brand that may drive some rural dealerships, especially those which lost their Mercury franchises, out of business.

Chrysler Group LLC, in deciding which franchises to terminate during its corporate restructuring, included in the evaluation whether dealers offered all brands in a single facility with arches and a specific look for each marque. Chrysler also demanded standalone facilities for the Fiat brand.

Wade said many of these dealers feel they are acting on blind faith, investing now on promises of new vehicles down the road.

General Motors Co. began a major push in late 2009 to work with its dealers on revamping their stores to redefine each GM brand with a distinctive look.

Many automakers help dealers offset the cost with quarterly payouts for hitting sales, service and technology targets.

But dealers want economic data on whether the investment improves sales and customer satisfaction, Wade said, adding the findings will be of value to dealers and automakers alike.

Wade said NADA recognizes the need for standards, “but they should be realistic.”

Dealers say financing for upgrades is tough to secure, and automakers can’t guarantee a single additional sale because the new floor is a darker shade of gray, Wade said.

ORANGE COUNTY – Sales and management training expert and renowned author, Joe Verde, was asked to speak at the 2012 National Automobile Dealers Association (NADA) Convention & Expo in Las Vegas in February. This year’s convention will mark the 25th time that a member of Joe Verde Sales & Management Training, Inc., has spoken at NADA since 1991.

Verde’s workshop “A Business Plan to Guarantee More Traffic and Sales,” is designed to help dealers find the right mix of e-leads, phone leads, walk-ins, advertising and repeat business to guarantee their dealerships more sales.

“Customers have changed – they are more sophisticated,” said Verde, president at Joe Verde Sales & Management Training, Inc. “One of the biggest challenges for dealerships today is generating more floor traffic to protect themselves in this market. I’ll show dealers how to establish goals, based on their market, and how to structure a step-by-step business plan.”

Two types of customers have evolved over the past five years, according to Verde. His workshop will cover these two customer groups and how they’ve changed the market, so dealers can focus on maximizing the potential of floor traffic in 2012.

“Today’s market is more volatile than ever and dealers have to learn to generate more floor traffic each month without breaking the bank,” he said. “I’ll show attendees how to flood their showroom with buyers.”

WASHINGTON – The board of directors of the National Automobile Dealers Association (NADA) has elected William P. Underriner as chairman and David W. Westcott as vice chairman for 2012.

Underriner, 59, president and co-owner of Underriner Motors in Billings, Mont., operates Honda, Hyundai, Buick and Volvo franchises. Underriner, NADA’s current vice chairman, has served three terms as NADA treasurer and represents Montana’s new-car dealers on the association’s board of directors.

“I’m honored that my peers have elected me for this position,” said Underriner, who’s been in the automobile business since 1984. “I’m looking forward to the challenges ahead and the unknown because you never know what can happen in the auto industry.”

Westcott, 64, president of David Westcott Buick GMC Suzuki in Burlington, N.C., has been a new-car dealer since 1981. He currently represents North Carolina’s new-car dealers on NADA’s board of directors.

The election was held Sept. 20 at an NADA conference in Washington, D.C. Underriner and Westcott will take office at the 2012 NADA-ATD Convention and Expo in Las Vegas, which runs Feb. 3-6.

Underriner is a past member of the association’s Executive, Industry Relations, Dealership Operations and Membership committees. He’s also served as chairman of NADA’s Finance and Convention committees.

Westcott currently serves as chairman of the association’s Dealership Operations Committee. He’s also a member of the Industry Relations Committee and the Dealers Election Action Committee (DEAC) board of trustees. He’s past chairman of NADA’s Government Relations and Regulatory Affairs committees and DEAC.

WASHINGTON – The U.S. Federal Trade Commission will examine whether dealerships try to exploit military personnel and their families in the second of a series of public roundtables on dealer practices.

The roundtable will take place Aug. 2-3 in San Antonio, the FTC said in a statement on its Web site.

Roundtable topics include “motor vehicle sales and financing issues pertaining to military consumers, fair lending and financial literacy,” the statement said.

The FTC was given streamlined authority to adopt standards for dealer-assisted financing under financial reform legislation enacted last year, reported Automotive News.

The agency has said it plans to convene as many as five roundtables this year to determine “what consumer-protection issues, if any, exist that could be addressed through a possible rule-making or other initiatives.”

During the congressional battle last year over whether dealerships should be overseen by the new U.S. Consumer Financial Protection Bureau, the Pentagon weighed in on behalf of military families.

Undersecretary of Defense Clifford Stanley argued unsuccessfully that dealers should fall under the new agency’s oversight.

“There are still documented cases of service members falling victim to predatory practices and prohibitively expensive products,” Stanley said in a Feb. 2010 letter to the Treasury Department.

A Pentagon survey found 72 percent of 659 counselors and attorneys on military installations had counseled service members in the previous six months on deceptive auto-financing practices, the letter said.

Among these practices were falsification of loan applications, failure to pay off liens on trade-ins, and packing loans with items at inflated prices, Stanley said.

The National Automobile Dealers Association has been invited to participate at the upcoming roundtable.

“We will clearly demonstrate that optional dealer-assisted financing expands access and reduces the cost of credit for all car buyers — including those who serve our country in uniform,” NADA spokesman Bailey Wood said.

At the first FTC roundtable in April, NADA argued that current state and federal rules already prohibit dealerships from practices being reviewed by the commission.

The dealer group said a review of customer complaints showed “no systemic concerns with dealer-assisted financing.”

The new Consumer Financial Protection Bureau, which is to be up and running July 21, oversees the financial institutions that provide loans to auto consumers.

An office within the new agency was created to educate military families about financial issues and protect them from unscrupulous lenders.

The office is to be headed by Holly Petraeus, wife of Gen. David Petraeus, who was unanimously confirmed by the Senate today to head the Central Intelligence Agency.