An intriguing question is raised by the presence of former Big Three sales vice presidents on the boards of three of the nation's largest megadealers: Isn't it time that retired dealers serve as board directors at auto companies?
After all, dealers are the biggest customers of the factories, indeed the only direct customers. Decisions made by the powerful boards in many ways affect an auto maker's franchised dealer body.
Dealer input at the time those decisions are made can be influential in avoiding costly mistakes, such as harmful dealer policies by the producers or their captive lenders.
Factory executives will argue that an alleged conflict of interest precludes dealers of the same brand from serving on the board. But conflicts do not prevent bankers, brokers, attorneys and land developers from being named directors.
The usefulness of having a “dealer director” on a factory board came to light when the second largest megadealer, UnitedAuto Group, added retired General Motors Corp. sales group vice president Bill Lovejoy to its board this past March.
In 2000, Lovejoy was called upon to move to the sales and marketing helm when his predecessors stumbled badly in pushing through an initiative to buy up “collections” of dealers in major urban markets.
No GM executive knew more dealers than the gregarious New York City native who had run GM's powerful and profitable parts and service division and GMAC. Lovejoy knew the idea of returning to “factory stores” was flawed, but he was powerless to do anything about it.
Lacking a dealer who could have pleaded against the idea, the GM board signed off on a plan that could conceivably cost hundreds of millions and alienate the entire GM dealer body. A GM loyalist, Lovejoy put off a planned retirement so that the dealer body could see the collection strategy dead and buried.
GM's experience replicated the same sort of brainstorm across town at Ford Motor Co. The auto maker plunged into a “Ford Collection” initiative, buying out almost all its dealers in Tulsa, OK and Rochester, NY, plus several in San Diego, and taking charge of those stores.
When Chevrolet started outselling Ford in Rochester and Tulsa, the folly of the factory-store revival was made abundantly clear. Jacques Nasser, then-Ford CEO, had pushed through the plan on another board devoid of dealer input.
Two former Ford sales chiefs, Bill Benton and Bob Rewey, now serve as directors of megadealer Sonic Automotive.
Two other alumni of Ford sales, Ben Bidwell and Lou Lataif, accepted board memberships at Group 1 Automotive. Bidwell now is a dean at Boston University, his alma mater.
What Bidwell brought to Group 1, as a sales chief and division general manger who rose to executive vice president at Ford and vice chairman at Chrysler, was an acquaintanceship with as many dealers nationwide as GM's Lovejoy.
Reportedly, Rewey reluctantly oversaw the Ford Collection's inception — a strategy which key Ford dealers such as Bert Boeckmann in California and Jerry Reynolds in Texas knew was doomed. Their protests, like those of NADA officers and dealer council members, fell on deaf ears.
Auto makers should see the value of having dealers on their boards — just as major megadealers have put ex-factory executives on theirs.
There isn't a franchise out there that couldn't benefit from having a dealer director at the decision-making level. Excesses and abuses abound, whether it be unfair takeaways, unreasonable demands for expansions and “de-dualing,” payments of warranty claims at wholesale instead of retail, leasing cutbacks and pressures on rural dealers to fold.
Sure, there are franchise laws in every state, and aggressive regulatory agencies in California, Florida, Illinois and Texas. There are dealer councils with bark, but no bite. There are policy boards and umpires. But the factories' only customers — their franchised dealers — lack a voice on those all-powerful boards. It's time.
Mac Gordon, dean of U.S. auto writers, has covered the industry since 1944. He's at [email protected].