John McEleney takes over the helm at the National Automobile Dealers Assn. as its chairman during a period in which the nation's car dealers are facing their most intense threat in their history.
“There certainly have been a few more issues than we bargained for,” chuckles McEleney. “I guess I'd rather be in the middle of all this, rather than on the sidelines.”
The credit crisis is one. Numerous dealers are being squeezed on the floor plan credit front as their lenders are forcing them to pay the principal owed on aged inventory. Meanwhile, potential customers are finding it difficult to get their loans financed. The result being, dealers aren't selling cars and bringing in revenue. As inventory piles up, lenders begin to exert more pressure on the dealer.
Approximately 1,000 dealers were forced out of business in 2008 and estimates on what 2009's damage will be range from 1,000 — 8,000 dealers closing their doors.
The powerful state franchise laws that protect dealers from manufacturer incursions into their businesses now don't seem so strong. They offer no protection against banks and finance institutions that once were the dealers' best friends.
“My first priority this year is assisting dealers who have to make tough decisions,” McEleney tells Ward's during an interview New Year's Eve. “We're trying everything we can to be a resource for dealers who might have to close a dealership. It's not pleasant, but it needs to be done.”
A second priority on his list is helping move General Motors Corp. and Chrysler LLC through the process of restructuring while protecting dealers' interests.
NADA also has to reassess its business this year as the downturn will cause membership numbers to decline. McEleney started the process in December 2007 but it took a back seat as the credit and industry crisis developed.
McEleney started in the business in 1976 at age 24 running one of his dad's stores. He is a second generation NADA chairman — his dad was chairman in 1971.
Asked if dad gives any advice to being chairman, McEleney says he's been told to “take things one day at a time. There are some things you can't control.”
“Dad's also told me it's important to have someone to confide in. So you don't have to shoulder the burden alone.”
“It seems like ancient history now,” he says. “But in the ‘70's people were trading large vehicles for compacts, and then six months ago, the same thing was happening. Every day is kind of crazy here.”
“My grandfather started the business in 1914,” he says. “My dad took over when he was 30.”
McEleney, talking with Ward's just 10 days after his mother passed away, says his father, at age 86, still comes into the dealerships. He is married and has two grown children who represent the fourth generation of the family business.
The group consists of McEleney Autocenter, Inc., in Clinton, IW, and McEleney Autoplex, Inc., in Iowa City, selling Buick, Cadillac, Chevrolet, Toyota, Scion, GMC, Pontiac and Hyundai.
McEleney got involved with NADA about seven years ago, although he has been to every convention since 1976.
He's been part of the association's leadership for the past five years.
After graduating from the University of Notre Dame in 1973, McEleney worked in the dealership as a sales consultant and body shop estimator.
Although Iowa has not experienced the credit issues other areas of the country have, McEleney's stores have felt the pressure. His Clinton store was up through September, but then sales declined by 22% the last three months. “That was a shock to the system,” he says. Yet, he still has not laid anyone off.
The stores have cut back on advertising by a third, and has focused more on digital advertising. They also have worked hard at keeping days supply down to 50 or 60 days.
McEleney is a quiet man who chooses his words carefully, and doesn't always let on to what he is thinking.
Outgoing Chairman Annette Sykora says he will be a force to be reckoned with and that it would be a mistake to underestimate him.
“He's been great as vice-chairman,” she says. He's served on various dealer councils, including a stint as the chairman of the Pontiac National Dealer Council, and is a past chairman of the Iowa Automobile Dealers Assn.
He's also active in the community, serving on civic boards. He is trustee and vice chairman of Mount St. Clare College, director of Citizen's First Bank, director of Paul B. Sharar Foundation of Clinton Community College and past president of Clinton Rotary Club.
In addition to electing McEleney as chairman for 2009, the NADA board of directors also elected Edward C. Tonkin as 2009 vice chairman. Tonkin is vice president of Ron Tonkin Dealerships in Portland, OR.