Charlie Gilchrist, 2019 NADA Chairman on Vehicle Affordability, Threats to the Industry, and His Plan for the Year Ahead

Charlie Gilchrist

Thousands of franchise dealers descended on San Francisco for the 2019 NADA Convention. One of the high points of the event is the installation of the Association’s new Chairman; Texas dealer Charlie Gilchrist. We had the chance to sit down with Charlie just before taking the reigns as the new Chairman of the NADA for 2019. We asked Charlie about the future of the industry, the year ahead for NADA and what he wants to get accomplished.

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Jim Fitzpatrick: We are so honored to have the new Chairman of the NADA for 2019, Mr. Charlie Gilchrist, thank you so much for spending some time with us.

Charlie Gilchrist: Well thanks for inviting me, it’s great to be here.

Jim Fitzpatrick: Sure, you’re the man of the hour right now, right? The man of the year.

Charlie Gilchrist: Well I don’t know about the hour or the year, but I’m here right now. So …

Jim Fitzpatrick: That’s right, well we very much appreciate that. I know your schedule is jam-packed so thanks for taking some time with us.

Charlie Gilchrist: Thanks, it’s great to be here.

Jim Fitzpatrick: Great, great. So I want to run some things by you, I read some articles that you’ve been involved in here recently and given to Automotive News, so I’m gonna kind of pick up on some of those issues for our viewers here at CBT News. I’ll kind of play the dealer and throw these issues at you that face …

Charlie Gilchrist: Okay, make them easy.

Jim Fitzpatrick: Okay, you got it, you got. Okay so, we’re at NADA and you hear a lot of dealers talk about these headwinds that we might see in 2019 coming at us, you know? We talked to one dealer and he said, “Yeah, how great is it that we might go from the low 17 millions to the high 16 millions.” That’s not a real big problem, is it?

Charlie Gilchrist: No, it’s … our forecast is 16.8 but if you remember last year, we forecasted 16.7 and we ended up at 17.3.

Jim Fitzpatrick: Right. Now, do you guys do that on purpose?

Charlie Gilchrist: We kind of make sure … but you know, but 16.8’s a great industry. It’s a very healthy industry. We are facing some headwinds and I don’t know if you want to get into them right now but you know …

Jim Fitzpatrick: Well, yeah, well I’m gonna throw some things at you here, you know we hear so much dealers are suffering from margin compression, how do we make more money on these vehicles? The OEMs want us to build these huge dealerships and do even more to win that customer over but they’re not really allowing a lot of money to manage, shouldn’t have said they’re not allowing but because of the internet, it’s very difficult to make money selling new cars. What’s your take on that?

Charlie Gilchrist: Well the new vehicle department, the profitability, the long term sustainability is a serious issue for dealers. And we as dealers have to work with our OEMs to figure out how to profitably sell new vehicles, and that’s one of my big issues that we need to work together, it’s a collaborative effort between the OEM and each OEM’s gonna be different.

But if you look at all of us, overall, the profitability of our new vehicle departments is under attack, it’s a real serious issue and it’s not sustainable long term. And together with the OEMs, we’ve got to figure it out because it affects both of us.

If we can sell cars profitably, we can take care of our customers, it helps our OEMs so we’re all in this together but we have to really work on that.

Jim Fitzpatrick: Yeah. You’re coming in at a time with the Trump administration, they’re breathing down our backs with regard to these tariffs in the auto industry. What kind of an impact do you think this will have in 2019, the tariff issue?

Charlie Gilchrist: Well we’re working really hard with the administration, making sure that they have the data that they need, it’s a real complex issue.

And you know, we think we can work through this, the US MCA agreement, talking to a lot of the OEMs, they’re okay with that but we’ve got to get it through Congress, but the affordability, we can not afford to allow these, our cars to get more expensive. Affordability for our customers is a huge issue, so obviously, tariffs affect that.

And so we’re working with the administration to make sure they get their data, I hope it’s not a strategy but we hope we get it all worked out.

Jim Fitzpatrick: Sure, sure. Affordability is a very hot topic and in fact so hot that we see consumers now are moving to other alternative means of transportation; such as rideshare and now Ford has invested in bicycles and scooters and things of that nature. Talk to us a little bit about the mobility issue.

Charlie Gilchrist: Mobility as a service, I think there’s a lot of misunderstanding there and like our chairman last year said, We need to get through the hype and really look at the facts and in what’s happening is, we’re talking to Wall Street, we’re talking to Silicon Valley, Think Tanks but nobody’s actually talked to our customers so every day I talk to my customers. And I have not had one customer say they would give their car up and go strictly to riding. In fact, we did a study and we surveyed 1200 millennials across the nation, we had two focus groups, one in LA and one in Boston.

And we asked them about what do they think the future of personal ownership and personal transportation is … and it’s interesting. It was a resounding, I love my car, I love my vehicle, I’m gonna keep my vehicle. Ride-hailing is actually a supplement to owning the vehicle. So when it’s more convenient to get somewhere, maybe parking issues, you might take ride-hailing but our customers love their personal vehicles. They like the flexibility, the freedom, the comfort, the convenience, and the control; they can go whenever they want, wherever they want. So we think ride-hailing is actually a supplement to our customer’s transportation needs, not a replacement.

Jim Fitzpatrick: Right, and speaking about alternatives to transportation; we see now companies and manufacturers that are coming out with subscription models. What’s your take on a subscription to drive a vehicle?

Charlie Gilchrist: So, as long as we use subscriptions through dealers and it provides our customers a flexibility or the ability to own these vehicles, we see it as another form of financing but yo have to use the incredible value dealers provide and then they got to make sure that they comply with all the state and federal laws and all the regulations in the disclosure… and all that. But as dealers, if that’s a way that our customers can finance a car or lease a car and it gives them the options and the affordability then we’re all for it.

Jim Fitzpatrick: Right, right. And I know that one of your pet peeves or initiatives coming into the chairmanship is the situation with technicians. There seems to be a huge shortage now, there seems to be they’re going to be from your numbers of 76 000 in the next five or six years, talk to us about that issue and what, from the NADA standpoint, can be done to help dealers in that area?

Charlie Gilchrist: Well we’re launching a new initiative called the workforce initiative through NADA Foundation.

We’ve been talking about it this weekend, it’s interesting that Chrysler just came out and said that they’re gonna have an initiative, I know that we talked to Ford yesterday and they’re interested in it. This is a huge issue for all dealers and the OEMs because if you think about, we need 76,000 technicians each year. Between now and 2026.

Jim Fitzpatrick: 76,000 a year?

Charlie Gilchrist: It’s each year, it’s not just in one year. And we have 30 000 retiring each year and the training schools are only graduating 37 000 so we’re 39 000 technicians per year short. So it’s a huge issue and we can’t take of our customers without technicians so people are so vital to our industry, it’s the only irreplaceable variable in this equation is our people.

Jim Fitzpatrick: It’s human capital.

Charlie Gilchrist: Yeah. And so we’re very proud to launch it. I think it’s good, we’re all gonna go in together to have one place for somebody that wants to become a technician or is thinking about it can learn where all the training centers are. Private and public, across the nation in one place, they can figure out where all the scholarships are in one place. And then they can even see what the lifestyles of technicians are… and what their job is and what they get to do.

Jim Fitzpatrick: And they’re great paying jobs.

Charlie Gilchrist: Yeah. And so instead of all of us kind of competing, we just all need to get together so we can recruit and train technicians and then let the dealers pick out the best of them.

Jim Fitzpatrick: Right. Well, when you say we all get together and we handle this problem, that kind of is a perfect segue to my next issue and that is; how do we get more NADA members? I know you have 16 000, it seems to me, looking and speaking to different dealers, it’s kind of either a participant sport or a spectator sport, how do you go about getting more dealers, and I say this because I used to be one, off the couch or off the boat and more involvement?

Charlie Gilchrist: That’s a great question. It’s one of my initiatives also because in fact, I’ve brought a card, I’ve got a card that we’re handing out to everybody here and it’s the one NADA card and if one the back you can see we’re gonna ‘nurture, advocate and deliver in accountability’.

That’s what we do as NADA for our dealers, but I want to encourage every member, every general manager… every sales consultant, even if you work in accounting, parts service… you are NADA.

Jim Fitzpatrick: That’s right.

Charlie Gilchrist: We’re all NADA, we’re in this together and you can’t depend on just a select few that want to run for a board position like I’ve done. And I will tell you until you really get involved with NADA, you don’t understand what it does but NADA, the 190 professionals on this NADA tea… they are truly the dealers’ greatest comfort …

Jim Fitzpatrick: Oh there’s no question.

Charlie Gilchrist:… because they are so proactive. And they help protect our business rights as franchise new car dealers and navigate through the regulatory environment at the federal level, the legislative environment and I just encourage everybody to get involved.

Jim Fitzpatrick: And it shouldn’t be that the first time you hear from a member is when they’re in hot water and they need the NADA to drag them out, right?

Charlie Gilchrist: Well, and you think about it, we have the NADA Academy, we educate, we train so we are all together, we are the world for a dealer, so if dealers would get involved and understand what we do and one dealer makes a huge difference.

Jim Fitzpatrick: Yeah, it does.

Charlie Gilchrist: When we were trying to get the tax reform bill through…and they didn’t want to let the dealers deduct interest, floor plan interest, we had one dealer that helped get that bill carried through. So one dealer makes a huge difference.

Jim Fitzpatrick: Makes all the difference no question about it. I know that you’re pressed for time and I certainly appreciate all the time that you’ve given us. What are some of the biggest challenges that you’ve got from your standpoint as new chairman going into 2019 that you got to get your hands around?

Charlie Gilchrist: You know, we talked about it, the affordability issue is a huge challenge. Tariffs, manufacturers to get more disciplined so they’re controlling production and incentives. So we got tariffs, interest rates, the manufacturers’ discipline. So we got to make sure we retain affordability for our customers… we’ve got to work together with our OEMs on the profitability of our new vehicle departments, the business model for our new vehicle departments. And we really need to recruit, train and retain the best people in our industry.

We need a workforce, we need younger people to get involved and it’s an incredible business. It’s just a wonderful business and so, I just want to encourage everybody to get involved.

Jim Fitzpatrick: Yeah, for sure. One last thing and that is, Tesla seems to still be kind of a thorn in the side of many in the auto industry whether you’re an OEM or a dealer, the notion that they’re selling cars directly to consumers without going through a dealer franchise network, what’s your take on the future of that business model for Tesla?

Charlie Gilchrist: Well, I can’t predict what’s gonna happen to Tesla but I will tell you, we have that we, as dealers, offer the most efficient vehicle distribution system in the world, so our models gonna be around for a long time and …

Jim Fitzpatrick: Got a lot of runway.

Charlie Gilchrist: Yeah, so we just need to continue to be able to take care of our customers, service our customers, retain them and they’ll come back to us time and time again.

Jim Fitzpatrick: I agree. Mr. Charlie Gilchrist, I want to thank you so much for all your time. Congratulations to you on this phenomenal honor of being chairman of NADA, I know you’re gonna do a great job, you’re a great dealer and my best of luck to you.

Charlie Gilchrist: Thank you, thank you so much.

Jim Fitzpatrick: Thank you.

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