|
Ed Tonkin is vice president of Ron Tonkin Dealerships in Portland, Ore. His father, Ron Tonkin, served as chairman of the National Automobile Dealers Association in 1989.
Used Car News: What’s your background?
Tonkin: Like many dealers, I have been around the auto business my whole life. My dad was a dealer when I was a young boy. He was the youngest Chevrolet dealer in America in 1960 when I was 5 years old. It was natural for me to work in the business and I had various dealership jobs as I grew up. I learned to drive in the back lot and have had my share of “fender-benders” with our used-car inventory, mine being the only moving
vehicle at the time. This resulted in my initiation into the
spectrum of emotions that used-car managers are able to exhibit. Let me just say that I was single handedly responsible for a lot of our used vehicle reconditioning expense.
I went to school at the University of Washington, where I obtained a business degree in 1976 and a law degree in 1979. Wanting some practical experience, I practiced law for a few years in Portland before joining our family business full time in 1981. At that time, we had a Chevrolet dealership, a Ferrari dealership and had just acquired a Toyota franchise. My father, my brother Brad, and I have run the business ever since, up through today.
Currently, we have 15 franchises and 16 dealership
locations.
I have always been involved in our metro and state associations. In fact, I chaired our Portland International Auto Show in 1983. I have served as both Metro Portland Automobile Dealer President and Oregon Automobile Dealers Association President before becoming involved on a national level as the Oregon state director for NADA in 2002. I have served as chairman of various committees during my eight years on the NADA board including my current position as vice chairman and becoming the chairman in February 2010.
UCN: What is your used-car strategy?
Tonkin: With a declining new-vehicle market, the importance of a successful and profitable used-vehicle department has become paramount to the livelihood of a new vehicle dealership. I think most can agree that
employing the “right” people with the proper training, defined responsibility and accountability, experience and communication skills are essential to the success of your used vehicle department. That is a fundamental fact that has not changed.
However, times have changed. The used car department has moved closer to a science
project with the advancements in technology and software. In today’s world we employ a used-vehicle strategy with the “right” people and marry them to
technology.
UCN: Are you active in
certified pre-owned?
Tonkin: Yes, we are active in certified pre-owned and know that this is a very important part of our business due to the new-vehicle market being down. We are allocating part of our
advertising dollars directly to the certified pre-owned departments of our dealerships. In
today’s market, customers do not necessarily want to spend the money on a new vehicle so the trend is that more customers want to buy certified vehicles
because of the warranties, low miles and value proposition. We plan to expand this business greatly in 2010 as we see it as a very powerful niche; almost as a separate franchise.
UCN: Where do you get your vehicles? Has that changed?
Tonkin: The majority of our used-vehicle inventory comes from customer trade-ins.
Traditionally, we would visit our local auctions to fill holes in our used-vehicle department. However, as the demand for frontline used inventory escalates and local auction prices rise, we have been actively exploring other sources to find inventory.
Online auctions have grown in popularity and provide excellent outlets to find vehicles that are available globally that might not be found locally. Also, we have experienced an increase in purchasing vehicles from the public by searching online sites such as Craigslist, eBay, Cars.com, Autotrader and other sites where the public is posting its personal vehicles for sale.
UCN: How do you handle
financing?
Tonkin: It is an interesting question that may have not been posed just a few years ago. Granted there is a tremendous amount of concern in the rapidly
changing financial arena, but we handle financing in much of the same manner as always.
We manage our lending relationships from a top down
philosophy that has served well in this ever changing climate. Meeting weekly with our financial partners who keep us apprised of new regulations,
fluctuating rates, program amendments and other upcoming changes. This information is disseminated quickly and shared with our dealerships. Aligning our company with solid financial partners who have similar goals and direction has proven to
provide a smoother ride during these turbulent times. Cultivating relationships with financial partners is more critical than ever before.
UCN: How would you describe your management style?
Tonkin: My job is to create the best possible environment for our employees to succeed. Our employees work “with us” not for us. The development of
people that I have worked with is very rewarding. I’ve watched them grow professionally as well as personally. If we create an
environment for the employees to succeed, the dealerships’ success will come as a by-product. We have built this business and are able to expand opportunities for people and product because of our most precious human capital – that is, our dedicated, long-term employees. I love the
dynamic nature of this industry, with ever changing products, marketplace and being able to work and help develop people.
UCN: What do you hope to accomplish as NADA chairman?
Tonkin: Well, I hope to leave both NADA and the industry a little better off when I leave my chairmanship than when I start it. NADA serves the dealer so well and that story needs to be told. The last year and a half, in this industry has left many
battered and bruised; dealers, manufacturers, finance arms; you name it. Anyone connected with this industry seems to have suffered to an extent.
I wish to bring the message of value to dealers of just what their NADA does for them; how valuable it is and how necessary. After all, it’s our mission to serve the dealers and we do it on so many different levels.
Internally I think we can create a more efficient NADA. We can create a strong agenda and action plans by employing more internal debate and by outwardly listening more closely to
dealers all around the country. I plan on having NADA reach out and work through the state
associations in concert with the state executives to garner dealer issues and priorities from all over the country. Our agenda should come from dealer input and that’s what I hope to build.
I am hopeful that we can
resolve some thorny IRS issues like UNICAP and finally put the debate over LIFO to rest; perhaps even play a role in
reducing or eliminating the “death tax” altogether or at least diminishing it significantly. Another major issue we hope to resolve is the CAFE mileage standards rule to ensure that we end up with a single federal mileage standard and avoid a patchwork of individual state standards that would wreak havoc in the marketplace.
We must continue to stay vigilant on congressional and regulatory action that may be harmful to our industry. It takes an ongoing effort by our legislative team to stay in tune with what’s happening on Capitol Hill.
UCN: How can the government help the auto industry in general and dealers in particular?
Tonkin: We have seen over the past couple of years how the government can play such a mighty role in affecting the
automobile industry both positively and negatively. The government helped tremendously when the executive branch
extended bridge loans to keep GM and Chrysler from going bankrupt at the end of 2008.
Congress enacted some legislation that helped dealers in 2009. In particular, the law which allowed consumers to write-off sales taxes when purchasing a vehicle and, of course, the Cash for Clunkers program which provided a much needed boost to our industry.
For dealers in particular,
Congress was very helpful in passing a law that allowed dealers who were either terminated in the Chrysler bankruptcy or wound down in the GM bankruptcy to arbitrate to get their franchises back.
Of course, there are many ways the government affects the overall economy, which of course affects the automobile industry.
Perhaps a future Cash for Clunkers program will be needed. We must wait and see how the market and overall economy develop. In order to do that, taxpayer sentiment must be gauged to see if it is viable. The American people seem to tire these days of public funding for private enterprise.
UCN: How can it harm the auto industry in
general and dealers in
particular?
Tonkin: The government can cripple the
industry by taking unreasonable and thoughtless action, specifically in the area of developing fuel economy standards. Fuel economy standards must be reasonable. It is understandable that with developing technologies in the area of hybrid vehicles, electric vehicles and fuel cells that our government wishes to push the mileage standards higher, especially when combined with the desire for a greener world.
But “reasonable” is the operative word here. You must not develop standards that are too high, unreachable and impossible that result in inhibiting commerce.
The government also needs to ensure that we do not have a patchwork of mileage standards that vary from state to state. California is currently trying to establish its own mileage standards and if it is successful 17 states will follow. If this occurs it will be nigh impossible for a manufacturer to design, manufacture and distribute different vehicles to different state markets. This would be an example of inhibiting commerce.
UCN: Anything you’d like to add?
Tonkin: Even with all the business cycles, even with the turmoil we've faced this past two years; this is a marvelous business with great potential for those who love it. Just as night follows day, the good times and healthy markets will return. Our business models may look a bit different than before, but just take a look back a few years and see how the product we sell has changed. We'll do fine with change. Dealers are resilient folks. Dealers are entrepreneurs. We are survivors. And we will prosper once again.
Let's have some fun along the way, too! Good luck to all in 2010 and beyond. |
