CHAIRMAN’S CORNER: Another Great Auto Show Builds Momentum for 2019

What better way to start the New Year – and my term as your new HADA Chairman – than with another record-breaking Houston Auto Show. Attendance at this year’s show was up four of the five days over last year’s show and up about three percent overall.

I’m particularly pleased to report that, for the first time, our Preview Night Gala raised over $100,000 for our new beneficiary, the Texas Children’s Hospital Cancer Center. And HADA has bigger plans for this fundraiser in the future. The Gala also featured two new vehicle reveals – a Ram heavy duty pickup and a special Aston Martin Superleggera Tag Heuer edition, both great vehicles for the Houston market.

Speaking of our market, I can also report that the Houston Region ended 2018 with a slight gain over 2017. According to the latest TexAuto Facts Report published by InfoNation, Inc. for HADA, total sales of 303,417 units through December 2018 were up 4.5 percent year-to-date from December 2017. Retail Sales of 261,553 units through December 2018 were up 4.7 percent for the same period.

The report also shows the 10-year average retail sales for 2017 and 2018 were almost identical – ended at 258,140 in 2018 and 258,142 units in 2017. That tells me we have evened out, but are still in a strong market. Maybe not the record breaking streak we enjoyed over the past three to five years, but I believe it’s still going to be a really good year.

At the recent NADA Show in San Francisco, NADA economist Patrick Manzi forecasted 16.8 million new cars and trucks would be sold in 2019. That would be a sales drop-off of three percent this year, due mainly to rising interest rates on auto loans which will put more pressure on vehicle affordability for consumers. But he called the economy “robust” and expressed little fear of recession.

I’m personally anticipating up to a five percent decline in total retail auto sales in U.S. this year. But that’s coming from 38 years of history in the automobile business, and it would still rank the year ahead in the top 85 percent of the sales years I have experienced. Depending on the franchise (some are hot, some not), I expect a good year for most franchised new car dealers in a Houston economy that remains strong. We just need to keep a sharp eye on our operations and new retailing challenges.

I agree with what outgoing NADA Chairman Wes Lutz told dealers at the NADA Show. Contrary to the belief that dealers are far from resisting changes, such as ride sharing and autonomous vehicles, dealers actually embrace change. “Dealers aren’t fighting the future, we’re writing it,” said Lutz “Keep writing this script, continue searching for a better customer experience, and keep defining this industry. [Like we] always have.”

Charlie Gilchrist, the incoming chairman of NADA and a fellow Texan with five stores and multiple franchises in the Dallas-Fort Worth area, also hit the nail on the head when he cited “profitability in our new-vehicle department” and “new vehicles affordability for consumers” as serious issues. “This means we have to be better, and more creative, at running the rest of the store,” he told dealers. “We must adapt to this reality to survive in this new world.”

I have complete faith that dealers will adapt and thrive. I’ve been reading about the demise of the new car dealer for the last 30 years, but we’re still hanging on, aren’t we? I remember reading in 1999 that all cars are going to be bought over the internet in five years – still waiting for that one.

The truth is car dealers will continue to be an integral part of the automobile business as long as we bring value to the sales and service transaction, and, I think that we still do. We purchase and maintain large facilities and provide a service backdrop for automobile ownership.

Today, 90 percent of the retail transactions occur at car dealerships. Sure, people shop the internet for pricing and other factors. But when it’s time to buy a house, a car or a suit or dress, those are transactions you want to do in person. You want to sit in that car or truck. You want to make sure it serves your needs and fits in your driveway or garage.

Although I acknowledge changes in our business will play a greater role, I think automobile transactions will still take place, in the traditional sense, at the dealership for the foreseeable future. I sure don’t see any weakening of the desire, and need, to maintain private ownership of an automobile in Houston.

Again, I base that on a lifetime in the automobile business. My father, Tom Peacock, started an automobile business in 1970 with a Chevrolet store. I was just a teenager, but I guess I was hooked from the start. In 1979, dad was awarded a new point Cadillac franchise, and he sold the Chevy store in 1982.

When I graduated from Baylor University in 1980, I went right to work for my dad at Carriage Cadillac, as it was then known. I worked my way up and bought dad out in 1993, and purchased a Nissan franchise that same year. I’m proud to say we became a three generation dealership when my son, Tom, came to work for me two years ago.

I think the family aspect is one of the greatest strengths of franchised dealerships. It is one of the reasons your association fights so hard to protect your franchise from harmful public policy and regulation. In fact, we are at the legislative session in Austin right now trying to resolve the complicated Tesla issue as well as a new loaner car auto insurance issue that could impact dealers.

Leading that charge are two HADA directors; Donnie Buckalew, this year’s chairman of the Texas Automobile Dealers Association, and Joe Chastang, chairman of the TADA Legislative Committee. That’s some strong Houston leadership who will also be working on national issues such as harmful auto tariffs that could significantly increase the cost of new vehicles.

Of course, very special thanks go to my predecessor Chris Gillman and the HADA Board of Directors, as well as the great hard-working HADA staff who make it all happen!

For me, it is a great honor and privilege to serve as the 2019 HADA Chairman. I thank you.