NADA Chairman Rhett Ricart Discusses Challenges Dealers Face with the Coronavirus Crisis

As part of our continued coverage of the Coronavirus outbreak, we are very pleased to bring you a special segment with Rhett Ricart, 2020 NADA Chairman, and President of Ricart Automotive. To stay up-to-date and informed on the Coronavirus situation, follow NADA on Twitter here, and be sure to check out their blog for more information and insight.

VIDEO TRANSCRIPT:

Jim Fitzpatrick: Hi, everyone. Jim Fitzpatrick with CBT News. Thanks so much for joining us today. Today we have a special guest with us that we’re excited to interview here. Mr Rhett Ricart. I know that you know him. He’s the president of Ricart Automotive. In addition, he’s also the newly installed chairman of the NADA. What time to become the chairman of NADA, Rhett. Thanks so much for joining us.

Rhett Ricart: Hey, thanks very much for having me. Isn’t quite my expectations after serving with the NADA for five years, but I’m prepared for this and I know our staff is too, so I look forward to having this discussion.

Jim Fitzpatrick: Sure, that’s that’s for sure. You guys are fighting the good fight every day and I know you’re going to lead the association to the place that it needs to be. Let’s jump right in here. Is Ricart Automotive open for business today?

Rhett Ricart: Yes. Actually in Columbus, Ohio we are. We have a skeleton sales crew, we have a full service department. We have currently, each state has different laws that you have as far as sales and service. We’re big at the NADA, we’re real big on keeping sales and service open where it makes sense to be able to service our customers. We have a small factor. There’s 140 million service emergency room visits last year, only 20 million of those were done by EMSs. That means 120 million people last year had to drive to the emergency room.

Jim Fitzpatrick: Wow.

Rhett Ricart: So we got to make sure we keep people in their cars, make sure they’re safe in their cars and then they can get to their destination. The Homeland security released the data here and I don’t know if you can read it, but I’ll hang it off the air here, is from the Cybersecurity and Infrastructure and there are just pages and pages and pages in the modern economy reliance on technology and just in time supply chains. It means workers must be able to access certain sites, facilities and assets to ensure continuity of functions.

Rhett Ricart: We have to be aware that the world is still spinning and the country’s still operating.

Jim Fitzpatrick: Right. Right.

Rhett Ricart: We have to be able to have automobiles that people can rely on that are safe, that they can repair them and replace them. So that’s a message the NADA was trying to get across to a lot of our states. I know some of the smaller communities are having these shelter downs or shelter ups, whatever they call them, to be able to, so people can’t leave. But hey, let me tell you something. Food and agriculture, law enforcement, public safety, you name it. There’s pages and pages in this from the federal government saying these people are integral and essential to our operations. And automobile dealerships are too.

Jim Fitzpatrick: Yeah, for sure. Can it come across… What do you say to the dealer that says, “I’m concerned about it being insensitive to the community if I remain open and business as usual.” What do you say to those dealers?

Rhett Ricart: Well, every dealer in the United States… The beauty of the NADA is every city and every market’s a little bit different. Every dealer is an entrepreneur. They can do whatever they want.

Jim Fitzpatrick: Yeah.

Rhett Ricart: They can do whatever they think is the proper thing for their community. They can do whatever they thinks a proper thing for their employees, both. In some cases, I think you’ll see more of it in the metro areas. Every reliance on our police departments, our emergency vehicles, energy companies, municipalities, et cetera, et cetera, et cetera, et cetera, to keep their vehicles running. We can’t eliminate the public safety for anything. So in those cases, the service departments make sense. And in addition to repair and replace, sometimes we have floods, hurricanes, tornadoes. We haven’t had a lot of rain here in Ohio here lately. People’s cars come in accidents anyhow and they’re totaled, they have to be replaced too.

Rhett Ricart: So you have to use a little sense on this. America, the last line that we have right now, the web that there’s a safety net for the United States right now is the automobile dealer service and sales network because otherwise people are either riding bicycles because the issue with planes and the issue with buses and subways and that mass transit have been shown not to be very… Have not been good for as far as the transmitting of this virus. But your own personal car where you cleaned it, you know who’s been in it, right? It’s like your family room going down the road. It’s really only the safe place to be.

Jim Fitzpatrick: Sure.

Rhett Ricart: It’s why I want to reach out to our dealers out there to make sure your municipalities and your state governments understand this, that people still have to operate in this country and pick up a copy. You can go to it. It’s under Cyber Infrastructure and it’s a right here in the www.cisa.gov and you take that and go to there and they’ll have a list and that’ll give you something to talk to your local mayor and the rest of them that are trying to figure out how to control this thing. The worst thing they can do is destroy the transportation infrastructure because we’re the last line of defense and for people to be able to get and to do their jobs and keep this country safe.

Jim Fitzpatrick: Sure. What other things would you like to see from an involvement standpoint your members do during these times? Because I think that you have such a huge voice out there. If dealers do band together, as you know, in many associations, and I talked to a lot of association presidents, their frustration sometimes comes from the fact that dealers will often sit on their hands and say, well we’ll let a certain group, maybe 10% of the organization really kind of run with it. But isn’t this a time that more dealers need to get involved?

Rhett Ricart: Well, I think, yeah. I’ve met a lot automobile dealers in the last five years and I could tell you where the most community minded people you ever met in your life.

Jim Fitzpatrick: Right.

Rhett Ricart: There’s nobody more important to community than your automobile dealer. That’s the beauty of the franchise automobile business, is the fact that we’re so connected with our community. We’ll always do the right thing for the community and we’ll always be able to be there to protect our community.

Jim Fitzpatrick: Sure.

Rhett Ricart: For example, these issues I’ve mentioned to you about being open for service and things like that for safety vehicles, sometimes we have to get that message across.

Jim Fitzpatrick: That’s right.

Rhett Ricart: I think with the NADA as almost every dealer in the United States is a member of the NADA. So we all understand our importance and we all understand the roles we need to take in the future. Today and in the future, because there’s a tail on this that we don’t know how long it is, but the fact is we’re still going to be there and we’re still going to supply the services that are instrumental to the safety of our community and our employees.

Jim Fitzpatrick: Sure. So for the dealers that are on the fence about whether I should be open or not, your messages that you kind of have a duty to be open to serve those customers in that community.

Rhett Ricart: If the dealer sees that, if the dealer sees that. They know their customers better than I do.

Jim Fitzpatrick: Sure.

Rhett Ricart: And they know what’s really required in their environment. But for example, if you have a doctor and a doctor gets in a car accident and he has a car and he needs another car to be able to get to work, you need to be able to either fix his car or sell him another car to get him so he can get to the hospital.

Jim Fitzpatrick: Right.

Rhett Ricart: And as I said, if you go to the Cybersecurity Infrastructure letter, it’ll outline hundreds of people that they feel is essential to the ability of the United States to keep operating.

Jim Fitzpatrick: That’s right.

Rhett Ricart: And until we get over this hump. Yeah?

Jim Fitzpatrick: What do you say to an associate that comes into your office and says, “Mr. Ricart, I just don’t feel comfortable working here until this thing is cleared up.” What do you do with that associate?

Rhett Ricart: In our situation, because they say talk about the six foot of space, et cetera, et cetera. We, without any question, if someone says they want to go home, they can go home. You know? And the fact is, I think you’ve seen most new car dealerships in the United States, they’ve had a significant drop in new car sales. So the requirement of new car sales people in that order is not really needed. The used car sales are off a little bit nationally. The NADA takes a survey regularly. In fact, I’m going to ask the dealers, we’re going to send a survey out to them here very shortly to please fill it out. It’s eight questions. I don’t ask for a lot of things. Give me your eight questions. So it gives us an idea exactly how we can approach this virus thing in the future. So as you get this new survey, please fill that out.

Rhett Ricart: As I said, I’m being redundant. Eight questions, please send it back. The more answers we get, the better. And then everybody can do what’s best for their community, as I said before.

Jim Fitzpatrick: Yeah, for sure. And you know, we heard of one dealership which I thought was an inspiring story where he turned his new car showroom into a distribution center for food and for different types of supplies, diapers and such for those individuals that immediately did lose their job here in the last a week or so, from the hospitality industry on. There’s been many people that are just, the companies have been shut down and it’s affected their income. And I thought that was a pretty cool story. Have you seen other stories like that among your members?

Rhett Ricart: You know, part of this survey question number eight, you’re right on target on this. Question number eight when you get it is please share with us some of your best practices and what you’re doing for your community.

Jim Fitzpatrick: Sure.

Rhett Ricart: We can’t think of everything.

Jim Fitzpatrick: Right.

Rhett Ricart: You know?

Jim Fitzpatrick: Right.

Rhett Ricart: We can’t think of all the different… I have one dealer down in Lexington, Kentucky that gives his vehicles to the local food shelter so they can run the food around at the different food shelters.

Jim Fitzpatrick: Oh, that’s good.

Rhett Ricart: He supplies vehicle for them. I’ll guarantee you we’re going to find hundreds and hundreds of good ideas we can share with each other. And you know, quite frankly in every crisis there’s an opportunity.

Jim Fitzpatrick: Right.

Rhett Ricart: And the opportunity for the automobile dealers in the United States to say, “Hey, here’s who we are. We’re in your community. We’ve been here a long time and here’s the things that we’re going to do to help us get out of this… Not get out, but sustain in this situation and show you what good stewards we are in this neighborhood.”

Jim Fitzpatrick: Right.

Rhett Ricart: And this is our opportunity.

Jim Fitzpatrick: Sure, for sure. Let’s talk a little bit about the employees of these dealerships. There’s a lot of anxiety out there, obviously. Many people that work in dealerships are on commission basis, whether it be service advisors or salespeople or used car sales people, managers and such. What do you say to them about the immediate future here? Because a lot of them are nervous and we’ve gotten a lot of emails and text messages and such that say, “What does this mean? Should I be looking to jump industries? Am I going to survive? Is my dealer, if we have to close, are they going to continue paying me?” Where does this lie?

Rhett Ricart: Oh, that’s such a fair question. To look into the future and we’ve got to at least reflect a little bit in the past. The NADA was active during the… There was three buckets the government had. The first 8.3 billion was to provide the CDC with the funds it takes to be able to provide different equipment they need to be able to fight this virus.

Jim Fitzpatrick: Sure.

Rhett Ricart: The second bucket was the attention to people that are affected with the FMLA and other things. And that was just signed recently, just in the last day. The next bucket, which you mentioned earlier, is a relief funding in which the government is going to have for different individuals in the future. And the NADA, we’re in there with both hands and feet on this.

Jim Fitzpatrick: Yeah.

Rhett Ricart: We’re in this thing. We’re on Capitol Hill all over this thing.

Jim Fitzpatrick: Sure.

Rhett Ricart: So, I mean, we’re going to try to do everything we can to make sure our small, our automobile dealers have the type of relief they can have in the future, or at least get their fair share.

Jim Fitzpatrick: Right. Right. For dealers that are out there, it seems to be, there’s different types of dealers out there, some that are very well capitalized. You’ve got your public companies out there, they probably have a boatload of money or at least access to it. What about the franchise dealer that just became a dealer in maybe the last four or five years and they’re trying to grow their business, but they don’t know if they have the next three or four months of capital as either business slows down or perhaps even closes altogether. Should those dealers be getting their hands on as much capital as they can right now?

Rhett Ricart: Well, I think you’re finding that even your banks, since everybody’s, we all live in the same house. I mentioned this in Las Vegas, we all live in the same house. We just have different addresses, right?

Jim Fitzpatrick: That’s right.

Rhett Ricart: So we’re going to have to approach this thing. I think our dealers are pretty savvy if you’re in there already. We already pushed back the April 15th tax issue with for better flexibility to improve the cashflow flow, floor plan financing doesn’t become an undue burden. We made sure they knew about that on the manufacturers and all the government. We encourage retail demand and keep the dealer partners afloat with the programs. You saw Ford just announced 84 months, zero. GM, 84 months, zero. Others will follow. We’re pushing every button at the NADA on this for us.

Jim Fitzpatrick: Right.

Rhett Ricart: We’re pushing every button all at the same time and because there’s no one single thing that will help the dealer. It has to have all these things, good programs, good dealer support. We’ve got to keep the parts depots open to make sure we can keep our service humming. We got to be able to keep our people at our company to be able to afford to live on a livable wage. We also have to be able to have our inventories in check. We need to have our financing in check. We need to have working capital loans. And if you got it for another hour and a half, I can share with you everything else that we need. But we are hitting every button.

Jim Fitzpatrick: We’ll do part two.

Rhett Ricart: We’re hitting it with our fist. We’re not hitting with our finger.

Jim Fitzpatrick: You touched on it on an item that that’s got a lot of dealers nervous as well and that’s inventory. You know, we were running at such a good click here in the auto industry prior to this taking place, another 16 plus million vehicles in new and of course and umpteen million in the area of used. So we were ready for a great spring selling season, right? Stocking the lots. At Ricart, what are you doing with the used cars or maybe even the new cars today? Are you liquidating them? Are you holding onto them? Have you ceased purchasing any more? What does that look like?

Rhett Ricart: I think as businesses, in my case, and I can’t speak for the other dealers in the country because every market’s totally different. I talked with a good friend of mine in Oklahoma who has a dealership in Oklahoma. He goes, “Wow, I just got hit with a double whammy.” He says, “I got the virus and I got the plunging oil prices as closing refineries.” Think about that for a minute.

Jim Fitzpatrick: Yeah, wow.

Rhett Ricart: So every market’s totally different. Everybody does something different that they have.

Jim Fitzpatrick: Right.

Rhett Ricart: And they approach it that they feel is best for their employees and their community and their own business. And the NADA, that’s the reason we’re hitting every button. We’re hitting every button. So somewhere in this buffet of buttons that we push all the dealers are going to have something they can lean back on.

Jim Fitzpatrick: That’s right. You mentioned that the OEMs have announced different incentive programs for consumers such as 90 days, no payments, no money down. All kinds of different interest rates, 0% interest rates, I should say, and other incentives. Should dealers be marketing and advertising those opportunities and those offers as they have been right now?

Rhett Ricart: I believe they should intelligently. I just had this discussion with one of our state automotive trade executives last evening and we were talking about how can you look benevolent to the community at the same time to inform them? And I think that you have to be very sensitive to that. We have to be sensitive to people that are out there that might not be at work, might not have a job, they’re still part of your community. So each dealer, I’m going to rely on their own good judgment to take the high road on this to make sure that they can inform their customers in a very eloquent and in a very humble way to make sure they know these things are available and let them understand that we’re more than a car dealership. We are a device in their community that will help get them through this issue.

Jim Fitzpatrick: That’s right. That’s right. As we’ve all seen, the commercials over the last couple of years from a company called Carvana where you can sit on your couch and pick up your cell phone and look at a vehicle and have it delivered to your front door. Do you think through this you’ll see more dealers taking a closer look at digital retailing as part of their everyday life because of what’s happening right now?

Rhett Ricart: Well based on facts, because you know I like to deal in facts because we did a survey, and we’re going to continue to surveying and a lot of these questions we have the dealers will receive this NADA survey and I’m going to tell it again. You want to be part of the solution, fill out the survey. You want to be part of the problem, don’t fill out the survey.

Jim Fitzpatrick: Right.

Rhett Ricart: But one of the questions in there, it says, what has been your change in internet sales traffic? Which is critical because I believe more and more people are going online. We showed a 5% up significantly, 12 and a half up a little, 20% no change. So that’s almost 35% of the people that have either had more or the same. Down a little is about 37 and a half. Think about that. So people are using that online right now more and more and more and there’s more tools out there, so there’s no excuse for a dealer not to use them.

Rhett Ricart: But it also gives that ability to run a skeleton sales crew in your dealership, approach, direct yourself towards the virus issue and at the same time deliver a lot of vehicles. So yes, online sales I think is going to change the way that customers are going to buy a car. In the past, like electric vehicles, we always had them but they didn’t want to buy them because one thing or the other.

Jim Fitzpatrick: Right.

Rhett Ricart: Well, we had online sales and they really didn’t want to do it. Well, now they’ve got a reason to do it and we have the pieces in place at our dealerships so they can go from scoop to nuts and buy a car and we’ve seen the increases right here and it’s all on data. And we’ll continue this message.

Jim Fitzpatrick: Sure. Is Ricart today prepared to deliver vehicles online?

Rhett Ricart: Well, ideally several years ago we were one of the very first Autofy dealers in the country, one of the Delta products. So we’re way ahead on the curve on this thing and our online sales here recent were even higher than that. And the reason being is because our people and our culture are all accustomed to actually dealing with this. And I strongly encourage every dealer in the country, if you don’t have an online product like Autofy or something like that, that you can do a scoop to nuts. You got do scoop to nuts, because if you only do part of it, you’re not going to do any of it.

Jim Fitzpatrick: Right.

Rhett Ricart: We need to be able to deliver these vehicles to customers very quickly, either in your show room or in the back of your prep area and make it a very safe environment for them and we can deliver it to them.

Jim Fitzpatrick: Sure. I assume that this Autofy, I’m not that familiar with it, but I assume it’s a company that helps dealers to sell cars online.

Rhett Ricart: Yep, yep. They’re an online, one of the online and there’s others. That’s just the one that we’ve been utilizing because we were one of the first adopters of it. And it helps change your culture of your company too, which is good.

Jim Fitzpatrick: Yeah, for sure. Let’s talk about the culture in the company, which was my next question here, which is a perfect segue. What do you tell your employees in meetings now? They must be looking at you saying, “Okay leader, lead us, lead us through this and let us know what’s happening.” And how important is a constant communication with your staff when you’re the dealer principal?

Rhett Ricart: Well, we do it just to let… All the governors across the country have a 2:00 call at Eastern Standard Time and they update the American public. The president of the United States does it once a day, updates the public.

Jim Fitzpatrick: Right.

Rhett Ricart: I encourage every dealer across the United States that they have, we have ours at 3:30. Encourage all your… Let’s educate them and let them know what’s really going on on a day to day basis. Because as soon as they get home, they’re going to get bombarded with some sort of news media. This is going to get them confused, et cetera, et cetera.

Jim Fitzpatrick: Yeah.

Rhett Ricart: The most important thing is this. We’ve been through wars, recessions, depressions, recessions, oil embargoes, OEM collapses and bankruptcies. This is just another one for us here. We’re going to come through this thing and we’re going to be just fine. I mentioned that in Las Vegas today. We’re going to be just fine. It’s just a different little twist on this one here because it’s taking the banking environment as well as the customer environment as well as the manufacturing environment-

Jim Fitzpatrick: Right.

Rhett Ricart: -all at once. It’s a little different.

Jim Fitzpatrick: Yeah. Out of all of the things that you just mentioned, and many people will say, well this is much like 9/11 it’s a tragedy that happened in America. However, 9/11 as you know, didn’t affect every single American with regard to shutting down their businesses in such. While it was a terrible situation for DC and New Yorkers and such, but… And we all felt for those individuals and felt bad as an American. Would you say this is much, much different than at 9/11?

Rhett Ricart: Well, because this is a… They’ve quoted it as… I’m not a doctor by any means. They call it a pandemic.

Jim Fitzpatrick: Yeah.

Rhett Ricart: But I think what happens is it’s across as all the lines, there’s an issue and I’m going to roll right back to my initial thought, the only safety net for people in the United States to be able to endure this thing is the dealership to be able to to provide repair and replace for transportation. We take the transportation structure out of the United States right now, we’ll collapse. It will angrily collapse and it will collapse to the point like if you’ve ever visited Cuba, you know what they’re going through. I mean they’re having a hard time because they haven’t been able to upgrade their vehicles. They haven’t been able to sell new vehicles and all those other things.

Jim Fitzpatrick: That’s right, that’s right.

Rhett Ricart: I believe our government’s on the right track. They’ve got a good control on this. The states are doing everything they can. Then national government’s doing everything they can. I mentioned to you that this CISA report they have is very important, but we have to make sure that we keep our heads cool. We keep doing business, we respond to our communities and we make sure that we’re delivering the quality products our customers come to expect in both sales and service.

Jim Fitzpatrick: Well, Rhett, Ricart, you heard it right here folks, the chairman of the National Auto Dealers Association for 2020. Sounds like a man that’s going to make it through this and be okay on the other side and it sounds like you’re welcoming all the other dealers to do just that.

Rhett Ricart: Well, thank you for and thank you for the time, and I know I look forward to talk to you on a more regular basis, if possible.

Jim Fitzpatrick: That would be great, we’d love it.

Rhett Ricart: I know the dealers out there are kind of wondering what’s going on in the NADA.

Jim Fitzpatrick: Sure.

Rhett Ricart: I can assure you not only we’ve had your back for 100 years, we have a set of black belt people in this organization that know exactly how to handle these issues from Capitol Hill right down to your state government. We’re working as hard as we possibly can, even with the OEMs and the finance companies. God bless you. Take care of your people in your community and thank you for everything you do.

Jim Fitzpatrick: Thanks so much, Rhett.

Did you enjoy this segment? Please share your thoughts, comments, or questions regarding this topic with host Jim Fitzpatrick at jfitzpatrick@cbtnews.com.

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