BG Products Industry News

The primary purpose of a professional service advisor is to sell service, or as Scott Russeau puts it, “inspire your guest to invest!”

Earlier this year, I attended one of Russeau’s energy-packed workshops. (Okay, it wasn’t a workshop as much as it was a workout!) Russeau is passionate about giving dealership customers a positive, consistent, predictable service drive experience—one that focuses on educating customers and inspiring them to invest in themselves by investing in their cars.

Before we unpack the process, let me tell you a little bit about the man. Russeau, a high-performance fixed ops trainer and coach is as comfortable on the service drive as he is in the classroom. His credibility comes from experience: in the trenches as a technician, on the front lines as a service advisor, in leadership as a fixed ops director, and at the top as a general manager. He gets it, because he’s done it!

Here are five takeaways from the workshop that, if implemented, will have an immediate impact on your service sales success and hence, your bottom line:

Inspire Your Guest to Invest

Inspire – Not pressuring, not begging, not arm twisting, but clearly educating, communicating, offering, and asking. A guest who is inspired takes action; they purchase.

Guest – An honored, unique person that invested their time and energy to enter your service center. “Of all the places they could have taken their car, literally thousands of service centers across America, they chose you,” Russeau said.

Just like a guest in your home, folks on the service drive deserve your highest respect and your undivided attention. You’ve got to treat them like family. They are why you came to work; without them, you are out of business.

Invest – Informing your guests about their vehicle needs and selling tech-recommended service is not something you do to your guests, it’s something you do for them. When they invest in brake pads and a brake fluid exchange, they receive increased safety and stopping reliability in return.

Inspiring your guests to invest in their vehicle is done for the benefit of your guests. They get a greater blessing by having a safe, reliable, trouble-free vehicle that gives power, performance, and that is fun to drive. And don’t forget about saving money. Maintenance is always cheaper than repair, and fuel economy is best when a vehicle is well-maintained. What a great return on their investment!

As an automotive professional, you are in business to make money. So here’s the win-win: the more tech-recommended maintenance and repair that you sell, the more money you make—and the more money your guests save.

System Selling

Russeau warned against offering service a la carte when presenting an estimate. Don’t quote a left outer tie rod for $200 and an alignment for $100; rather quote the suspension “system” repair for $300. You wouldn’t do one without the other, so keep it simple and quote it that way.

“You’re not selling parts (the rods) and labor (time),” Russeau said, “You are selling safety, peace of mind, a smoother ride, reliable vehicle control, and driver confidence.”

Package Pricing Technique

This is similar to system selling, but it is a comprehensive price quote that includes the primary concern and related items, immediate safety needs, and recommended maintenance. The process is used when organizing and presenting the results of the multipoint inspection to the customer.

First, the advisor organizes the tech recommendations into three categories: primary and related concerns, immediate needs, and recommended maintenance. Next, he reviews each item with the customer. Lastly, he quotes one price for the entire package.

If the customer says yes, you communicate with the tech and he gets to work. If you get hit with a price objection, then “sell up” (read on).

The Sell-Up Process

The priorities are:

1. Primary and related concerns

2. Immediate safety needs

3. Recommended maintenance

Sell up (from bottom to top) means you might drop recommended maintenance from your price quote, but then you would move related maintenance items up to item #1. For example, if the primary concern was hot air blowing out of the A/C, you would move cabin air filter replacement from the recommended maintenance category up to the primary concern category because it is a related item.

Likewise, if the technician finds a weak, corroded battery, then battery replacement becomes an immediate safety concern. Therefore, you would move battery protection pads and terminal cleaning up from the recommended maintenance category to the immediate safety needs category because it is related to the safety concern.

To clarify, let’s say our original quote included a cabin air filter, a battery service, an alignment, and a transmission fluid exchange in the recommended maintenance category. By selling up, you still get the cabin air filter and the battery service, even though you drop the other maintenance items. The package price drops and yet you still retain two services you would not have had if you hadn’t sold up.

Related, Immediate, Maintenance (RIM)

The RIM process has been around for decades, but Russeau’s twist on the process brings a fresh approach to RIM…with amazing results. I’ll fully explain RIM in detail in a future article. For now, I want to leave you with a simple yet effective word track Russeau has crafted to “inspire your service guest to invest.”

“Related to your original concern(s) for your vehicle, your technician has found that your vehicle needs…”

“From the multi-point inspection we discussed earlier, we found a few items that require your immediate attention.”

“Last but certainly not least, your technician has asked me to talk to you about the following maintenance needs…”

“So to take care of everything related to the original concern, all the items that require immediate attention and your maintenance needs, your total investment is $____. May we please take care of that for you today?”

Every process in your dealership falls into one of two categories; it’s either administrative or revenue-generating. Granted, every job description of every service employee has a certain amount of administrative duties, but the majority of the processes they follow must be revenue-generating.

Rex Weaver says it like this (when talking about where to focus your training): “If your training revolves around processes that are administrative and not revenue-generating (like salesmanship), you need to re-shuffle your training schedules.” Weaver, service director of Mercedes Benz and Porsche of Lehigh Valley in Emmaus, Pennsylvania, goes on to say that ongoing, consistent training of your revenue-generating employees is one of the most profitable moves your dealership can make.

“If you aren’t spending time every day in salesmanship training for your advisors, then you have no idea what your ultimate potential can be,” Weaver concludes.

Well said. And speaking of training, most new and used car departments rally the team for sales training every day, yet many service managers I talk to have never had a service sales meeting. Oh, sure, they may have a monthly service meeting, but they rarely discuss sales goals and the selling skills needed by techs and advisors to hit the numbers. That’s got to change.

Your new and used car sales department is, by definition, a sales organization with a sales culture. Your service department must also, first and foremost, be a sales organization with a sales culture. Additionally, revenue-generating employees (advisors and technicians) must have revenue-production-based pay plans. That means no earning cap…the more they sell, the more they make. (Outdoorsmen and hunters understand this concept; “you eat what you kill.” Otherwise, you go hungry.) When your personnel sell lots of maintenance services, they should make lots of money. Passive order-takers deserve to starve.

You don’t bat an eye about offering a spiff to your new and used car sales team to sell vehicles that have been on the lot too long. Oftentimes, you have fun with it and offer a $250 bonus for the first car sold before 10:00 a.m., or something along those lines. Therefore, don’t be reluctant to offer a spiff to advisors for selling preventive maintenance services. Have fun with it. Pay $5.00 for each service sold and start a Century Club for those advisors that sell over 100 services a month. Give them a $100 bonus each month that they earn Century Club status. How about an additional $100 for the first advisor to hit 100 maintenance services for the month?

Advisors are not administrative-process-driven-paper-pushing-clerks….no, no, no. They are revenue-generating, production-based professional sales people!

You wouldn’t tolerate a car salesman who wouldn’t sell cars, right? Then why on earth would you tolerate a service advisor that won’t sell service?

There are only two things in life: knowing and doing. That said, let’s unpack this further. Training precedes knowing. Accountability precedes doing.

Forgive me for stating the obvious, but don’t expect your advisors to sell maintenance if they haven’t been trained in the art of selling. Selling skills, overcoming objections, and closing the deal are learned behaviors. You can’t send someone to training once and call them trained; sales training must be ongoing. Your service sales team must routinely practice, drill, and rehearse.

Countless business studies have shown that people do more and perform at a higher level when there is an accountability structure in place. Everyone’s production increases when they know you are watching. (Obviously, I don’t mean that you should stare a hole through them every minute of the day, but direct observation for a few minutes every day is good.) When an employee knows the boss is looking at their numbers, guess what? Their numbers go up.

The opposite is also true. According to Dave Anderson, some people complain about the money they don’t have from the work that they don’t do! They do just enough to get by. They could do more, but they just don’t want to. Heaven forbid that the employees learned this attitude from the boss! Basically, they have learned that no one above them cares, so why should they?

In closing, here are some characteristics of a healthy sales culture:

Clear Goals and Expectations. If nothing is your goal, you’re sure to get it—nothing. Training, Mentoring, and Coaching (not screaming, ranting, and cursing). Management by fear and intimidation is not leadership.

• Practicing, Drilling, and Rehearsing. The greatest sports heroes and teams never stop training or improving. The world’s greatest musicians never stop practicing.
• Marketing and Merchandising Tools. Equipping your service sales team with menus, multi-point inspection forms, tablets, videos, processes, and point-of-sale materials to help them close the sale.
• Accountability Structure. Don’t overthink this. Decide your top three or four revenue-producing key performance indicators and monitor every tech and advisor every day.
• Celebrate Milestones Publicly. Celebrate and reward your parts and service team when they knock it out of the park one month. Publicly award top achievers who meet their numbers.

Fixed ops is first and foremost a sales organization. Make it a priority in 2019. You can do this.

“You don’t build a business, you build people—then your people will build your business!” –Zig Ziglar

Wow! That’s powerful, isn’t it? Zig Ziglar was my hero for over 40 years. Even after his passing, his words still inspire me.

Business men and women always say people are their most valuable resource; yet all too often they don’t provide the resources and training necessary to grow their people.

To clarify, I’m talking about consistent, intentional, planned training. Practice, drill, and rehearse. Follow-up and accountability. It is so easy to get caught up in the daily grind of taking care of business that training gets pushed to the back burner.

When training does occur, it is often used as punishment. I’ve actually heard service managers tell their advisors, “Whoever doesn’t hit their numbers this month will have to go to training!” Oh brother! Don’t be the moron that says that.

Service departments can never stop training. The “knowledge retention” curve declines quickly, meaning people only remember 10% of what they learn. Therefore, constant reinforcement is necessary to turn knowledge into action, and to turn action into revenue.

Training is never ‘one and done.’ No one is ever completely trained—rather, it is an ongoing career-long process.

Some managers say building their people is a waste of time—they’ll just quit and move on. I have heard it said that it is far better to train your people and have them leave than it is to not train your people and have them stay!

Max Zanan wrote a wonderful little book called “Perfect Dealership” (perfectdealership.com). It is a quick read that’s packed with nuggets of practical advice on running a dealership.

Zanan wraps up the book with the Ten Commandments of Success. Three of them focus on personnel development:

• „Remember, automotive retail is a career, not a temporary gig.

I believe techs get it, and they’ve made a huge investment in their tools to further their careers. I think the biggest challenge dealers have with techs is keeping them at your dealership. Working conditions, work load (read that as not enough work to do), production-based pay plans, and continuing training are all potential deal breakers. Lube techs and service advisors often view their jobs as less of a long-term career path. These folks are way too transient and often bounce from dealership to dealership. I am truly amazed at the turnover of advisors. If a guy is an order-taker at the Toyota store, then he’ll be an order-taker if he gets hired at the Ford dealership across town.

• „ Focus on employee development that provides a path for career growth.

Remember what Zig says: build your people and they will build your business. Don’t get cynical because of a handful of jerks that don’t want to grow and get better. Most of your people are good people that want to do better; they aspire to more—more money, more responsibility, more productivity, more respect.

• „Attract a better workforce by having better pay plans, schedules, and training.

I get the part about pay plans and training, but schedules? I’m motivated by money and I thrive on a production-based pay plan, but not everyone does. There is a growing segment of the workforce that values time off and flexible schedules. They aren’t lazy, they don’t want something for nothing, they just want it on their schedule. A three-day weekend and two Saturdays off per month might be a game-changer for these folks. As a manager, don’t have an attitude that says, “hey, I’m in charge and my people will work when I tell them to work.” At least look into what motivates your people and see if you can accommodate them. Maybe you could tie sales production to flex-time off. Going back to pay plans, I’ve seen dozens of advisors that believe the only way to get a raise is to move to a different dealership. Tragically, all too often, they’re right. Just when they start making good money, the pay plan changes and out the door they go.

Action Points:

„ You must be intentional with your training. Schedule a service sales meeting with all fixed ops personnel once a month. Make it a big deal where you feed everyone, celebrate victories, and reward production.

„ Train your service advisors on how to sell. I’d suggest 15-30 minutes per week. Consistently reinforce the message. Spend half the time reviewing last week’s training and the remainder on new material.

„ If you’re hung up on exactly what to do, then subscribe to a blog, podcast, or video series from Dave Anderson. Show one clip at each weekly training session. Give your team access to Dave’s library of free resources (learntolead.com)

„ You might also want to check out all the service advisor sales training resources provided by Jeff Cowan (automotiveservicetraining.com). Jeff has an amazing ability to simplify word tracks that advisors can use to close the sale.

„ Lastly, I work with a team of over 700 fixed ops trainers spread out across North America. Let me know if you’d like to connect with one of them for live in-dealership training.

If you build your people in 2019, if you invest in their development and growth, then they will build your fixed ops department into a vibrant revenue stream for your dealership.

Happy sales to you and Happy New Year!

‘Tis the season to be of good cheer, and fixed ops departments have much to celebrate. The future for dealership parts and service departments is very bright. In fact, there has never been a better time in history to be in fixed ops than right now—and I’ll prove it to you.

Vehicles in Operation Increasing

There are more vehicles on the road today in the U.S. (over 273.7 million) than ever before in history. Compare that to 202 million vehicles in 2001; that’s growth of 71 million vehicles. Every year we manufacture more cars than we scrap, so the vehicle population continues to rise with no end in sight.

Service Centers Declining 

Today there are 225,000 service centers in the U.S. compared with 245,000 in 2001. That’s 20,000 fewer places to have cars and trucks serviced, repaired, and maintained. Sadly, about 4,000 of those shuttered service centers were dealerships. (From 21,900 in 2001 to 17,800 today.) So let’s put these two statistics together: 71 million more cars and 20,000 fewer places to have them serviced. Wow, what an opportunity. The “supply” of service centers is dropping and the “demand” of cars on the road is increasing; therefore, your service department has greater value today than it has ever had.

More Money Spent

Last year U.S. consumers spent $252 billion on customer-pay maintenance and repair. That’s up from $199 billion in 2006—a $53 billion increase in 12 years. We are in a growth industry. Okay, let this sink in; $53 million more is being spent at 20,000 fewer service centers. Wow. Did I mention the future is bright?

Dealership Getting Bigger Share

Of the $252 billion spent on vehicle maintenance, only $37.4 million was spent at dealerships. The sobering news is that number represents only 15% of the total. (100% of all cars were purchased at dealerships, yet only 15% of service dollars were spent at dealerships.) The good news is that dealers gained market share (from 14% to 15%) in the past year, which represented several billion dollars in growth.

As a sidebar, the $37.4 billion dealers collected from customer-pay maintenance and repair represented $20 billion in labor and $17.4 billion in parts. That means the parts-to-labor ratio was .87:1, which is a very, very good number and shows dealerships are starting to grasp the importance of performing preventive maintenance service.

Unperformed Maintenance Dropping 

Speaking of preventive maintenance, here is the most promising statistic from last year: unperformed maintenance dropped from $73 billion to $55 billion; that’s the lowest it’s been in over a decade. Obviously, the less unperformed maintenance, the less service money that was left on the table. The only way to recapture unperformed maintenance dollars is to perform more preventive maintenance services—and the only way to do that is by asking the customer to purchase needed, tech-recommended maintenance.

Seeing unperformed maintenance services on the decline indicates that service managers and advisors are starting to get it and it is paying off.

Time out. I’ve given you five indicators of great growth opportunities in the automotive industry. So, how is your service department doing? Are you experiencing the prosperity and growth in your shop? Is your personal income going up? Are you crazy busy all the time?

Or are your techs running out of work at 3:00 p.m.? Is your shop efficiency under 100%? Are your hours per CPRO under 2.0 hours? Are you saying, “what prosperity?”

If so, help is on the way. In 2019 I’ll be writing a series of articles centered around creating a sales culture in the service department. You can’t save your way to prosperity, you must sell your way to prosperity. The only way to grab your share of the $252 billion preventive maintenance pie is to ask for it. In 2019, I’ll show you how.

Statistics Sources:
AASA Status Report, NADA DATA, Lang Marketing Annual Report, and Auto Care Association Fact Book

Every year the number of higher mileage older vehicles increases. And every year dealership service departments lose more market share.

Vehicle owners almost always defect to the aftermarket as their vehicles get older and accumulate more miles. What’s worse is that many service managers, advisors, and technicians just shrug their shoulders and let them go. They accept this defection as a fact of life; “it’s always been this way and it always will be,” they think.

This negative thinking is so pervasive that it becomes a self-fulfilling prophecy. They expect the customers to take their service business elsewhere, and they do!

This has got to stop.

Unless you are crazy-busy all the time, you need to hold on to aging vehicles and reach out to those who have already forsaken you. It’s not like you’re being greedy…you just want it all!

The Opportunity

Look at this graphic: the opportunity is huge—and increasing every year.

Older Vehicles

The average vehicle on the road is 12.2 years old. That’s 20% older than a decade ago. Think about that; it means half of the cars on the road are over 12.2 years old. Older vehicles need more maintenance and repair.

„Higher Mileage

The average vehicle on the road has accumulated mileage of 120,500 miles—roughly 10,000 miles annually. That’s up slightly from 2013 when accumulated mileage was 115,000 miles. Higher-mileage vehicles need more maintenance and repair.

„ Vehicles in Operation

There are 24 million more cars on the road than there were 10 years ago—273 million vehicles. I’ve been tracking this number for almost four decades and it goes up every year. Lots and lots of older vehicles with higher mileage need lots and lots of maintenance and repair.

„ Domestic vs Import

In 2007, domestic vehicles made up 66.7% of all the vehicles on the road…today it has dropped to 54.4%. Conversely, import vehicles on the road have risen from 33.3% in 2007 to 45.6% today. In a few years, imports will have the largest share of the American fleet.

Okay, so what? There are a lot more domestic dealers than import dealers, so domestic service departments need to be ready. If you are a RAM dealership, realize that you might have a BMW sports car in the service bay next to a Cummins diesel pickup. The core maintenance services on these two vehicles are remarkably similar and don’t require special tools, fluids, or parts.

Action Points

Why not create a business within a business? I’m talking about a “garage” in your service department. This is really not a radical concept, because you probably installed a “jiffy lube” in your shop years ago.

Now it’s time to install a garage that works on all makes, all models, all years, all mileages…the higher the better. Just start with one or two techs. They don’t have to be OEM factory certified A-level techs (which are getting harder and harder to find). There is a bigger pool of competent, hard-working, B- and C-level techs that might jump at the chance to work in your shop.

You might want to consider a simplified maintenance menu and create a marketing piece inviting customers to bring their “other car” to your shop.

Ask the parts department to provide estimates that give vehicle owners an aftermarket option on replacement parts. They’ll likely retail for 30%-50% less and the profit margin might be greater. (I’m sure this idea will cause some of you heartburn; but remember I’m talking about older, higher-mileage cars). If they defect to an aftermarket shop, they won’t be using OEM parts. Obviously, your profit drops to zero when customers defect.

You can do this…at least give it a try. You sold them the car, it ought to be yours to service…for life!

Dealership service departments have a great opportunity to increase traffic on the drive by pursuing recent used car buyers—those who bought from your dealership and those who bought elsewhere.

First, let’s look at the statistics (according to Lang Marketing):

 Almost a million vehicles were lost in 2017 due to hurricanes Harvey and Irma, creating a surge in demand for new and used vehicles.

 There were 42.4 million used cars sold in 2017; that’s up over two million units from 2014 when 40.3 million used cars were sold.

 The average age of used vehicles sold in 2017 was 4.5 years old. That is down from five years old not too long ago. (Newer vehicles typically bring higher prices, which may explain the next statistic.)

 The average sales price for used cars in 2017 was $19,500. That’s $1,400 more per car than in 2010 when the average sales price was $18,100.

Jim Lang of Lang Marketing makes the following observations:

“Higher used vehicle prices are generally positive for the aftermarket since they make it easier for consumers to justify investing in the repair and maintenance of older vehicles. Higher used vehicle prices also raise the value threshold for scrapping cars and light trucks, thereby keeping older vehicles on the road longer.”

So, as prices go up, many consumers are motivated to not only keep their old car but to spend some money on it to make it last a few more years. Yea! But the sobering fact is most vehicle owners aren’t spending that money at their local dealership; rather, they are heading to the aftermarket.

You’re okay servicing older vehicles in your shop, right? And you’re okay servicing any make or model, right? If you’re an import store that sold an F-150 pickup off your used car lot, then you’re okay having that vehicle serviced in your shop, right?

Most independent garages and franchised aftermarket shops are ready, willing, and able to work on anything. I’m suggesting your dealership should be, also.

There are 267 million cars on the road in the United States and that’s increasing every year. Combine that with the fact that the number of service bays are declining every year and you have the perfect opportunity for fixed ops growth…if you pursue it.

Action Point #1: First, let’s look at the low-hanging fruit. I’m talking about being intentional in retaining your pre-owned car buyers—making them lifetime service buyers. I see a plethora of new car retention programs designed to keep consumers loyal, but rarely do dealers aggressively pursue their used car buyers. That’s tragic and doesn’t make good business sense.

The action point is to give your used car buyers access to all of the retention programs available to your new car buyers. Things like “Engines for Life,” lifetime warranties, complimentary roadside assistance for life, and scores of other incentives to keep them coming back.

But you can’t stop there. Customer loyalty in and of itself won’t make you any money. You can’t deposit loyalty in the bank. Forgive me for stating the obvious, but you can only deposit money in the bank, and the only way that will happen is when the service advisors sell something!

Don’t assume your advisors understand the big picture. Take the time to have a service sales meeting and lay out your two-fold used car buyer retention strategy:

1: Get them back on the service drive.

2: Sell tech-recommended services to keep their cars trouble-free and fun to drive…and to keep them coming back!

Action Point #2:
Secondly, equip your advisors with word tracks that are brief and easy to learn. For example, if you implement some type of lifetime engine warranty on all of your used cars, you might coach your advisors to check vehicle history and say, “Mr. Customer, I see you are already enrolled in our Engines for Life Program. In order to keep your coverage intact, you would want our performance oil change package, right?”

Or you might have them say, “All of our pre-owned vehicles come with Lifetime Roadside Assistance as long as you choose our “better” or “best” oil service. Which one of the oil change packages best meets your driving needs?”

The intent here is to give your advisors an opening sentence—a proven phrase that will “get them started” on the road to a sale. Most professional advisors can take it from there if you can just give them a starting point.

Action Point #3: Lastly, proactively reach out to “lost souls”—vehicle owners that haven’t been on your service drive in over a year. Most folks have their oil changed twice a year, so if you haven’t seen them in that amount of time, they’ve defected to the aftermarket. Oh, you’ll see them again if they have a catastrophic failure that’s covered under warranty, but for routine maintenance, you’ve lost them.

Go get them back! How about a car care clinic on a Saturday morning? Make it a grand party with hot dogs and those inflatable bounce thingies for the kids. All fixed ops personnel will be needed, from “A” techs to lube dudes to porters. The centerpiece of the event is a free multi-point inspection performed on every vehicle.

Granted, it’s a lot of work, but if you regain 20-30 lost customers, it’s a great success. Plus, you’ll sell lots of labor hours simply by having your techs get their hands and eyes on every vehicle.

So many used cars, so little time. Go start rounding them up. It’s worth it! My personal thanks to Jim Lang of Lang Marketing. For more information on the Lang iReport, you can visit langmarketing.com.

“What is true environmentalism? The Obama administration told us you can’t be about jobs and growth and protect the environment. I simply reject that! We can do both,” according to Scott Pruitt, Administrator of the US Environmental Protection Agency.

“I think true environmentalism is really environmental stewardship. We have been blessed with wonderful, abundant natural resources in this country…and to whom much is given, much is required,” Pruitt continued.

“We need to be about managing the resources God has given us. So, we can do both—providing jobs and growth while being good environmental stewards.”

Last fall I had the privilege of sitting down with Administrator Pruitt to discuss the EPA’s impact on the automotive industry and to gain some insight on what the future holds concerning regulatory mandates. The event, “A Fireside Chat with the EPA” was attended by hundreds of professional automotive fixed ops consultants from all across North America and around the world.

Obviously, the laws and policies that come out of Washington, D.C. affect all Americans, but no agency has more impact on our industry than the EPA. From regulatory bans on lead in gasoline to emission mandates to compliance demands as a result of the Clean Air Act, the EPA has had a profound impact on automobiles.

On the topic of regulation, Pruitt said “One of the greatest issues for businessmen regarding energy and the environment is regulatory uncertainty—is a businessman supposed to follow the regulation (created by a federal agency) or the statute (created by Congress)?”

“The previous EPA created regulations that were not tethered to any statutes. Capital will not be put at risk by businesspeople if there is regulatory uncertainty.”

The Administrator on many occasions has said that the purpose of a regulation is to “make things regular.” In other words, regulations should bring clarity, not confusion. If there was ever an industry that needed consistency, clarity, and certainty, it’s the automotive industry.

Therefore, I asked him about Corporate Average Fuel Economy standards, which are actually set by the National Transportation Safety Board with input from the EPA. The CAFE standard for 2025 is a whopping 54.5 mpg. For our industry to attain that number, which is almost 20 mpg higher than it is today… well, I just don’t see it happening.

Specifically, I asked him to explain the process in order to find out if there’s any way to roll CAFE back to a more attainable number.

According to Pruitt, “the mid-term review in April 2018 is important…in looking ahead to 2025. In essence, the review is to evaluate if the projections were correct…or overly optimistic.”

“The Obama administration rushed the mid-term review by pushing it up 16 months to January 2017.

The EPA under the Trump administration will be doing the review at its appropriate time in April 2018.”

I think it will be very interesting to see what they find out. I am assuming they will find out that the projections were way out of line and I hope they will recommend a lower, more realistic target. We’ll see.

Pruitt went on to say, “Concerning the design of vehicles, we shouldn’t go to Detroit and say, ‘manufacture a segment, a percentage, of your fleet that no one wants to buy!’ Rather, we need to look at what vehicles people are actually buying and then strive to make them fuel-efficient with acceptable emissions.”

Okay, time out. Let that soak in for a minute. Here’s a member of President Trump’s cabinet, a cabinet secretary who runs a powerful federal agency, saying let the people decide. Let the market dictate the direction. Let’s find out what people want and help the manufacturers meet the demands of the market and at the same time achieve environmental mandates. Wow, what a common-sense approach! How refreshing.

“If you make vehicles that people don’t want to buy, then it’s counter-productive,” Pruitt concluded.

It’s counter-productive because people will hold on to gas-guzzling, high-emission, older vehicles longer. That’s bad for the environment and for new car sales.

I pointed out to the Administrator about government involvement designed to influence vehicle manufacturing: specifically concerning mandates for increased fuel economy and decreased emissions. This was the desired outcome, yet the new engine designs are susceptible to fuel deposits and that has had the reverse effect: deposits actually reduce fuel economy and increase emissions.

So, the federal government’s mandates have caused the exact opposite of what they were intended to do. Therefore, I respectfully asked the Administrator, “When does the government need to get out of the way?”

Pruitt responded, “My philosophy is that the market is the better governor of those things. The government, when it mandates certain things or implements price controls, it can have a detrimental effect. It’s always best when technology and innovation control the market. American innovation and technology, when left to drive the process, always work best. Government is slow and reactionary while industry moves to get things done quickly and efficiently.”

It seems to me that the EPA has been a political hot potato since its creation in the 1970s. EPA policies have a polarizing effect in our society with strong emotions on both sides. Pruitt summed it up like this:

“So much of what we do at the EPA has been politicized…and it shouldn’t be. What’s ‘Republican’ or ‘Democrat’ about cleaning up a superfund site? Nothing! Clean water and clean air should not be political…so we are working hard to change the discourse and have meaningful discussion.

In the past, the EPA exercised regulatory overreach and lost sight of its core mission. We are trying to bring clarity as we go forward.

We have lost civility in our discourse—we need to get back to a reasonable discussion.

We need to celebrate the achievements in innovation and technology that we have made in this country with respect to clean air and clean water. We need to embrace how far we’ve come.”

Well said, Mr. Administrator. Well said.

My personal thanks to Scott Pruitt for taking time out of his busy schedule to sit down and discuss the issues that impact our industry. Due to his vision and leadership, I believe the relationship between Washington, D.C. and the automotive industry will be stronger and have more synergy than ever before. The best is yet to come.