Economist Looks Back on Career Watching the Car Business Featured
Tom Webb is calling it a career after spending five decades watching the car business. He has worked at the National Automobile Dealers Association, PricewaterhouseCoopers (PwC) and, since 2001, as the chief economist at Manheim. Webb started as an analyst after graduating from the University of Wyoming. He took the job with the intention of attending Georgetown University full-time to work on his doctorate. Webb soon found he preferred the financial freedom of working, so he switched to night school at Georgetown. I started in October of 1973, one week before the Arab oil embargo. Back then, new-vehicle sales were reported every 10 days. Part of my jobs at NADA was following those sales. They were down 6 percent or 7 percent in the first 10 days, then down 15 percent and then 40 percent by the end of the month. It was a horrible time for the industry. I started thinking, ‘I’m not going to be here much longer.’ But 26 years later, I was still there. NADA had just started its Twenty Group program and we were getting those financial statements. As a result, we had better financial information than anybody out there. These days, everybody is sweeping dealers’ databases. I primarily focused on analyzing dealership financials. I never worked for NADA Used Car Guide, but I interacted with them quit a bit. It wasn’t long after I started that Lynn Weaver came on board as the direct of the Used Car Guide. I always enjoyed his insights. He always sought out my opinions, but every time I left his office, I knew more than when I entered it. At that time, there was a big push for cost-benefit analysis of regulation. I did a lot of work on that. That was rather frustrating because they didn’t really consider it that important. So focused more on dealership financials. We really were the source for the state of dealership performance at that time.Today, with publicly traded companies and other sources, there is plenty of information today on how dealerships are doing. When I started, it was a lot of small dealerships with direct dealer-principal involvement. My first NADA convention was 1976. The attendees were primarily dealers. Some of the largest stores might bring their general managers, but it was usually just the dealer. They were single-point dealer-operators. Today, it’s primarily managers. That’s how I learned about the business. Dealers are very open about their business and they enjoy talking about it. They’ll tell you a lot of stuff. I would attend NADA board of directors meetings and soak up what they were talking about. There were all kinds of operators. Some were what you would call ‘car guys,’ but others were finance people. They all had a different attitude, but they were all sharp operators. I learned a lot from them. Webb stayed with NADA until 1999, when he took a job at PwC. That turned out to be the shortest tenure of his career. It wasn’t a mistake, but I did leave for the wrong reasons. It was a more lucrative offer for a position I didn’t fully understand. It was fun, because it was more of an academic position. PwC has a lot of very sharp economists and they recruit the cream of the crop for interns. It was fun to work with young people who were totally focused on economics and analytics. I was there for just over a year. After leaving PwC, Webb sold everything that he had in Northern Virginia and moved to Kitty Hawk, N.C. He went to work as a greenskeeper at a local golf course. Then one day, out of the blue, he received a phone call from Manheim’s chief operating officer. Manheim was buying ADT Automotive, but plans to incorporate their economic insights hit a snag. Eventually, I was going to seek employment, since I wasn’t financially ready for retirement. But it did come out of the blue. It resulted from Manheim’s purchase of ADT. Darryl Ceccolli sought me out. He called NADA and the people there said I had retired down to North Carolina. So he contacted me there. It was one of those great, fortunate things that happen in your life. (ADESA chief economist) Tom Kontos, just like everybody at ADT, was offered to stay on, but when he decided to go another way, they decided they wanted that functionality. They didn’t have that kind of outreach. I joined Manheim in October and that January we had our first press conference at the NADA convention. I think it was the first press conference Manheim ever had. It was different for Darryl, but he went along with it. My biggest experience at joining Manheim was getting to know Darryl. We knew each other well enough that he sought me out for the job. When we met, he just started to talk about the industry. And any question I asked, he could talk about it. It was another tremendous learning experience. I came in without a job description and filled it out with the things that I like to do and what the industry needed. For example, I had a lot of contact with the financial community and I knew the Index was something they would gran right onto. It was really a relatively little project, but it was a way to increase our profile. We had a lot of analysts on individual client accounts. But Manheim Consulting separated the analytics from sales. One of Webb’s most notable contributions at Manheim was the creation of the Used Vehicle Value Index. The monthly Index takes wholesale prices and adjusts them for mix, mileage and seasonality. Manheim Used Vehicle Value Index I sort of have this love-hate relationship with the Index. I love that the financial community adopted it so readily. At the same time, I hate that it had too much influence based on any particular movement. They would upgrade or downgrade a stock based on those movements and that’s not what the Index is all about. Originally, we just published the Index on a semi-regular basis. I was at a conference and it was during a time when AmeriCredit (now GM Financial) was under some pressure. It was near the end of the month and I indicated what the Index would do for the month. I don’t know it, but there was an analyst in the audience and he wrote a research report that mentioned the Index. I got a call from AmeriCredit’s investor relations and was read the riot act that the Index was material information for publicly trade companies and it needs to be released to everybody at the same time. That’s why it now comes out on the fifth business day of every month. That was eye-opening because I didn’t know people were following that closely. We also had issues where analysts were basically hacking our website by changing the date and getting the Index early. Now there’s a lot of information about used-vehicle price trends. I knew the Consumer Price Index reading on used cars was a bad indicator. I also knew the straight AuctionNet numbers were misleading. It was frustrating to see those numbers picked up and analyzed. I certainly hope the Index isn’t my lasting legacy. I would hope my legacy would be the broader perspective that I’ve given to some of Manheim’s clients, that there are factors beyond their own portfolios that affect them and how those interact. I really enjoyed working with Manheim’s clients on the remarketing process. There are a lot of great people out there trying to understand how to best preserve their residual values.