The Puget Sound Dealer, 2014 issue #3 by Blue Water Publishers, LLC

The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: jim@psada.com www.psada.com

BOARD OF DIRECTORS 2014 President Steve Klein Klein Honda, Everett 1st Vice President Jim Walen Ford-Hyundai of Kirkland 2nd Vice President Dan Wilder, Jr. Wilder Auto Center, Port Angeles 3rd Vice President Marc Ikegami Doug’s Lynnwood Mazda, Doug’s Lynnwood Hyundai, Doug’s Northwest Cadillac Trustee Position #1 Vince Hanson Hanson Motors, Olympia Trustee Position #2 Mark Revord Revord Buick GMC Truck, Everett Immediate Past President Sara Carter Carter Subaru, Shoreline PSADA STAFF James R. Hammond Executive Director Linda Halverson Executive Assistant Susan Leonhardi Programs and Data Base Manager Michele Foley Administrative Assistant

Inside this Issue

For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474 www.bluewaterpublishers.com

A Message from the President Steve Klein Klein Honda

The Auto Training Center at Shoreline is Healthy and Serving Dealers Well As President of PSADA it is always a great feeling to share good news with fellow dealers. Over the past year some very exciting things have taken place at the Professional Automotive Training Center (PATC) at Shoreline Community College. When Don Schultz retired we didn’t know how we would find anyone that could fill his enormous shoes. It took a long time to find someone. With Don’s help, we did! I want to introduce you to Michael Boehm. Michael is a bright young man who stepped into the PATC’s Director role this past June. Michael is no stranger to the automotive industry. He has worked for new car dealers and has had a passion for new cars all his life. As exciting as that is, Michael also brings vast workforce training experience with him, long-term experience building and maintaining partnerships and multiple years working within the community college system. His first 100 days have been remarkable. He has proven to understand what our business, as new car dealers, is about and he is working alongside PSADA to build new and innovative programs to help our businesses grow and prosper. The PATC has proven to be a critical training resource for more than half of PSADA membership over the past 30 years. Keeping the training center healthy and focused on the needs of new car dealers has always been important to PSADA and Shoreline’s administration. This summer Shoreline created the Accountability and Sustainability Task Force which Michael oversees, and is Chaired by Pam Nelson of Foothills Toyota, Burlington. This task force, made up of nearly two dozen new car dealers and factory executives from all of the manufacturer programs at the PATC, was designed to be a compass for the administration of the training center to assure that its programs stay relevant and current to the needs of new car dealers. This is an important task force that I am very pleased to be part of. It is important to always remember the critical role that the PATC plays in so many of our dealerships and how important our dealers are to the PATC. It is your training center. And, I am glad to tell you that it is healthy and prospering. Thanks to each of you for your unselfish support.

Message from the Executive Director - Jim Hammond

Understanding Employee Paycheck Deductions

Fraud? Not in My Dealership

Creating the Best Company

Jim and Amy Walen - Service, Community, Value

Navigating Through the Political Advertising Season

It’s Really a Matter of Choice

Culture Club: Just the name of an 80’s band or the most important ingredient in your business?

How Shoreline’s Auto Training Center Changed Automotive Training in America

Preparing for the road ahead should feel this good.

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Knowing your business is our business. Every dealership has unique legal needs. At Ryan Swanson, we pride ourselves on not only being great listeners, but in truly hearing what is affecting dealer businesses. By understanding your business goals and the auto industry, we are more than trusted advisorsâ&#x20AC;&#x201D;we are collaborative partners. Itâ&#x20AC;&#x2122;s with this collaborative style that we have built a lasting trust with auto dealers in the Puget Sound for over 20 years.

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A Message from the Executive Director James Hammond

Why Dealers Are the Core of the American Economy

Over the many years I have been Executive Director of Puget Sound Automobile Dealers Association, I have lived through many economic crises with the industry and with our dealers. For many of us who remember the 70s, we remember the 21% interest and the long gas lines when gas was rationed and auto manufacturers began their first scurry towards building smaller cars. The early 80s brought us Black Tuesday. Again, for those of us who remember, that was the day the stock market crashed…or at least we thought it was a crash. Car sales plummeted and everyone was crying the “sky is falling.” Then we all lived through the 90s of inflated values and the sky was the limit and everything looked and felt great. It stayed that way a long time and everyone associated with car dealers did well. Then, post 9/11, things began to change. What appeared on the surface as unimaginably high profits for several years in a row because of 0% interest, proved to be many years of slow sales because so many people who would have been future customers were enticed to purchase early. Then, as the industry began to rebound towards 2006 and 2007, the bottom of the entire economy fell out and the golden goose who laid the golden eggs collapsed with it. The golden goose is the network of new car dealers across America. Without healthy new car dealers, America does not prosper. Many years ago Seattle Times business columnist Stephen H. Dunphy wrote that “when the new car dealers in Washington State don’t do well, the state of Washington gets a bad case of the flu.” His foresight was crystal clear. During the recession of 2008+ his point was proven to be prophetic. Without car dealers our schools, hospitals, and municipalities suffer. That is what all of the past crisis I have mentioned have in common, besides being terrible economic times with horrible economic consequences for

business. In each of these crises car dealers suffered and because car dealers suffered so did America. And there is a reason. Car dealers are the core of the American economy. I like equating this fact to building a house. A house built on sand does not stand. A house built on a solid foundation survives. Think of the economy as a house of bricks. A solid brick foundation can carry a great deal of weight if the network of bricks is strong. Car dealers are the very bottom and most significant brick that holds all of the other bricks in place. Why? Because car dealers are a key part of the fabric of American communities. As I said above, when car dealers don’t prosper, neither do our communities. New car dealers are the essence of the true American free enterprise system because they unselfishly give back to the communities that support them. But this example of the importance of new car dealers doesn’t stop with local communities. As Stephen Dunphy pointed out, when car dealers don’t do well, the state of Washington gets a bad case of the flu. Revenues from car sales are critical to the state budget. So, yes, if you don’t do well, neither does Washington State. As the economy grows, more and more bricks are built on top of other bricks and the economy expands. The house gets bigger, wider, and taller. Everyone prospers. But for prosperity to take place, our cities and municipalities have to be healthy. Our public schools and hospitals need to be healthy. The charities that support the social and economic structure of our nation have to be funded. Thank God for new car dealers. The welfare and prosperity of our communities have always been a priority to new car dealers. Because of new car dealers our communities can be more confident and secure.

Understanding Employee Paycheck Deductions

By Britenae Pierce Ryan, Swanson & Cleveland, PLLC

Many employers face the question of how to handle making deductions from employee paychecks. Dealerships face this question even more often because they offer services and merchandise to their employees. Below are the basic rules and some additional tips for navigating the laws for employee paycheck deductions. EMPLOYEE DEDUCTIONS GENERALLY A number of circumstances exist where employers may deduct an employee’s wages either from ongoing paychecks or from the employee’s final paycheck. In some circumstances, employers may make deductions causing the rate of pay to be below the minimum wage. While these circumstances exist, they are limited. Best practice is to limit deductions for each paycheck so that the employee still receives minimum wage for the hours worked. One exception is for deductions required by state or federal law or for court-ordered deductions such as child support. For any deduction, the employer must identify and record all wage deductions openly and clearly in each employee’s payroll records. APPROPRIATE PAYCHECK DEDUCTIONS During an ongoing employment relationship, standard deductions are as follows: 1) as required by state or federal law, including for taxes; 2) for medical surgical, or hospital care or service; or 3) to satisfy a court order, judgment, child support payments, or other court-ordered deductions. Medical, surgical, or hospital services are not those related to job-related

injuries. Instead, those occur when a company elects to pay a worker’s medical costs for non-work related injury or care. While the employee is employed, an employer may deduct wages from the employee’s paycheck when the employee agrees to such deductions in advance and in writing. The purpose behind the deduction must be lawful and be for the employee’s benefit. A common example of these types of employee-agreedupon deductions is for employee premiums for health and benefit plans. Employers can elect to participate in their company’s health or dental plan, or even life insurance or other benefit plans, and have the employer deduct the necessary premiums for the employee. This is a benefit to the company so that it can keep track of its plan participants and also a benefit to the employee so that the employee does not handle multiple premium payments per month. Another example of these types of deductions is when the employee purchases goods or services from the employer and instead of paying directly, opts to make payments through paycheck deductions. For any goods or services sold to an employee, such goods and services must be provided to the employee at the same or better rate than given to the public. For example, an employee purchasing dealership merchandise or car services through his/her dealer-employer can agree, in writing, to have those purchases or services deducted from his/ her paycheck. Another example is a loan. Some companies offer loans to their employees, whether to tide them over to payday or for

more significant purposes. The dealer can charge interest on employee loans but the rate must be reasonable. Alternately, if the employee has an automobile loan, either funded by the dealer or a third party financial institution or other third-party creditor, then the dealer or third-party can withhold such loan payments. All of these types of deductions work best if the employer and employee can agree to a schedule of deductions in advance. As a practical matter, the employer and employee reaching agreement over all aspects of paycheck deductions in advance reduces the likelihood of future problems. FINAL PAYCHECK DEDUCTIONS Employers and employees should have an agreement in advance that if the employee’s employment terminates (whether voluntarily or involuntarily) prior to the end of the scheduled deductions, then the remainder owed may be deducted from the final paycheck. For example, if the employee has a $500 loan and $50 is taken out per paycheck, but at the time of the employment ending the employee still owes $300 on the loan, then the employer may deduct the entire $300 from the final paycheck based on the written agreement. There are a number of circumstances where the deductions are allowed from the final paycheck, even though such deductions are not allowed from regular paychecks. These circumstances include deductions for breakage, loss, or damage to equipment but only if it was caused by the employee’s dishonest or willful act, for employee theft if the theft was dishonest

or willful and if the dealer files a police report, and for failure to return a company uniform if the parties agreed to the uniform deduction in advance. Additionally, employers and employees can make their own agreements for deductions from the final paycheck at the time of termination. But if the employee does not agree to a voluntary deduction, such as for damage to a vehicle, then the employer may not deduct. Final paychecks are due to employees on the next regularly scheduled payday. Paychecks may not be withheld until the employee turns in company property. To avoid any issues, best practice is to require employees to turn in all company property at the time of termination. PRACTICAL APPROACH The above list is not exhaustive of all allowed and disallowed deductions, but it covers some of the most frequently asked questions about deductions. The most basic rules for paycheck deductions to avoid running into trouble are to deduct only when agreed by the employee in advance and in writing and to limit deductions so that the resulting paycheck is at or above minimum wage. When considering payroll deductions beyond these rules, consult your employment attorney for more detailed assistance. Britenae Pierce is a partner practicing in Ryan, Swanson & Cleveland, PLLC’s Employment Rights, Benefits and Labor Group. She can be reached at 206.654.2289 or pierce@ryanlaw.com 9

While you may not want to think about fraud and may believe there is no fraudulent activity in your business, statistics suggest those thoughts would be wrong. Several past and recent surveys show a typical business loses 5% of its annual revenue to fraud. It occurs across industries and in organizations of all sizes. Who commits fraud and why? Men and women have an equal frequency of committing fraud. However the losses from fraud perpetrated by men are three times higher than those of women. Most are first time offenders - only 7% have been convicted of a prior crime. In addition, 33% of frauds involve two or more people. They are from all areas of an organization but most are from: accounting (24%), operations (21%), upper management (14%), and sales (13%). Most individuals who commit fraud do so because they’re experiencing some type of pressure. It could be financial — stemming from debt, addiction, gambling losses, poor investments, medical bills, divorce, family member job loss or an extravagant lifestyle. Pressure also can come from supervisors with unreasonable sales targets or other performance goals or from the company’s owners with high earnings expectations. How does fraud occur and what forms are the most common? Most people maintain their honesty through beliefs and perceptions, culture, fear of punishment, lack of financial need, and no opportunity or inadequate opportunity to commit a fraudulent act.

Not in However any of these factors can change over time and create an opportunity for fraud to occur. There are generally three factors that cause a person to commit fraud: • an incentive or pressure creating a need for financial assets • an attitude that ignores culture and beliefs; a rationalization that they deserve the gains, or they believe it is a short-term activity and will repay the amounts soon • an opportunity to commit and conceal the activity Most frauds are asset misappropriation (90%) with a median loss of $100,000: theft, false billings, ghost employees, false expense reimbursements/credit card charges, false register voids or refunds, etc. Another fraud area is corruption issues (22%) with a median loss of $175,000: invoice kickbacks, purchasing schemes and sales schemes, etc. The lowest number of frauds is related to financial statement fraud (4%) but with the highest median loss of $1,800,000: false revenues, asset overstatement, liability understatement, etc. Note that the percentages exceed 100%, as many times a fraudulent activity will occur in multiple categories. How are frauds detected and how long do they last before being caught? The median fraud lasts for 18 months before detection. While the perception is that an external audit or internal controls will detect fraud, most are found as a result of:

By Matt Matson, Partner Peterson Sullivan LLP Work with Peterson Sullivan and experience the difference. Our proactive approach makes tax savings a breeze. Did you know the IRS issued new regulations on repairs and depreciable assets that contain favorable opportunities for dealerships? These changes create an opportunity to significantly reduce your tax expense. By reviewing fixed assets and adopting these new rules now, your dealership can take advantage of these new benefits.

Confidence earned. pscpa.com

my dealership! Tax advice that’s this good is like driving with the windows down!

PS Auto Dealer Ad FINAL.indd 1

• • • • •

tips from employees, customers, vendors or others (40%) management review (15%) by accident (8%) account reconciliation 6% external audit 5%

How can an organization reduce the likelihood of fraud? There are several ways to reduce the likelihood of fraud. The surveys show that organizations which have more than one antifraud activity or procedure in place can reduce fraud risk more than any activity on a stand-alone basis. Create an antifraud environment • let all employees know that fraud will not be tolerated and handle all issues thoroughly. • eliminate opportunities (ensure adequate segregation of duties, rotation of duties/mandatory vacations) • seek early detection and if there is doubt about the existence of a fraud assume it is happening and conduct a thorough investigation • conduct pre-hire background checks, reference checks, etc., on all employees • encourage employees, customers, vendors and others to question and report suspicious activity • recognize and publicize that retaliation against tipsters is illegal (i.e., have a whistleblower protection policy in place)

2/18/14 6:06 PM

Conduct employee education programs as employees are an organization’s top fraud detection method • train employees on what represents fraud • discuss how fraud hurts everyone at the company • let them know how to report questionable activity (do you have an internal reporting process or an external tip line?) • discuss signs that are often exhibited by a perpetrator: living beyond their means, control issues/unwilling to share duties or take vacation, unusually close association with a vendor or customer, family issues, defensive or suspicious attitude Also important is a regular detailed review of financial information by management. Unfortunately most organizations will incur some losses from fraudulent activity. To reduce the likelihood of loss, you should foster a strict tone at the top and let all employees know that fraud will not be tolerated. Also, top management must ensure their own actions are in harmony with the anti-fraud message. Rely on employees, customers, and vendors to do the right thing but assist them by making it easy to report suspicious activity by publishing a reporting phone number. Finally, thoroughly investigate claims and take appropriate action against all perpetrators when fraud is detected. For more information on this subject, contact Matt at 206-382-7777 or at mmatson@pscpa.com 11

Creating the

Best Company

By John Strom Strom & Associates

This is the fourth in a series of columns discussing how to hire the best people. I began by saying that the best people will only be attracted to (…and as importantly, stay in) the best job. Because they’re the best – top performers in their chosen profession – they expect the best of everything. I identified six “bests” to consider in creating the best job – 1) pay and benefits, 2) working conditions, 3) management support, 4) working with the best people, 5) working for a company with a great reputation for customer service, leadership in the industry and community service and 6) working with the best products and services. Previously I discussed why best pay and benefits is important and addressed working conditions and management support. This time I’ll talk about how to create the best company. What do I mean by the “best company”? When I talk about the “best company” I’m not talking about the company with the greatest sales or highest profits. Rather I’m looking at a company that top performers – the “best people” – say is the “best company to work for!” It’s a company they choose over all others (…and remember, they’re “the best” so they have a choice!). What do the best people look for in a company? The single most important criteria the best people look for in a company is whether or not they’ll be able to consistently perform at their best. Does the management recognize and encourage their high performance by giving them what they need to be at their best? Do they remove obstacles to their achievement? Do they create a great working environment? Do they regularly ask the top performer what else can be done to improve performance? Do they listen and take action? The number one reason good people leave an organization is because their manager does not do these things. This has been proven over and over again.1

Re-read the six criteria above! Actually, it’s fairly easy to describe the “best company.” It’s the one that excels in all the six criteria listed above. They have great pay and benefits, excellent working conditions, outstanding management support, the “best people” work there, the company has a great reputation for customer service, leadership in the industry and community service and offer the best products and services. If any of these aren’t there, it isn’t a “best company to work for” – simple as that. In fact, the absence of any one of these could easily cause the “best people” not to initially choose that company or will cause them to leave. If you look back at each you probably can come up with examples from your experience where this is true – when that element was not there/no longer there, the “best people” chose not to work there/left the company. A great manager trumps other factors! Of all the criteria, the management component is THE most important. When a top performer works for a great manager (see my earlier column on management support2), they get the most important element they seek – the ability to be able to perform at a top level. They “put up with” not having the other elements (…though each will tend to draw down their performance) because they like they way they’re managed. It’s the work group that’s important. Gallup has shown through their extensive research that individual work groups within a company vary greatly. They would say there aren’t any “great companies,” only “great work groups.” You can see this in many dealerships – one department or even one work group within a department consistently performs better – sells more, produces higher profits, has a higher level of customer and employee satisfaction – and has greater stability. Members of that team demonstrate a consistent high level of engagement – they go above and beyond – even when no one’s looking! They like each other; they like working together; they enjoy themselves at work! I’ll repeat a paragraph from 13

my last column because it describes what the best managers do so well. “Great managers must know what work their people do best – where they’re the most productive – and what work they’re less productive doing. They work with each team member to achieve their best results in their own unique way. They understand how to engage each team member so they consistently produce their best work. The best people respond to managers who encourage, teach and coach.” Great managers work to take the stress off their people. Whether it’s giving them additional resources that make the work easier, more efficient, or helping reduce the stress of life outside work (e.g. providing time off when needed or providing child care). Great managers truly care about their people. They know what’s going on in their people’s lives outside work. They’re good listeners when they need to be. They take action to help their people both at work and away from work – they understand that each can affect the other both positively and negatively. Other elements of the Best Company Several other elements are typically present in a company the “best people” choose to work for. The company values the same things they do. They believe in the same things. They’re proud of each other. The company supports the team members in what’s important to them. For example, they give their team members time off and even financial support for causes that are important to that team member. The company takes action to provide the “best possible products and services” for the “best people” to work with. Since there are always 14

variances in product desirability, the best companies seem to consistently get more of the most desirable products…and less of the less desirable ones. They choose to represent the latest and best aftermarket products and services. Sales consultants are provided with the latest and most effective sales tools. Technicians get the latest training and special tools and equipment. The parts inventory is what’s needed to perform service in the most effective and efficient manner. The office staff has the latest and best equipment and supplies to do their job. Phone and computer systems are the most effective and efficient – support the highest levels of productivity and customer service. The physical plant is optimized in the same ways. To be the “best company” – to attract and keep the “best people” – you need to be “the best” in every way possible. When these “best people” say it’s “the best” then it is. It’s their opinion that counts most – it’s what they’ll act upon in choosing to join a company and in choosing to stay there. So, are you “the best”? Do you have the “best people” working for you? I’ll address that next time and bring together all the elements we’ve discussed. It should be a good read! John Strom has been helping retail automotive managers improve their performance for over 25 years. He has held a number of management positions in both singlepoint and multiple franchise operations, including General Manager. His company, Strom & Associates, is a member of the Performance Development Group. 1 – Research by the Gallup Organization has consistently shown that the number one reason the best people leave a job is because of their manager. 2 – “Working Conditions and Management Support”, The Puget Sound Dealer, Vol. 2014, No. 1.

Photo by Adam Buchanan

By Craig Chastain

Jim and Amy Walen

Service, Community, Volume

Spend any time with Jim and Amy Walen and one thing is quickly obvious: these two would excel - and have fun - no matter what they were doing. That they have chosen the car business is a reflection of their shared mission. To do exceptional work. To be of service to others. To enjoy and savor the journey. While the road to Kirkland, Washington, and their award-winning Ford-Hyundai dealership has had no shortage of challenges, the duo is quick to point out that their successes are the result of loyal customers and a stellar staff. “Our business would not have the top-selling new car dealerships in the state for both Ford and Hyundai without our customers and our team,” says Jim. “It all starts with great people.” Jim knew early on that the car business was his destiny. Raised by a single mother, he was used to hard work from an early age, whether it was cleaning dog kennels, digging ditches or working as a restaurant cook. Midway through college, he got a summer sales job in a San Diego car dealership and knew his path was set. He worked his way up through every facet of the operation, which led to a GM position and then an opportunity to work for a Denver-based dealer group to help “fix” ailing dealerships around the country. Those travels took him to major competitive car markets like Houston, Dallas and Kansas City. He ultimately landed in Portland, Oregon, where he became minority partner at Courtesy Ford and first encountered

a gifted, legally-trained business woman who would become his partner in business and in life. Born in the Northwest, Amy had spent her formative years with her family in Australia where she earned a law degree from the University of Queensland. She practiced law in Australia before returning to Oregon to care for her ailing father. While attending night school to get accreditation in Oregon of her law credentials, she worked as a waitress, a cashier and then a controller for a dealership group. She passed the Oregon bar, but by then she had fallen for the car business and Jim Walen. Natural-born salesman and motivator meets a business-savvy executive with a shared love for the car business. The beginnings of Team Walen. By the time the Kirkland Ford Franchise opportunity came in 2005, the Walens were well-prepared and excited for a dealership of their own. Then, a major health setback. “I was diagnosed with breast cancer as we were getting ready to move our business and lives up to Washington,” says Amy. “I had lost my mom to the disease and, frankly, I was scared.” Thankfully, she found the world-class treatment she needed right in her new neighborhood at EvergreenHealth Medical Center. Her healing has led to a lifelong commitment to support the hospital and its patients who are experiencing similar challenges.

“Getting my life back was a profound experience,” she says. “I’m driven now to serve, to pay it back.”

underperforming franchise has helped rebuild Honolulu Ford into a profitable and market-leading operation.

Driven, indeed. Since establishing Ford of Kirkland in 2005 and Hyundai of Kirkland in 2009, the Walens have been tireless in their community service and charitable activities. With the active support of their 135-person staff, Ford-Hyundai of Kirkland’s beneficiaries include the Boys & Girls Clubs, Hopelink, Hyundai’s Hope on Wheels for Pediatric Cancer, Kirkland Interfaith Transitional Housing, plus food drives, park and highway cleanups, kids sports, support for first responders, the EvergreenHealth Foundation and a host of other charitable organizations.

Jim and Amy point to a familyfriendly culture as a cornerstone of their success. “We support the concept of family members working together here,” says Jim. “We have husband-and-wife teams, twin sisters and siblings in several departments.”

Photo by Adam Buchanan

That family environment extends to many levels of their operation.

All this and, by the way, Amy is the current mayor of Kirkland. “We first got involved in city politics because of our business, but Amy saw an opportunity to make a contribution that would have an even greater impact,” says Jim. “The so-called experts advised against it, but she ran for city council and won in 2010, was re-elected, and she’s been the mayor since January.” Back on the subject of health, it should be noted that Jim faced a health challenge of his own when, on the day in 2009 when papers were to be signed for the Hyundai dealership, his appendix burst. With typical Walen resolve, he completed the deal from his hospital bed and was back in the showroom within days. Still, the connection between major deals and major health events is not lost on the couple. “It makes us think twice about buying any more dealerships,” observes Amy with a smile. Managing business, politics and family (they have three children aged 24, 17 and 16) may appear daunting, but the Walens have found a balance that makes the best use of their talents and of those on their team. They credit their staff for growing their Ford and Hyundai stores to #1 status in new car sales and for earning multiple President’s Awards for their customer service. Their ability to build and grow dealerships extends to the Hawaiian Islands, where their partnership in an 18

“We try to involve as many co-workers as possible in our day-today activities,” says Amy. “Jim brings in teams to work on everything from purchasing to advertising, which we think helps keep people engaged and motivated. If we do it right, that family friendliness passes on to our customers.”

Their advertising campaigns, particularly their “Jim and Amy” commercials, are among the most unique and comprehensive in the region, encompassing conventional methods like television, radio and newspaper as well as internet and social media. “We don’t have an agency – all the advertising decisions are made by the team,” says Jim. “We try to have a balanced approach to our advertising and our customers tell us they like the campaigns that Amy and I do together, so we’ll keep doing them.” In a prominent place in their Ford store is posted the FordHyundai of Kirkland Mission. Some highlights: • • • • •

To offer quality products and services. To encourage, support and motivate the team. To be generous to the community with time and resources. To market and sell a large volume of Ford and Hyundai products. To treat customers like family and create a fun, family atmosphere.

For Team Walen, it’s mission accomplished.

Stop letting your write-offs ride off. Is your dealership taking advantage of all the tax deductions and deferrals it’s entitled to claim? From new tangible property regulations to changing state and local tax incentives, opportunities abound for you to keep more of your money—and accelerate your dealership’s cash flow.

We’ve been helping businesses ease their tax burden for more than a century. Put our knowledge to work for you. W W W. M O S S A D A M S . C O M /A U T O M O T I V E

Tax Audit Fraud Detection & Prevention Dealership Valuations Management Succession Ownership Transition

By Jeff Kent Business Development Manager Comcast Spotlight â&#x20AC;&#x201C; NW Region

Navigating

Through The

POLITICAL ADVERTISING SEASON

Although the Seattle market and Western Washington will most likely not see big dollars when it comes to political advertising in 2014, many automotive dealers still consider it a cluttered time in media â&#x20AC;&#x201C; when the airwaves are inundated with messages calling for votes, defending reputations and posturing for position. Between now and November 4th, the political season is in full swing. There are virtually no state-wide races, but we will see some activity from legislative races and issues highlighted by the universal background checks for purchased firearms that could heat up quite significantly depending on any opposition backing. For auto dealers, generally the largest local advertising spenders, it is still important to fully understand the impact that political advertising can have on the media landscape in 2014 in order to best take advantage of the opportunities that lie just below the surface. With that being said, political ad spending still exists this year and the Seattle market could see an increase through November, 2014.

Every dealership has a story.

Tell yours. Comcast Spotlight reaches more people, in more ways, on more screens. Partner with Comcast Spotlight and engage buyers by combining great programming with state of the art targeting technology. The result is that your message is heard by the exact customers you want to reach. Put Comcast Spotlight to work telling your story.

Major takeaways from the 2014 (and Beyond) Political Advertising Outlook (from Borrell)* •

Nationally 2014 will see $8.3 billion dollars in political advertising

Every dealership has a story. •

Politicians and political organizations spend $37 per eligible voter to sway opinion via media advertising, up 9% from the last mid-term election year

•

Digital media is projected to grow 70% from 2012

•

Cable is projected to see a 46% increase from the last mid-term election year (2010)

Tell yours.

If political spending in Western Washington heats up, cable television is expected to see the largest rise in political advertising due, in part, to the limited supply on broadcast stations. The benefits of cable’s ability to run advertising in specific zones are also expected to play a key role as political spenders look for more ways to target their messages. Online advertising will continue to see growth during the political season. Tactics will be expanding as political marketers will use everything from search to social media to banner ads and video. Reaching specific audiences will now be the priority in political marketers’ online strategies as opposed to simply amassing impressions.

These statistics hint at media gridlock and may suggest even the most seasoned auto dealer should sit on the sidelines and wait until November 4th. Do not be intimidated. There are numerous opportunities for your dealership to break through the possible clutter, reach your consumer and grow business in 2014.

AMC, Travel Channel, Golf Channel, History and more. The key thing to remember is that while auto buyers will be watching news for updates on the myriad of political issues being debated – they will also be tuning into great premieres during the summer and beyond. The bottom line is that with 50+ channels and 27 zones in the Seattle market, advertising on cable over the next few months will be the golden ticket for auto dealers looking to avoid any political pile up. While political advertisers will be expanding their voice online in 2014, auto dealers have ample opportunities to engage consumers in this important arena and grow their business. The ability to target auto buyers by zone will prove to be the most efficient online strategy. This important statistic can help guide your online media plan. Online video consumption is exploding and pre-roll and in banner video campaigns on xfinity.com are two of the most effective ways to build awareness and drive business. Another opportunity that auto dealers can embrace during the political season is the unique ability to creatively stand out from a homogenous landscape of commercials. Think of your own viewer fatigue leading up to an election as one ad after another argues the merits of a measure or the position of a politician. Use this time and environment to take another look at your creative strategy. Viewers are ready for something different and entertaining during commercial breaks. Make sure your brand is there with a message that provides relief from political season burnout. If the activity heats up this political season, there is no avoiding the political season in media – as a consumer and as a marketer. But by understanding the landscape, the challenges and the opportunities there are plenty of ways to stay in the game and come out a winner.

Cable’s wide variety of programming and networks provide ample choices for marketers who may be shut out of local news programming. The same adult audiences that are *Source: Borrell and Associates: 2014 And Beyond Political Advertising watching local news are also watching premier programming Outlook, July, 2014 on History Channel, Discovery Channel, ESPN and A&E. ** Source: Nielsen, Scarborough, Seattle-Tacoma DMA, 2014 Release 1, Consider these statistics to give you a sense of the enormous Adults 18+, – TV Watch: Local News-Morning, h Comcast Spotlight and engage buyers by combining great programming withTarget state ofPrograms the art Typically targeting Local News-Evening OR Local News-Late. Cable Viewing = Past 7 Days cross viewing and mass audience that auto dealers can reach The result is that your message is heard by the exact customers you want to reach. Put Comcast Spotlight in the Seattle market: In an average week, History Channel ng your story. reaches 751,053 Adults 18+ who typically watch local news, while Discovery Channel reaches 745,143.** High profile t, Automotive Media Advisor at 206-858-6582 or programming offered by these premium cable networks and Kent@cable.comcast.com the ubiquitous Sports Center on ESPN are great avenues for auto buyers. is a registered reaching trademark ofpotential Comcast Corporation. ©2014 Comcast. All rights reserved.

cast Spotlight reaches more people,

e ways, on more screens.

Additionally, cable news viewers who watch CNN and Fox News are also highly engaged with programming on 22

By Scott Dreisbach

It’s Really a Matter of

CHOICE

Today’s technology gives us all the opportunity to make better inventory management choices and more intelligent decisions, more accurately and faster than ever before. Literally, with a few clicks of your mouse in the right program, you can get all of the information you would need to make the best possible inventory choice / decision. While it is impossible to predict economic swings, natural disasters, terrorist activities or wild fuel price fluctuations, you can phase in a “more active” inventory. Ask yourself this question: Am I confident that my managers are using all of the tools and data available to them to make the very best possible inventory management choices? If not, why not? Many of the previous articles I have written have emphasized the key indicators that are the backbone of precise vehicle inventory management. These include, but are not limited to: specific model number, option packages, color, trim, individual options, average age to retail, average gross per unit, average age of inventory, seasonality, and special events. I have included the formulas, displayed examples and explained how to assemble the information in a format that your managers could use. In many cases, I also made available various worksheets, excel spreadsheets and other tools that I would send via E mail upon request. The proverbial bottom line is this: If you want to increase your bottom line, (and who doesn’t?) it can be done by re-examining and re-structuring the way you make new and used vehicle purchasing / acquisition choices / decisions. It really is all about choice and the system you use to facilitate that choice.

The idea of any good vehicle inventory management system is to quickly give information to management that will help accomplish the following: 1. To continually phase in what we need and phase out what we do not. 2. Make it easy to read, use and understand. 3. Recommend some specific action that needs to be taken. 4. Make decisions based on actual data, not “gut feel.” As mentioned at the beginning of this series, there is tremendous upside potential to implementing an inventory management system for both your new and used vehicle departments. By improving your “methods of choice” the following is a partial list of benefits that you can enjoy. • Earn a 5% Bottom Line •

“Release” frozen capital

•

Increase GP PVR

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Enjoy month after month floor plan interest credits

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60 day supply of new vehicles

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35 day supply of used vehicles

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Reduce wholesale “pain”

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Painlessly reduce variable selling expense

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Continuous training and system implementation

•

Feedback and accountability

•

Significantly improve market penetration

Change your “Methods of Choice” and Improve your Bottom Line

•

Easily increase closing ratios

•

Group Reports for multiple locations with different demographics

•

Reduce advertising expense

•

Significantly impact Return on Investment

•

Improve CSI

•

Deliver more units at higher grosses

•

Complete new vehicle inventory turn 6+ times per year

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Complete used vehicle inventory turn 10 / 12 times per year

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Know your highest producing color, package code, engine, etc

•

Use science and technology to manage inventory

•

Have an inventory stocking guide by specific model number

•

Eliminate “gut feel” in inventory decisions

•

Inventory decisions totally objective

•

Eliminate inventory being “pushed” on you

•

Know exactly what to advertise and when

•

Acquire inventory to match current market demands

I have been working at refining and improving vehicle inventory management systems for over 20 years and am always finding ways to make the process better. Inventory management is a science. Make no mistake about it. Choosing to do nothing differently will get you just that…Nothing Different. Making better choices will be worth the effort. There are a few good vehicle inventory management systems available from which to choose. Naturally, I would like you to choose to look at mine. If you would like to talk about it, simply send me an email or give me a call. Finally, I have developed a “Revenue Impact Calculator” that will allow you to plug in your own real numbers (in private) and will give you an idea of how much money is “on the table” for you to pick up by using a precise vehicle inventory management system. I will send you the link to the “Revenue Impact Calculator” upon request. The power of choice really does make a difference. We have all experienced it and we all will continue to do so. I will continue to choose to try and expose you to the benefits of precise vehicle inventory management and I hope you will make choices that are in your dealership’s best interest. Thanks for reading and if you ever choose to want to talk about it, please let me know. For more information contact Scott Dreisbach at Valuinsight, Inc., www.valuinsight.com www.qrwindowstickers.com or sdrize@valuinsight.com. 26

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CULTURE CLUB –

By Kevin Iden Iden’s Dealership Services

Just the name of an 80’s band or the most important ingredient in your business?

How can you not remember the 80’s band Culture Club with their music videos featuring the band members in their crazy makeup and funky clothes playing one of the most popular pop tunes on the radio of the time. Who knows how they came up with the band name; however the term “culture” is becoming more talked about and realized by successful businesses as quite possibly the single most important ingredient of success. Creating the right culture can improve efficiency, reduce turn-over, improve customer satisfaction and affect the bottom line. As most people realize, business has many similarities to sports, football in particular. To be successful, every position must be filled by the best person suited for that role. Russell Wilson is an amazing quarterback but would likely struggle to be the best in all positions. On the other hand, a team full of quarterbacks wouldn’t be effective either.

Even when a company does have the right people in the appropriate positions for which they can excel, it’s the culture we, as business owners and managers, create that really make the difference. Pete Carroll has created a culture amongst his players where they wouldn’t want to play for any other team or work anywhere else, for that matter. It’s the culture that creates that loyalty and commitment where employees, players, don’t want to make a mistake or let their team down. Creating an environment where people are afraid to make a mistake is far less effective than the desire to do their best. Would you jump higher or run faster because the coach and the team around you are all doing their best, or just because you’re scared not to? How long would you stick around and give a good effort purely out of fear for your job? Building the culture you want starts from the moment your employee makes their first contact with your company and should continue throughout their career there:

As most people realize, business has many similarities to sports, football in particular.

•

Recruiting – your recruiting representative, their methods and communication must be an example of what you are looking for every day from every team member.

•

Interview - it should not only be a time for you to learn about the applicant but also be a time for them to hear about your company, culture, values, vision, opportunities, making them want to join your team and also setting the expectations up front.

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Onboarding - having an organized orientation for not only getting all of the paperwork and HR items handled, but also having a clear and specific job description for the new-hire can help make them more comfortable and less likely to disappoint. This is also the time to start talking about the culture and positive environment your team has and is looking to maintain.

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Day one, hour one - be sure someone shows them around to everything from the first-aid cabinet, bathroom, emergency evacuation route as well as welcomes them and introduces them to help remove any awkwardness and give them a good first impression.

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A true open door policy…some of our best ideas have come from our employees, by us encouraging them to share. At the same time, coming to us with concerns or potential problems has allowed us to be proactive and adjust accordingly.

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Rewards/recognition - it doesn’t always have to be financial. Sincere appreciation from a manager can go a long way toward keeping attitudes positive and performance high.

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Integrity - the leaders must earn their people’s trust to get trustworthy people in return. It will make or break the culture dependent upon if your people can trust and respect the leaders of the organization.

In my business where our people are reconditioning and applying products to cars for dealerships, it can be difficult to get people excited about the task at hand. However, making the end result the focus can get people excited. Proper training, accountability, measuring the results, reporting the results, praise and rewards based on the results, meeting deadlines, etc., can all be very motivating and rewarding. When it comes to attracting and retaining the best people and to get the most out of those people, it’s the culture we have created as business owners and managers that will determine the true success of our companies. The culture will determine how satisfied people are, which will translate to how happy our customers are in doing business with us. It starts at the top in how we talk to people and leading by example, with the attitude we hope and expect our people to have. A positive working culture is a never-ending effort by the leaders in any organization to acquire and maintain the type of culture you want and can’t afford to be without. Kevin Iden, President of Iden’s Dealer Services, has almost 30 years in the auto dealership industry. He founded Iden’s Dealer Services which has become the largest provider of dealership reconditioning, detailing and protection services in the Pacific Northwest with both on-site and off-site staffing programs. Kevin can be reached at kevin@idensmail.com. You can also visit Iden’s Dealer Website at www.idensdealerservices.com. All PSADA members will receive a free consultation/evaluation.

THE PROFESSIONAL AUTOMOTIVE TRAINING CENTER The PSADA And Shoreline Community College Partnership that Changed the Way America Trains Auto Technicians

A Comprehensive “Real World” Model

The PATC is virtually indistinguishable from a modern, firstclass automobile dealership. It has been designed to simulate all departments and services of an automobile store capable of selling 900 cars a year, including 40 service bays, sales and show room, clerical offices, parts department, and sales offices. Through its long- and short-term courses, the PATC provides comprehensive, current and competency-based training for almost every type of personnel employed by a dealership. Its most intensive curriculum is the two-year Associate of Applied Arts and Science Degree in Automobile Service Techni-

cian Training. Currently, the PATC offers eight such programs in partnership with automobile manufacturers: two Toyota’s Technical Education Network (T-TEN), two General Motors’ Automotive Service Educational Program (GM-ASEP), two American Honda’s Professional Automotive Career Training (PACT), and two Chrysler’s Mopar College Automotive Programs (CAP). Before admission to one of these programs, applicants are tested on their reading, writing, communication and mathematical levels, and evaluated on their prior automotive experience. After admission, a student will alternate between quarters of

“Shoreline Community College’s automotive training programs are a wonderful reminder that technology can elevate all workers and give more meaning, more dignity, more opportunity and more value to all workers. And this very impressive facility is a stunning example of the accomplishments that can be achieved by the partnership of education, business, labor and the government.”

study at the College and work in a dealership. Through the Automotive Youth Educational Services (A-YES) partnership with area high schools managed by PSADA for the state of Washington, the PATC shares its resources and experiences and joins in efforts to acquaint students with the requirements and rewards of automotive careers. The National Automotive Technicians Educational Foundation (NATEF) has certified all PATC’s automotive technology programs. Upon completion of course work, PATC student technicians can be certified by the National Institute for Auto-

motive Service Excellence (ASE) in eight areas for which ASE standards have been established: engine repair, engine performance, automatic transmission and transaxle, manual drive train and axles, front suspension, brakes, electrical systems, and heating and air conditioning. The students receive certification simultaneously from their respective factories. Most graduating student technicians leave their program with 50% or more of their required manufacturer certifications. The average graduating technician from the PATC is worth between $50,000 and $75,000 in saved training expense to the hiring new car dealer.

Photo by Adam Buchanan

President Clinton and Bill Gates visit the Professional Automotive Training Center

Former President Bill Clinton The Professional Automotive Training Center Shoreline Community College February 24, 1996

CHANGING LIVES And Creating Great Careers

Photo by Adam Buchanan

Since its inception in 1978, the Professional Automotive Training Center has touched the lives of more than 4,000 students, and has given them the opportunity to sustain a high-wage, secure career for the rest of their lives. Additionally, more than a quarter million incumbent workers from new car dealerships from five northwestern states have been trained at the PATC facility.

U.S. Department of Labor Backs PSADA/PATC Program with $1.5 Million Dollar Grant In addition to the two-year manufacturer-specific programs, the PATC also has the General Service Technician Program (GST). GST is a three quarter non-manufacturer-specific technician program aimed at students needing basic automotive/academic skills. Graduates from GST qualify for entry level jobs in auto repair shops; however, approximately two-thirds of GST graduates continue on to the manufacturer supported programs and many already have positions working as technicians at dealerships whose manufacturers don’t have established national training programs like Toyota and General Motors. GST was developed through a partnership of PSADA, Shoreline Community College and Toyota Motor Sales of America, and funded by a $1.5 million grant from the U.S. Department of Labor. 32

PATC Serves 12,000 Students Annually Through Industry Partners Annually, more than 12,000 automotive personnel take advantage of the PATC’s workforce training and its wide variety of factory-sponsored training options. There are also many shortterm classes in all dealership support departments, including sales, service advising, title clerk, finance and insurance, legal seminars, and environmental regulations accountability. The sale of vehicles is the only primary dealership function that does not take place at the PATC, although popular sales training classes are given by top automobile sales trainers from national sales training companies. The PATC also serves as a permanent home for the manufacturers’ own factory training programs for their dealership employees in Washington, Oregon, Idaho, Montana and Alaska. Toyota University, Chrysler Academy and Hyundai Corporation use the PATC regularly for training Toyota, Hyundai and Chrysler dealership personnel. General Motors has its own facility and trains dealership service personal year-round. Volvo Cars of North America and Kia also use the PATC for their multistate satellite training. The PATC also partners with automotive major equipment suppliers such as Hunter Engineering and Snap-on Tools. Hunter Manufacturing’s northwest regional training center is located in the PATC. This center is outfitted with Hunter’s state-of-the-art alignment and undercar equipment which is

LEARN MORE. EARN MORE. Looking for research, insights about online marketing or merchandising best practices? Find all this information and more at DealerLearningCenter.com. 33

shared with the PATCâ&#x20AC;&#x2122;s four manufacturer-specific two-year programs and GST. Snap-on Tools has designated the PATC a National Coalition of Certification Centers (NC3) facility and built in it one of only three Snap-on Innovation Works Centers in the nation. In 2011 Snap-On introduced new Snap-on tools and innovative training for torque technology, diagnostic platforms and undercar technology for dealers in the western United States. The PATC has proved to be such a valuable partner in addressing the needs and accessing the opportunities of the automotive industry that, only two years after it began its

operations, it was recognized as the industryâ&#x20AC;&#x2122;s premier training site in the nation. In 1995, the American Automotive Manufacturers Association and the American Vocational Association gave it their Award for Excellence for the most outstanding factory-affiliated automotive training program at any American college or university. Today, the National Automobile Dealers Association and the Automotive Trade Association Executives recognize the PATC as the national model for state-of-the-art automotive training. To date the PATC has inspired similar facilities across America.

THE BIRTH OF A NATIONAL TRAINING MODEL Historic Beginnings that Caught the Attention of a US President The PATC, which began its operations in the fall of 1992, is a nationally important and innovative achievement in partnering higher education and business and industry. For the first time in the United States, a post-secondary institution offers a comprehensive, competencybased, state-of-the-art professional technical training program and general education for virtually every employment position in the automotive dealership.

Birth of Training Program This partnership began in the fall of 1978 when the College, working with an industry advisory committee assembled by the Puget Sound Automobile Dealers Association (PSADA), offered its first automotive training program. The 11-week NADA Fundamentals of Automotive Service Training (F.A.S.T.) helped service technicians solve the most common automotive problems. Lacking facilities, the College offered the course in the evenings at a nearby automobile dealership. In 1984, a subsequent emissions control course inspired the College to offer its two-year associate degree High Tech Automotive Service Technician Training Program. The program evidenced Shoreline’s recognition of the impact the computer-driven revolution in motor vehicle manufacture has had on dealership training needs.

Photo by Adam Buchanan

The recognition of the PATC continues in 2014 during Governor Jay Inslee’s visit with PSADA President, Steve Klein, Klein Honda, Everett 36

Photo by Jim Hills

Foundation Established In 1985, friends of the College established the Shoreline Community College Foundation, a Washington non-profit, 501 (c) (3) corporation, to strengthen and support the College’s educational and professional technical programs and services. The Foundation’s volunteer leadership immediately recognized that the automotive industry suffered a large and growing shortage of technically skilled workers with solid educational backgrounds. This lack could be traced to the dearth of relevant and responsive workforce training programs. Forming a partnership with PSADA, the Foundation launched a capital campaign that raised approximately $2.8 million in private and public funds to construct and equip the original 28,150 sq. ft. PATC. In addition, the College increased its financial commitment to the automotive programs dramatically -- from a 1985 outlay of an estimated $35,000$45,000 to a projected $900,000 for the 2007-2008 academic year.

Ties to PSADA Shoreline’s partnership with the automotive industry is further evidenced and strengthened by the location of the PSADA offices and operations in the PATC. PSADA takes an active role in co-managing the PATC, helping develop and manage PATC programs and offerings, and helping establish its industry advisory committees. The relationship between PSADA and the PATC has been heralded nationally as a first in the automotive industry and has been instrumental in helping establish other similar relationships between education and other dealer associations across the country. Nationally Recognized The PATC has won a number of national awards recognizing its outstanding service to the regional automotive industry: “Best Factory Affiliated Program in the Nation” by the American Automobile Manufacturers Association and the American Vocational Association; “Best Example of a Business/Education Partnership in the Nation” by IBM and the American Association of Community Colleges; “Most Outstanding Toyota T-TEN Program in the Nation,” by Toyota Motor Sales, U.S.A., Inc.; and “Most Outstanding GM-ASEP Program in the Nation,” by General Motors Corporation. In 2010 PSADA’s partnership with the PATC was recognized as the “Best in Washington State” by the Washington State Trustees Association for Community and Technical Colleges. In 2011 the PATC was awarded the Bellwether Award recognizing it as one of the top ten workforce training programs in Washington State. The PATC was also visited and recognized in 1996 by President Bill Clinton and Bill Gates. Phase Two Expansion As the PATC approached the turn of the century, it became apparent the Center was seriously out of space. The Toyota T-TEN, Honda PACT, Chrysler Mopar Program, and GM-ASEP programs had doubled their programs. The Center’s factory incumbent training had expanded to seven automakers serving 12,000 dealer technicians annually in five northwestern states. In 2007, to accommodate the growth, the College announced Phase 2 of the PATC which would add 36,000 state-of-the-art square feet to the facility. PSADA fundraised $4.2 million dollars for the project with $1.2 million of those funds coming directly from the dealers association. Culminating with nearly 63,000 square feet, the PATC was rededicated on June 8, 2010. The expanded Center quickly filled. Snap-on Tools built one of its three Innovation Works Centers at the PATC to develop new tools and training technology for new car dealers. Hunter Engineering brought its Northwest Regional Training Center into the PATC to provide state-of –the-art alignment and undercar training technology. 38