Revista Dealer - Ed 40 - Inglês

40 February/March 2013

National Federation of Automotive Vehicles Distribution Bimonthly Publication

A NEW TIME

In the event that gathered more than 21,000 Dealers, optimism and the gradual recovery of the U.S. market showed that the Chain must seize the time and follow the growth path.

23RD FENABRAVE CONGRESS AND EXPOFENABRAVE 2013 President of NADA and renowned business consultant, Vicente Falconi, confirm presence.

INTERVIEW

LEGAL SUPPORT

Carlos Morassuti, Volvo, explains that people’s appreciation is part of the recipe of talent retention.

Dealers should be pay attention to the new resolution of COAF.

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editorial

Wiser than smart!

Flavio Meneghetti President of Fenabrave - National Federation of Automotive Vehicles Distribution

W

hile I was participating in NADA Convention, Orlando, Florida, I recalled a Chinese thought that says: “Smart people learn from their mistakes. Wise people learn from the mistakes of others.” In fact, I use to say that it is cheaper and faster to learn from the experience of others and, by having the clear perception of the recovery of the U.S. market of vehicles since the 2008 crisis, I thought how “We can be wise and learn from the successes of others.”

That’s right, as you will be able to read the Cover Story of this edition, to which I ask you a special attention, the U.S. market rose virtually from the ashes, it is in full recovery and should reach the level of 40 15.5 million units sold this year. But just this record may not mean much if, as the chief economist of NADA, Paul Taylor, mentioned, it were an artificial growth, like the one before 2007, when that market hit the mark of 17 million cars sold, but without credit consistency and profitability to dealers.

In recent years, the North American Dealer learned to reinvent itself and began to focus their attention to second-hand cars, parts, after-sales services and to the letter “I” in F&I, much more than just the sale of brand new cars.

The change of focus brought them a return equivalent and close to 50% of the results and to more than 60% of the coverage of expenses. Associated to that, a lot of training of teams, much leaner since the crisis, investments in the Internet and social media, as well as high level of creativity to win and retain customers.

Doing the basic well done and going beyond seems to be the formula for success found by more than 16,000 American cars dealers. But this formula, according to the President of NADA, David Westcott – whose presence is already confirmed in our 23rd Fenabrave Congress, began by raising awareness that the focus of profitability had changed hands and was no longer on selling brand new cars.

Think about it. Please read carefully this issue of Dealer Magazine, and participate in this movement of rethinking and reinventing the business.

After all, learn from the successes and also from the mistakes of others seems to be very wise … and profitable Enjoy your reading and great deals!

February/March 2013

National Federation of Automotive Vehicles Distribution Bimonthly Publication

A NEW TIME

In the event that gathered more than 21,000 Dealers, optimism and the gradual recovery of the U.S. market showed that the Chain must seize the time and follow the growth path.

23rd Fenabrave Congress and expoFenabrave 2013

President of NADA and renowned business consultant, Vicente Falconi, confirm presence.

IntervIew

LegaL support

Carlos Morassuti, Volvo, explains that people’s appreciation is part of the recipe of talent retention.

Dealers should be pay attention to the new resolution of COAF.

Dealer

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Bimonthly publication of Fenabrave - National Federation of Automotive Vehicles Distribution.

Year 7 – Issue 40 February/March 2013 Board Chairman of Deliberative Council and Board Flávio Antonio Meneghetti President Alarico Assumpção Jr. Vice Presidents Antonio Figueiredo Netto, Edson Luchini, Elias dos Santos Monteiro, José Alberto Gisondi, Mário Sérgio Moreira Franco, Mauricio de Souza Queiroz, Paulo de Tarso Costa Beber, and Paulo Matias “Ad-hoc” Vice Presidents Gláucio José Geara, José Carneiro de Carvalho Neto, Octávio Leite Vallejo, Melchior Luiz Duarte de Abreu and Luiz Romero C. Farias Ex Officio (Former Presidents) Alencar Burti, Sergio Antonio Reze, and Waldemar Verdi Jr. Editorial Board Flávio Meneghetti, Alarico Assumpção Jr., Paulo Engler, Marcelo Ciardi, Valdner Papa, Rita Mazzuchini Editorial and Production MCE – Mazzuchini Comunicação e Eventos R. Frei Rolim, 59 – CEP 04151-000 – São Paulo, SP Phones: (11) 2577-6533 / 5582-0049 E-mail: rita@mcepress.com.br Editor and Journalist in Charge Rita Mazzuchini (Mtb 22128) Assistant Editor Igor Francisco (Mtb 57082) Collaborator Daniela Figueira, Jô Ribeiro, Luis Yuaso, Márcia Moreno e Marilena Rocha Graphic Design and Art Edition Heraldo Galan and Patricia Tagnin

Radar Fenabrave

radar fenabrave

Fenabrave Deliberative Council, Board and Regional Administrations come together in São Paulo. Fenabrave TV opens a new class for Preparatory Course for Correspondents. ABRAC and ABRANOMA encourage their Chains to participate in the 23rd Fenabrave Congress.

Opinion

opinião

Tereza Fernandez, Managing Partner of MB Associados, analyzes the U.S. market and shows that the work focused on after-sales is an example of success to be followed.

Economy

economia

Octávio de Barros, Officer of Researches and Economic Studies Officer at Bradesco, speaks at Fenabrave and show optimism in the Brazilian economy this year.

F&I

F&I

Experts say that F&I operation should not be made of products only. Efficient processes are necessary.

Legal support sucessão

Jair Jaloreto and Luiz Eduardo Vidigal Lopes da Silva explain why Dealers should pay attention to the new resolution of COAF against money laundering.

Open Space

espaç o aberto

Luiz Carlos Corrêa Carvalho, President of ABAG - Brazilian Agribusiness Association, says that the expected record harvest will benefit the heavy vehicles segment.

Photos Leo Martins, Marco Venicio, Marcos Alves e Reinaldo Marques Commercial DNF Comunicação – Gutenberg Soledade Phones: (11) 2281-8134 and (11) 9169-7485 E-mail: dealer@dnfpropaganda.com.br Circulation 10,000 copies Free distribution Correspondence Address Av. Indianópolis, 1967 – Planalto Paulista CEP 04063-003 – São Paulo/ SP Phone: (11) 5582-0000 / Fax: (11) 5582-0001 E-mail: fenabrave@fenabrave.org.br

Collaborated in this issue:: Tereza Maria Fernandez Dias da Silva, Luiz Carlos Correa Carvalho, Jair Jaloreto e Luiz Eduardo Vidigal Lopes da Silva

Editorial staff contact E-mail: rita@mcepress.com.br

Authorization for text reproductions Signed articles in this magazine are of responsibility of the author, and do not necessarily represent Fenabrave opinion. Authorized a total or partial reproduction of unsigned materials, provided the source is mentioned. Reproduction of signed articles and materials must have the author’s prior written consent.

Download this edition of Dealer Magazine on your tablet or smartphone!

Cover Story 22 matĂŠria de capa

U.S. market overcomes effects of financial crisis deflagrated in 2008 and shows optimism with future.

Seize the momentum was the word of order of NADA Convention, which this year gathered more than 21,000 Dealers in Orlando, Florida, and was attended by more than 50 Brazilians in a special program developed by Fenabrave in partnership with Megadealer consulting company.

Interview 18 entrevista

Carlos Morassuti, Vice President of HR and Corporate Affairs for Volvo Latin America shows that investing in people is the key for business success.

Launches 46 lanç amentos

Asians step on gas pedal: Hyundai introduces the new version of HB20 sedan, JAC Motors bets on the Urban Freight Vehicle segment and Geely Motors announces start of operations in Brazil.

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Fenabrave Deliberative Council, Board and Regional Administrations come together in SP Fenabrave held, at its headquarters in São Paulo, a meeting with Fenabrave Deliberative Council, Board and Regional Administrations, on March 6. One year after the entity Strategic Planning presentation meeting, Fenabrave assembled the leaders of committees created to present their works developed throughout 2012 and disseminate the future projects.

Flávio Meneghetti, Chairman of Fenabrave Deliberative Council, thanked all those present and assessed the actions taken in his management, such as the change Fenabrave trade dress, including new logo, new Portal and all audio-visual materials of Fenabrave. Meneghetti also made a comment about Fenabrave great exposure and visibility in all media, the meetings with Regional Administrations on specific dates, participation in international events such as NADA, besides presenting the entity balance sheet.

“In just over a year since I am in Fenabrave we’ve made significant changes in the entity and intend to improve even more,” he added.

Alarico Assumpção Jr., Fenabrave Executive President, emphasized the meeting importance and also spoke to the leaderships on the renovation recently carried out in Fenabrave premises. “The renovation has contributed to a significant equity growth. The renovation is being paid for with the savings generated by the cut of expenses made in 2012, not to mention that it has provided us with more comfort and reduced future costs,” he explained.

In Fenabrave meeting with the Deliberative Council, Board and Regional Administrations, in 2012, working committees were created with specific goals and divided into several work fronts.

During the meeting in early March, each representative presented the actions already taken and their main results.

New challenges for Fenabrave – “In Brasília we had a meeting with Mr. Fernando Pimentel, Minister of Development, Industry and Foreign Trade (MDIC), to discuss a project focused on the creation of a vehicle recycling industry. We asked the Minister to create a Multidisciplinary Committee to address this important issue, which generates so many burdens to the Brazilian economy and society. The theme was welcomed by the Government,” explained Fenabrave Chairman, Flávio Meneghetti, during the meeting.

The Chairman commented that this is an old idea of the Federation that aims to reduce accident rates, broaden the environment preservation and encourage the automotive chain. “In a short-term we should create a multidisciplinary committee to develop proposals and, eventually, a national recycling program. We are the 4th largest market for vehicles. So we have to create, as well as other countries, a vehicle dismounting company,” he argued.

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Committee of Market Intelligence Chairman: Elias Monteiro The Committee aims to obtain and process data to generate market intelligence, besides adapting IBGE data to interface with Fenabrave Database (licensing of new vehicles, second-hand car transactions and fleet). The result of this action was the formation and formulation of powertrain rate (per capita, per region) which was already completed by the committee. “It still is not moving the way we want, but we are striving to improve and present something better to improve the entity, always,” clarified Monteiro.

Committee of Urban Mobility and Motorcycles Chairman: Antonio Figueiredo Netto The Committee of Urban Mobility and Motorcycles aims to develop, in partnership with ABRACICLO, proactive actions in the theme-oriented projects.

The group partnered with Caixa Econômica Federal and Banco Panamericano, denominated “Support Plan”, with the aim of financing motorcycles with the Central Bank. The project has had positive results, such as the release of compulsory deposit, deduction of deposit for motorcycles financing, motorcycle funding increase and improved conditions of installments for final consumer, which turned financing more flexible. “Sales in this segment are very weakened and we need to come together with the banks so that there is more credit and the consumers have more chances of buying their motorcycles,” said Paulo Engler, Fenabrave Chief Officer, who made the presentation on behalf of the chairman of the committee.

Committee of Market Relations Chairman: Valdner Papa This committee aims to promote the exchange of knowledge (strategic, tactic and operational) and world best practices of fellow international entities. Through this committee, there were opportunities for important relationships, such as the one established with NADA, which has already confirmed its presence in the 23rd Fenabrave Congress, in addition to other international entities, such as ATD (American Truck Dealers) and CADA (China).

Another important partnership was held with Harvard representative, which right now is in cost discussion phase. The project involves making courses available online from renowned United States educational institution, via web, in Portuguese and with certification to the participants. This project will be part of Fenabrave TV.

Sustainability Committee Chairman: Mauro de Stefani Flávio Meneghetti, Chairman of Fenabrave and Alarico Assumpção Jr., Executive President of Fenabrave, during meeting of Fenabrave Deliberative Council, Board, and Regional Administrations.

Committee of Technological Innovation Chairman: José Carneiro de Carvalho Neto The purpose of this committee is to promote networking, new practices and innovations to create value for the automotive distribution industry. Among the projects carried out in this first year are the Planning and Implementation for the development of the New Fenabrave Portal, which have being 95% implemented and will be finalized by end of April, according to Valdner Papa’s presentation, replacing the Chairman of the Committee during the presentation.

Besides the entity modernization and greater exposure of services, the new portal will bring to the entity the possibility of advertising space revenue.

Another project already forwarded by the committee is the support to the development of a new website of Fenabrave TV inside the Portal, that focus on optimizing all the presence power and offer web interactivity and portability to the content of Fenabrave TV. Following NADA example of success, which university is one of the pillars of professional training, Chain training, corporate values dissemination and of revenues, this project is expected to be developed during 2013 and is in the process of selecting a technological supplier. Other projects and their positions were presented.

Tractors and Agricultural Machinery Committee Chairman: Paulo Costabeber With the purpose of promoting the segment and taking actions for its development, the committee is seeking the National Register of Agricultural Machinery implementation, made by farmers at no cost. In a meeting with the Acting Minister of Finance, Nelson Barbosa, Anfavea, Senator Kátia Abreu and the Federal Representative Marcos Montes (Front Parliament of Agriculture) the support of all on the topic was discussed. The entity succeeded in having the Government to postpone the entry into force of a record which format would be inappropriate. On the coming March 20, there will be a segment meeting at Fenabrave with CEOs of banks and insurance companies to submit a proposal for a unified registration system.

The purpose of this Committee is to help creating/increasing sustainability commitment actions. Fenabrave understands the importance of Federal Technical Registry (CTF), a legal obligation of all vehicle dealerships, regardless of the segment in which they operate, especially those that provide services related to air-conditioning gas change and lube oil change. The committee has also served as provider of proposals for discussion at the 23rd Fenabrave Congress through themes as the CTF – new rules for 2013, green Workshop: How to increase profit in your dealership, Vehicle recycling scenarios in Brazil, among others.

Also, in order to discuss the Dealer’s role in the matter, another action of the Sustainability Committee was to hold a round table on Sustainability on Fenabrave TV which was attended by experts in the area.

“There is the possibility of recycling existent old vehicles all over the country, so we are striving to achieve this goal of ours,” argued Paulo Engler, Fenabrave Chief Officer, on behalf of the chairman of the committee.

Trucks, Buses and Road Implements Committee Chairman: Paulo Matias The mission of the Committee is to promote the segment and carry out actions for its development. With Fenabrave commitment, the IPI zero tax rate exemption for the trucking segment remained, resulting in a 5% reduction in the final price. The government also kept the PSI 4 financing and fostering program until 12/31/2012 facilitating the purchase (this modality represents approximately 75% of the financed purchases). Another extended maintenance rate was the 3.0% deflated during the period of 01/01/2013 to 06/30/2013 and for 4.0% from 06/30/2013, which resulted in the continuation of the facility to purchase trucks.

Committee of Institutional Relations Chairman: Melchior Luiz Duarte de Abreu.

The purpose of this committee is to approximate the entity and government agencies. During the year, Fenabrave met several times with the government looking for support for improvements in the industry. Through this committee, together with other entities, financial institutions, Anfavea and other leaderships, it was possible to address issues faced by the industry in early 2012, which resulted in incentive measures, as the IPI reduction that boosted vehicles sales in Brazil during last year.

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Help to motorcycle segment The two-wheeler industry has struggled in sales, thanks to a more restricted credit, mainly for low cc motorcycles. With the purpose of helping to leverage the segment, Fenabrave and Febraban (Federation of Brazilian Banks) met on January 23 at Fenabrave headquarters in São Paulo. Among the participants, presidents of Make Associations, representatives of banks and assemblers, Dealers, industry professionals, entities and guests that, together, discussed solutions for this segment.

During the meeting, the Chairman of the entity, Flávio Meneghetti, highlighted the efforts of the entity to seek alternatives to change this scenario before government agencies. “We are monitoring closely this segment. We gather in an attempt to relieve this suffering we feel on the skin and in the pocket, and we will seek solutions so that the result is positive,” he argued.

Alarico Assumpção Jr., Executive President of Fenabrave, has also highlighted the entity concern with the segment of motorcycles, which suffers from credit restriction. “The year 2012 was very difficult. However, we believe that if we join forces we can change this scenario,” he said.

Flávio Meneghetti, Chairman of Fenabrave and the Senator Marco Antonio Costa.

Fenabrave Vice President and motorcycle segment representative, Antonio Figueiredo Netto, commented on Fenabrave efforts that, through several meetings with the government economic area, has been demanding and sensitizing the authorities on the status of the segment. “The purpose of these meetings is to seek alternatives to mitigate the segment problems, as we know we will have a tough year in terms of credit approval from financial institutions, but we are here to try to solve this,” he argues.

To base the time and economic trends for the segment, the meeting included a speech by Tereza Fernandes, managing partner of MB Associados.

According to Fernandes, in 2012, approximately 4% of 2,500 motorcycle dealers in Brazil went out of business

Motorcycle segment leaderships discuss market obstacles.

Fenabrave Vice-President and motorcycle segment representative, Antonio Figueiredo Netto (below), points out Fenabrave efforts to recover the segment.

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due to sales decline. “Last year, 1,637,481 motorcycles were licensed, i.e., 300,000 less than in 2011 (1,940,552), and the main reason is the lack of credit, since 85% of consumers rely on financing to buy motorcycles,” he explains.

Despite the cheering for the two-wheeler segment to grow again, MB Associados Managing Partner believes in a slow return for this segment in 2013. “Unfortunately we point to a modest growth for the motorcycle segment, which can grow 3.3%. Let’s say this year will be better than the last, however, we believe 2014 will be a better year,” said Tereza Fernandes, who also commented on the drop in the consumer debt during this year, which could help the segment to sell more. “We find that in 2013 the debt will start to diminish, but still in small steps.

With this fall, banks should re-release credits and thus people will have more facilities to acquire motorcycles,” he concludes.

Preparatory Course for Correspondent happens in April Fenabrave TV opens a new class of Preparatory Course for Correspondents which will be given in April. Still without a defined date to begin, the course will be made available in two formats: live classes via Fenabrave TV and supplement via web, and also 100% web, created for the Dealers who still do not have a TV reception point. For this format, students accompany all online content with video lessons, study material and exercises.

Conducted in partnership with Febraban Education Institute, the course aims to prepare and train professional who work as correspondents in vehicle sales to obtain certification, which will be mandatory as from 2014. (see on F&I section, page 42, the importance of this certification for dealerships businesses).

Tereza Fernandez, Managing Partner of MB Associados.

Integration at a meeting held in Orlando During the visit of Fenabrave committee to NADA - National Automobile Dealers Association annual convention on February 8-11 in Orlando, Florida, Fenabrave Twenty Group coordinator, Diego Alvarez, had the opportunity to participate in a Twenty Group meeting of North America General Motors. “Participating in this Twenty Group was a marvelous opportunity to learn about the U.S. market. I had a chance to have access to the Composite of this 19-member group. That provided us with several ideas which we can work throughout the year with our groups in Brazil,” says the executive.

In Brazil, it was formed a new Group with AutoHonda (Brazilian Association of Honda Dealers of National and Imported Motor Vehicles). “We will probably create two groups with Dealers of Honda make cars. AutoHonda Executive Officer, Virgílio Juliani, is already working together with some of the make entrepreneurs to standardize the financial statements required for the group formation,” explained the program coordinator.

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Randon Gross Revenue reaches R$ 5.3 billion In February, the companies of Randon S.A. Implementos e Participações published the results of total gross revenues in 2012, which had a retraction compared to previous year (without eliminating sales among companies) of R$ 5.3 billion, with a drop of 16.2% over 2011 (R$ 6.4 billion).

According to the company, the reason for this drop was the Brazilian economy advance, the predictability of demand for the Company products, agents’ difficulties to adapt to changes in the most requested credit line financing conditions by the market and greater rigidity in credit analysis, in addition to the sharp drop in domestic production of trucks because of the transition of powertrain to EURO V technology (Proconve 7), were the main factors that affected Randon results adversely.

The consolidated net revenues for the year closed at R$ 3.5 billion, 15.7% less than in the previous one (R$ 4.2 billion).

The consolidated net profit reached R$ 42.6 million for the year, 84.2% less than the ascertained in 2011, and the net margin (net profit x net revenue) of 6.5% last year to 1.2% in 2012.

According to Randon companies Chief Executive Officer, David Abramo Randon, for 2013 the expectation is to resume the pace of grow, with more than 15% of increase in revenues and margin recovery: “2013 begins in intense activity.

A record harvest, more public investments and increased private investments will be important vectors to the increase in demand for commercial vehicles during the year,” he noted.

The positive highlight is represented by the group operations, installed abroad, which now have greater representation in the 2012 revenue. The plant of to-

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David Abramo Randon, CEO of Grupo Randon.

wed vehicles in Argentina, controlled by the Company, ascertained gross revenues of USD 44.4 million. The units controlled

by Fras-le in China, the U.S. and Argentina, obtained, respectively, gross revenues of USD 13.2 million, USD 22.4 million and USD 36.3 million. Now, the other Fras-le distribution centers and commercial offices reached revenues of USD 5.6 million.

Together, these revenues make up a value of USD 121.9 million, against USD 108.5 million in 2011, expanding by 12%.

In the overseas market there was also a less vigorous reflection of the global economic growth, generating a fall of more than 10% in business. Abroad consolidated sales in 2012 – accounting for 14.3% of consolidated net revenues against 11.9% in 2011 – totaled USD 264.2 million or drop of 10.3% over the same

period in 2011 (USD 294.4 million). In this period there was a change in markets with emphasis on growing sales for the markets of South American which are not part of Mercosur/Chile and in the African continent, in detriment to traditional markets such as Nafta, Mercosur and Chile.

“The conquest of new markets in recent years is mainly due to the expansion and strengthening in the service structure, which has allowed Randon Companies to position themselves closer to each other in markets hitherto unexplored,” explains the officer of corporate and investor relations, Astor Milton Schmitt.

In 2012, the investments totaled R$ 276.9 million, an increase of 11% over 2011 (R$ 248.3 million), enabling sustainable growth of business for years to come.

New Fenabrave portal Since February, the more than 160,000 users visiting Fenabrave portal on a monthly basis find a space completely redesigned.

The new portal, conceived in partnership with Agência Click Isobar, was designed to modernize and expand the use and access to important information and projects headed by Fenabrave and by the automotive distribution industry in the country.

The project, initiated in the first half of 2012, under the responsibility of the Technological Innovations Committee, led by José Carneiro de Carvalho Neto, Fenabrave Vice President, brings new tools, convenience and better navigability, with more dynamic content, new look and fully integrated to social networks. Thus, the Make Associations, Dealers, the press and other users all over the planet will count on an updated content on a website of easy navigation,” said Carvalho Neto.

The main page of the new Fenabrave portal was conceived to display, in the foreground, the most accessed areas of the site, such as market data (which now has a quick search tool on the portal home), the daily updated news and the Dealer Magazine, which features new reading tool, with the possibility to be downloaded to any computer, tablet or mobile, both in Portuguese and English versions, exclusive to the site.

In the area allocated to market data, the user can search for new and second-hand vehicles, by selecting the desired period, with the opening of PDF in easy navigation specific tool. Moreover, one may consult the entity interim and annual reports with more speed and practicality.

The access to Tela, exclusive to Dealers, may also be done through the new portal. At the top, by clicking on “Dealer Club” link, the user will be taken to the regular login screen. According to Carvalho Neto, Fenabrave becomes part of this new technology scenario with the reformulation of the new portal aiming to be market benchmark. “We also want to expand our visibility to social networks like Facebook and, with the new portal, we will have the opportunity to put Fenabrave as leadership of automotive industry,” he highlights.

To learn more about the new features of Fenabrave portal visit: www.fenabrave.org.br

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ABRAC and ABRANOMA encourage their Chains As in previous years, the Make Associations affiliated to Fenabrave carry out actions to encourage the participate of their Chains in the 23rd. Fenabrave Congress and ExpoFenabrave, to be held on August 7-9 at Expo Center Norte, in São Paulo. This year several Associations are already planning to take more and more dealers to the events.

ABRAC - Brazilian Association of Chevrolet Dealers is offering all its Chain dealers - comprised of over 580 points of sale - a 30% discount on the enrollment schedule published on the event website and which already has a progressive discount, according to the effective day of enrollment. If the dealer enrolls until May 10, for example, for three days of Congress, including F&I and HR Seminars, rather than pay R$ 990, they may pay only R$ 693, according to ABRAC incentive. “Our expectation is that Fenabrave Congress brings more and more knowledge and opportunities for the Make Association and Chain. This year there will be a speech on Human Resources and will be very helpful to the dealers, as the distribution sector still lacks a lot of information on this topic,

not to mention the importance of investing in people. It is always worthwhile, because if we invest in a well prepared employee, the return is always positive to the company,” concluded ABRAC Executive Chief Officer, Décio Farah.

On the other hand, ABRANOMA - Brazilian Association of NOMA Representatives negotiated the purchase of 33 enrollments, which will be directed to the dealership headquarters it represents. The dealer will receive an invitation with a promotional code, and the interested shall use it during the enrollment process on the event website.

Note: Promotional enrollments, made through Make Associations incentives, do not include lunches on August 7-8.

President of NADA confirms presence In January 2013, NADA - National Automobile Dealers Association, entity that gathers all car dealers in the United States, elected Peter K. Welch as its new President. “I am excited and honored to have been chosen as President of NADA,” said Welch, who is President and Chief Executive Officer of California New Car Dealers Association (CNCDA), in Sacramento, since 2003, and has managed its governmental affairs office, including legal, legislative and regulatory matters since 1990.

In addition to Welch, David Westcott, who used to be Vice-Chairman of NADA Board of Directors, was elected as Chairman of the entity for 2013. A dealer since 1981, Westcott said that his appointment “is the highest honor he has ever had professionally. I am excited to represent the North American dealers this year.”

So in recent years, NADA presidency has already confirmed their presence at the 23rd Fenabrave Congress and demonstrates the strength and importance of the relationship among the world entities of the industry.

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Flávio Meneghetti and David Westcott, Chairman of NADA, who confirmed his presence at the 23rd Fenabrave Congress, together with Peter Welch, President of NADA (smaller photo).

Speakers confirmed!

Some speakers have already confirmed their presence for the largest event of automotive distribution industry in Latin America. Valdner Papa, thematic coordinator of the 23rd Fenabrave Congress notes that the themes to be presented were chosen, mostly, based on indications made by Make Associations.

“We’ve already sent several invitations to industry professionals to attend the event. About 70% of the Congress agendas were suggested by Make Associations,” emphasized Papa.

Check out some names already confirmed for the event: • Vicente Falconi

Strategic Business Consultant

• Thomas Schmall

Chief Executive Officer of Volkswagen do Brasil

• Charles Mills

Vice-President of JD Power

• Michael Drury

Global Automotive Market

• Samy Kopit

Advisor to Officer of BNDES

• Francisco Mendes

Economist and consultant

• Marcelo Prado e Wanderson Rodrigues da Silva Consultants

• Wilson Brito

Honda sponsors Broadway Musical “Hello Dolly!”

Honda is sponsoring the musical “Hello Dolly!”, that it is now showing at Bradesco Theater at Bourbon Shopping, in São Paulo, in season until June 2.

Directed and starred by Miguel Falabella and Marília Pêra, the show ran for five months in Rio de Janeiro. To attract the public, the play direction decided to gift the customers who own a Honda vehicle, motorcycle or car, with the exclusive benefit of 30% discount in the purchase of a full ticket (valid for the owner and a companion).

To obtain the discount it is necessary the customer submit the vehicle document at the box office of the theater, noting that the discount is not valid for purchases made by Internet or telephone.

Hello Dolly! takes place in 1890, in New York state, and tells the story of Dolly Levi (Marília Pêra), a famous widow matchmaker who is contracted by the greedy and grumpy merchant of Yonkers, Horácio Vandergelder (Miguel Falabella), to get him a wife in the big city (New York capital).

Dolly introduces him to Irene Molloy (Alessandra Verney), but begins a series of tricks when she decides that she will conquer the ‘good catch’ and will become rich. A comedy musical for the whole family, Hello Dolly! still is today one of the most successful musicals of Broadway history. The cast also counts on Ricardo Pêra, Ester Elias and Patrícia Bueno, in addition to an ensemble composed of 14 actors (seven men and seven women) and five ballet dancers.

Specialist in marketing and sales.

Vicente Falconi will lead a Keynote Speech Vicente Falconi, who will lead the Keynote Speech after the opening ceremony of the 23rd Fenabrave Congress, is one of the best known and renowned management consultants in Brazil and emeritus professor at the Federal University of Minas Gerais. His concepts of leadership and method are adopted by most large corporations in Brazil and have been driving their successful internationalization, as in the case of AmBev/InBev, Gerdau, Petrobras, CSN, Arcelor Mittal, Usiminas, ALL, and Vale, among others.

Author of six books that have sold over 1 million copies in Brazil, a record for the Brazilian parameters, Falconi was the only Latin American to appear among the “21 voices of the 21st century”, elected by the American Society for Quality. He was also awarded the Order of Rio Branco by the Brazilian government. College graduate in Mining Engineering and Metallurgy from the Federal University of Minas Gerais, earned a Ph.D. in Metallurgical Engineering from the Colorado School of Mines.

Hello, Dolly!

Bradesco Theater – Bourbon Shopping São Paulo Rua Turiassú, 2.100 – 3rd floor - Pompéia Premiered: March 2, 2013 – Season: from June 2, 2013 Timetable Thursday at 9 PM; Friday at 9:30 PM

Saturday at 6 PM and 9:30 PM; Sunday at 6 PM Tickets

R$ 20 to R$ 200

Box Office Sunday to Thursday, from 12 AM to 8 PM

Friday and Saturday, from 12 AM to 10 PM Internet Sales: www.ingressorapido.com.br and telephone: 4003-1212.

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radar fenabrave

Drops Decree of ICMS (VAT) Exemption for Disabled People Vehicles On February 20, Fenabrave was invited to attend the signing of the decree that provides ICMS Exemption for Disabled People Vehicles. The event took place in the Hall of Audiences of Bandeirantes Palace in São Paulo.

The gathering was attended by the State Secretary of Disabled Persons Rights, Linamara Rizzo Battistella, by the Deputy State Secretary of Disabled Persons Rights, Marco Antônio Pellegrini, and by the Governor of the State of São Paulo, Geraldo Alckmin. Alarico Assumpção Jr., Executive President of Fenabrave, and Paulo Engler, Chief Officer of Fenabrave, were there representing the entity.

Fenabrave/SC meets with Denatran to request improvements for the inventory of dealerships Fenabrave Santa Catarina and Denatran and DETRAN/ SC leaderships met in Brasília on March to file a request to create the temporary possession of vehicles in dealership’s inventory before Denatran.

The Chief Officer of National Fenabrave, Paulo Engler, represented the entity at the meeting together with Ademir Saorin, Fenabrave Santa Catarina Regional Officer. The following also attended the meeting: Morvan Cotrim Duarte, Chief of Staff to the Denatran Officer, Alina Zimmerman Largura, Vehicles Registration and Licensing Manager at DETRAN/SC, Vanderlei Rosso, General Manager of DETRAN/SC, Roberto Craveiro Rodrigues, Computing and Statistics General Coordinator of Denatran, Antonio Claudio Portella Serra e Silva, Officer of Denatran.

Meeting of Tractors and Farm Equipment segments In February, Fenabrave held, at its headquarter, a meeting of the Tractors and Farm Equipment segment, which was attended

by Alarico Assumpção Jr., Executive President of Fenabrave, Paulo Costabeber (Fenabrave), Marcello Franciulli (Fenabrave), Paulo Engler (Fenabrave), Renato Pinese and Osmar Pereira Jr. (Abraforte), Luiz Piccini and Rejane Hermann (Assodeere), Odair Lopes da Silva (Assomar), Rui Almeida (Unimassey), Luiz Alberto Gotardo (Abracase), Mario Fioretto and Milton Rego (Anfavea).

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New boards of Make Associations • Oswaldo Scheer Filho was elected President for the biennium 2013/2014 of ABBM - Brazilian Association of BMW Dealers. Maurício Celso Berringer Portella takes over as Vice President.

• Guido Benedito Viviani was elected as President of the Brazilian Association of Fiat Dealers – Abracaf for the biennium 2013/2014.

• Luiz Alberto Gotardo will occupy the presidency chair for the biennium 2013/2014 of Abracase - Brazilian Association of Brazil Case IH Distributors.

• ABRANOMA – Brazilian Association of NOMA Representatives elected, in February, a new Board for the entity, for the biennium 2013/2014. The newly elected President is Claudio José Rodrigues Montagna.

• Ricardo Bernardino Pamplona was elected President of Abravo - Brazilian Association of Volvo Distributors, for the biennium 2013/2015.

• Assodeere - Brazilian Association of John Deere Distributors, elected Luiz Piccinin as President for the biennium 2013/2014.

• Rui Fabio de Campos Mello was reelected, for the biennium of 20132014, as President of Assointer Brazilian Association of International Distributors.

• Ricardo de Oliveira Lima was elected as President for Autohonda - Brazilian Association of Honda Dealers of National and Imported Motor Vehicles, for the biennium 2013/2014.

CE Regional Administration supports the “Push it to start it” group For the first time, Fenabrave Ceará supported the carnaval group “Push it to start it”, which paraded bringing joy to carnaval reveler in Fortaleza. Every year, owners of old cars gather and parade through the city streets with their rarities. The parades take place between January and February, or until the Carnaval date that, in some years, happens in March.

About 30 vintage cars participated in the revelry, of various models and years of manufacture, all with the sole purpose of bringing joy to revelers.

“Our intention was to show that whenever there are cars Fenabrave is there, regardless they be modern, highly technological or a motorized relics,” boasts Fernando Pontes, Regional President of Fenabrave and Sincodiv Ceará, adding that the idea is to keep this support in the coming carnivals. “It was a great experience. We intend to keep this support in the coming years and participate of this beautiful party that brings joy to everyone,” added Pontes.

“Push it to start it” carnival group revelers enlivened the streets of Fortaleza with the support of Fenabrave/CE.

Anfavea has a new President After three years in the Presidency of Anfavea (Brazilian National Association of Motor Vehicle Manufacturers), Cledorvino Belini, who is also Fiat CEO passed the post to Luiz Moan Yabiky Júnior, General Motors Executive, elected the new President of the entity. Moan, who already actuated in the entity, now leads the new board for the triennium 20132016. The inauguration event is scheduled for April 22.

The executive, 57, is economist and officer of Institutional Affairs for General Motors and has been working for over 30 years in the automotive industry. He has already worked at Volkswagen and for the last three years he has been Anfavea Vice President, representing the assembler in the entity.

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opiniĂŁo

Dealerships respond to crisis

Tereza Maria Fernandez Dias da Silva

To bypass the crisis effects in the automotive market, U.S. Dealers focus their efforts on aftersales and F&I. And this is an irreversible trend.

T

he world is still experiencing the impacts of the financial crisis of 2008/2009 with economic unbalances in various regions of the world. The United States begin to sketch a recovery of the activity rhythm, particularly in the automotive industry, with significant growth in sales throughout 2012, but still with impacts and consequences of the difficulties of those years that were not fully overcome.

The impacts on the automotive industry were significant, with a sharp decline in auto sales which, after reaching a trading volume of almost 17 million units in 2005 (16.94 million), dropped to 10.4 million in 2009 (Chart I). A fall of this importance in the market could not leave unscathed the dealership segment that saw its profitability decrease strongly or even close doors leaving the activity. In fact, the number of dealers in the United States that in 2000 totaled 22.5 thousand was reducing and it is expected that in 2013 it does not reach 16,000.

The intensity with which the disaster got installed in this segment resulted in strong movement of the industry seeking recovery of profitability and sustainability in business.

This became very clear at NADA-National Automobile Dealers Association Meeting this

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year, when most of the discussions were associated with the survival of the business and the maintenance of profitability recovered last year, particularly on the smaller and smaller dependence on sales of new and second-hand cars and increasingly expansion of the use of F&I and services in a broad sense: financing, insurance, extended warranties, pre-paid maintenance, among other services, as well as the expansion of the parts business.

In the end, the probability of obtaining customer’s loyalty with a good service after-sales increases, a lot, for this dealer. At the meeting of this year the focus was associated to resources management, business leverage with the sales revenue and spare parts, after-sales, use of Internet resources in each part of the business, and the pursuit of lower dependence on car sales. And most importantly: the dealerships succeeded, the most part, have gone from the pits to the tops and an average of 50%-70% of their results come from this new vision of the market and management.

The consolidation of this new management trend seems irreversible. Even with the sales recovery in 2012, when 14.4 million units of cars and light commercial vehicles were sold and with an expectation of 7% growth in 2013, the scare in 2009 was big and served

Commercialization of cars and light commercial vehicles in the U.S. (millions of vehicles)

16,9

16,5

16,1

13,2

10,4

11,5

12,7

14,4

2005

2006

2007

2008

2009

2010

2011

2012

as a warning to the industry business people.

In Brazil, the dealership profitability is currently 1.5%-2.5%. The dependence on new car sales (50%-60% coverage of fixed costs), the decreased F&I funding compensation and the underperforming segment of second-hand vehicles contributed directly to this weaker result in recent years, even with a car and light commercial vehicles heated market in terms of marketing.

And, meanwhile, the share of services sector, especially in the after-sales and parts, is very small. So, we still have some road to travel while we think on a managing model and business vision, even if part of the entrepreneurs is attentive to the changes in business in the international market. The potential of the dealerships in services and parts revenues in Brazil is still virtually unexplored and, if we add this to the use of electronic

communication devices and Internet tools, revenues will naturally grow with the fall of car dependence and the increase of profitability.

In fact, the segment of dealerships in Brazil still must undergo important transformations that are not limited to the discussion of management model and that, theoretically, should come first. First of all, the segment should go through a consolidation phase. Probably the number of groups participating in the market will reduce, even increasing sales points. And secondly, the nationals still have a challenge, apparently better resolved in the United States, which refers to the relationship with their assemblers, whether in relation to patterns of headquarters building, whether in relation to patterns of inventories, in relation to part commercialization, to name the most important. There is plenty work ahead and negotiations are not the simplest.

Tereza Fernandez – Managing Partner of MB Associados.

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INTERVIEW

Finding and retaining good talents in the market is a difficult task for most corporations. For this reason many companies invest in training and in talents retaining programs. This is the formula found by Carlos Morassutti, Vice President responsible for HR and Corporate Affairs at Volvo Latin America, for whom “a strong belief in people is what, in fact, can put a company among the best in the world.�

Carlos Morassutti

The human side of success

When investing in people is crucial to the business world

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At Volvo Group in Latin America, which currently has 6,000 professionals, being 4,000 from Brazil, the Vice President for HR and Corporate Affairs, Carlos Morassutti, believes in the potential of each employee and, therefore, encourages continuous personal and professional improvement of the teams. “One of the tools we use for this work is the “Personal Business Plan”, which aims to define, encourage and outline the actions necessary for employees’ personal and professional development,” says the executive.

In Morassutti’s opinion, besides the compensation, which is “an important ingredient” in the recipe of talent retention, appreciation of people, in the internally available opportunities, is one of the most important points to hold employees in the company. “We believe the employee’s satisfaction is what holds him/her at the company and we take it very seriously,” he adds.

Recently, the executive launched a book by Editora Alaúde publishing house, “The Human Side of Success,” which presents his personal and professional history intertwined with Volvo history of installation and consolidation in Brazil. According to Morassutti, to achieve exceptional results it is not enough for a company to have modern facilities, adequate processes, well-defined organizational structures and vanguard strategic planning. “A strong belief in people is what, in fact, can put a company among the best in the world,” he says.

In the last five years, Volvo invested R$ 2.5 million in the development of its employees. The company maintains an education program that provides scholarships to employees, since the completion of elementary and high school until the doctorates.

By these actions, in 2012, the company won the fourth highest score in the overall ranking and the award for Best Company in Brazil in People Development, in the ranking of the 150 Best Companies to Work for, published by Você S/A Magazine. Volvo has always been present among the top 10 in the publication. It took the first place in 2008 and 2011, the second in 2010, the third in 2009 and the fifth in 2007.

In an interview with Dealer Magazine, Morassuti comments on the subject matter.

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“The company offers a range of programs and support aiming people training, but we make clear the importance of the employee to assume their responsibility in this development process. They cannot simply delegate to the company.”

Dealer Magazine – Do companies in the automotive industry face difficulties recruiting skilled labor? What are the main difficulties? Does Volvo bring foreigners to work in the company?

Carlos Morassutti – We know the automotive industry as a whole finds some difficulty in finding professionals to some technical areas, with more specialist knowledge in industrial, engineering and even mechanical areas for dealerships.

At Volvo do Brasil, this situation is mitigated due to the enormous work of training conducted internally, which includes positions at all levels, and for the image the company has for being considered one of the best to work for in the country. Thus, the company effectively becomes desired and able to attract qualified professionals for all positions.

Therefore, we have no need to bring professionals from outside the Country. The foreigners we have working in Brazil are part of a mobility police existing in the group. We also have Brazilian professionals scattered around the world.

Carlos Morassutti – Indeed. More and more we see organizations with ambitions and business plans closer to each other in the market. And, in my view, people are the ones that can make the difference, by their power of achievement and delivery. It is what can lead a company to achieve outstanding results and stand out in their segment.

Of course it is important to have plans, dreams, products and services, but we cannot forget that we will always need people committed and engaged to give life to these plans and dreams, otherwise they will remain on paper. We must understand that we need people to rotate the complex organizational machine.

Dealer Magazine – Please comment on how does Volvo training (training/development) area work?

Carlos Morassutti – We have a strong belief in people and their potential for achievement. We believe they do make a difference for the company to succeed in their business. Therefore, we encourage continuous personal and professional enhancement of our employees. One of the tools we use for this work is the “Personal Business Plan”, which aims to define, encourage and outline the actions necessary for employees’ personal and professional development.

Like any other organization, we rely on policies and structures of internal training, but the big difference is the development of our community partners, with expertise to supplement us in this mission.

The company offers a range of programs and support aiming people training, but we make clear the importance of the employee to assume their responsibility in this development process. They cannot simply delegate to the company.

Dealer Magazine – How is the retention of talents developed in the assembler? Remuneration is effective for retaining talents?

Carlos Morassutti – Remuneration will always be an important ingredient in this recipe, but not the only one. In my view, the talent retention starts with the values established by the company and by the practice of these values with all its internal and external publics. At Volvo, the retention policy is focused on valuing people and the opportunities offered to them. We believe that the employee’s satisfaction is what holds him/her at the company and we take it very seriously. The Volvo Way, which adopts as internal values to work with energy, passion and respect for people is what has guided our actions in this direction.

However, it is very important that people’s appreciation is not just a speech. The company must adopt internal procedures and practices so that the employee realizes that this is true.

Dealer Magazine – So, do you believe that people are the ones who make a difference within the companies?

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Dealer Magazine – How many employees does Volvo have in Brazil?

Carlos Morassutti – In Latin America, Volvo Group has approximately 6,000 employees. Of this total, approximately 4,000 work in Brazil.

Dealer Magazine – Were the retaining talents actions developed by Volvo headquarters? Or were they developed particularly for Brazil? Please, comment on them.

Carlos Morassutti – Of course that we benefit for being part of a large business group, with global policies and tools that help in this regard. However, our policy of retaining and valuing people is tied to local culture and conditions. We adopt local tools, appropriate to our reality to suit our needs.

Dealer Magazine – Are there numbers to prove the efficiency of practices adopted by Volvo?

Carlos Morassutti – I always say that the best indicators are the company results as a whole. We have indicators that show us the efficiency of our practices with the public with whom we interact, whether the employee, customer or even the shareholder. Internally, we have a very low rate of turnover and absenteeism, coupled with a high degree of commitment and engagement of our employees.

We are the only company in the industry to receive for the second time the National Quality Award (NQA), the highest recognition of excellence in management that a company can receive, placing us at a level of world-class company.

Dealer Magazine – Are the training and developing programs extended to the Chain?

Carlos Morassutti – Dealers are our partners and benefit directly and indirectly from the way we think and act. And it must be so, because we are in the same boat, working towards the same goal, which is the satisfaction of our customers.

For that, we have several training and development tools, regardless they belong to Volvo Group or are jointly defined with the Chain. An example is the VISTA project, Volvo biggest global after-sale competition, which main goal is the training and development of competences of technicians and mechanics who work in the make dealerships. As example of local programs, we have training courses for driver instructors and development of managers of the Chain.

Dealer Magazine – What would be the advice to the Dealers so they retain employees?

Carlos Morassutti – For me, it all starts with creating an environment of appreciation and opportunities for personal and professional development

so that people feel encouraged to contribute with their best. Although it sounds simple, I know that is not so easy to achieve, as it requires us to believe that people are the ones that make the difference and understand that people who are on the front line, running the operations on a daily basis, giving life to projects and ambitions of dealerships. For that, I recommend always having a strategic HR, with ability to understand the needs and desires of people and business, according to the characteristics of each region and the phase of development of each house. It is also important to have a look at the practices adopted by the market and by the own assembler to evaluate what can be adapted to the dealership reality.

Dealer Magazine – Is there an alignment between assemblers and dealerships management policies?

Carlos Morassutti – Assemblers, because they are global organizations, benefit from policies and practices adopted in different parts of the world, which provides innovations in management. So it is important an adaptation to local conditions. But I see that, more and more, dealerships are closer to assemblers practices and have profited from it.

Retaining good employees improves the deliveries and minimizes costs.

Dealer Magazine – Recently you’ve released the book “The Human Side of Success.” You emphasize the importance of having a life plan that includes other dimensions besides work. How important is that for professional life?

Carlos Morassutti – We seek more and more skilled professionals, engaged, committed and with great power of delivery. In my view, this professional is not only result of the development of their professional technical side, but the sum of what they also perform in other aspects of their lives. Therefore, it is extremely important that they have a life plan contemplating other nuclei of interest. It is necessary to effectively search professional development, as well as personal fulfillment and other goals. And, as it happens, the person becomes a better professional, better citizen and a better employee, with gains for the company and for society.

“Of course it is important to have plans, dreams, products and services, but we cannot forget that we will always need people committed and engaged to give life to these plans and dreams, otherwise they will remain on paper.”

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cover story

As a Phoenix!

U.S. market rises from the ashes

Optimism is the result of overcoming

By Rita Mazzuchini, with collaboration of Igor Francisco.

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With the theme “Catch the Momentum,� the 2013 Convention organized together with NADA- National Automobile Dealers Association and ATDAmerican Truck Dealers, held in Orlando, Florida, on February 8-11, gathered 21,000 United States Dealers connected to the two segments, more than 500 exhibitors at the trade fair, as well as several foreign groups including Brazil.

Optimistic with the gradual recovery of sales volumes that should reach 15.5 million automobiles this year, but with recurring concerns, the United States distribution industry demonstrates that the efforts to emerge from the crises - started in 2008 flattening sales to a little over 9 million automobiles per year – have been based on financial services, such as F&I and After Sales, and increasingly less dependent on new vehicles sales outcome.

The pressure from assemblers for chains to make large investments in infrastructure continues to be one of the main impediments for the industry in the United States.

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matéria de capa

Bill Underriner, presidente da NADA, em 2012, transfere o cargo a Peter K. Welch (dir.), que presidirá a entidade em 2013.

T

he large movement of Dealer in the corridors of Orange County Convention Center, in Orlando, already showed that NADA and ATD 2013 Convention would be very different from the one held on the same site in February 2010.

The 21,000 attending Dealers in this last one - against the approximately 13,000 registered for the event held 3 years ago – gave Brazilian Dealers attending the feeling that the United States market had recovered from the strong crises established in 2008, which impacted adversely the automotive business in that country.

Americans saw their sales recover gradually and reach the celebrated 14.4 million automobile sold in 2012, against the bitter 9 million recorded in 2009. “In fact, the attendees’ mood in this convention was totally different from the other, much more optimistic, transpiring overcoming.

The United States rose from the ashes,” stated Flávio Meneghetti, Chairman of Fenabrave, who attended the event.

Necessary reinventing – During the traditional Opening Session, held on the afternoon of February 9, Bill Underriner, former President of NADA in 2012, stated that the automotive distribution industry in the United Stated is strong, and that “Catch the Momentum” was the chosen theme for the 2013 Convention as 2012 represents the “overcoming”. “We provided 14.4 million people with the opportunity of purchasing new cars,” celebrated

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Underriner, who passed the post to Peter K. Welch (President of NADA in 2013) and to David Westcott (Chairman) during the event.

According to the former President of the American entity, in order Dealers overcome the 2008 crises and the Sandy hurricane impact on the East Coast in 2012 it was necessary to learn how to reinvent oneself. “One can feel the energy of the moment. We had economic growth, job creation, and more tax collection. We worked hard, innovated and were able to come together in the adversities,” stated Underriner when mentioning the USD 40 million donated by NADA Foundation to Dealers victims of Sandy Hurricane.

Despite the optimistic moment, NADA former President commented on the main impediments experienced today by the distribution industry in the Country. The strongest refers to the assembler’s standards of requirement, which includes sales plans, infrastructure expansion and innovation.

“Much has been demanded by assemblers, and Dealers cannot pay for that. We already have to invest in the community and innovate to meet the consumers’ requirements increasingly better, going from the suburban style to the new urban,” warned Underriner, criticizing: “But, when the dealership needs, the assembler does not help,” he struck, recalling the traditional GM Dealer case that, according to him, “has always been significant in marketing the make and when needed help during the crisis, the assembler simply terminated its activities,” burst Underriner, drawing applauses from the audience. More than that, Underriner stated that assemblers favor some Dealers at the expense of others which damages the industry entrepreneurs, the market and the own consumers.

When he left, Underriner said that NADA is a free entity and thanked the industry for the union and fight in favor of the so-called “American dream”.

Flávio Meneghetti, Chairman of Fenabrave, delivers to David Westcott, Chairman of NADA, the “National Sculpture”, Brazilian tribute created by the artist Suzana Gouveia.

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matéria de capa

Hyundai: “New Ideas. New possibilities”

I

f the Chain and assemblers relationship issue is visible in the United States, makes like Hyundai get ahead and, in the opposite direction, gain the market and the satisfaction of Dealers and consumers. According to John Krafcik, President and CEO of Hyundai Motor America, the make success is based on three key factors: Design, Product Quality and a profitable Chain of Dealerships so it can work towards customers’ satisfaction.

And speaking of satisfaction, according to the Relationship Survey, published by NADA in the second half of 2012, the Korean make Chain is the most satisfied with the assembler it represents. “Hyundai is right in its sales and relationship policies with the Dealerships which, by their turn, are satisfied with it,” assessed David Westcott, new Chairman of NADA, who attributes the fact also to the assembler greater flexibility regarding the investment requirements by their Chain, while maintaining a pricing policy that avoids market distortions not emphasizing the direct sales channel.

Perhaps for this reason, John Krafcik, has been chosen to be the keynote speaker at the Opening Session of NADA e ATD 2013 Convention. Right at the opening of his speech, Krafcik addressed the audience recognizing the Chains importance in the market: “I am very honored to be here today talking with members of the National Association of Automotive Dealerships. This organization represents the essence of our industry – those who actually operate on the front lines serving our customers on a daily basis – our dealerships. I want to begin by acknowledging the 823 Hyundai dealerships in the U.S.A. I would like to congratulate them for a broken record in 2012. Thank you for your partnership, your dedication to Hyundai, and the focus on the absolute satisfaction of each customer they met.”

Within the Hyundai model of success, which holds 5% of the American market and in 2012 conquered 75% of his American customers’ satisfaction, who rated the make at a high level, according to a JD Power consulting survey, some assumptions stand out. “The Hyundai system works”, says Krafcik, strengthening: “I should say that, at Hyundai, we are big fans of this system and great defenders of our retail Chain.”

The President and CEO of Hyundai Motor America criticized initiatives of assemblers that tried to establish their own Chains at the expense of the authorized ones. And explains: “According to our perspective in Hyundai, the U.S. franchised dealership system works because it is the concentrated distillation of another system that also works. One that has been proven over the last two centuries, the free American enterprise system. Many of you here today are prominent dealers. You are CEO/owners of your own business. In most cases, you own a significant percentage of net value invested in your business. You are, as we say, “totally involved.” This, my friends, is the clearest reason of all. You have to profit. Or your business will go bankrupt. You have to enchant customers, or someone else will,” he argues.

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For Krafcik, sharing gains with the Chain is part of the assembler philosophy and helps in engaging everyone towards the customers’ satisfaction. “Together, we have built a Chain that is enchanting record amounts of owners and consumers, and without depending on volume- or rebate-based bonuses that jeopardize the make,” he said.

The customer whisperer – As part of Hyundai system, besides the make dealerships Chain appreciation, the challenge occupies space in innovation. Repeating the concept: “Defy – Design - Delight,” Krafcik recalled how the assembler is inspired by the challenge to excel in the development of Premium products, launching innovative technologies and designs that in the end enchant the consumers.

As example, Krafcik mentioned the current Hyundai Sonata and Veloster. “When we launched Sonata a couple of months ago, the industry conventional logic was that midsize cars have standard 4-cylinder engines and optional V6 engines. We challenged that logic, replaced the V6 for a fuel-efficient turbo 2.0L and turned Sonata into the first high-volume and midsize car with power trains of only 4 cylinders. Since then, the model has won three consecutive annual sales records and established a new concept for other midsize sedans. Challenge the conventional thinking, as also happened in Veloster case, is something that is etched in our culture at Hyundai,” he recalled.

Now, the design, according to Krafcik, is a unique opportunity and perhaps the most important of charming consumers.

When mentions Eddie Opara, partner at Pentagram, the CEO of

John Krafcik, President and CEO of Hyundai Motor America.

Hyundai Motor America emphasizes that: “Design is not there to solve problems. It should make people happy. Think about that for a moment. Design should make people happy. As an industry, we may have taken a while to arrive at this conclusion. But I think we have all understood the message now,” admits Krafcik.

Focused on the Premium segment, in which already stands out with 9% of the American market, Hyundai takes care of the details it considers fundamental in the relationship with customers of this vehicle category. Through EQUUS, a Premium product customer-oriented program, dealerships offer a special space in the showroom, with coffee machines and sophisticated and comfortable environments to accommodate exhibited product consumers.

According to Krafcik, “for wealthy and expert buyers, time and convenience are the ultimate luxuries. The programs Your Time, Your Place and the Equus At Your Service dedicate care that makes a difference. It’s really enticing. Customers pay for the luxury, but they must perceive value in the product. This is why the test drive is considered essential, because the customer should try what he is going to buy, in what we call of ‘Delight our Customer’,” he says.

Another issue in the service Premium package is related to the after-sales. According to the CEO of Hyundai Motor America, “Premium customers do not want to take the car to the dealership and wait to be repaired. That’s the cue to put the EQUUS Program into practice. It created the so-called Pick Up and Return, i.e., the dealership picks up the car at customer’s home or company, lends him/her another car in the meantime, and returns his/her car at the end of the repair. And the customer enjoys it, because he/she does not want to waste time. Currently, 50% of our customers use this service and, of course, our Dealers are rewarded for it,” explains Krafcik.

Innovation online – As part of this market agility, the Internet is predominant. According to a Survey conducted by Hyundai, 84% of American automobile buyers use, somehow, the Internet during the purchasing process and a new study by AOL reveals that it takes only 28 days between the first search until the customer actually goes to the new car dealership. “The issue here - more than ever due to the short lead-time of the purchasing process - is to unify the online environment with the physical environment of the dealership, achieving an integrated progression that is

consistent, aligned with the make and offers a delightful experience to consumer every step of the way. See, for example, what we are doing with our online presence at Hyundai. We standardized our Dealers’ sites with a spreadsheet that gives wide customization flexibility and even so ensures that we have a consistent trade dress and tone. It is very similar to our approach in the standards for retail facilities,” says Krafcik.

The executive mentions the case of success during the last Super Bowl period, one of the major sporting championships in the United States, which happened at the beginning of the year. “We wanted that our investment in Super Bowl created more than just nice ads …. We were firmly focused on conducting procurement activities … Not just at Hyundai.com, but on third-party websites, mobile website and dealerships websites. Results were great. Some, such as AutoTrader.com, saw the purchases increase by more than 1,000%. Mobile visits rose 547%. The level 3 visits rose 261%, with inventory searches reaching 293%. These results demonstrate the power of a more integrated Internet shopping experience that we created with our partner dealers. The transformation we’ve made with our Dealers in the Internet is a great example of the relationship we’ve built together,” reiterated Krafcik.

At the end of his presentation during the 2013 NADA Convention Opening Session, Hyundai Motor America President and CEO summarized the significance of the make slogan, “New Thinking. New Possibilities”. ”I like to say that when the entire industry moves to the left, we will look at that direction, but will look more closely to the opportunities on the right. In any fast transformation industry, to be able to change is crucial. In his book, Tribes Seth Godin says that the change almost never fails for coming too early. It almost never fails for coming too late.”

Philosophical and inspiring, John Krafcik concluded: “When the winds of change blow, some people build walls, others build windmills. We are always facing daunting challenges in this industry. And think of the time we live in now, from the uncertainty in the economy and fiscal code to the imperative issues we’ve faced with fuel, economy, mobile connectivity, vehicle safety and the challenges of increasing global mobility. In this uncertainty …

In these challenges … In these winds of change … there are great opportunities for all.”

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More F&I and After-Sales – The United States are recovering and, with the economy, also the vehicle sales.

In 2012, sales volume grew 14% over the previous year, reaching 14.4 million units, well above the 13.9 million estimated by NADA at the beginning of the year. For 2013, the projections are even better and point to a performance that can reach 15.5 million cars and light commercial vehicles. “Until 2016, we may come close to the pre-crisis levels of 2008, when we had 16 million units, which is a sustainable growth,” explains NADA chief economist, Paul Taylor. According to the specialist, to go back to the 17 million unit threshold, as it happened in 2007, would be artificial.

According to Taylor, the repressed demand of cars, the easier credit and the expected growth of economy should favor the automotive scenario in the coming years. In 2013, the country GDP should reach 3%, very close to what is also expected for Brazil.

For the current Chairman of NADA, David Westcott, due to the crisis, the average car fleet aged and is now 12 years old. “This situation, tied up to the credit facility, which is driven by the low default in the industry, encourages us,” said Westcott to the Brazilian journalists invited by Fenabrave in an exclusive interview.

According to the Chairman of NADA, 14% of United States GDP comes from car sales, and the distribution industry employs one million people, directly. With all that weight over the country economy, the enviable taxes for the Brazilian parameters (in the United States, car taxes range from 3% to 8%, depending on the state and, in Brazil, surpass 40%), the scenario looks favorable for U.S. entrepreneurs.

However, the current reality is not like before.

Before the crisis, there were 22,000 auto Dealers and, currently, there are 16,000 that together hold 32,000 points of sales. “Many did not survive the crisis, and the number of concessions fell as a result of consolidation and market downturn,” assessed Westcott.

In their analysis, the Dealers who were able to recover took two correct paths: “They invested heavily in F&I and After-Sales, leaving aside the focus on new car sales only, and cut costs. And, with lower costs, after the crisis is gone, you can grow more and better,” assessed the Chairman of the American entity.

Given the difficulty of profiting from new car sales, the F&I and after-sales services began 28

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Paul Taylor, chief economist for NADA.

to have a major role in the revenue and results of U.S. dealerships. According to Westcott, in 2012, the average profitability per dealer reached USD 950,000 against USD 750,000 recorded in 2011. “In this scenario, between 50%-70% of the costs are covered by services and parts, and the F&I percentage in the results reaches an average of 50% or more in some cases,” states the Chairman.

Like his predecessor Bill Underriner, Westcott has also criticized the pressure exerted by assemblers over the dealers regarding investments in facilities.

“All manufacturers have trade dress programs. It is true that some dealerships were old and needed changes, but it is very expensive and takes flexibility to negotiate. Manufacturers should talk with their Chains. If we make investments of USD 5 million, for instance, and we have proportional increase in sales, then fine, but we do not have this return on investment,” concluded Westcott.

No news in trucks – The trucking industry in the United States, as recorded by Dealer in 2012, remains bad. “It was bad, very bad. One of the worse years in the 22 years I have been in this market,” Dick Witcher said to the Brazilian journalists, Chairman of ATD – American Truck Dealers, who remained in office for 2013 management.

According to Witcher, the problems coming from the American government, which generated uncertainties in the economy, caused the truck buyers “to stay put waiting for government initiatives. But the economy remained flat.” As a result, the industry walked sideways in 2012 e recorded the same volume of sales of the previous year, i.e.,

325,000 trucks per year. In fact, according to the ATD Chairman, this volume is repeating itself since 2007. Now, the number of dealerships reduced from 2,000 (2011) to 1,750 (2012). “There was a consolidation. The number of dealerships is getting smaller, but the number of buildings is increasing,” reveals Witcher.

Unlike Brazil, the agricultural behavior has no influence on trucking industry, which accounts for 75% of all cargo transported in the country. Items such as grains and coal, which account for 12.5% of cargo handling, are transported by train.

According to Witcher’s assessment, the United States GDP should grow 1.9% in 2013 (and not 3% as estimated by NADA chief economist), and some legislation pending changes, such as the mandatory reduction of working hours per driver, could impact positively on sales this year, which, according to ATD Chairman, could grow about 5%. “To maintain the same volume of transported items, companies will have to own more trucks,” he concluded.

The world on wheels – On February 11, leader from several countries assembled at Orange County Convention Center, in Orlando, to present the world automotive key markets reality. Great Britain, United States, Russia, China, Brazil and other Latin America representative leaders attended the traditional International Round Table during NADA Convention. Bill Underriner, former President of NADA, who held the position in 2012, thanked the presence of so many countries in the event and introduced Peter Welch as his successor for this year, commenting on his experience in the

David Westcott, Chairman of NADA and Dick Witcher, Chairman of ATD, grant press conference to Brazilian journalists, alongside Flávio Meneghetti, Chairman of Fenabrave.

industry and mainly in the activities organized

by NADA. In the first block of presentations, automotive distribution representatives attended the speech delivered by Steve Young, ICDP, called “The Global Distribution Model: Common Approach, Common Challenges”.

According to Young, despite the cultural differences among the countries, the distribution model of vehicles evolved similarly worldwide. “Is it a perfect model or does it just work?,” the speaker questioned. According to him, the issues are also similar, such the struggle for higher margins. “Profitability is, more or less, 5%,” he adds.

According to studies conducted by ICDP, one third of the Chinese dealerships lost focus in the first half of 2012, causing financial losses of about 49%. Other countries, such as Germany and Spain, recorded a fall of 70% in return on net sales. ICDP representative also commented that in Brazil the presence of large groups have strengthened the market with local strategies. “Russia evolves the same way, but with extremely gigantic structures.

India remained very fragmented, with 10 large groups,” he said.

Continuing to analyze the main markets, Young said the dealers’ profiles change a lot, according to the location, the active makes and the percentage of participation of all players, however, there are different challenges to be worked on.

“Innovations are transferable among markets. No market monopolizes good ideas,” he adds.

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Young mentioned examples of strategies adopted in various countries, such as what Fiat did in England to implement the pilot project in online channel, with automotive shopping and test-drive delivery. In Brazil, for instance, the expert praised GM strategy in Brazil for the work developed in the services area. “The company has replicated the independent repairer experience in a dealership environment. The consumer schedules the service, follows up and approves,” he said.

All examples presented by Young show that the Dealers are trying to increase the performance, efficiency and enhance the structures to raise results. “The Chains realized the need to improve professional qualification of dealerships,” he added, summarizing that though the global distribution systems are similar, there are some particularities. “Markets are at different phases of evolution, but in a common way. Innovation can be applied anywhere, but in new markets the application is less restricted and finally we need to work more with people, enhance processes, systems and structures.”

Brazil stands out – The Chairman of Fenabrave Deliberative Council, Flávio Meneghetti, presented to the leaders of various associations present an overview of the Brazilian market and how the entity works in the defense of vehicle distributors interests. “The automotive distribution industry, in Brazil, has an important role in the economy, as it represents 5.9% of domestic GDP and generates more than 391,000 direct jobs – three times more than all manufacturers operating in the country together,” said Meneghetti.

The Chairman of Fenabrave showed that, even with the perspective of less than 1% of GDP growth in 2012, the market of cars and light commercial vehicles would grow more than 6%. The rationale, according to Meneghetti, was the historic agreement occurred in May 2012 which involved the government, Central Bank, public and private banks, in addition to Fenabrave and Anfavea, that resulted in the Excise Tax [equivalent to IPI in Brazil], which included the fall of bank spreads, industry margin reduction and end of the compulsory deposits, with the aim of reducing the cost of vehicle financing. “The program was fundamental to boost the market,” he added.

According to Meneghetti, the market expansion in 2012 was possible due to the rapid governmental initiatives that resulted in a significant 30

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reduction of retail prices (about 12% to 14% reduction in monthly installments), attracting new consumers, as C and D classes, making it easier to access new cars. “Furthermore, banks have reduced significantly interest rates for bank loans and financing, and industry has adapted its production to meet growing demand,” he explained.

All these changes in the market impacted on the sales results of cars and light commercial vehicles in 2012, which recorded more than 405,000 units sold in August only. “Today, Brazil is consolidated as the fourth largest world market with more than 40 active makes and more than 250 models being marketed,” enumerated Meneghetti.

According to the Chairman of Fenabrave, the entry model still has a high market share due to the growing status of the new “C” class that used to represent 62% of the population and now accounts for 38% (income increase). “Today Brazil has a solid image of potential growth for different types of projects and segments,” he said.

Even with the work carried out in 2012 and the good perspectives for market development, Meneghetti warned those present about which will be the main challenges for the Country from now on. According to the Chairman of Fenabrave, companies costs are still high due to excess of taxes. There is also a heavy red tape, inefficient and inadequate infrastructure, especially on roads, ports and airports, an enormous cost of social

At the International Round Table, automotive distribution leaderships from various countries gathered to discuss the main global challenges for the industry.

benefits and transports, which turns the Country less competitive. “This is what we call cost Brazil’”, he added.

For the automotive segment, Meneghetti warned that the market is still much too connected to the access of credit by the consumer, and banks are increasingly more selective in granting loans.

Besides that, Dealers’ margins and profitability are tighter,” he said.

According to the Chairman of Fenabrave, Brazil still has a great growth potential, reaching 2014 with more than 3.8 million of cars and light commercial vehicles sold. “In Brazil, the ratio is one vehicle for each six inhabitants. In comparison with other countries, we have a lot of potential to grow,” he added.

Finally, Meneghetti presented Inovar-Auto concepts, stating that Brazil is a fast growing market, as it will have more competitive products with the establishment of new players, both in the industry and the distribution, in addition to the attribution of new practices to act in a market increasingly competitive and selective.

Chinese view – Executive Vice Chairman and Secretary General of CADA - China Automobile Dealers Association, entity that represents the Chinese Dealers, Shen Jinjun, presented an overview of the market in that country, particularly with regard to the production and sales, the characteristics of the

industry and the current conditions of the Chain and its development trends.

According to Jinjun, in 2012 more than 19.2 million vehicles were produced in China, 4.6% higher value than the previous year. Sales showed a little lower percentage of increase (4.3%), with 19.3 million units. “The second-hand vehicle market grew 10.6% last year, with more than 4.7 million vehicles sold. The percentage of import growth was similar, with an increase of 9% between 2011 and 2012, resulting in more than a 1.1 million units sold in China,” analyzed the Executive Vice Chairman and Secretary General of CADA. Exports continue to be highlighted in that country. In 2012, more than 1 million vehicles were exported, an increase of 20% over the previous year.

According to the Executive Vice Chairman and Secretary General of CADA, the market is going through a drop in demand for vehicles, resulting in a slowdown in recent months. On this account there is a very high competition regarding the prices practiced in the market, even more compounded by the high inventory of vehicles. “Sales scale is now growing, as well as the concentration of regional groups and multimakes are increasing. Revenues have grown steadily, but Chain profit is declining,” he pointed out.

Jinjun added that the Chinese Dealership Chain used to be very dependent on the manufacturers in the past. So, today they do not give much

Flávio Meneghetti presented the main Brazilian challenges and how the union between industry and government leaders resulted in market recovering acts in 2012.

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Investments in facilities A hotly debated issue during NADA Convention was the relation of high investments in dealerships facilities, which have significant impact on the finances of the distribution entrepreneurs and little concrete evidence as to their return.

Therefore, the U.S. entity created NADA Facilities Programs Project with the aim of studying and discussing the pros and cons of these programs.

Glen Mercer, responsible for the program at NADA, made a presentation showing what the progresses of the project were; it started last year and has now reached its second phase. In his presentation, the expert questioned the procedures currently adopted for the topic, which shows standardization phases and points of sales modernization.

“Does it really make sense?

To make such an investment a number of factors is necessary, such as realistic sales forecasts and market stability, among others. Economists and marketing professionals see that as a negative thing,” he said.

As an example, Mercer presented the case of some Apple stores distributed in various markets. In the projected images, the architectural concept of the points of sales is different, but the processes and operation are the same.

“They are all equal in theory, but have particularities. The experts do not understand how to standardize if each market has its own regional difference,” he said.

Then, the speaker showed the evolution of this discussion through case studies proving NADA arguments. According to Mercer, the expansion of service area, for instance, can help to bring investment money back in a few years. “We encourage dealers to be more creative in finding solutions for new facilities. Examples such as innovations in services, alternative formats for small dealers or even new formats for urban stores, can be applied to the return on investment in a shorter period,” says NADA representative, who adds: “We think it is time the assembler worked with Dealers in store designs that are not only modern and attractive, but also easily remodeled at a low cost.”

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attention to services. “Most Dealers are composed by factory stores, thus are less careful about make building. There is a lack of financial leverage for sales and services,” he explained.

In the view of the Executive Vice Chairman of CADA, the Chinese automotive distribution has a development trend and will undergo transformations, innovations and a great leap into the future. According to him, distributors will guide the production and demand expansion. “We see the presence of more conglomerates, the consolidation of active makes in the market, expansion of standards, and the cross function of several sectors: Dealers, banks, government, Internet and telephone operators,” he added, inviting leaders present to participate in the annual convention of the Chinese entity, which will be held on November 28-30 and for which the Chairman of Fenabrave has already been invited.

Special programs for Brazilians – For the third consecutive year, Megadealer, a consulting company specialized in the automotive segment, in partnership with Fenabrave took Brazilian Dealers to 2013 NADA Convention. This year, more than 50 participants, including truck and car dealers, divided in dealership owners and managers, assemblers professionals, insurance companies, Make Associations and tiers, joined the program prepared for this technical mission.

Apart from speeches with simultaneous translation into Portuguese, there were three technical visits to cars, trucks and buses dealerships. On February 11, the car market group visited two dealerships in Orlando: the first one was Sun, Toyota make representative and, in the afternoon, the group headed to Lockey, which markets Nissan and Volkswagen products. “Dealers had the opportunity to see closely how American dealers have operated, mainly regarding the after-sales and F&I,” said JR Caporal, Megadeler.

Dealers related to truck market also had special programming during the event, since ATD – American Truck Dealers held its convention in parallel to NADA Convention. Participants attended Nadine Eptein’s speech; Epstein is a consultant at NATARO Accounting & Business Process Consulting, Canada, and operates in the financial, reporting, management and operation support areas in the automotive industry.

In her speech, “The Four Keys to Financial Success for Truck Dealers,” Nadine showed how to

analyze balance sheet key items to find out and analyze some type of potential hidden profit. In addition to that, the speaker taught how a cash flow statement reveals the path through which the money has gone and ideas to get it back.

Dealers got tips and tricks on how to quickly achieve their financial targets for the trucking business. “It was a valid speech and conveyed us good concepts. We’ve learned that the daily control of management, mainly cash flow, accounts payable and receivable, is crucial for the operation success. If we fail to do it for one day, it will be one day less in our results,” said Francisco Garcia, ABRAVO - Brazilian Association of Volvo Distributors.

Besides the scheduled speeches, trucking area professionals conducted technical visits to Maudlin dealership, International Trucks make dealership. “I would go back and would do all the programming again! The technical visits were important for our knowledge, as well as all the programming and grandiosity of the event,” Garcia added, regretting just the fact that NADA

and ATD simultaneous events sort of dimmed a little the event focused on trucks.

A JM&A Brasil, which belongs to the traditional U.S. group JM Family Entrerprises, Inc. and that has settled in Brazil in late 2011 working in the F&I area with the dealerships, has also held special program to take Brazilian entrepreneurs to the event organized by NADA, in Orlando.

More than that, the JM&A Brasil program held on February 8-14 included not only the trade fair and speeches included in NADA Convention, but also stretched the trip to Fort Lauder Dale/Boca Raton and Miami, where invited participants could visit the world largest Lexus dealership, owned by JM Family Entrerprises, Inc, in addition to the other dealership, the Arrigo, that operates strongly in Financing and Insurance products in partnership with the company, and also get to know the

Brazilian Dealers made technical visits to U.S. dealerships, as the group of trucking industry dealers (above) who visited an International dealership. At NADA Expo, visitors passed

by LifeStyle, where it was possible to do makeup and manicure, among other services.

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Travis Mazza and Ed Brown, JM&A Brasil, welcomed Brazilian Dears at the company booth during NADA Expo. The Trade Fair brought together other companies that also exhibited at ExpoFenabrave, such as Assurant Solutions and Resource Automotive.

company headquarters and its F&I training center, where they could attend a training class that was occurring at the time of the visit, and also the speech specially scheduled for the group and delivered by Professor Timothy Gilbert (who has already been a speaker at Fenabrave Congress).

During the visit to the company headquarters, the group was welcomed by the CEO of the corporation and the executives who coordinate the F&I area trainings for dealerships. According to the training manager, Heather Haynes, the JM&A Group offers training in several countries, such as Canada, United States, Central America and Brazil, with content in the local language and adapted to the reality of each country. Every month, more than 500 students attend those courses and trainings offered by the company, in classrooms of up 15 34

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students e with variable workload of a half day to five days, according to demand.

According to the manager, besides the partner dealerships being able to conduct the training in one of the two centers established by the JM&A Group, the courses can be offered directly at the dealers’ headquarters, and foresee previous steps ranging from meetings conduction to identify needs, training outline – which is previously approved by the dealership management, until the consultants team preparation who will give personalized training and, subsequently, will do the implementation follow-up and F&I process development at the dealership. “Our team of consultants consists of former dealerships sales managers and, therefore, knows very well the sales environment of a dealership. Besides, the material and method used follow the market evolution. If the market changes, our material also changes,” says Haynes, assuring a continuous updating of the F&I process of JM&A Group partner dealerships.

According to Haynes, there are more than 40 courses offered in the process, and they range from

the receptionist to the sales departments professionals, F&I and dealership services. “In addition, we also offer online courses,” informs the manager.

This training model is not available for Brazil yet.

In addition to Dealerships, JM&A Group also trains large retail groups, such as SAM’s Club, owned by Walmart.

For Ricardo Emílio Costin, who joined the trip as owner of BMW, Mitsubishi, Peugeot and Volvo dealerships, established in Vitória (ES), and Belo Horizonte (MG), the program was positive, as it served to anticipate the steps Brazil will follow in the coming years. “I went to NADA Convention to understand where the Internet is turning to in our industry. Indeed, Brazil is moving forward, but the United States are four or five year ahead of us and it is good to know the trends. Of course the Brazilian reality differs from the American one and we cannot implement literally everything,” assess Costin.

Also, in the F&I area, the owner said they had perceived, clearly, the differences on how to market products in Brazil and the United States, where there is greater emphasis on the products related Dealer

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to the “I” in the acronym (“insurance”). I believe that in a medium and long term, the same products market in the U.S. will be marketed in Brazil, but for the time being both should be tropicalized,” assesses Costin.

According to the entrepreneur, who still does not have any consulting company specialized in F&I, Brazilians lack an insurance culture, which in his analysis is already highly developed in countries such as United States and England. “The selling menu works there due to the consumers already have a concern with their asset safety. In Brazil, this is still in the beginning and still very much concentrated on higher added value vehicle consumers,” warns Costin.

In the evaluation of José Arthur Silveira Barbosa, Kyoto Motor dealership officer, owned by Canopus Group, the trip promoted by JM&A Brasil was decisive for the Group to make the decision to close contract with the company. “We were able to know the size of the U.S. group operation and I was quite impressed with the corporation, which gave us certainty for executing the agreement,” said Barbosa.

In its assessment, JM&A differs itself from other companies in the industry for having an efficient proposal and model, focused on educating sales teams. “We need to know how to sell the product and how to train a team in order to obtain the best results and this often means having to adapt a model to each company reality, which was quite perceived in relation to JM&A, that is absolutely focused on how to make the Dealer to obtain results in F&I in a flexible way regarding the methodology of solutions,” the officer assessed.

According to Barbosa, the trip back has already resulted in the beginning of a partnership. “We’ve made a diagnosis about the potential revenue and results and we’ve estimated a 30%-50% growth over the next 12 months in F&I. Of course that the percentage will be defined, mainly by the involvement in the process, but we are optimistic,” the dealership officer concluded.

Arrigo Case – During the trip organized by JM&A Brasil to the United States the dealership participants could visit the Arrigo Sawgrass dealership, which is part of the namesake group that represents Chrysler, Dodge, Jeep and Fiat makes.

During the visit, the dealership owner, Joe Perez, explained the sales process as of the customer’s entry in the showroom until the 36

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Five winning strategies to sell more secondhand vehicles The topic addressed by the expert Tommy Gibbs during NADA Convention drew the attention of Brazilian dealers present, who were attentive to the second-hand car-driven strategies adopted in the United States.

The first step in Gibbs assessment is to face the inventory as a short-term fund. “A second-hand vehicle cannot stay in stock for too long, as it generates loss,” says the speaker.

In the United States, dealerships adopt the so-called “Hot Sheet”, where all sold cars and sales values are listed. “Analyze on a monthly basis the sales values to find out the average, where are included the profit value, average value and average cost per unit sold,” explains the expert that states: “The higher the sales number, the lower is the cost.”

The search, in this case, is for the reduction of the second-hand car daily average cost. “It is not what you buy that it is important only, but what you keep in stock. It is rare to make a lot money with a car that stays in stock for a long time, it is almost a miracle,” challenges Gibbs.

As an example, Tommy Gibbs talks about a case where the car was sold after 25 days in stock and had a cost of USD 12,000 for the dealership. Company profited USD 2,500 with the sale, which was considered to be a good margin, with a 300% return.

“However, if this same car had stayed 60 days in stock, the dealership would have profited only USD 1,200, what would not have been a very good result,” teaches the consultant.

The strategy, according to Gibbs, is to list the cars that require higher investments and, therefore, have a higher cost to stay in stock and one should “attack their commercialization”, with trained and focused teams. “If a car needs repairs, it has to be done quickly to avoid passing too much time to sell it.

This information should be passed on to all in the dealership,” argues the expert.

To encourage the team, besides the training, a management of bonus on quick sales should be considered, particularly in cases of more expensive cars. “We should establish deadlines for the sale of each vehicle. Pass by the showroom with the team and analyze each case. A car in which we invest a lot, and that for any reason was depreciated in the market, should be marketed in 20 days at the most,” warns Gibbs.

Using the Internet as a selling feature, but with investment in the production of products, with professional photos made in the studio, can help in marketing second-hand cars. “Using a car as a decoy is important, as the consumer is attracted by a promotion and may end up becoming interested in other vehicles,” assess the expert who concludes: “But, the best way of selling well a second-hand car is to buy one of low investment and easier to sell.”

Using the Internet to your advantage David Kain, KainAutomotive.Com, company specialized in developing digital projects for dealers, presented, on February 9, ways of working with the Internet to expand sales of dealership.

In the theory presented by Kain, responsible for the FordDirect.com project preparation, a portal that gathers a series of digital services for the make dealers, it takes three labor forces for the Chain digital presentation: digital world expertise, communication tactics and personal development.

David Kain recommends the dealer to act as a true consultant to the customer. “The professional does not need to verbalize how good his/her company is. Show it to the customer,” he recommends. “The consumer’s experience is fundamental for the business success,” he adds. As examples, David Kain mentions some campaigns made by dealers which by the own slogan it is possible to identify that the consumer will have a good experience in buying. “Invest in websites with mobile reading versions. Thirty-six percent of emails are opened on the mobile,” says the speaker, stating that the content cannot lack price and detailed information on offered products.

Kain warns about the need of having processes of approaching and communication with the customer on the Internet.

The expert says the offers online are just a means by which the customer makes contact with the dealer. “This process is necessary. From the moment we receive a message from the consumer asking for information on a certain offer on the website, the consultant should contact this potential buyer, in order to lure him/her to the store,” says David Kain, providing a step by step that should be done every day since the first approach until the after-sales. “The individual SMS is great, but be careful not to scare the customer.”

Another successful strategy presented by the officer of KainAutomotive.com is the use of promotional videos on the Internet. As an example, the expert show the video of a sales consultant in a Honda dealership, that besides introducing itself and making themselves available to the customers, he/she goes with their camera to the second-hand vehicle department and present the offers in a fun and irreverent way. “There were more than 162,000 views on YouTube, which offers the service for free!

You can also leave your contact information and talk with the customer, online, via Skype,” says Kain adding that it takes only a little creativity to stand out.

Speaking of creativity, the team responsible for online work should be familiar with this environment. “The technology is here to stay. People used to technology, combined with a good communication, will have a high probability of success,” he says.

“Ask the candidate to send a video presenting their curriculum.

Thus you gain a lot of time in the selection and learn the knowledge the candidate has on digital media.

How to retain your customers The dealership management consultant, affiliated to NADA University, Jim Phillips, has more than 30 years of experience in the automotive distribution market in the United States and held a special workshop – with simultaneous translation into Portuguese – to present the best ways for dealers retain their customers.

According to Phillips, there are only three ways to increase the profits of a dealership: reduce expenses, improve gross margins and sell more. According to the speaker, after a market downturn, many dealers learned to control their expenses and began working the margins, diversifying the mix of sales, marketing other products and services. Thus, the big step now is to increase sales and retain customers already conquered.

“Good retention processes are the best appeals to win and keep customers. One needs to be armed with new ideas and create a script for retention,” he recommends.

According to NADA University expert, once the company preliminary vision – i.e., how it wishes to be seen by the market is defined, the entrepreneur must select the processes that create an experience on the customer in accordance with the vision.

Then the entrepreneur needs to build the necessary structure to support the processes and create marketing parameters to promote the company and his/her vision. “It is important to verify if the customer experience is according to the marketing promise,” he warns.

Another point raised by Phillips is a survey conducted by a major vehicle manufacturer stating that its Chain achieved important numbers of returns from customers to the stores, simply because they visit regularly the service facilities. “The most regular visitors became recurring buyers in 86% of the cases. Those who visit occasionally gave 46% return with new purchases. Even those making fewer visits have a high rate of return,” says the speaker.

Even with the area available for customers’ visits, Phillips warns that speed services also help in the retention. An interview conducted by Ops Magazine with 379 dealers showed that 33% of respondents, who perform speed services, began to be loyal to the dealership. “The customer relationship with the mechanic, the speed and convenience are important to consumers’ satisfaction,” he says.

At the end, the speaker made several recommendations for the improvement of operations area which, according to him, is the department that retains most customers at the dealership. “Work faster, conduct mechanical trainings, for example, with new customers, conduct a consulting experience for the consumer and develop a loyalty program with your customers,” added Phillips.

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Curiosities in the American market • Together the automotive dealerships employ one million people, have revenues of $670 billion in sales, accounting for 13.7% of total retail sales in the United States. The automotive distribution industry accounts for 14% of U.S. GDP. • 84% of American car buyers use, somehow, the Internet during the purchasing process. AOL new study reveals that the duration of a purchasing process, perhaps as a consequence of all purchasing tools available nowadays via Internet, is of 28 days only between the first search and the customer leaving the dealership in a new car.

• To overcome the crisis, U.S. Dealers began to focus their results on F&I and After-Sales.

Currently, 50% to 70% of results come from those areas.

• The cars tax burden varies from 3% to 8% in the United States, according to the state.

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As part of the programming offered

by JM&A Brasil, Brazilian Dealers attended an F&I training on JM&A campus conducted

by Professor Timothy Gilbert.

final process of F&I product offering, made under JM&A Group advisory services in the United States.

With an 18-salespeople team and selling 180 new cars and 90 second-hand cars on a monthly basis, the service is done without delay at the dealership. Managers stay on an island that allows them to view the entire store, and if a customer comes in and is not immediately approached by the sales team, a manager takes the lead and approaches him/her,” clarifies Perez.

In a sales process quite different from what happens in Brazil, due to the culture of each country, the American customer first completes a CRM form where profile and need are already identified.

After that, a salesperson discusses the possibilities of vehicles available at the dealerships and offers test-drive to customers. “Only after testing the car we talk about price, and only after we close the sales price negotiation the customer is referred to the F&I management to define his/her plan of guarantees within the selling menu that offers variable coverage packages or possibilities,” explains Arrigo owner who adds: “The F&I negotiation takes place in the end of sales process, because if the salesperson offered a lot discount on the vehicle, the F&I effort should compensate,” says Perez, who relies on one F&I officer and three managers specific for the area at Arrigo.

While F&I area negotiates the package options with the customer, the purchased vehicle is parked close to the window of the room where the negotiation takes place. “If the customer sees the good he/ she is purchasing they will want more guarantees

for it. Cars are a passion for Americans,” says Perez.

According to the owner, a customer with good credit record can finance up to 130% of the vehicle in the United States, which means to include accessories and the full range of guarantees in the monthly installments.

For the dealer, F&I can represent up to 60% of the company results, proving that the area can be the business future guarantee.

Brazilian Press – As part of Fenabrave commercial mission present at the 2013 NADA and ATD Convention, three journalists were invited by the entity; they could translate the American market of vehicles and draw comparisons with the Brazilian market.

The following were among the guests who participated in the trip, the G1 Portal (Globo. com) journalist, Priscila Dal Pogetto, Autodata chief editor, Alzira Rodrigues, and the vehicle section reporter of Folha de São Paulo newspaper, Ricardo Ribeiro Ferreira. The professionals were accompanied by Fenabrave press office headed by Rita Mazzuchini.

Besides the Convention programming, the Brazilian journalists participated of exclusive interviews with the Chairmen of NADA, David Wetscott, ATD, Dick Witcher, Fenabrave Deliberative Council and Board, Flávio Meneghetti and Fenabrave Executive President, Alarico Assumpção Júnior.

As a result, 25 articles were published in the invited media and other 30 generated as a repercussion in other media.

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39

economy

Brazil grows back in 2013!

Bradesco executive, Octávio de Barros, outlines a scenario of the global economy and complements the importance of emerging markets growth for the performance of Brazil.

For the automotive sector, 2013 will be better.

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I

nvited by Fenabrave, the economist Octávio de Barros, Researches and Economic Studies Officer at Bradesco, spoke to the members of Fenabrave Deliberative Council, Board and Regional Administrations in a speech held last March 6, in São Paulo.

The executive began his speech explaining why he thinks 2013 will be different from the previous year. “2012 was a terrible year for the world economy, with low growth, worry with the United States, Europe and China. All this was complicated and the international scenario reflected in the growth of Brazil,” explained Barros.

According to the expert, this year will be different with respect to the performance of the European and North-American economies. “In 10 years we will look back and thank the changes in Europe, which is growing and has advantage over other countries; despite of growing just a little, the European GDP is substantial. The American economy – which I consider to be good - is reviving the industrial growth. The car industry in the country is growing, the stock market is breaking records, i.e., is going well and I believe it should grow 2.3% this year, but the global crisis has left sequelae in all sectors of the industry,” added the Bradesco executive.

For Barros, in Brazil, the poor performance of the economy, with a GDP of only 0.9% in 2012, was also a reflection of the low growth of the industrial sector. In the case of the automotive industry, the foreign invasion helped this process, reducing the productivity of the industry installed here, and that made the government to announce the Inovar-Auto. “The Brazilian industry is fragile, but remains firm for its recovery. I noticed that since a year and a half ago all industries ran out of overstock. This is a beautiful sign for the economy because it means they are selling,” he explains.

According to the economist, in the last 12 months Brazil got the 4th place in the world market of vehicle consumption and is growing above the developed countries. “We sold 69 million vehicles in 2012, and the growth rate for this industry worldwide is 3.6% for cars and light commercial vehicles. We are moving at a good pace and our market is growing faster than developed and emerging countries, below Europe only and this is a good sign,” concludes Barros.

In a balance estimated for the first quarter of 2013, Octávio de Barros foresees a 3% growth for the industry and an increase less rapidly for services

that, in its analysis, was one of the sectors with the highest growth last year. “It is important that this sector grows, because basically the sector of services means paycheck. It is remarkable that Brazil is improving socially, with higher quality of life and better conditions for Brazilians to purchase goods,” he emphasized.

Tail winds in 2013 – Not wanting to be labeled an optimistic, Octávio de Barros calls himself a realist. “My goal is to hit the forecasts and I can say that 2013 will be definitely better. “In fact, for this year the perspectives are better. In Europe things improved considerably; in the U.S., as soon as the Senate election and the tax debate were over, the economy began to improve and ended the worry with the past. This will reflect positively in the future, as I believe the American economy could help the global economy in 2013. Now, China is moving and everything indicates that it can grow approximately 8% in 2013, and this will be very good for Brazil,” he said.

For the economist at Bradesco, 2013 will be a different year, but positive for the economy in Brazil. “There will be changes in figures such as our neighboring Argentina, which should not help the Brazilian GDP, but will not stand in our way.

Another positive factor refers to exports, which are expected to grow around 6% this year, a quite different result from 2012, when the industry grew 1% only. The business people confidence is better, there are inventory to work and everything moves to be a good year. Not to mention that consumption will also follow the tracks well, as well as the retail sales that grow moderately and the GDP that should reach the top between 3% and 3.5%,” says Barros.

Another important factor for the economy this year, according to Barros, is the slowdown

of default that, in his analysis, should be reduced throughout the year depending on the current financing conditions offered. “Today we buy cars with 30% down payment, in up to 60 installments, and this will help to slowdown the default,” explains, anticipating improvement for the segment, also in granting credit. “Last year, credit growth was 0%. For this year we believe that it should grow 6.7%.

According to the executive, the production sector should also take off, despite the decline in vehicle plate licensing in February (drop of 25% over January). “I do not think there was such a drop in the sector, once typically the beginning of the year is weaker; this sector will experience grow during the year,” assured Barros.

In view of this perspective, the executive bets in 3.5% growth for car and light commercial vehicles, with an estimation of 3,935,000 licensed units.

“Undoubtedly, the automotive industry is crucial for the Country economy,” says Barros.

For the agricultural sector, the economist also believes in high performance, mainly in the South.

“This will be a good year for agricultural sales in Brazil, and also for the cattle breeder, whose forecast is also positive, albeit on a smaller scale,” reveals the executive, estimating an increase between 5% and 10% for the sector.

On exchange rates, Barros believes that there won’t be more hikes. “The exchange rate in 2013 will not appreciate more than we are currently seeing, and will be in the average of 2.02 this year,” he informed, saying that interest rates should not rise too much this year, which should value the Brazilian currency. “I believe the interest rates should not rise much this year, maybe somewhere around 0.75%, and the Real will be more valued,” he concluded.

Flávio Meneghetti and Octávio de Barros, Officer of Researches and Economic Studies Officer at Bradesco, during speech at Fenabrave.

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F&I

Much more than products: you must have a process Experts say that F&I must be transformed into a business unit. With this, it is necessary to organize sales process, train people involved and review committee policies, so that consumers effectively receive the product offerings.

B Marcos Moreira, Officer of F&I Brasil.

razilian dealers are already aware that there is a market need to diversify the form of action and focus their efforts on after-sale activities and also on F&I. This scenario became clearer during the 2013 NADA Convention, held in Orlando, United States, in February. In this edition of the event, it was possible to notice the large number of Brazilian Dealers from different parts of the country in search of managerial technique know-how already well known by Americans, who - a few years ago - experienced the same situations that are faced today by the Brazilian Chain. “We can say that 2013 is the year in which the dealerships will be assured that the old levels of revenues with financing operations will not come back,” explains Marcos Moreira, Officer of F&I Brasil.

New standards of profitability for F&I

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According to the expert who acts in several dealerships throughout Brazil, the issue is not only the banks discipline in maintaining new standards of remuneration, but also some conditions and factors that support it, such as industry consolidation and fewer players, the loss of banks appetite for volumes and risks, strategic direction for their own over-the-counter market (agency) and publicity campaigns with explicit interest rates. “In Brazil, the returns on financing operations are already at the same levels of the U.S., i.e., somewhere between 2% to 3% of the financed value,” defines Moreira.

The difference between the two countries, besides the size of the market, is that in that country 80% of the new vehicles and 55% of the second-hand vehicles are financed. The average interest rate is 5% p.a. for new vehicles and 9%

F&I gain for 100 cars

R$ 1,379 per car

Products

Average Ticket Penetration

Unit gain

Financing

R$ 25,000

65%

R$ 750

Financing

R$ 343

25%

Accessories

R$ 1.000

100%

R$ 400

Accessories

R$ 487

35%

Expediter

R$ 600

95%

R$ 200

Expediter

R$ 190

14%

Auto Insurance

R$ 1,400

30%

R$ 252

Insurance

R$ 359

26%

Financial Protection

R$ 900

40%

R$ 360

Guarantee

R$ 1,000

35%

R$ 400

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p.a. for second-hand vehicles, in a market where the average financed ticket is equivalent to R$ 51.4 thousand for new vehicles and R$ 34.8 thousand for second-hand vehicles. “In Brazil, interest rates are 20% to 25% p.a. and the average financed ticket is R$ 25,000 for new vehicles and R$ 17,000 for second-hand vehicles, with an average of 55% of financed sales,” he says.

According to the figures presented by Moreira, in the U.S. the percentages of returns are the same, but they are applied on a much larger financed volume, due to whether the average ticket or penetration of financed sales, but delinquency level in Brazil is three times higher than in the U.S.,” he adds. “And it worsens if we compare the tax burden,” he adds.

With the loss of hope in having back the good times provided by the “F” returns, dealerships are really searching for new ways; but the challenges are many and entrepreneurs will have to strive and remove the difficulties in management. “To bring home new revenues, the first response is to search for the sale of new products, but the dealership already had in its structure some products with very poor sales performance,” says Moreira, exemplifying the accessories area.

According to the expert, R$ 1,000 in accessories per car should be sold. However, the average number is R$ 600. The auto insurance should have 30% penetration on new sold vehicles, but the perceived rate in the Brazilian Chain is 18%.

“The question is: Why are the current products not showing good sales results? What are the chances of doing better with new products?,” he asks, stating that the same problems that prevent dealers from selling well existing products on the shelf are the same that will determine a low performance in the new products. “You must create new standards of profitability for F&I,” he adds.

Marcos Moreira says that the entrepreneurs of the distribution industry have already woken up to the need to look up additional revenues. And for that, you must tread more effective ways to achieve good results. In his opinion, one must reorganize the whole sales structure of aggregated products and F&I, including the reorganization of sales processes, involved people training and committee policies revision, so that consumers effectively receive the product offerings. “And this includes a reorganization of the financing operation, where the priority is now seeking higher levels of approval and then profitability,” he concludes.

Mandatory certification for correspondents is closer According to the Central Bank resolution No. 3954/11, which amended and consolidated the rules that regulate the activity of approximately 160,000 field reporters operating in Brazil, the professionals working for the field reporters shall have, by 2014, a professional certification to act in dealerships. To obtain the certification, the professional shall master concepts of credit, vehicle financing, SFN knowledge, among others. “It is very important that the Chain does not leave it to the last minute. Otherwise, there will not be enough time to certificate the entire public,” explains the Chairman of FENABRAN Vehicles Committee, Bartolomeu Ribeiro.

According to the expert, the certification deadline is February 25, 2014. The person qualified for the role of correspondent will be the only responsible for sending the records for credit approval to the financial institutions. “Once the institution receives the vehicle financing proposal it will verify if the issuer is certified. If the issuer is not certified, the proposal returns to the dealership before the credit analysis,” warns Ribeiro.

FENABRAVE TV offers preparatory course for correspondents, via TV and Internet, for which FEBRABAN Educational Institute was hired and developed a specific program for car dealerships, with the objective of preparing and training professionals who work as correspondents in the sale of vehicles for obtaining Certificate. It is noteworthy that the FEBRABAN Education Institute does not offer the certification required by the Central Bank. However, the Prep Program provides the student with the necessary content so they can take the exam of certification required by the Central Bank.

According to the Chairman of Fenabrave, the course intends to train at least two professionals per dealership, since each company must have at least one certified. “If we consider the possibility of having one professional absent from the company due to vacation or illness leave, or even leaving the company, I imagine each dealership shall prepare and certify at least two professionals”, recommends Meneghetti.

To ensure convenience to the student, the course is taught entirely at distance with 12 hours of lessons, broadcast live on FENABRAVE TV once a week (Monday), from 6 PM to 20 PM. The Dealers who still lack Fenabrave TV reception point can access the supplementary content via Internet.

Coordinated and taught by Professor Francisco Ávila Filho, the “Professional Certification Prep Program - Vehicle Loan Module” consists of three modules: “Module I” - legislation and credit; “Module II” customer service, relationships, ethics and representativeness, and “Module III” vehicle financing. Each module shall be concluded in two weeks. Lessons will be televised by FENABRAVE TV and activities will be held on the FEBRABAN Education Institute portal. After attending all classes, the student will be able to perform a mock test. Besides the content, the Institute is responsible for the faculty members and didactic materials to be used in classrooms as well as textbooks, video lessons, among others.

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Legal support

COAF new rules against Money Laundering.

Why we should be vigilant.

Jair Jaloreto e Luiz Eduardo V. L. da Silva

The resolution establishes procedures that must be adopted by car dealerships, which includes the reference file of customers. Such reference file must contain sufficient information to identify the transaction, detailed description of properties and traded goods, as well as value, form and method of payment.

A

iming to establish procedures to prevent money laundering and terrorism financing, on the first day of March came into force COAF Resolution No. 25, issued on 01.16.13, which “refers to procedures to be adopted by individuals or corporations that sell luxurious or high value personal properties or intermediate their commercialization”.

Such a rule, authoritative, must be observed by the entire commercialization sector of motor vehicles.

Considering its content, companies that sell and mediate the sale of motor vehicles, as well as provide technical assistance and maintenance certainly shall submit to their rules.

According to the text, luxurious or high value personal properties are those which unit value corresponds to Ten Thousand Real or more. By assigning this obligation to a private the State aims to facilitate the identification and tracking of criminal acts by the Police and Justice, as well as the replacement of “dirty” money in the formal market, through the purchase of vehicles, vessels, aircrafts, artworks, jewelry, etc.

Therefore, companies that carry out sales, purchases and/ or mediation of luxurious or high value personal properties shall keep as described by the Resolution, a file of customers and their representatives. Such file must contain sufficient information to identify the transaction, detailed description of the properties and traded goods, as well as value, form and method of payment, and shall be kept for at least five years.

Besides keeping the reference file mentioned above available to any demand by the authorities, the Resolution assigns entrepreneurs an even more serious obligation – communicate to COAF, regardless any analysis or other consideration, all transactions which paid or received value of a certain customer is equal to or exceeds Thirty Thousand Real in a six-month period.

Additionally, “any transactions that, considering the parties and other involved, the values, accomplishment and means and form of payment, or the lack of economic or legal basis,

may constitute evidence of the occurrence of serious crimes under the Law No. 9.613/98, or relate to them”, i.e., the suspicious transactions must be communicated to COAF. Because the rules do not present a special list of suspicious activities and while COAF does not clarify precisely which situations are reached by this hypothesis, our suggestion is that, within the parameters defined in the Resolution, transactions with cash receipts in foreign currency, which receipts come from transfers of business outsiders, paid to third parties, as well as via international wire transfers.

The communication cannot generate consequences to the communicator, besides COAF being required to maintain secrecy about the provided information.

Important to emphasize that the failure of these administrative rules have immediate impact on the provisions of Law 9.613/98, which regulates the crime of Money Laundering. The company required to do the reporting, as well as its administrators (partners, shareholders, managers or professional executives) can be held liable civilly and criminally. Corporate penalties range from a mere warning, monetary fines of up to Twenty Million Real and finally “forfeiture or suspension of license to exercise activity or operation.” To individuals, in addition to warnings and fines, the “temporary disqualification for a period of up to ten years of the exercise of administrator position”.

All this considered, it is advisable and recommended that companies do their homework, reviewing their internal controls and reporting, training their teams closely connected to the theme and holding their employees liable for complying with, and for causing the compliance with, rules of maintenance of files and reporting to COAF, without prejudice to the election of a person responsible for the overall coordination and control of this work, who, in the ultimate analysis, will ensure the integrity of the company and serenity for its managers.

Jair Jaloreto and Luiz Eduardo Vidigal Lopes da Silva are, respectively, partners at the firms Portela, Campos Bicudo e Jaloreto Advogados and Lopes da Silva & Associados, LEXNET members, law firms aliance.

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Results

Master Sponsor

Gold Sponsor

Revenue

Silver Sponsor

Support

Fenabrave

Realization

Venue

Organization and Promotion

launches

Market is invaded by Asians Asian makes are betting on the Brazilian market potential, and the proof of that are the ads of several models that are being imported, or even manufactured in the country in 2013. The main novelty is the launching of Hyundai HB20 S, third version of the best-selling model that will also have its production plant in Piracicaba, SP. Some automobile assemblers introduced new versions of models already established in the market, such as the case of JAC Motors that showed a sedan version of the most successful model of the make. In addition to this novelty, by launching the T40 the Chinese assembler entered the Urban Freight Vehicle (VUCs) market.

New players are also novelty in the market, as is the case of Geely Motors that through Gandini Group representation in Brazil will bring the midsize EC7 sedan as from August. As from November, the LC Compact Hatchback, 1.0 liter model, will land on Brazilian soil. The forecast is to sell 360 units per month of the compact model EC7 and 420 this year yet.

Follow some of the major releases of the industry.

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JAC The first units of the new model of JAC Motors family in Brazil, the J3 S 1.5 Jet Flex, began to be sold in the country in late February. According to the importer representative in Brazil, the first bi-fuel model of the make will cost R$ 37,490.

The J3 sports version was introduced during São Paulo Auto Show last November. The model inherited the 1.5 16V VVT engine from the J5. To receive a bi-fuel technology, however, the engine was entirely reworked by JAC Motors and Delphi engineers, in Brazil and China. The result was the elimination of the cold start gas tank.

For this, a system preheats the fuel directly into the injector nozzle, which is essential when using ethanol, because of its low heating value. With gasoline, ethanol or any possible percentage mixture between these two fuels, the engine fires up normally in any operating temperature and in various weather conditions. “The development of this system is part of an ambitious plan of JAC Motors of really investing in new technologies, in a decision made long before the release of the new automotive regime,” says the CEO of JAC Motors Brasil, Sérgio Habib.

Named Jet Flex, the JAC Motors bi-fuel technology will equip the entire family of make vehicles this year still.

Besides the J3 S launching, JAC Motors Brasil announced its entry into the light truck market, introducing the T140 model, betting on the VUCs (Urban Freight Vehicle) segment.

The Chinese make, which should begin operating its first plant in the country only in the second half of 2014, expects to sell, in the next six months, an initial batch of 500 light trucks up to 3.5 tons, imported. Local production should occur only when the company plant in Bahia is ready.

According to the CEO of JAC Motors Brasil, Sérgio Habib, the intention of the group is to produce – at Bahia unit – models of up to 10 tons that will share the facility with the car production that the make is developing for the domestic market. The unit production capacity will be of 10,000 trucks per year, in addition to the expected 100,000 cars. The total investment in the project is R$ 1 billion.

“JAC analyzed the Brazilian truck market for some time, but with the Inovar-Auto (new automotive regime), it is not possible to sell trucks in Brazil without manufacturing them in the country,” said Habib, adding that he even had negotiated with the Indian Tata Motors a local production of trucks before the regime being approved by the government in 2012.

The businessman said the new regime “raised” the performance level of new makes in the country by charging more investment in domestic production, weighting factor in the case of trucks, since it is necessary a national service network, unlike cars where the Dealership Chain can initially focus in some capitals.

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J3S 1.5 Jet Flex

T140 M6

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launches

GM In February, General Motors do Brasil introduced the second generation of Prisma sedan, in Joinville, SC, derived from the Onix model, with cost starting from R$ 34,990, value equivalent to the first version, LT with 1.0 engine.

The intermediate version, LT with 1.4 engine, should be marketed starting from R$ 39,090, and the top of the line, LTZ 1.4, hits the market for R$ 45,990.

Developed from the same architecture of models such as Sonic, Cobalt, Spin and Onix, Chevrolet Prisma 2013 has the key features of the GM global DNA. “The launching of Chevrolet Prisma 2013 consolidates one of the most important investment plans in 88-year GM history in Brazil.

There were more than R$ 5 billion used to renovate the line of products, expand and modernize our plants. Gravataí Industrial Complex, today, is the largest in South America and Onix success allows us to anticipate a victorious journey for the new compact sedan,” says the CEO of GM South America and GM do Brasil, Jaime Ardila.

This year Onix sold approximately 19,000 units, considering the first two months, according to data published by Automotive Vehicles Distribution National Federation (Fenabrave). The previous Prisma totaled 34,932 plate licenses over last year.

As its main competitor the model has the new model of Korean Hyundai, Sedan HB20, launched in early March (see details in the sequence).

Coincidence or not, in October, during the 27th Auto Show in São Paulo, GM introduced the Onix model and the HB20 Hyundai, both small hatchbacks that entered the market to face the strong competition in the segment.

Both GM and Hyundai celebrate the results so far, as Onix and HB20 quickly climbed the sales ranking reaching the 5th and 6th positions, respectively, in the accumulated results in the first two months of the year.

Hyundai In March, Hyundai introduced the HB20S to the domestic market, a sedan version of the first model manufactured in Brazil. After five months of the official launching of hatchback model, the make decided to face their rivals like the Chevrolet Prisma, Ford New Fiesta and Chevrolet Sonic, and brought a model with very attractive features.

The model will also be produced in Piracicaba, SP, and will hit the dealerships as from R$ 39,450. As standard, the entrance version Comfort Plus comes equipped with 1.0 engine, power steering, air conditioning, board computer, stereo CD player, MP3 player, Bluetooth and USB ports and auxiliary; key pocket-knife, alarm, electric windows in all four doors, steering wheel with radio controls and airbag, among other items. The model also offers a version with 1.6 engine capable of 128 hp, considered by the assembler as the most powerful of the category.

According to Hyundai Motors Brasil, customers who buy sedan models have a higher level of demand with respect to comfort items. “Customers in this category do not accept to buy cars without air conditioning, stereo and electric

windows,” explains Rodolfo Stopa, assembler Product Manager.

The plant in Piracicaba must produce 150,000 units of the model per year. “Hyundai considers activating the 3rd production shift, but it does not serve to meet peak demand. It would be a long-term solution,” explains Maurício Jordão, make Press Manager. The remainder of the HB20 line is divided in 100,000 for hatchback and 10,000 for adventurous version, HB20X. The Brazilian market of compact sedans grows every year and accounts for 24% of all cars sold in the B segment in the country. In 2012, over 580,000 units of sedans in this category were plate licensed in Brazil. “The consuming public of compact sedans has very rational reasons to buy a car. Our goal with the HB20S is to deliver a car with excellent value for money, adding the Hyundai design, cutting edge technology, comprehensive package of standard features and super finish to that offered by the market today,” said Cassio Pagliarini, Marketing Officer of Hyundai Motor Brasil.

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launches

suzuki In the 2010 edition, the 25th Auto Show of São Paulo, Suzuki announced it would produce the Jimny mini jeep in Brazil – available in the domestic market for some years, but hitherto imported from Japan. As a promise is a promise, Suzuki kept its promise and, in late February, introduced the Jimny mini jeep to the domestic market, the first model of the make produced in Brazil and already on sale for R$ 55,990 in 4ALL version. “In a historic moment for Suzuki in Brazil, Jimny will be the first vehicle of the make locally produced,” said Luiz Rosenfeld, CEO of Suzuki Veículos do Brasil.

For R$ 59,990, the consumer can purchase a 4SUN (with sunroof) and for R$ 61,990, the radical 4SPORT. As standard, all versions bring power steering, air conditioning, CD player with USB port, Bluetooth and electric windows, locks and

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mirrors. ABS brakes and airbags will be items added to the list of equipment until the end of the year.

According to Rosenfeld, “in the world, mini jeep sales are thunderous. They are 150,000 units per year in Europe and 100,000 per year in South American; in India the make owns 40% of the market. In Asia, Jimny has publications devoted entirely to it. Here in Brazil, we estimate 2,500 units per year through the current 60 dealerships,” he says.

With more than a century of tradition, Suzuki surpassed 40 million cars sold in 196 countries and produces approximately 3 million units per year. For Suzuki, Jimny customer ranges from the freshman jeep user, passing by those who have a small garage, until farmers and mill owners – or simply admirers of the style.

volare Volare introduced its 2013 line of vehicles and launched three new bus models, W6, W7 and WL. The latter, the one with greater capacity in the segment for up to 36 passengers has differences such as internal space, design, functionality and versatility. The manufacturer also innovates and introduces to the market the concept of models by passenger capacity / application instead of the traditional Total Gross Weight (TGW).

According to Milton Susin, Volare Officer, the family gets three new models developed in an unprecedented way, both in terms of design and functionality. “The great innovation is that we are changing the product application concept.

The new family has models defined by their application and the number of passengers to be transported, which makes customer’s choice easier and the use of the vehicle more rational and beneficial,” explains the executive.

The new Volare family has seven different models – V5, W6, W7, W8, W9, DW9 and WL – in five versions (Executive, Chartering, Limousine, Urban and School), that serve to transport 15-36 people besides the driver. “The new vehicles were developed from a modern and intelligent conception to carry people with maximum comfort, safety, efficiency, economy and mobility, and with a minimum of emissions,” said Susin.

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launches

geely From August, Geely Motors do Brasil starts its operations for the domestic market. After 20 months of signing the representation agreement in July 2011, by and between Gandini Group and Geely International Corporation, the make is pending with the adjustments to structure the importer/distributor and appointment of the Dealership Chain.

The first Geely to be marketed in the Country will be the midsize EC7 sedan. In order to do that, the company hopes to have a structure of about 20 dealerships, to begin with, in the South and Southeast.

In November, Geely Motors do Brasil launches the compact LC 1.0 hatchback. Models will come from the new Geely International Corporation assembly line, in Montevideo, Uruguay. “Although the Geely International Corporation line of products is broader, at first we will bring models produced in Uruguay,” emphasizes Ivan Fonseca e Silva, Chief Executive Officer of Geely Motors do Brasil. “Before the Uruguay project, Geely cars, coming directly from China, were not feasible from the point of view of the final consumer, once the models compete directly with other national and imported vehicles of the same categories,” he adds.

The EC7 sedan will come in versions with manual transmission of five-speed and CVT automatic, with engine

made up of aluminum block of 1.8-liter that generates 140 horsepower. Geely Motors do Brasil will only make the EC7 available with air conditioning, hydraulic power steering, leather-covered seats, and other comfort items. The compact LC 1.0 hatchback brings under its hood a 68 horsepower engine. The company will also bring its most complete version, with air conditioning, electric steering, electric trio, air bags, ABS and other items of comfort and safety.

According to Fonseca e Silva, the business plan of Geely Motors do Brasil for this year foresees sales of 360 units per month of EC7 sedan and 420 units per month of LC 1.0 hatchback. “Although consumer prices are not yet defined, we intend to launch the sedan for about R$ 55,000 and the hatchback for approximately R$ 35,000,” says Fonseca.

Geely International Corporation automotive group began manufacturing cars in 1997. Geely owns Volvo Cars, Sweden, and Manganese Brown, taxi manufacturer in England. Geely group revenues in 2012 were approximately USD 23 billion. Only with Geely make, last year the group produced more than 491,000 units, which meant a sales increase of 16% over the previous year. Also in 2012, Geely was the Chinese assembler that exported most, with volumes exceeding 100,000 units.

Ivan Fonseca e Silva, CEO of Geely Motors do Brasil

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Participe e amplie seus canais de conhecimento!

A Universidade Fenabrave promove cursos presenciais e a distância voltados à gestão de negócios dos Concessionários brasileiros, em parcerias firmadas com instituições, como ESPM, Trevisan e Fundação Dom Cabral, que garantem metodologia de ensino de qualidade, certificação profissional, especialização, extensão, MBA e pós-graduação, por meio de mais de 50 professores.

TV Fenabrave: Contando com a parceria tecnológica Dtcom, a TV Fenabrave oferece mais de 30 cursos preparados exclusivamente para as concessionárias de veículos, de todos os segmentos, além do conteúdo Dtcom. Os cursos são transmitidos ao vivo, com interatividade pela internet ou sms, a mais de 1,2 mil pontos de recepção em todo o Brasil, e já garantiram treinamento para mais de 35,5 mil profissionais.

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Outflow of another record harvest

Luiz Carlos Corrêa Carvalho

The expected record harvest reflects positively on the sale of heavy vehicles, tractors, combines and agricultural implements.

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n 2012, Brazil showed a positive variation in the Gross Domestic Product (GDP) of 0.9% only. The result itself brings no surprise, as it was anticipated by most analysts. Perhaps the biggest news is the fact the neighboring countries of South America and others in developing phase showed much better performances. It is an unpleasant sensation. With a weak investment rate around 18% p.a. Brazil does not reach the GDP growth results, aspired by its society.

In the case of agricultural GDP, the negative variation recorded in Brazil, of 2.3%, is unexpected news by the performance in exports, investment in machinery and inputs consumption. The main explanation for the fall is the smaller harvest performed by major crops, such as soybeans, 1st harvest of corn, sugar cane and orange, among others.

Indeed, agriculture, especially grains, was driven by the worst climate disaster with the most severe drought of the last fifty years, occurred in the fields of production in the United States. The loss in production of 120 million tons did not ruin the U.S. producers due to the providential policy of rural insurance existent in the country. In the international market, important commodities such as corn, soybeans and wheat had a pricing race and operated at record levels.

As a direct consequence of this situation, in 2012, the gross revenue (price multiplied by production) of Brazilian agriculture rose because of increased prices, as the production decreased. Farmers were encouraged to increase the planting area and adopt a higher technological standard. Thus, sales of inputs such as fertilizers and pesticides showed unusual high numbers in 2012. Also the commercialization of tractors and combines kept good pace, mainly in the second half.

We certainly entered 2013 with better perspectives, but nothing to celebrate beforehand. The basis of comparison

with last year does not serve as a reference and obstacles need to be removed immediately from the way. For the 2012/13 season, national harvest is estimated by Conab in 185 million tons, approximately 12% above the 2011/12 season.

Again, we will have higher revenue, but due to much more volume than price. If on one hand this finding deserves a celebration, on the other becomes clear the fragility of the infrastructure and logistics in the country. A substantial part of the producer’s revenue is lost during the harvest outflow.

Without sufficient storage network in the regions of their origin, production is shipped. Transport routes in these places are usually poor and insufficient. There is lack of road, rail and water transport integration. The opening of new corridors usually requires advance plans and takes time to be done. This diagnosis is repeated every season with long queues of trucks on the roads and ships waiting to board and take the production abroad. And it won’t be different in 2013, it will certainly be worse.

The agenda is heavy to reverse this situation, but it must be accomplished. On the issue of ports, in an analysis of 140 countries, Brazil is at the 130th place in the ranking prepared by the World Economic Forum. As it is unacceptable to ABAG, we will discuss relevant topics in our upcoming Brazilian Agribusiness Congress to be held next August.

In 2013, we will also fight the Law No. 12.619/12, which addresses drivers’ working hours. Along with entities representing transport services users, we’ve presented the dramatic situation to the Chief of Staff. The topic also involves the Ministries of Transport and Labor. For example, in Brazil there are 8,500 gas stations which will serve as points of stop for compliance with the mandatory rest for drivers. Many of them will need some time to adapt to the new requirements, while Brazilian competitiveness pays a high price.

Luiz Carlos Corrêa Carvalho presides ABAG - Brazilian Agribusiness Association

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