Fiada April 2015 web by FIADA

FIADA 1940-2015

Y E A R S

www.FIADA.com

APRIL 2015

Information and Insight for Florida Used Car Dealers

True heroes The men and women of the used car industry are the backbone of America. We salute our FIADA members and the contributions they have made for 75 years. SEE PAGE 6.

FINDING MONEY FOR YOUR CUSTOMERS The proper way to electronically register liens.

ENGAGING CUSTOMERS

ONLINE PROFILING

Evaluating your current F&I procedures to make sure you are offering what your customers need.

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Dealer Independent

MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308 TELEPHONE (850) 385-2712 (800) 237-0448 FAX (850) 385-3251 WEBSITE www.FIADA.com EXECUTIVE COMMITTEE Jim Winterick, Sr. President Paul Matton Senior Vice President Dino Mercurio Chairman of the Board Brad Joel Secretary Lisa Compagno Treasurer Scott Lanier Regional Vice President Christopher Leedom Regional Vice President Steve Marbais, CMD Regional Vice President Phil Risley Regional Vice President Govinda Romero Regional Vice President FIADA STAFF Lisette Mariner Executive Director Terry Myers Educational Instructor Jason Berthiaume Education and Marketing Coordinator Amelia Tillman Membership Director Christy Taylor Editorial/Advertising

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FIADA • 1840 Fiddler Court Tallahassee, FL 32308 (850) 385-2712 • Toll Free: (800) 237-0448 Fax (850) 385-3251 • www.FIADA.com The Independent Dealer is a publication of: Florida Independent Automobile Dealers Association, 1840 Fiddler Court, Tallahassee, FL 32308 The magazine is published every month in Tallahassee and distributed to Florida new, used, wholesale and lease/retail car dealers. Advertising rates are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Independent Dealer or the Association. Likewise, the appearance of advertisers, or their identification as members of FIADA, does not constitute an endorsement of the products or services featured.

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Contents April 2015

For members of the Florida Independent Automobile Dealers Association

C O L U M N S & F E AT U R E S 4

President’s Message Jim Winterick, Sr.

Executive Director’s Message Lisette Mariner

Finding Money for Your Customers Terry Myers takes a look at why you need a Lien Provider number and the right way to register a lien electronically.

Member News

Dealer Training & Town Hall Meeting Don’t miss out on the next installment of this popular FIADA educational series, heading to Jupiter in May.

Engaging Customers in this Brave New World Your customers have a lot of options to connect with you, is your F&I Department reaching them?

Legislative Update FIADA Lobbyist Sandra Mortham

Profiling the Online Car Shopper Can Help You Map the Final Sale The key to good marketing is knowing who your customers are. Understanding the market data of today’s customers can help you turn leads into sales.

A Look at Current Legal Issues Attorneys Tom Hudson and Nicole Munro recap recent federal and legal developments of interest to dealers.

Industry News

UPCOMING EVENTS May 8, 2015 FIADA Town Hall Meeting • 10am -2pm Jupiter, FL

July 10, 2015 FIADA Town Hall Meeting • 10am -2pm Cocoa Beach, FL April 2015 — Independent Dealer — 3

FROM THE PRESIDENT

After 75 Years, Florida Is Still Leading the Way BY JIM WINTERICK, SR., FIADA PRESIDENT

“W

hat happens in Vegas stays in Vegas.” This saying certainly does not apply to the FIADA. How so you ask? Let’s start with our incoming NIADA National President-elect Frank Fuzy, owner of Century Motors in Pompano Beach, Florida. I have served with Frank on many membership drives. He is a tireless worker and supporter of independent dealers here in Florida. Frank is a past President of the FIADA and has worked in every capacity on the national level. He has represented us used car dealers in Tallahassee and in Washington D.C. He is able to explain our business in a relatable fashion to our elected representatives. His approach is we independent dealers are not the problem, but the solution to the transportation needs of the constituents these elected officials represent. Whether it is lobbying, educating, supporting other dealers, attending meetings, phone conferencing, signing members, Frank is the “Man.” Of course, I would be remiss if I did not mention Frank’s wife, Gina. Gina is always by his side elbow to elbow getting the job done. All this for the remuneration of $0000.00 (that’s zero) dollars. “What,” some may ask, “are they nuts?” Far from it. They are people dedicated to the advancement of our profession. They want to improve the independent dealers of Florida and now the nation. Frank and Gina are amongst the top sellers in the nation on eBay. How do they find the time? We can all find the time for what is important to us. Bettering the profession of the independent dealer is a passionate pursuit for both of them. We are blessed to have people such as these donate their valuable time for our professional development. I am looking forward to being in Las Vegas and witnessing Frank’s installation. I hope you will be there also. It has been over 25 years since Florida has had a National President. I hope you will be there to witness the event. Next is our own “Quality Dealer of the Year,” Chris Leedom, owner of AutoMaxx in Sarasota, Florida. If you are in the used car business anywhere in the United States you have probably heard of Chris. You may be a Twenty Group

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member of the Leedom Group. He is a nationally recognized authority in Buy Here-Pay Here. He has conducted innumerable educational meetings both nationally and internationally. He is a sought after speaker by business leaders across varying professions. His business acumen is applicable to any situations in the profit spectrum by fulfilling the customers’ needs. He has many varied interests, but his passion is the independent dealer. We are honored to have such a man representing Florida as our national nominee for Quality Dealer of the Year. Florida has not had a winner of this award in a significant amount of time. We are the oldest association in the industry, founded in 1940. The national association did not begin until 1946. Florida has had their share of Quality Dealers over the years, but none in the last 20 or so. Chris is Florida’s nominee for this prestigious award. Every year Florida nominates a fellow dealer as their Quality Dealer and all of them are deserving of their attainment. Chris is another unpaid volunteer Florida dealer deserving of the award. I hope we can get as many Florida dealers as possible to Las Vegas to support our state’s nominee. Of course we cannot leave out fellow Floridian Steve Jordan. Steve was the Executive Vice President of the FIADA. His talents were noticed by the national association and he was selected to be Mike Linn’s replacement at NIADA. As you can see, Florida is well represented on the national level. We are the oldest association supporting the Independent Dealer. Our members have an impactful impression on the nation. We need to be in Las Vegas this June to add our support to this great group of Floridians. Working together we can all improve the public perception of our business. We can support this great group of Floridians. We can all attend the convention to get new ideas, meet various vendors and be with like-minded people. All with the same goals of making this business better for us and those to come. All this, while making a profit doing it. Jim Winterick, Sr. FIADA President www.fiada.com

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April 2015 — Independent Dealer — 5

EXECUTIVE DIREC TOR’S MESSAGE

To All Our Superheroes BY LISET TE MARINER, EXECUTIVE DIREC TOR

n 1940, writer Joe Simon conceived the idea of Captain America. According to Simon, there were too many ‘supers’ around and Captain America had a good sound. Though the cover of Captain America Comics No.1 features March 1941, it was in December 1940 that this issue was released, with the help of illustrator Jack Kirby. Thus, Captain America was born. The cover features Captain America punching Hitler, who was the impetus for the character. Through the years Captain America evolved. He continues to be a leader and an icon of American patriotism. Like Captain America, FIADA was created in 1940 to protect dealers. And like Captain America, our board doesn’t possess any superpowers, they just have been injected with the desire to serve the industry. Since 1940, FIADA has continued to evolve with the help of our superheroes…the FIADA board. There are a number of villains in this new world. In this age of increasing litigation, dealers find it more difficult to protect themselves. Dealers are being squeezed from all angles. Much like Captain America’s iconic shield helps to protect him, the FIADA helps to protect the independent dealer against the villains of unwarranted litigation, government overreach, and so many more. But even Captain America couldn’t do it alone. Eventually, he joined the team of superheroes called The Avengers. Iron Man, Thor and Hulk are just a few of the other Avengers members.

Whether you are a superhero or an independent dealer, there is strength in numbers. And at FIADA there is a place for everyone. Whether you seek to become a Board Member, committee member, or are simply a dedicated dues-paying member, your contribution is invaluable. Only if we stand together and speak with one voice can we beat back the slings and arrows. Professionalism, camaraderie and knowledge are our weapons and FIADA plays an important role in equipping us with them. Through education, government relations and our shared commitment to a Code of Ethics, we become more than the sum of our parts. Have you renewed your pledge to be part of the FIADA team? Do you know an independent dealer that should be a member of FIADA? Even the “superheroes” on our Board will tell you that it all began with that first phone call or conversation with a fellow dealer about FIADA. And if seeing FIADA and its voice grow isn’t incentive enough, don’t forget that we offer $50 for every new member that you sign up, or with at least five new members sponsored by April 30th, a chance to win a trip to Las Vegas for the NIADA Convention in June. Tell prospective members that no superhuman strength, speed or magic hammer are required. Just a passion for our industry and a willingness to get involved.

Sponsor at least 5 new members BEFORE APRIL 30, and you could win a trip to Vegas and a free registration to the 2015 NIADA Annual Convention. Details at www.FIADA.com CHECK OUT THE VEGAS LEADER BOARD ON PAGE 11. 6 — Independent Dealer —April 2015

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April 2015 — Independent Dealer — 7

BACK TO BASICS

Finding Money for Your Customers BY TERRY MYERS

Having a Lien Provider number gives you the authority to place a lien on the vehicles you sell and hold the paper.

o finance directly you need a Motor Vehicle Retail Installment Seller license, as discussed in last month’s article. In addition, you also need to obtain a Lien Provider number. “Why?” With a Lien Provider number, you may place liens on vehicles you sell and then hold the paper. When you complete the HSMV 82040, Application for Certificate of Title, you will place your Lien Provider number and information in Section 4. The title and lien will be created electronically. When you return to your office and look on your third party provider website, you will see that the lien is already acknowledged in Florida’s

Realtime Vehicle Information System (FRVIS). This gives you power over the title until: • The customer pays the lien off and you then release the title. (or) • The customer stops making payments and you then activate the repossession process. “What is a third party provider and how do I choose one?” The third party provider is the contact between you and the FRVIS database. You may choose from the list at the following website: http://www. flhsmv.gov/html/dmv/ELTcontacts. html. Complete the ELT Third Party Provider contract or application. No contract exists between the lienholder and the Department.

The FIADA preferred partner is: Auto Data Direct Electronic Lien and Title (ELT) Services. Auto Data Direct is offering free activation for dealers who sign up for their ELT services and deposit $50 in a prepaid account. ADD’s web-based ELT service offers volume discounts, an online lien manifest, email and text notification, printable confirmations, integrated paper title requests and many additional dealer tools. To take advantage of the free activation offer, visit http://www.ADD123.com and use the promo code FIADAELT at sign up. Current ADD customers can take advantage of the special offer by entering the FIADAELT promo code under the ELT tab after log-in. Lienholders work directly with the approved ELT Third Party Providers for software, record management, and reporting needs. For more complete information about this process, go to: http://www.flhsmv. gov/dmv/ELTLienholdersGuide.pdf. We will take a look at the following questions over the following two month’s articles. “What happens when I release a lien?” “Are there other elements or governing agencies I may need to consider when adding a lien or repossessing a vehicle?” When you find money for your customers, you find money for you. You do want to get paid, right? Terry LB Myers is an author, lecturer, FIADA instructor and FADS owner/instructor. Terry can be reached at (727) 804-7375 or tmyers@ floridaautodealerschool.com. Feedback is appreciated and encouraged. Copyright 2015.

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April 2015 — Independent Dealer — 9

MEMBERSHIP NEWS

New Members

MARCH 2015

#1 USA AUTO MARKET, LLC Port Richey, FL Elvira Ozborn Sponsor: Amelia Tillman

CAWLEY MOTORSPORTS, LLC Tallahassee, FL John Cawley Sponsor: FIADA

MULLIGAN MOTORS INC. Miami, FL Dan Mulligan Sponsor: Jim Winterick, Sr.

SUNRISE AUTO MALL, INC. Ft. Lauderdale, FL Steven Buckner Sponsor: Amelia Tillman/Kevin Scott

A+ AUTO RESTORATION LLC St. Petersburg, FL Kris Kuenzler Sponsor: Paul Matton

DRIVE EASY CAR SALES Jacksonville, FL Benjamin Saliba Sponsor: Jeff McClintok

PIX 46 AUTO SALES LLC St. Petersburg, FL Anthony Kronz Sponsor: Terry Myers

THE PROFESSOR AUTO SALES, INC. Davie, FL Jean Francois Sponsor: Terry Myers

A1 WHIPZ AUTO SALES Pompano Beach, FL Rose Justafort Sponsor: Terry Myers

FC USED AUTO SALES LLC Tampa, FL Theresa Porter Sponsor: FIADA

RACE WAY AUTO SALES, INC. Pinellas Park, FL Dawn LeBlanc Sponsor: Paul Matton

THE RIDE FACTORY Tampa, FL Somer Huffman Sponsor: Terry Myers

ACE AUTO WHOLESALE, INC. Pinellas Park, FL Kevin McNally Sponsor: Paul Matton

GOLDEN EAGLE MANAGEMENT SERVICES, LLC Land O Lakes, FL George Spatt Sponsor: FIADA

REMEDY AUTO CLINIC Melbourne, FL Frederick West Sponsor: Rich Stazzone

TOWN CARS AUTO SALES LLC West Palm Beach, FL Faez Hallak Sponsor: Amelia Tillman

SOUTH FLORIDA TRUCK SALES Miami, FL Stephanie Rodriguez Sponsor: Maximo Rodriguez

U.S. AUTO LTD COMPANY Pompano Beach, FL Kenneth Behr Sponsor: Frank Fuzy

AUTOMARINE, INC. Fort Pierce, FL Barry Stern Sponsor: Janet Curry AUTOSDIRECT FLORIDA, LLC Jacksonville, FL Joseph Strickland Sponsor: Kevin Scott

ISLA MOTORS CORP. Wellington, FL Luis Berrios Sponsor: Terry Myers JAXTREME AUTO SALES & FINANCE, LLC Jacksonville, FL Alexander Hung Sponsor: FIADA

Renewing Members

SUNRAY AUTO SALES, INC. Holiday, FL Ara Vizoyan Sponsor: Paul Matton

MARCH 2015

30+ Year Members 3445 Car Store, Inc K.K. Car Company, Inc. Panama Motor Sales, Inc. Ray’s Motor Sales, Inc. 20+ Year Members Bubba Hill Auto Plaza, Inc. Caicos Trading & Equipment Larry Condon Auto Sales Le Bo Auto Brokers O’Donnell Automotive Taylor Morgan, Inc. dba Network Auto Sales The Truck Center, Inc. 10+ Year Members Autoshopper.com Magazine B & T Enterprise Services, Inc. dba 5 Star Auto Sales Bargain Auto Sales of Lakeland, Inc. Beach Boulevard Automotive GWC Warranty Corporation of Florida Sides Cars-Trucks Taylor Auto Sales, Inc. Vaughn Motorgroup Under 10 Year Members A & B Auto Sales of Jacksonville, Inc. Ace Motors, Inc. Amaan Motors LLC

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St. Petersburg, FL Lake Worth, FL Jacksonville, FL Lake Wales, FL Panama City, FL Miami, FL Stuart, FL Cape Coral, FL Orlando, FL Jacksonville, FL Ft. Walton Beach, FL Lakeland, FL Brooksville, FL Lakeland, FL Jacksonville, FL Wilkes Barre, PA New Smyrna Beach, FL Tallahassee, FL Jacksonville, FL Chipley, FL St. Petersburg, FL Pompano Beach, FL

ASC Warranty, Inc. B & E Autos B & A Auto Sales of Central Florida Beford Auto C&D Getty Auto Sales LLC Car Solutions LLC Central Florida Sales & Leasing Cochran Motorsports, Inc. Dan’s Deals on Wheels Auto Sales, Inc. Dealerbuilt Florida Auto Auction Properties dba ABC Orlando Auto Auction Galaxy Auto Services, Inc. Good Rides, Inc. Got Car Auto Brokers Hasco Medical, Inc. Jimmie’s Auto Sales LB Auto Trading Penske Truck Leasing CO PNP Enterprises Purvis, Gray and Company, LLP Ride-Away Handicap Equipment, Inc. RTG Auto Sales, LLC Sharp Deal Automobiles Corp. Timeless Motors United Auto USA Corp Vac-Con, Inc. Yaris, LLC

Mountain Home, AR Altha, FL Winter Garden, FL Holiday, FL Port Orange, FL West Palm Beach, FL Orlando, FL Hastings, FL Davie, FL Mason City, IA Longwood, FL Orlando, FL Stuart, FL Hollywood, FL Londonderry, NH Madison, FL Orlando, FL Orlando, FL Palm Bay, FL Gainesville, FL Addison, TX Tarpon Springs, FL Hialeah, FL Lakeland, FL Doral, FL Green Cove Springs, FL Orlando, FL

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Rejoining Members

MARCH 2015 VIZION AUTOMOTIVE, LLC Palm Bay, FL Brad Blankman Sponsor: Amelia Tillman

ACADEMY CARS OF FLORIDA, LLC Lake Worth, FL Michael Rocco Sponsor: Amelia Tillman

EMOTORCARS OF FLORIDA Holly Hill, FL Donald Bell Sponsor: Amelia Tillman

O’CONNOR AUTOMOTIVE, INC. Plant City, FL Bill O’Connor Sponsor: FIADA

ADVANTAGE FUNDING Lake Success, NY Al Damiani Sponsor: Amelia Tillman

MIKES CARS & TRUCKS Port Orange, FL Mike Schumann Sponsor: Amelia Tillman

THE WHOLESALE CLUB, INC. DBA TARGET AUTO BROKERS Sarasota, FL William Chong Sponsor: Amelia Tillman

AUTO AUCTION Congratulations to our Vegas contest leaders: MEMBER

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We’re Looking for the Best of the Best. The Quality Dealer of the Year Award is FIADA’s top honor. Learn more about it at http://www. fiada.com/?page=QualityDealer. If you, or someone you know, meets the criteria, submit a nomination before June 30. www.fiada.com

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Friday, May 8, 2015 10:00am - 2:00pm

Jupiter Resort & Spa | Jupiter, FL Don’t miss this opportunity to network with your peers and learn about the latest issues impacting independent dealers. The meeting will be held at the Jupiter Resort & Spa from 10am – 2pm. The town hall meeting is absolutely free to attend. Online registration available through May 5, 2015. To book a room for the weekend at the Jupiter Resort & Spa, call (800) 228-8810 and mention that you are with the FIADA Town Hall Meeting. Room rate is $169 per night. The resort fee has been waived and self-parking is complimentary. Valet parking is $15 per night. The cut-off date is April 14, 2015.

Stick Around and Join us for the FIADA Board of Directors Meeting

May 9, 2015

Juipter Resort & Spa 5 North A1A Jupiter, Florida 33477

www.fiada.com

(800) 237-0448

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April 2015 — Independent Dealer — 13

F&I TIPS

Engaging Customers in this Brave New World BY REBECCA CHERNEK

When it comes to new technology and digital interaction with customers, are you covering all the F&I bases?

he technology-fueled changes in the way consumers prepare for a purchase, shop and communicate has totally transformed auto marketing and sales in an incredibly short period of time. Just when you think your dealership is up to speed with the latest techie trend, a dazzling new platform creates yet another competitive window. An F&I audit can help ensure that your marketing extends to all the latest venues. Today’s Internet-savvy consumers are armed with a knowledge of consumer protections and buying procedure tips. They’ve conducted pre-purchase research in makes, models, features and prices – and dealerships’ customer ratings. Many communicate via their cell phones primarily through texting, rather than talking. And, most expect to receive instant answers or service, thanks to a seemingly infinite digital marketplace that provides immediate access to virtually any product from anywhere around the globe.

environment, dealers have to meet customers on their own terms. Since 83 percent of customers are shopping online, that means you need to make your website as welcoming and accommodating as your dealership. F&I Training is essential to mastering the ability to connect with your customers sooner in the process. And, more now than ever before, time is money. To compete, you need to connect with customers the instant they land on your website. Establishing a positive relationship via chat, friendly emails and follow-up phone calls will help you hold that top of mind position as the customer scrolls the digital auto marketplace. For veteran sales and F&I people

who are used to an initial face-to-face with potential customers, online F&I training and in-store consultations can help them navigate the new landscape. You also need to be fluent in the customer’s preferred communication venue, be it chatting on your website, emails, phone calls or texts. New software allows dealerships to text with customers without adding hardware or additional phone lines. You can carry on running text conversations with your customers as they go through their day – resulting in their ability to control the pace of the conversation. For the texting generation, this builds trust, resulting in more buy-in and retention. Many are not only shopping online, they’re getting pre-approved. Preapproval eliminates a lot of customer angst and the rough spots that slow the in-dealership process. When the virtual customer you’ve been courting comes into the store, you’ll continue the relationship with a classic meet-and-greet. Remember, successful selling begins with the first greeting, the first handshake and the first smile. It begins with ensuring that all potential customers feel Continued on page 16.

To compete in this new

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www.fiada.com

The Florida Department of Revenue is initiating a statewide audit campaign against Florida used car dealers, starting late summer 2014. The Department obtained DMV records of all used cars sold in Florida and is comparing these records against sales tax returns filed by used car dealers. Based on this information, the Department will estimate what taxable sales should have been for each used car dealer and initiate desk audits, full audits, and criminal investigations based on the level of estimated underreporting. These estimates can be erroneous and do not take into account financing charges, repossessions, sales to out of state residents, or other factors that can affect sales tax. Even worse, it only takes $301 of collected but not remitted sales tax to face felony charges and up to 5 years in jail under FL law.

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April 2015 — Independent Dealer — 15

CUSTOMER ENGAGEMENT continued from Page 14.

welcome and happy they made the decision to include your dealership on their shopping trip. If the customer isn’t pre-approved, the meet-and-greet procedure is the time to carefully qualify the customers to determine if they can buy the vehicle of choice. By asking the right questions in a pleasant, conversational manner, you’ll build rapport by showing customers you are listening and understanding their needs. I call the qualifying questions the first part of “The Interview,” though they should never seem like an interrogation. Keep in mind that these questions are being asked while also discussing the vehicles on the lot or in the showroom. QUALIFYING QUESTIONS • Are you here to see someone in particular? • Have you purchased from us in the past? • Are you interested in a new or preowned vehicle? • How long have you been living in this area? • Do you own your home? • What are you currently driving? Will you be trading out this vehicle? • What have you liked about your current car? Are you interested in the same features in a new vehicle, or are you looking for something different? • Will you be the only driver? • Who financed your current vehicle? • Were you pleased with the banking relationship you had with them? • What do you do for a living? • How long have you been with your company? Understanding the customer’s needs early in the process is essential to maximizing profits. 16 — Independent Dealer —April 2015

The second part of The Interview qualifies the customer for product sales. “Did you say you wanted leather interior? Were you also thinking of tinted windows? Will your new vehicle be kept outside or in your garage?” Every question has an answer that becomes a clue for potential sales from the product menu. While reviewing the purchase agreement, the following questions will glean more useful information. PRODUCT NEEDS QUESTIONS • How long do you usually hold onto your vehicles? Are you planning to do the same with your purchase today? • How many miles do you usually put on your vehicles each year? Are you planning to do about the same with this purchase today? • Did you purchase the trade-in as a new or used vehicle? If used: About how many miles were on the vehicle at the time of your purchase? • Do you think your driving habits are going to remain about the same? • If my used car manager were to ask, where can I say you had the vehicle maintenance work done? Are the maintenance records in the glove compartment of this car? Is there a payoff? If not, do you have your title with you today?

•

Do you have full-coverage insurance on the trade-in vehicle? What is the name of your carrier/agent? How long have you used this particular insurance company? Was your last vehicle insured through the same provider? If not, why not? What is your insurance deductible? Have you had to use your insurance for anything major over the past five years? Have you ever experienced a total loss?

The customer’s answer to these questions will help you overcome objections using a value proposition. Your discussion points support the value of your products by accentuating the benefit based on the customer’s actual circumstances. Both phases of The Interview should be rehearsed until they become a natural part of the conversation. When you meet your customers on their terms early in the process – where they shop and in their preferred mode of communication – and make a genuine effort to meet their needs, you’ll build relationships that last a lifetime. And your customers will spread the word. Rebecca (Becky) Chernek is the President and Founder of Chernek Consulting, LLC. She can be reached at (404) 276-4026 or via email at becky@chernekconsulting.com

Chernek Consulting Virtual Pro is a state-of-the-art interactive online learning experience that will provide your F&I manager with the fundamentals needed to run an efficient F&I department. It covers the basics on structuring nonprime/subprime paper to limit liability and avoid jeopardizing your reputation. F&I managers will also learn how to effectively present a menu – plus three of the most powerful responses to service contract objection your F&I staff will ever need to know! All FIADA members will receive a “two day” free trial to ALL CONTENT on the platform! 10% Discount on Individual Plans available for FIADA members Dealer Group Discounts Available – Please contact Chernek Consulting for details at 404-276-4026. www.fiada.com

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April 2015 — Independent Dealer — 17

L E G I S L AT I V E U P D AT E

Budgets and Tax Cuts Take the Stage BY SANDRA MORTHAM, FIADA LOBBYIST

e are in the fourth week of the 2015 Legislative Session, and right now the focus is all about the money, budgets and tax cuts to be precise.

There is a $4 billion dollar difference between the House and Senate’s spending plans that have hit the floor. According to Florida TaxWatch, the House budget totals $76.154 billion and the Senate budget comes in at $80.425 billion—which would be the largest budget in history. The House proposal is $826 (1.1 percent) million less than the Governor’s recommended budget and $919 million (1.2 percent) less than current year spending. The Senate budget would be a 4.3 percent increase over current year spending. Despite the big difference in budget totals, the two chambers are fairly close in many areas. The higher Senate budget is due to a proposed increase in federal dollars being drawn down through its alternative to Medicaid expansion. In fact, the Senate spends $229 million in general revenue less than the House. The House just released its proposed $690.1 million tax cut package. It includes: •

• •

A reduction in the state communications services tax on wireless phone, cable and satellite television and non-residential landline phone services rate by 3.6 percentage points ($470.5 million); A small reduction in the sales tax on commercial leases from 6 percent to 5.8 percent ($53.1 million). Sales tax exemptions for certain agricultural items and equipment ($13.4 million); school book fairs

18 — Independent Dealer —April 2015

•

($2.8 million); K-12 food and beverage concessions in support of extra-curricular activities (1.7 million); college textbooks and instructional materials ($43.7 million); metal recycling machinery and equipment ($0.9 million); gun club memberships or admissions $1.2 million); and motor vehicles brought to Florida by military personnel deployed outside the U.S. ($0.9 million). Sales tax holidays that would include the three-day “back-to-school” holiday, a one day holiday for items sold by small businesses priced at or below $1,000 ($40.3 million); and a one day tax holiday for firearms, ammunition, camping tents, and fishing supplies ($3.2 million). Increase in the property tax exemption for widows, widowers, blind, or totally and permanently disabled persons from $500 to $5,000 ($41.3 million); and expansion of the partial homestead exemption available to military servicemembers deployed overseas ($0.2 million).

As these proposed cuts make their way through the legislative checkpoints, it’s a good time to remind you about the FIADA PAC Fund. As you help contribute to the PAC and show your support of this industry, we have more momentum to get the issues and agendas that are important to dealers in the spotlight. There is a neverending line of advocates and groups trying to be heard in Tallahassee. With enough FIADA members’ voices aligned together, we can get things done.

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April 2015 — Independent Dealer — 19

O N L I N E S T R AT E G I E S

Profiling the Online Car Shopper Can Help You Map the Final Sale How car shoppers search online and what they are looking when they log-on are the things you need to know if you want to convert them into buyers. BY CHRIST Y TAYLOR

recently got a story assignment for Independent Dealer from an FIADA member about how to choose which automotive third-party websites to list cars on. With so many choices available to dealers, it is a great topic to research and write about (stay tuned to an upcoming issue of Independent Dealer to see the results). As I started digging in, I came across an interesting bit of research that would seem to make another good article “in the meantime.” I stumbled upon a white paper prepared by a company called CarStory. CarStory uses over four million real-time used vehicle listings along with

20 — Independent Dealer —April 2015

crowdsourced data from over eight million searches a week to produce unique insights that help move consumers from online shoppers to on-the-lot buyers. I’ve always been a sucker for market research and what it says about the buying habits of the segment it is analyzing, so I had to take a look. The results were too good not to share, and I hope this summary will give you some things to think about as you log-in to your web portal this week to list the new items in your inventory, online. You can read the entire paper at CarStory’s website (www.CarStory. com), but here are the highlights.

The first question the paper set out to answer was, “why used?” Today’s economy and financing landscape have evolved a lot over the last decade, and more and more people are able to purchase new if they choose but, just because they can doesn’t mean they want to. Overwhelmingly, the 262 respondents in CarStory’s survey said they wanted to buy a used car because of money. Most (60%) said they bought used “to save money,” and 53 percent said “to get a good deal.” Other reasons with significant percentages were “to minimize depreciation” and “to get better features for the price.” While that is probably a no-brainer to most people in the industry, it does reinforce the importance of competitive market pricing and highlighting the right features in the copy you write. The survey asked about those features in a random pool of participants ages 18 to 65 years by having respondents rank their top 25 used car features as “must haves.” At the top of the list (over 40%) was an MP3 player, with Bluetooth, iPod adapter, high performance tires and heated seats next in line. This information helps when trying to decide what to emphasize in those online vehicle descriptions.

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ONLINE SHOPPERS continued from Page 20.

One of the most interesting points in the study, was the explanation of the buying process and how consumers go from shoppers to customers. In all, there were 24 “research” points identified that car buyers use to narrow searches and zero in on the right vehicle. Some methods seem to be more accessed than others, but each step seems to play a key role, and should be evaluated by dealers to see how their dealership is (or isn’t) addressing it. (Take a look at Mapping the Car Buying Process at the bottom of the page). No surprise, the first place most people go in the year 2015 to start the shopping experience is online. With 86 percent of people identifying online searches as the first step of the process, it is clear that a sound internet strategy is essential for today’s dealerships. But, in a never ending sea of digital listings, is it possible to stand out? Yes, especially when you have taken the time to understand shopper’s online behaviors. As handheld technology has taken over the online research phase, the instant access to a nearly infinite number of possibilities has made most consumers somewhat scattered and distracted. The attention span for consumers in the online research phase is shrinking, meaning dealers only have a handful of opportunities to impress and engage buyers.

22 — Independent Dealer —April 2015

You could think of the hierarchy of web listings and pages as somewhat of a sales funnel. Large at the top with basic “search result views,” those matches that customers get when they enter the details of what they are looking for into various search engines and fields. From there, they begin to narrow down the intimidating heap into “Vehicle Detail Page Views,” the spot where they land after clicking on a listing they want to know more about. At this point, the customer makes a decision whether to find out more by completing a lead submission, or return to the previous page and keep looking. To better understand the consumer attention span during the online research phase, CarStory looked at the average number of search results pages (SRPs) and vehicle detail pages (VDPs) that consumers across their marketplaces viewed. Then, they looked at how many leads were being submitted. From January 2015 to February 2015: • • •

7.8 million unique consumers viewed SRPs 4.1 million made it to at least one VDP. 103,700 unique consumers submitted a total of 182,533 leads (online form submissions).

From this information, it can be said that the average shopper views about eight SRPs, five individual VDPs and generally submits only one or two leads.

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Are there any tricks to getting customers further down the funnel and onto your website? A few. The first being in pricing. As said earlier, the majority of used car shoppers are motivated by price looking to “save money” or “get a good deal.” CarStory looked at what pricing structures seemed to get the most interest. They started with the oldest trick in the book, ending the price in a 9. What was interesting to uncover was that when the 9 is placed in the last digit of the total price, it has no effect on converting shoppers. However, when it is used in the last two or last three digits, trends start to appear. Prices that end in “99” instead of “00” showed a 16 percent lift in SRP to VDP conversion (taking that extra click from the basic search result to the details page) and prices ending in “999” performed 9 percent better than those ending in “000.” The moral of the story: end your prices with multiple 9s. When it comes to images, the nines have it again. While customers are looking to a dealer’s photos to accurately depict the condition of the vehicle, too many photos can be overload. The research conducted found that nine images seemed to be the “sweet spot.” Postings with nine images saw a: • • •

50% higher lead submission rate than those without any images. 56% higher lead submission rate than those with 20 images. 71% higher lead submissions rate than those with 30 images.

While it may seem counterintuitive to use fewer photos, it appears that consumers can suffer from “image fatigue.” At this early stage in the research process, consumers are scanning multiple vehicles and are not ready to wade through dozens of photos. Sharing too many photos forces the consumer to navigate the picture carousel to find the ones that tell the most about the vehicle. Make it easy by posting only key shots on the third-party sites. Save the additional photos for the listings on your own website, where the consumer will come when they are closer to the sale and interested to find out as many details as possible before deciding to come in for a visit.

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This article only starts to paint the profile portrait of today’s online car buyers. You can read the entire paper at http:// www2.carstory.com/l/62222/2015-03-19/gfph. It’s a free download, and worth the effort of review. Take a look and evaluate your current online strategy, so when my next article comes out, you’ll be ready to get posting. www.fiada.com

April 2015 — Independent Dealer — 23

LEGAL ROUND-UP

A Look At Current Legal Issues BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO, HUDSON COOK, LLC

A monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits followed each month. COMPLIANCE TIP This isn’t so much a compliance tip as it is a “don’t get ripped off ” tip. When buyers provide you with “stip” documents, do you use phone numbers in those documents to verify employment, length of residence and other details? We’ve heard of scam providers of these documents who also provide the phone numbers for creditors to call for verification of the fakes. It would be a best practice to locate employers’ and other information providers’ phone numbers independently, and to not rely on information appearing in the stip documents themselves. FEDERAL DEVELOPMENTS DOJ Settles Reverse Redlining Case Against North Carolina Dealer. On February 11, the U.S. Department of Justice, the U.S. Attorney’s Office for the Western District of North Carolina and the North Carolina Department of Justice announced a settlement of the federal government’s first-ever discrimination lawsuit involving “buy here, pay here” auto financing. The settlement, subject to court approval, resolves a lawsuit by these authorities, alleging that Auto Fare Inc. and Southeastern Auto Corp., two Charlotte “buy here, pay here” dealerships, and their owner violated the federal Equal Credit Opportunity Act by engaging in a pattern or practice of “reverse redlining” by intentionally targeting African-Americans for unfair and predatory credit practices in financing used car purchases. The lawsuit alleged that the two dealerships’ sales prices, down payments, and interest rates were disproportionately high compared to other subprime used-car dealers. 24 — Independent Dealer —April 2015

Because, the government charged, the dealerships did not meaningfully assess the customers’ creditworthiness or ability to repay, their rates of default and repossession allegedly were disproportionately high. Additionally, the dealerships allegedly engaged in repossessions when customers were not in default. North Carolina also alleged that the dealerships’ actions violated the state’s Unfair and Deceptive Trade Practices Act. The settlement requires the dealerships to implement practices to ensure that the terms of their credit sales and repossession practices are no longer unfair and predatory. The required changes include: limiting projected monthly payments to no more than 25% of a buyer’s income; requiring interest rates to be at least five percentage points below the state’s rate cap; mandating a lower interest rate for buyers with specified evidence of lower credit risk; requiring competitive sales prices; prohibiting hidden fees on top of the required down payment; prohibiting repossessions until at least two consecutive payments have been missed; providing down payment refunds to buyers who quickly go into default; requiring strict compliance with state repossession laws; providing buyers improved disclosures at sale (including disclosing the presence of any GPS or automatic shut off device); allowing buyers to obtain an independent inspection of the car before completing the purchase; and providing buyers improved notices before repossession. The settlement also requires defendants to establish a $225,000 settlement fund to compensate victims of past discriminatory and predatory financing

practices. The settlement came after the court denied the dealerships’ motion to dismiss the case and agreed that reverse redlining by an auto creditor is illegal discrimination. Finally, Some News on Arbitration. On February 23, the CFPB announced that it will hold a field hearing on arbitration in Newark, New Jersey on March 10. The hearing will feature remarks from Director Richard Cordray, and testimony from consumer groups, industry representatives, and the public. Perhaps it will not happen at this event, but we are expecting the CFPB to ban the use of pre-dispute, mandatory arbitration agreements in finance contracts and leases. DOJ Settles Servicemembers Repo Case. The Justice Department announced on February 25 that it reached a settlement with Santander Consumer USA to resolve allegations that Santander illegally repossessed servicemembers’ vehicles in violation of the Servicemembers Civil Relief Act. Santander has agreed to pay at least $9.35 million to resolve the lawsuit. The settlement covers the allegedly improper repossessions of 1,112 motor vehicles between January 2008 and February 2013. The lawsuit alleged that Santander conducted 760 repossessions, without court orders, of vehicles owned by SCRA-protected servicemembers. The agreement requires Santander to pay $10,000 plus compensation for any lost equity (with interest) to each of these servicemembers. The suit also alleges that Santander sought to collect fees arising from an additional 352 repossessions that unrelated vehicle Continued on page 26. www.fiada.com

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LEGAL ROUND-UP continued from Page 24.

creditors had conducted in violation of the SCRA before Santander acquired the accounts. Santander must pay $5,000 to each of these servicemembers, and must repair the credit of all affected servicemembers. For future repossessions, the settlement requires Santander to check the Defense Department’s automated database to see if a car’s owner is in military service prior to repossessing. Finally, the settlement requires Santander to conduct a review and provide compensation for any additional unlawful repossessions that may have occurred since February 2013. LITIGATION Court in Buyer’s State Lacks Personal Jurisdiction over Nonresident Vehicle Seller: Two cases we report on this month consider whether a court in a car buyer’s state had jurisdiction over an out-of-state seller. In one case, a Washington resident bought a Jeep through eBay. The buyer flew to Philadelphia to pick up the Jeep and drove it back to Washington. He had trouble with the Jeep on the return trip. He sued in Washington state court, alleging that the seller hid the defects by manipulating the error codes and alleging additional violations of Washington trade practice law. The trial court dismissed the case for lack of jurisdiction, and the Court of Appeals of Washington affirmed, holding that a single sale through eBay, without any additional evidence, did not meet the minimum contacts requirement for personal jurisdiction over a nonresident seller under Washington’s long-arm statute. The appellate court found no additional obligations between the parties and no evidence that the seller had additional sales to Washington residents. See Cook v. Advanced Auto Brokers, LLC, 2015 Wash. App. LEXIS 59 (Wash. App. January 20, 2015). In the other case, a Wisconsin resident saw a car ad by an Illinois dealership on cars.com. He called the dealership 26 — Independent Dealer —April 2015

about the car from his home in Wisconsin and was told that the vehicle was in excellent condition with no known mechanical problems. A dealership representative also made a brief call to the Wisconsin resident at his home. The man went to the dealership in Illinois and bought the car. After the buyer had problems with the car a few months later, he sued the seller in Wisconsin state court, alleging fraud by wire and fraudulent representation. The seller moved to dismiss the complaint for lack of personal jurisdiction, and the trial court granted the motion. On appeal, the buyer argued that the trial court erred because the seller’s online ads on third-party websites and the phone conversations with him met the “minimum contacts” test required for the court to assert jurisdiction. The Wisconsin Court of Appeals affirmed. The appellate court noted that online ads are only potential contacts with the state of Wisconsin. The seller did not target Wisconsin residents and could not control who viewed or responded to the ads. In addition, the two phone calls were not significant contacts. See Carlson v. Fidelity Motor Group, LLC, 2015 Wisc. App. LEXIS 27 (Wis. App. January 14, 2015). FTC Holder Rule Allows Buyer to Assert Affirmative Claims against Finance Contract Assignee for Substantial Breach: A couple bought a recreational vehicle from a dealership, and the finance contract was assigned to a bank. The couple alleged that the RV was defective and that the manufacturer did not perform the repairs and refused to rescind the sale. The couple sued in U.S. District Court for the Eastern District of Louisiana, alleging violations of Louisiana redhibition laws, lender liability on the part of the bank, violation of the MagnusonMoss Warranty Act, and negligent repair. The bank moved to dismiss the claim and argued that the FTC Holder Rule does not entitle a buyer to bring affirmative claims against the assignee of a finance contract, but

instead merely entitles the buyer to assert the same defenses it would have against a seller against the assignee of the contract. The court, however, ruled that the plain language and history of the Holder Rule expressly permitted affirmative claims by buyers against assignees in cases of a substantial breach warranting rescission of the sale. As such, the court denied the bank’s motion to dismiss. See Wales v. Arizona RV Centers LLC, 2015 U.S. Dist. LEXIS 2628 (E.D. La. January 9, 2015). Court Refuses to Dismiss Claim that GAP Waiver Was Finance Charge: A woman bought a car and a Guaranteed Asset Protection waiver from a dealership. The cost for the GAP waiver was included in the Itemization of Amount Financed in her retail installment contract. Both the retail installment contract and the GAP waiver contained recitals stating that the GAP waiver was not required to obtain financing. However, the buyer claimed that, during negotiations, a salesperson told her that she had to buy the GAP waiver in order to get financing. She sued, claiming that, under the Truth in Lending Act, the GAP waiver charge should have been included in the finance charge, rather than in the amount financed, because the purchase of the GAP waiver was required as a condition of financing. The dealership moved to dismiss the complaint, and the federal trial court denied the motion. The regulations implementing TILA provide, among other things, that charges for debt cancellation coverage may be excluded from the finance charge if the coverage is not required by the creditor and that fact is disclosed in writing. The dealership argued that the contract recitals show conclusively that buying the GAP waiver was not required. The buyer argued that the recitals were not conclusive given the salesperson’s statement that the GAP waiver was required for financing. The court agreed with the buyer, noting that case law and Federal Reserve Board staff letters agree that a consumer’s signature www.fiada.com

Tom (thudson@hudco.com) and Nikki (nmunro@hudco.com) are partners in the law firm of Hudson Cook, LLC. (410) 8655411 or www.counselorlibrary.com.

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April 2015 — Independent Dealer — 29

INDUSTRY NEWS Third-Party Websites Can Drive Retail Sales

Vehicle shoppers who are highly satisfied with their shopping experience on an automotive thirdparty website are 10 times more likely to request information from a dealership than those who have a poor shopping experience, according to the J.D. Power 2015 Third-Party Automotive Website Evaluation Study. Among vehicle shoppers who are highly satisfied with their shopping experience, 52 percent say they “definitely will” request more information from a dealership about the vehicle versus just 5 percent of those who have a less satisfying experience. Slightly more than onefourth (27%) of new-vehicle shoppers say they “definitely will” request information from a dealership, while 14 percent of used-vehicle shoppers say the same. “When shopping online, a positive automotive third-party website experience can influence shoppers’ inclination to reach out directly to a dealer to request information about the vehicle they are researching,” said Arianne Walker, senior director, automotive media and marketing at J.D. Power. In 2015, overall satisfaction with automotive third-party websites averages 746. NADAguides ranks highest (768), followed by Cars.com (763) and The Car Connection (760). The findings are based on evaluations from more than 5,000 new- and usedvehicle shoppers who said they would be in the market for a vehicle within the next 24 months.

Proposed White House Bill Could Stop the Sale of Recalled Vehicles President Barack Obama sent a sweeping, six-year, $478 billion transportation bill to Congress in March, which includes an “imminent hazard authority” clause of the National Highway Traffic Safety Administration (NHTSA) that would be able to order automakers to stop selling vehicles presenting “an immediate likelihood of death or serious injury to the public.” The so-called stop-sale proposal, one of several auto safety regulatory reforms Obama’s bill is seeking in the wake of a record year for recalls, would give NHTSA broader power to unilaterally intervene on the sale of vehicles while it and the affected manufacturer settle their dispute. Under the current law, automakers have significant power

to challenge NHTSA and delay fixes by rejecting the regulator’s allegations. NHTSA must seek input from manufacturers when it identifies a vehicle safety issue, but the claim can wind up in a court battle that can last as long as two years, Joan Claybrook, a consumer advocate and former NHTSA administrator, said. The bill also includes a provision that would require used car dealers to check their inventories for pending safety recalls, and fix any they find, before sale. Under the current law, only new cars fall under the rule. The final bill is expected to be out in June. A copy of the bill that was sent to Congress can be seen online at http:// www.scribd.com/doc/260514855/2015Department-of-Transportation-bill-theWhite-House-version.

PassTime and The Car Finance Company Expand UK Partnership PassTime, a leading provider of GPS-based technology solutions and The Car Finance Company, Europe’s leading alternative finance lender, announced today an exclusive agreement between the two companies that will bring 70,000 payment assurance and telematics devices to the United Kingdom. The deal will build upon an already successful relationship between PassTime and The Car Finance Company, offering solutions and distribution in the United Kingdom. “PassTime has been supplying Payment Assurance and GPS devices to The Car Finance Company since 2009 and it is been a real pleasure to work with a company that recognizes the quality and features of the products that PassTime designs and distributes worldwide. We are looking forward to supporting The Car Finance Company’s continued growth in the UK markets and we also have just finalized a distribution agreement with them for additional expansion into additional European markets which is very exciting,” said Stan Schwarz, Founder/ CEO of PassTime USA.

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