MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
auto M a s s a c h u s e t t s
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
February 2015 • Vol. 27 No. 2
The official publication of the Massachusetts State Automobile Dealers Association, Inc
The Winning
LEGACY Scott Shulman — MSADA TIME Dealer of the Year
Ma s s a c h u s e t t s
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St a f f D i r e ct o ry Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Marta Argueta-Guerra Administrative Assistant/www Membership Coordinator mguerra@msada.org A u t o D e a l e r M Ag a z i n e Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator macdonaldcs8@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: mguerra@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
Ad Directory Blum Shapiro, 21 Boston Herald, 32 Conserv Group, 20 Downey & Company, 22 Ethos Group, 2 Lynnway Auto Auction, 20 Nancy Phillips, 21 O’Connor & Drew, 31 Reynolds & Reynolds, 24 Southern Auto Auction, 19 SunTrust, 23 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Back Cover: $1,800 Quarter Page: $450 Inside Front: $1,700 Half Page: $700 Inside Back: $1,600 Full Page: $1,400
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Ta b l e o f C o n t e n t s
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From the President: A Moment in the Limelight THE ROUNDUP: Snow and Slow TROUBLESHOOTNG: Reporting Pay Requirements SECURITY: Dealership Data Risks AUTO OUTLOOK ACCOUNTING: Fail to Plan, Plan to Fail: How Your Dealership Can Prepare for 2015
15 INSURANCE: Drive More Customers Back to Your Dealership 16 Cover Story: The Winning Legacy— Scott Shulman, Dealer of the Year
19 25 26 28
NEWS From Around the Horn DEALER SERVICES: Leaders Have Goals nada update: Another NADA Convention for the Ages NADA MARKET BEAT
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer FEBRUARY 2015
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from the President
By Scott Dube, MSADA President
A Moment in the Limelight
Celebrating TIME Dealer of the Year nominee Scott Shulman
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s an essential part of the retail business community and community at large, we all have a unique opportunity to serve as civic leaders and beacons of the American dream we are all chasing. For 2014 Massachusetts Dealer of the Year Scott Shulman, that American Dream now spans three generations as he continues to run the business his father started in 1957. Nat, who passed in 2009, served as an example not just for his son but the entire dealer community in his role as former MSADA president and respected columnist. Both father and son now share the award. More importantly, over the past 60 years the Shulman family has built a business that’s become ingrained in its role in the community. Scott Shulman has continued to give back, while also pushing the business forward, with the introduction of his Chrysler store. And while many of us share multigenerational success stories, Scott’s record of community service stood out as we looked for a nominee. An accomplished athlete, Shulman supports local sports organizations by coaching and donating resources. He served on the board of Thayer Academy in Braintree for 12 years and recently provided funds to Hingham High School for a new scoreboard for the football stadium. He is a major supporter of the Hingham Recreation Department, which provides affordable childcare, athletics programs, senior citizens programs, and summer camp for residents. A major supporter of healthcare in his community and programs at South Shore Hospital in South Weymouth, Scott says
FEBRUARY 2015
“As we continue to do more than most to help drive our communities forward, Scott’s recognition should make us all proud.”
he is most proud of sponsoring the launch of a mobile educational and training resource for EMS and fire personnel. He also runs blood drives at his dealerships and supports Child Reach Foundation, Toys for Tots, Dana-Farber Cancer Institute, food pantries, Boy Scouts of America, and many
other organizations. Scott being recognized in San Francisco at the NADA Convention was an exciting time not just for Scott, his family and employees but also for the Massachusetts dealer community as a whole. MSADA is always working diligently to inform the public that our dealer members are neighbors just as much as they are businesses. Getting an opportunity to see Scott on a national stage is a chance for all of us to feel proud of the work we do every day as a group. It’s a reminder that the work we do every day is part of the essential fabric that makes up Main Street America. As we continue to do more than most to help drive our communities forward, Scott’s recognition should make us all proud. Please join me in congratulating Scott on this milestone, and make sure to start thinking about who we should submit as a nominee this year for our 2016 TIME Dealer of the Year.
Annual Meeting Preparations Underway Be on the lookout for more information about our MSADA Annual Meeting, which will take place May 1 in Boston. As always, if you have any feedback on past events or ideas for what we’re about to put on in a few months, please reach out to us. t
Massachusetts Auto Dealer www.msada.org
MSADA
A ssociate M ember D irectory Name
Msada Board Barnstable County
Brad Tracy, Tracy Volkswagon Audi
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group
Franklin County
Jay Dillon, Dillon Chevrolet
Hampden County
Jeb Balise, Balise Auto Group
Hampshire County
Bryan Burke, Burke Chevrolet
Middlesex County
Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru
Norfolk County
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
Plymouth County
Christine Alicandro, Marty’s Buick GMC Isuzu
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President James G. Boyle, Tuck’s Trucks
NADA Director
Don Sudbay, Jr., Sudbay Motors
Officers
President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian
Contact Telephone
ADESA Boston Chris Carli (508) 270-5403 ADP Dealer Services Maria Trezza (973) 404-4466 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Lennox Cornwall (304) 702-7399 AutoAlert Don Corinna (949) 398-7008 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly (617) 929-8373 The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 CitNOW Jack Gardner (617) 221-8008 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Inc. Mike Douglas (770) 246-9724 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance John Ballard (859) 312-9896 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Stephanie Franklin (713) 580-3143 GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 KEEPS Corporation Darcy Silver (718) 309-6133 Key Bank James Q. Moretti (781) 558-5132, Mark Flibotte (617) 385-6232 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 MetalWave Mark Babcock (603) 686-4421 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp Dealer Services Frank Salkovitz (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services, Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Ping Weiner (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Richard Anderson (401) 432-0749 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500 SunTrust Bank Michael Walsh (617) 345-6567 Taino Consulting Group Herby Duverné (617) 797-9316 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 The Institute For Business Excellence Bill Napolitano (508) 643-2299 TrueCar Pat Watson (803) 360-6094 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092
www.msada.org
Massachusetts Auto Dealer FEBRUARY 2015
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The Roundup
Snow and Slow By Robert O’Koniewski, Esq. MSADA Executive Vice President Join us on Twitter - @MassAutoDealers Not to belabor the obvious, you’d have to be living in a cave in the South Pacific to not know the number one story so far in 2015 has to be the record-breaking snowfall that has slammed us over the last four weeks. The single biggest disruption to car and truck sales, as well as to our overall economy, in the first two months of the New Year is not a labor strike, an oil embargo, or some other catastrophic economic event. It has been something completely out of our control – the repeated snowstorms Mother Nature has dumped on Massachusetts. When the last attendee left our 2015 New England International Auto Show in the early evening of Monday, January 19, Boston and her surrounding environs had experienced less than 6 inches of total snowfall this winter. Since then, four different major storms have dumped a total of over another 90 inches of snow, shutting down schools, the transportation and transit systems, and businesses of all sizes, causing a loss of well over a $1 billion in economic activity, as estimated by economists. To add insult to injury, the Presidents’ Day weekend storm had a chilling effect on the traditional push for car and truck sales that this holiday has come to signify. While dealership employees were busy clearing cars and lots, potential customers were home plowing and shoveling, again – certainly not visiting showrooms. Whether sales are delayed later into March or disappear entirely for now is yet to be seen. Right now, everyone is just holding his or her breathe to see if this winter will continue to be plagued with more snow, which would make this the snowiest winter on record and one of the worst economic starts to the selling season. FEBRUARY 2015
Massachusetts Auto Dealer www.msada.org
Government Moving at Snail’s Pace The debilitating snowstorms have caused newly inaugurated Governor Charlie Baker and his team to temporarily focus their energies not on pursuing his agenda for economic growth and reforming government’s role but on addressing the effects of at least four major snowstorms over the last four weeks, especially as it relates to the shortcomings highlighted by the storms in our failed transit system and road clearance systems. During the meteorological tumults, however, Governor Baker and the General Court did manage to pass legislation to attempt to address the $768 million budget deficit for FY2015 his predecessor left him halfway through the fiscal year. The good news for all of us was the deficit “fix” did not include any new taxes or fees. Further, the House speaker, Robert DeLeo (D-Winthrop), stated in his “State of the State” address to his colleagues that there will not be any new taxes emanating from the House in 2015. Other than this budget bill, however, very little else has thus far been undertaken in the two branches of the Legislature. The two chambers have elected their overall leaders for the 2015-2016 session: The Senate is led by President Stan Rosenberg (D-Amherst), and the House by the aforementioned Speaker DeLeo. However, the Senate has progressed to elect all its leaders and allocate all committee assignments, but the House has not yet fulfilled its procedural role. (There is speculation that the House may do so before the close of February.) The new Senate leaders (all Democrats) for this session are the following: President: Stan Rosenberg, Amherst
MSADA Majority Leader: Harriette Chandler, Worcester President Pro Temp: Marc Pacheco, Taunton Asst. Majority Leader: Cynthia Creem, Newton Asst. Majority Leader: Brian Joyce, Milton Asst. Majority Leader: Mark Montigny, New Bedford Majority Whip: Anthony Petruccelli, East Boston Asst. Majority Whip: Ken Donnelly, Arlington Ways & Means Chair: Karen Spilka, Ashland The six Senate Republicans re-elected Bruce Tarr of Gloucester to be Senate Minority Leader. Although the House and Senate each have approved rules governing both of their chambers, they have not yet approved joint rules, which govern such things as the composition and operations of the joint committees (most legislative committees consist of House and Senate members) as well as legislative procedural matters. A conference committee has been charged with resolving the differences in the joint rules proposals put forth by each chamber. The major sticking point on the joint rules surrounds a Senate approved rule that would allow the Senators on a joint committee to approve moving a Senate bill out of committee, with a majority vote of the Senators, regardless of how the House members vote on the Senate bill. The joint committees usually consist of 11 House members and six Senators, thereby giving the House a disproportionate say in legislative matters before the committee. The new rule is being pushed by the Senate, because Senators feel that the House has too much control over the flow of legislation in the joint committees, to the detriment of Senate bills. House leadership, obviously, so far does not look too kindly on this proposed rule. Until this dispute gets resolved, the committee process will cease to exist.
Finally, as reported last month, the Legislature awaits Governor Baker’s proposal for the FY 2016 budget, which commences on July 1. The Governor must file his proposal, known as House 1, by March 4. Since the debacle of the numerous MBTA subway, bus, and commuter rail disruptions during the recent snowstorms have highlighted the need for serious reforms in that agency, the Governor will have his plate full as he strives to work with the Legislature on a balanced budget for this and the next fiscal years, as well as improvements to a transportation system upon which so many employers and workers rely for a stable and growing economy.
Bill Filings for 2015-2016 For this year’s legislative session, your Government Relations Committee, chaired by John Hartman of the Ira Motor Group, developed a number of proposals to address lingering issues affecting franchise dealers in Massachusetts. Other members of the GRC are Scott Dube, Bill Dube Hyundai; Jack Madden, Jack Madden Ford; Charles Tufankjian, Toyota of Braintree; and Jim Boyle, Tuck’s Trucks. The bill filing deadline for the current session was January 16. At some point, once the aforementioned skirmish on joint rules is resolved, the House and Senate clerks will provide a number to each bill filed by members of their respective chambers and then assign each bill to a committee for review, including a public hearing, which is mandatory for every bill. The issues being addressed by the Association’s legislative proposals are the following: • 93B Amendments. The Legislature last approved amendments to our auto dealer franchise law in 2012. Those amendments included strengthening our warranty reimbursement law by establishing a formula for the parties to rely on to ensure dealers receive actual retail-level reimbursement for warranty and recall work and parts. Issues addressed in this year’s bill, which was filed by Senator Marc Pacheco (D-Taunton), and Rep. www.msada.org
Ted Speliotis (D-Danvers), include the following: – Prohibits vehicle surcharges by manufacturer to pay for warranty reimbursement at the statutorily required retail rate; – Limits how often the manufacturer can request a facility upgrade; – Prohibits a manufacturer from requiring a dealer to purchase goods or services from a vendor selected, identified, or designated by a manufacturer or distributor by agreement, program, incenwtive provision, or otherwise without making available to the dealer the option to obtain the goods or services of substantially similar quality from a vendor chosen by the dealer; – Protects dealer’s customer data from OEMs and other third parties; – Prohibits an OEM from arbitrarily or unreasonably altering the geographic area of responsibility within which it measures the dealer’s performance; – Protects dealers from manufacturers’ using export chargebacks to penalize dealers for cars that get exported without dealer’s knowledge; and – Clarifies the current limit on the manufacturer ownership of dealerships and direct sales of vehicles by manufacturers. • Licensure of Inspection Stations. Filed by Sen. Vinny deMacedo (R-Plymouth), this would require the RMV registrar, regardless of any internal restriction the agency has in place, to approve a license for an inspection facility to any new car dealer that requests one and who has invested a threshold amount in constructing a new dealership or re-doing an existing store. • Motor Vehicle Service Contracts. This legislation would prohibit OEMs from requiring dealers to exclusively sell OEM-only extended service contracts or extended maintenance plans; filed by Sen. Eileen Donoghue (D-Lowell) and Rep. Angelo Puppolo (D- Springfield). • Repeal the Used Vehicle Record Book (aka the Police Log), filed by Rep. John Rogers (D-Norwood).
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The Roundup • Insurance Labor Rates Paid to Auto Body Repairers. Filed by Rep. Joe Wagner (D-Chicopee), this bill would establish a process for setting insurance reimbursable labor rates paid to auto body repairers that is in line with the current economics of the industry in Massachusetts. The average rate presently paid by insurance companies to repairers is the lowest in the country. We will keep dealers informed as to the date of the public hearings on these bills in order to mobilize our grassroots of dealers to contact legislators. Should you require any additional information on these items or wish to volunteer to get involved in the process, please do not hesitate to contact me.
Dealer Day on Beacon Hill – May 13 A great opportunity for dealers and their key managers to get involved in the legislative process, our annual “Dealer Day on Beacon Hill” will be held on Wednesday, May 13, in Boston. Be on the lookout for information on this event. We are asking our member dealers and their key employees to convene at the Parker House Hotel in Boston beginning at 10:00 a.m. in preparation of walking up to the State House to meet with their representatives and senators to discuss those issues in the automotive industry that dealers are presently confronting. We will have an issues briefing and a keynote address to get dealers in a proper frame of mind to provide legislators a dealer’s perspective on your economic footprint locally and throughout the state in the aggregate. For those dealers we know who will be attending, we will schedule your legislative appointments for you. It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. No one knows your business better than you. That knowledge needs to be conveyed to your legislators in an environment and manner they understand, hence our Dealer Day on BeaFEBRUARY 2015
MSADA
con Hill. Please circle the date and plan on visiting Boston on May 13.
Key Compliance Webinars – March 5 & March 12 We have two important compliance webinars coming up, complimentary for our member dealers and their key managers. Employment Law Risk Reduction Seminar – March 5, Framingham, 9AM. How confident are you that your managers and you have kept pace with all the new employment law requirements thrown upon your business? On Thursday, March 5, at 9:00 a.m., at the Sheraton Framingham Hotel, 1657 Worcester Rod (Route 9), in Framingham, attend our seminar by Fisher & Phillips attorneys Joe Ambash and Jeff Fritz to receive important updates on critical employment law issues specifically affecting auto dealers in Massachusetts. The enforcement of wage/hour laws continues to challenge Massachusetts dealers. In order to assist our member dealers, last June we unveiled our Legal, OSHA Compliance Assistance Program, which includes employment law compliance in conjunction with the law firm of Fisher & Phillips. Our employment law compliance program is designed to encourage our members to review their pay plans, employee handbooks, and employment application, and to undertake a management training audit. With our presenters we will: • Introduce our new MSADA Employment Law Compliance Guide for managers, which will help you train managers to understand and follow employment laws; • Review the ins and outs of lawful pay plans in Massachusetts; • Review the essential elements of lawful handbooks in Massachusetts; • Review the details of the MSADA-subsidized pay plan, handbook review, and manager training programs available to our member dealers. Obamacare Employer Mandate Seminar – March 12, Natick, 9AM. We warned you - the Obamacare bureaucrats
Massachusetts Auto Dealer www.msada.org
have struck yet again. In case you missed it, on February 10 the Internal Revenue Service (IRS) released long-awaited final regulations implementing the Employer Shared Responsibility provision (the socalled Free Rider Penalty or employer mandate) under the Health Care Reform law, affectionately known as Obamacare. Join us for an important health care law seminar on Thursday, March 12, 2015, at The Verve Hotel, 1360 Worcester Road (Route 9), in Natick, 9:00-11:00 a.m. The seminar will be presented by Kelli Personette of American Fidelity Assurance, which is an MSADA associate member and endorsed partner. This seminar, designed specifically for auto dealers and their HR managers, will review the general rules, describe the changes and key clarifications provided by the final regulations, and highlight some of the questions that remain unanswered. More specifically, the seminar will: • Describe the Health Care Reform provisions impacting employers that require action between now and 2016; • Discuss the 2016 reporting requirements and review the templates; • Analyze how the rules apply to an employer’s current staffing practices and could impact the structure of their workforce going forward; • Identify the employer’s health plans and administrative practices that may need to be revised; and • Create an action plan for organizing key compliance activities. Email me at rokoniewski@msada.org to register for either or both seminars. Breakfast will be made available prior to each seminar, beginning at 8:15 a.m. both days.
EV Rebates Program Webinars Last June, the Commonwealth of Massachusetts, in an effort together with seven other states to reduce greenhouse gas emission levels by encouraging consumers to purchase more electric-powered vehicles, launched the Massachusetts Offers Rebates for Electric Vehicles (MOREV) program.
MSADA Massachusetts consumers who purchase or lease an electric or hybrid vehicle can apply for rebates of up to $2,500 through the MOR-EV program. Applicants must apply for the rebate directly within three months of the completed transaction, and the approved applicants will receive their checks directly from the state. There is no action required on the part of the dealer in the rebate process. The Center for Sustainable Energy will be hosting a webinar for dealers on the MOR-EV program on the following dates and times: • Tuesday, March 3, 3:00 p.m. EST • Wednesday, March 4, Noon EST • Thursday, March 5, 10:00 a.m. EST Simply use this link to attend the webinars: https://join.me/CCSEskypark. On a phone or tablet, launch the “join.me” app and enter meeting code: CCSEskypark To join the Audio Conference by phone: • Dial 781-666-2350 • Enter conference ID: 812-319-637# Topics to be covered are eligibility requirements; important funding availability updates; and overview of the rebate application process If you have any questions or a specific topic that you would like addressed during the presentation, e-mail Nicole Appenzeller the Program administrator in advance at nicole.appenzeller@energycenter.org or call (866) 900-4223. Additional webinars can be arranged upon request.
Our PACs - DEAC & NCDPAC We appreciate the contributions we receive from our member dealers who answer our calls for donations to our PACs. Each year MSADA expresses itself politically through NADA’s federal PAC, Dealers Election Action Committee (DEAC), and through our state PAC, the New Car Dealers Political Action Committee (NCDPAC). We depend on contributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Contributions to our PACs are an
inexpensive insurance policy. Since by law we cannot use our membership dues or other association revenues for political contributions, the PACs help us to remain strong politically as we advocate for our dealers’ interests in the political process. If you have not yet given to the PACs this year, please contact me at rokoniewski@msada.org and we can make sure your contributions happen. Thank you.
DealersEdge Webinars Schedule for March Are you taking full advantage of our weekly educational and training seminars provided to you through our partnership with DealersEdge Management Training? Are you receiving our weekly e-mails announcing upcoming webinars and registration information? If not, you are missing out on an incredible bargain that will add value to your employees knowledge and skills, and ultimately to the success of your stores. The live courses, and more than 100 pre-recorded webinars (and growing), are available to MSADA members in two ways. Members can elect to register for a live webinar or purchase a pre-recorded course on an a la carte basis with MSADA’s member discount OR you can sign up for the MSADA VIP Season Ticket. A dealership can use the VIP Season Ticket to register up to 10 team members to access all programming, both live and recorded. If you have any questions, please don’t hesitate to contact DealersEdge at 800321-5312 or me at rokoniewski@msada. org. All MSADA-related DealersEdge information can be found at https://msada. dealersedge.com. The upcoming schedule of webinars for the next several weeks is as follows: • March 5, 1pm EST – “Habits and Practices of the Exceptional Parts Manager”; • March 12, 1pm EST – “Effective Recall Handling: Full Responsibilities Without Killing Service Profits”; • March 19, 1pm EST – “Dealership Controllers: How to Financially Triage and Cure Poor Performance in Key Departments”. www.msada.org
MSADCF Auto Tech Scholarships Available Applications for the Massachusetts State Auto Dealers Charitable Foundation’s 2015-2016 Auto Tech Scholarships are now available on our website at www. msada.org. The Foundation’s auto tech scholarship program awards scholarships to eligible applicants for use at post-secondary educational institutions that offer auto tech training programs. Since its inception in 2003, the Foundation has awarded almost $1 million to more than 200 students. A scholarship award is worth $6,000-$13,000 each over two years. To obtain additional information on the scholarship program, contact Jean Fabrizio at MSADA at (617) 451-1051 or by e-mail at jfabrizio@msada.org. The application deadline is Friday, May 22, 2015.
Save the Date: Annual Meeting – May 1, Boston Your Association will conduct this year’s Annual Meeting on Friday, May 1, at the Mandarin Oriental Hotel in Boston. We are lining up a number of exciting industry speakers for the day. Be on the lookout for our invitation and registration materials.
MSADA-Reynolds Forms Rollout For five years we have operated our forms sales program in partnership with Reynolds & Reynolds. For the past year we internally have been working with Reynolds on an improved menu of forms, including updating the forms needed by our dealers to properly conduct business in Massachusetts and full vetting by MSADA and Reynolds attorneys. We are now in the process of rolling out the increased menu of forms, and we encourage our members to take full advantage of the improvements we have made. Check out the ad in this month’s magazine and contact your Reynolds rep today to obtain the full complement of forms your dealership may need. t
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Troubleshooting
MSADA
Reporting Pay Requirements By Peter Brennan, Esq.
Staff Attorney, MSADA February of 2015 in New England has been one of the snowiest months on record, and will likely be spoken about for years to come in the same revered tone once reserved for the blizzard of ‘78. For business owners and employees around Massachusetts, the novelty of the snow wore off sometime shortly after Malcolm Butler’s last minute interception sealed Super Bowl XLIX for the Patriots and secured quarterback Tom Brady his fourth ring and third Super Bowl MVP award. As dealerships struggle to keep pace with the snow piling up on their lots and roofs, it is easy to assign wagehour compliance matters a low priority. However, dealers must be mindful of the state and federal wage-hour laws that apply when a dealership is forced to close due to the weather. Otherwise, a pile of legal problems will remain long after the snow has melted. Please keep in mind that a dealer must comply with both state and federal law. The provision of the federal or state law most favorable to the employee applies. Federal Law: If a dealership is forced to close due to the weather, the question of whether certain employees must be paid during the closure depends on the individual classification of the employees as exempt or non-exempt under the Fair Labor Standards Act (FLSA). Generally, managers and administrative employees, as well as certain sales and FEBRUARY 2015
parts personnel, mechanics, and service writers are employees that are considered exempt from FLSA. Under FLSA, a dealer is required to pay all exempt employees their regular salary for all storm-related closures that last less than one week. A dealer that makes deductions from an exempt employee’s pay in a situation where the dealership is closed due to weather runs the risk of losing the employee’s FLSA exemption. If the dealership remains open but an exempt employee cannot get to work due to the weather, the dealer can make a deduction from the employee’s salary that represents the absence. Employees that are classified as nonexempt under FLSA are not required to be paid under the law for any days that the employee does not perform any actual work. Accordingly, non-exempt employees do not have to be paid for days where the employee is scheduled to work but the dealership is closed due to weather, subject to the state reporting pay provisions discussed below. State Law: Under the state’s Reporting Pay Rule (found in the code of Massachusetts regulations at 455 CMR 2.03), if an employee is scheduled or requested to report to work on a regularly scheduled workday, reports to work but is sent home because of a lack of work, the employer must pay the employee for at least three hours at the Massachusetts minimum wage of $9.00 per hour. This regulation has been interpreted previously as requiring the payment only when the employee has reported to work on a scheduled workday expecting to work more than three hours and is sent home. Conversely, for an employee who is called in to work on his or her off day and is then sent home before working three hours need only be paid for the time actually worked, unless the employee was told that he or she would be
Massachusetts Auto Dealer www.msada.org
working more than three hours. More recently, the Massachusetts Division of Occupational Safety has clarified how the Reporting Pay requirement applies to employees scheduled to work less than three hours. If an employee is, in good faith, scheduled for less than three hours, the employer may pay the employee for only the hours worked. For example, if an employee is scheduled for a two-hour meeting and the employee works two hours, the “three hour rule” is inapplicable, and the employer must pay the employee for only the hours worked. Further, dealers also must be aware of how they handle closures due to weather conditions in the dealership’s employee handbook. If you provide employees paid days off in such instances, then your payroll for the week must be consistent with those policies. For managers, the situation is different. You cannot limit the compensation for them on such a shortened or no-work day. Managers must be paid for the day, whether you assign them work or not. Some employees believe that if they are ready and willing to work, the employer is obligated to allow them to work their regular schedule or to pay them for the hours they missed due to the closure of the business. This is not true under Massachusetts or federal law. An employer is not required to provide a set number of hours of work each week and, with the exception of “reporting pay” discussed above, is not obligated to pay an employee except for hours actually worked by the employee. t If you require any additional information on this or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@ msada.org, or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org, or by phone at (617) 451-1051.
MSADA
Security
Dealership Data Risks
By Herby Duverné Principal & CEO of Taino Consulting Group
Matthew Riley
Operations Manager at Taino Consulting Group
As the prevalence of cybercrimes against both businesses and consumers continues to rise, the widespread issue of information and data security has become a top priority for dealerships worldwide. When purchasing a vehicle, since very few individuals pay with cash, the process of giving loans plays a significant role in the dealership’s business. In order to extend credit to customers, dealerships are required to collect confidential information, including both PCI (Payment Card Industry) and PII (Personally Identifiable Information) data from consumers, which represent both compliance and consumer data security challenges. According to one leading information technology provider for the automotive industry, statistics have shown that in 2014 the average number of exposed or compromised records per breach in the U.S was over 29,000, which in turn costs enterprises an average of $5,850,000 per breach. “Service providers can be a source of breaches. It’s a big dealer issue because dealers rely on service providers. The way it works is that you are exposing this data to all sorts of people”
–Brad Miller
Associate Director of Legal and Regulatory Affairs for the National Automobile Dealers Association
In the Finance & Insurance office in every dealership, consumer data desirable to
cybercriminals are often stored where they are easily accessible to various financial companies. Storage and security controls surrounding PCI and PII data storage often are not in compliance with industry bestpractices and regulatory standards, and the data are accessible to an experienced or motivated intruder. As a result, the dealership’s ability to accurately monitor access and security controls surrounding sensitive data has become a growing problem. Many automobile dealerships in the U.S. are highly dependent on computers, systems, and networks that have access to the Internet and the manufacturer’s web-sites, which are often used for ordering vehicles, submitting warranty claims, ordering parts, checking the statuses of inventories of other dealerships, and various other functions. If cybercriminals are able to access networks and databases storing sensitive data, they may have the ability to access dealership documents, spreadsheets, and other tools that are commonly used to manage customer information. Since a majority of customer data is stored in digital databases, valuable information is at a high risk of being targeted if the internal security controls are not in compliance with the appropriate security standard. When it comes to what types of dealerships are at risk, new car dealerships, used car dealerships, motorcycle dealerships, RV dealerships, boat dealerships, farm equipment dealerships, etc., are all potential targets. In efforts to ameliorate security surrounding sensitive data and decrease the possibility of falling victim to security breaches, whether directly or indirectly through a vendor, the National Automobile Dealers Association (NADA) has developed a contract for vendors of dealerships limiting the use of information systems to one dealership management system (DMS). This is intended to prevent vendors from having the ability to sell information to third-party businesses, which would increase the risks of a DMS breach. In regards to assessing the risks a dealership may be facing, it is important to www.msada.org
consider factors such as the methods used to transport files and information throughout the dealership, whether every business laptop is encrypted, how backup tapes are used and carried off-site, whether any employee has given out their password to diagnose any technical problems. Also, it is important to take into account whether third party services have been used for data storage, IT systems support, management, collections, or claims processing. In addition, dealerships must be sure that paper loan applications and any other records containing sensitive information are securely stored and shredded before being disposed of. These are examples of security controls which can be assessed by consultants or in-house security departments. Often times, small, mid-sized, and even the largest dealerships do not have the staff, time, or expertise to manage a comprehensive security program to balance both rapidly increasing cybersecurity risks and physical security elements within dealerships. To be as secure as possible, enterprises should at least undergo an annual risk assessment based on their individual risks and data classifications, and in turn conduct a gap analysis or remediation based on applicable regulatory standards such as PCI-DSS or NIST 800-53, depending on the data. Security experts agree that not only is the prevention of potential breaches essential for the protection against theft of customers’ confidential information, it is also necessary for the prevention of potential lawsuits, as well as loss of reputation and revenue for the dealerships. Because every dealership is unique, it is important to evaluate risk on an individual basis and implement appropriate security controls based on the classification of data and the characteristics of the dealership. With the continuous evolution and increasing complexity of threats to data security, the need for enhanced cybersecurity in automobile dealerships is an issue that does not appear to be diminishing any time soon. t
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AUTO OUTLOOK
FEBRUARY 2015
Massachusetts Auto Dealer www.msada.org
MSADA
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Accounting
MSADA
Fail to Plan, Plan to Fail: How Your Dealership Can Prepare for 2015 By Jeff Caruso, CPA
Jeffrey joined O’Connor & Drew, P.C. in 2002. In 2005, he left O’Connor & Drew, P.C. to join a consulting firm that provides finance and accounting support to various
Fortune 500 companies. In 2008, Jeffrey rejoined O’Connor & Drew, P.C. to continue his career in public accounting. Jeffrey has experience in auditing commercial accounts
don’t bother putting a plan in place if you are not going to do anything with it. You can start your plan for 2015 by taking a deep dive into your dealership’s performance in 2014. Do not utilize this information in a vacuum; however, do consider the current state of the economy in your backyard and also across the country. Consider the automotive industry as a whole as well as your particular franchise. Other market indicators to consider are: where is consumer sentiment, what franchisers are gaining market share, what franchises are launching new products? Profit targets should be broken down by department. In the front end, ana-
ensuring all customers know about all the available products. In the back end, gross profit margins can be fairly consistent, but check your margins against industry averages periodically to ensure you are not out of line. If margins are in line, gaining ground generally comes in increasing service business. Establish realistic targets for increasing labor hours per repair order. Get advisors and managers involved so that the targets are well known. Don’t spend what you make. Expense budgets should also be prepared by department. Get department heads involved with the process and hold them account-
as well as in auditing not-for-profit organizations and higher education.
Prospects for vehicle sales and the overall economy are set to be better in 2015. If history repeats itself, however, no one really knows until after it happens. Having a business plan in place for the upcoming year can help with the inevitable roadblocks that may come. There are several key components involved in putting a business plan together. Let’s start with the last one, which is the one that comes after you actually have to put your initial analysis in place. First, recall the first 45 days of 2015 for a moment: We are approaching record breaking snow totals in the North East. Sales have no doubt been interrupted. Those of us who did put a plan in place likely did not think their snow removal budgets and the related loss sales would have added up to what we have seen so far. Gross profit targets and expense budgets are meaningless if they are not organic. They must be revisited and revised at least quarterly, or sooner if you have larger unforeseen changes in the market (like the recent snowstorms). Ultimately, FEBRUARY 2015
Gross profit targets and expense budgets are meaningless if they are not organic. They must be revisited and revised at least quarterly, or sooner if you have larger unforeseen changes in the market (like the recent snowstorms). lyze front end gross profit by model type and understand where the opportunities for improvement exist. The decision to manage for revenue growth vs. gross profit per unit should be communicated to everyone involved. New and used vehicle sales targets should be established by month and also be individual sales consultants. Consider going further and developing targets by vehicle line. Review ordering and upcoming allocations to ensure it is in line with the goals you put in place. Don’t forget about F&I, with competition for the front end sale as fierce as ever, this is often where the perunit gross is made. Analyze penetration rates and communicate the importance of
Massachusetts Auto Dealer www.msada.org
able. Budgets can be developed and measured on absolute dollars and on a percentage of gross profit basis. Where possible, measure effectiveness of dollars spent. Advertising is the largest discretionary but necessary expense. Determine what mediums and spots are the most effective. What is your gross profit per employee? Evaluate the efficiency of your current staff. O’Connor & Drew, PC can assist with benchmarking existing performance, identifying opportunities for growth and assist in developing a specific and attainable plan. Please call Jeffrey Caruso at 781-729-4949 for more information. t
Insurance
MSADA
Drive More Customers Back to Your Dealership Strategies for Increasing Customer Retention
Customer loyalty through service Why is service such a powerful area of focus to retain customers? The answer is great service experiences result in satisfied, loyal customers. Opportunity is created each and every time a customer returns for service – opportunity to deepen and expand relationships with current customers, and opportunity to begin new relationships. In the past, dealers may have overlooked the importance of service, which created an opportunity for competition. Customers didn’t look to the dealership for service, they went elsewhere. That’s lost opportunity. From tires to engine replacements and basic maintenance, customers need to know you can do it all – and you do it with superior technology and better trained technicians who know their vehicle better than competitors who service all makes and models. And there’s another, potentially greater opportunity for you when your customer has a great service experience: They are much more likely to share their great experience with others. A single household represents a small fleet of drivers, with two to five vehicles on average. Add to that the extended family of the household, and a much larger universe of social media contacts and friends. The single great experience you deliver can drive continuous traffic to your showroom.
Retaining customers by building the dealership brand Manufacturers are increasingly focused on building their brand with customers. They continually raise their game when it comes to warranties and maintenance, offering complimentary maintenance, roadside assistance, courtesy checkups and inspections, wear item replacement, SiriusXM/OnStar trials and the list goes on. But what manufacturers offer doesn’t necessarily drive traffic to your dealership. Dealers need to focus solely on building and enhancing the dealership brand, not on
the manufacturer brand. Customer retention is a target on which dealers are increasingly focused. We see dealers rolling out new service solutions aimed at driving continuous traffic to their showroom. They realize that service department customer retention leads to more vehicle sales, increased RO count, increased customer loyalty, increased dealership brand loyalty, and increased referrals.
Influencing customers’ re-purchase intentions with a complimentary maintenance plan Dealership customer retention programs should offer a discernable advantage to effectively market the dealer’s vehicles and increase profits with higher sales. Offering a complimentary maintenance plan, for example, enables your dealership to eliminate the competition by capturing customer service intentions before customers leave the dealership. It also allows your dealership to spend less time and money chasing lost opportunities after it’s too late, provides your fixed operations department with increased absorption while augmenting more repair work opportunities, and, most importantly, offers you the chance to be proactive in influencing your customer’s re-purchase intentions. These programs can offer customization and flexibility. With 12/24/36-month programs available, interval and service options, and point-of-sale tools that showcase the many reasons why the customer should purchase from you over neighboring dealerships. Maintenance programs can offer customers: • A welcome kit, personalized with dealership logo and content delivered via first class mail; • Automated service reminders that eliminate the monthly expense associated with inviting customers back for service appointments; • Personalized service reminders offered in www.msada.org
email, text message, or postcard format; • Online service including customer lookup and verification and simple claims process; and • Automated notification of lost opportunities and personalized win-back email campaigns.
Sales and service integration Integration of your sales and service teams can also be tremendously effective in retaining customers and selling cars. If a dealership has an effective method of selling cars out of the service department, they can be unbelievable successful. Creating a sales role that sells out of the service department gives you an opportunity to work with satisfied customers. There is a financial investment in this approach, and it requires progressive thinking, but it can be very effective.
F&I role in customer retention This new approach to customer retention also enables your F&I department to increase their PPM penetration, because the customer sees real savings to commit to a longer term plan at delivery. The value-added approach provides the customer a chance to package their basic pre-paid maintenance options at the time of sale. Your salesperson should be encouraged to include a service tour during which customers can meet advisors and schedule the first pre-paid visit in advance. t © 2014 Zurich American Insurance Co. For an F&I proposal from Zurich, call us at 800-840-8842 ext. 7449, email us at zdm.management@zurichna.com or visit us at www.zurichna.com/automotive. If you are interested in receiving more F&I risk insight content from Zurich, sign up for our newsletter.
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Cover Story
The Winning
LEGACY By Catherine MacDonald
Best Automotive tive thinking, we have W hen football dreams were dashed, TIME DOY owner Scott Shulcreated an environment man was never meant Scott Shulman took up the family business. Decades later, where employees are to stand alone in the happy and continue to spotlight. grow.” he reflects on his dealership’s success. Even when he stood In 1957 Best Autoas Massachusetts’ TIME Dealer of the Year candidate on-stage motive opened its doors in Hingham, with Nat Shulman at the in San Francisco in January, he was there for the team. helm. Nat Shulman spent decades as a leading voice in the Back at his dealership in Hingham, Shulman said, “The most auto industry, serving as MSADA President, earning the TIME rewarding part of my job is the satisfaction of knowing that, nominee distinction, and becoming a columnist. His son, howthrough a combination of support, encouragement, and posiever, was reluctant to follow the same path. FEBRUARY 2015
Massachusetts Auto Dealer www.msada.org
MSADA
“I didn’t want to get in the business. My father hit me with the whole thing about generations. You just did it, and then you come to love it.” Scott Shulman, a 1973 graduate of Hingham High School, earned a bachelor’s degree in communications from the University of Maine in Orono in 1977. He was a star football player in high school and college -- a two-time All-American who was inducted into the athletic Hall of Fame of both his high school and college. Shulman was poised for a career in pro football or in coaching before a series of injuries while playing at the University of Maine caused him to take a different path.
Getting in the Game “My father has a proud history in the automotive retail industry,” Shulman says. “So he called me back home to help him grow his dealership. I started at the bottom, washing cars, filing and, eventually, worked in sales and service.” “I was more of a jock,” Shulman adds. “I worked here when I had to, I didn’t want to get in the business. My father hit me with the whole thing about generations and this and that. You just did it, and then you come to love it.”
It was the less-than-positive image of a car dealer at the time that inspired Shulman to take a different approach to leading his team. After attending an automotive conference at Walt Disney World in Orlando, Florida, he was impressed with the way Disney ran its company and began to study the principles behind their success. He attended the Disney Institute and realized he could transform his business by following a few simple rules: provide quality service, implement quality business practices, and exceed expectations. “When General Motors filed for bankruptcy, I saw it as a chance for growth,” Shulman said, and he did grow his business. “My staff got us through the tough times – they have stayed through it all, and I still think of that challenging time as my proudest.” Shulman invests in his employees, sending many of them to the Disney Institute for training. The result is a very high retention rate among his staff. “Many of them have been here since they were kids,” he said. “I believe that everyone’s job is equally important and that this way of thinking achieves employee and customer happiness.” continued on next page www.msada.org
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The Winning Legacy Building the Team Shulman also recently made the bold move of opening a new dealership. It’s the company’s first new store since the ‘50s. Shulman’s Chrysler, Dodge, Jeep and Ram dealership opened in Plymouth in January. The new store brings its own unique challenges, he says. “It’s more work than I ever imagined, because we started from scratch. It’s one thing to take an operation that’s ongoing. When you start with no customers and no inventory and you have to go and buy tools and nuts and bolts and stationary ... It’s been a daunting task, let’s put it that way.” But Shulman says the most important tool remains the same: his team. “Maintaining our culture -- that’s my longterm goal. I keep things really simple. We hire nice people; that’s how we do it.” So for Shulman, the Dealer of the Year nomination came as an award shared by his 150-member team. And while that’s a lot more people than the football team he wanted to one day lead, the satisfaction is that much greater as well. “We’re coaching all our people every day. All I wanted to do was be a football coach, and lo and behold I am.”
Passing Success Along
An accomplished athlete, Shulman supports local sports organizations by coaching and donating resources. He served on the board of Thayer Academy in Braintree for 12 years and recently
FEBRUARY 2015
Massachusetts Auto Dealer www.msada.org
MSADA provided funds to Hingham High School for a new scoreboard for the football stadium. In addition, he is a major supporter of the Hingham Recreation Department, which provides affordable childcare, athletics programs, senior citizens programs, and summer camp for residents. A major supporter of health care in his community and programs at South Shore Hospital in South Weymouth, Shulman is most proud of sponsoring the launch of a mobile educational and training resource for EMS and fire personnel. “We will all need an ambulance at one point in our lives,” Shulman said. “You just hope and pray that when it happens, the EMT staff have had the opportunity to reap the benefits of this Mobile Sim Lab.” He also runs blood drives at his dealerships and supports Child Reach Foundation, Toys for Tots, Dana-Farber Cancer Institute, food pantries, Boy Scouts of America, and many other organizations. “Scott truly earned our Dealer of the Year distinction simply by exhibiting the personal traints and leadership of the quality person he is,” said Robert O’Koniewski, MSADA Executive Vice President. “Whether it has been answering the call of local charities in need, talking with legislators on vital issues affecting our industry, or growing his economic footprint in two communities, Scott does it with the same energy and positive leadership skills we can all learn from and be proud of.” t
NEWS
from Around the Horn
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NORWOOD
Patriots’ Brady Gifts Butler His Super Bowl Truck, Courtesy of Clay Chevrolet Clay Chevrolet played a role in one of the final passes of the Super Bowl last month. Tom Brady’s Super Bowl MVP award came with a Chevrolet Colorado, but the four-time champion quarterback decided to give it to Malcolm Butler instead. Butler made a game-winning interception in the final seconds, leading Brady to pass off the truck. Butler took delivery of the vehicle from Clay, posing with the truck for cameras and expressing his appreciation to both Brady and the dealership. “I am ecstatic that Chevrolet has chosen to reward me with a Colorado,” Butler said in a statement. “It is just another unreal event in what has been an incredible week.”
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NEWS from Around the Horn NORWELL
Ciccolo Breaks Ground on Porsche Store This Summer, Village Automotive Group’s Ray Ciccolo will be opening the first ever freestanding, exclusive Porsche dealership on the South Shore of Boston. The store, which will be opening at 75 Pond Street in Norwell, will encompass the latest architectural design, making it Porsche’s most modern facility and enhancing the experience for Porsche customers across Massachusetts.
FEBRUARY 2015
Left to Right: Jacob Harb, Area Vice President at Porsche Cars North America; Ray Ciccolo, Owner and President of Village Automotive Group, which includes Porsche of Norwell; Stacee Mahony, Regional Manager at Porsche Cars of North America.
Massachusetts Auto Dealer www.msada.org
MSADA BOSTON
Presidents’ Day Blizzard Hits Sales The traditional Presidents’ Day boost in sales missed Massachusetts this year following heavy snow over that weekend. Bonnell Ford in Winchester told a local CBS affiliate that sales were down 50 percent, and that the dealership had to close early on Saturday because of the storm and didn’t open until midday on Presidents’ Day. “We definitely lost a lot of business,” president Steven Bonnell said. “This is typically our biggest weekend of the month and that kind of kicks off our spring selling season.” CBS also talked to Honda Cars of Boston, who said they are hoping customers would take advantage of Presidents’ Day deals after the holiday snow. Pre-owned manager Joe Avilla told the network the dealership typically sells 80 to 100 vehicles during this holiday weekend. “The moving of the snow and pushing it around the lot, and finding different places for it is definitely difficult,” Avilla said. Haverhill
AutoFair Purchases Regan Ford AutoFair Automotive Group announced the acquisition of Regan Ford this month. Under AutoFair’s new ownership, the Ford location on I-495 will operate as AutoFair Ford of Haverhill. The Ford dealership dates back to the closing days of World War II when Frank Regan, Sr. opened the dealership in Haverhill. Under the Regan family, the dealership remained heavily involved in the greater community for 70 years. AutoFair Automotive Group CEO Andy Crews says he has great respect for what the family and team have done at the Ford location, and he plans to honor both the history of success and expand upon it. “We are excited to be operating in the greater Haverhill and I-495 corridor, and this Ford dealership has a great and loyal following of customers for a good reason,” Crews said. “Like the AutoFair team, the Regan team valued service and community, and we look forward to continuing the tradition of success in Haverhill with the AutoFair name now a part of this dealership’s rich history spanning back 70 years.” AutoFair Automotive Group is headquartered in Manchester, NH and will add the Haverhill Ford store to its growing group of dealerships now in Massachusetts and New Hampshire. www.msada.org
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NEWS from Around the Horn HADLEY
Cosenzi Raises Nearly $500K in Sixth Annual Charity Golf Tournament For six years, the Tom Cosenzi Driving for the Cure Charity Golf Tournament has raised more than $480,000 to support Dr. Patrick Wen and his team of researchers in the Neuro-Oncology Department at Dana Farber Cancer Institute. This year the
4-player scramble held at Crestview Country Club on September 15 included 144 golfers and 175 banquet guests, raising $76,300. The annual tournament was started by Carla and Tommy Cosenzi in memory of their father, Tom Cosenzi, who passed from a glioblastoma brain tumor in 2009, in the hopes of carrying on his legacy and finding a cure for this dreadful disease. “Words cannot describe the enormity of what this tournament means to us,” said Carla Cosenzi. “Whether you were a sponsor, a golfer, a donor, or a volunteer, we would like to thank everyone for their participation in the sixth Annual Tom Cosenzi Driving for the Cure Charity Golf Tournament. We are extremely proud to be able to support Dana-Farber’s world-class researcher’s work to reduce and ultimately eliminate the burden of cancer.” AUBURN
Prime Motor Group Gains Auburn Location Prime Motor Group has acquired its 25th location and second Ford store after purchasing Langway Ford in Auburn. Longtime Prime employee Sean Van Praet has been named General Manager of the store. Van Praet brings over 15 years of retail experience working at both import and domestic dealerships. Most recently, Sean was the GM at Prime Toyota Saco and Prime Infiniti. “It is our goal to bring the same high level of customer service to the Worcester market that the rest of our Prime Motor Group customers have come to enjoy,” CEO David Rosenberg said in a statement. FEBRUARY 2015
Massachusetts Auto Dealer www.msada.org
RAYNHAM
Mastria Auto Group Installs Solar Energy at 3 Dealerships Mastria Auto Group has installed solar energy systems at three of its dealerships in partnership with Solect Energy Development of Hopkinton. The systems, installed at the Buick GMC Cadillac, Nissan, and Subaru dealerships, are expected to save Mastria Auto Group up to $40,000 per year in electricity costs, covering 30 percent of the auto group’s overall usage. The company’s fourth dealership—Mazda—is expected to have a system installed by Solect in mid-2015, saving the company an additional $10,000 per year. Local regulations prevented the auto group from deploying larger systems, but if rules change in the future, owner Rick Mastria said he will consider expanding the dealershops’ systems. In addition to the cost savings generated, Mastria Auto Group is also able to take advantage of state and federal financial and tax incentives, including SRECs (Solar Renewable Energy Certificates), which solar system owners earn based on the amount of solar energy their system generates.
MSADA BURLINGTON
Grand Opening of Mercedes-Benz of Burlington
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JANUARY 2015
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Dealer Services
MSADA
Leaders Have Goals By Rob Sneed Rob Sneed is a development rep and motivator for Ethos Group Consulting Services and the author of various articles in the automotive industry.
Ethos Group provides
franchised automotive dealerships across the
United States
with an integrated pro-
gram of results-driven income-development services, comprehensive training, robust recruiting and industry-leading products.
Automotive retailers are inundated with numerous goals, objectives, benchmarks, averages, and matrices. Our industry certainly understands the value of tracking performance and pacing forecasts. The purpose can easily get lost in what quickly becomes an overwhelming amount of details. Leaders have goals – things they would like to achieve, both individually and through their people. It is easy for performance-driven people working in a performance-driven business to focus on the end result rather than the tasks that make the results happen. This simple misstep quickly creates an environment where the focus, drive, and empowerment of the team can be lost in the routine of chasing what feels like an ever-moving almost unattainable target. Simply stated, our progress stagnates. Business becomes busyness. People lose their motivation. Performance suffers, sometimes dramatically.
Crafting Purposed, Performance-Driven Goals A focused and motivated team performs and produces exceptionally well. Constructing well-designed, purpose-driven goals is the first step in taking business to the next level. Quality goals will not only define one’s vision for the business but also
provide the team with a blueprint for its achievement. The key is to measure the effort, not simply target the results.
arrange our actions, and design our day. We must plan. We work in an industry that is highly
As leaders, it is our responsibility to cast a clear vision and outline a plan of action that will inspire and motivate our team to operate with focus and intent. competitive and highly dynamic. As leadWell-crafted goals focus on objectives ers, it is our responsibility to cast a clear that will yield the desired end result. For vision and outline a plan of action that will instance, rather than have the finance deinspire and motivate our team to operate partment work to increase their profit per with focus and intent. Establishing goals retail unit, give their efforts direction. Foand holding our people and ourselves accus on targeting what needs to be done in countable for their achievement is the order to increase specific product sales and single greatest tool we have to begin takpenetrations. Increased product sales will ing our business to the next level. It takes yield increased profits. Your store’s income a commitment of time and energy to orgawill increase, and you will sell more cars. nize and prepare a game plan. The return Our goals must be detailed enough that is exponential. we can measure specific actions we have taken on each task. This is important because holding ourselves accountable to perThere are four key aspects of conformance-focused objectives structing focused, purpose-driven rather than outcome-oriented results will significantly regoals: duce distractions that can 1. Clearly define expectations based easily surface as excuses for on potential. poor performance.
Take the Time to Prepare
2. Construct performance-based objectives rather than simple outcome-based goals.
The most essential re3. Outline smaller, accomplishable sponsibility of a leader is to tasks within larger ones. create a culture that enables the realization of the team’s 4. Hold all stakeholders accountable greatest potential. This is the to their role in achievement. foundation for developing and communicating goals. It does not happen by accident. It happens on purpose. This Energy is a renewable resource. Time means that success is intentional. is not. Make the investment in one to preWe must decide in advance what we will serve the other. pursue and how we will pursue it. Effect tiveness requires that we frame our focus, www.msada.org
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NADA Update
By Don Sudbay
Another NADA Convention for the Ages Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your
questions
and
concerns
(donsudbayjr@sudbay.com). Our new NADA Chairman, Bill Fox, has some very timely comments in the paragraphs below. Please take the time to read what he says, and be proud that you are a franchised automobile dealer in the USA. Please know that NADA will always be there to protect the franchise system. It is a system that has worked for the manufacturer, the customer, and the dealer for over one hundred years.
A Special Note from NADA Chairman Bill Fox If there’s any industry that’s rooted in resilience and progress, it’s the retail-auto industry. Over the past several years, America’s new-car dealers have survived many challenges and have a lot to be proud of today. Last year, the nation’s franchised auto dealers sold 16.4 million new cars and light trucks and generated more than $13 billion in taxes. Dealers prove their worth every day. Car buyers benefit from the automotive franchise network, because it is the best and most efficient method of bringing new vehicles to the driving public. This year, NADA’s forecast calls for sales of more than 16.9 million new vehicles. I commend all dealers for their dedication and hard work, which marked the successes of last year. Last month, NADA hosted a successful convention and exposition in the great city of San Francisco. And, in case you missed it, I asked my fellow dealers a pivotal question: When was the best time to be a car dealer? The thousands of dealers and dealership employees in attendance at the convention already knew the answer to that question. Today is the best time to be a car dealer. That was evident by 26 dealer-manufacturer franchise meetings; 66 educational workshops offered; a sold out Expo floor with 570 companies showcasing the latest and greatest products; and numerous networking events. We’re already gearing up for the 2016 NADA convention in Las Vegas, which runs Thursday, March 31, to Sunday, April 3. FEBRUARY 2015
But today also comes with challenges. Between government guidance that threatens the consumer benefits of dealer-assisted financing and misinformation about the franchise system, we will continue to experience serious challenges to our businesses. When it comes to solutions, NADA is working hard to be a catalyst for progress and positive change. We will continue to show the policymakers and the public that, through competition, the dealer franchise system benefits consumers, manufacturers, and local communities alike. We will continue to show that dealers are advocates for their customers, whether they need service for warranty or recalls or assistance with financing. And we will continue to guide franchised dealers through a host of issues—from the security of dealer and customer data to dealing with future regulatory challenges and tax burdens. No matter the obstacles ahead, NADA is the first line of defense for new-car dealers and a strong voice for dealers in Washington, DC. So let’s make this year another year for being the best time to be a car dealer. Fox is a multi-franchise dealer in Auburn and Phoenix, New York. NADA represents more than 16,200 new-car and -truck dealerships with both domestic and international franchises.
Auto Dealer Associations Back Call for the CFPB to Correct Bias Found in Auto Lending Enforcement The National Automobile Dealers Association (NADA), the American International Automobile Dealers Association (AIADA), and the National Association of Minority Automobile Dealers (NAMAD) recently applauded the efforts of five financial services organizations to fix the serious flaws in the Consumer Financial Protection Bureau’s approach to regulating auto financing. The groups, which include the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable, and U.S. Chamber of Commerce, sent a letter to CFPB Director Richard Cordray urging the Bureau to change its enforcement policy on dealer-assisted financing, in light of findings in a peer-review study that showed there is significant bias in the Bureau’s analysis. “Discrimination in the market simply cannot be tolerated,” said NADA President Peter Welch. “However, in light of the rigorous peer-review that has cast significant doubt on the CFPB’s findings, the Bureau should change course – or at least hit the pause button – and address these new concerns. We applaud the courage of these organizations
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for speaking up.” In 2013, the CFPB issued guidance urging lenders to change the way they compensate dealers for arranging financing for their customers because of a risk of disparate impact in the loans issued. However, an in-depth study by Charles River Associates demonstrates that the analysis the CFPB uses in enforcing its guidance is substantially flawed and that, as a result, the Bureau’s findings are erroneous and overstated – in some cases, dramatically so. For example, Charles River, after reviewing data from more than 8 million financing transactions, concludes that the CFPB overstates one of its comparisons by 41%. And, remarkably, despite this indictment of its methods, the CFPB has yet to address the study or its implications on CFPB policy. For more information about the CFPB and dealer-assisted financing, visit www.nada.org/cfpb.
Low Gasoline Prices Cause Shift to Light Trucks in 2015 Low gasoline prices and pent-up consumer demand will combine to drive new car and light truck sales to an estimated 16.94 million in 2015, says the National Automobile Dealers Association. NADA’s original sales forecast of 16.4 million new cars and light trucks for 2014 was on target. The split among the segments this year is expected to be 44 percent cars and 56 percent light trucks and SUVs because of lower gasoline prices, increased job growth, and an improving housing market. “Consumers are more able to spend for extras because of declining gasoline prices and continued low interest rates,” NADA Chief Economist Steven Szakaly said last month at a press briefing during the NADA Convention & Expo in San Francisco. “We expect to see significant growth in sales of light trucks, particularly in the large-size CUV and SUV segments,” he added. “At the end of the day, consumers like the utility and comfort that larger vehicles provide. Lower gasoline prices accelerate that shift.” The pickup truck segment, in particular, is expected to benefit from an improving housing market, climbing to 15.2 percent this year from 13.7 percent in 2014. On the downside, small and midsized cars are likely to face a tougher market in 2015. Szakaly expects incentives to rise on small and midsize vehicles. In addition, hybrid sales are expected to be slower, as long as oil remains cheap. Midsize cars are expected to decline in share of total light vehicle sales from 18.6 percent to 17 percent, while small cars are expected to lose 1 percent of share. “The one area where prices and segment share are likely to remain stable is in the luxury segment,” he added. “A strong luxury brand, in any retail business, will hold extra goodwill that a consumer is willing to pay for.”
NADA Update
NADA’s economic outlook calls for gross domestic product to be up 3.1 percent in 2015, with the potential for growth to exceed that level. “The U.S. economy is poised to accelerate in 2015. The only negative remains stagnant wages. If we see some sustained rise in incomes, GDP could easily exceed our forecast,” Szakaly added. There is little threat of inflation, though key policy rates from the Federal Reserve are expected to rise 50 basis points by the end of the year. “Interest rates have to rise. Admittedly the chaos in some overseas markets and the strong deflationary pressures from a rising U.S. dollar and a slowing Chinese economy leave room for rates to rise slowly,” he said. “The bottom line is that it will be a good year for consumers with great products that last longer, are more fuel efficient and are safer than ever before,” Szakaly added. “It’s always been about consumer choice and the benefits of a competitive market, and that is definitely what we have.”
New Video: NADA Highlights the Benefits of Franchised Dealers for Recalls and Warranty Claims Local new-car dealers put their customers first with a network of professional auto technicians who provide quick and efficient service during vehicle warranty and safety recall situations, says the National Automobile Dealers Association in a new animated video released as part of its “Get the Facts” initiative. “Dealers side with their customers on warranty claims and recalls and make sure the work gets done right,” says NADA. “Local dealers work with manufacturers to get the necessary parts and car owners can choose the dealership of their choice to get the work done. The manufacturer benefits from a huge network of well-trained service professionals at dealerships to get recalls remedied.” NADA’s “Get the Facts” initiative is designed to inform policymakers, opinion leaders and the media about the numerous benefits of the dealer franchise network through a variety of multimedia resources and videos available at www.nada.org/GettheFacts. Dealers and local dealer associations are encouraged to link to the videos on their websites, and with permission can co-brand the videos with their own logos. For more information about co-branding content from NADA’s “Get the Facts” initiative, contact publicaffairs@nada.org. t
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Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist
Review of New Light Vehicle Sales Overall
There were 1.1 million light-vehicle sales in January 2015 in the U.S. Light-vehicle sales for the month were down 23.5 percent from December 2014 but up 13.7 percent from January 2014. The Seasonally Adjusted Annual Rate (SAAR) for lightvehicle sales for January 2015 was 16.6 million units. Car sales were up 7.8 percent from January 2014; cars held a market share of 44.9 percent of lightvehicle sales in January 2015, down from a share of 47.3 percent last year. Lighttruck sales were up 19.0 percent from January 2014; light trucks held a share of 55.1 percent of light-vehicle sales, up from a share of 52.7 percent a year ago. See Figure 1.
Companies/Brands
The company with the leading market share in January 2015 light-vehicle sales in the U.S. was General Motors with a share of 17.7 percent, up from a share of 17.0 percent in January 2014. Sales for the company were up 18.3 percent compared to January 2014, with each brand experiencing sales growth except Buick; GMC was the leading brand under General Motors in terms of sales growth at 28.6 percent over this period. In descending order of company market share of sales, Ford company held second place with 15.2 percent of the market, up from a share of 14.9 percent in January 2014. Sales were up 15.8 percent from the prior year. The Ford brand dominated sales for the company, holding 96.2 percent of the company’s sales in January 2015, up from a share of 96.0 percent in January 2014. Toyota company was in third place with 14.8 percent of the market, up from a share of 14.5 percent in January 2014. Light vehicle sales for the company were up 15.6 percent over the prior year with the Toyota brand taking the largest share of the company’s FEBRUARY 2015
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January 2015 sales at 84.1 percent, down from a share of 85.2 percent in January 2014. Fiat Chrysler Automobiles (FCA) was in fourth place with a share of 12.6 percent of the January 2015 market, unchanged
from its share in January 2014. Sales were up 13.7 percent in January 2015 compared to the prior year. The Jeep brand held the leading share of the company’s sales at 35.7 percent, up from 33.1 percent a year ago.
MSADA Nissan company held fifth place with a share of 9.1 percent of January 2015 light-vehicle sales, up from a share of 9.0 percent from the prior year with sales up 15.1 percent from January 2014. The Nissan brand held the leading share of the sales for the company at 90.7 percent, up from 90.1 percent a year ago. The ‘Other’ category comprises of sales from 9 companies. Collectively, these companies held a share of 8.2 percent of light-vehicle sales across the U.S., in January 2015, up from a share of 8.0 percent in January 2014. This category experienced sales growth of 16.5 percent from January 2014 with all companies undergoing sales growth except for Isuzu, which had a contraction of sales by 58.0 percent. Isuzu was the only company that had a contraction in light-vehicle sales out of all 21 companies listed in January 2015 light-vehicle sales compared to the prior year. See Figures 2, 3 and 4.
Segments
The cross utility vehicle (CUV) segment was the leading segment in January 2015, holding a share of 28.8 percent of light-vehicle sales, which was up from a share of 28.0 percent in January 2014. Within the CUV segment, the middle CUV sub-segment was the largest sub-segment, holding 64.5 percent of January 2015 CUV sales. Although it was also the leading subsegment of CUV sales in January 2014, it held a larger share in January 2014 CUV sales at 64.7 percent. The CUV segment was not the only segment that had a rise in its share of sales in January 2015 compared to the prior year; the sport utility vehicle (SUV) and pickup segments also experienced increases in their respective market shares. The leading sub-segment of SUV sales was the middle SUV sub-segment with a share of 49.2 percent of January 2015 SUV sales, while the leading sub-segment of pickup sales was the large pickup sub-segment with a share of 84.2 percent of January 2015 pickup sales. The other segments – the small car, middle car, large car, luxury car, and van segments – each experienced reductions in their respective shares of lightvehicle sales compared to January 2014. All the segments except for the large car segment experienced growth in sales since last year; the SUV www.msada.org
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segment had the most growth in light-vehicle sales, since January 2014, with a figure of 29.5 percent. See Figures 5 and 6.
Power Source
Gasoline-powered light vehicles held a share of 94.8 percent of light-vehicle sales for January 2015, up from a share of 94.0 percent in January 2014. Diesel-powered light vehicles held 2.4 percent of the January 2015 market, down from a share of 2.6 percent in January 2014. In the alternative power category, only electric light vehicles experienced an increase in share of January 2015 sales compared to the prior year. The shares held by hybrids, plug-in hybrids, and vehicles powered by natural gas declined over the same period, while there were no vehicles powered by fuel cell technology sold in either January 2014 or January 2015. The following light vehicles were sold in the alternative power
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category in January 2015: 3,820 electrics; no units powered by fuel cell technology; 25,384 hybrids; 50 units powered by natural gas; and 2,082 plug-in hybrids, amounting to 31,336 light-vehicle sales. In this category of light-vehicle sales, only electric light vehicles experienced sales growth since January 2014. See Figure 7.
Models
In January 2015, light trucks occupied the highest three ranks on the list of 15 best-selling light vehicles in the U.S., with the Ford F-Series in the lead position directly followed by Chevrolet Silverado and then the Ram pickup. Toyota secured fourth and fifth place with two of its car models: Toyota Corolla and the Toyota Camry, respectively. Cars outnumbered light trucks slightly on the list of 15 best-selling light vehicles for the month: eight cars to seven light trucks. See Figure 8. t