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
March 2015 • Vol. 27 No. 3
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Getting On B ard
Ma s s a c h u s e t t s
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St a f f D ir 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 Membership Coordinator mguerra@msada.org Aut 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, 23 Boston Herald, 36 Downey & Company, 24 Lynnway Auto Auction, 25 Nancy Phillips, 23 O’Connor & Drew, 35 Reynolds & Reynolds, 21 Southern Auto Auction, 22 SunTrust, 26
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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: Springing Forward THE ROUNDUP: Legislature Crawls Along TROUBLESHOOTNG: Handling Employee Complaints LEGAL: The Commission-Paid Overtime Exemption: Are You Maximizing Its Utility?
12 AUTO OUTLOOK 14 ACCOUNTING: Buying or Selling a Dealership? 16 SOUND OFF: Benchmarks of Dealership Values 18 Cover Story: Getting On Board
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NEWS From Around the Horn nada update: Throwing My Hat into the Ring ACCOUNTING: The Forgotten Profit Center DEALER SERVICES: Transitions to Work DEALER SERVICES: Why So Much Sales People Turnover? NADA MARKET BEAT
ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer MARCH 2015
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from the President
By Scott Dube, MSADA President
Springing Forward As the snow melts, MSADA watches for new dangers in our industry
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s we continue to dig out from one of the harshest winters any of us can remember, I’m both excited and wary about the challenges facing our industry this year. On the positive side, we’ve got two great new additions to your Association’s Board of Directors. Then, of course, there’s the ever present regulatory threats that we push back on every day. Being an auto dealer is an all consuming task. This isn’t a job where you can have a case of the Mondays or phone in from the club house four days out of the week. Our business requires leadership, giving it 100 percent every day. MSADA is here to keep lookout while you are out moving metal. A handful of your colleagues are always spreading themselves between both worlds -- the daily grind and bigger picture. In addition to the stalwarts on our Executive Board, we’re always in need of representation from across the Commonwealth. And it’s my pleasure to welcome new board members: Brad Tracy, who now represents Barnstable County through his Tracy Volkswagen dealership, and Jeb Balise, who represents Hampden County through the Balise Auto Group. Both are hard working, high achieving dealers whose backgrounds you more than likely share. Read more about them in this month’s cover story on page 18. I look forward to continuing to work with them on the board as we face a ramp up in legislative activity and continue to plan for the year ahead. You’ve heard me say it over and over again, but it’s always more true than the last time I said it: We all can do a few simple things to advance the interests of our entire industry in Massachusetts. When was the last time you called your legislator?
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Was it when we were working for 93B reform or fighting back on Tesla’s encroachment? It’s time to make that call again. And while there’s always something on our agenda, it’s important to never forget that engaging them on the ins and outs of your business is crucial. You legislator should care about how your business is doing, not just how you feel about the hot button issue of the day. Our next Dealer Day on Beacon Hill will be Wednesday, May 13. When you receive our materials, please be sure to register. As we finally enter Spring, I encourage you to grow your relationship with your legislators. It’s a relationship that will always pay off when it counts, and it’s as simple as a few minutes here and there. While a new governor might provide some relief, it’s never a good time to be complacent as business owners in Massachusetts. So next time you see Brad and Jeb, likely at our Annual Meeting on May 1, please take a minute to show your appreciation for their efforts. More importantly, I encourage you to join us for Dealer Day and make that call to your legislator some time soon -- definitely before the next crisis. While not all of us have the time or ability to contribute at the director level, we can all be useful in helping to spread the word about our role in the communities we serve. Finally, we wish “good luck” to our NADA Director Don Sudbay, who has thrown his hat in the ring for NADA Vice Chairman. The Vice Chair has never been from Massachusetts, so this is an historic undertaking. .t
“Our business requires 100 percent every day. MSADA is here to keep lookout while you are out moving metal.”
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
Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Lennox Cornwall (304) 702-7399 AutoAlert Don Corinna (505) 304-3040 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, Tom Drislane (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 Cliff Lang (713) 580-3143 GW Marketing Services Gordon Wisbach (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 MARCH 2015
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The Roundup
Legislature Crawls Along By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers As we approach the first day of Spring (finally!) the Legislature seems stuck in its procedural doldrums about which we wrote last month. As you may recall, the House and Senate have elected their overall leaders for the 2015-2016 session, and each chamber has approved rules governing their own sides of the building. A conference committee, however, is still meeting to resolve differences in the joint rules proposals put forth by each chamber.
Consumer Protection Committee Re-Forms While the world awaits the commencement of substantive activity by the 189th session of the General Court, the House finally approved chairmen and member assignments for the 27 joint standing committees and the 13 House committees, to go along with the Senate assignments, which occurred in early February. One of the committees that has oversight of issues of considerable import to us is the Joint Committee on Consumer Protection and Professional Licensure. This committee has jurisdiction over such issues as the new- and used-car Lemon Laws, our 93B franchise law, the 93A Consumer Protection Act, doc fees, proposals like the Car Buyers Bill of Rights, and the so-called “right to repair” act. As the 2015-2016 session commences, 10 out of the 17 Committee members will be new to this body, including four newly elected representatives (Vincent, Carvalho, Tosado, and McKenna) and one new senator, who was promoted by voters to the Upper Chamber from the House (Fattman). Thomas Kennedy (D-Brockton) returns as the Senate chairman. There is a new House chair, MARCH 2015
Massachusetts Auto Dealer www.msada.org
however – four-term representative, Jennifer Benson, a Democrat from Lunenburg. Here are the committee members with their party and hometown (* indicates returning committee member): Rep. Jennifer Benson, House Chair (D-Lunenburg) Rep. Frank Moran, House Vice Chair (D-Lawrence)* Rep. James Arciero (D-Westford) Rep. Tackey Chan (D-Quincy)* Rep. Jonathan Zlotnick (D-Gardner) Rep. Dan Hunt (D-Dorchester) Rep. RoseLeeVincent (D-Revere) Rep. Evandro Carvalho (D-Dorchester) Rep. Jose Tosado (D-Springfield) Rep. Steven Howitt (R-Seekonk)* Rep. Joseph McKenna (R-Webster) Sen. Thomas Kennedy, Senate Chair (D-Brockton)* Sen. Anthony Petruccelli, Senate Vice Chair (D-East Boston)* Sen. Kathleen O’Connor Ives (D-Newburyport)* Sen. Michael Rodrigues (D-Westport) Sen. James Timilty (D-Walpole)* Sen. Ryan Fattman (R-Webster) Once the legislative process gets into gear and the public hearings unfold as bills are sent to committees, these individuals will be reviewing some of the most important legislation for dealers. We have been meeting with Committee members and key legislators to brief them on our issues in preparation of the hearing process. Another committee that has oversight of some of our issues, such as activities by the Registry of Motor Vehicles, is the Joint Committee on Transportation, chaired by Sen. Thomas McGee
MSADA (D-Lynn) and Rep. William Straus (DMattapoisett). They return as chairmen from the last session, and they are already confronting potential reforms of the public transportation system, whose flaws were greatly exposed this past Winter.
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. We have sent out 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 Beacon Hill. Please circle the date and plan on visiting Boston on May 13.
Gov’s FY2016 Budget On March 4, as required by the state constitution, Governor Charles Baker filed his proposed spending plan for fiscal year 2016, which begins July 1, 2015. The $38.1 billion budget proposal does not include any new proposed taxes and would increase state spending by 3 percent while
aiming to carve $750 million in savings out of the MassHealth Insurance program. Having addressed in his first month of office a deficit of at least $760 million in FY2015 left over by his predecessor, Deval Patrick, Gov. Baker is looking at, as offered by several analysts, a structural budget deficit of at least $1.8 billion going into FY2016. One of the major challenges the Governor and legislators face is how to reform the administration of the mass transit system and other public transportation activities, including a discussion of any potential revenue streams earmarked for transportation. Readers may recall that, as a result of other “reforms”, the MBTA presently receives at least 20% of all sales tax revenues, including all sales tax revenues derived from motor vehicle sales. The House and Senate Ways and Means Committees are conducting joint public hearings around the state on the Governor’s budget proposal. The House will offer up its own version of the budget for consideration by members in April, and the Senate will do similarly in May. Their differences will be resolved by a conference committee, hopefully in time for the July 1 start of the fiscal year.
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.
New RMV Head – Erin Deveney On March 10 Governor Baker, through his Secretary of Transportation, Stephanie Pollack, appointed attorney Erin Deveney to the post of Interim Registrar of Motor Vehicles, effective March 16, 2015. This is a one-year appointment. Deveney will succeed Registrar Celia Blue, who will transfer to a new role as MassDOT Senior Advisor for operations assisting Secretary Pollack to facilitate a seamless transition www.msada.org
at the RMV. Blue has served as Registrar since January 30, 2014. After graduating from the College of the Holy Cross in 1994, Deveney went on to earn a Juris Doctor from Suffolk University Law School in 1997. Deveney comes from the Department of Children and Families, where she served as Interim Commissioner beginning in April 2014. Immediately prior to joining DCF, Deveney was Chief of Staff at the RMV for five years and previously served as Deputy Registrar, General Counsel from 2000 to 2005, under Dan Grabauskas.
Snow Storm Loan Fund In recognizing the hardship that small businesses throughout the Commonwealth have faced in recent weeks due to unprecedented snowfall and historic winter conditions, Governor Baker announced that the Massachusetts Growth Capital Corporation (MGCC) has approved a snow storm loan fund to help small businesses regain financial stability and recover from lost storm revenue. MGCC will make up to $1 million in loan funds available to provide microloans of $5,000 to $10,000 to small businesses located in communities impacted by the harsh winter weather, particularly those in Boston and in gateway cities. It is anticipated that this program will run through May 2015. The general terms of the loans are as follows: • Open to Mass.-based businesses; • Loan amounts $5,000-$10,000; • 3-year note; • Annual interest rate 5%; • Personal guarantee required of all owners with 20% or more interest in the company; • All asset lien on business; • No prepayment penalty. MGCC will be responsible for funding the loan, managing the loan portfolio, collection of interest and principal payments, and all decision-making regarding loan approval. To apply for a snow storm loan from the MGCC, please visit the following link: http://www.massgcc.com/about/ article/application-storm-loan-fund. continued on next page Massachusetts Auto Dealer MARCH 2015
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The Roundup from prezious page
FMLA New Definition of “Spouse” The United States Department of Labor issued a new rule, effective March 27, 2015, broadening the definition of “spouse” for purposes of the federal Family and Medical Leave Act (FMLA). The FMLA grants eligible employees the right to take unpaid, job-protected leave for specified family, medical and militaryrelated reasons. The purpose of the new rule is to permit eligible employees in legal same-sex marriages to take FMLA leave to care for their spouse or family member, regardless of where they live and regardless whether their current state of residence recognizes same-sex marriages. The rule change was prompted by a 2013 Supreme Court decision. Under the new definition, a spouse can be an opposite-sex or same-sex individual who was legally married in the location where the marriage took place, regardless of where they currently live. The regulation also recognizes common law marriages that were entered into in a state where such marriages are recognized. If the marriage was entered into outside the United States, the couple are considered spouses if the marriage was validly entered into in the country where the individuals were married and if the couple could have been lawfully married in a least one state. Language in the preamble to the new DOL rule seems to suggest that an eligible employee seeking FMLA leave need only allege the existence of a spousal relationship, and that employers may not require proof or documentation of such. This runs directly counter to existing regulatory language and to DOL Forms WH381 and WH-382, which contemplate that employees seeking leave provide sufficient documentation to establish a spousal relationship. Moreover, the preamble seems to suggest that employers are presumed to know the marriage laws for all potential “places-of-celebration.” Massachusetts dealers who have 50 or more employees and are therefore covMARCH 2015
MSADA
ered by the FMLA should be aware of this expanded definition of spouse in the event they question an employee’s marriage status. For most dealers in Massachusetts, this will not be a problem since Massachusetts recognizes same-sex marriages and dealers are unlikely to inquire about the location of the marriage. Dealers should revise their leave policies to accommodate the new definition of “spouse,” should educate employees about the new definition and its potential impact on FMLA leave requests, and to attempt to administer the FMLA rules equally and fairly with respect to all eligible employees.
Reminder on Open Safety Recalls A recent ABC News item reported that new vehicles had been delivered with open safety recalls. Federal law imposes a “stop sale” on all new, undelivered vehicles and parts subject to a safety recall. Once a dealer receives notice of a safety recall, affected new vehicles or parts may not be delivered until the defect or noncompliance is remedied. Dealers are encouraged to review their internal policies to ensure that new vehicles under recall are not being delivered to customers. We have written extensively on dealers’ obligations when confronting the overwhelming number of recalls receiving coverage in the media. These responsibilities cannot be taken lightly, especially when state and federal consumer protection laws are at play. In a further step to bring additional transparency to the recall phenomenon for consumers and dealers alike, in mid2014 the U.S. Department of Transportation’s National Highway Traffic Safety Administration announced the launch of a new online tool to identify cars and light trucks with uncompleted recalls. By allowing Vehicle Identification Numbers (VIN) based searches, the lookup tool will help dealerships determine if particular used vehicles have any unremedied safety recalls. The lookup tool can be used prior to making a purchase
Massachusetts Auto Dealer www.msada.org
or taking in a trade, for used vehicles in inventory, or to help provide consumers with useful safety recall information on their vehicles. In announcing its new tool, NHTSA specifically mentioned that it is “working with the National Automobile Dealers Association to help ensure that franchise dealerships across the United States become aware of and understand how to use the new VIN search tool.” NADA worked with NHTSA to prepare the document, Dealer Tips for VIN Lookup and Vehicle Recalls. NADA has also updated its document, Safety Recalls Q&A for Franchised Dealers, which provides guidance on how to handle recalls impacting new and used inventory and service vehicles. Dealers and consumers can access the new NHTSA tool at www.safercar.gov/ vinlookup, where a consumer FAQ and other recall-related information also are available. Questions on vehicle safety recall issues or the new VIN-searchable database may be directed to NADA Regulatory Affairs at regulatoryaffairs@nada.org or (703) 821-7040.
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 .t
MSADA
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Massachusetts Auto Dealer MARCH 2015
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Troubleshooting
MSADA
Handling Employee Complaints By Peter Brennan, Esq.
Staff Attorney, MSADA Happy employees are productive employees, but despite dealers’ efforts to keep workplace morale high, employee complaints will occur from time to time. When dealing with an employee dispute or complaint, make sure to document every step, and realize that what seems to be the most logical solution to a problem might turn out to be a costly mistake. Take the following example: Two of your salesmen often work the same hours and compete for deals. Salesman A develops a flirtatious relationship with the Manager, who begins scheduling Salesman A for work on shifts that are traditionally better for sales volume, to the detriment of Salesman B. Salesman B complains to you about this perceived mistreatment and states that the potentially romantic relationship between Salesman A and the Manager is making him uncomfortable. While you suspect that Salesman B’s complaints are meritless, as he has underperformed and made excuses in the past, you know that all employee complaints of this nature must be handled carefully and in accordance with the law. After conducting a review of the situation and investigation into the relationship between Salesman A and the Manager, you arrive at what seems like a reasonable solution: You need a salesman at your same-line make dealership in another town, and decide to transfer Salesman B to that dealership in the same role and same salary. This transfer MARCH 2015
will fill a legitimate need for your organization and will diffuse the productivity-sapping tension that the employee rift is causing. Because the move is lateral, you reason, it cannot be interpreted as a retaliation against Salesman B for filing a complaint. Unfortunately, if Employee B were to file a lawsuit against the dealership in above-described scenario, the likely outcome may not be in the dealer’s favor, based on a recent Massachusetts decision. Last May, in Kelley v. Commonwealth, et al., the Massachusetts Superior Court upheld a jury verdict which awarded a low level employee of the Department of Conservation and Recreation $750,000 following her complaint of retaliation in response to her grievance to a supervisor about a hostile work environment and subsequent lateral transfer. In Kelley, the Plaintiff was employed as a clerk for the Department of Conservation and Recreation at a sign shop near her home. The Plaintiff alleged to her supervisor that a co-worker and a supervisor had engaged in a romantic relationship, which made the Plaintiff uncomfortable and led to the co-worker receiving favorable treatment in the workplace. DCR investigated the allegations, but several other workers in the shop were directly or indirectly made aware of the complaint and the investigations, which upset the Plaintiff to the point where she took a sick leave. When the investigation concluded and the Plaintiff returned to work, she was given a lateral transfer within DCR to a different location with the same salary and benefits. Despite receiving the same compensation, the new location was further from the Plaintiff’s home, and she filed a lawsuit alleging that the transfer was a retaliation for her complaint. In upholding the jury verdict, the Superior Court used a “totality of the circumstances” test to determine that the lateral
Massachusetts Auto Dealer www.msada.org
transfer was “adverse in character”, as the new position required greater skills, a longer commute and a different schedule. In Kelley, as well as the preceding example of Salesman B, an employee engaged in activity protected under Massachusetts law (M.G.L. 151B) by complaining to their supervisor about a hostile work environment caused by a potentially inappropriate relationship between another employee and a manager. In both cases, the employee was then transferred to a different position in another location, albeit with the same pay and benefits. Dealers must be extremely cautious when making changes regarding an employee that has engaged in protected activity, as Kelley has demonstrated that preserving salary and benefits is not sufficient. Even if a legitimate business reason exists to move such an employee, as in the example above, the court will look at the totality of the circumstances surrounding the move. A comprehensive employee handbook that clearly states the dealership’s formal disciplinary process is a necessity when dealing with employee disputes and complaints. A good first step at the earliest sign of trouble is an informal meeting with the employees involved, which is documented by the dealer. If the issue persists, the dealer should not hesitate to issue written warnings. Key here is that the dealer is documenting every step of the disciplinary process, and abiding by the terms of the process laid out in the employee handbook. t If you require any additional information regarding employee complaints 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
Legal
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By Joseph W. Ambash and Jeffrey A. Fritz
The Commission-Paid Overtime Exemption: Are You Maximizing Its Utility? As you know, state and federal law requires employers to pay some employees an overtime premium for any time worked over 40 hours in any workweek, while other employees are exempt from this requirement. Many employers are aware of the “executive,” “administrative,” “professional,” and “outside sales” exemptions. Many automobile dealers also are aware of the federal “salesman, partsman, and mechanics” exemption and the Massachusetts “garageman” exemption. But are you aware of the federal “commission-paid” exemption? And are you aware of how Massachusetts law treats a commissionpaid employee? And, most importantly, are you maximizing the utility of the commission-paid exemption? This article may help answer these questions. Unless an employee is exempt from overtime under state and federal law, an employer must pay him an overtime premium (at one-and-a-half times his “regular rate of pay”) for time worked over 40 hours in any workweek. For example, if you pay a non-exempt employee $12 per hour and the employee works 50 hours in any given workweek, his compensation that week would be $660 ((40 hours x $12 per hour) + (10 hours x $18 per hour)). Similarly, if you pay a non-exempt employee a salary (for all hours worked in any workweek) of $500 and the employee works 50 hours in a given week, his compensation that week would be $550 ($500 + ($500 ÷ 50 hours x 0.5 x 10 hours)). If an employee is exempt from overtime pay under state and federal law, he is not entitled to any overtime premium pay. Most exemptions depend, at least in part, on the actual duties and responsibilities of the employee. For example, for an employee to be exempt under the “executive” exemption, (1) his primary duty must be the management of a department or recognized subdivision of the dealership, (2) he
must supervise the work of two or more full-time employees, (3) he must have the authority to hire and fire other employees or to recommend such actions, and (4) he must receive a salary or guarantee of at least $455 per week. Unlike these other exemptions, the federal “commission-paid” exemption does not depend on the duties and responsibilities of the employee. It, therefore, is versatile and can apply to many categories of jobs. To be exempt from overtime under federal law under the “commission-paid” exemption, the employee must (1) be employed at a “retail” dealership (essentially, so long as your non-retail sales, if any, are less than 25% of your gross sales), (2) receive a majority of his compensation over a representative period from commissions on goods or services, and (3) receive at least one-and-a-half times the federal minimum wage (which is currently $7.25 per hour) for all hours worked in an overtime week. This last prong essentially means, in any week in which the employee works over 40 hours, he must receive at least $10.89 for each hour worked that week. If the employee meets these standards, he will be exempt from overtime pay under federal law. That takes care of federal law, but, as you should know, that is only half of the concern. When it comes to wage and hour issues, dealerships in the Commonwealth must be in compliance with both federal and Massachusetts law. Unfortunately, Massachusetts does not have a “commission-paid” exemption. However, unlike federal law, Massachusetts does not include commissions in determining an employee’s regular rate of pay, which is used to determine overtime pay due. Accordingly, if you pay a commission-paid employee on a 100% commission basis, under Massachusetts law, www.msada.org
his regular rate of pay technically is $0. In that situation, so long as the commissions the employee receives are at least equal to the Massachusetts minimum wage (currently $9 per hour) for all hours worked up to 40 hours, and time-and-a-half (currently $13.50) for all hours worked over 40 hours, your dealership will be in compliance. (Of course, if the commissions are less than that amount in any workweek, you will need to supplement them.) Keep in mind that paying an employee on a “piece rate” basis is not a commission basis. A “piece rate” basis means an employer pays the employee a set amount of money for a unit of work (i.e., $10 per car wash, $15 per appointment scheduled, etc.). In contrast, a commission basis means the employee is paid a portion or percentage of the profit resulting from a sale. This is a subtle but important difference. Are you in compliance with all applicable wage and hour laws, which are complex and, at times, counterintuitive? If you have not yet taken advantage of the MSADA’s subsidized compliance program, which includes a comprehensive pay plan review, you should consider doing so.
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Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at 617 722 0044.
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AUTO OUTLOOK
MARCH 2015
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Accounting
Buying or Selling a Dealership? Know the facts about the current landscape
By Bart Haag
CPA, Principal, Albin, Randall & Bennett
Jason Kendall CPA, Assistant Senior Accountant, Albin, Randall & Bennett
The auto industry has rebounded strongly from the depths of the 2008 recession. ARB’s Automotive Group has seen a rebound as well, particularly among dealer groups in all New England markets. Our group has participated in well over $200,000,000 in buy/ sell transactions for dealership clients over the past several years, and we’ve evaluated many more that didn’t transpire for one reason or another. Most experts believe dealerships are approaching their peak values in the current business cycle and that it’s a seller’s market currently. We agree; however, barriers to entering the retail automotive industry are so significant, valuations will likely remain fairly stable for good franchises in strong markets. Despite the obvious improvement, there are roadblocks ahead, and buying or selling a dealership is no easy task. If you are considering buying or selling a franchise, planning ahead and familiarizing yourself with the landscape is the best first step. The landscape US vehicle sales have increased from a low of 11 million total SAAR (Seasonally Adjusted Annual Rate) in June 2010 to 16.7 million total SAAR in December 2014 with peak volume over 17 million SAAR. So, MARCH 2015
what’s driving higher unit sales? The ARB team recently attended several seminars hosted by Erin Kerrigan of Kerrigan Business Advisors. Here’s what she had to say: • Jobs: Most importantly, the US economy has created jobs for 59 consecutive months, which is the longest job-creating streak in history since data has been collected. Broadly, this trend has increased consumer confidence and enabled consumers to repair their balance sheets and become more comfortable with additional long term debt. • Interest Rates: Auto dealerships are obviously heavily reliant on interest rates. Interest rates affect dealership business loans, lines of credit, vehicle floorplan, and consumer loan terms. Since rates have been exceptionally low for an “extended period,” it is natural to expect a rebound in vehicle
mortgage payments before they missed car payments. Since investors discovered that auto loans had lower default risk than expected, they have purchased more auto asset-backed securities. In fact, they’re already above pre-recessional levels. As more investors purchase auto securities, credit has expanded for consumers, which further increases demand.
production, vehicle inventory, and eventually unit sales to consumers. Low rates for such a long time have clearly contributed to higher unit sales. • Investors: Finally, investors learned from the Great Recession that it’s nearly impossible to drive your mortgage to work (unless you work from home). As a result, consumers opted to default on their
or below-market rent payments, and countless other potential items. Whether or not a dealer’s facilities are image compliant also plays a significant role in valuation. Once these adjustments are made, a base level of earnings is established and blue sky valuations can be determined. When discussing blue sky valuations, most advisors talk in terms of multiples or
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Four key factors that drive franchise Blue Sky valuations Most dealers understand that Blue Sky valuations are not based on the net income figure that’s reported on their monthly manufacturer statements. Adjustments must be made for personal expenses, management compensation, re-insurance programs, above-market floor plan agreements, above-
MSADA return on investment (ROI). So, why do facturers had an average multiple of 6.3. turns on luxury and non-luxury dealerships some dealerships command a higher mul- Some experts believe that a higher multiple are between 14%-17%. Finally, public comtiple or ROI? In her presentation, Ms. Kerri- is caused by the better performance of high pany buyers have lots of fans and stakeholdgain identified four factors that we agreed were key: earnings Dealership High Dealership S&P 500 MSCI Floorplan US 10 Yr A-rated Returns Returns Financing Treasury Corporate Yield 10 Yr Real Estate growth expectations, dealership Non-Luxury Luxury Bonds 10 Yr Bonds Average buyer demand, real estate, and Yield 2.0% 2.6% 3.4% 5.7% 8.2% 8.5% 14.1% 16.9% market vehicle preference. One trend in valuation multiples is clear: there appears to be a 3X floor on Blue wage earners out of the recession and also ers who encourage and support expansion. Sky multiples currently. Additionally, some because there are fewer luxury franchises Clearly, expanding the dealership group is an manufacturers have higher multiples than than non-luxury franchises in the market. attractive investment opportunity. others. For example, the data indicates that there Road Blocks & Strategies for Success 1. By far the most important factor in are roughly 1,600 luxury franchises in total valuations is expected earnings growth in compared to roughly 3,100 Ford and 3,000 However, as Ms. Kerrigan pointed out in terms of gross per retail unit, Finance and Chevrolet franchises. This and other fac- her presentations, sellers are catching on to Insurance per unit, and net earnings overall. tors often times translate into higher earn- the trend and recognize that now is the time 2. Second, the data indicates that the ings and, thus, higher blue sky. to act in the current business cycle. Our exhigher the number of interested buyers, the On the other hand, the top non-luxury perience indicates this is true and that more higher the valuation. Texas happens to be manufacturers were Honda and Toyota with sellers are coming to market. Ms. Kerrigan one particular geographic region that’s in 5.75 average valuations. Interestingly, Ms. points out that the average earnings growth demand — most notably, Warren Buffett’s Kerrigan points out that the data indicates rate is expected to be roughly 3%, which is purchase of Van Tuyl and the creation of that the higher the manufacturer credit rat- close to inflation and, therefore, indicates Berkshire Hathaway Automotive. This same ing, the higher the Blue Sky multiple. Let’s that earnings growth is near its peak. This is theory holds true for Northern New England play this out. Toyota/Lexus has a Moody’s also consistent with retail sales growth excompared with metro areas like Boston, too. credit rating of Aa3 and is, therefore, very pectations. Additionally, take a look around 3. Third, dealership compliance with high-quality debt. As a result, Toyota is able and you’ll see an aging dealership populamanufacturer brand image requirements is a to borrow from capital markets cheaply tion. Many of wthese dealers have week or concern among buyers. Typically, buyers do and then pass lower rates on to consum- nonexistent succession plans, which gives not want to undertake a large building proj- ers, which in turn, increases the demand for reason to sell. Many owners are approachect. Therefore, a discount is usually made if Toyota and Lexus vehicles. The reverse is ing their retirement years and need to plan also true. Both GM and Ford have medium- ahead for succession. a building renovation is needed. 4. Finally, the last, but not least, adjust- quality credit ratings at Baa3 and cannot Timing is always important when sellment category for Blue Sky multiples per- pass along lower rates as easily to consum- ing a dealership and some experts believe tains to how well the franchise is matched ers. However, credit ratings are improving that after the current business cycle the next the dealership’s geographic region. Items to for GM and Ford as their balance sheets best time to sell could be roughly 5-10 years consider are consumer income in the region, strengthen. from now. So if you’re a seller, it’s prudent a truck versus car market, as well as luxury to find multiple buyers so that a higher price Buyer attributes brands versus non-luxury brands. Thus, if is achieved. On the other hand, if you’re a Buyers are increasingly big dealership there’s a strong match between the franchise buyer, do your best to find a seller and try to and the local region, then a premium is add- groups and they are getting bigger. Our prac- limit the seller’s options of suitable buyers. ed. Conversely, if there isn’t a good match tice is seeing an increase of dealership groups t between the dealer and the nearby region, as active buyers. After several years of profthen a discount is applied. It doesn’t make its, buyers have deeper pockets with ample sense to operate a Mercedes-Benz dealer- capital to put to work. Moreover, financing To learn more about how ARB’s Automotive from capital markets is more available than ship in a low income market. Group can support your dealership as you ever for public company buyers with few navigate the buying and selling process, Trends in Blue Sky Multiples other attractive options for investment. Capi- contact us at bhaag@arbcpa.com . As of June 30, 2014 BMW, Mercedes- tal investments such as floor plan expansion Bart Haag, CPA and Jason Kendall, CPA Benz, Lexus, Porsche, and Audi have the yield a meager 2%, US 10-year Treasury practice with Albin, Randall & Bennett’s highest Blue Sky valuations. According to bills yield 2.6%, the 10-year average return Automotive Group. Contact them at bhaag@ Ms. Kerrigan’s data, these luxury manu- on the S&P 500 yields 8.2%, while the re- arbcpa.com or jkendall@arbcpa.com.
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Sound Off
Benchmarks of Dealership Values By Nancy Phillips
Why the Theory of ‘Multiples’ May Not be the Answer Nancy Phillips Associates has been selling auto dealerships for over 25 years. Documenting and studying dealership transactions has proven to be a reliable way to anticipate and project future dealership values. Every month we receive numerous calls from Dealers asking what the current multiples are for their particular franchise. The flaw with this method is that a dealership losing money may in fact be worth the same as a profitable one. We feel that value is easier to understand when Business Value (Goodwill) is defined as a percentage of total Dealership Revenues. The three key elements to dealership desirability are Franchise, Market Area, and Facility. Profitability is an enhancement; loss, however, while opening the door for negotiation, is not always a deterrent.
Few Buyers Radically Overpay While there have been radical increases in the amount of Business Value paid for certain franchises, overall value fluctuations have been moderate. They are neither as low as you might have expected during bad years, nor do they skyrocket in better years. That’s because those buying in difficult markets pay based on better futures, and those buying at the top of a market do so with an eye toward the next downturn. There are very few buyers, either individuals or Dealership Groups, who will substantially overpay without a quantifiable return.
Historical Franchise Values Over the Last 24 Years The historical information presented below is based on our portfolio of dealership transactions from 1990 through 2014. The data demonstrates varia-
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tions in business value that relate to economic factors taking place during specific time periods. Despite the introduction of Dealership Groups as major acquirers, dealership values have increased modestly over the last fifteen years from an average of 4.2% from 1990-2010 to 5.5% from 2011-2014.
A Different Way to Determine Value Another way to determine the value of a franchise is to compute the amount of Business Value paid for each new vehicle retailed (PNVR) over the past 12 month period. This method, in combination with that of Business Value as a percent of total revenues, presents a relatively simple and clear explanation of current franchise values.
Franchise Values Today Over the last 18 months we have seen new and interesting trends relative to franchise values. The market is always the defining element and based on recent dealership transaction data; the results indicate that intangible business value has increased significantly for certain franchises that were previously much lower. At the same time, there are several franchises that need to focus on reversing noteworthy declines in order to strengthen values in the future.
Determining True Value Requires In Depth Analysis All of the data contained herein is from actual dealership sales. The values obtained were from appropriately priced transactions in which financial statements were recast to
MSADA
properly reflect profit or loss, facility upgrade costs were accounted for, and all other obstacles and franchise alignment issues were addressed. Strictly speaking, you cannot simply apply these calculations to your own set of circumstances to determine the value of your business.
Why Contact Nancy Phillips Associates We hope you will find this information helpful as you consider your long term dealership strategy. Information for this article has been obtained from our portfolio of over 300 dealerships sold. Each year Nancy Phillips Associates and her team average 12 dealership transactions plus over 30 dealership evaluations for the purpose of a sale or acquisition, estate planning, or partnership buyout. In addition to handling all negotiations pertinent to a Dealership transaction, we also co-ordinate expert Environmental Services, Legal Services, Parts Inventory and Dealer Application Services through our long term highly successful Business Partners.
t Nancy Phillips Associates specializes in sales, acquisitions and evaluations of franchised automobile dealerships. Contact Nancy Phillips at (603) 658-0004 or email auto@ nancyphillips.com.
Do you have an opinion you want to share? Send submissions to macdonaldcs8@gmail.com www.msada.org
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Cover Story
Getting On Board Jeb Balise and Brad Tracy reflect on their careers, and why they decided to serve their fellow dealers on the MSADA Board of Directors. By Catherine MacDonald Being on the front end of the auto industry isn’t easy, as any dealer could tell you. The long hours, the uncertainty — and the reward — are all-consuming. But even as individuals seek their own success, it takes a team effort to make sure dealers aren’t swept aside in a constantly evolving business climate. The MSADA Board of Directors works to make sure member dealers are being represented from across all corners of the Commonwealth. As of the beginning of this year, 19 dealers
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now represent their colleagues from the Berkshires to Cape Cod. With the addition of Springfield stalwart Jeb Balise and longtime Cape Cod dealer Brad Tracy in 2015, the Board of Directors is as fully represented as it has been in years. Their families represent nearly a century each of auto retail experience and legacies built from the ground floor of some of the world’s most venerated brands. Both spoke to Auto Dealer magazine about their background, and why it’s important to them to take on a leadership role as the industry continues to turn unknown corners.
MSADA Hands-On Approach While many dealers may like to tinker around on a project car in the garage, a dealer who can keep up with the ever-evolving technology of modern automotive engineering is rare. Brad Tracy of Tracy Volkswagen in Hyannis is among them. He starts
each morning by checking in on the shop, eager for the challenge a problem car brings. “It’s hard not to,” Tracy says. “I just love the cars. I grew up working in the shop, and my best friend from kindergarten is the shop foreman. He’s probably one of the best VW techs in the country.” Tracy’s family has deep roots both in Boston and Hyannis — his great grandfather had one of the first Ford dealerships in the area — and a long history with Volkswagen. His grandfather, Albert Tracy, took on the franchise in the ‘50s, making it among the oldest in the country. Albert began his career with American Motors, and his son, Jay, got into the business straight out of college in the ‘60s as one of the youngest distributors of Cadillacs in the country. “But both of them always wanted to have their own dealership,” Tracy recalls, “and they had the opportunity with VW.” The two ended up on the Cape through Tracy’s mother’s side of the family, who held their own Nash dealership. Jay worked summers pumping gas around the corner from it and eventually started working there. His grandson remembers stories of the early car dealing days, when appointments were made during the day for salesmen to make house calls by night. “You’d go to the living room floor and sell the car,” Brad laughs. But he says that early-era work ethic has grounded his modern day business sensibilities even after spending time in California finding his feet as a VW salesmen. The community
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comes before everything else. While Tracy had operated an Audi franchise for years, he sold it last year to focus on VW. Doing so has allowed what makes his family business great shine through a little brighter. With the singular focus on VW taking hold -- and a new product lineup around the corner -- Tracy says he was ready for a new challenge. After seeing his father, Jay, heavily involved in MSADA as Brad started in the business, he decided it was time to serve his fellow dealers as well. “I want to stay in touch with what our rights are and what’s happening with the manufacturers,” Tracy says. “We’ve had quite a few issues with ‘Right to Repair’ and other things like staying on top of our wage and hour laws that change as time goes on. It keeps us on our toes.” Tracy wants to help keep his fellow dealers ahead of the curve -- whether it’s employment law issues or larger industry question marks such as Tesla. “Things are coming that we need to try to combat, and I want to help make it better for us,” Tracy adds. “We have to be careful to not get our head in the sand out here.”
An Optimistic Outlook The Balise family’s network of dealerships across Massachusetts and Rhode Island didn’t happen overnight. It started with a tractor repair shop in Hatfield in 1919 -- and has emerged with time as both one family and the entire industry continued to grow. It started with Paul Balise, who grew up on a farm in Hatfield at the beginning of the 20th century. His tinkering on the farm led to that repair shop, and a Chevrolet dealership in 1929. Since then, the family has spread east and from one son to the next. Jeb Balise has presided over the company since 1986. “I’m not smart enough to do anything else,” Balise —Jeb Balise, jokes. “I was five-yearsHampden County MSADA Director old, opening and closing the garage door in winter storms. All I’ve ever wanted to do is to be in this business.” As Balise continues to expand the Balise Auto Group through-
“I think the car business is really good for all dealers right now. The tide is rising.”
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Getting On Board
out Massachusetts and Rhode Island, he says the time has come for his family business to give back to the larger dealer community. “I just see a lot of dealers that have dedicated their time,” Balise says. “I feel an obligation to my fellow dealers and the guys who have worked their tails off in the past.” Balise is optimistic about the direction of the industry in general after the cataclysmic changes of the past five years, where dealers were thinned out considerably in the western part of the Commonwealth as GM and Chrysler proceeded through bankruptcy. “The consolidation that took place made the playing field a healthier one,” Balise concedes. “I think the car business is really good for all dealers. The tide is rising.” Those hard won gains are worth defending, Balise says, especially in an industry as family oriented as the auto business. His brothers are also heavily involved with one running Statewide Auto Auction in Connecticut and another working alongside Jeb at Balise Auto Group. MARCH 2015
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But even as the economy and the industry turns around, Balise says he remains concerned by the looming threat of issues such as Tesla’s encroachment on the dealer franchise system. He hopes his tenure on the board will help keep dealers connected to ways of speaking out for themselves amid the regulatory onslaught that comes from Beacon Hill.
Room at the Table While Balise and Tracy settle into their new roles, MSADA Executive Vice President Robert O’Koniewski says they’ve taken on the challenge with aplomb so far. “What’s exciting about Brad and Jeb coming on board is how much collective experience they bring,” O’Koniewski says. “Both come from families with deep roots in the business, and I look forward to working with them on the challenges our industry is facing.” O’Koniewski adds that any dealers interested in serving on the Board should reach out. “We’re always interested in hearing from dealers who are looking for opportunities to represent their fellow dealers,” he says, “Our strength lies in our dealers. Each dealer has an opportunity to do his or her part in making sure our interests are represented and our Association remains vital and responsive.”
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NEWS from Around the Horn from Around
NEWS the Horn
IN MEMORIAM
Martin Alicandro, Jr. Martin Alicandro, Jr. (“Marty”), 79, of Plymouth, MA died on March 5, 2015, at Massachusetts General Hospital surrounded by his family at his bedside. He was born in Cambridge, MA, the son of the late Martino Alicandro and Josephine Cobuzzi. Marty graduated from Rindge Technical School in 1954. After a two-year stint in the Army, Marty returned home and pursued the trade of an auto technician specializing in automatic transmissions. After meeting his soulmate and beloved wife, Barbara Alicandro, formerly Barbara Marinos, of Plymouth, MA, Marty moved to the South Shore and subsequently opened Kingston Automatic Transmission Company, in Kingston, MA with his wife. Never ones to be complacent, Marty and his wife then purchased a GMC Truck franchise, which is now located at 5 Kingston Collection Way (formerly Independence Mall Way) in 1968. Through years of hard work, patience, and determination, Marty
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fostered the dealership to be an industry leading performer in the region, as evidenced by the multitude of accolades bestowed upon the dealership by General Motors. Determined to enact change on a larger level, Marty served on several boards and committees at General Motors and was a supporter of local charities in the community. Marty mentored his loving daughter, Christine, who has succeeded Marty as the dealer principal. Through Christine’s leadership, with the ongoing guidance of Marty, Marty’s GMC continues to flourish with the addition of the Isuzu and Buick franchises and its latest renovation. Until his recent illness, Marty’s presence was known to both employees and clients through his almost daily appearances at the dealership, imparting his years of experience, knowledge, and work ethic to those around him. Marty truly lived the American dream – he was a self-made, selfless man who achieved success through his work ethic, honesty and loyalty. He always put his family first and instilled a sense of values that are rare to find these days.
NEWS from Around the Horn
MSADA
Marty’s patience and loyalty were not just exemplified at the dealership. He was one of the original season ticket holders for the New England Patriots in 1960. After tolerating years of disappointing and often heartbreaking seasons through rain, snow, sleet, and occasionally sunshine, very little brought him more joy than being present at three Super Bowl victories with family and friends. Win or lose, Marty’s unwavering devotion to the Pats is indicative of his character – loyal ‘til the bitter end. Marty’s “work hard, play hard” philosophy did not just apply to football on Sundays. Traveling the world with his family revealed Marty’s adventurous side. From Russia, Australia, Brazil, to Asia and Europe, Marty treasured time spent exploring new destinations and cultures and was always a good sport trying new things. He instilled this “travel bug” in his daughters, ensuring that they always take advantage of the opportunity to travel, but also enjoy returning to the lives they have built back home. Marty will be forever missed by his loving wife of 52 years, Barbara Alicandro, f/k/a Barabara Marinos, of Plymouth, MA, dearly loved daughter, Christine Karnolt, f/k/a Christine Alicandro, her husband Stephen Karnolt and his cherished grandchildren (or monkeys as he lovingly called them) Sophia and Martin (Tino), all of Kingston, MA, dearly loved daughter, Theonie Alicandro, and her wife Amy Spurling, of Cambridge, MA. Marty is also survived by his loving siblings Mary Mullane, of Medford, MA, Connie McNeil, of Maryland, Joseph Alicandro and his wife Ernestine Alicandro, of Somerville, MA, Joanne Kendall and her husband Howard Kendall, of Plymouth, MA, Jean Collins and her husband Dan Collins, of Medford, MA. Marty was predeceased by his brother Ralph Alicandro. Too numerous to name, but by no means any less treasured, are many nieces and nephews. Marty’s legacy and impact on his family and the local community will be felt for years to come. Memorial donations may be made to the American Lung Association, 55 W. Wacker Drive, Suite 1150, Chicago IL 60601. For online condolences please visit shepherdfuneralhome. com. NORTHAMPTON
Lia Auto Group Buys Chrysler Dealership The Lia Auto Group purchased Northampton Chrysler Jeep Dodge Ram this month, adding to its growing collections of brands across the region. The Chrysler store, purchased from Artioli Chrysler of Enfield, Connecticut, is Lia Group’s 20th dealership www.msada.org
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NEWS from Around the Horn among franchises spread across Massachusetts, Connecticut, and New York. Co-Owner Michael Lia told The Springfield Republican that while they already own a Chrysler location just north of Albany, the brands are making a comeback. “It is doing very well for us,” Lia said. “The products they have are really good. This was the time to jump back in.” SALISBURY
Pride Motor Group Opens Chrysler Dealership After receiving Selectmen approval in December, Pride Motor Group is now operating a Chrysler franchise in Salisbury. The Salisbury Chrysler Group franchise is selling Chrysler, Dodge, Jeep, and Ram trucks and expects to carry an inventory of 300 cars. Pride Vice President Paul Bertoli said he’s excited about opening a dealership in the town -- Pride currently also operates Chevrolet, Hyundai, and Kia franchises. “I think this town and the surrounding communities are wonderful,” he told the Selectmen. “I think the demographics are great and Salisbury is terrific. It shows very positive growth.” Bertoli said he plans to spend more than a million dollars on renovations and improvements in months to come. “We have fireplaces in all our other dealerships,” Bertoli said. “We want a warm, welcoming environment when people come in the door.” WESTWOOD
Boston Globe Profiles David Rosenberg’s Early Challenges David Rosenberg’s rise to prominence with Prime Motor Group wasn’t always easy, and The Boston Globe featured an extensive interview with the dealer in a recent Sunday feature. The story chronicles his early years as a dealer, working with his father to build Ira Motors, fresh out of business school and at the helm of a struggling business. Rosenberg said his first experiences helped him cultivate the culture that he keeps with the company to this day. “We were honest,” he told the paper. “We told our employees that the dealerships were not doing well. A lot of employees were very loyal to my father; in fact, my dad had instituted a profit sharing plan for them. It still tears me up when I think of the number of employees who wanted to give back some of that MARCH 2015
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money to help me save the company.” Since that time, Rosenberg built that company up to the point where he was able to sell it to Group One Automotive. Itching to get back into the business, he later founded Prime, which he and his partner Matt McGovern have built up to 25 dealerships. WESTBOROUGH
Chambers Earns Honda President’s Award Herb Chambers Honda of Westborough and Herb Chambers Honda of Burlington have been honored with the 2014 Honda President’s Award. Only 125 out of the more than 1,000 Honda dealerships in the country were given this honor. “Honda has a proud tradition of delivering excellence in everything we do,” John Mendel, Executive Vice President of Automobile Sales for Honda, said in a press release. “The President’s Award is reflective of our long-standing commitment to create exceptional customer experiences. Dealerships that earn this coveted recognition are role models for building positive connections with customers.”
MSADA Awards Season The season for manufacturers recognizing the achievements of their franchise dealers is in full-swing. Here is a list of some of our Massachusetts dealers who have received recognition recently. Acura
Ford
Prime Acura of Walpole was named among the Dealerships of Distinction for 2014. The dealership is a 3-year recipient of the award.
Ford Credit Partners in Quality Award Winners for 2014: Owen Motors, Dedham Watertown Ford, Watertown
Audi
Mercedes-Benz
2014 Audi Magna Society awards: Magna Society Elite: Audi Burlington Audi Natick
Herb Chambers was named among the company’s 2014 Best of the Best Dealer Recognition Award.
Magna Society: Audi Shrewsbury Audi Westwood
Toyota
Chevrolet
Best Chevrolet owner Scott Shulman was one of 62 Chevrolet dealers named 2014 Dealer of the Year -- the only Massachusetts dealer so named.
Top 25 dealers for 2014 for certified used vehicles: Boch Toyota, Norwood Ira Toyota, Danvers Boch Toyota South, North Attleborough
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Volkswagen
2014 Wolfsburg Crest Club champions – Gold Level: Quirk Volkswagen, Braintree
Top Dealer Groups Announced
Automotive News released its annual list of the top 150 dealer groups based on total 2014 new-vehicle retail sales units. Five Massachusetts-based dealer groups made the list: Herb Chambers Companies, based in Somerville (#17); Prime Motor Group, based in Westwood (#44), which made the list for the first time; Balise Motor Sales, based in West Springfield (#64); Colonial Automotive Group, based in Acton (#93); and Kelly Automotive Group, based in Danvers (#112). Additionally, three groups based outside Massachusetts with dealerships located here achieved recognition: Group 1 Automotive (#3), Lia Auto Group (#53), and AutoFair Automotive Group (#123).
Congratulations to all!
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NEWS from Around the Horn IN MEMORIAM
George Berejik Former Oldsmobile dealer George Berejik of Buzzards Bay and formerly of Needham passed away on March 10, 2015, after a long and courageous battle with kidney cancer. Berejik Oldsmobile operated in Needham from 1951 through 2001, opened by George’s father, Anthony. As a salesman, George was known for his affinity for muscle cars, which continued through his becoming owner and retirement. George is remembered as a man who made an impact on everyone he met. He loved working with his hands and was always building and fixing things, especially for neighbors and friends. His passion for Oldsmobiles was evident in his extensive car collection and the many car shows he hosted and attended. He loved the ocean, and boating was one of his favorite pastimes. He was well-known for his spectacular Christmas display, which brought people from far and wide. His 11 grandchildren kept him smiling every day. His family is his greatest legacy, and he left them many treasured memories. George will always be remembered for his kind heart, generous nature, and zest for life and fun.
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He is survived by his adoring wife, Betty Ann (Bernardo), four beloved children, Brandon and his wife Abigail of Wareham, Lori Bosworth and her husband, Michael of Arizona, Christopher and his wife Katy of Virginia and Kristen Campanella of New York. He was the cherished Papa of eleven grandchildren (Connor, Ryan Lexi, Morgan, Colton, Cannon, Ace, Jack, River, Riley and Kenzie). He is also survived by his siblings Joan, Harry and his wife Susan, and Philip and his wife Danielle Berejik, and many nieces and nephews. BOSTON
Albrecht to Dine in Deval Patrick’s Office — With Charlie Baker Governor Charlie Baker had some fun and raised money for a good cause following the controversy surrounding former Gov. Deval Patrick’s $11 million taxpayer-funded office upgrade. Baker auctioned off lunch with himself at the Junior Achievement of Northern New England anniversary dinner this month, noting “My office, if you haven’t seen it,” before stopping himself from saying more. George Albrecht, founder of Albrecht Auto Group, won the auction with a $10,000 bid.
NADA Update
By Don Sudbay
Throwing My Hat into the Ring 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). My sincere congratulations and thanks to the new MSADA Directors who have just taken office. I know you will enjoy your experience with this great organization. Some of you may have heard that I am throwing my hat into the ring as a candidate for NADA Vice Chairman. The election will be held in October of this year at a meeting of the NADA Board of Directors. If I am bestowed the honor, I will assume the office of Vice Chairman at the annual convention in March 2016 and the office of Chairman the following year at the convention in New Orleans. Those of you who know me know that I am very passionate and protective of our franchise system, and I feel strongly that NADA needs to do everything possible to protect our businesses in the future. The time is right for me for this challenge, and I look forward to hearing your thoughts at our Annual Meeting in May.
A Special Note from NADA Chairman Bill Fox “It’s clear by now that new-car dealers are not just responsible for facilitating the complex transactions of vehicle sales to the American public, but also for complying with numerous federal and state regulations on a daily basis. And to assist dealers with this ongoing challenge, the National Automobile Dealers Association is providing its members with another essential tool to help navigate the maze of federal regulations. It’s called A Dealer Guide to Federal Advertising Requirements. “In January 2014, NADA rolled out a vital resource for its members. The NADA Fair Credit Compliance Policy & Program serves as an optional tool to help dealers comply with fair credit requirements. Just like auto finance, several important federal requirements govern the field of advertising, and cover everything from credit and lease advertising to prize promotions to green-marketing claims. “To demonstrate its commitment to advertising compliance, NADA released its comprehensive guide on federal advertising requirements at the 2015 NADA Convention and Expo. This provides a compliance resource in an area that has come under intense scrutiny by the Federal Trade Commission, and that has resulted in a series of enforcement actions against dealers across the country.
“This guide—like the fair credit guide—is a pdf that is easily accessible at www.nada.org. It provides dealers and others in the industry with information on 41 federal advertising topics; a series of examples of ‘bad’ and ‘good’ ads; and the ability to quickly hyperlink throughout the document and to additional information on various advertising topics. The guide focuses on advertising standards at the federal level, so it is important that dealers consult with their state dealer associations on additional requirements imposed at the state level. “NADA’s goal this year is steadfast; to defend the efficient business model of dealers from the challenges posed in our nation’s capital, and be an effective advocate for the thousands of franchised new-car dealers across the country. “This is a moment in the auto industry when all franchised new-car dealers must show their cards and their diligence— to our supporters and critics—so that we can continue to thrive and proudly serve our customers, manufacturers and communities. “NADA will continue to provide the tools dealers need to manage the increasingly complex web of federal regulatory requirements that apply to our businesses.”
NADA Hires Jared Allen as Senior Director of Media Relations The National Automobile Dealers Association recently announced that it has hired Jared Allen, a veteran communications professional and former journalist, as its senior director of media relations. In this position, Allen will help build out NADA’s communications and marketing efforts, and will serve as the organization’s primary spokesperson on policy issues. Allen comes to NADA with more than ten years of combined experience strategic communications, journalism and public affairs. Throughout his career, he has provided leading counsel in the areas of corporate communications and reputational management, issues management, media relations, digital engagement, crisis communications, and litigation communications.
University of Portland Receives Grant from the NADA Foundation The National Automobile Dealers Charitable Foundation provided the University of Portland with a $7,000 grant last month. The funds will be used for the emergency needs of students. The contribution was made through the NADA Foundation’s Joseph J. Sanchez Memorial Fund. The fund was established to honor Sanchez, former vice president and general manager of General Motors’ Oldsmobile division and the first president of Saturn Corporation. t www.msada.org
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Accounting
MSADA
The Forgotten Profit Center By Raymond Lofstrom Principal
Joining O’Connor & Drew, P.C. in 1994 and becoming a principal in 2002, Ray is currently responsible for managing accounting, auditing, and tax services for a wide range of clients. Ray has extensive experience in our automobile division, and he has written articles in several trade publications. To contact Ray, call 617.471.1120 or email him at rlofstrom@ocd.com.
When it comes to profit centers in your dealership, you might be thinking: new car sales, used car sales, F&I, parts and service and maybe a body shop, right? What if I told you there is an often overlooked department that may not get the glory of the above but can be vitally important to the profitability of your operations? Not buying it? If you take a step back and review what your accounting office can provide your dealership, you will see that an experienced accounting firm can help your dealership become more profitable just like any other department. It may not generate gross profit but it will help you retain profits. Some key areas your office can and should be helping retain profits are: Compliance – Every day the government is coming out with more and more regulations with which you must comply. Non-compliance with these regulations can result in significant fines and penalties. Cash reporting, sales tax, wage reporting, insurance, privacy safeguarding, identity theft, and OSHA are just a few areas where significant fines and penalties can be incurred if you are not in compliance Your accounting office is MARCH 2015
the backbone of your compliance efforts. You should be supporting their efforts and ensuring that they are up to date and trained in these areas to keep you compliant. Cash Management – A well run office can ensure that the profits your dealership is making are turned to cash in a timely and efficient manner. Cash flow is imperative for dealerships today. The amount of working capital a dealership needs is significant. Quick turns of cash can result in reduced bank fees and the ability to utilize cash in other areas of the dealership to make profits. Excess cash can also be utilized to reduce floorplan interest charges and to take advantage of vendor discounts if offered. Office Efficiency – A well run and well trained office can run with fewer person-
Accurate Reporting – A timely prepared and accurate financial statement or DOC report can provide management of the dealership with the information it needs to make smart and timely business decisions. A month-end close of 5 days or else is ideal. Again, support the office in this area and ensure that sales cut-off is adhered to. Fraud – Some estimates of losses caused by fraud range anywhere from 1% - to 2% of sales annually. Although this number may seem high, we have all heard the horror stories of dealerships being defrauded out of significant money. This is by far the most important role your office should play in your dealership. The control of these losses is imperative. A well run, well trained office with proper segregation of duties and proper internal
“A strong, well run dealership accounting office should be viewed as an integral part of your operations.” nel than a poorly run office resulting in less personnel cost, lower turnover, and a happier work environment. Make sure your office staff is cross-trained to ensure that if someone is out, their work can be covered. Great office efficiency can only be obtained if the information that is coming into the office is accurate and timely. The old adage, “garbage in – garbage out” is applicable here. You need to support your office in their efforts to ensure that paperwork coming into the office is accurate. They should not be spending their time chasing down missing or inaccurate paperwork.
Massachusetts Auto Dealer www.msada.org
controls can help to mitigate these losses. Again, support your accounting office efforts to ensure internal controls are being followed by all departments. A strong, well run dealership accounting office should be viewed as an integral part of your operations and not just an overhead item and cost of doing business. Not only does the office safeguard the dealership assets they also help in reducing, controlling, and eliminating expenses. They may not sell cars or turn a wrench, but they should not be a forgotten department. t
Dealer Services
MSADA
Transitions to Work
Business Opportunity to Hire Individuals of all Abilities
By Beth Tauro Business Community Liaison-Combined Jewish Philanthropies/Transitions to Work.
What was your first job? For some, getting hired is an easier process than for others. Individuals with disabilities are talented, skilled, qualified applicants who are incredibly able, dedicated, and successful colleagues, yet getting hired is a high hurdle. The unemployment rate for individuals with disabilities is roughly twice as high as the general population. Transitions to Work aims to create transformative change in hiring practices and engage the corporate and business community to employ individuals with disabilities. Transitions to Work is a high quality supported employment program for young adults with disabilities and is based on an intensive training and internship cycle. Transitions to Work is focused on training participants to meet and exceed the needs and requirements of an employer. Current employer partners include: Prime Motor Group, The New England Aquarium, CVS Caremark, Brigham and Women’s Hospital, Hebrew Senior Life’s NewBridge on the Charles, Legal Sea Foods, Panera Cares, Reebok, Anton’s Cleaners, Reebok, Kappy’s Fine Wine & Spirits, Destination XL, Combined Jewish Philanthropies, Star Market, and The Lewwwventhal-Sidman Jewish Community Center. Job responsibilities include: auto dealer customer service greeter and maintenance, restaurant host, data finance entry, office clerk, food preparation/ server/wait staff, health club locker room attendant, cashier, mailroom, organizing clothes,
housekeeping, café manager, and stockroom. Approximately 78% of graduates have earned jobs, and there is an 89 percent retention rate. Our employer partners hire Transitions to Work graduates because it is good for business. Their stories exemplify the benefits hiring Transitions to Work graduates has brought to their companies. Many have hired multiple candidates. • Prime Motor Group has hired three Transitions to Work graduates throughout its dealerships. Owner David Rosenberg was an early supporter and introduced Transitions to Work to all of his General Managers. Mike Brown, General Manager, Prime Toyota, quickly recognized the opportunity to hire talented candidates and also make a difference. Mike is thrilled to have Isaac Varon as part of his team. Isaac is responsible for keeping the dealership looking like new inside and outside. As Isaac finishes one task, he is planning on how to execute another. Mike reports that Isaac exceeds all of his expectations and is a model employee. Mike admires Isaac’s commitment and dedication. Despite his 1.5 hour commute, Isaac is on time and always ready to work. Mike sums it up by saying, “Everyone loves Isaac; he is like the mayor.” • Destination XL Senior Vice President Human Resources Walter Sprague’s philosophy is to build a good team and to hire individuals who add value and continue to grow in their roles. Mark Burgess, Administrative Assistant for Destination XL and a Transitions to Work graduate, continues to do this. Hired to handle basic office administrative tasks to support the Human Resources, Payroll, and Benefits groups, Mark dove right in. Mark reorganizes and brands files, manages labeling and mailings, updates job application status and profiles of applicants, edits requisitions, and handles other computer tasks. Jennifer McClaren, Human Resources Genwww.msada.org
eralist and Mark’s supervisor, describes Mark’s work ethic and skills. “Mark is always ready to take on extra challenges. He asks questions and is great at time management. He has even taught me a few things on the computer!” Corporate commitment is the cornerstone to creating and implementing inclusive hiring. Benefits to a company with inclusive hiring practices include: • Higher Productivity - Employees with disabilities typically exhibit higher loyalty, lower turnover, and contribute to the collegiality of the workplace. • Increased Market Share - Individuals with disabilities and their families reflect an expanding customer base and are loyal patrons of companies that support inclusive hiring. • Expanded Talent Pool - Individuals with disabilities are an underused pool of talented, skilled, and qualified applicants. • Public Relations - Inclusive hiring positively impacts a company’s image. • Diversity and Morale - All employees report a higher degree of workplace satisfaction when working in integrated teams. Transitions to Work continues to connect with new employers to educate on inclusive hiring and build employer partnerships. Please let us know if you or someone you know might be interested in exploring Transitions to Work as a fit for your or their company. Please visit Transitions to Work on Facebook at www. facebook.com/transitionstoworkboston or at www.cjp.org/transitionstowork to learn more about the program. Transitions to Work is a collaboration among Combined Jewish Philanthropies, Jewish Vocational Service, and the Ruderman Family Foundation. Funding is provided by the Ruderman Family Foundation and a grant through The Commonwealth of Massachusetts, Executive Office of Labor and Workforce Development. t Massachusetts Auto Dealer MARCH 2015
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Dealer Services
Why So Much Sales People Turnover?
given to new sales people, this problem is compounded. A good strong individual who has a high money need is much more likely to go after the support he or she needs to make it, and they are more resourceful to quickly figure out how they need to relate to a prospect. 3) Good people relationship skills. Managers overlook how difficult it is for someone who comes into this business or Management Developers Inc (MDI) Dealersomeone who is new to this business to ship Strategic Planning – 25 years in helpbe able to quickly relate to strangers who ing dealerships build great teams, be more productive, increase market share and imare defensive and feels that the sales perprove profitability. son is there to take his or her money. A sales person with good people relationship Here’s a fact to digest: dealerships skills has a fighting chance to eventually with great management don’t have a sales overcome this and know how to relate people turnover problem. Dealerships properly. Someone who doesn’t have very with average to weak management always good people relationship skills doesn’t have a sales turnover problem. have a chance. The easiest way to deterFrom this statement, you should be able mine if a sales person has good people to deduce that turnover relationship skill is to is more of a managesee how they relate to ment issue than it is you in the interview. a sales person issue. If they look you in “What you’re looking to accomplish Hopefully by the end the eye, they commuis developing people. ... By putting a of this article, you’ll be nicate well and you convinced that the betcan’t help but like strong focus on developing people ter the management, the them, then the people you will wind up with more and lower the turnover; and relationship skills are the weaker the manthere. more top performers.” agement, the higher the 4) An aptitude to turnover. sell. If you hand a Management usually prospective sales permakes the case that because they’re in constantly improving in their work history son your cell phone or your pen or whatdesperate need for a body, they quickly or, if there are hiccups, there are good reaever and you ask them to sell it to you, advertise and can’t get any good prossons for it. you’re going to see if they don’t have a pects. Whether they hire one person or 2) Desire to make money. With someclue – they’re making up stories and toa few people, most of them don’t stick. one new coming into a dealership, the tally lost in how they handle a sales situaManagement will say those people don’t sales floor is very competitive and custion. Someone who has a basic aptitude is have the drive, persistence, and ability to tomers are difficult to relate to correctly. going to ask you good questions, bring out handle the customers or the sales floor. So So someone who is living at home, with some good points, and try to influence you when you think about that, how much of little responsibility in most cases will not into having interest in the object they are that can be controlled by management? have enough perseverance and determinatrying to sell you. Usually there is no midThe answer is all of it. tion to be able to overcome those obstadle road, they either have it or they don’t. It first starts with the right attitude for cles. Because of the usual lack of support I have a test I’ve designed that measures
By Dale Boch
MARCH 2015
an ad. That attitude is: you’re not looking for a 10-12 vehicles a month sales person; you’re looking for a 20+ vehicles a month sales person. If you advertise compensation for a 10-12 a month vehicle sales person, that’s what you’re going to get. If you advertise for a 20+ vehicle a month compensation, that’s what you’ll get. Now the big problem management has is how to differentiate the two. There are four main attributes a salesperson needs in this business. To the degree they have those attributes is going to determine how successful they will be in selling vehicles. Good dealership support is another important factor (we’ll get to that later). The four attributes are as follows: 1) Good track record. This means someone who has some sort of a plan for their life and is interested in trying to reach particular goals. In other words,
Massachusetts Auto Dealer www.msada.org
MSADA
these four items on a scale of one to ten. I consider a 32 a passing grade (for a free copy of this test you can email me at db@ managementdevelopers.com). If you perform a thorough interview (which is a lot more important than most people think it is) and you scale a prospective sales person on these four items without any bias or prejudice and stick to the 32 rule, your chances will increase tremendously on hiring a great sales prospect with true potential.
Good Dealership Support – Developing People The biggest complaint at this point is that not enough qualified people are answering the ad and you need a body. If you continually think this way, you will never stop your turnover because you can never build a high performing team with weak hiring. So how do you hire strong? This is where great management is an important factor. Great management understands that strong sales people can
manage just about as many prospects as you can throw at them. Average/weak management doesn’t think that way because they have too many weak performing sales people. Plus, they’re afraid certain prospects won’t be taken care of, and they are unwilling to get off their butt and find a way to get the prospects taken care of. Most sales forces consist of 1/3 good producers, 1/3 medium producers, and 1/3 weak producers. In this typical scenario at a dealership, the sales manager is pressured to keep filling spots with bodies, for which 80% of those bodies turn out to be weak producers. When they find a strong producer they put him or her into the mix. Because they don’t clearly recognize what they have, they don’t give that producer the support needed to wind up in the top category. A lot of those producers get stifled in the middle category and never end up utilizing their true potential. So they end up leaving the dealership. If you look at typical sales forces, the www.msada.org
turnover is usually in the bottom and middle categories and not the top categories. With average/weak management the top category of sales people rule the roost and they create the environment so average/ weak management can’t succeed in producing more top performers. If you are in the league of great management, you will understand that building a team is all about developing people. If you have a sales force that is 1/3 good, 1/3 medium, and 1/3 weak, it is nearly impossible to develop a high performing sales team. In other words, you’ll never be a Bill Belichick. So what you’re looking to accomplish is developing people. Developing people is to weed out the weak players, challenge the medium players to either perform with the top players, or fall into the weak category where they become eliminated. By putting a strong focus on developing people, you will wind up with more and more top performers. t Massachusetts Auto Dealer MARCH 2015
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NADA Market Beat
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Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist
Review of New Light Vehicle Sales Overall
There were 1.3 million light-vehicle sales in February 2015 across the U.S. Monthly sales were up 9.3 percent from January 2015 and up 5.4 percent from February 2014. February 2015 YTD light-vehicle sales amounted to 2.4 million units, up 9.2 percent from a year ago. The February 2015 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 16.2 million units. Car sales held a share of 44.7 percent of February 2015 YTD light-vehicle sales; car sales were up 3.0 percent from last year. Light trucks held a share of 55.3 percent of February 2015 YTD light-vehicle sales; light-truck sales were up 14.8 percent from last February. See Figure 1
Companies/Brands
General Motors held the leading market share in February 2015 light-vehicle sales in the U.S. with a share of 18.5 percent, down from a share of 18.7 percent. Sales for the company were up 4.2 percent compared to February 2014, with each brand experiencing sales growth except Buick and Cadillac. Although Chevrolet was the brand with the largest share of sales for General Motors in February 2015 at 69.1 percent, GMC was the leading brand in terms of sales growth at 19.3 percent since last February. The Chevrolet share was down from a share of 69.3 percent last year. In descending order of company market share of sales for the month, Toyota company held second place with a share of 14.4 percent of the market in February 2015, up from a share of 13.4 percent in February 2014. Sales for the company were up 13.3 percent from last year. The Toyota brand held the largest share of the company’s February 2015 sales at 85.1 percent, down from a share of 85.3 percent in February 2014. MARCH 2015
Massachusetts Auto Dealer www.msada.org
Ford company was in third place with a share of 14.1 percent of the market, for the month, down from a share of 15.1 percent in February 2014. There was a contraction in light-vehicle sales by 2.0 percent for the company from last year. The dominant
brand, Ford, held a 96.5 percent share of Ford company sales in February 2015, up from a share of 96.3 percent in February 2014. Fiat Chrysler Automobiles (FCA) was in fourth place with a
MSADA share of 13.0 percent of the February 2015 market, unchanged from February 2014. Light-vehicle sales for the company were up 5.6 percent in February 2015 compared to last year. The Jeep brand held the leading share of the company’s sales at 34.2 percent in February 2015, up from 29.8 percent a year ago. Nissan company held fifth place with a share of 9.5 percent of February 2015 light-vehicle sales, down from a share of 9.7 percent last year with sales up 2.7 percent from February 2014. The Nissan brand held the leading share of the company’s sales in February 2015 at 90.2 percent, down from 91.6 percent a year ago. The nine companies in the ‘Other’ category collectively held a share of 8.0 percent of lightvehicle sales in February 2015, up from a share of 7.6 percent in February 2014. This category had sales growth of 11.9 percent since February 2014 with all companies experiencing sales growth except Isuzu and Porsche, which each experienced a contraction of sales since last year. See Figures 2, 3 and 4.
Segments
The cross utility vehicle (CUV) segment held the largest share of February 2015 YTD light-vehicle sales at 28.8 percent, up from a share of 28.0 percent last year. The CUV, sport utility vehicle (SUV), and pickup segments were the only segments that experienced an increase in market share of light-vehicle sales for February 2015 YTD over last year. From the light-truck sales for February 2015 YTD, the CUV segment held the largest share of sales at 52.0 percent, but this was down from a share of 53.2 percent a year ago. Pickups held a share of 25.8 percent, up from a share of 25.2 percent a year ago. The SUV segment held a share of 13.2 percent of these sales, up from a share of 12.0 percent a year ago. All the segments except for the large car segment experienced growth in YTD sales since last year with the SUV segment experiencing the most growth at 26.0 percent. The large car segment had a contraction in sales by 8.1 percent over last year. See Figures 5 and 6 www.msada.org
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NADA Market Beat
Power source
Gasoline-powered light vehicles held the dominant share of light-vehicle sales for February 2015 YTD at 95.0 percent of the market, up from a share of 94.1 percent a year ago. In 2014, there was a visible trend towards an increasing share of YTD sales held by gasoline-powered light vehicles, in comparison with the previous year, and this trend is still evident. The market share held by diesel-powered light vehicles for February 2015 YTD declined to 2.3 percent from a share of 2.6 percent last year. For February 2015 YTD electric light vehicles were the only vehicles in the alternative power category that experienced an increase in share of sales since last year. The market shares held by plug-in-hybrids, hybrids, and vehicles powered by natural gas each declined over the same period. The following light vehicles were sold in the alternative power category for February 2015 YTD: 51,731 hybrids; 8,254 electrics; 4,673 plug-in hybrids; 76 units powered by natural gas, and no vehicles powered by fuel cell technology, amounting to 64,734
MARCH 2015
Massachusetts Auto Dealer www.msada.org
light-vehicle sales. The alternative power category accounted for 2.7 percent of light-vehicle sales for February 2015 YTD, down from a share of 3.2 percent last year. See Figure 7.
Models
There were three pickup trucks and two cars in the leading five ranks of the list of the 15 best-selling light vehicles for February 2015 YTD. The list comprised of eight light-truck models and seven car models. The light trucks in the leading five ranks included Ford F series (first place), Chevrolet Silverado (second place), and the Ram pickup (fourth place).The cars in the leading five ranks on the list were both Toyota models: Toyota Camry (third place) followed by Toyota Corolla (fifth place). Nissan has two models on the list of the 15 best-selling light vehicles for February 2015 YTD: Nissan Altima (car) and Nissan Rogue (light truck). This is the first time, this year, for two Nissan models to appear on this list. See Figure 8. t