Massachusetts Auto Dealer August 2016

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

August 2016 • Vol. 28

The official publication of the Massachusetts State Automobile Dealers Association, Inc

Uncurbed Enthusiasm

Ma s s a c h u s e t t s

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S ta f f D i r e c t o r y 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 Jorge Bernal Administrative Assistant/ Membership Coordinator jbernal@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@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.

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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

4 From the President: Making a Move on Capitol Hill 6 THE ROUNDUP: No Lack of Action During Dog Days of Summer 10 LEGISLATIVE SCORECARD 11 TROUBLESHOOTNG: Regulation B Refresher 12 AUTO OUTLOOK 14 LEGAL: The New Massachusetts Pay Equity Law 15 ACCOUNTING: Don’t Rely on Your DMS for IT Security 16 Cover Story: Swedish Car Day

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Ad Directory Blum Shapiro 22 Boston Herald 32 Ethos Group 2 Leader Auto Resources 24 Lynnway Auto Auction 20 Nancy Phillips 22 O’Connor & Drew, P.C. 31 Southern Auto Auction 23

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DEALER SERVICES: When the Shift Hits the Fan NEWS From Around the Horn SOUND OFF: The $370K Profit Add-Back Your Dealership Isn’t Thinking About nada Market Beat Truck Corner: Communication is Key nada update: Getting Geared Up for 100

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 AUGUST 2016

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from the President

MSADA

Making a Move on Capitol Hill

By Scott Dube

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MSADA President

s we exit Summer, MSADA is gearing up for the 2016 NADA Washington Conference on September 20-21. This is our annual sojourn to our nation’s capital to make sure our national representatives understand that we continue to struggle under the weight of ever changing regulations, and that the policies they pursue should be focused on making it easier to do business instead of the opposite.

Each year it seems the same general principle of Free Enterprise is under attack. There’s so much we could say to each and every member of our Massachusetts delegation about any number of policies, from emissions regulations to safety recalls to taxation. So we keep our punch list short and stick with making sure our legislators understand that tax increases and regulatory changes may seem sensible while dreaming them up in their offices, but back on Main Street the small businesses that make up the fabric of those communities are being pushed to the limit.

It may seem like too much of a slog at times, but we can never stop putting effort into making sure our representatives know who we are, what we do, and how vital our contribution is to their districts. Building these relationships means that it becomes more difficult to write-off our concerns. Instead, we’re putting faces to names and doing the best we can to establish some level of trust.

Our representatives may not see eye-to-eye with us on every issue, but the time put into establishing these relationships can really pay off when it counts. All of this work is done for the benefit of our member dealers, who are working tirelessly day in and day out to make their businesses succeed. They’re putting food on the table for their families and, by extension, are doing the same for as many as fifty men and women in their communities.

They don’t have time to make a trip down to Washington, and that’s why we feel privileged to speak on your behalf.

The majority of us are unable to fly down to Washington for two days out of the work week, but there are plenty of other chances to contribute. Our state Political Action Committee is a great way to make a big impact, and so is writing or calling your representative to check in. There doesn’t have to be some big issue at hand. Simply saying hello and inviting your representative to come visit will help immeasurably the next time a potentially difficult piece of legislation crosses their desk.

Get Ready for a September 21 Webinar As you’ll see in this month’s Sound Off column on page 25, Hireology has some insightful information about what they call “employment branding.” They’re offering MSADA members a complimentary webinar on September 21 at 12 p.m., and I encourage everyone interested to tune in. Registration information is available in the column.

I hope you will make plans to join us either in Washington or online for the Webinar next month. Please contact Executive Vice President Bob O’Koniewski with questions about either event at rokoniewski@msada.org or (617) 451-1051. t AUGUST 2016

Massachusetts Auto Dealer www.msada.org

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

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

Associate Members

MSADA A ssociate M ember D irectory ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 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 and Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Sarah Macomber (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealer Creative Glenn Anderson (919) 247-6658 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen (401)-742-1959 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 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 Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (857) 404-404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank 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 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 PreOwned Auto Logistics Anthony Parente (877) 542-1955 ProActive Leadership Group Bill Napolitano (774) 254-0383 Quik Video Jack Gardner (617) 221-5502

R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (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 & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 SPIFFIT Sean Ugrin (303) 862-8655 Sprague Energy Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092

www.msada.org Massachusetts Auto Dealer AUGUST 2016

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The Roundup

No Lack of Action During Dog Days of Summer

By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers

Legislative Formal Sessions End with a Mad Dash Although they needed to go past midnight into Monday, August 1, to do it, the House and Senate completed their scheduled final formal session on July 31 amid a frenzy of last minute votes, approving five out of six major bills and overriding over 200 of the Governor’s vetoes, thereby adding a couple of hundred million dollars back into the FY2017 budget.

With the completion of formal sessions, legislators will be forced to get their legislative wants passed in the informal sessions, which will continue until Tuesday, January 3, 2017, when only matters receiving unanimous consent can be approved.

“Big Six” Bills. The governor and legislative leaders had designated six major bills remaining for final action by July 31, each of which could have some impact on small businesses: diversification of the state’s energy supply; regulation of the Uber/Lyft ride-for-hire industry; restricting the use of non-compete agreements; ensuring pay equity between genders; economic development; and municipal finance reform, the last two being governor-filed priorities.

The pay equity bill (Senate 2119) received final legislative approval on July 23 and sent to the governor, who signed it into law on August 1 (Chapter 177 of the 2016 Acts). The other five were still being hashed out well beyond Sunday’s dinner hour in separate six-member conference committees, consisting of three House members and three Senators.

Of the other five major bills still in play, legisAUGUST 2016

Massachusetts Auto Dealer www.msada.org

lators came to agreement on four of the five; the conference committee on non-compete agreement restrictions failed to achieve a compromise.

The pay equity law bars discrimination on the basis of gender in the payment of wages for comparable work “unless the variation is based upon a mitigating factor” including seniority, education, training, experience, or a bona fide merit system like one that measures earnings by sales. The law also prohibits employers from asking applicants about salary history until after a formal offer of employment and compensation has been made, and it will make sure that employees cannot be punished for discussing salaries with co-workers.

It takes effect on July 1, 2018. [See our Bulletin #33 regarding this subject matter.]

The economic development compromise, approved just after midnight on August 1, included language creating a statewide auto tech training and recruitment program tied into the schools and potential employers. Beginning with the bill’s public hearing several months ago, we have advocated in favor of bolstering specific efforts at our voc-tech high schools and community colleges in recruiting and training auto tech students for ultimate hiring at your dealerships. The number one employee need at dealerships is techs, and there are over 70 high schools and six community colleges with auto tech education in their curriculum. More can be done from identifying students, training them, and recruiting them for full-time employment at excellent pay at your stores.

As the bill moved through the process, your association was active with legislators, including House and Senate leadership, to ensure passage

MSADA of the program. This was included in both the House and Senate versions of the bill due to the efforts of Reps Gailanne Cariddi (D-North Adams) and Denise Garlick (DNeedham) in the House and Sen Mike Rush (D-West Roxbury), whose district encompasses the Norwood Auto Mile. The governor signed this bill into law on August 9 (Chapter 219 of the 2016 Acts).

Another issue addressed in the econ dev bill – insurance reimbursed labor rates at auto body repair facilities - did not make it into the final document. Repairers and your association have been lobbying for at least 15 years for some help on increasing the labor rate level the insurance companies pay, to no avail. Bills have passed each chamber separately in the past, but never both the House and Senate in the same year. Massachusetts body shop repairers are now reimbursed at the lowest rates in the country, having been passed by Mississippi last year. It just goes to show you the grip the auto insurance companies and their lobbyists have on the throat of innovation and equity in the Commonwealth.

Two bills we have promoted can be addressed in the informal sessions that will continue until early January: Used Vehicle Record Book (House 3074). The House, after giving initial approval to House 3074 on April 13, finally engrossed the legislation in an informal session on July 18 with a clarifying amendment and sent it to the Senate.

This bill would allow new car dealers to maintain in a dealer’s DMS the information demanded of the used vehicle record book without having to duplicate the recording of the info into a hand-kept book or the electronic version of the book. Our next step is to get this through the Senate.

Inspection Station Licensure. We have been working with the Baker Administration and the Registry of Motor Vehicles to address the problem of new franchised dealerships not being able to be licensed as vehicle inspection facilities. As a result of the intransigence of the RMV to recognize that a problem exists

and that dealerships need to be able to inspect vehicles they are selling in order to maintain high customer satisfaction scores, your association asked legislators to file legislation to grant franchised dealerships a license upon request. Senate 1820, filed by Sen Vinny deMacedo (RPlymouth), and House 3044, filed by Rep Chris Markey (D-Dartmouth), received favorable reports from the Joint Committee on Transportation and referred to each’s respective committee on ways and means. On July 28, the Senate Ways and Means Committee reported a bill out favorably (Senate 2476), which was then passed by the Senate in an informal session that same day and sent to the House Committee on Ways and Means, where it presently resides. We continue to advocate for the legislative fix as we also work with the RMV on a plan for the licensure of dealerships without inspection capabilities today.

Finally, the doc fee cap bill (Senate 140) has seemingly died in the Senate Ways and Means Committee. This legislation would cap dealer documentary preparation fees at $100. Your association opposes this legislation. The bill, after receiving a favorable report from the Joint Committee on Consumer Protection, was referred to the Senate Ways and Means Committee, where it presently remains and hopefully will continue to do so. We will maintain watch so that it does not move out of committee, which is unlikely given its controversial nature and adverse fiscal impact on the Commonwealth.

Mass. TIME Dealer of the Year, Gary Johnson MSADA proudly announces that Gary Johnson of Johnson Ford Lincoln in Pittsfield has been selected as the Massachusetts 2017 TIME Dealer of the Year Award winner. The TIME DOY award recognizes new vehicle dealers across the country for exceptional performance in their dealerships, combined with distinguished community service. Gary will represent Massachusetts in the National competi-

tion, which will take place at the upcoming NADA Convention in New Orleans, January 26-29, 2017. It is the highest honor bestowed on a dealer each year at the NADA Convention. Congratulations to Gary, and good luck on the national stage next year!

REAL ID Law & New State Driver’s Licenses Residents of Massachusetts (MA) are required to have a valid MA license to legally operate a vehicle in MA. Out-ofstate or foreign-licensed drivers must obtain a MA driver’s license upon becoming a state resident.

On July 24, 2016, the Massachusetts Registry of Motor Vehicles began issuing the “next generation” of driver’s licenses and identification (ID) cards. The new licenses and ID cards are among the most secure and technologically advanced in all of North America.

The federal REAL ID Act imposes new security standards for state identification cards. Not updating Massachusetts cards would have meant that residents could not take domestic flights or enter federal buildings.

Following are some facts you should know about the new licenses and ID cards: • All driver’s license and ID cards issued by the RMV will be produced using the new design beginning on July 24, 2016.

• Your current (non-expired) driver’s license and ID cards will remain acceptable throughout the transition period (approximately five years).

The new driver’s license and ID cards have an updated design along with advanced security features that include: • Tactile features - raised lettering similar to a credit card • Laser technology (making duplication difficult) • Distinct and innovative security designs highlighting the history of Massachusetts: • Golden Dome of the State House • State bird - the Chickadee

www.msada.org Massachusetts Auto Dealer AUGUST 2016

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The Roundup • State flower - the Mayflower • Memorial to Robert Gould Shaw and the Massachusetts 54th Regiment REAL ID Implications: On July 25, Governor Baker signed legislation (Chapter 172 of the 2016 Acts) to update the state’s licenses so they can become compliant with the federal REAL ID Act. The legislation requires Massachusetts applicants to show “proof of lawful presence” in the United States in order to receive identification cards. The RMV will begin issuing REAL ID compliant licenses in Fall 2017. “This legislation is required for Massachusetts to continue to be able to offer our customers a card that is acceptable as federal identification,” said Registry of Motor Vehicles Registrar Erin Deveney at the time. If a resident chooses not to apply for the new license they would not be able to use their license to enter Federal buildings or board domestic flights when the new rules are implemented as soon as 2020.

Please let us know if you require an RMV poster illustrating the new changes and one will be sent to your dealership.

U.S. DOL Updates Employee Rights Poster As of August 1, 2016, dealerships are required to use the newly revised poster mandated by the Fair Labor Standards Act (FLSA) and the Employee Polygraph Protection Act (EPPA). Revisions made by the U.S. Department of Labor (DOL) in July 2016 fulfilled a requirement imposed by the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 that the DOL and other federal agencies adjust civil penalties periodically to reflect inflation. The revised posters contain only a general statement that civil monetary penalties may be assessed for certain violations, eliminating the need to reprint them each time penalty adjustments are made. Also, the updated FLSA Minimum Wage poster includes a new worker classification statement and new language on the rights of nursing mothers.

The revised FLSA poster is available

AUGUST 2016

online at https://www.dol.gov/whd/regs/ compliance/posters/flsa.htm.

The revised EPPA poster is available on line at https://www.dol.gov/whd/regs/ compliance/posters/eppa.htm.

EPA/NHTSA Issue Phase 2 Truck Fuel Economy Rules The final Phase 2 truck fuel economy/ greenhouse gas rule, issued jointly by the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA), is massive, complex and technology-forcing. It will require manufacturers to make large and challenging investments to achieve compliance.

During the year-long rulemaking, the American Truck Dealers (ATD) testified before and filed several sets of detailed comments with EPA and NHTSA. ATD also met several times with agency and White House staff to raise key issues and concerns, including the rule’s potential cost impacts, technological feasibility, questionable customer uptake rate assumptions, “engine-only” vs. “whole vehicle” mandates and glider kit constraints.

The final rule generally kicks in with Model Year 2021, increases in MY 2024, and fully phases in by MY 2027. It takes aim at three main targets: • Class 7 and 8 Combination Tractors. New combination tractor standards will require 25 percent lower CO2 emissions and fuel consumption compared to the Phase 1 rule. They differ by vehicle weight class, roof height and cab type (sleeper or day). Compliance strategies likely will include engine, transmission and driveline improvements, and better aerodynamic design, lower rolling resistance tires and idle reduction technologies.

• Vocational Vehicles. New vocational vehicle standards will require a 24 percent reduction in CO2 emissions and fuel consumption over Phase 1. They will vary based on vehicle weights and driving cycle (optional application-specific standards are available for emergency vehi-

Massachusetts Auto Dealer www.msada.org

cles, cement mixers, coach buses, school buses, transit buses, refuse trucks and motor homes). Compliance strategies likely will include engine, transmission and driveline improvements, lower rolling resistance tires, idle reduction technologies, weight reduction and hybridization.

• Engine Standards. The new rule sets separate standards and test cycles for tractor, vocational diesel, and vocational gasoline that require a 4-5 percent reduction in CO2 emissions and fuel consumption over Phase 1. Revised test cycle weightings for tractor engines effectively increases the stringency of those standards over what was proposed.

Compliance strategies likely will include combustion optimization, air handling and emissions after-treatment improvements, reduced engine friction and waste heat recovery.

The final Phase 2 rule also regulates the CO2 emissions and fuel consumption of large pick-ups and vans, sets standards for trailers used with Class 7 and 8 tractors, and constrains how “glider kits” are used.

Of greatest concern is that at some point during the rule’s ten-year life, compliance costs will translate into higher vehicle prices that may not pencil out for many new truck customers, especially smaller fleets and owner operators. To the extent that happens, the demand for new trucks, tractors, pick-ups, and large vans will fall, reducing employment throughout the supplier, factory, and dealership chain while leaving hoped-for environmental and energy security gains unrealized.

Do You Want to Increase Your Profits? Hireology Webinar – Sept. 21, Noon All dealerships want to drive additional profitability to their stores, but many are missing how the people side of their business could help them add to the bottom line.

In a study created for DrivingSales, Hireology found that dealerships who build a strong employment brand and utilize a data driven hiring process see a stagger-

MSADA ing profit increase. In fact, a 55-employee store that reduces their turnover could see an additional $370,000 in profit each year.

In a brief but impactful 20-minute webinar, Hireology will touch on the study and what your dealership can do to obtain similar results. Attend this webinar and walk away with: • Comprehensive knowledge of Hireology’s groundbreaking study; • Innovative ways to build an employment brand; and • How much profit your store could add back with this formula.

Register for the webinar at: http://resources.hireology.com/msada-webinarseptember-2016.

Are You Participating in Our Community Outreach Program?

Most, if not all, of our member dealers financially support various charitable, social, athletic, and other non-profit related programs in their communities. When the Little League needs new uniforms, when the neighborhood hospital needs new ER equipment, when the local food pantry needs turkeys at holiday season – one of the first phone calls goes to a local franchise dealer. The contributions our members have made to their community groups is incalculable and the impact immeasurable.

For 2016 your Association’s Board of Directors approved a program to enhance the value of your membership. In order to assist our members in their local support activities, we are implementing the Dealer Community Outreach Assistance Program. Using the application form we have sent to our member dealers, dealers can apply to the MSADA for financial support that the applicant dealer can use to supplement his or her dealership’s community giving. The maximum amount each dealer principal can apply for shall not exceed $1,000 in the aggregate in a calendar year.

We at your Association value what you do every year to provide jobs and revenue

to our local cities and towns, as well as to the Commonwealth. More importantly, what gets left unsaid, we value the positive impact you all make with your neighbors by providing the necessary funding to assist these charitable and non-profit groups in helping those who cannot help themselves.

We thank you for that, and, as a token of our appreciation with our new community outreach program, we want to help you expand your “giving” footprint.

Primary Day – Thursday, September 8 On Thursday, September, 8, voters can go to the polls to participate in the Republican and Democrat Parties’ state primaries to select their candidates to compete in the final election on Tuesday, November 8. Unenrolled voters who have chosen not to join either party are allowed to pick a party ballot that day and participate in that party’s primary. The polls will be open from 7:00 a.m. until 8:00 p.m. This may seem like a long span, but commuting times can impact a citizen’s ability to get to the polls either when they open or before they close.

There are choices throughout the ballots for state legislative, county, and Congressional (not U.S. Senate, however) offices across the state. For information on elections in your community, go to the Massachusetts Secretary of State’s website, www.sec.state.ma.us.

Please note: State law makes an accommodation for the time your employees may need to vote. Under Massachusetts law (MGL Chapter 149, Section 178), an employer must give an employee up to two hours off to vote if the employee requests it. The employee does not have to be paid for this time but should be allowed a two-hour absence after the opening of the polls in the employee’s voting precinct.

The law specifically states: “No owner, superintendent or overseer in any manufacturing, mechanical or mercantile establishment shall employ or permit to be

employed therein any person entitled to vote at an election, during the period of two hours after the opening of the polls in the voting precinct, ward or town in which such person is entitled to vote, if he shall make application for leave of absence during such period.”

Tech Scholarships Update In July our Charitable Foundation’s Auto Tech Scholarship Committee met to review this year’s applications for what will be our Class #14 group of scholarship recipients, comprising two years/four semesters: Fall 2016 through Spring 2017, and Fall 2017 through Spring 2018.

The Foundation awards two types of scholarships: full and partial. In the first year, a full scholarship can total up to $3,250 per semester, and a partial scholarship can total up to $1,000 per semester.

In the second year, a full scholarship can total up to $3,250 per semester, and a partial scholarship can total up to $2,000 per semester.

This year’s recipients are Denny Cvinar of Peabody, Ronald Eid of Methuen, David Flores of Cambridge, Ronald Grabke of Braintree, Kristian Leal of Cambridge, Amanda Leonardo of Braintree, Scott Leveillee of Worcester, Jesse Moniz of Cambridge, Tim Schirduan of Holden, and Ethan Wing of West Hatfield.

We extend our congratulations to them and wish them the best of luck in their upcoming studies.

Welcome Jorge Bernal Please extend a warm welcome to Jorge Bernal, our newest staff member. Jorge, a recent Endicott College graduate, will serve in the capacity of administrative assistant and membership coordinator. He also will be responsible for processing our members’ requests for DRT-1 forms.

He replaces Marta Guerra. Jorge can be reached by e-mail at jbernal@msada.org.

If you get a chance, welcome him aboard to your Association. t

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MSADA

Troubleshooting

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Regulation B Refresher

By Peter Brennan, Esq.

MSADA Staff Attorney The waning days of August are a great time to brush up on your dealership’s compliance with state and federal regulations, especially those laws and regulations that might get taken for granted in the ordinary course of business.

The Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, prohibits discrimination in credit transactions based on race, color, sex, marital status, religion, national origin, age, receipt of public assistance, and good faith exercises of rights under the Consumer Credit Protection Act. As the Consumer Financial Protection Bureau (CFPB) has sought to influence automobile transactions by penalizing lenders when it finds instances of “discrimination”, compliance with ECOA and Regulation B has become a hot topic for dealers and their attorneys.

ECOA and Regulation B were drafted to be the primary safeguard against discrimination in consumer transactions involving credit. Importantly, from the dealer perspective, compliance with the laws is not automatically triggered but depends on the performance of certain actions by the dealer during the transaction.

A dealer will trigger a duty of compliance under ECOA by acting as a “creditor”, as defined by the law. While a dealership may not generally see itself as a “creditor”, under Regulation B the term extends to “a person, who, in the ordinary course of business, regularly participates in the decision of whether or not to extend

credit”. Further, Commentary to Regulation B states that the term “creditor” includes “all persons participating in the credit decision”.

In common practice, the dealer becomes a “creditor” for the purposes of Regulation B when the dealer establishes the customer’s Annual Percentage Rate (APR) after receiving a buy rate from a third party lender. By setting the customer’s APR, the dealer is participating in the credit decision and, therefore, falls under the regulatory reach of ECOA and Regulation B. Of course, if the lender’s guidelines prohibit the dealer from setting the APR, an argument can be made that the dealer is not, in fact, participating in the credit decision and, ergo, not a “creditor”.

In this event, it is still better to minimize exposure and comply with ECOA and Regulation B, as detailed below.

Arranging a spot delivery of a vehicle, while discouraged by your Association, is another way in which a dealer can participate in a credit decision and open the door to ECOA and Regulation B liability.

Once established as a “creditor” under Regulation B, the dealer must assume several responsibilities to ensure compliance. Most importantly, the dealer must not discriminate in any way based on race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant’s income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. Dealers also are prohibited from discouraging reasonable persons from making or pursuing credit applications. The discouraging act does not have to be explicit to violate the regulation, written or oral pre-screening questions relating to the factors listed above could be considered discrimination through discouragement.

Another potential area of liability under Regulation B lies in the distinction www.msada.org

between those applying for individual or joint credit. Customers should be instructed to indicate whether they are applying for joint or individual credit on the credit application, and the dealer must ensure that the appropriate box on the credit application has been checked.

However, if a married person chooses to seek credit individually, then the dealer cannot discourage them from doing so and encourage the person to seek credit jointly with a spouse. If a married woman chooses to seek credit individually and in her maiden name, then she should be allowed to do so.

Dealers must provide a credit applicant with an Adverse Action Notice within 30 days when an adverse action to the credit application is taken. Dealers also must retain all record relating to the credit application and transaction for a minimum of 25 months, although retaining all records for 60 months is recommended.

Regulation B prevents non-mortgage creditors from asking about or documenting a customer’s race, so ensure that this is not part of the credit application.

The penalties for a violation of ECOA or Regulation B are severe. A lawsuit can be brought by either the customer or the United States Attorney General and liability can include: actual damages, punitive damages, costs and attorney’s fees.

Liability for punitive damages is limited to $10,000 in individual actions, and the lesser of $500,000 or one percent of the creditor’s net worth in class actions. Additionally, the punitive damages that can be awarded for a violation Regulation B may be imposed even if the violation was accidental. t If you require any additional information on these wage and hour issues 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.

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AUTO OUTLOOK

AUGUST 2016

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MSADA

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Legal

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

The New Massachusetts Pay Equity Law What Dealers Can Do to Minimize Risk of Violations

On August 1, 2016, Governor Baker signed into law a comprehensive pay equity bill entitled, “The Act to Establish Pay Equity.” While the law does not go into effect until July 1, 2018, Massachusetts employers can, and should, start taking steps now to ensure compliance by evaluating their pay practices and making any necessary changes.

Goes Beyond Existing Discrimination Laws. You may be saying to yourself, “I thought pay discrimination already was illegal?” And you would be right; state and federal law already require employers to pay similarly-situated men and women the same for doing the same job. The new Massachusetts law, however, goes further. It requires employers to pay similarly-situated men and women the same for doing different but comparable jobs. A “comparable” job is one whose work is “substantially similar” to the one at issue in terms of skill, effort required, responsibility, and working conditions.

Permits Variations in Wages on Certain Factors. While the new law prohibits gender-based discrimination in the payment of wages, it allows employers to base variations in employee wages on the following factors: (1) seniority, (2) a bona fide merit system, (3) a bona fide system that measures production or sales by quantity or quality, (4) geographic location, (5) education, training, or experience, to the extent such factors are reasonably related to the job at issue and consistent with business necessity, or (6) the extent the job requires travel as a regular and necessary condition. Employers should be prepared to articulate clearly any variations in pay based on such factors.

Limits How Employers May Remedy Disparities. If, after reviewing your pay practices, you determine a gender-based pay disparity exists, you should take steps to remedy the disparity or risk liability.

How can you remedy any such disparity?

The new law specifically prohibits emAUGUST 2016

ployers from reducing the pay of its male employees to match that of its female employees. Accordingly, the only way to remedy such a disparity is to increase the pay of your female employees to match that of your male employees (subject, of course, to the permissive variation factors described above).

Promotes Pay Transparency. The new law also prohibits “pay secrecy” policies or practices. In other words, a Massachusetts employer may not prohibit its employees from asking about, discussing, or disclosing information about his or her own wages, or even about another employee’s wages. An employer who disciplines an employee for engaging in such communications may be found liable for retaliation.

Prohibits Asking about Salary History.

While an employer may gather information about a prospective employee’s salary history from a publicly-available source and a prospective employee may volunteer such information, the new law specifically prohibits employers from asking a prospective employee (or his or her current or former employer) about salary history. In light of this requirement, you should review your employment applications to ensure they do not ask the applicant to disclose such information.

Penalizes Non-Compliance. Massachusetts employers face potentially steep penalties for non-compliance. The new law gives both employees and the Attorney General the right to sue, and, if they are able to prevail, employers may be found liable for unpaid wages (going back three years), double that amount as liquidated damages, attorneys’ fees, and costs. And like many wage violations, lawsuits claiming violations may be brought as a class action, which can result in more significant damages awards.

Encourages Self-Evaluations. On a good note, the new law provides that an employer who engages in a good faith self-

Massachusetts Auto Dealer www.msada.org

evaluation of its pay practices, and can demonstrate reasonable progress has been made towards eliminating any gender-based pay differentials for comparable work, may use that evaluation as a defense to liability. That said, the defense would be viable only for three years after the evaluation’s completion, which means that, to reap its benefit perpetually, an employer must complete such an evaluation every three years. You should strongly consider engaging counsel to assist in such evaluations to increase the chance the attorney-client privilege protects them from disclosure in other contexts.

On the substance or form of the selfevaluation, the law simply states it must be reasonable in detail and scope in light of the size of the employer, or consistent with any templates or forms the Attorney General ultimately issues. Even if your self-evaluation is deemed unreasonable, however, it still may act as a defense to liquidated damages.

Review your Pay Plans to Ensure Compliance. The Attorney General may issue regulations, either before the new law goes into effect or after, that flesh out its contours in more detail. Nonetheless, Massachusetts dealers are well-advised to review their pay plans in light of the new law and take steps now to ensure compliance come July 1, 2018. t

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.

Accounting

MSADA

Don’t Rely on Your DMS for IT Security You’re Not as Protected as You Might Think and what’s yours. Your understanding should be the same. Make sure you know what activities they are performing and on what systems. Develop a plan if there are any gaps. It’s very easy to read about computer hacks and data breaches and think, “That’ll never happen to us!” – until it does.

Your dealer management systems are providing a crucial service to your business. Take a close look at the service agreement and include your local IT manager or provider. Ask your DMS to see their SOC 2 report. A SOC 2 report is a report on the non-financial controls of a service organization as they relate to security, availability, processing integrity, confidentiality, and privacy – as pertains to the services they offer you

saw an explosion of ransomware, a type of malware that locks all your important files, replicates to other computers and file shares, then demands money to unlock them. This is likely to continue. Another growing threat comes from all of the connected devices we have, like smart O’Connor thermostats, streaming audio appliances, & Drew smart lightbulbs, and even things like networked cameras. These are known as the Internet of Things (IoT). Because these Nick DeLena is a Senior Manager at OCD Tech, the IT Audit & Security Division of devices are tiny computers with connecO’Connor & Drew, P.C., one of the most tivity to the internet, they introduce many well-respected regional accounting, tax, of the same vulnerabilities. Since some of business and IT consulting firms in New England. these devices are not maintained by the manufacturers after being sold, they may not be fixed as bugs are found in their software and these bugs can be exploited by Dealer Management Systems have hackers. Many of these devices are on the come a long way in the last several years. same network as your DMS Originally taking up quite a lot and credit card processof physical space in the server ing machines. It is a scary room, they’re now almost enthought. tirely cloud-based with very litIn short, ignorance is not tle footprint in the stores. These bliss. Think about the data systems are also almost comyou are collecting from cuspletely managed by the providtomers, especially those who ers, requiring little day-to-day finance their purchases. That involvement by IT resources on information is very valuable the dealer side. It’s a compelling to certain people on the interproposition. net. Pointing to a DMS conThe problems arise when the tract and pleading ignorance boundaries of responsibility are will not help when having to not clear. Too often I’ve heard Cybersecurity threats go through data breach pro“the DMS handles that” when I ask about software patching are rising and coming from cedures with the Attorney General’s office. Instead, and desktop security. While it’s every direction. make sure you know what’s largely true that the systems proon your network. Read the viders will perform a number of and your data that they manage. SOC 2 service agreement’s fine print. With reautomated security and operations tasks, reports have a very helpful section called spect to computer maintenance and secuthey will only be performing those tasks “Complementary User Entity Controls” rity, make sure you have knowledgeable on their installed systems, typically the – a section designed to tell you what resources you trust. Have them help you servers and network components that controls you should have in place at your identify practices that might be absent or they provide and are owned by them. dealership to securely and safely use the otherwise deficient and develop a plan They will not maintain and protect your product you’ve paid for. to address them. Though it’s not an easy dealership-owned IT hardware.

Cybersecurity threats are rising and process, the alternative is much worse.

From the DMS point of view, there’s t coming from every direction. This year a clear boundary between what’s theirs

By Nick DeLena

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Cover Story

Uncurbed Enthusiasm Swedish Car Day, hosted by the Village Automotive Group and the Larz Anderson Auto Museum, is a cornerstone of New England car culture.

By Tom Nash

R

ay Ciccolo doesn’t remember exactly when he first visited the Larz Anderson Auto Museum, nestled within Brookline’s twisting and tree-lined lanes, but he remembers the first impression.

“I was blown away,” Ciccolo recalls. “The setting, the ambiance -- it was just wonderful.”

While the museum aspect of the auto collection amassed

by Larz Anderson and wife Isabel Weld Perkins beginning in the 1899 didn’t emerge until after their passing, the wealthy couple’s gearhead hobby defined much of how they interacted with Brookline. The massive “Carriage House”, styled after France’s Château de Chaumont-sur-Loire, continues to leave as much as an impression as their collection. In the 1920s, the

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MSADA MSADA couple would invite fellow car owners to their lawn -what Larz Anderson Executive Director Sheldon Steele calls “a country club of the wheel.”

Perkins left the Carriage House as a museum when she passed in 1948, formalizing the Larz Anderson Auto Museum’s role as the keeper of the couple’s early automobiles. The collection currently includes an 1899 Winton Phaeton and 1926 Lincoln Limousine among a dozen other pristine examples of early auto history. But the museum also continues a legacy dating back almost a century of inviting enthusiasts to roll up to their lawn.

Among the theme days that range from German Day to Tutto Italiano, Swedish Car Day’s 17th appearance in late August represents one of the most fervent groups of collectors.

Its founding and continued success began with a partnership with Ciccolo.

“It’s one of those pairings that works like a wine and cheese or Scotch and cigars.”

Sheldon Steele, Larz Anderson Auto Museum Executive Director

Going Swedish

When Ciccolo’s Village Automotive Group purchased Charles River Saab in 2000, he wasn’t just acquiring the oldest Saab dealership in the country. He brought on board an entire dealership staff comprised of Saab die-hards who now were expected to share at least some of their resources with notorious Swedish rival, Volvo.

“We were doing business a mile apart, but there was kind of a big gulf between us,” says Pierre Belperron, who served as service manager at Charles River Saab from 1999 until 2012. The idea of working on a project together became “a way to create synergy between the stores.”

Ciccolo approached the museum and got the green light.

The first Swedish Car Day saw only 40 people -- which Belperron says was initially disappointing. “But the museum

said that, for a first time event, that was the best first time they ever had.”

By the second year onward, Saab fanatics were on board.

The day quickly became one of the most popular events of the season, and Steele credits Village Automotive Group’s handling of the event each year as one of the keys to its success.

“It’s a natural,” Steele says. “When you look at the oldest Saab dealer and the oldest car collection, it’s one of those pairings that works like a wine and cheese or Scotch and cigars.”

Given that some of the initial impetus was creating a bridge

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uncurbED enthusiasm

with Volvo, Village Auto and the company worked together to up their representation as well. Volvo sent their classic car collection, and a stunt bicycle team to perform. Volvo clubs began to embrace Swedish Car Day as well.

Keeping the Memory

While Volvo’s presence continued to increase, its rival entered a twilight era. As Saab found dire straits in 201l and eventually began winding down operations in 2012, Swedish Car Day took on a new presence as keeper of the flame for the beloved mark. Belperron, who has managed the event since 2000, had been with Saab in some capacity since 1984.

“I never expected to leave, or drive anything else,” he says.

“There’s a twinge that you get at the event, thinking that this is gone. But there is relief from that when you get together with other likeminded people.”

The devotion emerges in both a thriving 1,500-people strong Facebook community and the distances people will drive to get to Brookline -- with some coming from as far as California and Texas. That passion is something Belperron now says he’s trying to cultivate in Volvo, both personally and at the event. Now service manager at Volvo Village of Danvers, he says, “it’s easy to let that silliness pass.”

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“These cars have an aesthetic that we understand. The priorities are shuffled a little bit differently, but the pillars are quite similar. Being a former Saab person, if you look a the product Volvo is building now, we say Saab lost the business war, but it won the ideas war.”

A New Legacy

Belperron is working to instill his own new passion within Swedish Car Day -- including Volvo representatives making presentations. At this 17th event, Volvo Cars USA brand manager Joe Haslem was on hand to address attendees. The event will also highlight new models from Volvo. It’s a perfect melding of passion with commerce.

“The event is a completely non-threatening way of building relationships and new business,” Belperron says. “There are some parts tents, but nobody feels like they’re being sold anything. They’d be angry if we didn’t have them.”

There’s also an emerging presence of supercar builder Koenigsegg, which has donated items to be raffled off to defray event costs. Village Automotive Group donates 90 percent of the door admission back to the museum.

For his part, Steele says he continues to be inspired as he walks the event each year.

“They are loyal, diehard, long lasting fans of these (manufacturers),” Steele says. “As a result, family members, husbands, wives, children and two or three generations of Saab or Volvo owners can be in one family. That loyalty is very interesting, and it shows that it’s an extremely well-run show.”

Ciccolo says that such events are even possible in the Boston region is evidence of both a thriving New England car culture and an opportunity to continue to build community as dealers.

“The Boston area is fortunate and blessed that we have a museum of this type,” Ciccolo adds. “It’s one of the treasures that makes this place special.” t

Dealer Ser vices

MSADA

When the Shift Hits the Fan By Rob Sneed

Rob Sneed is a development rep and motivator for Ethos Group Consulting Services and the author of various articles in the automotive industry.

Ethos Group

provides franchised

automotive dealerships with an integrated program

of

results-driven

income-develop-

ment services, comprehensive training, robust recruiting and industry-leading products.

It does not take an economist to recognize that when consumer confidence and optimism is high, new and used vehicle sales soar. When consumers experience the pressure of a weak economy, sales suffer.

The business of automotive retail sales and service is cyclical. There are good times, and after the good times come bad times. If business is difficult, push through it, because it will get better. It always does.

It is the depth and degree of getting better that varies.

Dealers that are able to maximize the opportunities that present themselves in both good and bad times not only recover from the down cycles, they emerge stronger and better-positioned in the upcycle. For them, the deeper the recession is, the bigger the rebound will be.

The last economic recession is an example of this. The global economy was turned upside-down. Unprecedented stress shook the foundation of what once was thought to be stable; financial institutions failed, lending weakened, and automotive manufacturers faced extraordinary levels of pressure.

Dealers were not exempt from the pain, either. As the economy weakened, so did consumer confidence and the desire to spend money on newer, nicer things. As lending weakened, it compounded this effect and caused retail sales to spiral further down.

Dealers went from thriving to surviving.

Yet through this experience, valuable lessons were learned that made our business stronger. Dealers should never lose sight of three key lessons.

It’s Simple Math The last recession forced dealers to eliminate excess and operate with extreme efficiency. While most dealers saw their return on sales slip during the toughest times, they emerged stronger than ever before. The recession forced them to watch every percentage and spend every dollar carefully.

As a result, many dealerships have since experienced dramatically increased net performance compared to pre-recession.

Revenue and expenses are two components of profit. When the business cycle is weak, dealers maximize management’s ability to tighten the purse strings and count every penny. Dealers also ensure valuable capital is invested in things that will likely produce a return, rather than spent on non-essential items. Unfortunately, when the business cycle is strong, management operates the businesses very differently. It doesn’t take long for the latest, greatest thing the team doesn’t have to become the only thing that will make the team successful. Customer relations software, inventory management programs, and desking systems lure management into thinking that there is a substitution for adherence to processes and attention to detail.

Somehow good sales seem to devalue the dollar; after all, easy come, easy go.

The key to realizing the business’s potential during the good and bad times is to remember that dealerships should never spend money on resources that will not be fully utilized. Revenue minus expenses equals profit. Increase the revenue and lower the expenses, and profit is maximized.

Avoid People Poverty Retail automotive sales and service is a high-touch business. Despite the fact that consumers have access to more and more information, there is still something valuable about interacting with a highly skilled www.msada.org

and competent salesperson or service advisor. People like to be treated well. They value customer care, respect, and appreciation. You cannot get that any other way but the old-fashioned way.

When sales come easy, dealership management often neglects the development of sales people and the processes driving the sale of products, whether these products are sold out of the sales, F&I, or service departments. People work the processes that sell the products.This means that recruiting, hiring, educating, and training is an “all the time thing”, not a sometimes thing.

It’s All About Retention Customer retention, loyalty, and return business are the “hottest” of hot topics in the industry today and for good reason.

Customer loyalty is one of the most undervalued competitive advantages dealerships have. When customers enjoy the experience of purchasing a vehicle, they are more likely to finance with the dealership and return for all routine maintenance and servicing.

One key responsibility of sales and F&I departments is to drive customers into the service department. Some studies show that as many as nine out of ten customers who service their vehicles at the selling dealership will give that same dealership an opportunity to sell them a second vehicle.

This is powerful!

Taking care of today’s customers with intentionality will position dealerships for tomorrow’s success.

If history is any indication of the future, then we know there will be another economic shift. The question is not a matter of whether a shift will happen, but when and how much of a shift will happen. Dealers that remain focused on these key lessons when success comes easily will find they are positioned to take advantage of opportunities when success is hard earned.

We know that good habits are created during hard times, and dealers must refuse to allow bad habits to develop in these very good times. t Massachusetts Auto Dealer AUGUST 2016

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NEWS from the NEWS from Around Around the Horn Horn from Around

NEWS the Horn

NORWELL

Ray Ciccolo’s Porsche Success Profiled in Automotive News Porsche Norwell’s service revenue, gross profit, and number of repair orders have increased by around 20 percent so far this year, and owner Ray Ciccolo shared what’s behind the growth with Automotive News in a recent profile.

Ciccolo said that the dealership has been pairing the same tech with customers for each visit to recreate the dynamic between a customer and an independent techician.

“The reason most people go to an independent repair facility is because they know the tech one-on-one,” Ciccolo told the magazine. “They know the first name; they have a personal relationship with them. So we’re trying to establish that same thing. It’s one more thing to discourage them from going outside.”

“There’s nothing worse than putting a different tech on it, and,

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God forbid, he gives a different opinion of what is needed,” he added. “All of a sudden, that trust can be shaken.”

The full article is available at www.automotivenews.com.

NEWS from Around the Horn

MSADA

BOSTON

Globe Site Uncertainy Clouds Herb Chambers’ Plans Herb Chambers, who hopes to build a 216,000-squarefoot dealership on Morrissey Boulevard in Dorchester, told The Dorchester Reporter in August that he has “no knowledge” of what the potential buyers of The Boston Globe property building next door intend to do with the 16acre site.

Chambers wants to build a Land Rover-Jaguar showroom and repair shop on the property next to the Globe that he has owned since 2012. He had said earlier that he wanted to transform the adjacent former WB56-TV building into a pre-owned BMW dealership -- a plan that won community and Boston Redevelopment Authority approval. But he has shifted gears to focus on the luxury British auto brands instead.

“It’s been very difficult to design a dealership on this site,” Chambers said in an interview on Tuesday.

“I don’t know what’s going to happen with the Globe property. I don’t even know if it’s been sold yet.”

“This thing has been going on for a long, long time, and we’re under the gun,” he added. “If we can’t build it [at 75 Morrissey] we will have to build it somewhere else.”

Chambers told The Reporter he has had outreach from Center Court, the New York-based real estate firm that has reportedly entered into an agreement to buy the Globe property. He said that he would prefer to build the car dealership and not sell the property, saying, “ I’ve really had my heart set on doing this building.”

WEST SPRINGFIELD

Balise Renames Jerry Rome Nissan Balise Motor Sales has changed the name of its Jerry Rome Nissan location and has plans to renovate the building to match the automaker’s current branding.

Balise announced the new name — Balise Nissan of West Springfield — in a statement issued in August.

“Our team is thrilled for the all-new Balise Nissan of West Springfield,” Bill Peffer, president & COO of Balise Motor Sales, said in the release. “We look forward to exceeding customers’ expectations in areas of sales, service, and overall customer experience.”

Balise bought the Jerry Rome dealership in 1999 and kept the name. Rome’s son, Gary Rome, owns Gary Rome Hyundai in Holyoke and the Gary Rome Kia

dealership in Enfield, Connecticut. He is expanding Hyundai to a new location on Whiting Farms Road, also in Holyoke. www.msada.org

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NEWS from Around the Horn BOSTON

Sen. Markey Demands ‘Do Not Drive’ Order for Honda Airbag Recall Two U.S. Senators are putting more pressure on Honda to get hundreds of thousands of vehicles into the repair shop.

Sen. Richard Blumenthal (D-Connecticut) and Sen. Edward Markey (D-Massachusetts) sent a letter to the president of Honda North America in late July, urging the automaker to issue a “do not drive” order for more than 300,000 vehicles due to defective airbags that have already proven deadly.

The letter says: “Honda has a responsibility to clearly communicate the danger to consumers so that they understand the grave risks at hand” and “a ‘do not drive’ instruction is absolutely warranted.”

The unusual request comes two months after the National Highway Traffic Administration expanded a nationwide recall of airbags manufactured by Takata Corporation. The recall now impacts at least 70 million vehicles in the United States. Those vehicles have defective inflator modules that can explode when activated in a crash, shooting sharp pieces of metal shrapnel at drivers and passengers.

WALTHAM

Cars.com Purchases Locally-Based Review Site DealerRater Cars.com announced in August that it has acquired Waltham-based DealerRater, in a deal that will add auto-dealer and salesperson reviews to its Chicago-based website.

The acquisition comes in the wake of an uptick in mergers and acquisitions activity, specifically in the technology sector, that Massachusetts has seen since January.

DealerRater, which was majority-owned by Bostonbased private equity firm Great Hill Partners, employs about 60 and plans to retain its brand. The company will continue to be operated out of the Waltham office and employee growth is expected, said CEO Gary Tucker.

“This is a really exciting evolution of our brand and our products in the marketplace,” Tucker said in an interview. “Consumers have come to rely on third party reviews to help make the decision on what dealership to go to for this new or used car or service experience.”

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MSADA CAMBRIDGE

MIT Study Disputes EV ‘Range Anxiety’ Electric vehicles promise to free us from our dependence on gasoline, but there’s a catch: Most models can’t travel as far as their internal-combustion counterparts without recharging. As a result, whenever widespread adoption of electrics comes up, the conversation almost always turns to “range anxiety.”

New research suggests the concern is overblown. By analyzing people’s driving habits across the country, Jessika Trancik at Massachusetts Institute of Technolgy and colleagues found that currently available electric cars could replace 87 percent of the personal vehicles on the road and still get us where we need to go (and back again). Assuming battery technology improves in line with government estimates, by 2020 up to 98 percent of vehicles could be replaced.

In their analysis, the team used performance metrics for the Nissan Leaf, which starts around $29,000. According to the researchers, the Leaf’s range averages 74 miles per charge, which includes a buffer of 10 percent of charge left in the battery,

though that depends on things like whether you often drive in heavy traffic and how hard you tend to lean on the accelerator.

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NEWS from Around the Horn LYNNFIELD

Kelly Jeep Chrysler Land Deal Moves Forward Lynnfield may move forward with a land deal with the owner of the Kelly Jeep Chrysler dealership on Route 1 after Gov. Baker signed special legislation in late July authorizing the move.

According to the agreement, the town will convey the 9,104-square-foot parcel behind the dealership in exchange for $170,000 and a permanent easement of 13,431 square feet stretching from Route 1 through part of the dealership to the Bow Ridge Conservation Area.

Lynnfield plans to create five parking spaces for the public to use when visiting Bow Ridge and Lynn Woods Reservation.

AUGUST 2016

BOSTON

Tesla Plans to Open Store in New Prudential Tower The electric auto manufacturer Tesla will open a new store on the ground floor of the new Prudential tower in December, The Boston Business Journal reported in August.

The company already has a location in Back Bay at the Prudential Center.

Observers say Tesla plans to have over 300 stores by the end of the year, up from about 260 currently, and the number should go up to 450 by the time the Model 3 hits the market in 2017.

The current Boston location opened in late 2015.

Massachusetts Auto Dealer www.msada.org

MSADA

MSADA

Sound Off

The $370K Profit Add-Back Your Dealership Isn’t Thinking About

By Kevin Baumgart VP Business Development, Hireology Hireology was fortunate to speak and present at the DrivingSales Presidents Club 2016 event as a finalist for the Most Valuable Insight Awards. As a way to present our “most valuable insight,” Hireology presented the findings from an inhouse study on how effective employment branding drives quality hires and improved store performance at dealerships.

Our study found something to be true across all retail automotive dealerships: Employment branding matters. We want to tailor our career sites or “employment brand” to best show the culture, history, community involvement, and benefits of working with our organization.

Here is a condensed look at the results of the study: Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make. When dealerships build a strong employment brand and utilize process to manage the recruiting and hiring effort, the results are staggering.

Our survey exposed numerous challenges facing the automotive industry when it comes to finding and hiring employees. There is a clear difference between utilizing job boards and a company career site when it comes to recruiting talent.

We analyzed the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications. We found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic: • 0.2% conversion rate from job boards • 11.5% conversion rate from organic traffic Organic traffic is defined by visitors who are coming to your site after finding you in a search engine like Google. They could be searching for your brand or openings at your company because of your established career site and content tailored to employees.

Candidates by source

We define “candidate” as someone who has applied for an open position via the career site, and who has been deemed qualified first review such that a next step (like an interview) is warranted. Nearly 94% of candidates who applied for an open job were attributable to a paid job board, versus organic traffic attributable to a career site.

Hires by source While job boards control a majority of candidate traffic, our data showed 77% of all hires made resulted from organic traffic generated by the dealer’s career site, versus job boards.

Even though organic traffic attributable to a dealer career site generated just 6% of all candidate traffic, this cohort produced a whopping 77% of all hires made. In other words, 6% of traffic generated 77% of hires.

Turnover Percentage by Source Most importantly, the results show that turnover rates diverge substantially based on cohort. The new variable ops hires that originated from an candidate attributable to a branded career site turned over at a rate that’s two-thirds less than than the industry average.

Key Takeaways So, what’s the value in having a branded career site for your dealership? Here are four things to consider: 1. Organic applicant traffic and process is over 5x more cost-effective.

2. Organic applicant traffic and process yields the majority of hires 3. Hires sourced this way are 2.5x more likely to be an A or B player 4. Hires sources this way have higher retention rates Retail automotive dealers that want to build better teams and reduce turnover should invest in employment branding and should integrate a data-driven hiring process.

The financial benefits of such an approach far surpass nearly all potential operational improvements through which dealers can generate a return on investment.

Now, let’s assume that this dealership gets its act together, implements a branded career site and a structured hiring process, and produces a turnover rate similar to the cases studies discussed previously (25%). That’s a profit add-back of $368,000 per store per year. The bottom line is that dealers must take charge of the hiring challenge by taking control of the hiring process. Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make.

View the full report here: www.hireology.com/blog/decreasing-your-dealership-turnover-with-a-strong-employment/brand. t

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AUTO OUTLOOK TRUCK CORNER

MSADA

Communication is Key

ATD is committed to broadening our industry engagement

By Steve Parker

Baltimore Potomac Truck Centers ATD Chairman

There is a popular adage that you’ll see in many health and lifestyle articles that states, “The key to a good relationship is communication.” Throughout the year, the American Truck Dealers (ATD) board and I hold important conference calls to make sure that we are effectively reaching our delegation, our association leaders, and our industry members. We work to make sure that you hear from us and that we hear from you.

One of my key initiatives as chairman is to enhance communication and outreach to all commercial truck industry stakeholders. We have been making a concerted effort to provide the tools and resources to hear from our dealer members, while at the same time allowing them to hear from ATD. I encourage everyone to subscribe to the ATD Insider newsletter which has a large following of more than 9,000 subscribers. Our newsletter is one of the best resources for learning about ATD’s recent activities and priorities.

And I have the opportunity to give you my thoughts and updates in monthly commentaries, such as the one you are reading right now. The ATD website also provides a wealth of information, including the status on important legislation on Capitol Hill and future industry events like our annual truck dealer fly-in or the legislative roundtable.

Apart from reading about issues, ATD welcomes engagement and active participation throughout the entire year. The ATD board conducts three in-person meetings each year with the NADA/ATD staff. This is an opportune time to come together and discuss industry issues, such as regulatory overreach, and to prioritize our objectives. Monthly conference calls are scheduled in the off-months to ensure each board members is up to date on a timely basis. In

addition, each board member is assigned to a committee in conjunction with NADA board colleagues.

Finally, each year provides an opportunity for us to converge in one host city for the annual NADA and ATD Convention & Expo. Please book your tickets and plan your trip now because you won’t want to miss out on our next convention in New Orleans. We’re back on a January schedule and the ATD Convention runs from January 26-29, 2017, at the Ernest M. Morial Convention Center. We will be holding the ATD Convention in conjunction with our car dealer cousins. NADA will be turning the big “1-00”, and our Centennial celebration will be bigger than ever. This is a chance to meet face-to-face with executives of major truck manufacturers and other industry experts. We will feature world class exhibitors, showcasing the latest equipment, services, and technologies. You’re invited to learn in dozens of workshops with the industry’s best trainers.

ATD is committed to broadening our industry engagement, and it starts with each stakeholder in our industry. It starts with you. Let’s continue to build on our lines of communication, and make this relationship a great one! t

“We have been making a concerted effort to provide the tools and resources to hear from our dealer members.”

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Massachusetts Auto Dealer www.msada.org

Parker is chairman of ATD, a division of NADA in Tysons Corner, Virginia, which represents 1,800 heavy- and medium-duty truck dealerships. He is president of Baltimore Potomac Truck Centers in Linthicum, Maryland, which operates five fullservice commercial truck dealership locations with Mack, Volvo, and Hino Trucks franchises in Maryland and Virginia.

NADA Update

By Don Sudbay

Getting Geared Up for 100 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).

As we say goodbye to another too-short Summer, I encourage you to look ahead a few months as NADA ramps up to its 100th anniversary. As you’ve seen in this issue, Massachusetts has its own special place in the century-long history of the automobile, and 2017 will be a perfect time to highlight the dealer’s role in changing the face of transportation.I encourage you to sign up for the NADA Centennial by September 9 to receive a $100 discount – find details on that below. And as you begin to make Fall plans, please reach out if you have any questions about NADA’s Capitol Hill activities coming up September 20-21. It promises to be a great opportunity to meet with our legislators, and it’s always great to see both new and old faces with our delegation.

Countdown to 100

By Jeff Carlson, NADA Director As the chairman who hails from the great “Centennial State,” I would be remiss if I didn’t officially invite all dealers to our Centennial Celebration next January in New Orleans. Yes, in 2017 your national association will proudly turn 100 years old! On behalf of all of us at NADA, I invite our members, automakers, industry allies, and partners and the media to celebrate at the NADA100.

There is no better place than the lively and historical city of New Orleans to celebrate a legacy of serving the public for the past 100 years. And our invitation list is long.

We expect more than 24,000 people, including over 3,000 guests from other countries, to attend our birthday bash. To accommodate them we have booked some of the best hotels throughout the city. I encourage you to register for the convention and book your trip now, as we expect all available hotel rooms to be fully booked by November. Register online to access immediate hotel availability and receive confirmation of your transaction in minutes. You’ll save $100 if you register by September 9.

Once you arrive in New Orleans, you can be sure to experience a CAR-nival! It isn’t a party without food and entertainment. Be ready to enjoy some of the best food and

music in the nation. Our gala birthday party on January 26 will feature musical guests Foreigner, Cowboy Mouth and other New Orleans favorites.

And, of course, you’ll also find hundreds of exhibitors on the expo floor and over 100 workshop sessions geared for dealers and their managers to optimize their performance and profitability throughout the year.

More than 20 franchise meetings give dealers a prime opportunity to discuss marketing plans, sales outlooks, and product launches with OEM execs. In short, it’s a great time to build relationships. All meetings will be held in the New Orleans Ernest N. Morial Convention Center.

True to the New Orleans spirit, you’ll see things that you’ve never seen before. NADA is excited to launch the Exchange: The Modern Dealership Experience, which will provide dealers an overview of how the auto retail world is evolving and how we need to adapt and thrive in a changing world. This is a great time for us all to discuss strategies, share ideas, and open dialogue with other industry innovators. We’ll have the chance to explore critical topics like the online consumer buying experience, the showroom and service lane experience, and best-in-class technology.

New Orleans is one of our favorite cities. It’s tough and resilient just like our industry, just like all of us. Come January 26-29, I hope to see you in one place: the Big Easy.

There are five more months until we turn 100 years old. It won’t be a party without you, so I’ll see you there!

Donate Today to Help Flood Victims in Louisiana Thousands of dealership employees have suffered devastating losses from the recent flooding in Louisiana. The need for financial assistance is great and will last for many weeks to come. The Emergency Relief Fund of the National Automobile Dealers Charitable Foundation helps dealership employees after natural disasters and is also seeking donations.

Dealership employees affected by the flooding can apply for financial assistance through the NADA Foundation’s Emergency Relief Fund. (Lost wages or commissions are not eligible for reimbursement from the fund.)

NADA is also calling on its members to donate online to the Emergency Relief Fund. Checks can be made payable to NADCF Emergency Fund, c/o NADCF, 8400 Westpark Drive, MS 7, Tysons, VA 22102. For more information, call (703) 821-7233.

Established in 1992, the fund has provided more than $5 million to more than 8,700 families. To apply for assistance or to contribute to the fund, call (703) 821-7102 or visit www.nada.org/emergencyrelief.

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NADA Update NADA Economist: Vehicle Sales Remain Strong in 2016 Despite some economic and political uncertainty ahead with the upcoming elections, the National Automobile Dealers Association is holding steady its sales forecast of 17.7 million new cars and light trucks for 2016.

“We’ve had six straight years of steadily rising sales, which has been a fantastic period of growth, and vehicles per household have returned to the same level prior to the Great Recession,” said NADA Chief Economist Steven Szakaly at the Center for Automotive Research Management Briefing Seminars in Traverse City, Michigan. “But most pent up demand has been satisfied. For 2017, we expect new-vehicle sales to reach 17.1 million units.”

Szakaly added that rising employment and leasing remain big positives that will continue to grow and drive sales, as well as low gasoline and diesel prices, which allow consumers to spend more on vehicles, and continue the trend of higher light truck sales compared to cars. “For 2016, light trucks will account for about 59 percent of the new-vehicle sales market and cars will account for 41 percent,” he said.

NADA is holding steady its sales forecast of 17.7 million new cars and light trucks for 2016.

“Leases are increasing, which now accounts for more than 34 percent of the market.”

“Interest rates on auto loans are expected to rise modestly by about 50 basis points,” Szakaly added, but “consumers will not feel the pinch of rising interest rates because automakers will roll out additional financial incentives,” he said.

Szakaly highlighted several trends that could slow down new-vehicle sales growth in the coming years. “The aging vehicle fleet discourages long-term vehicle sales; average loans terms for new vehicles have risen to 68 months; and new-vehicle transaction prices are continuing to rise, up about 3 percent this year, while wages remain stagnant.”

Szakaly added that the greatest growth ahead will likely come millennials and new household formations. “Until millennials come of age with higher wages, get married and have children, the auto industry will experience stagnant growth periods.”

Register for the NADA Convention by September 9 and Save $100 Online registration and hotel selection for the 2017 NADA Convention and Expo in New Orleans is now open.

NADA members and their managers who register by SepAUGUST 2016

tember 9 will receive a $100 discount.

NADA, founded in 1917, will kick off yearlong events commemorating its 100-year anniversary with NADA 100 Carnival in New Orleans. The exclusive event for NADA members, international affiliates, and guests will be held at Mardi Gras World on Thursday, January 26. The Carnival will feature cuisine from top New Orleans restaurants, as well as musical entertainment from Foreigner, Cowboy Mouth, and jazz favorites. The NADA member and manager registration fee includes admission to the NADA 100 Carnival.

Convention speakers include comedian Jim Gaffigan, NADA Chairman Jeff Carlson, inspirational speaker Amy Purdy and NADA Vice Chairman Mark Scarpelli. A fifth speaker will be announced in the coming weeks. The fourday NADA Convention, which runs from January 26 to 29, includes dealer franchise meetings, workshops, an exhibitor showcase and numerous networking events. Click here to register.

NADA Urges Regulators to Confront Affordability Problem in Fuel Economy Mandates NADA 2016 Regulatory Affairs Chairman Wes Lutz joined other automotive industry leaders in warning regulators about the significant costs to consumers of implementing overly aggressive fuel economy standards.

Speaking at the Center for Automotive Research Management Briefing Seminar in Traverse City, Michigan, Lutz explained that new vehicles are already becoming unaffordable for millions of consumers, and he urged regulators to consider that reality before adopting stringent fuel economy mandates that will only add thousands of dollars to prices of all new cars and trucks.

“The manufacturers have sounded the warning: The drastic upswing of the miles-per-gallon compliance curve from now until 2025 is going to have a dramatic effect on vehicle prices - and not just on the most fuel-efficient vehicles in the fleet, but up and down the entire lineup,” said Lutz, who is also the president of Extreme Chrysler/Dodge/Jeep, RAM Inc. in Jackson, Michigan. “Every car, every truck, every SUV could soon be $5,000 more expensive than it is today. On an average 60-month contract, $5,000 increases the monthly payment by approximately $100.”

“Our industry is proud to have repeatedly met and exceeded currently regulatory requirements for fuel economy, and our customers have told us that they’re very pleased with the progress that’s been made in miles per gallon,” Lutz said. “But as dealers, our top priority will always be providing our customers with the ability to purchase the fuel-efficient cars they need at a price they can afford.” t

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