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December 2016 • Vol. 28 No. 12
The official publication of the Massachusetts State Automobile Dealers Association, Inc
2016 M S A D A i n
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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 Wjbernal@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.
Ad Directory Blum Shapiro 22 Boston Herald 32 Ethos Group 24 Leader Auto Resources 21 Lynnway Auto Auction 23 Nancy Phillips 22 O’Connor & Drew, P.C. 31 Southern Auto Auction 20
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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: Thank You 6 THE ROUNDUP: Compliance Knows No Holiday 9 LEGISLATIVE SCORECARD 10 TROUBLESHOOTNG: Looking Ahead to 2017 – And Beyond 11 LEGAL: OSHA’s New Reporting and Anti-Retaliation Rules 12 AUTO OUTLOOK 14 ACCOUNTING: Compliance, Compliance, Compliance 15 DEALER SERVICES: What Got You Here Will Not Get You There 16 Cover Story: The Year in Review
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NEWS From Around the Horn Truck Corner: New Challenges and Opportunities in 2017
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nada Market Beat nada update: Looking Back on 2016
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Join us on Twitter at @MassAutoDealers www.msada.org Massachusetts Auto Dealer DECEMBER 2016
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from the President
MSADA
Thank You
As the Association transitions, a moment of appreciation for where we have been and where we are going.
By Scott Dube, MSADA President F our years ago,
when I took the reins of our Association as its president, we were an industry in transition from the economic downturn of 2008 and 2009 to the relative prosperity we have seen in the past few years. As our industry continues to develop new innovations with each passing day, the challenge of finding a way to incorporate these innovations in a way that follows time-tested policy in Massachusetts falls to MSADA. The curse “May you live in interesting times” is well applied here. Too often, we see our policy makers, regulatory agencies, and elected representatives ready to make a call based on incomplete information and wrong ideas about the realities of the marketplace. During the past four years, I have worked to make sure our Association puts the dealer perspective in front of all who have the power to make decisions that affect our livelihoods. Sometimes, this has been an exceedingly hard road. We have seen Tesla Motors talk its way into violating nearly a century of franchise law through our court system, for example. MSADA played a critical part in trying to stem the tide as the manufacturer continues its march across the country. But more often, we have seen opportunities for collaboration and the creation of understanding where our voice had initially been unheard. The Zero Emission Vehicle Commission, where our concerns are being heard only after the Commonwealth set a wide-ranging set of regulations, will hopefully yield results that we can work with as businessmen and women. As I leave this position in the more than capable hands of current MSADA Vice President Chris Connolly, I want to stress the need for all of us to remain engaged in our communities and our government. As MSADA continues to work to ensure the public learns more about our industry, this is one area we will continue to do more work on. Our message to the public that we have worked to refine over these past years is that dealers are local, green, and innovative businesses in each community they call home. This is an important way to frame debates around the regulations that may be sent our way before their implications are fully understood. We are part of the leading edge of technology that will help our planet, which means our input into how that technology is circulated remains vital to the success of any government-mandated program. All that being said, this is work I have loved, and I look forward to helping further craft our message and mission as our industry moves forward. In the meantime, I look forward to seeing you in January at the New England International Auto Show Dealer Summit and Charity Gala to celebrate the successful year behind us and the promising year ahead of us. . t
DECEMBER 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 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 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 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 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 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 DECEMBER 2016
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The Roundup
Compliance Knows No Holiday By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers As we go to press amidst the peaceful holiday season of Chanukah and Christmas being right around the corner, we can always count on the remaining breath of the Obama government to keep the chaos going. No “God rest ye merry gentlemen” for them. Take this as a lesson – Compliance knows no holiday. For starters, we continue to hear from dealers who are experiencing visits from the U.S. Department of Labor regarding spot checks on dealers’ compliance with federal wage and hour rules, especially as they relate to overtime pay and dealers’ use of “independent contractors”. At the state level, dealers are facing potential litigation from the plaintiffs’ bar for their pay practices, including OT calculations and the use of commissions and bonuses. Throughout the last several years we have conducted numerous wage-hour compliance seminars around the state and at our annual events, the Dealer Summit in January and the Annual Meeting in May. This column and others appearing in this publication, as well as legal bulletins sent to you via e-mail, continue to highlight the intricacies of state and federal employment law. Compliance efforts can be expensive. To be found in violation, even more so, especially when adding in attorney’s fees and treble damages. Good news for our members – your Board of Directors has approved a continuation of our compliance subsidy program for 2017, which includes employment law assistance with the law firm Fisher Phillips, OSHA and environmental DECEMBER 2016
Massachusetts Auto Dealer www.msada.org
law compliance with Furrh Associates and KPA, and cyber security and tax guidance from our accounting partners at O’Connor & Drew. If you have not signed up for our compliance program, check it out once the good cheer of the holidays wears off. Here are several recent federal items of interest:
VW Settlement and Truck Dealers The U.S. District Court for the Northern District of California in October approved a settlement between the federal government, several states, and Volkswagen (VW) regarding several hundred thousand 2.0 liter engine-equipped vehicles. In addition to a comprehensive process for addressing those vehicles and their owners, the settlement establishes a $2.7 billion Environmental Mitigation Trust designed to reduce nitrogen oxide (NOx) emissions. Truck dealers potentially stand to benefit from the appropriate use of these Trust funds. Under the settlement, each state will receive between $7.5 and $381 million from the Trust based on the number of “noncompliant” VWs associated with the state. (Massachusetts will receive $69 million; Governor Baker has not yet appointed a trustee for the funds.) Monies can be targeted toward NOx reduction strategies ranging from the retrofitting of emission controls on older diesel vehicles, to the conversion of diesel vehicles to natural gas or electricity, to reducing vehicle idling. Importantly, funds can also be used to support the sale of new cleaner-greener-safer diesel trucks to replace older vehicles.
MSADA The EPA has issued an FAQ (found at https://www.epa.gov/sites/production/ files/2016-11/documents/faqsecondedition.pdf), which has an excellent discussion of the Trust and how it works. Bottom line: Truck dealers stand to make extra money in sales, service, and parts depending on the how the states end up allocating the VW Trust funds. As you might imagine, any number of competing interests are lining up to have Trust monies flow their way, so the sooner dealers weigh in, the better.
U.S. Senators’ Letter to FTC on Dealer Practices In a November letter to Federal Trade Commission (FTC) Chairwoman Edith Ramirez, four Democrat U.S. senators, including our own Ed Markey, urged the FTC “to continue aggressively pursuing enforcement actions over ... unscrupulous [auto] dealers and to additionally use its rulemaking authority to proactively curb the wide range of abusive conduct” that is “rife in the auto dealer industry.” The letter identified six practices that the FTC should address with new Unfair or Deceptive Act or Practice (UDAP) rules, ranging from engaging in “yo-yo” transactions (abusive spot deliveries) to “the packing of loans with a laundry list of add-ons.” In a November 22 letter to Chairwoman Ramirez, NADA challenged the “erroneous and unsubstantiated assumptions” upon which the senators’ letter is based and described its call for new rules as “both unnecessary and imprudent.” NADA’s letter explained that: • rules that apply to an entire industry are only appropriate if the practices they seek to address are prevalent in the industry; • any determination that a harmful practice is prevalent should be based on credible data and not anecdotes; • the FTC has repeatedly recognized the need for, and sought, credible data demonstrating that harmful practices are prevalent in the industry but has received none; and
• when harmful acts do occur, the FTC possesses ample authority to take enforcement action addressing them. NADA further highlighted the extensive and ever-increasing regulatory duties with which dealers currently must comply and stated that imposing additional rules on honest small-business dealers only increases their regulatory burden without producing any corresponding benefit to consumers. NADA also met with the staffs of the senators who signed the letter to present the association’s concerns. (In addition to Markey, the other signers were Connecticut Sen. Richard Blumenthal, New York Sen. Kirsten Gillibrand, and California Sen. Dianne Feinstein.) At these meetings, the senate staffs were unable to identify any needed new rules. NADA’s letter supplements extensive oral and written comments that the association presented to the FTC during the 2011-12 Motor Vehicle Roundtable process and more recent written comments that NADA filed with the FTC in response to the Auto Buyer Survey that the commission plans to conduct in the near future. Contact me if you have questions or would like additional information.
OSHA Slip Rules The Occupational Safety & Health Administration (OSHA) has released a new rule updating the long-standing OSHA walking-working surface and related personal protective equipment standards designed to address and reduce workplace slip, trip, and fall hazards. The new rule requires training by May 17, 2017, for dealership employees potentially exposed to slip and fall hazards. Additionally, the rule preserves an exemption for rolling stock, including trucks and trailers, but contains several new duties and requirements, including for repair pits less than 10 feet in depth. NADA’s regulatory affairs team is preparing a dealership compliance guide on the rule. Those seeking more information before then should visit OSHA’s website at www.osha.gov/ walking-working-surfaces/index.html. www.msada.org
Revised I-9 Form The U. S. Citizenship and Immigration Services has revised its Employment Eligibility Verification Form I-9 to reduce potential errors and enhance digital completion. Effective January 22, 2017, employers must use only the new Form I-9, which is dated November 14, 2016. The new form is available at: https://www. uscis.gov/i-9. Enacted into law in 1986, the Immigration Reform and Control Act (IRCA) prohibits employers from hiring people for employment in the United States without first verifying their identity and employment authorization using Form I-9. For further information about this mandate, please see NADA’s Driven Guide on Employment Eligibility Verification (L21).
FCC Limits on Robotexting The Federal Communications Commission’s Enforcement Bureau has issued an advisory outlining the limits on the use of autodialed text messages, known as “robotexts”. The advisory details the restrictions on certain text messages to consumers under the Telephone Consumer Protection Act. A copy of the enforcement advisory is available here: https:// apps.fcc.gov/edocs_public/attachmatch/ DA-16-1299A1.pdf.
Regulations M and Z Thresholds Unchanged The Federal Reserve Board and the Consumer Financial Protection Bureau announced that the dollar thresholds in Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) for exempt consumer credit and lease transactions will remain at $54,600 through 2017. That means consumer credit transactions and consumer leases at or below $54,600 will continue to be subject to the protections and requirements of Regulations Z and M. This announcement is consistent with the Dodd-Frank Act amendments to the Truth in Lending Act and the Consumer Leasing Act to adjust these thresholds each year by the annual percentage increase in the Consumer Price Index.
Massachusetts Auto Dealer DECEMBER 2016
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The Roundup 2017 Auto Show, Dealer Summit & Charity Gala Circle the dates now – MSADA’s 60th edition of the New England International Auto Show will run January 12-16, 2017, at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers, their families, and key employees are invited to attend on Friday, January 13, our Twentieth Annual Auto Show Charity Gala at the BCEC, from 5:00 p.m. to 10:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program. Prior to the Charity Gala we will conduct the Dealer Summit at the BCEC from 1:00 p.m. to 5:00 p.m., at which we will have several speakers discuss on-going events in our industry. We have several interesting speakers lined up for the afternoon, including: • Glenn Mercer, “The Dealership of Tomorrow” • Joe George of Manheim Vehicle Solutions • Joe Roesner of The Fontana Group • Attorney Joe Ambash of Fisher Phillips, Employment Law Challenges for 2017 • And more Do Not Delay – Register Today!
Pay Rules Reminder - Christmas and New Year’s Day on Sunday As we’ve written previously, dealers need to worry about the proper treatment of the next two major holidays – Christmas Day (December 25, 2016) and New Year’s Day (January 1, 2017) – each of which fall on a Sunday. (You may recall we had a similar situation with these holidays in 2011/2012.) Because of the Sunday dates, there are certain Massachusetts rules that dealers need to keep in mind as they plan their operations for those weekends. 1. Under Massachusetts law, a holiday such as Christmas or New Year’s Day that falls on a Sunday is celebrated on the following Monday. So this year, for work purposes, such as at government offices, schools, post offices, banks, etc., the DECEMBER 2016
Christmas holiday is officially celebrated as a day off on Monday the 26th, and New Year’s Day is officially celebrated as a day off on Monday the 2nd. 2. Generally speaking, dealerships are usually not open on Christmas Day and New Year’s Day. However, dealerships are usually open their respective subsequent days – December 26 and January 2. Under the law, for work purposes, with the upcoming celebration day shifting into December 26 and January 2, if your dealership is going to be open on the holiday of Monday, December 26 and/or January 2, you must pay most employees (those other than executive, administrative, and professional employees as defined under law) holiday/premium pay at the rate of time and one-half their regular rate for their holiday work. Further, you cannot force an employee to work on the holiday. 3. Massachusetts law does not recognize “paid holidays.” In other words, if an employee does not work on a legal holiday, there is no requirement that he or she be paid for the holiday. If, however, an employee does work on certain legal holidays, Massachusetts law requires that the employee be paid at least time and onehalf his or her regular rate. In addition to complying with the Massachusetts holiday laws, a dealer must also comply with its own policies. If your Employee Handbook or past practice says that Christmas and New Year’s Day are “paid holidays,” then you are required to pay employees for those days even if they are not regularly scheduled workdays. In addition, if an employee works on one of these days, the employee would be entitled to holiday pay for the day plus the additional premium pay for the hours worked on the holiday, or another day off with pay, if the handbook so provides. As a result, dealers are urged to review their holiday pay policies carefully to ensure that they accurately reflect their actual practices. Keep in mind, employees who are normally exempt from overtime may not be exempt from the holiday premium pay requirement. Bona fide “executive”, “administrative” and “professional” employ-
Massachusetts Auto Dealer www.msada.org
ees are exempt from overtime and are also exempt from the holiday premium pay requirement. However, technicians, for example, who are normally exempt from overtime, are not exempt from holiday premium pay. They still, however, must receive as a floor for weekly compensation the Massachusetts minimum wage for all hours worked and must keep a time record. For the two holidays, when an employee works the day the employer is required to pay their employees “time and one-half” for hours worked on the holiday. The law does not describe how an employer is supposed to figure this holiday premium pay beyond saying it must be at least 1½ times the regular rate. Since “regular rate” is generally defined as total weekly earnings divided by total hours worked in the week, you would wait until the end of the week, calculate the “regular rate” for the whole week (total flat rate earnings divided by total hours worked) and then pay ½ that amount as the holiday premium pay on top of the hourly rate for the hours worked on the holiday. Example: Technician works 36 clock hours Tuesday-Friday and flags 40 FRH (@$20/FRH). He also works 8 clock hours on Monday, a holiday, flagging 7 more hours on that Monday. Total earnings for the week: (40 FRH x $20) + (7 FRH x $20) = $940. However, total clock hours for the week are 36+8 = 44. “Regular rate” for the week is $940 divided by 44 = $21.36. Holiday premium due above the regular rate is ½ x $21.36 x 8 hrs worked on the holiday = $85.44. Total amount to be paid for the week = $940+$85.44 = $1,025.44. Don’t Forget: The state minimum wage goes to $11/hr. on January 1, 2017.
Here’s to Wishing You a Merry Christmas, Happy Chanukah, and a Successful and Healthy New Year! t
MSADA
www.msada.org
Massachusetts Auto Dealer DECEMBER 2016
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Troubleshooting
MSADA
Looking Ahead to 2017 – and Beyond By Peter Brennan, Esq.
MSADA Staff Attorney December is a great time for reflection. Did you accomplish all of the goals that you set for yourself and your dealership in 2016? If not, what can you do differently in 2017? The new year is barreling towards us with few guarantees and a lot of uncertainty. In order to start the year off on the right foot, here is a non-exhaustive list of things to look out for in 2017.
Wage and Hour Compliance On January 1, 2017, the Massachusetts minimum wage will increase from $10 per hour to $11 per hour. This increase represents the third and final phase of a $3 per hour increase that was phased in between 2015-2017. Accordingly, no one should be caught off guard by the change. Dealerships would be wise to take this occasion to re-evaluate their pay plans in order to ensure compliance with state and federal laws. The past year saw several Massachusetts dealerships open their doors to unwanted visitors from the federal Department of Labor and the Massachusetts Attorney General’s office. If you were able to avoid the hassle and expense of a federal or state investigation, that’s great, but it could also mean that you are due in 2017. Having legally sound pay practices will reduce or eliminate your exposure to liability should the regulators come knocking. If you know that you are not in compliance, then it is in your best interest to make the necessary changes as quickly as possible; the statute of limitaDECEMBER 2016
tions will limit how far back the regulators can look. Even if you escape government enforcement, dealerships have increasingly found themselves in the crosshairs of the enterprising plaintiffs’ bar based on wage payment issues, with a recent focus on overtime paid to commission-based employees. Please note that, unless exempt, employees must receive at least one and one-half times their “regular rate of pay” for all hours worked in excess of 40 in a work week. The fact that the employee’s commissions exceed the amount of overtime due on the salary or hourly wage does not excuse the dealership from making this overtime payment. For more information please see the MSADA March 2016 Wage and Hour Guide.
Electric Vehicles In order to comply with the Zero Emission Vehicle (ZEV) Mandate, which Massachusetts has adopted, 4.5% of a manufacturer’s model year 2018 vehicles must be ZEVs or a mixture of ZEVs and Plugin Hybrid Electric Vehicles (PHEVs). This rises to 22% for model year 2025, with a minimum of 16% being ZEVs (hybrids cannot account for more than 6% percent of the total). The goal of the mandate is that by 2025 ZEVs will represent 15% of all new vehicle sales, with a total of 302,000 EVs sold in Massachusetts by 2025. To date in 2016, 1,944 ZEVs have been sold in Massachusetts, representing a paltry .71% of vehicles sold. To reach the 2025 target requirement, an additional 292,732 ZEVs will need to be sold in the Commonwealth between now and then. There is widespread concern that automobile manufacturers, who meet their obligation under the regulations by “delivering for sale” the necessary quota of ZEVs to the dealer and not to the end use consumer, will simply dump unwanted vehicles on dealer lots. The California Air Resources Board (CARB), which drafts the regulations, is said to be considering changes to the program and has been
Massachusetts Auto Dealer www.msada.org
contacted by several state associations (including your MSADA) regarding an amendment to the ZEV credit calculation. On the bright side, Massachusetts, which currently offers a rebate of up to $2,500 per vehicle on qualifying vehicles through the MOR-EV program, recently dedicated an additional $12 million to the successful rebate program. Manufacturers are also beginning to roll out a new selection of ZEVs in order to comply with the regulations, which could lead to an increased demand.
The CFPB under Trump With a new Presidential administration taking office on January 20, many are excited about the possibility that the Consumer Financial Protection Bureau could be eliminated, gutted, or some variation thereof. Many assume that President-elect Trump, who showed no deference to CFPB protector and Massachusetts Senator Elizabeth Warren during the campaign, will represent an ideological 180 degrees from the current administration. At the very least, the hope is that President Trump will not represent an automatic veto to any “CFPB unfriendly” legislation that the Republican-controlled Congress can pass.
New Legislative Session In Massachusetts, our two-year legislative cycle will begin on January 4 with the kickoff of the 2017-2018 legislative session. Please contact MSADA if you have an idea for new legislation that would benefit the dealer body.
Year of the Rooster Will it be lucky? Time will tell …
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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.
MSADA
Legal
By Joseph W. Ambash and Jeffrey A. Fritz
OSHA’s New Reporting and Anti-Retaliation Rules In May 2016 the U.S. Occupational Safety and Health Administration (OSHA) published a final rule that went into effect on December 1, 2016, concerning, among other things (1) procedures for employees to report work-related injuries and illnesses and (2) retaliation, specifically as it relates to drug testing and incentives. Here’s what you need to know:
Reporting Procedures While OSHA’s regulations previously (and simply) required employers to set up a “way” for employees to report work-related injuries and illnesses promptly and accurately, its new rules clarify that the procedure established for employees to report such injuries or illness must be “reasonable.” A procedure will be deemed unreasonable and, therefore, in violation of the law if it would deter or discourage a reasonable employee from accurately reporting a workplace injury or illness. Accordingly, employers should ensure their procedures are not unduly burdensome on employees and allow for some flexibility. Such procedures, for example, must allow for the reporting of such injuries and illnesses within a reasonable timeframe after the employee has realized he or she has experienced a work-related injury or illness (rather than, for example, requiring them “immediately” to report), and in a reasonable manner, depending on the facts and circumstances of each case. Too rigid a procedure, OSHA maintains, may discourage reporting for fear of discipline for not strictly adhering to that procedure. If, for some reason, your dealership does not have established procedures for employees to report work-place injuries or illnesses, you should establish such procedures as soon as possible. In any event, you should (1) review your current procedures to ensure they are reasonable and do not discourage reporting and (2) ensure every employee knows about them, about their right (and obligation) to report work-related injuries and illnesses, and about the law’s (and your dealership’s) prohibition on retaliation for reporting the same.
Retaliation
OSHA’s new rule also reasserts its existing prohibition on retaliation: “You must not discharge or in any manner discriminate against any employee for reporting a workrelated injury or illness.” To issue a citation for retaliation, OSHA must have reasonable cause to believe a violation occurred and must demonstrate: (1) the employee reported a work-related injury or illness, (2) the employer took adverse action against the employee (i.e., action that would deter a reasonable employee from accurately reporting a work-related injury or illness), and (3) the employer took the adverse action because the employee reported a workrelated injury or illness. OSHA enacted this new retaliation provision largely to address three types of policies employers may use to retaliate against employees for reporting: (1) disciplinary policies, (2) post-accident drug testing policies, and (3) employee incentive policies.
Disciplinary Policies While the new rule does not prohibit employers from disciplining employees who violate legitimate safety rules or reasonable reporting requirements, it does prohibit disciplining employees because they reported a workplace injury or illness. As with all employee discipline, of course, you should be as consistent as possible. That said, disciplining an employee because he or she failed to comply with too rigid a reporting procedure may lead to a finding by OSHA that such discipline was retaliatory.
the reporting employee could have contributed to the injury or illness at issue. Factors that may considered include (1) whether other (non-reporting) employees involved in the incident that be caused the injury or illness also were tested and (2) whether a heightened interest in whether drug use was factor exists due to the hazardousness of the work being performed. In short, an employer cannot retaliate against reporting employees by requiring them to take a drug test, and a blanket, postaccident drug testing policy likely would violate OSHA’s new rule. That said, employees can be drug tested so long as an objectively reasonable basis exists for believing drugs or alcohol may have played a role.
Incentive Policies Some employers try to incentivize employees by rewarding them with a bonus for each month during which they have no workplace injuries or illnesses. OSHA now takes the position that such incentives are illegal because they, in essence, discourage employees from reporting and not giving employees the incentive because of such a report could be deemed retaliatory. While you certainly can incentivize employees to comply with legitimate safety rules (such as a monthly bonus for each month in which all employees were in compliance), you cannot condition such incentives on having no injuries or illnesses. t
Drug and Alcohol Testing Similarly, the new rule does not prohibit employers from drug testing employees who report work-related injuries or illnesses so long as such employers have an objectively reasonable basis for testing. The new rule does, however, prohibit such drug testing where an objectively reasonable basis for the same is lacking. In the event OSHA considers an alleged violation, the central inquiry will be whether the employer had a reasonable basis for believing drug use by www.msada.org
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
DECEMBER 2016
Massachusetts Auto Dealer www.msada.org
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Accounting
MSADA
Compliance, Compliance, Compliance 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.
In today’s regulatory environment, a car dealership needs to be all about compliance, compliance, and compliance. Federal, state, and local rules and regulations have inundated auto dealers over the last several years. If compliance is not a priority, you may be exposing yourself to fines and penalties, damaging your reputation and more. As federal, state, and local regulations continue to pile up, dealers must make efforts to stay on top of the regulations that impact their dealerships. These rules, laws, and regulations are far reaching and impact all aspects of your business, from facilities to banking, from data security to taxes, and everything in between. These regulations have become so daunting that the National Automobile Dealers Association commissioned a report in 2014, “The Impact of Federal Regulations on Franchised Automobile Dealerships”. This report, prepared by The Center for Automobile Research, concluded that the average dealership incurred approximately $183,000 annually in federal regulatory compliance costs for regulations pertaining to employment, business operations, vehicle financing, sales, marketing, and vehicle DECEMBER 2016
repair and maintenance. The report goes on to state that these regulatory costs comprised 21.7 percent of the average dealership’s 2012 beforetax net profits, or nearly $2,400 per dealership employee, and that the average dealership needed to sell 106 vehicles just to recoup their regulatory costs. Costs are based on 2012 data so you can imagine that with added regulations since the report date, these costs are even higher today. In addition, the report did not assess local and state regulations, making the costs to the dealer even greater. Fines that can be levied due to noncompliance can be significant, and there are stories of high six figure assessments that have been imposed depending on which rules or regulations have been broken. Even with such significant potential exposure, some reports indicate that only 37 percent of dealers are providing adequate compliance training to employees. A very brief list of some of the rules and regulations that a dealer must follow are as follows: • Federal Wage-Hour Laws • IRS/DOL worker classification • Affordable Care Act • Employee Retirement Income Security Act (ERISA) • FTC Safeguards • IRS Cash reporting • Equal Credit Opportunity Act • Fair Credit Reporting Act • FTC Privacy Rule • Deceptive and Unfair Trade Practices Although trying to comply with all the rules and regulations that a dealership must address may appear to be an overwhelming chore, if you follow a few key steps you will be on your way to ensuring your dealership is protected as much as possible: (1) Set the tone at the top. As with most best-practices in business, having the tone set at the top will usually make a big difference in the outcome. Employees need to see that management takes
Massachusetts Auto Dealer www.msada.org
compliance seriously if you expect them take it seriously as well. (2) Provide training. Training is imperative to successful compliance. You should determine the areas where you feel there are weaknesses and search out appropriate training. Training can be done by hiring outside expertise, utilizing your state auto dealer association, or by utilizing expertise you may already have in house. (3) Engage the entire dealership in the process. Due to the volume of rules and regulations that need to be followed you should assign key management personnel to oversee compliance in each area. Whether this is one, two, three, or more people, having a key management point of contact for each area will streamline the process and ensure that processes are being followed. (4) Monitor compliance. You need to set up a process to periodically review compliance in any given area. You should institute some sort of testing program to assess compliance with various regulations. Again, due to the significant amount of rules and regulations that you need to follow, you could focus on those where you see the most exposure. (5) Make modifications to your compliance programs as needed. Whether this is due to changes in rules and regulations, changes in the operations of the dealership, or changes due to periodic testing you have done, you need to be able to adjust and react to ensure ongoing compliance. Compliance in a dealership can be overwhelming, time consuming, and costly. Although regulations may be relaxed with a change in the White House, there are complexities in our world today that will require that certain rules and regulations stay in place. Avoiding these rules and regulations or assuming that you don’t need to be concerned could be a very costly mistake. Take the time to evaluate your situation and take the necessary steps to ensure you are in compliance.
DEALER SERVICES
MSADA
What Got You Here May Not Get You There 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. franchised an
Ethos Group
automotive
integrated
program
provides
dealerships of
with
results-driven
income-development services, comprehensive training, robust recruiting and industry-
It is apparent that 2016 will be another great year in the automotive industry. Though new vehicle sales will likely fall just short of 2015’s recent record high, most industry experts remain optimistic that 2017 will provide a third straight year of new vehicle sales above 17 million. Consumer confidence remains relatively high. Manufacturers continue to deliver vehicles of unprecedented innovation, performance, and quality. Dealers are operating more efficiently than ever before (leveraging on lessons learned in past years). Dealership employees are benefitting from a larger share of a sweeter pie. As we look forward to what to expect in the coming year, it is important not to forget that bad habits are formed in good times. Success is the sweetest of lullabies, and it can easily lull the most driven organizations into an ominous state of satisfaction – comfort turns to complacency and proactivity turns into reactivity. Regardless of whether your business captured its share of the industry’s success in 2016, 2017 holds opportunities that are accessible to anyone who chooses to pursue them. Your dealership’s potential is limited only by your vision and your team’s capacity to make it a reality. It is your vision that is the foundation for everything that will be accomplished over
the coming year. The most successful organizations, regardless of industry, have well-designed game plans. Leaders think through the end-game, envision challenges, and implement their strategy. They prepare for success and refuse to accept excuses for unpreparedness and disorganization. Recognizing the need to develop a detailed vision for your business may sound simple, but often it requires you to embrace change. While it is easy to get attached to the way you have always done things, it is important to recognize that what got you here may not get you there! To deal with the dynamics of an everchanging business environment, you must have a game plan that is dynamic enough to succeed. It must be adaptable and align your organization’s day-to-day operations with your organization’s strategic goals. Address the number one excuse for leaders’ failure to create a robust game plan: time. Here is a simple principle: Finding time to create a game plan is difficult because there will always be other interests competing for your time and attention. Yes, yesterday’s deals are still outstanding. Yes, today’s business will not get done without today’s focus. But is there a chance that you do not have enough time now because you did not plan adequately before? The reality is that planning will always yield a net gain of time — always! If you want to speed up your dealership’s growth, you have to reject the notion that there is no time. Your game plan should outline your vision for your organization while acting as a roadmap for success. Your game plan should not be static, unchanging words on a page, but a tool that will accommodate your dealership’s changing needs. The best strategic plans focus on the following four priorities:
Develop Market Share Increasing sales is all about taking better care of the people in your market. As www.msada.org
customers are more satisfied with the way they buy, finance, maintain, and service their purchases, you will see business grow. To grow market share, outline a strategy for marketing vehicles through advertising, merchandising inventory on the lot, creating an exceptional buying experience, and maintaining a superior ownership experience in the service department.
Maximize Revenue There is nothing wrong with prioritizing profit! Consumers are willing to pay more to get more. By aligning your organization’s game plan with customers’ wants and needs, you earn the ability to ask a premium for your services.
Expense Control Making money is one thing, but keeping it is another. Structure your organization’s game plan in a way that retains earnings and minimizes expenses. By controlling expenses, you can reinvest in your organization.
Customer Satisfaction Satisfied customers are your best resource and should never be undervalued. You cannot compromise when it comes to creating a truly exceptional, world class, and completely satisfactory experience that earns customer loyalty. If you want your dealership to experience more than its “fair share” of growth over the coming year, you must develop a game plan. To plan strategically you must be willing to sacrifice two of your most precious resources: time and energy. To get the maximum impact out of every effort (energy), you must invest your resources in preparation (time). This commitment requires you to begin working proactively now. Start by clearly defining your vision and creating an action-oriented game plan, and then inspire your team to work to make the vision a reality. t
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year in review
in Review JANUARY
The MSADA held its 59th annual 2016 New England International Auto Show at the Boston Convention and Exhibition Center. In conjunction with the show, the MSADA Dealer Summit brought dealers from across the region and had discussions about the state’s mandate to bolster electric vehicle sales with a zero emission initiative. Following the Summit, dealers and their families enjoyed the annual New England International Auto Show Charity Gala, benefitting the MSADA Auto Tech Scholarship Program.
FEBRUARY
Herb Connolly Auto Group has been around for nearly a century, and the past 22 years have been with 2016’s Massachusetts nominee for TIME Dealer of the Year Adam Connolly at the helm. The award honors dealers who excel not only with financial success, but also in their dedicated efforts for community service. DECEMBER 2016
Massachusetts Auto Dealer www.msada.org
MARCH
With the Commonwealth adopting regulations to get 15,000 electric cars on lots around the state by 2018, the question to explore is where to find the demand in a market heavily supported by government rebates. The program’s goal is to have 300,000 zero emission vehicles on the road by 2025, with dealers caught in the bind between energy policy goals and the realities of the market.
MSADA
APRIL
MSADA sponsored Justin Albernaz and Jonathan Arruda at this year’s National Auto Tech Competition. The Bristol-Plymouth Regional Tech seniors placed third at the competition held at the Jacob Javits Center during the New York International Auto Show, the best showing for the Massachusetts team in a decade.
MAY
Meeting at the Mandarin Hotel in Boston, the 2016 MSADA Annual Meeting focused on embracing new technology. MSADA President Scott Dube, NADA Director Don Sudbay, and RMV Registrar Erin Devaney led speakers in a call to work together to continue the future growth of the industry in Massachusetts.
JUNE
Self-driving cars were once a science fiction pipe dream. As the realities of driverless vehicles loom on the horizon, dealers need to prepare for consumers who aren’t looking to get behind the wheel. The auto dealer of the future will combine knowing these emerging technologies with being able to demonstrate their vehicle capabilities on the road. www.msada.org
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2016 year in review
JULY
When Volkswagen got caught in an emissions test scandal that rocked the industry, local VW dealers worked to maintain a rapport with their customers and helped keep sales from plummeting as they had in other parts of the country. While VW worked to establish a final settlement over the Summer, dealers standing behind their customers helped many dealerships maintain hard-earned loyalties.
AUGUST
Nestled in the tree-lined lanes of Brookline, the Lars Anderson Auto Museum is a treasure that hosted Swedish Car Day’s 17th appearance. Ray Ciccolo’s Village Automotive Group brought Saab and Volvo enthusiasts from across the region to celebrate Scandinavian design, tracing the history of the event back to when Ciccolo first found himself owning both a Volvo and Saab dealership at the same time.
SEPTEMBER
Air bags are a safety measure that seems a perfect fit to help keep drivers safe in case of an impact, but Takata-made airbags were recalled after being responsible for a string of injuries and even deaths. With nearly 1 in 7 vehicles on the road using these airbags, the call for immediate repairs had impacts on many area dealerships that by September had only continued to grow. DECEMBER 2016
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OCTOBER
Your Association sent a team of fellow dealers, including NADA Director Don Sudbay, MSADA Vice President Chris Connolly (Herb Connolly Auto Group), and Board Clerk Charles Tufankjian (Toyota of Braintree), to Washington, D.C. to meet with the Massachusetts Congressional delegation on Capi-
NOVEMBER
tol Hill. Your Association’s dealers presented Consumer Finance Protection Bureau reform, overbroad recalls, LIFO, and deductability of advertising expenses as the issues most pressing to area dealers.
The Paragon Group announced the star cars to be presented at the 2017 New England International Auto Show, which will feature an array of new technologies from electric vehicles to driver assists and improved fuel economy. Whether drivers are looking for the flash and flair of a roadster or the reliability and convenience of a hatchback, the show promises to offer something for everyone.
’ s r a C r a ‘St t the Come out a how 2 017 Auto S
2 017
DECEMBER
The MSADA Board of Directors elected current Vice President Chris Connolly to serve as MSADA President beginning in January 2017. MSADA President Scott Dube had served in the position since 2013, leading the Association through the fight against the erosion of franchise law precedents and during the post-recession era that kick-started sales across the Commonwealth. www.msada.org
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NEWS from the NEWS from Around Around the Horn Horn from Around
NEWS the Horn
HAVERHILL
MSAMSAMSA-
Commonwealth Motors Hosts Annual Christmas Basketball Tournament The Commonwealth Motors Annual Christmas Basketball Tournament banquet took place at DiBurro’s Hall on December 11, featuring scholarship awards from Commonwealth Motors presented by dealer Charlie Daher. This is the fourth year of the Commonwealth Scholars -- a significant part of the mission of the tournament. To date, over $64,000 has gone toward the scholarship awards for these
DECEMBER 2016
Massachusetts Auto Dealer www.msada.org
NEWS from Around the Horn deserving student athletes. Boys recipients of the $1,000 scholarships included Brandon Witten (Andover), Victor Mwuarah (Central Catholic), Junior Marte (Lawrence), Jake Coleman (Londonderry), Andrew Marcelino (Methuen), Connor Rogers (North Andover), Dean (DJ) Coletti (Salem, NH), and Christopher Houde (Windham). Girls recipients included Jillian Webber (Andover), Abbi Field
(Bishop Guertin), Bridget McCarthy (Central Catholic), Kelsey Coffey (Londonderry), Megan Lucey (North Andover), Natalie Davis (Pentucket), Cammy Desrochers (Westford Academy), and Emily Britton (Winnacunnet).
MSADA
ALLSTON
Boston Volvo Village Trots to 60 Years On Thanksgiving Day, Boston Volvo Village held their 17th Annual Turkey Trot to raise funds to battle multiple sclerosis. Owner Ray Ciccolo was among the 1,500 participants in this year’s race. “It’s a great cause, and I’m grateful I’ve been able to run in the event every year. We’ve had a number of celebrities run the race over the years,” says Ciccolo, citing congressmen, police commissioners, and media members. “The nice part is that everyone is finished by 10 a.m., in time to head out to a high school football game or back home to help in the kitchen.” Next year’s race is just one of the many things on the horizon for Volvo Village as 2017 marks the 60th year that the Swedish cars have been sold on this location. Ciccolo bought the dealership in 1963. Initially intending just to purchase a new car, he bought the whole business instead. From that beginning, Village Auto Group has expanded to cover six brands over eight locations across Eastern Massachusetts.
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NEWS from Around the Horn HOLYOKE
Marcotte Recognized by Ford as Energy Leader Marcotte Ford has been named the number one Ford Energi Dealership in Massachusetts for Energi vehicles sold or leased under the Ford brand, the company announced in November. “Our dealership sells or leases about a dozen Energi brand vehicles per month,” said Mike Marcotte, President of Marcotte Ford. “As a third generation Ford dealer with more than 50 years in the Holyoke community, I’m especially proud to be the number one seller of these ecofriendly cars among my statewide peers.” Statistics from the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program identify Marcotte Ford as selling the most Ford Energi vehicles in the state. Residents can receive a $1,500 upfront rebate for Energi vehicles and up to $2,500 from MOR-EV. Energi vehicles have the potential to use no gasoline for low-speed, in-town driving with a 20-mile range on a single overnight charge. A single gasoline fill-up can get over a thousand miles in conjunction with charging for the possibility of 100 miles per gallon. SOMERVILLE
Chambers Continues to Grow Thanks to Keen Use of Used Car Market
As profiled in a recent Boston Globe story, Herb Chambers has been in the car business since the bought a Cadillac franchise in New London, Connecticut. Now, 31 years later, his empire has expanded to 57 dealerships, making him the sixth largest group in the country. While he’s constantly expanding, 2016 was a bit of a down year with new car sales down 1 to 2 percent over the past year for him. However with a 17 percent boost in used car sales, Chambers has been able to compensate. Chambers credits much of his used car success to a business model he learned from Home Depot. Adopting their liberal return policy made sure that customers are happy with the car they end up buying. In the first five days a car can be returned for a refund, and in the next 25 there is an exchange program. Owning a wide variety of brands also helps with used car sales as Chambers can relocate vehicles internally so that a Honda traded in at a Volvo dealer can find an easier home with other Hondas. They can get the best price and remarket vehicles in different markets under the same Chambers umbrella. DECEMBER 2016
Massachusetts Auto Dealer www.msada.org
MSADA BOURNE
Marty’s Chevrolet Opens in Bourne Marty’s Chevrolet opened its doors November 25 with the popping of champagne corks. One of the first members of the Women’s Retail Network, owner Christine Alicandro Karnolt is the daughter of Martin Alicandro Jr. (Marty), who started Marty’s Buick GMC Isuzu in Kingston. Twenty employees were present for the grand opening and mingled with members of the public. The opening-day festivities were part of three full days of activities that included a brunch and giving tree catered by Gray Gables, a gift card grab from Cape businesses, face painting, balloons, a fire engine from the Bourne Fire Department, Smokey the Bear, and live music. Marty’s Chevrolet donated $10 to the Bourne Friends Food Pantry for each person who entered the free vacation drawing.
“I’ve always been community-involved and community-driven,” Karnolt said. “If I expect the community to support me, I need to support the community.” Marty’s Buick GMC Isuzu in Kingston has proven that dedication by supporting the Boys & Girls Club and once donating a vehicle to Jordan Hospital in addition to hosting fundraisers and collecting food for local causes.
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MSADA AUTO OUTLOOK
TRUCK CORNER
New Challenges and Opportunities in 2017 By Steve Parker
Baltimore Potomac Truck Centers ATD Chairman
We are in a time of celebration and merriment, and it is in this spirit that ATD would like to thank all truck dealers and our allies and industry partners for a healthy and successful 2016. ATD’s core is its members, and we are committed to our mission of serving and advocating for dealers through good times and bad. ATD has already begun laying the groundwork for 2017. Just last month, I testified before the Internal Revenue Service in regards to dealer concerns with recently proposed Federal Excise Tax (FET) regulations. Truck dealers already bear the burden of the highest excise tax levied on any product. ATD’s priority has been preventing a tax increase and potentially eliminating the tax all together. During my testimony, I expressed the difficulty of complying with the FET regulations, the tremendous compliance risks that dealers face from paperwork alone, and problems from the new “Sale for Resale” certificate. This new certificate would add administrative issues, especially because it seeks to eliminate the blanket certificate option and requires a separate certificate to be completed for each sale for resale. No matter the challenge at hand, ATD pledges to do its best by our dealer members. That’s why, on November 29, ATD was among 25 organizations to sign a letter that urges President-elect Donald Trump’s transition team to support the current tax system for “like kind” exchanges (LKEs). We are committed to supporting the efficient operation and ongoing vitality of American businesses, and it starts
“What truck dealers do is not easy. We work in a complex
business with rapidly evolving
technology and
changing consumer demands.”
with the policies in Washington, D.C. But before we forge ahead into a new year, I’d like us all to meet in one place: New Orleans! Once again, I urge you all to attend our annual Convention and Expo in New Orleans from January 26 to 29, 2017. NADA’s 100th anniversary is approaching, and this is your celebration and our opportunity to recognize you and your achievements over the course of the year. What truck dealers do is not easy. We work in a complex business with rapidly evolving technology and changing consumer demands. Yet this business is critical to the whole trucking industry and our nation’s economy. During ATD’s general session at the convention on Friday, allow me to recap the year and thank you in person for all your hard work, passion, and commitment to this business. Speaking of business, this time of year reminds me of a famous passage from the pages of Charles Dickens’ A Christmas Carol. Ebenezer Scrooge reflects that his friend Jacob Marley was “a good man of business.” Jacob, in turn, proclaims that “mankind was my business; charity, mercy, forbearance and benevolence were all my business. The deals of my trade were but a drop of water in the comprehensive ocean of my business.” Truck dealers serve their customers daily—with forbearance—and contribute back to the communities they serve with charity and benevolence. We can truly say that mankind is always a part of our business. It is in this spirit of the truck dealer that I am confident about our future in 2017 and beyond. From our ATD family to yours, we wish you a very happy holiday season, a Merry Christmas, and a prosperous New Year! t
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. Massachusetts Auto Dealer DECEMBER 2016
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DECEMBER 2016
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SEPTEMBER 2016
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NADA Update
By Don Sudbay
Looking Back on 2016 As a new year looms, let’s take a moment to reflect on a year of change. 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 the clock runs out on 2016 and we gather with our families to celebrate the holidays, it is often difficult to take a moment to reflect on the year in the larger industry. As individual businesses, all of us are working each day to bring success home to our loved ones. Below, NADA Chairman Jeff Carlson adds some needed perspective on what we saw collectively from 2016 and the road ahead for us as NADA begins its centennial year. Within our own dealer community, now is a time to celebrate a steady hand at the wheel that will now change over. I hope you will join me in congratulating outgoing MSADA President Scott Dube on a job well-done and in wishing luck to incoming President Chris Connolly. In the meantime, I hope this last NADA update of the year finds your family healthy and prosperous.
The Year at a Glance: A Final Message from Your 2016 Chairman by Jeff
Carlson As the last month of 2016 is well under way, we often become engrossed in holiday plans, end-of-year travel, and New Year’s resolutions. But it’s equally important to pause and appreciate what we’ve accomplished over the past year. The National Automobile Dealers Association would like to thank its amazing dealer network—over 16,500 strong— for the hard work and passion that helped us earn a recordbreaking year. 2016 has been an excellent year for the auto industry as we end with 17.5 million new-car sales. It seems timing is on our side. In the regulatory and legislative arenas, NADA continued to hold its defensive line with the Consumer Financial Protection Bureau’s intrusion into our business. We worked hard to gain traction for the critical Senate Bill 2663, which aims to curb the CFPB’s regulatory overreach. We tackled many other regulatory agencies with the knowledge that many of their policies have a significantly
negative impact on the dealer business. We quantified and communicated the potentially negative economic impact to consumer affordability. This includes examining CAFE rules, recall mandates, manufacturer direct sales, and many others. NADA’s messages were effectively circulated and re-circulated through the year in major news outlets, including The Wall Street Journal, Bloomberg, and The New York Times, just to name a few. I have had the honor of reminding the greater public that dealers are the solution, not the problem. We are agents of change, and I’ve had the great opportunity to meet many of you and speak at your state association conventions. Internally, NADA has never been stronger. Our re-branding is
As individual businesses, all of us are working each day to bring success home to our loved ones.
complete. With NADA President Peter Welch at the helm, this association has never been leaner, more focused, and more ready to take our members through the challenges of the next century. Let’s celebrate NADA’s century milestone together at the 100th Convention & Expo in New Orleans in January. Allow me the opportunity to thank you in person while handing the keys over to 2017 NADA Chairman Mark Scarpelli. Finally, I want to thank each and every one of you for an excellent year as your NADA chairman. I have met so many passionate and hardworking dealers throughout the United States and abroad in four different countries. Each time, I’m amazed at the kinship we have and the spirit we share—we are all resilient and energetic, with high risk tolerance and boundless entrepreneurial skills. U.S. dealers have the best advantage with our incredible business model called the franchise system. It is a valuable asset for dealers and the envy of the world. For 100 years, we’ve served the driving public better than anyone else through this system, and I know it will take us through the next 100. I could not have had such a productive year without the great leadership at NADA and the love and un-
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NADA Update swerving support of my wife Nancy and my children. As we all look to the future, let us not forget to appreciate the blessings of the past year. On behalf of NADA, I wish you a very happy holiday season and a boundless and prosperous New Year!
NADA Concerned about Potential ‘Border Adjustability Tax’ in 2017 Tax Reform Bill House Ways and Means Chairman Kevin Brady (R-Texas) released a “Tax Reform Blueprint” in July 2016 that outlined the general provisions of a comprehensive tax reform package. However, a tax reform bill was not introduced, and the 114th Congress adjourned in mid-December for the year. When the new Congress convenes in January, the House Ways and Means Committee, the Senate Finance Committee, and the Trump administration will begin developing the actual text for a tax reform bill. In anticipation of tax reform being a priority next year, the Republican members of the House Ways and Means Committee met informally in midDecember to discuss the basic structure of their version of the expected tax bill. One of the provisions included in the Tax Reform Blueprint has generated significant concern among several industries, including the automotive sector. The “border adjustability tax” proposal would provide corporate income tax preferences for exporters of products made in the U.S. and impose tax burdens on importers of products made overseas. While the blueprint contains few specifics, the implementation of such a provision could adversely affect industries that rely on global supply chains, such as the automotive sector. This provision is not likely to have a direct effect on dealers’ tax liabilities, but it could have a significant impact on a dealer’s business model. If imposed, the tax change would trigger a significant increase in the cost of the imported vehicles and vehicle components (whether from Korea, Japan, Mexico, or Germany). This could have a wide-ranging impact, because currently the highest domestic content of any vehicle sold in the U.S. is 75 percent. There is uncertainty about how this proposal would be implemented and what the impact would be to consumers. In advance of the meeting of the Republican members of the Ways and Means Committee, several trade associations, including NADA, AIADA, the Alliance of Automobile Manufacturers, and the Association of Global Automakers, joined with other associations to express concerns about the border adjustability tax provision in a letter to Chairman Brady and Ranking Member Richard Neal (D-Massachusetts). That letter was sent on December 13. As the tax reform process unfolds in the coming months, DECEMBER 2016
NADA will continue to work with members of Congress, the Trump transition team, and the new Trump administration to advocate for tax policies that enable dealers to continue to drive the economy.
Trump to Nominate Elaine Chao for Transportation Post In late November, President-elect Donald Trump announced he would nominate former U.S. Labor Secretary Elaine Chao to be Secretary of Transportation. Chao, 63, was the first Asian-American woman to hold a Cabinet position when she served as Labor Secretary from 2001 through 2009 under President George W. Bush. She previously was the Transportation Department’s deputy secretary under President George H.W. Bush. “Elaine Chao is an excellent choice to lead the U.S. Department of Transportation, and we commend President-
The next Secretary of
Transportation will play a critical role in determining whether we keep automotive retailing affordable for millions of Americans.
elect Donald Trump for nominating someone who will be able to hit the ground running on Day One,” NADA President Peter Welch said in a statement. “Access to affordable personal mobility is what drives America’s economy, which is exactly why NADA has urged Washington to steer clear of policies that will only add to the cost of buying, financing, servicing, and trading-in a vehicle. The next Secretary of Transportation will play a critical role in determining whether we keep automotive retailing affordable for millions of Americans, and NADA is very much looking forward to working with Secretary Chao to make sure we do just that.”
The NADA Convention & Expo returns to the Big Easy for ‘17 If you haven’t already, now is the time to make your arrangements to attend the NADA Convention & Expo in New Orleans, January 26–29. If you’re the principal at your dealership, NADA 2017 is a great place to see what direction the auto industry is heading, and to see the innovations that are coming. Go to convention.nada.org for more information and registration. t
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