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The official publication of the Massachusetts State Automobile Dealers Association, Inc
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
June 2016 • Vol. 28
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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 Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator mguerra@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 ConServ 21 Ethos Group 19 Lynnway Auto Auction 24 Nancy Phillips 22 O’Connor & Drew, P.C. 31 Reflex Lighting 20 Southern Auto Auction 23
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Ta b l e o f C o n t e n t s
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From the President: Getting Ahead of the Curve THE ROUNDUP: Legislature Plods Along LEGISLATIVE SCORECARD TROUBLESHOOTNG: Transgender Accommodations AUTO OUTLOOK ACCOUNTING: Understanding Vehicle Depreciation Provisions Will Increase Sales
15 SOUND OFF: What we have here is a #FailureToCommunicate 16 Cover Story: Going Full Auto
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NEWS From Around the Horn Truck Corner: Two Sides of the Same Coin nada Market Beat nada update: Getting in the Summer Groove
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
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from the President
MSADA
Getting Ahead of the Curve Dealers need to know more about what we’ll be selling in 10 years
By Scott Dube MSADA President
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very year we see the vehicles on our lot change -- whether it’s little cosmetic details or brand new safety systems. For an increasing number of our customers, the technology requires training and help like we’ve never seen. That leaves us dealers in a position that belies the idea that, as vehicles get more advanced, the franchise dealer system needs to change with it. A recent study conducted by the Massachusetts Institute of Technology shows that dealers will be relied on more than ever among some car buyers to show them the ropes when they buy a car with a system such as vehicle backup cameras or “accident prediction.” So it’s up to you and me to ensure that we’re staying up to speed not just on what technology our vehicles have right now but also where technology could be taking us. If moves by several of our manufacturers are an indication, that means electric vehicles and self-driving vehicles are the wave of the future. In this month’s cover story, you’ll see an overview of some of the recent developments in the self-driving arena as well as what it could mean for us. We have GM, which is partnering with ride sharing companies to develop autonomous fleets (eliminating the need to pay drivers). Then there’s Chrysler, which has partnered with Google on a self-driving minivan. How soon are we going to see cars driving themselves onto our lots? Most say it’s at least a decade out, if not more. But too often, we dealers find ourselves brought to the table at the end of the conversation about where technology is headed. It’s time we start getting involved at the ground floor, so that our customers’ needs are represented. What’s becoming more clear is that, as these vehicles get more advanced, buyers will need more help, not less. All of us who make our livelihoods selling and servicing these vehicles are the front of the line ambassadors -- which means it’s time for us to get ahead of the curve on what the next 10 years look like.
Every year, we take time to recognize one of our own as a nominee for TIME magazine’s annual Dealer of the Year program. The broad experience represented by the candidates we’ve chosen the past few years is astounding, and I’m excited to accompany whomever we choose to the NADA Convention to receive some hard-earned recognition. I encourage you to nominate a dealer who fits the mold of the best of the best today. The Board of Directors will make a decision some time in August, so please don’t delay. More information and a faxable nomination form is available on page 2. t
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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
TIME Dealer of the Year Nominations Open
JUNE 2016
Msada Board
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 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
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The Roundup
Legislature Plods Along By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers With the conclusion of June, the Massachusetts General Court will have 31 days remaining to complete its business on controversial matters for the 2015-16 session. As the House and Senate race to the July 31 date, legislators have built in parts of two weeks in which nothing will get done; they will break July 18-21 and July 25-28 for the Republican National Convention in Cleveland and the Democrat National Convention in Philadelphia, respectively. This will set them up for possible rare weekend sessions during the month, including a full court press on Saturday and Sunday, July 30-31. If you as an entity are playing defense on certain bills, as we do 95% of the time, the situation is ideal – the less amount of time available, the better it is to make sure nothing bad can happen. If, however, one is looking to get something accomplished, the pressure is even more intense when one is trying to raise one’s interest and profile above the din of the last second rush. Like school kids who put off the book reports until the night before the due date, our representatives and senators love to push things to the last second. We have two issues receiving much positive attention as we try to prod them along. House 3074, sponsored by Rep John Rogers (D-Norwood), would eliminate the requirement to maintain the used vehicle record book. This has received initial support in the House and, after final House passage, will be sent to the Senate for its scrutiny and passage. The other bills deal with granting vehicle inspection licenses to dealers who have built or rehabbed new dealerships. Over the last several JUNE 2016
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years, dealers in the post-recession economy have opened new dealerships or purchased older facilities and spent considerable dollars reconstructing the store to factory specs. However, based on the manner in which the state administers the inspection contract, those dealers have not been able to receive a license to conduct vehicle inspections. Senate 2264, filed by Sen Vinny deMacedo (RPlymouth), and House 4272, filed by Rep Chris Markey (D-Dartmouth), are under review in each’s respective Ways and Means committee. On the defensive front, we have actively lobbied against legislation that would cap dealers’ doc prep fees at $100 (Senate 140, sponsored by Democrat Sen James Eldridge of Acton). The bill is presently in the Senate Ways and Means Committee, where we would like it to remain through July 31 and beyond. Finally, as we go to press, the Legislature’s budget conference committee has yet to resolve the differences between the House and Senate’s FY2017 budget proposals. The fiscal year begins July 1. Each chamber has a bottom-line of about $39.5 billion, which is close to the total first proposed by the Baker Administration in February. However, there are scores of differences between the House and Senate documents, which must be resolved by the six-member conference committee, consisting of three Senators and three Representatives. Your legislative team worked throughout each chamber’s budget process to make sure there were no provisions adversely affecting auto dealers. To compound the problem, the Baker administration and legislative leaders are grappling with
MSADA a potential shortfall in FY16 revenues of around $250 million and a possible gap of $750 million in FY17. Both the House Speaker and the Senate President expect the conferees to make considerable cuts to the FY17 budget in order to deliver a balanced budget to its members for a vote. Since new taxes have been taken off the table – for now – advocates of bigger government are anxiously awaiting what the revised FY17 will look like.
Recalls Reminder As previously reported, on December 4, 2015, the President signed the Fixing America’s Surface Transportation (FAST) Act. The FAST Act imposes new requirements of which dealers need to be aware. Effective June 1, 2016, the FAST Act prohibits rental companies with an average of 35 or more vehicles in a rental fleet (in a calendar year) from renting any such vehicles if they have an unremedied safety recall. This requirement does not apply to vehicles over 10,000 lbs. While not required by the FAST Act, NADA and your MSADA also encourage dealers to: • use the www.safercar.gov or manufacturer VIN-specific look-up tools to regularly check the recall status of all rental and loaner vehicles; • refrain from renting or loaning any vehicle subject to an unremedied safety recall if the manufacturer has stated in the recall notice that the vehicle should not be driven; and • with respect to any other rental or loaner vehicle, disclose to the prospective renter or borrower the recall status of the vehicle. The FAST Act also provides that a dealer can lose its federal statutory entitlement to be fairly reimbursed for performing safety recall repairs if: • it fails to notify “in-brand” service customers of any unremedied safety recalls applicable to their vehicles; and • a “franchise, operating, or other agreement between the dealer and the manufacturer” requires such a service lane
notice. Note that franchise agreements often incorporate documents by reference (e.g., operating manuals) that may impose this obligation. Since the law does not specify the manner in which such service customer notices should be made (e.g., oral, written, specific forms, etc.), manufacturer requirements, if any, control. While not mandated by this provision, NADA and your MSADA encourage dealers to: • adopt a policy to check all in-brand service vehicles for open recalls and to notify service customers of any that are identified; and • obtain an acknowledgement of receipt from customers to whom notices are provided stating: ° that they authorize the recall work to be done; or ° that they are declining the recall work; or ° that they will return to have the work done when the remedy becomes available. Franchised dealers are being overwhelmed with recall notices from their manufacturers. Many of these recall notices have included a “stop sale” announcement from the manufacturer. Vehicle recalls can trigger legal implications for dealers. In addition to the FAST Act provisions regarding rentals/loaners and recalls, dealers need to keep in mind the following regarding recalls on new and used vehicles. Under the federal Motor Vehicle Safety Act, a new vehicle subject to a safety recall or a stop sale order issued by the vehicle manufacturer or the national Highway Traffic Safety Administration (NHTSA) cannot be sold and delivered to a customer until the defect is corrected. The law provides two forms of compensation to dealers in possession of new vehicles subject to a recall: • The manufacturer may repurchase the recalled vehicle at the price paid by the dealer, plus reimburse for transportation charges, plus one percent (1%) of the
vehicle’s costs per month, prorated from the date of the “stop sales” notice until the vehicle is repurchased or the problem remedied; or • The manufacturer may provide the parts and equipment to address the recall problem and compensate the dealer for the costs of parts and labor associated with performing the required repair, plus one percent (1%) of the OEM’s selling price of the vehicle per month (prorated from the date of the recall). Dealers need to, obviously, work closely with their franchisor manufacturers to address these recall problems, especially as the financial exposure for dealers grows daily. However, should a manufacturer fail to comply with the law, the manufacturer can be sued for damages, court costs, and attorneys’ fees. Manufacturers have a habit of discouraging their franchised dealers from invoking their rights under the federal Act and state franchise laws, to the ultimate benefit of said manufacturers. As the scope of the recalls expands, dealers’ financial exposure will continue to grow absent compensation or timely recall remedies from the manufacturers. The federal law does not have jurisdiction over used vehicles subject to a safety recall. Technically, a dealer may sell and deliver a used vehicle that is part of a safety recall. However, as we have stated previously, to sell and deliver such a vehicle may not be such a prudent act, as we will discuss below. On top of all this, dealers need to keep in mind that manufacturers do not have any control over a dealer’s used vehicle inventory, except if the vehicle is part of the certified pre-owned program inventory. This has not stopped manufacturers from trying to restrict their franchised dealers from selling certain used vehicles subject to a recall. As a franchised dealer putting used vehicles into the market place for which you are franchised as well as those not within your franchise family, you have an obligation to find out as much as possible
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The Roundup about a vehicle before you offer it for sale – certainly as much as a customer can find out working on his or her own. We have recommended for years that dealers run car checks on vehicles they take in trade or obtain at auction for the simple reason that there is a duty of disclosure under the Massachusetts Attorney General’s regulations. The Massachusetts Consumer Protection Act, MGL Chapter 93A, is broadly written to make unlawful any unfair methods of competition and any unfair or deceptive acts or practices in the conduct of any trade or commerce. The Massachusetts Attorney General has promulgated regulations to implement the statute. The disclosure issue is addressed in the regulations at 940 CMR 3.16(2), which states, “Without limiting the scope of any other rule, regulation or statute, an act or practice is a violation of [the Act] if: … (2) Any person or other legal entity subject to this act fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction;…” [emphasis added] Thus, the failure to disclose any information, including damage regardless of dollar amount, that would influence a buyer not to enter into the transaction is an unfair and deceptive practice. In this manner, a dealership can protect itself and avoid the severe penalties (treble damages, attorneys’ fees) provided under our state’s Consumer Protection Act. To better assist dealers in determining any open recalls on used vehicle inventory, NADA worked closely with NHTSA to develop a search tool at www.safecar. gov. Dealers can input the VIN for a vehicle and obtain recall status for that car, and then act accordingly regarding the sale and delivery of the used vehicle. Selling a used vehicle with an open safety recall without disclosing the fact will open you up to legal challenge by plaintiff’s attorney. Further, if a dealer
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sells a used vehicle with an open safety recall, and there is an accident related back to the recall, that dealer may be held liable under tort product liability, even if the dealer discloses the recall. Certainly, a dealer in possession of a used vehicle of that dealer’s franchise has an easier go of it than a dealer without that franchise – the dealer should have handy access to any and all recall information related to the franchise vehicles. Such a dealer should not sell any franchise vehicles until the repair is implemented. However, if you are taking in trade or obtaining at auction vehicles outside your franchise, you need to utilize the available search tools to determine the vehicle’s recall status. Although there is no federal law prohibiting you from selling a used vehicle with an open recall, you need to balance your desire for a sale with the ultimate expense of tort liability litigation. A vehicle with a low-risk recall situation (e.g., missing pages of an owner’s manual) could probably be safely sold with proper disclosure. On the other hand, a vehicle with an open recall regarding an airbag probably should not be sold at your store; just park it until fixed. Even if a vehicle is taken to auction, be sure to bring the proper disclosures with you so no fingers point back at you should there be an eventual issue. Always remember – disclosure gives you no guarantee for avoiding liability later on, but it could help. Finally, your dealership needs to formulate and implement an internal policy detailing how to best handle open recalls on your new and used vehicle inventories. Educate your managers and your employees on your policy, and make sure it is properly implemented and enforced. The ultimate goal is to limit your exposure until a proper remedy is available or compensation provided on a buyback. Keeping the policy in place and adjusted accordingly over time will be a prudent move. After all, what will be the next airbag-like recall problem we will face? Better to be prepared than sorry.
Massachusetts Auto Dealer www.msada.org
ATD Congressional Fly-In In conjunction with the American Truck Dealers (ATD) Board of Line Representatives summer meeting, approximately 40 truck dealers and state association staff gathered in Washington in mid-June for the second annual legislative fly-in dedicated to medium- and heavy-duty truck dealer issues. Our Massachusetts contingent included Kevin Holmes of Tri State Truck Center in Shrewsbury, who is the Freightliner rep on the ATD Board; Dick Witcher of Minuteman Trucks in Walpole, who is a past chairman of the ATD Board; and me. The ATD fly-in was focused on gathering co-sponsors for H.Con.Res.33 and S.Con.Res.40, concurrent resolutions in the House and Senate that would put Congress on record opposing an increase in the 12 percent Federal Excise Tax (FET) on heavy-duty trucks and trailers. We also discussed the anticipated release by the Obama administration in the Fall of Phase 2 standards regulating greenhouse gas and fuel economy standards for new commercial trucks. Legislative meetings (staff and/or elected officials) included Rep Niki Tsongas (D-Lowell), Rep William Keating (DBourne), Rep Stephen Lynch (D-South Boston), Rep Joe Kennedy III (D-Brookline), Rep Jim McGovern (D-Worcester), Rep Seth Moulton (D-Peabody), and our two U.S. Senators Elizabeth Warren and Ed Markey, both Democrats. Dealers are encouraged to contact their members of Congress to ask them to co-sponsor the resolution.
Lemon Law Sticker Audit The Office of Consumer Affairs and Business Regulation (OCABR) recently conducted a survey of Massachusetts new and used auto dealerships to determine how many were displaying Lemon Law stickers on every vehicle for sale, as mandated by state law. Inspectors visited over 80 new and used car dealerships in 26 cities and towns in Massachusetts and audited a total of
MSADA 2,265 cars. Of the dealerships inspected, 20 were 100% compliant, meaning all of their vehicles had a Lemon Law sticker, while 16 dealerships had 0% compliance. The OCABR has not yet released the list of dealerships visited and the compliance data. The agency conducted similar audits in 2014 and 2012. The OCABR sent letters to the inspected dealerships letting them know of their compliance rate and where to find information about their responsibilities as auto dealers. As dealerships are licensed by the city or town in which they are located, letters were sent to each dealership’s respective licensing authority reminding them of this requirement and asking for their increased vigilance in checking for these stickers.
Are You Staying On Top of Your Compliance? A franchised dealership is probably the highest regulated business in this country, being accountable to scores of federal and state laws, regulations, and agencies. Making sure your operations remain in compliance with all these laws and rules is a daunting task. Throughout the year your Association sponsors any number of seminars and webinars designed to improve our member dealers’ compliance activities. These are on top of our writings, such as legal bulletins, guides, and manuals, we issue periodically in print and electronically and make available on our website (www.msada.org). Under the Obama administration, with its overzealous regulatory mission, dealers are facing two major, continual regulatory challenges coming out of Washington: the Consumer Financial Protection Bureau’s (CFPB) allegations of discrimination when calculating dealer compensation for arranging auto financing and the Federal Trade Commission’s (FTC) enforcement program involving dealer advertising. Further, our state’s Attorney General maintains continued scrutiny over dealer
advertising practices and is not shy to pursue hefty fines and compliance agreements against alleged violators. The potential legal and financial liability for dealers posed by the recent actions of the CFPB, the FTC, and the Massachusetts Attorney General are considerable. Protect your dealership by learning how to mitigate the risks by attending our seminars and reading our writings. Another tool our members can take advantage of is our legal compliance program we unveiled in June 2014. We renewed our financial commitment to the program for 2016. Are you taking advantage of the services being offered? In June 2014 we announced a unique program designed to assist our members in their compliance with employment laws as well as occupational and environmental safety laws. This program is underwritten in substantial part by your Association in order to reduce costs and encourage all of our members to take advantage of this opportunity. We have established a four-part subsidy program to support your use of several compliance services offered by certain vendors: • Employment Law Compliance Program, by Fisher Phillips, which includes pay plan review, employment handbook/application review, and management training. • Occupational/Environmental Safety Law Compliance Program through two vendors – John Furrh Associates and KPA. • Sales Tax Compliance Assessment and IT Threat and Security Assessment services provided by our accounting partner, O’Connor & Drew. To take advantage of our previously offered employment and occupational/ environmental safety law opportunities and begin the process, including pricing information, simply contact: • At Fisher Phillips – Attorney Joe Ambash: (617) 532-9320 or jambash@ laborlawyers.com.
• At Furrh Associates – Jennie Cormier: (508) 824-4939 or jcormier@johnwfurrhassociates.com. • At KPA – Rob Stansbury: (484) 3269765 or rstansbury@kpaonline.com. • At O’Connor & Drew – Ray Lofstrom: (617) 471-1120 or rlofstrom@ocd.com. The MSADA subsidy will remain the same – for each chosen service, MSADA will cover $500 for a single point/anchor store and $300 per affiliate. This program is set to expire on December 31, so do not delay in signing up. If you used it in previous years, you can use it again. Laws and regulations are getting more complicated every year. You can no longer gamble and try to go it alone. We urge every member to take full advantage of this program to keep our dealer body compliant with all pertinent employment and workplace rules.
TIME Dealer of the Year 2017 It is that time of the year again. The highest honor bestowed on a dealer each year at the NADA convention is the TIME Magazine Dealer of the Year Award (TDYA). The process begins with nominations from each state. At MSADA we consider the state nominee so important that he or she is also designated as the “Massachusetts Dealer of the Year”. Dealers may nominate him/herself or another dealer. Since your Association’s leadership does the selection at the state level, the members of the MSADA Executive Committee are not eligible; neither are the TDYA Recipients for the last four years: Adam Connolly, Scott Shulman, Brian Kelly, and Ray Ciccolo. Please help by nominating candidates for selection as the Massachusetts TDYA. Please give this your careful consideration. Use the form on page 2 of this month’s magazine to nominate a worthy dealer or e-mail me at rokoniewski@ msada.org with your nomination. Nominations must be received at our office by Friday, July 15. Thank you for your assistance on this matter. t
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MSADA
Troubleshooting
Transgender Accommodations By Peter Brennan, Esq.
MSADA Staff Attorney Transgender rights and accommodations have become a major discussion topic in Massachusetts and nationwide over the past few years. Debate on the issue – in legislative chambers and at dinner tables – has likely far eclipsed any actual change that the typical, non-transgendered, person will experience as a result of any legislative action on the topic. With Massachusetts poised to pass a law relating to transgender accommodations before the legislature effectively ceases activity on controversial bills on July 31, it is worth exploring what retail business can expect and how they can prepare for any change in the current law. In 2011 then Massachusetts Governor Deval Patrick signed into law “An Act Relative to Gender Identity.” This law added “gender identity” as a protected characteristic alongside other characteristics including sex, disability, race, age, ancestry, and religion in the state’s employment, housing, credit, and public education anti-discrimination laws. “Gender identity” is defined in the law as “a person’s gender-related identity, appearance or behavior, whether or not that gender-related identity or behavior is different from that traditionally associated with the person’s physiology or assigned sex at birth”. As anyone who has attended our legal seminars is aware, the Act prohibits an employer from refusing to hire a person, or firing or discriminating against an employee in terms of compensation or privileges of employment, based on the
person’s gender identity. The law covers most significant job actions and prohibits an employer from considering an employee’s gender identity when making the decision to promote, demote, or discipline. One heavily debated section of the 2011 legislation would have codified protections for transgender persons in public accommodations, leading opponents to dub the legislation the “bathroom bill”. The “bathroom” language was ultimately cut from the bill in 2011, but has resurfaced and is likely to pass during this legislative session after stalling in the previous session. Two bills currently near the end of the legislative journey, Senate Bill 735 and House Bill 4343, both titled “An Act Relative to Transgender Anti-Discrimination”, would add “gender identity” to the Commonwealth’s civil rights law for public accommodations. Both bills have already been passed by their respective branches, and legislative leaders are attempting to work out some minor differences in the bills before sending a version to the governor for his review and signature. If the differences aren’t resolved in informal talks, then both pieces would be sent to a legislative conference committee to iron out the differences. Beginning with the similarities, both bills would add “gender identity” to the existing Massachusetts civil rights statute for public accommodations, which currently prohibits discrimination by any place of public accommodation, including retail businesses, on the basis of age, race, creed, color, national origin, sexual orientation, sex, religion, and marital status. Any business or other public accommodation that discriminates against a person by refusing the person service based on their gender identity would be subject to a fine of up to twenty-five hundred dollars and a year imprisonment, as well statutory liability in a civil lawsuit. This language would provide a powerful incentive for businesses not to deny service to transgendered persons. While employees at your dealership are likely well-trained on www.msada.org
preventing any type of discrimination, if this language becomes law it will be important to ensure that staff are aware of the new penalties. Both bills also contain the following provision: “Any public accommodation, including, without limitation, any entity that offers the provision of goods, services, or access to the public that lawfully segregates or separates access to such public accommodation or other entity based on a person’s sex, shall grant all persons admission to and the full enjoyment of such public accommodation or other entity consistent with the person’s gender identity.” Many businesses have expressed concern that this language would require the construction of new, gender-neutral bathrooms. Our interpretation of the provision is that, if a dealership currently has gender-specific bathrooms, no additional bathrooms are required to comply with the law. Instead, customers must be allowed to use whichever bathroom suits their gender identity. While significantly similar, the bills passed by the House and Senate do contain some key differences that have to be settled in order for the legislation to become law. First, the Senate version of the bill contains an emergency preamble, which would make the legislation effective as soon as it is signed by the governor. The House bill would not go into effect until January 1, 2017. Additionally, the House bill contains a provision that would task the Massachusetts Commission Against Discrimination and the Attorney General with issuing regulations that specify how to determine gender identity and how to enforce laws against anyone “who asserts gender identity for an improper purpose.” 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. Massachusetts Auto Dealer JUNE 2016
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Accounting
MSADA MSADA
Understanding Vehicle Depreciation Provisions Will Increase Sales Don’t wait until the end of the year to calculate your potential savings.
Paul McGovern Downey & Company, LLP
Paul has over 30 years of public accounting experience. He specializes in accounting and taxation of automobile dealerships. Paul is a member of the National Alliance of Auto Dealer Advisors. NAADA was created to provide leading accounting and consulting firms specializing in working with auto dealers with a unique venue to discuss issues affecting the profitability of auto dealers.
Additionally, he is a CerFinancial Planner. He graduated from Stonehill College with a bachelor of science in accounting. tified
In recent years, dealers had to wait until the middle of December for the passage of favorable depreciation rules for business vehicles. The “Path Act” that Congress enacted in 2015 eliminates any uncertainty over the next several years. Dealers can now promote these favorable tax deductions to boost sales throughout the year. Sales staff should be familiar with these rules to accelerate sales to business customers. Larger vehicles receive the highest tax benefits for business customers. Vehicles with gross vehicle weights (GVW) of more than 6,000 pounds but less than 14,000 pounds qualify for section 179 expensing of up to $25,000, as well as 50% bonus depreciation and regular depreciation. For example, a contractor purchases a new pickup truck with a GVW of 8,000 pounds for $40,000. The depreciation for 2016 will be as follows: - Section 179 election to expense: $25,000 JUNE 2016
- 50% bonus depreciation ($15,000 x 50%): $7,500 - Regular depreciation ($7,500 x 20%): $1,500 - Total 2016 depreciation deduction: $34,000 Certain vehicles with a GVW of over 6,000 pounds could be written off completely under section 179 election to expense. These include nine passenger vans, vehicles with a cargo area of six feet in length not readily accessible from the passenger compartment (i.e. box truck), and vehicles without seating rear of the driver (i.e. cargo van). Vehicles with a GVW of over 14,000 pounds would have no limits on depreciation and could be expensed completely. There also would be no limits on “specifically modified” vehicles. That would be vehicles modified in a manner so that personal use would be unlikely.
Massachusetts Auto Dealer www.msada.org
New vehicles under 6,000 pounds of GVW would have the following depreciation limits including $8,000 of bonus depreciation: • Passenger cars: $11,160 • Trucks and vans: $11,560 Dealers with sales staff that are familiar with these rules should be able to entice business customers to purchase vehicles throughout the year. There will still be increased activity in December as customers do their tax planning. The mad rush with a limited supply of inventory can be avoided by promoting these favorable tax deductions throughout the year and not waiting until the last minute. If you have any questions regarding this article or would like more information about this topic in general, please contact Paul McGovern at (800) 849-6022, or email him at PMcGovern@DowneyCoCPA.com. t
MSADA
MSADAOff Sound
What we have here is a #FailureToCommunicate By Daisy Medici
Managing Director of Governance and Education, GenSpring Family Offices Family offices and wealth advisors agree that communication is critical to sustaining wealth across generations. But when families are comprised of adults from four completely different societal eras, matters can get complicated. To help families overcome these crossgenerational communication challenges, we went straight to the source. GenSpring Family Offices recently hosted a women’s retreat for clients ranging in age from 21 to 91. In one of the general sessions, attendees split into groups according to their generation (traditionalists, baby boomers, gen Xers, and millennials). The conversations from these breakout sessions identified numerous cross-generational communication challenges, which included: • A lack of understanding or respect for different world views; • The role of technology; • Physical barriers to communication, such as geographic dispersion and busy schedules; • Family issues, such as judgmental attitudes, gossip, and hurt feelings; and • A general lack of transparency with regard to family wealth. After identifying these challenges, the participants came together in cross-generational groups to discuss ways to overcome them. The following is a list of helpful suggestions that resulted from the session, for families facing similar struggles: 1. Accept that over the years, generational gaps have been created, which require time and energy to bridge. Tackling communication challenges doesn’t happen overnight. One of the easy first steps toward bridging generational gaps is to avoid broad generalizations. Family members of all ages find to be offensive comments like “you all do this” or “people your age don’t understand.” 2. Be open to change, but recognize that change can be difficult. It is often said that “change” is the only constant. Trading old ways for new requires a great deal of understanding and flexibility on all sides. Listening and respecting each generation’s unique perspectives and needs goes a long way. Change is a two-way street. 3. Offer advice in helpful ways versus passing judgment. When older generations demonstrate genuine interest in the
lives of millennial family members, it may seem less obtrusive or judgmental when they assert themselves on critical matters. Sharing personal stories and mistakes made along the way is a positive way for older generation family members to connect with younger generation members. 4. Learn from each other. Many families struggle with issues related to technology and social media. One suggestion is for younger generations to mentor older generations on using and understanding new technologies. Likewise, the older generations can mentor younger generations in face-to-face interaction and interpersonal skills critical to success. Additionally, if older individuals accept the benefits of social media, they will have more credibility when working to help the next generation understand the risks associated with these platforms. 5. Use technology as a tool to improve communication. While technology poses a challenge for many multigenerational families, if leveraged correctly it can be a tool to improve communication. We recommend using email to broadly communicate information across the family to ensure the same message is being shared with everyone, and it can be easily retrieved. Additionally, utilizing a shared calendar system, such as a Google calendar, can ease scheduling challenges. 6. Hold regular family meetings. In today’s busy, fast-paced world, all families can benefit from regular, in-person family meetings. All generations should be included in the travel plans, and agendas should include time for shared values activities such as storytelling, sharing family photos, and/or documenting traditions. Families, whose family businesses require very structured board meetings, might consider scheduling separate get-togethers that are purely social. 7. Tackle the difficult conversations. While it may seem easier to avoid the “elephant in the room” or topics considered taboo, these are important issues to address in order to improve communication and transparency. To boost the likelihood that these conversations are productive, we recommend creating a safe forum and including a professional facilitator to help navigate any difficult conversations. Family leaders should encourage family members to challenge and question during these discussions.Utilize open-ended questions to allow for more information and healthier conversations. While the challenge of communicating across generations is certainly not a new issue for families, it’s an even greater struggle in today’s society. By taking the time to acknowledge differences and taking action to address these challenges, families will not only go a long way toward improving communication, but also toward sustaining their wealth for generations to come. t
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Cover Story
Going FULL AUTO New technologies are edging humans out of the driver’s seat of their own cars — it’s time for dealers to get ready. By Catherine MacDonald and Tom Nash As Massachusetts continues to push electric vehicles through its tax credit system -- absent a real market demand -- the prospect of self-driving vehicles may seem impossibly distant to dealers faced with moving metal many consumers don’t even know exists. For governments, analysts, and, most importantly, manufacturers, self-driving vehicles are a foregone conclusion. In the past four weeks, Google and Chrysler announced collaboraJUNE 2016
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tion on a self-driving Pacifica minivan, and IHS Automotive announced that it expects 21 million self-driving vehicle sales in 2035. IHS predicts the 2020 Summer Olympics in Japan will jump-start manufacturers to put self-driving autos on the market worldwide. “Future mobility will connect and combine many different modes and technologies, and autonomous vehicles will play a central role,” says Jeremy Carlson, principal analyst at IHS Automotive. “IHS expects entirely new vehicle segments to be created, in addition to traditional vehicles adding autonomous capabilities. Consumers gain new choices in personal mobility to complement mass transit, and these new choices will increasingly use battery electric and other efficient means of propulsion.” Even with a gradual growth over the next 20 years, Massachusetts government agencies large and small are not waiting around to encourage the industry to makes its technology investments in the Commonwealth. Massachusetts lawmakers also are already putting rules and regulations that govern self-driving vehicles in motion. The buzz around self-driving tech has not
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quite reached the dealership level. But new research, conducted by the Massachusetts Institute of Technology, shows dealers will play an increasingly important role for some customers as cars lose the element that left room for both danger and excitement: a human behind the wheel. The auto dealer of the future will need to understand and share automated technology that’s built to erase everything about the automobile we’ve ever known.
The Human Touch While Toyota and the Massachusetts Institute of Technology recently announced a nearly $1 billion self-driving technology development collaboration, MIT isn’t just racing to help Toyota put cars on the lot. The MIT AgeLab, working to find new solutions for successful aging across several sectors, recently conducted a study to find out where older drivers find themselves in the midst of the current tech in cars and what the implications might be for customers navigating an entirely driverless car lot. MIT AgeLab Research Associate Hillary Abraham says the need for dealers to know their tech backwards and forwards is already there, especially for older drivers who said they preferred dealers explain features than researching it for themselves. “Since the dealer may be the first place an older consumer is exposed to these types of technologies, first impressions are key,” Abraham says. “It is critical that sales and delivery staff effectively explain what the system does, while explicitly ensuring drivers see the benefit. Over the years we have seen that
“The auto dealer of the future will need to understand and share automated technology that’s built to erase almost everything about the automobile we’ve known.” a combination of hands on description and actual on-road demonstration of a technology is really valuable.” Abraham pointed to the AgeLab’s study on Ford’s Active Park Assistance as an example, with results showing reduced stress levels among drivers who used it. But getting proper instruction on its use was key. “The educational experience we provided users significantly increased the reported likelihood of using the feature and interest in buying a vehicle with the system,” Abraham says. “Perhaps most importantly for dealers, there was a strong likelihood they would recommend the technology to a friend who had difficulty parallel parking.”
Local Moves
As GM makes headlines with its collaboration with ridesharing company Lyft on a pilot autonomous Bolt program in Pittsburgh and Chrysler works with Google on their self-driving Pacifica in California, Massachusetts is working to attract similar development deals to the Boston area beyond Toyota’s large investment earlier this year. Some of the companies working on self-driving vehicle technology locally are Autoliv Electronics in Lowell and Amazon Robotics in North Reading. Two UMass Amhrst professors also are collaborating with the National Science Foundation and GM on a system to transfer human control to an automated system in a vehicle. www.msada.org
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GOING FULL AUTO
MSADA “To have such a world industry leader, Audi, testing their new ideas here in Somerville is a powerful thing for us,” Mayor Joseph A. Curtatone said in a statement, who adds that he’s hopeful Audi will decided to open a permanent lab in the city.
Getting in the Conversation
Audi CEO Rupert Stadler and Somerville Mayor Joseph Curtatone.
Massachusetts state legislators are looking to make easier going for manufacturers, since current law states a human must be behind the wheel of any vehicle on state roads. A bill that would change regulations to allow testing of autonomous vehicles had a public hearing in April 2015, but in June the Senate moved it along for further study. In Somerville, Audi isn’t waiting for the roads to catch up to them. The company started a partnership with the city last year to test its autonomous parking systems at the city’s Assembly Square mall development and is now working on “smart” traffic solutions in Union Square.
IHS Yearly Self-Driving Auto Sales Predictions, U.S. 2020: Sales begin 2025: 600,000 2035: 4.5 million
With manufacturers, politicians, and government regulators getting together, at what point should dealers be invested in the conversation? For MSADA Staff Attorney Peter Brennan, who has been monitoring the regulatory side, the important bridge to cross will be when and if lawmakers or manufacturers try to alter not just who is driving vehicles, but who is selling them. “The bottom line is protecting franchise laws,” Brennan says. “We think the most effective, safest way for these cars to be sold is through the dealer network. They’re going to need to explain how the car works, and the car’s going to need service.” “There’s an enormous amount of potential there,” Brennan adds, “but quite a few questions.” As MIT’s Abraham points out, the franchise dealer network will play a vital role for many consumers who could be interested in autonomous vehicles and need guidance. For her part, Abraham hopes to collaborate further with dealers. “Given the importance of this topic in the evolution of the digital age in vehicle safety, we would love to work closer with them.” MSADA Executive Vice President Robert O’Koniewski says that, as the conversation continues, dealers are ready to do their part to ensure customers are comfortable with the products that could be on the road sooner than many thought. “For 100 years dealers have been the key player in the relationship between a vehicle and its driver,” O’Koniewski says. “Whether it’s been the advent of power steering or in-car GPS, dealers have been the chief vehicle technology ambassadors on Main Street, and autonomous technology will be no different. “The key role dealers will play should remain the same, and MSADA is excited to work with all parties to ensure the core foundation of the franchise auto retail business serves the public in this new era.”
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NEWS from the NEWS from Around Around the Horn Horn from Around
NEWS the Horn
MSAMSAMSADA
NORTHAMPTON
Former Balise Lexus Employee Among Victims of Orlando Shooting Former Northampton resident and Balise Auto employee Kimberly Morris, known as KJ, was working the door of Orlando’s Pulse nightclub on June 12 when Omar Mateen opened fire. Morris was among 49 patrons and club employees killed in the incident. Back in Western Massachusetts, the community grieved with sidewalk tributes and vigils. Morris, 37, moved to Orlando a few months ago and had taken a job at Pulse nightclub as a bouncer, The Orlando Sentinel reported. “She was so excited,” ex-girlfriend Starr Shelton told the newspaper. “She’d just started working there and told me how she was thrilled to get more involved in the LGBT community there.” “I’m so thankful of the good memories I have of her. This is just unreal.” friend Liz Lamoureux, of Walpole, told The Associated Press. “It is just so senseless. What did KJ die for? It just
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makes no sense - her life amounts to so much more than that.” While living in Northampton, Morris spent time working at Balise Lexus in Springfield. Balise Sales and Leasing Consultant Barbara Spear recalled Morris fondly to Boston TV station WCVB. “She was a genuine person,” Spear said of Morris. Spear told the network that the two often discussed family, adding, “What they have to go through is heartbreaking.” “Our hearts are heavy today after the heartbreaking events which took place in Orlando, Florida over the weekend,” Balise Auto said in a statement. “KJ Morris, a former Balise Honda and Balise Lexus associate, lost her life in the tragic shooting. Our thoughts are with her family and friends as well as the families of all who were taken too soon. Our entire Balise Auto family is sending endless prayers for Orlando.”
NEWS from Around the Horn
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NORTHAMPTON
Northampton Volkswagen Donates Funds to Baystate Children’s Hospital Volkswagen and Baystate Children’s Hospital partnered for the fifth year in a row for the Cruising for Miracles. This year, during the month of March, Northampton Volkswagen donated $10 for every Passat test drive and $100 for every Passat purchased to the Children’s Miracle Network and Baystate Children’s Hospital. Thanks to customer involvement, Northampton Volkswagen was able to donate $1,520 towards the work and wellbeing of Baystate Children’s Hospital. To date, the dealership has raised over $15,000. “Northampton Volkswagen’s generous gift to Baystate Children’s Hospital and our philanthropic partnership with Carla Cosenzi over the years is just one more example of her leadership in the community and her team’s devotion to giving back in support of our patients and families,” said Donor Outreach Manager, Jenna Gleason, from Baystate Health Foundation. “We so appreciate their dedication to keeping care local and for making Baystate Health Foundation a
charity of choice.” “We’re strong believers in giving back to the communities we serve.” Cosenzi said. “We’re proud to be able to help Baystate Children’s Hospital. Thanks to this event, we’re able to help make a difference.”
HAVERHILL
NH Dealer Plans Move to Former Regan Ford Site The owner of New Hampshire dealership Plaistow Subaru plans to move the store to Haverhill, bringing more than 20 new jobs, he said. Andy Crews, president and CEO of AutoFair Motor Sales, has received a special permit from the City Council to expand the site of the former Regan Ford dealership on Route 97 to make room for the Subaru dealership. The Subaru dealership will be located next to the current Auto Fair Ford store. Attorney Robert Harb, who represents the company, said all that remains for Crews to do is appear before the city’s Conservation Commission for a hearing in early July. The new Subaru dealership will occupy the former Regan Ford collision repair center, which Harb said will be moved off site. Councilor Thomas Sullivan congratulated Crews and thanked him for his investment in the city. “A lot of us go back to the Regan family. For many, many years they were a prominent Bradford family who did a great job at that dealership,” he said to Crews. “I hear you’re very community-minded and I look forward to seeing more of that.” www.msada.org
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NEWS from Around the Horn BROCKTON
Copleand Chevrolet Breaks Ground on New Dealership Copeland Chevrolet broke ground on construction for a new 29,000-square-foot facility in late May, as it plans to move from Main Street to a more accessible location right off of the highway. “When you’re in the car business, you’re in the real estate business,” owner Todd Copeland told The Brockton Enterprise. “We want to be accessible to our customers.”
Copeland Chevrolet is moving from its current location at 1555 Main Street in the Campello neighborhood to the new site that’s now under construction on a vacant lot at 955 Pearl Street next to the Route 24 exit. The company plans to open the new location on January 1 next year. NEW HAVEN
Herb Chambers Receives Honorary Degree Herb Chambers, president of The Herb Chambers Companies, received an honorary doctorate in business administration from the University of New Haven in Connecticut in May. The Chambers Companies is the largest auto dealer in the Northeast, with 56 dealerships in Connecticut, Massachusetts, and Rhode Island. The company delivered 56,000 vehicles in 2015 and reported sales of $2.6 billion. Chambers bought his first dealership in New London, Connecticut, in 1985. Chambers is a supporter of the Dana-Farber Cancer Institute, The Jimmy Fund, and other nonprofit organizations. JUNE 2016
Massachusetts Auto Dealer www.msada.org
MSADA GREENFIELD
Greenfield Toyota and Ford Construction Completed Integrated Builders has completed the construction of Greenfield Toyota and Ford, a joint dealership located at 1 Main Street in Greenfield. Costing $5.8 million, the new 32,000-square-foot facility replaced the outdated dealership previously located on the site. The facility features 30,000 square feet of dealership space and a 2,000-square-foot system parts mezzanine level. Integrated Builders provided construction management services, while The Curtis Architectural Group served as project architect. The project team also included SVE Associates, Flood Consulting, and Environmental Design Engineering Inc.
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NEWS from Around the Horn
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NORWOOD
MASHPEE
Herb Chambers Lincoln GM Profiled
Tesla Opens New Store in Mashpee Commons
Wicked Local Norwood featured Herb Chambers Lincoln General Manager Peter Hern in a recent edition, focusing on the opening of Chambers’ new Norwood dealership and Hern’s career in the industry. “I attended Suffolk University in the early 1980’s. I needed a part-time job to get through college,” Hern said of his beginnings. “I went to work for a Lincoln-Mercury dealership. I was an accounting major in school, but I fell in love with the business. It’s a great business. If you treat people with respect, and earn their respect, you’ll get many, many repeat and referral customers.” The full profile is availHerb Chambers Lincoln General able at WickedLocal.com. Manager Peter Hern
Tesla opened a new sales location at the Mashpee Commons in late May without obtaining the necessary town permit to sell vehicles. John Renz, Mashpee Commons vice president, told The Cape Cod Times he was happy to add the company to the collection of retailers even with the paperwork not finished. “We’re excited,” he said. “This is something new and entirely different for Mashpee Commons. Hopefully it will be fun and entertaining, too.” But customers will not be able to finalize sales until Tesla obtains an auto dealership permit from the town. “There’s a lot of permitting involved here, so we help our tenants go through the process,” he said. t
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MSADA
TRUCK CORNER
Two Sides of the Same Coin ATD and NADA are working to prevent harmful federal tax increases
By Steve Parker
Baltimore Potomac Truck Centers ATD Chairman
(21 GOP, 9 Dem), but additional support is needed. Whether you sell cars or trucks, defending the I’m urging the commercial truck industry to contact dealer business is really two sides of the same coin. your members of Congress to ask them to cosponsor Since 1917, NADA has been working to serve H. Con. Res. 33. And just recently, Sen. Cory Gardthe interests of automobile dealers on a national ner (R-Colorado) introduced S. Con. Res. 40, which scale. And ATD—the younger division of NADA— puts the Senate on record opposing an increase of was created in the early 1970’s to accomplish the the FET. Please also contact your Senators and ask same goals but on behalf of franchised truck dealers them to cosponsor S. Con. Res. 40. We will continue across the nation. working on this issue and many more throughout We’re extremely proud of our history, and our imthe year. pact has been significant over the past four decades. This past April I spoke at the 2016 ATD ConvenATD has been at the forefront of national issues, tion and Expo about the importance of building rerepresenting our truck dealer members and providlationships with our elected officials so that we are ing the advocacy, education, and resources to this able to influence our industry’s progress and galvahighly specialized segment of NADA’s membernize outreach to prevent ship. ATD has had the exgovernment overreach traordinary opportunity to into our business. I have serve members alongside personally hosted memour “car dealer cousins.” “We serve to protect bers of Congress to tour In our endeavor to defend our industry, we’ve found our industry, not just my dealership and meet employees and even great common ground for ourselves, but for with ride in a heavy-duty truck amid the issues faced by so that they gain a true NADA and ATD: extreme future generations.” perspective of this busigovernment overreach ness. I cannot emphasize from federal regulators; enough how worthwhile complex manufacturer this experience is for both the dealer and the legislarelationships; adapting to a turbulent economy; evtor. I’ve found that elected officials come out learner-evolving needs of our consumers, just to name a ing much more than they expected regarding what few. Above all, we’ve learned it’s vital that both the we do in our stores and for our community. truck and auto industries are well represented in the As chairman of ATD, I am proud to represent nation’s capital. truck dealers as a voting member on NADA’s Board At every turn, ATD works hard to let the govof Directors and Executive Committee. I am humernment know that the commercial truck industry bled to serve ATD’s members and provide a voice moves America forward. We have met with imporon your behalf. And rest assured that ATD will tant federal regulators from the National Highway proudly represent truck dealers across the nation for Traffic Safety Administration (NHTSA), the Federthe next four decades and beyond. al Motor Carrier Safety Administration (FMCSA), Finally, in this month of June I’d like to wish all the Environmental Protection Agency (EPA), and the fathers a very Happy Father’s Day! Personally, the White House to remind them that what they do my wife and I are experiencing what it is like to has a real impact on all of us. be first-time grandparents since our newborn grandLast year, Rep. Reid Ribble (R-Wisconin) and son entered this world. The sight of a new life is Tim Walz (D-Minnesota) introduced H. Con. Res. reinvigorating and it reminds me that we serve to 33, a bipartisan resolution that would put Congress protect our industry, not just for ourselves, but for on record in opposition to any harmful increase to future generations. the Federal Excise Tax on heavy-duty trucks. H. t Con. Res. 33 currently has 30 bipartisan cosponsors www.msada.org
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NADA Update
By Don Sudbay
Getting in the Summer Groove NADA launches new academy, keeps up push for dealer protections on Capitol Hill
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).
Greetings, I hope this issue of Auto Dealer finds you and your dealership enjoying the Summer season. With this issue of the magazine focusing on autonomous driving technology that’s making its way into vehicles, I want to assure you that NADA is monitoring the situation on a regulatory front. It looks like federal standards regarding the operation of selfdriving vehicles are due some time in July, and we look forward to seeing the development of this technology as manufacturers continue to invest in making it consumer-ready. It’s a brave new world out there, and NADA will work to make sure dealers embrace the future while maintaining their proper, and needed, status in the marketplace. As you’ll see below, NADA doesn’t slow down for the warmer months, as we just announced our new NADA Academy Plus program. I encourage you to take a look and see who at your dealership might benefit. Additionally, I want to welcome new NADA Dealer Operations Senior Vice President Peter Fong, who took the position this month. He makes a great addition to the NADA team, and I look forward to working with him.
Chairman’s Column: Auto Dealers Rally Behind Consumer-Focused Senate Bill by
J eff C arlson
An important number that the nation’s auto dealers should know is 2663. NADA’s battle to tame the CFPB continues and Senate bill #2663 is the next chapter. This bill, entitled,“Reforming CFPB Indirect Auto Financing Guidance Act,” is identical to last year’s House bill, H.R. 1737, which passed the House with a resounding, veto-proof majority vote of 332-96, including 88 Democrats. NADA commends Sen. Jerry Moran (R-Kansas) for introducing this critical legislation this past March. Democrats and Republicans from both sides of the aisle have recognized a simple truth: Every consumer deserves access to competitive financing and great rates when they buy a new car or truck. JUNE 2016
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America’s franchised auto dealers strongly support S. 2663, and businesses that make, sell, service, auction, and finance motor vehicles have also joined in this support, Practically the entire auto industry is united on this issue. Like H.R. 1737, the bill would rescind the CFPB’s flawed auto finance guidance and make the bureau more transparent and accountable when issuing future guidance. The bill calls for a public comment period, coordination with regulatory agencies that possess authority over dealers, and a study of the impact of the guidance on small businesses and, most importantly, consumers. S. 2663 is a moderate bill that does not dictate a result. It’s important that dealers urge their Democratic senators to support S. 2663 when it comes up for a vote. Due to the shortened congressional session with the Presidential election looming, we need to be ready for a vote at any time. The bill allows for transparency and public notice so the public has an opportunity to analyze and to comment on the CFPB’s attempt to change the auto financing market via “guidance.” And it protects fair credit laws and their enforcement in order to safeguard equal opportunity in auto financing. We’re fighting for what dealers have known from the beginning: our current system of convenient dealer-assisted financing is fair and competitive. It boosts access to affordable credit for consumers and saves them money. At the same time, NADA supports the Senate in its oversight to ensure that the CFPB’s actions do not hurt consumers, especially those with less-than-perfect credit. If the CFPB intends to disrupt our highly efficient model, it can only be justified through reliable and sound analysis. Yet the CFPB continues to try to eliminate a dealer’s ability to discount credit for consumers, despite a clear prohibition in Dodd-Frank against regulating dealers. The optional NADA/NAMAD/AIADA Fair Credit Compliance Policy & Program is being adopted by a growing number of franchised dealers. Many are taking the proactive steps to ensure that the deserved participation that we earn when arranging financing falls within the Equal Credit Opportunity Act. Each of the three major credit application aggregators, including several other companies, have licensed the use of the program to facilitate its adoption and implementation by dealers. The significant flaws in the CFPB’s policy do not serve the nation’s 16,500 franchised dealers or the consumers they proudly serve. NADA will continue to support our members through these challenges as we prove that dealers provide the most
MSADA competitive, efficient consumer benefits on the planet in our current auto finance model. Visit NADA.org/autofinance to learn more about how the CFPB’s campaign to eliminate discounted financing rates is raising credit costs for consumers.
NADA Announces Academy Plus Program NADA is accepting applications for NADA Academy Plus, a new, cost-effective program that trains a dealership management team to improve business performance. “NADA Academy Plus is a rapid, fast-track program designed to align industry best practices with a dealership’s vision, goals, and objectives,” said Jim Schoonover, senior director of education and consulting for NADA Dealership Operations. “It’s unique in that it encompasses all of NADA’s educational and consulting offerings in one program.” The Academy includes six instructor-led weeks of education over a 12-month period. Each week focuses on a specific department discipline, including financial management, parts, service, pre-owned vehicle sales, new-vehicle sales, and business leadership. Academy Plus provides the opportunity for key department leaders to attend specific class weeks together. “By sending a department manager or director to attend with a full-time student, the dealership is going to accelerate its results,” said Peter Fong, senior vice president of NADA Dealership Operations. “Implementing new processes to improve profitability becomes easier when your key leaders are on the same page.” This is the first program of its kind. Enrollment includes the industry-leading Academy curriculum plus extensive integration of the NADA 20 Group composite, an in-dealership consultation facilitated by the NADA 20 Group, and a NADA University Online Premium Subscription for all employees at the dealership. Applications are being accepted now. The first class begins in October 2016. To enroll or for more information, call (800) 557-6232 or visit nada.org/academyplus.
Lexus, Toyota, and Subaru Achieve Top Overall Scores in NADA Dealer Survey Lexus ranked No. 1 overall among automotive brands in a recent survey that measured dealer sentiment of franchise value, automaker policies, and automaker field staff. Toyota was second, followed by Subaru, Honda, Porsche, Ford, Mercedes-Benz, Kia, Jeep, and Audi. The NADA Dealer Attitude Survey, which is conducted twice a year, conveys timely dealer sentiment with the goal of encouraging automakers to regularly engage in constructive and beneficial exchanges with their dealers. Additionally, in conjunction with the survey, NADA host-
ed more than two dozen meetings between individual automakers, members of NADA’s Industry Relations Committee, and Dealer Council representatives to review the survey findings and discuss successes, concerns, and areas for improvement. Hundreds of individuals - from the CEOs and other top executives of the major manufacturers on down - participated in these discussions and review sessions. “Facilitating open, honest, and productive discussions between auto manufacturers and their franchised dealers is one of the most important functions of NADA,” said NADA President Peter Welch. “Our members rely on the dealer attitude survey to present a comprehensive assessment of dealer sentiment to their manufacturers, and the automakers rely on it as a vital tool for improving their business practices.” Lexus has retained the top overall spot for the past three years (six survey cycles) and has scored in the top five throughout the last six years. In addition to measuring overall dealer sentiment, the survey also measured consideration of dealer input on product, product quality concerns, and advertising programs. In the 2016 winter survey, Lexus received the top score for consideration of dealer input, followed by Toyota, Subaru, and Honda. Ford and Kia tied for fifth, and Hyundai, Lincoln, Mercedes-Benz, and Porsche tied for seventh to round out the Top 10. Dealer response rates to the survey were also measured, as the willingness of dealers to share their views with their manufacturers is one of the best ways to gauge the desire to grow the OEM-dealer relationship on an ongoing basis. Lexus achieved the No. 1 ranking for survey participation, with 89 percent of its dealers completing the 2016 winter survey. Mercedes-Benz was second at 85 percent, followed by Hyundai (81 percent), Porsche (81 percent), Toyota (76 percent), Ford (73 percent), Audi (73 percent), Lincoln (68 percent), and Fiat and Jaguar at 66 percent. Welch commended the automakers who scored in the Top 10 for any of the three categories measured. “Brands that rank in the Top 10 among their peers in the marketplace are clearly doing something right, and they deserve recognition for it,” Welch said.
Peter Fong to Lead NADA Dealership Operations Peter L. Fong has joined NADA as senior vice president of Dealership Operations in June. Fong brings more than 20 years of industry experience to NADA, having held numerous executive-level sales, marketing, and brand management positions at Ford Motor Company and Chrysler Group LLC. Fong also guided Carmoza, an auto transport start-up company, through its merger and acquisition. Immediately prior to joining NADA, Fong was execuwww.msada.org
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NADA Update tive vice president and chief marketing officer at The Judge Group, a leading global firm specializing in technology consulting, staffing solutions, and corporate training. He joined the company in 2013. “I’m absolutely thrilled to be returning to the automotive industry, particularly now given the ongoing digital transformation of both the automotive manufacturing and retail sectors,” said Fong. “My primary goal will be driving value-added changes in all areas of Dealership Operations, so that the next generation of products and services provided by NADA to dealers and their employees is second-to-none.” NADA’s Dealership Operations department provides educational solutions and consultative services to member dealers in order to improve business operations. Dealership Operations includes Membership, Member Resources, NADA and ATD Academy, NADA/ATD 20 Group, and NADA/ATD University Online. Fong said one key area of interest in his new role at NADA will be implementing new best-in-class educational and training programs for dealerships to accelerate the ‘online to in-store’ car buying experience for consumers. “Digital technology and services will play a key role in the successful adoption of this process industrywide,” he said. “Peter brings tremendous understanding and a wealth of hands-on experience to NADA,” said NADA President Peter Welch. “With Peter at the helm of Dealership Operations, NADA will be able to continue providing our member dealers and their employees with innovative educational and training programs designed to meet the challenges of automotive retailing both now and well into the future.” Fong replaces John Lyboldt, who left NADA last year to become president of the Alexandria, Virgina-based Truckload Carriers Association. Fong started his career after graduating from Villanova University with an undergraduate degree in mechanical engineering and serving in the U.S. Navy from 1986 to 1994. He served as a naval aviator, instructor, and test pilot, and later as the senior class instructor and advisor for the Villanova University Naval ROTC Unit, while earning an MBA in strategic marketing and international management. He remains active with several professional and civic organizations and serves on the board of trustees for Villanova University. Fong served as an advisory board member for the automotive start-up GoMoto. He also served as vice chairman for the Wish Upon a Hero Foundation, area chairman for the New Jersey Chapter of the United Way, and advisory board member for the Southern New Jersey Chapter of the National Ovarian Cancer Coalition. Fong currently resides in Moorestown, New Jersey, with his wife and three children.
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MSADA Wholesale Depreciation Quickens in May, But Index Up NADA Used Car Guide’s seasonally adjusted used-vehicle price index rose by 0.7 percent to 119.1 — the first increase since November. And while wholesale depreciation sped up in May as prices of used vehicles fell by 2 percent compared to April, May’s performance was better than expected and was an improvement over the 2.7 percent decline average over the previous four years.
Letter to the Editor: When the Times Benefits From Fabrication (Published June 13, 2016) B y P eter W elch , NADA P resident Ignoring basic facts and fabricating others seems to be standard procedure for the New York Times’ editorial board, which leveled a number of irresponsible and blatantly false accusations against auto dealers on Sunday (“When Auto Dealers Profit From Bias,” June 11, 2016). It is widely known at this point that the Consumer Financial Protection Bureau’s overzealous prosecution of lenders is costing consumers as much as $600 on their auto loans by attempting to limit the discounts that are available at the dealership. It’s also an ineffective and woefully inadequate way to address fair credit risk in auto lending. Addressing such risk is a goal dealers share, which is why NADA recommends to its members a strong voluntary compliance program based on an approach first authored by the Department of Justice. The Times would do consumers a much greater service by encouraging the CFPB to embrace the DOJ approach – which both addresses fair credit concerns and preserves consumer discounts – instead of scaring its readers with inaccurate and misguided allegations. The Times also accuses bipartisan legislation to bring transparency to the CFPB of being anti-consumer. But the exact opposite is true. The bill, which passed the House with the support of 88 Democrats, would simply let consumers have a say before bureaucrats decide to make their auto loans more costly and make credit harder for everyone to obtain. And contrary to the Times’ allegation, nothing in the legislation would restrict the ability of the CFPB or any other agency to enforce fair credit laws in auto financing. In fact, Democratic views in the official House Financial Services Committee Report accompanying the legislation explicitly state that the bill would not impact the enforcement of the Equal Credit Opportunity Act. Lastly, President Obama did not issue a veto threat regarding the bill. Of course, the Times ignores all of these facts. But at this point that shouldn’t surprise anyone.
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