Massachusetts Auto Dealer November 2016 by Massachusetts State Automobile Dealers Association, Inc

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November 2016 • Vol. 28 No. 11

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

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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Jorge Bernal Administrative Assistant/ Membership Coordinator jbernal@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: mguerra@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Ad Directory Blum Shapiro 21 Boston Herald 32 Ethos Group 2 Leader Auto Resources 22 Lynnway Auto Auction 24 Nancy Phillips 21 O’Connor & Drew, P.C. 31 Southern Auto Auction 23

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: Getting the Show on the Road 6 THE ROUNDUP: Last Second Reprieve on New FLSA OT Rules 9 LEGISLATIVE SCORECARD 10 TROUBLESHOOTNG: Much Ado About Nothing? 11 LEGAL: Ch-Ch-Ch-Changes for Massachusetts Employers 12 AUTO OUTLOOK 14 ACCOUNTING: Getting “Credit” For Hiring Veterans 15 DEALER SERVICES: Great Results Begin with Great Expectations 16 Cover Story: Auto Show Preview

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NEWS From Around the Horn Truck Corner: NADA’s Centennial Celebration Kicks Off In New Orleans nada Market Beat nada update: Examining a Century

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 the Show on the Road

Our Auto Show gives the public a chance to step outside their screens

By Scott Dube, MSADA President W

e dealers know that digital strategy takes up an increasing amount of the pie for a number of aspects of our business. Of course, we are always looking to innovate and meet customers where they are. But the New England International Auto Show may be the exception that proves the rule. Nothing replaces the sensory thrill of walking into a room full of hundreds of the newest automobiles. While the shopping aspect of what our customers are doing may come down to their Google abilities, their hearts remain locked in a world where they can see and touch the latest and greatest. Here are just a few facts you should keep in mind about how important the New England International Auto Show is for representing our businesses: • 57 percent of attendees say they are in the market to buy a car or truck in the 12 months after the show. • 53 percent said they planned to visit a dealer showroom. • 51 percent of attendees who purchased new vehicles after the show said the show influenced their decision. As you’ll see from our cover story that previews just a few of the hundreds of new vehicle models that will appear next year at our Auto Show, January 12-16, at the BCEC, we continue to offer better products every year. The ingenuity of automotive technology has been in overdrive since the days of first inventing the internal combustion engine, but every year it seems our products are safer, more efficient, and more fun. We dealers are going to have our own favorites at the Auto Show. Of course, we dedicate our livelihoods to certain manufacturers, and we’d damned well better expect they be the best on the floor. But the bigger message is that with all these new models rolled out for the public, we dealers are here to help get them in the vehicle of their dreams. It is a critical message: the automotive business is a people-driven business. We are here for our customers. We are here for their convenience and, more importantly, their safety. That’s why the laws are the way they are, and why we are always striving to protect and improve them. The Auto Show delivers that message softly, but it can’t be missed. So I hope you will make plans to join me at our Auto Show Charity Gala on January 13, which will kick off right after our Dealer Summit held that afternoon. We’ll have a hotel block ready for you to enjoy a night at the BCEC and then hit the town. I encourage you to contact us with any ticket orders and questions. Executive Vice President Robert O’Koniewski can be reached at (617) 451-1051 or rokoniewski@msada.org. We’re planning a great night, and I’m excited to see you there. t

NOVEMBER 2016

Massachusetts Auto Dealer www.msada.org

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru

Norfolk County

Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree

Plymouth County

Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County

Robert Boch, Expressway Toyota

Worcester County

Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]

Immediate Past President James G. Boyle, Tuck’s Trucks

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian

Associate Members

MSADA A ssociate M ember D irectory ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly and Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Cars.com Heidi Allen (312) 601-5376 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealer Creative Glenn Anderson (919) 247-6658 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen (401)-742-1959 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350

First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (857) 404-404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank Mark Flibotte (617) 385-6232 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 Micorp Dealer Services Frank Salkovitz (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 PreOwned Auto Logistics Anthony Parente (877) 542-1955 ProActive Leadership Group Bill Napolitano (774) 254-0383

Quik Video Jack Gardner (617) 221-5502 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Richard Anderson (401) 432-0749 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 SPIFFIT Sean Ugrin (303) 862-8655 Sprague Energy Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092

www.msada.org Massachusetts Auto Dealer NOVEMBER 2016

The Roundup

Last Second Reprieve on New FLSA OT Rules By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers For the last several months, since the initial announcement in May, franchised auto dealers as well as small businesses around the country have been making adjustments to their employee pay plans to accommodate the U.S. Department of Labor’s new white collar overtime and minimum wage rules, slated to take effect on December 1. Your Association has written extensively on this, and we have conducted seminars and webinars to prepare dealers for the new landscape. Now, in the continuing drama that is 2016, as we prepared to go to press, a federal judge in Texas on November 22 blocked the new rules from taking effect. The judge granted a nationwide preliminary injunction against the rules’ implementation, which means that, until further notice, the existing (lower) “white collar” salary thresholds remain in effect and that dealers should not make employee compensation adjustments based on the revised “white collar” rule’s higher compensation thresholds. The lawsuit challenging the rule was filed by twenty-one states and a variety of business groups, including the National Automobile Dealers Association. District Court Judge Amos Mazzant stated in his ruling that it was improper for the DOL to adopt a salary test that categorically excludes a substantial number of workers who met the exemptions’ duties-related requirements. Although he acknowledged that Congress delegated definitional power to the agency with respect to these exemptions, he concluded that the DOL overstepped its authority. NOVEMBER 2016

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If I may quote from the Fisher Phillips alert on this matter: “[The judge] concluded that the rule change equated to a de facto ‘salary-only test’, because it would have had the effect of causing some 4.2 million workers who are today classified as exempt to become non-exempt, despite the fact they would have exactly the same job duties on December 1. He said that Congress never authorized the DOL to classify white collar workers based on salary alone, and the DOL ignored Congress’s intent by attempting to raise the minimum salary as it did. ‘If Congress intended the salary requirement to supplant the duties test,’ he said, ‘then Congress, and not the DOL, should make that change.’ “The judge recognized that, for 75 years, the salary levels that served as part of the DOL’s overtime exemption test acted as a floor and not a ceiling. He said during last week’s oral argument the new rule’s proposed salary jump was ‘a much more drastic change’. During that argument, in fact, he pointed out that the proposed substantial increase in the salary threshold could lead to inconsistent treatment of workers who each fulfill white collar duties but are paid differently. A convenience store manager who clearly acts as an executive and who is paid a salary annualizing to only $47,000 a year, for example, would be treated differently than a similarly situated manager who is paid a salary equating to $47,500 a year. “He rejected the DOL argument that the change was not ‘drastic’. At oral argument, counsel for

MSADA the government characterized the jump as a simple ‘course correction’ that was long overdue. She pointed out that the current salary level was below the poverty level for a family of four, proving that it is inappropriate for white collar workers. But even if it was considered to be a drastic increase, she said, it was within the DOL’s authority to set such a level because the agency’s process in arriving at this figure was carried out by the book and should be afforded deference by the court. Judge Mazzant obviously disagreed.” Regarding the jurisprudence, moving forward, this initial ruling may only delay the rules’ implementation past the December 1 date. We can expect a motion for summary judgement to be ruled on the week of November 28. Judge Mazzant could change his initial ruling, and then side with the DOL lawyers, putting the rule back into effect. Or, the judge could re-affirm his initial ruling, which could then later on be reversed by an appeals court before President-elect Donald Trump takes office in January. Regarding what to do, moving forward, if you have not made any adjustments to your pay plan in preparation for the December 1 change, your delay has paid dividends – you do not need to do anything for now. If you did make those changes as demanded by the rule, if you do decide to revert back to the current compensation levels, hopefully you have not begun to pay the employees accordingly. Once we have President Trump sworn in, who has made it clear he intends to remove regulations that are hindering economic growth, any number of events could occur, including the new administration killing the rule for good, the new administration commencing a rulemaking process with altered amounts and/or implementation timeframes, or Congress passing a law, subject to Trump signature, to address components of the existing statute and salary levels. The only thing we are certain of is the uncertainty of the situation. Your MSADA will keep you informed of developments as they may occur.

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 • And more Do not delay – register today!

Be Aware of the Pay Rules Christmas and New Year’s Day on Sunday Once we get past this month’s Thanksgiving Day celebration, 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 that weekend. 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

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. If in that extremely rare instance your dealership is going to be open on Sunday, December 25 and/or January 1, most employees who work the day are owed Sunday/premium pay of time and one-half their “regular rate” for the Sunday hours worked. Also, Sunday premium pay can be used to offset any OT pay owed an employee for the week. For example, if an employee works 45 hours for the week and 5 of those hours comes on a Sunday, you can use the Sunday premium pay to cover the required OT pay of 5 hours for the week. Finally, Sunday work must be voluntary; by law, you cannot force an employee to work on a Sunday. 4. 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 one-half his or her regular rate. In addition to complying with the Massachusetts Sunday/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 re-

www.msada.org Massachusetts Auto Dealer NOVEMBER 2016

The Roundup quired 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. 5. Opening on Christmas Day, New Year’s Day? Christmas is considered a Restricted Holiday for opening purposes; a dealership that is going to want to be open for the Christmas holiday will need to obtain a permit from the municipality in which it is located. There is no such permit requirement for the New Year’s Day holiday. Dealers may find additional information regarding the permit process and holiday pay rules in MSADA’s Guide to Wage and Hour Compliance for Massachusetts Dealers (March 2016). 6. Opening on December 26, January 2? One can be open on December 26 and does not need to obtain a permit; there is a statutory exemption for the Monday that falls after the Sunday Christmas on December 25. As New Year’s Day is always a non-permit day, no permit is needed for January 2. Keep in mind, employees who are normally exempt from overtime may not be exempt from the Sunday/holiday premium pay requirement. Bona fide “executive”, “administrative” and “professional” employees are exempt from overtime and are also exempt from the Sunday/ 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

NOVEMBER 2016

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.

NADA 2016 Dealership Workforce Study Results Available The NADA’s annual Dealership Workforce Study (DWS) provides data dealers can use to fine-tune employee compensation and benefits, promote retention, and stay ahead of the demographic curve. Participants receive comparative statistics for their own car or truck dealerships. The 2016 study analyzed more than 385,000 payroll records from 1,956 new-car and –truck dealerships. Dealers can obtain the full report by signing in to www.nada.org/onlinelearning and searching 2016trends, or by calling Customer Service at (800) 557-6232. To participate in the upcoming 2017 Workforce Study, go to www.nadaworkforcestudy.com beginning December 14. The NADA Dealership Workforce

Massachusetts Auto Dealer www.msada.org

Study aims to help dealers make databased decisions on recruiting, hiring, and retaining the best employees. All participants in the 2017 study receive a complimentary “Trends Report” as well as a custom report comparing their own dealerships to the nation, the region, the state, and the franchise.

2017 Fuel Economy Guide Now Available The U.S. Department of Energy and the Environmental Protection Agency recently released the 2017 Fuel Economy Guide. The Guide provides detailed fuel economy numbers for MY 2017 lightduty vehicles, along with estimated annual fuel costs and other information for prospective purchasers. Dealers must prominently display a paper copy of the Guide where new vehicles are offered for sale and must provide copies to customers upon request. Dealers are encouraged to download and print copies of the Fuel Economy Guide for their customers. There are a number of options available for dealers to comply: • The EPA will email dealers an electronic copy of the Guide through NADA in November. Dealers can then print the Guide from this electronic file. • Dealers can download the Guide at http://www.fueleconomy.gov and print it as necessary. • Dealers can order paper copies of the Guide by calling DOE’s Clean Cities Technical Response Service at (800) 254-6735 between 9 a.m. and 7 p.m. EDT, or via the Internet by clicking on http://www.fueleconomy.gov/feg/contacts.shtml. To ensure that you will receive a new model year Fuel Economy Guide via email in the future, you can provide your e-mail address to the EPA by sending an email to: fueleconomy@ornl.gov. Please note, the EPA no longer automatically mails paper copies of the Guide to dealers. t

MSADA

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Massachusetts Auto Dealer NOVEMBER 2016

Troubleshooting

MSADA

Much Ado About Nothing? FLSA Overtime Change Blocked

By Peter Brennan, Esq.

MSADA Staff Attorney A major regulatory change in the way that you pay certain employees was scheduled to take effect on December 1, 2016. After a federal judge granted an injunction temporarily blocking the rule from going into effect, the fate of the rule change is tenuous at best. What should employers do now? Some background: The Fair Labor Standards Act requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a work week. However, the FLSA provides an exemption from both minimum wage and overtime pay for employees employed in “white collar” jobs - bona fide executive, administrative, and professional positions. On May 23, 2016, the United States Department of Labor (DOL) published a major, although not unanticipated, rule change. Under the new rule, the minimum salary requirement for employees that qualify for the “executive”, “administrative”, or “professional” exemptions would more than double. While the rule previously set the minimum weekly salary for an exempt “white collar” employee at $455 per week (or $23,660 per year), the new rule called for roughly doubling that amount to $913 per week (or $47,476 per year). The new rule would allow up to 10 percent of the salary threshold to be met by non-discretionary bonuses, incenNOVEMBER 2016

tive pay, or commissions, provided these payments are made at least on a quarterly basis. Prior to this update, the rule was last changed in 2004. As part of the rule change, the threshold would automatically update every three years. Each update would raise the standard threshold to the 40th percentile of full-time salaried workers in the lowest-wage Census region, estimated to be $51,168 in 2020. The compensation threshold for employees that are currently exempt under the “highly compensated employee” exemption would also increase under the rule change, from $100,000 to $134,000 annually. The DOL has stated that the figure is set at the 90th percentile of data representing the “earnings of full-time salaried workers” across the nation. This threshold would also update automatically every three years. The potential impact on dealers from the rule change would be substantial. Any dealership employees that are currently exempt under the executive, administrator, or professional exemption, but who are making less than the new salary guarantee threshold of $913 per week, would no longer be exempt from overtime. This of course means that the employee would have to be paid one-and-one-half times their regular rate of pay for all hours worked over forty each week. However, a little more than a week before the rule change was set to go into effect, a federal judge in Texas sided with a group of 21 states and business associations, including NADA, and issued a preliminary injunction preventing the rules from being implemented on a nationwide basis. In blocking the regulation until trial, the judge reasoned that the DOL exceeded its authority by imposing an increased salary level that would supersede consideration of the employee’s actual duties when determining whether employees fell within the overtime exemption. In his decision, District Court Judge

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Amos Mazzant (an Obama appointee) reasoned that the rule change would have equated to a de facto “salary-only test”, because millions of additional employees would have become non-exempt based only on salary and not on any change to their job duties. Judge Mazzant noted that Congress never authorized the DOL to classify white collar workers based on salary alone, and that the DOL ignored Congress’s intent by attempting to raise the minimum salary as it did. “If Congress intended the salary requirement to supplant the duties test,” he said, “then Congress, and not the DOL, should make that change.” It is possible that the injunction merely delays the implementation of the rule change, a fact that Judge Mazzant stated in his opinion. The DOL will have an opportunity at a summary judgment hearing, and potentially again at trial, to convince the court that the rule should stand. However, if the injunction is still in place on January 20, 2017, when President-elect Trump is sworn in, it would seem unlikely that his administration would fight for the rule change. Where does that leave you as an employer? If you have already made changes to comply with the rule change, you are legally entitled to reverse course. While this may prove unpopular with employees, it is within your rights. If you had been waiting until December 1 to implement the changes, give yourself a pat on the back for being a wise procrastinator and feel free to put those altered pay plans back on the shelf while this situation sorts itself out. 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.

MSADA

Legal

By Joseph W. Ambash and Jeffrey A. Fritz

Ch-Ch-Ch-Changes for Massachusetts Employers

2016 has been a wild ride. Indeed, the world lost a number of important public figures, including Muhammad Ali, Nancy Reagan, Gene Wilder, and David Bowie, who, since 1971 and well into the 2010s, sang about “Changes.” The country made it through perhaps the most polarizing and vitriolic election cycle of the modern age, and the legal landscape has changed for Massachusetts employers, on both the federal and state levels. The following are some of the more notable changes you should keep in mind as 2016 comes to a close.

Changes to Massachusetts Minimum Wage In June 2014, Governor Patrick signed into law a bill that automatically increased the Massachusetts minimum wage by $1 each year until 2017. Accordingly, on January 1, 2017, Massachusetts minimum wage will increase to $11 per hour. You should review your pay plans, especially with respect to your hourly employees, and make any necessary adjustments to ensure you remain in compliance.

to $134,004; and (3) provide that, beginning January 1, 2020, and every three years thereafter, these thresholds will be “updated.” If you have not yet considered what impact, if any, these changes will have on your dealership, you should do so immediately, as non-compliance can result in significant liability, including triple damages for even unintentional violations. If you cannot realistically increase exempt employee salaries to $913 per week (or $821.70 plus $91.30 in commissions), you could consider eliminating the salary altogether, increasing the commission rate to account for the salary elimination, and paying such employees on a 100% commission basis. Such employees, therefore, would be exempt from federal overtime under the CommissionPaid exemption, and so long as they receive (1) at least Massachusetts minimum wage for all time worked up to 40 hours in any workweek, and (2) 1.5x Massachusetts minimum wage for all time worked over 40 hours, your dealership will be deemed in compliance under Massachusetts law.

Changes to the FLSA

Changes to Pay Equity Requirements

Back on May 19, the U.S. Department of Labor issued revised regulations, which take effect December 1, concerning the “white collar exemptions” to minimum wage and overtime under the Fair Labor Standards Act. The new rules, among other things, significantly increase the minimum salary basis requirement for those employees who qualify for the “executive,” “administrative,” or “professional” exemptions, from $455 per week (which annualizes to $23,660), to $913 per week (which annualizes to $47,476). The new rules also (1) provide that employers may attribute nondiscretionary bonuses, commissions, or other incentive payments to satisfy 10% of the salary threshold amount (e.g., $91.30), provided such payments are made at least quarterly; (2) increase the total annual compensation required to qualify for the “highly-compensated employee” exemption from $100,000

On August 1, Governor Baker signed into law a comprehensive pay equity bill that goes into effect July 1, 2018, and requires Massachusetts employers, among other things, to (1) pay similarly-situated men and women the same for doing different, but “comparable” jobs, subject to certain permissible variations; (2) refrain from having “pay secrecy” policies or practices and/or disciplining employees for discussing their or other employees’ wages; and (3) refrain from asking questions about salary history on job applications. An employer, who engages in a good faith self-evaluation of its pay practices and can demonstrate it has made reasonable progress toward eliminating any gender-based pay differentials for comparable work, may use that self-evaluation as a defense to liability. Moreover, the U.S. Department of Labor also is focusing on the issue of pay equity. It www.msada.org

is amending its EEO-1 survey (that employers of 100 or more employees must submit each year) to include, for 2017, wage and hour data based on gender. In light of the renewed federal and Massachusetts focus on this issue, it would behoove your dealership to review your pay practices to identify and remedy any disparities (intentional or not) with respect to gender.

Changes to Marijuana Law Ballot Question 4 (the Massachusetts Marijuana Legalization Initiative), which was narrowly approved, legalized the recreational use of pot in the Commonwealth, and created a commission to regulate it. The law will take effect on December 15. Nonetheless, the law does not require an employer to permit or accommodate the use of marijuana and will not affect an employer’s authority to enact and enforce workplace policies restricting the consumption of marijuana by employees. Moreover, marijuana (even for medical purposes) remains illegal under federal law, so employers appear to remain on firm footing in disciplining employees for pot use, at least for now. Change is inevitable, and the legal landscape for Massachusetts employers is no exception. You should minimize risk and exposure by keeping current on changes in the law and making any necessary adjustments to ensure compliance. t

Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at (617) 722-0044.

Massachusetts Auto Dealer NOVEMBER 2016

AUTO OUTLOOK

NOVEMBER 2016

Massachusetts Auto Dealer www.msada.org

MSADA

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Massachusetts Auto Dealer NOVEMBER 2016

Accounting

MSADA

Getting “Credit” For Hiring Veterans Todd E. Merriam O’Connor & CPA at O’Connor & Drew, PC. A few months ago a dealership owner called me regarding an employee he had just hired. The employee, a previously unemployed veteran, had just come into his office and mentioned that the dealership qualified for a tax credit for hiring him. After complimenting the owner on hiring the most diligent employee in the automotive business, I was happy to inform him that this employee may earn the dealership a tax credit of up to $5,600. Needless to say, this new employee was off to a great start in the eyes of the owner. By hiring this veteran, the dealership qualified for the Work Opportunity Tax Credit (the “WOTC”). This is a federal tax credit that employers may receive for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment. Last December, President Obama signed the Protecting Americans from Tax Hikes Act of 2015 (the “Act”), which extended this credit until 2019. Under the provisions of this Act, unemployed veterans represent one of the targeted groups qualifying for the WOTC. While this article focuses on the hiring of veterans, other groups qualifying for this credit include those receiving SNAP benefits (food stamps), Supplemental Security Income recipients, long-term unemployed individuals, and ex-felons. When a qualifying veteran is hired, the WOTC is based on a percentage of qualified wages paid to the veteran during the first year of employment. Subject to the maximum amounts in the chart below, an employer can earn a tax credit of up to NOVEMBER 2016

25% of an employee’s wages if they work at least 120 hours and 40% of the employee’s wages if they work at least 400 hours. The maximum credit for hiring qualifying veterans ranges from $2,400 for veterans who have been unemployed for four weeks or receive SNAP benefits to $9,600 for veterans who have a service connected disability and who have been unemployed over six months. There is no limit to the number of eligible employees for which an employer can receive a tax credit. Therefore, if an employer has several qualifying employees, this credit may be very beneficial to their tax situation.

(Source: Department of Labor)

While the WOTC is a Federal tax credit, it is administered at the state level. In order to earn the credit, the employee must be certified by a state agency. Here in Massachusetts that agency is the Department of Career Services. To begin the process, all newly hired employees should fill out IRS Form 8850 – Pre Screening Notice and Certification Request for the WOTC. This form asks the new employee questions to determine if their situation may result in a potential WOTC tax credit for the employer. If any questions are answered “yes,” then the employee meets the criteria. After identifying the qualifying employee, the next step is to receive a certification from the Commonwealth of Massachusetts. This is done by completing

Massachusetts Auto Dealer www.msada.org

the Department of Labor’s Form 9061. This questionnaire asks some additional questions corroborating that the employee qualifies as one of the certain groups that the WOTC is meant to assist. In the case of veterans, applicants will need to provide a copy of their driver’s license, discharge papers, and documentation supporting a service-connected disability if applicable. The IRS Form 8850 and Department of Labor Form 9061 will then be mailed to the state Department of Career Services. Both forms must be postmarked no later than 28 days after the employee begins employment. We have found that most of our dealers who submitted their completed documentation have received a certification from the state in a timely fashion. Once certified, the tax credit will be taken on the dealership’s corporate tax return. If the dealership is a Subchapter “S” Corporation then the tax credit will flow to the individual owner’s personal tax return. For dealers who have expanded or have increased their employee head counts and have hired veterans, taking advantage of the WOTC is a beneficial way to decrease your tax liability. The best course of action dealerships should take is to identify qualifying employees when hired and to prepare the appropriate paperwork to be filed timely with the state Department of Career Services. t If you have any questions about the WOTC, please feel free to contact Todd E. Merriam, CPA at O’Connor & Drew, PC at (617) 471-1120 or tmerriam@ocd.com.

DEALER SERVICES

MSADA

Great Results Begin with Great Expectations 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-

While dealers, GMs, and sales and service managers are comfortable challenging their coworkers to be their best, one of the more difficult things they must do is to challenge their own belief systems. I am not talking about ethics or business models or strategy, but rather challenging themselves to think bigger than they have thought before – to cast a vision for their departments or organizations by considering what is possible, not what has been previously accomplished. Ethos Group works with franchised auto dealers all over the nation, from small-town, heart-of-America to business-driven, major metropolitan areas, and we work with dealer-clients representing almost every manufacturer. We have been part of some of the most compelling and eye-opening success stories that you may never hear. Our dealerclients have experienced this success from setting high expectations for the dealership and the team. They are not afraid to think big, and, as a result, big things happen. One of our dealer-clients operates a large market franchise that has captured over 50% market penetration in the city for more than six years straight. We work with a dealer who owns several metropolitan area franchises that average over $1,925 per unit in F&I before packs, overfunds, and rein-

surance, and they do it on over 18,000 units annually. We have a dealer-client which, in just three short months, has increased its average customer pay repair order by over $140 while raising its customer service scores well above the regional average. Before you discount some of these successes, you must know that the dealership which penetrates its market by over 50% has several healthy and thriving competitors in the city. The dealership group that will run almost $2,000 per unit in finance also has a strong performance in front end gross, averaging several hundred dollars more per vehicle than it has in previous years. The dealer who has focused on providing a better experience on the service drive has also increased service capacity and reduced repair time without hiring a single additional advisor or technician. The relevance here is that many dealerships’ success is limited by the team’s ability to recognize its own potential and the willingness to work through challenges to bring the vision to reality. Sales departments can sell more cars, finance departments can run a higher per unit, and service departments can increase customer pay dollars – all while completely satisfying their customers. Past performance often holds dealerships back from their best performance. The processes, procedures, attitudes, and actions people are comfortable with keep them from adopting different ways of doing business that produce different results. The only way to get more is to do more. It is time to enlarge your thinking. Realizing your greatest opportunities means you must be willing to take an honest, no-holds-barred look at your business – from the products you sell to the people who sell them and the processes they execute. Then create a clear and executable plan of action to make the change you seek a reality. Refuse to settle for the same year-overyear market increase that everyone else celebrates and challenge your management

team to work through these three steps.

Evaluate Everything Do not allow the way business has always been done to dictate the way you will always do business. Take a look at everything from your marketing and pricing strategies to your product merchandising. Look at the appearance of your personnel and the cleanliness of your facility. Evaluate the professionalism, ability, and work ethic of your people and determine if they share your company’s vision. Scrutinize everything; hold no practice “sacred”.

Identify Opportunities While most dealerships do many things extremely well, very few do everything extremely well. Identify which of your current practices has led to your greatest successes; these are the things that your team does extremely well. Also, be willing to admit where your team falls short; identify the parts of your business that need attention and capitalize on these opportunities for improvement.

Game Plan If you want to experience bigger, bolder, and stronger successes, there are likely things about your business that you will need to change. What has been done so far may be good, even really good, but you cannot allow good business to get in the way of creating great businesses. Formulate a plan, commit to consistency, and then execute it effectively. As the coming year approaches and your management team finalizes projections and prepares commitments, challenge them to challenge themselves. Encourage them to think about what they do differently, embracing non-conventional, outside-the-box possibilities, and organizing their actions to make the most of the opportunities ahead of them. t

www.msada.org Massachusetts Auto Dealer NOVEMBER 2016

Cover Story

’ s r a C r a t ‘S ow h S o t u A 7 1 t at the 2 0

Come ou

Aston Martin

A fearless design philosophy has led to the DB11’s iconic looks. Discover the striking new grille, clamshell bonnet, and innovative Aston Martin Aeroblade.

Audi

The A4’s cutting-edge technologies like Audi “pre-sense” city merge also include an efficient 190-horsepower or available class-leading 252-horsepower engine.

Jeep

The Grand Cherokee Trailhawk is wellequipped for off-road adventure. Standard features include Jeep’s Quadra-Drive II four-wheel-drive system with a twospeed transfer case, an electronic rear limited-slip differential, and a specially tuned Quadra-Lift air suspension.

NOVEMBER 2016

Massachusetts Auto Dealer www.msada.org

MSADA MSADA Here are just a few highlights among the many vehicles you will find at the New England International Auto Show.

Chrysler

With the all-new Chrysler Pacifica Hybrid, you get family-friendly functionality and money-saving fuel efficiency. It truly is the nextgeneration minivan.

Nissan

The Rogue Hybrid features a 2.5-liter four-cylinder with 170 horsepower and 175 pound-feet of torque.Â

Acura

Cadillac

The MDX New Sport Hybrid powertrain delivers the ultimate in power and control while gaining 35 horsepower and is anticipated to add 7 mpg to city fuel economy.

The XT5 crossover was crafted to help you outsmart whatever task you have at hand. Its generously sized interior is filled with advanced features to help keep you safe and connected, while the chiseled exterior lines make a striking statement.

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Massachusetts Auto Dealer NOVEMBER 2016

‘STAR CARS’ AT THE 2017 AUTO SHOW

Fiat Chevrolet

The Bolt EV is an all-electric vehicle offering an estimated 238 miles of range per charge and was recently honored as the Motor Trend 2017 Car of the Year.

Infiniti Q60

Genesis

The Genesis G90 flagship sedan will compete at the top of the premium luxury car segment with world-class technological innovations.

Honda

The Honda CR-V will feature a slightly larger trunk, better performance, improved fuel economy, and great changes in the interior.

NOVEMBER 2016

The 124 Spider is the Italian roadster that will tempt your senses and reignite your love affair with driving.

Massachusetts Auto Dealer www.msada.org

Every aspect of the Q60’s luxurious interior has been thoughtfully designed for comfort, elegance, and intuitive function.

MSADA

Toyota

The RAV4 Hybridâ&#x20AC;&#x2122;s advanced innovations include 194 net horsepower and outstanding acceleration.

Ford

The F-150â&#x20AC;&#x2122;s new EcoBoost V-6 replaces the first-generation 3.5-liter EcoBoost V-6, which has been optional throughout the F-150 lineup since 2011.

Volkswagen

Boasting a 200 horsepower turbocharged engine, the Volkswagen Tiguan combines both versatility and premium amenities for all life may have in store.

Lincoln

With a redesigned interior, the new Continental manages to express classic luxury with a modern take in its styling.

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Massachusetts Auto Dealer NOVEMBER 2016

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

NEWS the Horn

MSAMSAMSA-

BOSTON

Honda Against Hunger Food Drive Launches The Rhode Island and Southern Massachusetts Honda Dealers announced the third annual food drive to benefit area residents at risk of hunger in November. The Honda Against Hunger Food & Fund Drive will be hosted at six local dealerships until December 12. Many people in Rhode Island and the southern part of Massachusetts do not have access to sufficient amounts of food, and hunger is a particularly acute issue for area children. The Honda Dealers hope that the food drive will raise substantial quantities of food and monetary donations, as well as improve awareness of this pressing concern. “We’ve been so fortunate these past two years to have had success with our food drive,” said Scott Birtles, President of the Rhode Island and Southern Massachusetts Honda Dealers and General Manager of Herb Chambers Honda of Seekonk. “Our hope this year is to once again harness the spirit of giving that thrives during the holiday season, and be able to provide our neighbors with the food they need to sustain them through the difficult winter months.” The 2014 and 2015 food drives resulted in the collection of 3,760 pounds of food from residents and businesses in Rhode Island and southern Massachusetts.

As they have done in the past, the Honda Dealers are partnering with the Rhode Island Community Food Bank, which works with agencies throughout the state to provide needy residents with food items. The organization serves approximately 60,000 people each month, and it distributed 9.7 million pounds of food in 2015. Those who are interested in donating non-perishable food items, cash, or checks may do so at any of the following six participating Honda dealers: - Balise Honda of West Warwick - Colonial Honda of Dartmouth - Grieco Honda of Johnston - Herb Chambers Honda of Seekonk - Majestic Honda of Lincoln - Saccucci Honda of Middletown “It’s gratifying to see our friends and fellow community members come together to support our neighbors in need,” said Birtles. “We look forward to helping the Rhode Island Community Food Bank again this year thanks to the generosity of our community.” For more information about the food drive, please visit www. RISMAHondaDealers.com.

FRAMINGHAM

Herb Connolly Charity Golf Tournament Raises Funds for Cancer Research The annual Herb Connolly Charity Golf Tournament raised $13,000 in its 2016 incarnation, topping off a more than $200,000 net over the past decade. The funds went to the Mount Auburn Hospital Hoffman Breast Center.

NOVEMBER 2016

Massachusetts Auto Dealer www.msada.org

NEWS from Around the Horn

MSADA

PITTSFIELD

Johnson Named as Massachusetts Dealer of the Year Gary Johnson, the chairman of the Johnson Dealerships Inc., has been nominated for the 2017 TIME Dealer of the Year award, one of the automobile industry’s most prestigious and coveted honors. Johnson, 71, is one of 49 auto dealers across the country who were selected to be nominated for the 48th annual award by TIME Inc., one of the world’s leading media companies. He was chosen to represent the Massachusetts State Automobile Dealers Association and was nominated by Executive Vice President Robert O’Koniewski. Johnson and his fellow nominees will be honored at the 100th annual National Automobile Dealers As-

sociation Convention & Exposition in New Orleans on January 27. A panel of faculty members from the Tauber Institute for Global Operations at the University of Michigan will select one finalist rom each of the four NADA regions and one national Dealer of the Year. The Johnson Dealerships were co-founded by Johnson’s grandfather, Arthur C. “Chris” Johnson, in Pittsfield in 1916. “My family is celebrating 100 years in the automobile industry this year,” Johnson said in a statement. “I am proud to carry on the legacy of my grandfather and father and pass along the love of this industry to my two children.” www.msada.org

Massachusetts Auto Dealer NOVEMBER 2016

NEWS from Around the Horn MANCHESTER, N.H.

Holloway Motor Cars Sold to Prime Motor Group Nancy Phillips Associates announced the sale of Holloway Motor Cars of Manchester, owned by Paul Holloway, to Prime Motor Group owner David Rosenberg in November. This is the 28th dealership Rosenberg has acquired under his highly successful Prime brand with multiple acquisitions facilitated by Nancy Phillips Associates. Prime Motor Group has locations in four New England states: New Hampshire, Massachusetts, Maine, and Vermont. Paul Holloway has owned and operated many dealerships in New Hampshire throughout his career. He has supported his fellow Dealers and worked as an activist for the industry serving as past Chair for the National Auto Dealers Association and former Director of the New Hampshire Auto Dealers Association. He is known for his philanthropy throughout New England and has made it his mission to support and fund an enormous number of programs particularly focused on children, education, veterans, and drug abuse. Nancy Phillips Associates has orchestrated all of the Holloway Automotive Group dealership sales and acquisitions over the last 25 years.

NOVEMBER 2016

Paul Holloway, Nancy Phillips and David Rosenberg.

Massachusetts Auto Dealer www.msada.org

MSADA COHASSET

HAVERHILL

Town Prepares Three-Year Electric Car Lease

International Cars Supports Veterans Appreciation Month

The numbers have been crunched, and Cohasset stands to save $1,080 every year through the Massachusetts Electric Vehicle Incentive Program, according to the Capital Budget Committee’s analysis released in late October. The Alternative Energy Commission started looking into the incentive program in February. Now the Town is in the final stages of signing a three-year lease on a trio of Nissan Leafs. The Town received $141,000 in funding this year through its participation in the Green Communities program. The 2017 grant cycle will bring in another $250,000. The Electric Vehicle Incentive Program is separate from the Green Communities program and it will essentially pay for itself this lease cycle. Cohasset has been granted $33,000 from the state: $22,500 for the vehicles themselves (or $7,500 per vehicle), and $10,500 to install charging stations. Coastal Nissan, a local car dealer, offered the most favorable bid at $7,586.96 per car. That one-time payment covers a threeyear lease with an allowance of 12,000 miles per year.

International Cars Ltd. again honored Veterans Appreciation Month in November by conducting an annual sales promotion to benefit the Veterans Northeast Outreach Center, of Haverhill. For each vehicle sold throughout the month at each dealership, a donation of $100 was made to the Veterans Northeast Outreach Center, up to a total donation of $10,000. Through the years, the focus of the Veterans Northeast Outreach Center has expanded to accommodate nearly 40,000 Veterans providing a continuum of amount of care to veterans and their families. Support services run from basic food and shelter needs, to advocacy, information, referral, career, and education services. “Our annual companywide sales event to benefit our veterans is something that we look forward to every year,” said Marshall Jespersen, dealer principal of International Cars Ltd. “We can’t think of a better mission to support than the Veterans Northeast Outreach Center. We’re so proud to support their cause again this November.” In addition to donating $100 per vehicle, ICL will also of-

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Massachusetts Auto Dealer NOVEMBER 2016

NEWS from Around the Horn fer employee pricing to all veterans and active duty military members. “We’re grateful again to partner with International Cars and all of their dealerships this November,” said John Ratka, executive director of the Northeast Outreach Center. “The support that ICL provides us helps so many of our veterans here in Northern Massachusetts and Southern New Hampshire.” Established in Lawrence in 1985, the Outreach Center started as a storefront operation, staffed largely by volunteers, to provide support and advocacy to Vietnam veterans. The center is funded, in part, through contracts with the Department of Veterans Affairs, Massachusetts Department of Veterans Services, U.S. Department of Housing and Urban Development, and private donations. WATERTOWN

Commonwealth Continues Self-Driving Vehicle Preparations As city and state officials inch toward allowing self-driving cars on the roads of Massachusetts, several private parties have been spearheading an effort to perfect the technology by per-

NOVEMBER 2016

MSADA

mitting the cars of the future to drive on their properties. Over the course of a year, the owners of a plot of undeveloped land at the Raymond L. Flynn Marine Park hosted autonomous car testing in a controlled environment. “We think it’s a great adventure, we think it’s a great idea, and if an opportunity comes and we have a location where we could do it again, we’d do it in a heartbeat,” Tom Miller, vice president of Kavanaugh Advisory Group, told The Boston Herald. “We allowed them to use a portion of our site just to test the car. It was a worthy endeavor.” Kavanaugh is developing what will become Innovation Square, a two-phase 360,000-square-foot building complex that will house office, lab, and research and development space. But before workers recently broke ground at the Tide Street site, Miller said the fact that it had been paved for a past Cirque du Soleil performance made the area a perfect location for self-driving car testing. City and state transportation officials have said they are working on a set of regulations and an application process to allow companies to test autonomous vehicles on public roads. Both have said it is possible on-road testing could begin this year, and a MassDOT spokesman said more information will be released in the coming weeks.

Massachusetts Auto Dealer www.msada.org

MSADA AUTO OUTLOOK

TRUCK CORNER

NADA’s Centennial Celebration Kicks Off in New Orleans Join your fellow dealers for networking and fun in a Great American City By Steve Parker

Baltimore Potomac Truck Centers ATD Chairman

You don’t turn 100-years-old every day, so I invite all our member dealers and industry allies to the biggest centennial celebration of them all—the 2017 NADA/ATD Convention and Expo, which runs from January 26 to 29 in New Orleans. NADA was founded in 1917. That is a century’s legacy of serving our customers and supporting dealers throughout the nation. This convention is your celebration in the lively and historic city of New Orleans. I encourage you to register today. Hotel rooms are filling up quickly, and the online registration process only takes a few minutes. The ATD convention begins with the Industry Roundtable, which features a moderated discussion on the new Phase 2 fuel economy/GHG rules. Our

sion on Saturday, January 28, is the subject of Steven Spielberg’s acclaimed 2002 movie, “Catch Me If You Can.” Abagnale was known as the master of deception and worked as a doctor, lawyer, and Pan American co-pilot all before his 19th birthday. He turned his life of forgery around and aided the FBI in catching the world’s most elusive counterfeiters. ATD’s member participation and engagement mean everything. I’d like to thank all of you -- at our general session at the convention when I take the stage on Friday, January 27 -- for the hard work and commitment that you’ve put into this industry every day of the year. New Orleans embodies the best of our industry. Along with its rich history, the Big Easy is marked

“New Orleans embodies the best of our industry. Along with its rich history, the Big Easy is marked by resilience and courage.” panelists include representatives from truck manufacturers PACCAR, Volvo, Daimler, Navistar, and Cummins Engines. And as always, ATD members are encouraged to attend all NADA events, general sessions, and workshops. There will be a combined 182 workshop sessions on a variety of topics geared for dealers and their managers to optimize dealership performance. Franchise meetings are scheduled for dealers to meet with their respective OEM executives to discuss their marketing plans, sales outlook, and product launches. You hear from your OEMs throughout the year, but this is the opportune time for them to hear from you. There will also be several networking events to build new relationships and opportunities to shop for new products at the expo. Frank Abagnale, our speaker at the general ses-

by resilience and courage. It has rebounded from the devastation of hurricanes and has come back stronger than ever, much like this industry has done through years of turbulent economies and industry challenges. The strength and success of ATD comes from its members. I urge you to join us next January in New Orleans to make this upcoming convention one for the century. 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 NOVEMBER 2016

26 OCTOBER 2016

NOVEMBER 2016

Massachusetts Auto Dealer www.msada.org

MSADA

www.msada.org

Massachusetts Auto Dealer NOVEMBER 2016

SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

NADA Update

By Don Sudbay

Examining a Century Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your

questions

and

concerns

(donsudbayjr@sudbay.com). As we look past another long election season and toward the future of our country, here in our universe change continues to be the only constant. As NADA Chairman Jeff Carlson outlines below, dealers have been linked with the public’s love of the automobile from day one, and we’ll reach the century mark in January. I encourage you to come down to New Orleans to celebrate this milestone with your fellow dealers from across the country. Much closer to home, we’re finalizing the preparations for the New England International Auto Show in January. The Association staff continues to outdo itself each year in working to put this event on, and I encourage you to reach out if you have not already made plans to attend this year’s Gala.

NADA Chairman: 100 Years of Standing Up for Our Customers

By Jeff Carlson Earlier in the Fall, I had the privilege of addressing the Automotive Press Association in Detroit. In addition to discussing what we’re doing now and what we will be doing in the future, I talked about the past and about how NADA began. We should never forget that this association’s genesis was in 1917 when dealers wanted to defend their customers from unfair policies in Washington, D.C. A century later, we are doing the same thing on behalf of our customers and this great industry. I explained this in great detail to the auto writers and other guests in attendance. And I did it through the eyes of our customers. After all, it’s our customers who are seeing increased prices during the point of sale, financing, and even recall work as a result of unfair, unnecessary, and overly broad policies from Washington. So I posed some of the following questions: If Washington wanted to implement a policy that would add $600 to the cost of financing a new car, what would that feel like as a dealership customer? What about a policy that would take anywhere from $1,200 to $6,000 out of a customer’s pocket when they trade in a used vehicle?

How about a policy that would add thousands of dollars to every single new vehicle that every manufacturer makes, up and down their entire lineups? Or what if new-car buyers had to pay hundreds of dollars more at the retail level because Washington thought it was no longer beneficial to consumers to have multiple, independent retailers competing with each other for the same customers? These are some of the questions I posed to the APA audience. The larger point is that it’s not just dealers who are negatively impacted; our customers will also suffer from government overreach and misguided federal regulations. These are many of the battles we’ve been fighting in our nation’s capital on behalf of our customers and fellow dealers, and the work is ongoing. Throughout the year, NADA has worked tirelessly to educate government officials and the media about the dealer business and how we provide efficient and cost-effective services to the driving public. We’ve had endless correspondence, roundtables, and even hearings with our federal regulators so they can understand how their decisions impact this industry and the customers whom we serve. This is what NADA was founded on, and it’s what we do best. Never forget that in 1917, Washington came up with the idea to classify automobiles as “luxury goods” in order to impose a new five percent tax on their purchase. This new luxury tax on what was rapidly becoming an essential item would hit a lot of Americans right in the pocketbook, at a time when they could least afford it. Someone had to quickly get the message to Washington ... and auto dealers did just that. Thirty auto dealers went before Congress and argued that automobiles were a necessity, not a luxury, and a tax could price customers right out of the market for generations to come. Congress listened back in 1917. Today in 2016, we’re working hard to get them to listen to us again.

NADA Economist: Assessing the Economic and Market Impact of the Election

By Steven Szakaly In assessing the impact that the election of Donald Trump to the presidency will have on the markets and the economic outlook, it is first vital to properly separate the immediate from the short-term, medium-term, and long-term. As for the immediate, indicators such as stock markets, gold prices, and foreign currencies are currently reacting to fear and uncertainty, not economic fundamentals. Similar to the immediate aftermath of the Brexit vote, market reactions within 48 hours of the result were a reflection that,

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Massachusetts Auto Dealer NOVEMBER 2016

MSADA

NADA Update above all else, markets hate uncertainty, and that markets are still in the process of adjusting to the fact that computer models have been unable to help them make accurate predictions of political outcomes. Moving on to the short-term, it’s entirely possible that markets will continue to react poorly, as companies are likely to take a breather on hiring and capital expenditures. That said, the more important short-term indicator is how consumers react, and in this regard we expect their reaction to be generally positive. Both happy people and sad people tend to spend more as long as they have jobs and unemployment is at historic lows. So barring a serious bout of layoffs affecting multiple industries, which is highly unlikely, economic activity will continue at the somewhat moribund rate we have seen as of late. Over the medium- and long-terms, Trump’s stated or understood policy objectives will produce significant positive tailwinds, particularly as they direct us to lower corporate taxes, increased infrastructure spending, and reduced regulation across all aspects of business. The negatives are, of course, an assault on free trade and immigration. But these require a nuanced look. Trump has been notably silent on the status of H1B visa grants for highly educated workers, and, given his general pro-business posture, it is not completely out of the realm of possibility that the H1B visa program gets expanded under a Trump administration, which would be a boon to U.S. economic growth. On trade, even if Trump truly wants to end NAFTA, he will find himself stymied, as these trade deals are complicated and require exit negotiations. What’s more, it would take years for the negative effects of a successful exit to take hold. What is needed is clarity. A clear set of economic policy goals delivered before the New Year would go a long way to ensuring that any immediate uncertainties are smoothed over. So where does this leave car sales? Still slowing in response to the U.S. market maturing, but not as a result of the election. In fact, in the medium- and long-term, if increased infrastructure spending happens and certain tax cuts materialize, it will mean a better long-term outlook than what’s in front of us at present.

Roger Penske and Helio Castroneves Join Speaker Lineup at NADA Convention Motorsports legends Roger Penske, chairman of Penske Corporation, and Helio Castroneves, three-time IndyCar Series winner at the Indianapolis 500 for Team Penske Racing, take the stage on Saturday, January 28, for an intimate conversation with Keith Crain, editor-in chief of Automotive News, during the 2017 NADA Convention and Expo in New Orleans. “As NADA celebrates its centennial, it’s a wonderful NOVEMBER 2016

honor for it to salute Roger Penske on 50 years of motorsports along with Helio Castroneves, who is an icon at Indianapolis as well as becoming a participant in an auto dealership,” said Crain, who is also chairman of Crain Communications, Inc. “NADA’s 100th anniversary is a milestone for auto dealers across this nation.” Penske is chairman of Penske Corporation, a closelyheld, diversified, transportation services company whose subsidiaries operate in a variety of industry segments, including retail automotive, truck leasing, transportation logistics, and professional motorsports. Penske Corporation manages businesses with revenues of more than $26 billion, operating in 3,300 locations and employing 50,000 people worldwide. Castroneves is a Brazilian auto racing driver currently competing in the North American IndyCar Series. In IndyCar competition, Castroneves has 14 wins and 28 poles, and has never placed lower than sixth in the standings in a complete season of racing. He won the Indianapolis 500 in both 2001 and 2002, becoming the fifth driver to do so in consecutive years.

NADA Forecasts 17.1 Million New-Vehicle Sales in 2017 Steven Szakaly, chief economist of NADA, predicts sales of 17.1 million new cars and light trucks in 2017. “We are headed toward a stable market for U.S. auto sales, not a growing market,” Szakaly said today at an economic briefing ahead of the Los Angeles Auto Show. “The industry has achieved record sales, and pent up demand is effectively spent.” The vehicle segment mix will continue to favor lighttruck sales, which are expected to account for 60 percent of the market in 2017, and continuing the upward sales trend. With seven weeks remaining in 2016, new-vehicle sales are on pace for 17.4 million, which would be a slight decline from the all-time record set in 2015. Sustaining the auto sales momentum established this year, Szakaly added that the overall economic outlook for 2017 remains strong with projected gross domestic product (GDP) growth at 2.6 percent, employment growth between 150,000 to 180,000 jobs per month, and the price for regular-grade gasoline at less than $2 per gallon. Outlining some areas of concern, he said rising interest rates, ever-increasing loan terms, and higher vehicle transaction prices will likely lead to a slower but still strong sales pace in 2017. In addition, NADA forecasts that newcar dealerships will retail 15.3 million used vehicles in 2017, compared to an expected 15.1 million used sales in 2016. The total used-vehicle market will exceed 40 million retail sales in 2017. t

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