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

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September 2016 • Vol. 28

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

Clearing the Air

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

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

Ad Directory Blum Shapiro 21 Boston Herald 32 Ethos Group 2 Leader Auto Resources 22 Lynnway Auto Auction 23 Nancy Phillips 21 O’Connor & Drew, P.C. 31 Reynolds & Reynolds 9 Southern Auto Auction 24 SunTrust Bank 20

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 6 10 11 12 14

From the President: Getting Inside the Beltway THE ROUNDUP: Dealers Convene in Nation’s Capital LEGISLATIVE SCORECARD TROUBLESHOOTNG: Autonomous Vehicle Regulations AUTO OUTLOOK LEGAL: Failing to Take Action on Harassment Can Cost Your Dealership Money

15 Business Planning: Act Now or ? 16 Cover Story: Clearing the Air

INSURANCE:

The Resilience Imperative

20 25 26 29

NEWS From Around the Horn Truck Corner: Continuing Education Leads to Greater Opportunities nada Market Beat nada update: Walking the Halls of Power

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 Inside the Beltway

NADA’s Washington conference brings our grassroots to Capitol Hill

By Scott Dube, MSADA President A

s I write this, our NADA Washington Conference delegation is just returning from the annual sojourn to our seat of government, where dealers from across the country continue to work to make the voices of Main Street businesses heard. The Washington Conference is a chance to make sure our representatives understand that we continue to operate in a land of shifting regulations and the constant threat of politically motivated challenges. We go to visit our Congressional representatives to advocate for policies that make it easier to do business, instead of more difficult. We’ll get into a little more detail about what these issues are in next month’s cover story and Bob’s column. As usual, unfortunately our delegation has its work cut out for it as Congressional gridlock prevents action on such issues as reforming the Consumer Finance Protection Bureau and reworking our federal tax code. We can never stop putting effort into making sure our representatives know who we are, what we do, and how vital our contributions are to their districts and our communities. We may not agree on every issue, but, as we’ve seen proven during these past couple of years, when the chips are down, the time put into establishing these relationships can really pay off. Especially in such a high profile election year, it’s important to remember that relationships matter, whether we’re talking about the local zoning board or the American presidency. All of this work is done for the benefit of our member dealers, who are working tirelessly day in and day out to make their businesses succeed. They’re putting food on the table for their own families, and by extension are doing the same for as many as 60 men and women in their communities. They don’t all have the time to make a trip down to Washington, and that’s why we feel privileged to speak on your behalf. I’d also like to thank our dealer delegation to Washington for sacrificing their time and energy to make sure our voice is heard: MSADA Vice President Chris Connolly, Herb Connolly Motor Group; MSADA Clerk Charles Tufankjian, Toyota of Braintree; and our NADA Director Don Sudbay, Sudbay Auto Group. It can seem like there’s no end in sight to the difficulties, especially given the nature of our Congress right now. But our dealer delegation remembers who they’re putting in the time for, and I hope you’ll join me in showing them our appreciation. Additionally, I want to continue to stress the importance of your voice in this process. We make the trip down to DC so you don’t have to, but that doesn’t mean you shouldn’t pick up the phone and let your legislator know what issues you care about as an important economic engine in their community. Please let me or Bob know if you would like any talking points or other tips for representing our business. t

SEPTEMBER 2016

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Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

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

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

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

Norfolk County

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

Plymouth County

Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County

Robert Boch, Expressway Toyota

Worcester County

Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

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

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

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

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

Associate Members

MSADA A ssociate M ember D irectory ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly and Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. 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 SEPTEMBER 2016

The Roundup

Dealers Convene in Nation’s Capital By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers

41st Annual Washington Conference At the end of September over 500 franchise car and truck dealers and dealer association executives from across the country hit our nation’s capital to attend policy briefings and meet with Members of Congress to discuss key legislative and regulatory issues during NADA’s 41st annual Washington Conference. This year’s MSADA delegation included MSADA Vice President Chris Connolly (Herb Connolly Motor Group); MSADA Clerk Charles Tufankjian (Toyota of Braintree); Massachusetts NADA Director Don Sudbay (Sudbay Auto Group); MSADA legislative agent Jim Hurrell; MSADA staff attorney Peter Brennan; and me. Dealers from across the country use the annual Washington Conference to meet with their Senators and Representatives to discuss various legislative and regulatory issues affecting their dealership operations. This is also a chance for dealers to see their legislators in the halls of power where they conduct their business, in contrast to the usual district functions like chamber of commerce rubberchicken luncheons and ribbon cuttings. NADA, as part of the festivities, schedules politicians and commentators to provide attendees with a flavor of the current situation in Washington and what may be in store for us prospectively. This year’s crop of speakers included Rep. Kevin Brady (R-Texas), the House Ways and Means Committee Chairman; Rep. Joyce Beatty (DOhio), a Democrat supporter of the CFPB reform bill in the House; Sen. Ben Sasse (R-Nebraska); Janet McCabe, Acting Assistant Administrator for the Environmental Protection Agency’s Office of Air and Radiation; and political analysts Charlie SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

Cook and Amy Walter. Once on Capitol Hill, we engaged our Congressional members in dealer dialogue on such issues as the Consumer Financial Protection Bureau (CFPB), which is our number one priority; the proposed repeal of LIFO; the treatment of open recalls on new and used vehicles; and the tax deduction on advertising costs. During our two days in DC we met with Rep. Stephen Lynch (D-South Boston), Rep. William Keating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Seth Moulton (DPeabody), and staff for Rep. Jim McGovern (DWorcester), Rep. Katherine Clark (D-Melrose), and Rep. Niki Tsongas (D-Lowell). We are familiar faces for them all, as we make the effort to sit down with them regularly back home in Massachusetts as well. Moving forward, we need to keep in mind that for two days we were only a handful of people going door to door to visit our elected representatives in Washington. We were a group of small businessmen who, on behalf of their fellow dealers back home, gave up time from their dealerships and families to fly to Washington to discuss issues important to their stores and getting the economy going in a positive direction. Back home, however, we are an association of 427 members, whose dealerships employ on average 60 men and women, and who are responsible for almost 20 percent of the Commonwealth’s retail economy. As we ask dealers to get more engaged in contacting their Congressmen and local legislators, we ask that you not be shy and let others carry the load. All dealers - big and small, domestic makes and foreign - are in the same boat. If we give the members of Congress a free ride and do not engage

MSADA them on the issues, they will think we have no problems. The same is true when we are fighting for or against certain laws on Beacon Hill. In the future, please heed the call from your Association to contact your elected officials when such an issue arises. The Obama Administration, supported by its Congressional party members and anonymous bureaucrats squirreled away in a myriad of executive agencies, seems to take great joy in continually rolling out more anti-business proposals that make it increasingly difficult for small businesses, just like your dealerships, to succeed in a challenging economy. Hence, the even greater need to go before our elected officials and inform them of our concerns and desires. Without our input, our esteemed members of Congress, if left to their own devices, could find a way to pour more gasoline on the fire. We will have more about our visits in next month’s magazine.

Reminder on Recalls Seemingly each day, word of a new recall sends shudders through dealerships across the land. As we have written previously, the rules are different whether a vehicle subject to a recall is a new or used vehicle. We have written extensively on dealers’ obligations when confronting the overwhelming number of recalls receiving coverage in the media, most recently with Bulletin #28, “Recalls Refresher”, on June 21. These responsibilities cannot be taken lightly, especially when state and federal consumer protection laws are at play. Additionally, NADA recently released a revised version of its “Safety Recall FAQ” guidance. This latest version of the FAQ contains recommendations on safety recalls and new vehicles, used vehicles subject to recall, service vehicles, and rental fleets. NADA recommends that these suggestions be reviewed with appropriate dealership staff. One can access the FAQ at https:// www.nada.org/workarea/DownloadAsset.aspx?id=21474837845. (Your NADA login will be required.) Dealers are also

reminded that NHTSA offers an online resource at www.safercar.gov/vinlookup, which allows anyone to search safety recalls by model year, make, model and VIN. Search results will show whether a vehicle is covered by an incomplete recall(s), whether a remedy is available and/or whether there are no incomplete recalls.

NADA and Others Sue DOL over OT Rules In mid-September twenty-one states and a coalition of more than fifty business groups filed separate lawsuits seeking to overturn the U.S. Department of Labor’s (DOL) “white collar” overtime rule, designed to qualify millions more Americans for overtime pay starting in December. NADA was among the associations filing a federal court challenge to the rule. Relying on the Encino Motorcars v. Navarro Supreme Court opinion issued earlier this year, the complaints argue that DOL exceeded its statutory authority and violated the Administrative Procedures Act when it issued the rule last May. For more information about the lawsuit, please contact NADA regulatory affairs at regulatoryaffairs@nada.org.

Autonomous Vehicles While we attended the Washington Conference, the White House announced a new Federal Automated Vehicle Policy designed to encourage the safe and responsible deployment of automated vehicles. (The fact sheet is available at: http:// newsmanager.commpartners.com/nadah2/ downloads/WH_OverviewAutomatedVehicles_092016.pdf.) Among other things, the new policy focuses heavily on the value of promoting national uniformity at the state level, the need to ensure the safety of autonomous systems, and the importance of cybersecurity and privacy issues. NADA has generally supported efforts in these areas and will continue to monitor implementation of the policy along with related efforts being considered by the American Association of Motor Vehicle Administrators (AAMVA)

and others. Questions about the Federal Automated Vehicle Policy can be directed to regulatoryaffairs@nada.org. Back home, State Rep. William Straus (D-Mattapoisett), the House Chairman of the Joint Committee on Transportation, stated this week that he would like to get an autonomous vehicle law passed in the Legislature’s next session. Check out Peter Brennan’s Troubleshooting column on page 11 on this subject matter.

NADA President Testifies Before Congress on Fuel-Economy Standards On September 22 NADA President Peter Welch urged lawmakers and regulators to keep the issue of affordability at the forefront of the debate over increasing fuel-economy standards for new cars and trucks. At the House Energy and Commerce joint subcommittee hearing on the Midterm Review for CAFE standards, Welch was one of several industry leaders who stressed that consumer affordability is the No. 1 factor to determine whether the government’s fuel-economy and greenhouse gas reduction goals will be achievable. Here’s an excerpt of Welch’s oral testimony at the committee hearing: “In America, motor vehicles are not luxury goods. Affordable transportation is critical to personal mobility and freedom; essential to individual economic empowerment; and a key driver of national productivity. Cars and trucks open up employment and housing opportunities that many Americans would not otherwise enjoy. “When it comes to decisions that affect the environment, local dealerships are providing their customers with unparalleled choices. In addition to incredibly efficient internal combustion engine vehicles, franchised dealers currently have on their lots over 75 different models of hybrid, plug-in electric and battery electric vehicles. Toyota dealers now even offer fuel-cell vehicles for sale. Local dealerships consistently educate buyers on the value of these technologies, and on how these vehicles can fit

www.msada.org Massachusetts Auto Dealer SEPTEMBER 2016

The Roundup into their lifestyles. “The No. 1 priority at every new-car dealership is to serve its customers by providing them with the choices they want and at prices they can afford. Every one of our customers deserves to be able to purchase a vehicle that’s right for them. “This means that during the mid-term review, careful thought needs to be given to keeping the cost of new vehicles reasonable and to ensuring that people can still afford to buy the cleaner, greener and safer car or truck they really need or want. Washington should not make personal mobility so expensive that it is no longer available for average Americans. “Consumers finance more than 90% of all new-vehicle purchases. When regulations drive-up the price of vehicles, fewer of our customers will be able to qualify for a car loan. The average price of a new vehicle is currently $34,250, with an average monthly loan payment of $510. This, with historically low interest rates currently averaging 4.2%, but longer and longer loan terms that now average 68 months. Since 2005, the percentage of personal income necessary to purchase a new vehicle has risen from 9.5% to 12.4%. This already puts a new-vehicle purchase beyond the reach of millions of Americans. “That’s why affordability is everything. We need to ensure that people can buy the cars they want or need, and make it possible for average Americans to afford cleaner new cars and trucks. “If moves here in Washington force our customers out of new cars because the technology needed to attain the 2022 - 2025 regulatory targets raise loan payments by $50 or $60 per month, many of our customers will be forced to drive less safe, less efficient and dirtier used cars and the CAFE/GHG regulations will have become counterproductive. “Let me be clear about one thing: America’s new-car dealers are not on opposite sides of this debate. Dealers are in favor national policies to reduce GHG emissions, increase fuel efficiency and promote energy independence. What we are standing up for is affordability and to SEPTEMBER 2016

make sure that our customers – your constituents – are put first. “An approach that enables more of our customers to purchase affordable new cars and trucks will produce a winning scenario for everyone: dealers, manufacturers and the driving public. “If we work together, we have a perfect opportunity during the midterm review to ensure that our customers have access to clean, efficient new vehicles at affordable prices.”

Columbus Day (Monday, Oct. 10) Pay Rules Reminder • A dealership that operates on Columbus Day is required to pay most employees at time and one-half their regular rate so long as work is actually performed on the holiday. • An employer may not require an employee to work on this holiday nor may it punish or penalize an employee for choosing not to work. • If the dealership is going to be open prior to Noon on the day, a local permit is required.

Four Ballot Questions in November Voters in November, in addition to electing a new president and various legislative offices, will be faced with four ballot questions this year, proposing the following laws: • Question 1: Expanded slot-machine gaming • Question 2: Charter schools expansion • Question 3: Regulating conditions for farm animals • Question 4: Legalization, regulation, and taxation of marijuana

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 employ-

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ees are invited to attend on Friday, January 13, our Twentieth Annual Auto Show Charity Gala at the BCEC, from 5 p.m. to 10 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 2 p.m. to 5 p.m., at which we will have several speakers discuss on-going events in our industry.

NADA Louisiana Flood Relief Efforts Last month thousands of dealership employees and their families suffered devastating losses in the recent Louisiana floods. The need for financial assistance is great and will last for many weeks, if not months. The NADA Foundation’s Emergency Relief Fund helps dealership families after natural disasters, and NADA announced several weeks ago that the Foundation would seek to raise $2 million for new-car dealership families displaced by the flooding in Louisiana. Initial estimates indicate that more than 1,500 dealership families from new car dealerships in Baton Rouge and surrounding areas have been flooded out of their homes and desperately need financial assistance. Because of the severity of the flooding and lack of insurance (affected areas were not in flood zones), the vast number of relief applicants will qualify for a $1,500 check from the Foundation. To fill the expected gap between what’s needed and what’s on hand (about $325,000 is currently available), NADA President Peter Welch initiated a nationwide fundraising campaign. All relief efforts will run through the NADA Fund. NADA has asked dealers across the country to consider making a taxdeductible donation to the emergency relief fund. You can donate online at www.nada.org/emergencyrelief or send a check, payable to NADCF Emergency Fund, to NADCF, 8400 Westpark Drive, Tysons Corner, VA, 22102. t

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SEPTEMBER 2016

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MSADA

Troubleshooting

Autonomous Vehicle Regulations By Peter Brennan, Esq.

MSADA Staff Attorney The impact of autonomous vehicles on automobile retailing is not certain at this juncture. Due to the enormous potential industry impact, any major policy or technological development requires monitoring. Accordingly, this month’s column may not contain the practical legal guidance that you have come to expect. In September, the Obama administration finally waded into the arena of regulating autonomous vehicles with the release of a hundred-plus page policy guidance titled, “Federal Automated Vehicles Policy”. While the guidelines in the policy fall short of formal regulations, the document does offer some regulatory certainty to automobile manufacturers in an area where technology has, thus far, outpaced the law. As stated in the document’s introduction, the goal of the policy is not to be the final word on autonomous vehicle regulation, but to create a regulatory foundation and framework upon which future regulatory action will occur. The Obama administration, through the Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA), sought input from a variety of sources in drafting the policy, including automobile industry leaders and state government officials. While the primary focus of the policy is highly automated vehicles (HAVs), or those vehicles that can complete all driving related tasks with no human assistance, vehicles with lower levels of automation, including

those currently on the road, are also covered by portions of the policy. The first section of the policy deals with vehicle performance standards for autonomous vehicles and includes a 15-point assessment that manufacturers are asked to perform and document to NHSTA on a voluntary basis, although the voluntariness of this assessment and documentation may be subject to future change. The assessment is comprehensive and covers everything from the science behind the technology to the ethical concerns raised by philosophical questions where the vehicle will have to determine a course of action when there are no good options (example: crash into a pedestrian or swerve into oncoming traffic?). In what is certain to provoke controversy, the performance standard section of the policy calls for manufacturers to record all crash data and to share it with both the government as well as other automakers. “Crash” here would be defined as any crash involving fatalities, injuries, or damage to the vehicle to the extent that it could not be driven under its own power in a customary manner on a public roadway without hazard and would require towing. This portion of the policy will not go into effect until after the public comment period has expired, and it is a certainty that many interested parties will weigh in. The document also contains a model state policy intended to prevent a hodgepodge of inconsistent state laws governing the testing, development, and use of HAVs. More accurately, the document recommends that states stay out of HAV regulation altogether and let the federal government handle it, but provides a template, as well as tips on law enforcement and insurance, should any state desire to pass a law. States are encouraged to stay within their legal authority and limit any action on HAV’s to the licensing of drivers (if any), inspection of HAVs (not to exceed federal standards), registration and titling of vehicles, and requirements www.msada.org

to obtain permission to test HAVs in certain state jurisdictions. Finally, the policy concludes with a review of NHTSA’s current regulatory tools and a pitch to expand its regulatory reach through the use of new tools and authorities. As you may know, automobile manufacturers do not need prior approval from any regulatory agency before bringing a new product to market. Instead, automakers self-certify that all vehicles sold for use on public roadways comply with all applicable Federal Motor Vehicle Safety Standards (FMVSS). Only after a vehicle reaches the stream of commerce are manufacturers and suppliers subject to NHSTA’s recall and enforcement authority. Under the proposed regulatory expansion, HAVs and related system components could be subjected to NHTSA review and approval before the vehicles are offered for sale. Additional regulatory powers sought by NHTSA include the authority to issue “cease and desist” orders to manufacturers for safety risks seen as “imminent hazards”, and the post-sale regulation of software updates and changes. This granting of new regulatory authority would require an act of Congress and is expected to be another point of serious contention going forward. NHTSA is now seeking public comment on the policy and intends to issue an updated policy within one year. The agency will hold public workshops and panels as part of the review process while it works to develop systems to implement the policy and considers regulatory changes. Those wishing to provide public comment can do so through November 21, 2016, at www.nhtsa.gov/AV. 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 SEPTEMBER 2016

AUTO OUTLOOK

SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

MSADA

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Massachusetts Auto Dealer SEPTEMBER 2016

Legal

By Joseph W. Ambash and Jeffrey A. Fritz

MSADA

Failing to Take Action on Harassment Can Cost Your Dealership Money Back in May 2014 we wrote about the importance of thorough and well-documented investigations into employees’ claims of harassment in reducing risk. An appeal the Massachusetts Supreme Judicial Court recently decided involving a Massachusetts dealership reinforces this point and illustrates a theme we raise repeatedly in this column: Training your managers to act appropriately—in particular, when they become aware of alleged or suspected harassment—is key, and failure to train your managers can be costly. The facts of the case, at least as a jury found them, boil down to the following: A female finance manager worked for a Massachusetts dealership from 2003 until January 4, 2012, when her employment was terminated because of the deterioration of her relationship with her coworkers. During her termination meeting, the finance manager reported to the general manager and general sales manager that, throughout her tenure with the dealership, the finance director had been sexually harassing her. The finance manager also reported the finance director’s conduct to the human resources manager later that day. While this was the first time the finance manager had reported the finance director’s conduct to those individuals, the jury ultimately credited her claim that, on multiple prior occasions over the previous eighteen months, she had reported the finance director’s conduct to an assistant general sales manager, who also was the finance director’s supervisor, but nothing was done in response to, or a result of, her reports. In any event, after the finance manager’s employment was terminated, the dealership conducted an investigation, which did not corroborate her claims, and the finance director was not disciplined. About a year later, the finance manager sued the dealership, claiming, among other things, hostile work environment sexual SEPTEMBER 2016

harassment, in violation of Chapter 151B of the Massachusetts General Laws. In December 2014, a jury rendered a verdict on that claim in the finance manager’s favor, and awarded $40,000 in emotional distress damages and $500,000 in punitive damages. The issue of whether an award of punitive damages was appropriate under the circumstances (i.e., whether the dealership should be punished for the sexual harassment of its finance director, or for some other reason) was appealed and, on August 24, 2016, the Massachusetts Supreme Judicial Court issued its decision. It held, in essence, separate and apart from the finance director’s conduct, the dealership could be punished because, as the jury concluded, it “failed to take adequate remedial measures after being put on notice of a sexually hostile or offensive work environment, and that that failure was outrageous or egregious.” In that case, the court concluded that the jury could punish the dealership (1) for the assistant general sales manager’s failure to act on, or report, the conduct the finance manager attributed to the finance director, and/or (2) for conducting a deficient investigation into the same. The case was then sent back down to the trial court to determine whether the amount of punitive damages the jury awarded was appropriate. The takeaways from this case for your dealership are clear. First, you need to ensure your managers are trained to (1) recognize conduct that could be construed as sexual (or other) harassment, and (2) promptly report it to the appropriate person(s) in your dealership to conduct an investigation. One way to stress the importance of doing so is to remind your managers that they may be held personally liable for aiding and abetting sexual harassment, or for retaliation, under Chapter 151B. We have made available free-of-charge to MSADA members, our “MSADA Employment Law Compliance Guide for Managers,” which can be

Massachusetts Auto Dealer www.msada.org

accessed on the MSADA’s website, www. msada.org. The Guide is a great resource for managers, which should be reviewed periodically to keep such concepts fresh in their minds, and a great risk reducer for your dealership. Second, you need to ensure that any allegation of sexual harassment is promptly and appropriately investigated by an individual properly trained to conduct such investigations; any remedial measures (such as disciplining anyone who has engaged in harassing conduct) taken are commensurate with the conduct in which he or she engaged, and reasonably calculated to stamp out such misconduct. Indeed, a prompt, appropriate, and well-documented investigation, coupled with adequate remedial measures, in certain instances, can act as a complete defense to a harassment claim. Harassment, of course, is not limited to sexual harassment. Harassment can be based on one’s race, religion, age, sexual orientation, or any other protected status. Your managers need to know that part of their job is to keep their eyes open for such misconduct, and promptly report and elevate it to the appropriate person(s) when and if they become aware of it. Otherwise, your dealership may pay the price. t

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

Accounting

MSADA

Business Planning: Act Now or ? By Mark V. Dow Mark V. Dow, CPA, MST, is a Principal at O’Connor & Drew, P.C. He can be reached at (617) 471-1120.

Long-term business and estate planning takes a certain amount of effort and inertia. It is often seen as having merit but best dealt with “tomorrow.” Those who push through the process and construct a plan always feel better on the other side. In nearly all cases, key changes come from a “real” effort to review the current business lifecycle and the plan in place, if there is one. Most plans are designed to provide order in the passing of business and real estate interests to the next generation, as well as to minimize the impact of estate taxes. Common issues such as how to hold title to assets, proper ownership of life insurance, asset beneficiary designations, and shareholder buy-sell agreements are often lacking, outdated, or in need of restructuring. There are often philosophical and entitlement issues that need to be addressed as well.

The Numbers The first place to start is the numbers. If they don’t work, then neither will the plan. The financial end of planning should begin with measuring the projected cash flow before and after planning takes place. This starts with an analysis of the businesses cash flow and the personal cash flow of the owners. The succession plan has a chance to work when everyone’s cash flow under the new plan is roughly equal to their current cash flow. Should the business perform better

in the future, then those benefits will go to the next generation and stay out of the first generation’s estate. A good plan also looks at the overall intangible impact on the business. The plan should address how the company will be managed going forward and consideration given to an advisory board to review operating results and provide advice on key decisions. Translation: Always protect the golden goose. The continued strong performance of the dealership is the highest priority!

Proposed Changes There is a significant development that needs careful review. This recent activity from the IRS should cause many to accelerate their pace. The IRS has recently

for many years. If you were contemplating the transfer of business interests and assumed that common discounts would be available, this is fair warning that the door could be closing.

The Five P’s and the Miami Dolphins Even without the ability to discount the value of certain transfers, proper planning still makes sense. As the saying goes, Proper Planning Prevents Poor Performance. Several years back, it was reported that the Miami Dolphins had to be sold to pay estate taxes. Whether assets are moved at a discounted rate or not, the transfer of assets will freeze the value of your current holdings and ensure that future income and asset appreciation will not inure to your estate. Reviewing your plan also will provide the benefits of being sure other business and estate planning documents are updated and in place. A review also provides a chance to simplify certain holdings and financial accounts and be sure that your affairs are in order for the benefit of your heirs. A review of trustees and your executor(s) should also be covered.

Call to Action

proposed regulations that would significantly reduce the ability to transfer closely held business interests at discounted values. Proposed regulations under Code Section 2704 are set for a public hearing on December 1. While new rules won’t go into effect that day, they could go in as early as the first quarter of 2017. The general thinking is that these new proposed rules have a decent shot of going through, as the IRS has been reviewing these regulations and looking at minimizing discounting of family transfers

Over the years, the firm has had many dealer clients who are proud that the legacy of their business has been preserved and that they made certain “smart” moves several years back. They have peace of mind knowing they have done all they can to preserve a lifetime of hard work, risk, and sacrifice. Most of them are just like the rest of us -- prone to procrastination. Something finally set them in motion. Maybe it was what happened to a friend’s business, or their inner conscience, or simply an article they read, that finally got them to act. t

www.msada.org Massachusetts Auto Dealer SEPTEMBER 2016

Cover Story

Clearing the Air The Takata airbag recalls are the most complex in the history of auto sales — here’s what dealers need to know. By Tom Nash

Nearly two years after U.S. Air Force Lt. Stephanie Erdman testified before a Congressional committee alongside an enlarged photo of herself bleeding from her eye, Erdman’s tale of being injured by a Takata-made airbag continues to drive what has become the largest automotive recall in U.S. history. Back then, Erdman said that following a 2013 accident in which the airbag sent shrapnel flying, she felt ignored. After approaching both the manufacturer, Honda, and the dealership, she said: “They did nothing.” The fallout from the raised awareness has brought an industry-wide shakeup. The National Highway Traffic Safety Administration has ratcheted up the number of vehicles recalled for their Takata airbags from 29 million to 40 million as of June 2016, with plans for 70 million total by 2019. Some estimates say that’s as many as one in seven vehicles on the road. The agency blames the faulty airbags for 14

SEPTEMBER 2016

deaths and 100 injuries so far, and has used increasingly strong language to describe the risks to drivers. The airbags made by the Japanese supplier are now known to degrade over time to the point that inflation can send pieces of the assembly out into the driver in certain moisture conditions. “With as high as a 50 percent chance of a dangerous air bag inflator rupture in a crash, these vehicles are unsafe and need to be repaired immediately,” U.S. Transportation Secretary Anthony Foxx said in June when adding 20012002 model Hondas to the list. “Folks should not drive these vehicles unless they are going straight to a dealer to have them repaired immediately, free of charge.” Two years after the trickle of recalls targeted in the South became millions and ensnared Massachusetts dealerships, more dealers are finding themselves addressing new angles to the recall each day.

Massachusetts Auto Dealer www.msada.org

MSADA MSADA “It’s a horrifying picture. It shows that even parts counter guys should get hazardous materials training.” Jim Boyle, Tuck’s Trucks MSADA Immediate Past President

er, whose remains could only be identified through dental records. The gruesome incident, Boyle says, serves as evidence of dealers’ responsibilities for the safety of their employees in tandem with the consumer safety push. “It’s a horrifying picture, and it shows that even parts counter guys should get hazardous materials training.” As more dealers become responsible for servicing the recalls, Boyle says it’s never too early or too late to make sure that everyone who comes into contact with parts understands that their safety comes first. “Your parts manager and your parts people are dealing with new stuff, that you never imagined in your wildest dreams. For my guys, it’s all about getting trained.”

More Questions

A Dangerous Reality Like every other Massachusetts dealer, MSADA’s Immediate Past President Jim Boyle is monitoring the Takata recalls carefully, especially as NHTSA considers adding General Motors-designed airbags in trucks that Takata manufactured. “It’s simplifying it, but the way GM designed it, the inflator blows backwards, so if shrapnel were to blow, it would blow away from driver,” he says. “So we’ll see.” Boyle points to a recent incident in Texas, where a truck carrying Takata airbag material exploded and killed one driv-

Another impact of the Takata recall surrounded by uncertainty is what should be done with trade-ins and other used vehicles that either sit on dealership lots already or may work their way into the system. MSADA Staff Attorney Peter Brennan says the Association continues to receive updates from dealers who are being told by manufacturers they can’t sell recalled vehicles, despite Massachusetts laws indemnifying dealers. “What they’re doing is saying, ‘if anything happens, you will be liable,’” Brennan says. “They’re not offering any depreciation or to absorb any of the other costs.” This can be an especially big problem for dealers whose franchise is affected by the recall, as that often means their used-vehicle stock is made up primarily of the same brand. “When it’s that kind of situation, you’re really on the hook.” MSADA Vice President Chris Connolly recently came out on the other side of a struggle with Acura, where it took six months to get replacement parts for 25 used RDXs as the manufacturer addressed recalls on newer models. “There were new cars from ‘12-‘15 getting notices saying ‘Your car could kill you,’ and people were showing up saying, ‘I just bought this car new, give us a rental.’ Acura spent

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Massachusetts Auto Dealer SEPTEMBER 2016

CLEARING THE AIR We’re the ones stuck in the middle. We didn’t choose to put bad parts in it; we didn’t choose an ethically challenged vendor. But we fix the problems and take care of our clients. Chris Connolly, Herb Connolly Auto Group MSADA Vice President

millions in rental cars, and then that became their priority. The dealers sitting on used cars became secondary.” Connolly points to one dealer in Texas who wound up with 300 vehicles that he had to put on a rented lot as an example of why federal regulation may be needed to force manufacturers to address safety recalls equitably. “Years ago, manufacturers didn’t want to have a recall. Now with the GM ignition problem and the Toyota unintended acceleration in the past few years, manufacturers are raising their hand and telling NHTSA when they find anything,” he says. “We’re the ones stuck in the middle. We didn’t choose to put bad parts in it; we didn’t choose an ethically challenged vendor. But we fix the problems and take care of our clients. If we’re not allowed to sell the cars after we buy them, we’re left holding the bag.” “It’s becoming a bigger a problem all the time,” Connolly adds. “Dealers need to be protected going forward, and we need to recognize what are life threatening recalls and what are just open recalls that must be disclosed.” Two states so far have pushed through measures to help

SEPTEMBER 2016

dealers recoup costs involved in getting stuck with a used vehicle with the Takata recall. Any future legislative fix in Massachusetts will not be considered until the next session starting in 2017. MSADA Executive Vice President Robert O’Koniewski adds that the Association is ready to help any dealer who may be looking for guidance or legal resources, especially relating to hazardous materials and any Takata-related trade-in troubles. “Dealers are the front line for helping a manufacturer make good on its promise to keep its customers safe,” he says. “A dealer’s role in servicing these vehicles continues to be a largely thankless task, and in too many cases manufacturers are only making life more difficult for them. “That being said, the Association works tirelessly to make sure our dealer members have the latest, most accurate information possible. Should a dealer have any doubt about where to turn or have any questions about the recall situation, whether it’s fix-related or a used car on their lot, we are here to help.” t

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INSURANCE

MSADA

The Resilience Imperative By Steven Megee Steven

Megee

regional

sa l e s

at the F r am i n g h am R e Office for Zurich North America C o mm e r c i a l ’ s P r o g r ams & D i r e c t M a r k e t s ’ b u s i n e ss u n i t .

ma n a g e r gional

Mitigation and adaptation efforts may not be enough to address the rise of climate risks. That’s the conclusion of “The Global Risks Report 2016,” produced by the World Economic Forum, which addresses the most pressing issues confronting the world and the potential impacts to people, institutions, and economies. “The Global Risks Report 2016” ranks

3. Leverage relevant, trustworthy expertise. Arrange expert networks in advance across multiple sections and disciplines. 4. Create an integrated risk management culture. All parts of an organization, including the supply chain, need to partner with risk management because of the potential cascading consequences of risks.

Building Water Resilience The Global Agenda Council on Risk & Resilience also takes a deep dive into the issue of building resilience to water crises. Recommendations for building water resilience include: • Make decisions based on scientific evidence. Transparency and trust, built on

The national economic losses due to climate change are predicted to cost $1.2 trillion through 2050, according to U.S. Global Change Research Program. the failure of climate change mitigation and adaptation as the most impactful global risk, with water crises ranking third. The report is based on a survey by nearly 750 members of the World Economic Forum’s global community across 140 economies. The report also identifies opportunities to build resilience against these risks and calls for a “resilience imperative.” The Global Agenda Council (GAC) on Risk & Resilience, as part of The Global Risks Report 2016, advocates building resilience at national and global levels: 1. Clarify C-level risk and incident roles and responsibilities. Outline senior level and crisis manager roles, ensure your organization’s environmental risk readiness with training and exercises and be ready to adjust your plans as needed. 2. Develop crisis leadership characteristics of openness, transparency, responsiveness and accountability.

a science and evidence basis for water issues, will provide a neutral platform for collaboration among communities, governments and businesses to manage water sustainably. • Invest in risk understanding. Understanding the effects of water crises in the future will require better ways to understand, model and visualize how and where such crises could occur. • Innovate to create new decision support systems. Improved decision support systems could help to reconcile competitive uses for water at local and regional levels. • Identify effective practices and assess scalability. Governments and communities must develop long-term strategies to account for greater fluctuations of precipitation. • Read the full Resilience Insights recommendations. http://www3.weforum.org/ docs/ GRR/WEF_GAC16_Risk_Resilience_Insights.pdf www.msada.org

Resilience to Extreme Weather events

In the U.S., extreme weather events have been growing in frequency and magnitude. “Extreme weather events are a major consequence of climate change and are becoming more frequent, powerful and erratic,” states a World Economic Forum report. “Certain types of extreme weather events with links to climate change have become more frequent and/or intense, including prolonged periods of heat, heavy downpours and, in some regions, floods and droughts,” reports the National Climate Assessment. The Intergovernmental Panel on Climate Change (IPCC) is a leading internationalbody for the assessment of climate change, including the physical science of climate; impacts, adaptation, and vulnerability; and mitigation of climate change. The IPCC 2014 report suggests that disaster risk management and adaptation to climate change focus on reducing exposure and vulnerability and increasing resilience to the potential adverse impacts of climate extremes. The IPCC suggests implementing lowregret measures for managing changing risks of climate extremes and disasters. Low-regret measures are starting points to address projected exposure, vulnerability and climate extremes; these measures have the potential to offer immediate benefits as well as lay the foundation for anticipated changes. Low-regret measures could include an early-warning system; improved communication between decision-makers and the community; improved health surveillance, water supply, sanitation and irrigation and drainage systems; climateproofing infrastructure; developing and enforcing building codes; and improving education and awareness. t

Massachusetts Auto Dealer SEPTEMBER 2016

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

NEWS the Horn

MSAMSAMSA-

KINGSTON

Marty’s Buick GMC Isuzu Hosts a Car Show to Raise Funds for NADA’s Emergency Relief Fund As soon as Christine Alicandro Karnolt, Dealer Principal of did not have proper insurance to protect their losses. He talks Marty’s Buick GMC Isuzu, learned of NADA’s campaign to about the auto mechanics who not only lost their homes, but provide financial assistance to victims of the flooding in Baton the dealership they work for also suffered damages resulting in Rouge, Louisiana, and its surrounding arlost wages and damage to the techs’ pereas, she shared the article with members of sonally owned tools, some valued up to We all could her management team. “We all could relate to this news relate to this news $60,000. “We all watched the video that was rerelease, because something like this could release because corded by NADA President Peter Welch happen to any one of us,” said Peter Whadescribing the traumatic devastation and something like this len, the Service Director for the store. losses the people incurred, namely the “After much discussion, it was decidcould happen to dealership employees,” remarked Kevin ed that if we hosted a car show, we had any one of us Ihlefeld, General Manager of the dealerthe chance of raising the most amount of ship. “After the two-minute video commoney in the shortest period of time,” pleted, there was an eerie silence in the room as each one of us added Bill Morris, Sales Manager. Brian Mello, Digital Mardigested the suffering these people were experiencing. At that keting Director, reached out to an Exotic Car Club he is aspoint, we knew we wanted to do something on a grand scale.” sociated with, and, within an hour, he received a dozen emails In the video, Peter Welch explains that more than 1,500 dealstating, “I’m in!” ership families were flooded out of their homes and, sadly, most On Sunday, September 18, Marty’s hosted a car show at their

SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

NEWS from Around the Horn

MSADA

dealership location. The show was open to exotic cars, classics, and hotrods, while a DJ provided entertainment and a food coach owned by a Marty’s customer offered the refreshments. Even though Marty’s competed with opening day for the New England Patriots and a rather dismal weather forecast, hundreds attended to support their campaign. Funds were generated from t-shirt sales, raffle ticket sales, and vehicle registration fees. A multitude of vendors from the commu-

nity stepped up to the plate and donated raffle items, including New England Team game tickets. Thus far, the car show brought in $5,000 for the Relief Fund. “I could not be more proud of my team,” said Christine Alicandro Karnolt. “The synergy displayed by so many employees and their families was extraordinary. I repeatedly relay to my team that ‘Exceptional Efforts= Exceptional Results.’ This event was a true testimony of this mantra.” The crew at Marty’s has already discussed hosting an annual charity car show to assist those who are more vulnerable in the community. “‘We serve’ is a Marty’s motto which we intend to expand upon even further,” added Nancy Simmons, Comptroller. “Hosting a car show allows us to remain in our wheelhouse, providing enjoyment for Car Guys and Car Gals while raising money to assist those who need a helping hand.” www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2016

NEWS from Around the Horn CHICOPEE

Mercedes-Benz Dealership Breaks Ground Officials heralded the late September groundbreaking for a new Mercedes dealership at the site of a long vacant hotel as a sign of new prosperity for the Western Massachusetts city.

SEPTEMBER 2016

â&#x20AC;&#x153;Mercedes coming here is recognition that Western Massachusetts matters, and Chicopee is a great place to do business,â&#x20AC;? Mayor Richard Kos said at the ceremony. The Springfield Republican counted nine of the 13 city councilors, two state representatives, the school superintendent and director of career technical education, and more than a dozen other city employees present at the ceremony. The Republican reports the $12 million dealership, owned by New York Mercedes-dealer Peter Wirth, will have to contend with asbestos issues as well as a bowling lane attached to the hotel that will remain open. Mayor Kos helped develop a tax incentive package to make the project more feasible earlier this year, including a 50 percent break on the property value over five years. The dealership, which is expected to bring 30 new jobs, is slated to open by Fall 2017.

Massachusetts Auto Dealer www.msada.org

MSADA BROOKLINE

BRAINTREE

Swedish Car Day Brings out Record Crowd

Mass. Dealerships Join Local Electric Vehicle Initiative

After fitting 267 Swedish vehicles onto the Larz Anderson Museum lawn and 100 latecomers finding parking around the neighborhood, organizers are predicting the 17th annual Swedish Car Day was the largest in the event’s history. The August event, launched by Village Automotive in 2000 and profiled in last month’s issue of Massachusetts Auto Dealer, has become a destination for Swedish car fans from across the country. Among the highlights this year, Volvo executives unveiled a luxury S90, and supercar manufacturer Koenigsegg sent a representative to work the crowd. Additionally, an on-site raffle raised $1,500 for the Dana Farber Cancer Institute.

The Braintree Electric Light Department announced in September a new initiative designed to highlight the benefits and economic incentives of driving electric vehicles (EVs)—and to help Braintree residents get behind the wheel to experience an EV first hand. Participating local dealerships include Quirk Chevrolet and Quirk Volkswagen of Braintree, Quirk Ford and Quirk Nissan of Quincy, and South Shore BMW of Rockland. Braintree Drives Electric Community Outreach Manager Madeleine Barr pitches plug-in EVs as fast, fun, affordable, and efficient. “Charging your EV battery in Braintree is equivalent to approximately $1.30 per gallon of gasoline. Plus EVs offer a fun, convenient drive with smartphone integration and nearly silent operation.” Barr added that a federal tax credit of up to $7,500 and a Massachusetts state rebate of up to $2,500 reduce the cost to lease or buy an EV, making it significantly less than a similarly priced gasoline-powered vehicle. Program participants can receive up to 175 free miles per month from BELD for charging their EV overnight and using an approved home smart charger. Braintree businesses are encouraged to take advantage of other

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Massachusetts Auto Dealer SEPTEMBER 2016

NEWS from Around the Horn incentives to install charging stations, increasing the number of available charging locations throughout town. BELD has hired leading energy services firm Sagewell to design and implement the program, which offers Braintree residents free test drives that start and end at residents’ homes or workplaces. The dealerships have provided pre-negotiated, 36 -month lease deals, some of which have monthly payments below $200 with all upfront costs reimbursed through the state’s rebate program. “Electric vehicles give Braintree residents an additional way to take advantage of BELD’s low electric rates while also taking a significant positive action for the environment,” BELD General Manager Bill Bottiggi said. AUBURN

VW Sales Manager Faces Fraud Charges A sales manager at Patrick Motors is facing 50 counts of various charges following an alleged scheme to withdraw money from the VW TDI settlement program using falsified identities.

SEPTEMBER 2016

MSADA

A report from the Worcester Telegram & Gazette details the attempt by sales manager Matthew Patrick to use fake email addresses, two drivers licenses for the same deceased person, and the same VINs in 350 attempts to obtain the two $500 gift cards offered by the TDI Goodwill program. “The combination of repetitively used IP addresses along with the use of an untraceable ‘Eparts’ e-mail that required no registrant information prompted VW to place a hold on the registered VIN’s and associated benefits packages,” a police official told the paper. “When asked by VW Customer Care for additional supporting documentation in order to unblock the registered package, Patrick provided a program ID card in (the woman’s) name which appeared to have been doctored as well as two different versions of (the woman’s) Massachusetts driver’s license,” they added. “One had a 2014 expiration and a second had a 2019 expiration date. But the police investigation found the woman had died in October 2015 “making it impossible for her to have been at Patrick VW requesting Matthew Patrick’s assistance with anything.” Patrick was due to be arraigned at the Central District Court in Worcester on September 29.

Massachusetts Auto Dealer www.msada.org

MSADA AUTO OUTLOOK

TRUCK CORNER

Continuing Education Leads to Greater Opportunities By Steve Parker

Baltimore Potomac Truck Centers ATD Chairman

leadership training. The key to success is education, regardless of your Plus, testing and reporting allow employees and occupation or stage in life. When school resumed their managers to track training progress. across the country in late August, 18 students workThe complimentary resources include Driven ing at truck dealerships graduated from the American guides, which are highly regarded publications covTruck Dealers (ATD) Academy. ering a variety of topics, from legal and regulatory The ATD Academy and its Plus program include compliance to best practices in parts and service. This six intensive, week-long instructor-led classes at is where you can find the ATD Performance MeaATD headquarters in Tysons Corner, Virginia, over surement Guide and the Dealer Guide to Federal Exthe course of a year. The curriculum includes classes cise Tax Compliance. on financial management, parts, service, pre-owned Our online webinars are also presented by indusvehicles, new vehicles, and business leadership. try-leading experts and focus on solutions. ATD There are also many opportunities for manufacturing members can view past and allied industry exwebinars on-demand ecutives to participate at no charge. Finally, in our Academy. After Thanks to this NADA’s interactive all, the better we comeducational resource, online courses are as municate, the better our close as you can get to relationships will be. 900 more men and hands-on learning and ATD welcomes all incorporate real world dealers and managers women are smarter, simulations. to access our online tougher, and ready Continuing educaeducation and traintion is the key to sucing. Hundreds of online to take our businesses cessfully passing our courses are available, into the future. industry down from one from convention workgeneration to the next. shop recordings, webiSince 1991 when ATD nars, publications, and Academy began, 900 students have graduated from other valuable resources to help improve business the program, including my sons. performance. I can attest to the strength of the curriculum. Not There’s something that can benefit every employee. only did it teach them about this great business, but it Content is regularly updated to meet dealers’ needs inspires them to become the next generation of leadand changing industry conditions. All members can ers while forming lasting professional friendships. access complimentary, online resources that cover all Thanks to this educational resource, 900 more men aspects of the dealership, and they have the option to and women are smarter, tougher, and ready to take upgrade to premium member resources. our businesses into the future. ATD members can gain practical knowledge Education is the key. through interactive exercises that develop skills vital t to daily operations, such as: Parker is chairman of ATD, a division of NADA New-Hire Training: Helps new hires learn the in Tysons Corner, Virginia, which represents 1,800 business and develop core skills to succeed in the heavy- and medium-duty truck dealerships. He is medium- and heavy-duty truck industry; president of Baltimore Potomac Truck Centers in Cross-Training: Develops employees’ skills and Linthicum, Maryland., which operates five fullexplores how their roles support the dealership’s service commercial truck dealership locations overall operation; and with Mack, Volvo, and Hino Trucks franchises in Career Advancement: Builds staff from within Maryland and Virginia. through successful advancement opportunities and www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2016

26 AUGUST 2016

SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

MSADA

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2016

SEPTEMBER 2016

Massachusetts Auto Dealer www.msada.org

NADA Update

By Don Sudbay

Walking the Halls of Power 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). I’m reporting back from Capitol Hill this month, where a team consisting of MSADA Directors Charlie Tufankjian and Chris Connolly, MSADA Executive Vice President Robert O’Koniewski, MSADA Staff Attorney Peter Brennan, lobbyist Jim Hurrell, and me, met with your Congressional representatives from across the Commonwealth. While it’s always thrilling to visit our Nation’s capital, we always have a long agenda that’s fraught with the conflict between government overreach and Main Street businesses. As you’ll see in this month’s cover story about Takata and next month when we focus in on other hot-button issues on Capitol Hill, there’s no shortage of stuff to chat about when we meet with our elected officials. I encourage you to followup and try to talk with your representative as soon as you can, to reinforce what we have tried to get across this month. Questions about what to say? I’m always ready to help.

Dealership Employee Jeramiah Baker Recounts Devastating Flood Damage in Baton Rouge Residents of Baton Rouge, Louisiana, awoke on August 15, 2016, to the worst flooding disaster in the United States since Hurricane Sandy. Jeramiah Baker, a service writer at Robinson Brothers Ford-Lincoln in Baton Rouge, suffered extensive damage to his home and wife’s car. “Our houses were filled with water seven feet deep,” Baker said in an exclusive NADA video interview. “It took me and six to 10 people over the course of a week to get everything out of my house … from the drywall, electrical outlets, windows and doors.” More than 140,000 families were displaced in the flooding, and 1,500 dealership families were forced to evacuate, according to early estimates. “We all lost 20-plus years of our lives ... memories, pictures, and personal items, including my mom and dad’s stuff,” he added. Baker said he plans to use a $1,500 relief check he received last week from the National Automobile Dealers Charitable Foundation to buy beds for his daughters, Auto-

motive News reported. To apply for assistance or to contribute to the fund, visit www.nada.org/emergencyrelief or call (703) 821-7233. Personal or corporate checks can be made payable to NADCF Emergency Fund, c/o NADCF, 8400 Westpark Drive, MS 7, Tysons, VA 22102. (Donations to the NADA Foundation are generally tax-deductible; contributors should consult their tax advisors for details.)

Mercedes, VW, and Hyundai CEOs Slated for NADA/J.D. Power Conference in LA The focus of the global automotive industry and news media will shift to Los Angeles when the National Automobile Dealers Association and J.D. Power kick off week-long auto show events beginning with AutoConference LA on Tuesday, November 15. The half-day conference, held at The L.A. Hotel Downtown, includes industry speakers and panelists Dietmar Exler, president and CEO of Mercedes-Benz USA; Hinrich Woebcken, CEO of Volkswagen’s North American operations; and David Zuchowski, president and CEO of Hyundai Motor America, and others. A new NADA study, which will be presented by auto industry consultant Glenn Mercer, will provide a perspective on what new-car dealerships might look like in 2025. It examines the potential rise of build-to-order cars, which could reduce on-site dealership inventories; the potential for mass adoption of autonomous vehicles, which could require new skills and equipment in dealer repair/service bays; and the new-car buying process, which continues to evolve to better align with consumer needs. Held on the eve of press days at the Los Angeles auto show, Auto Conference LA opens with registration at 11 a.m. and concludes with a networking reception from 5 p.m. to 7 p.m. For the complete agenda or to register, visit www.autoconferencela.com.

New Video: NADA Testifies at Congressional Hearing on Fuel Economy Rules NADA President Peter Welch urged lawmakers and regulators on September 22 to keep the issue of vehicle affordability for consumers at the forefront of the debate on increasing fuel-economy standards for new cars and trucks. “The No. 1 priority at every new-car dealership is to serve its customers by providing them with the choices they want and at prices they can afford,” Welch said at the House Energy and Commerce joint subcommittee hearing on the midterm evaluation process for Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) regulations. “Every

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Massachusetts Auto Dealer SEPTEMBER 2016

MSADA

NADA Update one of our customers deserves to be able to purchase a vehicle that’s right for them.” Welch was one of several industry leaders who testified at the subcommittees’ hearing, which examined the impact of CAFE and GHG reduction goals, set the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration, on new car costs and safety. “During the midterm review, careful thought needs to be

The No. 1 priority at every new-car dealership is to serve its customers by providing them with the choices they want and at prices they can afford.” –Peter Welch, NADA President

given to keeping the cost of vehicles reasonable and to ensuring that people can still afford to buy a cleaner, greener and safer car or truck they really need or want,” Welch added. “Washington should not make personal mobility so expensive that it is no longer available to the average American.”

NADA Hires Abram Olmstead to Lead Digital Advocacy NADA announced in September that it has hired Abram Olmstead, a veteran digital strategist, as the association’s digital media director. In this role, Olmstead will oversee NADA’s communications efforts across all digital platforms, and lead the development of the association’s strategy for using online platforms to communicate with and market to both internal and external audiences. Olmstead will report to NADA’s senior director of media and public relations, Jared Allen, who joined NADA’s Public Affairs team in February 2015. Olmstead comes to NADA from the U.S. Chamber of Commerce, where he was the senior manager of digital strategic communications. Olmstead led the chamber’s social media and digital marketing efforts, managed the day-to-day messaging, crafted and implemented long-term strategies, and expanded the reach and sophistication of the chamber’s digital media presence. Olmstead previously interned at the White House’s National Economic Council, as well as the U.S. Department of Labor’s Bureau of International Labor Affairs. “In order to be successful advocates for our dealer members, NADA has to be able to engage and influence the conversation wherever it is occurring,” said NADA President Peter Welch. “Having an experienced communicator like Abram lead our strategy for engaging across the entire digiSEPTEMBER 2016

tal and social media landscape will do wonders for NADA’s ability to remind consumers, regulators, and other critical influencers of the numerous benefits that franchised new-car dealers provide their customers.” Olmstead’s hire is the most recent in a series by NADA’s Public Affairs department, which Welch has significantly bolstered since Jonathan Collegio took over as senior vice president in 2014. In addition to adding Allen to run media relations, NADA has also added award-winning digital and video content capability in-house. “Dealers are vitally important to their communities, their local economies, and to the economic well-being of the nation as a whole, so their voice in Washington, D.C., needs to be heard - and heard effectively,” said Collegio. “Abram’s hire as digital media director is one of the final pieces of the puzzle that, when complete, will allow NADA to provide its members with an unrivaled ability to communicate on their behalf.”

NADA President Peter Welch: Competition Among Car Dealers Benefits Car Buyers [This letter originally appeared in The Washington Post on September 13.] By Peter Welch In attempting to report on the state of automotive retail in the U.S. (“The battle between Tesla and your neighborhood car dealership,” Sept. 9, 2016), The Post regurgitated a number of worn-out theories about what drives consumer preferences, but ignored the one fact that actually tells the story accurately – simply put, Americans like being able to save money on new-car purchases by letting multiple, independent dealers compete for their business. Lazy narratives and old stereotypes aside, the fact is that most credible, quantitative surveys – including ones from J.D. Power, and Car and Driver – of actual dealership customers find a very high level of consumer satisfaction with the dealership experience. And for good reason: The American franchise system for auto retailing promotes intense competition among dealers, and the primary winners are consumers. In fact, the real story about direct sales isn’t about profitability or even product; it’s about the attempt to be exempted from determinations – made by all 50 state legislatures, conservative and liberal alike – that consumers deserve to benefit from having multiple same-brand dealers compete fiercely for their business. Thankfully for consumers, their local elected officials continue to believe that preserving this intra-brand competition is important. If The Post or anyone else wishes to debate the merits of a system that saves consumers about $500 on the average new-car purchase, we only suggest the debate is grounded in fact, not fiction. t

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Massachusetts Auto Dealer JUNE 2015