May 2017 Massachusetts Auto Dealer Magazine by Massachusetts State Automobile Dealers Association, Inc

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

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May 2017 • Vol. 29 No. 5

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

2017

MSADA ANNUAL MEETING

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

auto D

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: jbernal@msada.org. Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Ad Directory Blum Shapiro 22 Boston Herald 32 Channel Building Company 24 Ethos Group 11 Lynnway Auto Auction 21 Nancy Phillips 22 O’Connor & Drew, P.C. 31 Southern Auto Auction 23 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400

Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600

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

Ta b l e o f C o n t e n t s

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From the President: Strengthening Our Annual Tradition THE ROUNDUP: Dealers Convene for 77th Annual Meeting and Dealer Day on Beacon Hill legislative scorecard TROUBLESHOOTNG: The Vehicle Advertising Minefield LEGAL: Massachusetts Likely to Expand Protections for Pregnant Employees

12 Sound Off: The Dealer Owned Warranty Company 13 ACCOUNTING: Social Engineering 14 AUTO OUTLOOK 16 Cover Story: 2017 Annual Meeting

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NEWS From Around the Horn marketing services: Get Engaged with Online and Sell More Cars nada Market Beat TRUCK CORNER: Step Up Your Spring Training with ATD nada update: Working Toward Fairness

Join us on Twitter at @MassAutoDealers www.msada.org

Massachusetts Auto Dealer MAY 2017

From the President

MSADA

Strengthening our Annual Tradition

Building relationships is important in our industry — MSADA is here to help

By Chris Connolly, MSADA President First, I would like to thank those of you who took the time out of your busy schedules to attend this year’s MSADA Annual Meeting and our Dealer Day on Beacon Hill. From the feedback I’ve heard from both events, many of you enjoyed a thought-provoking and engaging program with your fellow dealers with the support of our associate members, as well. Running dealerships is more than just one full-time job -- which is of course why most of us need 50 people to make such an operation work every day. Those moments when we are all in the same room are too few. It is a crucial reminder that, while we compete with each other day in and day out, we need to present a united front. It seems every year, when we get together for our Annual Meeting, there is some sort of industry-changing issue afoot. Protecting our industry is never-ending work, and “Protecting our it rests mostly on visibility and communication. Our industry is never- Annual Meeting, aside from being a time for camaraending work, and derie, is a time to invite lawmakers and regulatory ofit rests mostly ficials into our world to help them understand our issues. They get to see first-hand how many of us there on visibility and are, how much of the Commonwealth’s economy we communication.” represent, and how we are vital players in any local community. These are the moments legislators remember when we knock on their office doors, and they can make all the difference when our opposition has limitless money to throw against us. Our importance can certainly be measured in the esteemed company who came this year, ranging from RMV Registrar Erin Deveney to Governor Charlie Baker. We thank them for taking the time to meet with us. I would encourage any of you who have follow up questions for Ms. Deveney or the Governor to reach out to them. I hope their presence helped reassure you that, even as some continue to campaign against our franchise model and way of life, we do have allies in high places. The event provided valuable insight from several industry gurus as well, including Automotive News publisher Jason Stein on the economic environment we currently find ourselves in. As always, we are looking to hear your feedback on our guest speakers and hear any ideas you may have for next year. As we move into a well-deserved Summer, I ask that you continue to stay up to date on what your Association is up to. We need you to continue to be ready with emails, phone calls, and other grassroots messaging as we continue to push our industry’s future forward. If we team up on issues our industry faces as readily and ably as we compete with each other in the marketplace, our prospects remain strong. t

MAY 2017

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 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 Scott Dube, Bill Dube Hyundai

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell

Associate Members

MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 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 BMO Harris Bank Chris Peck (508) 314-1283 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 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Glenn Anderson (919) 247-6658 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Jane Webb (800) 304-3341 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Greg Gomer (617) 967-0303

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 Gatehouse Auto Jay Pelland (508) 626-4334 Gulf State Financial Services Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (857) 404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 Independent Power Systems Mariana Seabra/Ryan Ferrero (978) 998-4079 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

www.msada.org

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 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 Claude Peyrot (603) 430-7254 SunPower Christie McCarthy, (408) 457-2357 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance Marc Gerhart (781) 697-1525 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Stephen Janetz (215) 986-8498 Zurich American Insurance Company Steven Megee (774) 210-0092

Massachusetts Auto Dealer MAY 2017

The Roundup

Dealers Convene for 77th Annual Meeting and Dealer Day on Beacon By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers On Friday, May 5, your Association convened its 77th Annual Meeting of the Members at the Mandarin Oriental Hotel in Boston. We had a successful turnout of members, and attendees heard from a diverse group of speakers, including new MSADA President Chris Connolly; Massachusetts NADA Director Don Sudbay; Massachusetts Governor Charlie Baker; RMV Registrar Erin Deveney; Jason Stein, publisher and editor of Automotive News; Sharon Kitzman of Dealertrack DMS/Cox Automotive, whose presentation was entitled, “Stronger Dealerships through Change, Not Chance”; and Glenn Anderson of Dealer Creative, whose presentation was entitled, “Engaging Customers at Five Key Stages of the Online Buying Cycle.” Peter Brennan and I gave a government affairs report to update members on legislative events to date. We owe a huge “thank you” to our sponsors for the day, without whose assistance we could not put on such fine events: • ACV Auctions – Silver Sponsor • Auto/Mate Dealership Systems – Bronze Sponsor • Blum Shapiro – Bronze Sponsor • Burns & Levinson – Bronze Sponsor • Cox Automotive – Lunch Sponsor AND Silver Sponsor • Downey & Company – Break Station Sponsor • Easy Care New England – Friend of the Association Sponsor • GW Marketing Services – Friend of the Association Sponsor • Leader Auto Resources – Silver Sponsor • Murtha Cullina – Cocktail Reception Sponsor • Northeast Dealer Services – Bronze Sponsor • O’Connor & Drew – Silver Sponsor MAY 2017

Massachusetts Auto Dealer www.msada.org

• TrueCar – Gold Sponsor AND Welcome Gift Sponsor • Zurich – Bronze Sponsor You can read the details of our meeting as part of this month’s cover story.

Dealers Visit Beacon Hill Almost every dealer has some sort of relationship with his or her legislators at the local level, whose roots can be found in the interaction of our businessmen and women and politicians in any number of different settings. Until five years ago, however, dealers had never collectively come together to communicate directly with legislators at their place of business, the State House. On May 24, your Association held its fifth annual “Dealer Day on Beacon Hill” event designed to bring our member dealers right into the political arena where the legislative decisions are made affecting your businesses. Dealers and their key employees convened in the morning at the Parker House Hotel, just down the street from the State House. We provided attendees an issues briefing on our legislative priorities as the current two-year session is getting underway (and on which I have written previously): • 93B franchise law amendments; • licensure of inspection stations for franchised dealers; • reform of the used vehicle record book; • increasing the insurance reimbursed labor rates for auto body repairers; • temp tags; • diminished value; • preserving customer choice in service contracts; • class 1 license appeals; and

MSADA • expand and improve career technical education and training programs. More importantly, we reminded our dealers that it is important to tell your own stories regarding your role in the community, including your economic impact, the employees you manage, and the taxes they, your customers, and you pay. Legislators know dealers and dealerships exist; they just do not know the long and deep reach of your businesses’ tentacles into the state and local economy and throughout the community, especially through your charitable and other service-related activities. All our dealers were well received, and the dealers’ presence throughout the building created quite a buzz. In order to build on the successes of our “Dealer Day” events, it is vital that we continue to grow our attendance and participation amongst our members for our events. It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. No one knows your business better than you. That knowledge needs to be conveyed to your legislators in an environment and manner they understand. As a result of our dealers’ input, this event was a success upon which we can build for the future.

Berkshire Dealers Meet with Sen. Hinds In addition to our State House meetings and events, throughout the year we conduct meetings across the state with legislators and dealers at which we provide an update on various legislative and legal issues your Association is addressing, as well as receive input from our member dealers on issues of interest. The meetings serve as great opportunities to encourage active dialogue between the elected officials and local dealers. On May 19 we convened a meeting in Pittsfield of our Berkshire County dealers, led by our MSADA director Brian Bedard, and newly elected state Senator Adam Hinds (D-Pittsfield). This was the first meeting of our dealers collectively with the senator this year, and we had a robust exchange of ideas in our discussion of the

state of the auto industry and the Berkshire economy, especially in regards to education and job opportunities for auto techs. If you have an interest in hosting a legislator at your store for a visit, please feel free to contact me at (617) 451-1051 or by email at rokoniewski@msada.org.

Senate Budget Debate and Auto Tech Training Programs Last month we reported on the Massachusetts House of Representatives’ actions regarding funding for auto tech training programs during its debate of its $40 billion FY2018 budget proposal. As you may recall, there were two items for which we were seeking funding: the statewide auto tech training and recruitment program within the Department of Higher Education tied into high schools, community colleges, and potential employers, which was created in last year’s economic development law; and the auto tech training program administered by the state Department of Correction, which identifies certain qualifying inmates for training and placement as auto techs at repair facilities, including franchised dealerships, upon the trainee’s release from the state’s hospitality. The House ultimately provided $75,000 in seed money to the Higher Ed program and $125,000 for the DOC program. This month as we were going to press, the Senate was completing its own FY18 budget deliberations. As a result of actions in the Senate, led by Sen. Mike Rush (DWest Roxbury), who represents the Auto Mile in Norwood, the Senate approved an amendment that included language in its budget earmarking $75,000 in the Higher Ed line-item for the auto tech program. As for the DOC program, although the Senate did boost the necessary line-item by $125,000 over the House amount, the Senate did not ultimately include language the House has in the item specifically earmarking the monies for the auto tech program. Now that each chamber has created their own FY18 budget plans, a six-member conference committee, consisting of three House members and three Senators, will www.msada.org

be appointed to resolve the difference between the two. The Legislature will need to produce a final plan to be sent to the governor in time for his review and possible line-item vetoes before the start of the new fiscal year on July 1.

DealerPro Workshop – June 15, Natick – “6 Simple Changes for Record Profits in Fixed Ops” Do You Want to Improve Your Fixed Ops Profitability? Every Month Do You Feel Like You’re Leaving Money on the Table in Your Service Department?

Special MSADA-Subsidized Price - $150/person One of the top dealership needs dealers report to us is improvements to fixed ops profitability. To address this need, your Association is offering you the opportunity to attend a one-day Fixed Ops Profit Builders Workshop – “6 Simple Changes for Record Profits in Fixed Ops” – presented by Don Reed, CEO of DealerPro Training. Don is well respected in the industry and has presented to other state dealer associations and at NADA conventions. If you have not seen Don speak, then you are in for a treat. (See our ad on page 2.) This event will be held on Thursday, June 15, 2017, 8:30 a.m. – 4:30 p.m., at the Verve Hotel, 1360 Worcester Street (Route 9), Natick. We are offering this one-day profit building seminar at the MSADA-subsidized price of $150/person. The registration fee covers lunch, workbook, and profit potential calculator. Plus, for each dealer principal who registers and attends, you can bring one key manager at no charge. To register, use the registration form that has been sent to you via e-mail and snail mail. You can pay by credit card or check. Do not pass up this wonderful opportunity, sponsored by your MSADA, to grow your dealership profitability. Should you require any additional information, please do not hesitate to contact me at rokoniewski@msada.org. t Massachusetts Auto Dealer MAY 2017

MAY 2017

Massachusetts Auto Dealer www.msada.org

Troubleshooting

MSADA

The Vehicle Advertising Minefield By Peter Brennan, Esq.

MSADA Staff Attorney Most new car dealers and folks in the industry were excited to see President Trump pull off his historic upset victory at the polls in November. After the overregulation of the Obama era, dealers correctly assumed that a Trump administration would dedicate fewer resources to regulating their industry. The Consumer Financial Protection Bureau (CFPB), a major thorn in the industry’s side for the past several years, was certainly going to be declawed under the new administration, and the Federal Trade Commission (FTC) would hopefully follow suit. So far, dealers should be cautiously optimistic about the regulatory relief that they envisioned. The CFPB faces real danger in the Republican-controlled Congress now that Obama is not around to save the agency with his veto pen. Meanwhile, President Trump will have the ability to reshape the FTC through his appointment of three new commissioners and has already taken aim at the agency’s budget. While it may seem counter-intuitive, the uncertainty at the CFPB and FTC may actually result in more regulation in one key area: dealer advertising. If regulators are squeezed by staff cuts, decreased funding, and an uncertain legislative agenda, they will be more inclined to go after the low-hanging fruit instead of pursuing far-reaching investigations based on questionable legal theories like we have seen over the past few years. For regulators, checking out dealer advertising in

the weekend paper or looking at advertisements online is like targeting the fat kid in dodgeball. How confident would you be if you knew that a state or federal regulator was looking at your advertisements right now? Recently, Sage Auto Group, a collection of nine Los Angeles area auto dealerships, agreed to pay $3.6 million to settle charges brought by the FTC. The charges weren’t limited to advertising. The FTC also charged that Sage’s “yo-yo” financing and payment packing practices were illegal, but you can bet that the advertisements were the easiest part of the case to make and probably the “foot in the door” that the FTC needed. In its complaint, the FTC alleged that Sage enticed consumers, particularly financially distressed and non-English speaking consumers, into the dealerships with advertisements in all mediums that made an assortment of misleading claims. Some ads claimed that vehicles were generally available for the advertised terms and that consumers could purchase vehicles for low prices, finance with low monthly payments, or make low down payments; claims that the FTC determined were misleading. Other ads claimed that consumers could finance the purchase of vehicles, when in fact they were lease offers. Sage also said it would pay off the consumers’ trade-in vehicles when the consumer was actually responsible for paying off any amount owed on their trade-in. A frightening aspect of the Sage case is that three corporate directors were charged individually for their roles, with two agreeing to the settlement. So how can a law-abiding dealer make sure that his advertisements comply with the myriad of state and federal advertising regulations? When reviewing your advertising, remember that any deceptive advertisement is going to be illegal under state and federal statutes. Generally, an advertisement www.msada.org

is deceptive if it makes false, misleading, or unsubstantiated claims, or if it omits information necessary to prevent the advertisement from being deceptive. To determine whether an advertisement is deceptive, you must consider the advertisement from the consumer’s perspective and weigh the overall impression that the advertisement would give to a consumer. A collection of true statements can still be deceptive if the overall net impression is deceptive. For example, the defendants in Sage advertised a small or zero down payment due at lease signing when, in fact, the consumer had to come up with a large additional sum, not characterized as a “down payment”, at lease signing. The Sage defendants thought that they were technically correct and not deceptive in classifying the other sums due at signing as something other than a “down payment”. The FTC disagreed. An area where many dealer advertisements do not hold up under regulatory scrutiny is in the use of disclaimers. Generally, a disclosure must be clear and conspicuous to a reasonable consumer and cannot be used to contradict a false claim. Different advertising mediums will naturally have different requirements for disclosures, so make sure to review the disclosure requirements specific to your advertising medium in both state and federal statutes. The first step in any advertising campaign should be a careful review of the Massachusetts Motor Vehicle Advertising regulations at 940 CMR 5.00 and NADA’s Dealer Guide to Federal Advertising Requirements (available to members on the NADA website). You should also consult your legal counsel prior to publishing any new advertisement. 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 Massachusetts Auto Dealer MAY 2017

Legal

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

Massachusetts Likely to Expand Protections for Pregnant Employees The role of women in the workplace is a hot topic in employment law and has been for some time. Equal pay laws have been on the books since the 1960s, and pay equity laws are popping up all over the country, including here in Massachusetts (as we reported in our August 2016 column). While Massachusetts recently expanded its parental leave laws to apply equally to men (as we reported in our January 2015 column), it is poised to expand legal protections for pregnant employees and impose additional obligations on their employers. On May 10, the Massachusetts House unanimously passed “An Act Establishing the Massachusetts Pregnant Workers Fairness Act.” Assuming it is enacted, which we expect it will be, the Act would make it illegal to refuse to hire or employ, to terminate, or to discriminate against an individual in compensation or in the terms, conditions, or privileges of employment based on pregnancy, or a condition related to pregnancy, including, but not limited to, lactation or the need to express breast milk for nursing a child. Moreover, it would make it illegal for an employer to deny a “reasonable accommodation” for an employee’s pregnancy or related condition if the employee requests it, unless the employer can show it would impose an “undue hardship” on its business. On this point, the law specifically provides that a reasonable accommodation may include: (1) more frequent or longer paid or unpaid breaks, (2) time off to recover from childbirth with or without pay, (3) the acquisition or modification of equipment or seating, (4) the temporary transfer to a less strenuous or hazardous position, (5) job restructuring, (6) light duty, (7) a private, non-bathroom space for expressing breast milk, (8) assistance with manual labor, or (9) modified work schedules. The new law, however, would not require an employer to terminate an employee, or transfer a more senior employee, to accomMAY 2017

modate a pregnant employee, or promote an employee who is not able to perform the essential functions of the job, with or without reasonable accommodation. Whether an accommodation would be undue hardship for an employer would be determined by considering, among other things, (1) the nature and cost of the accommodation, (2) the employer’s overall financial resources, (3) how many employees the employer has, (4) the number, type, and location of the employer’s facilities, and (5) the effect such accommodation would have on the employer’s expenses and resources. The new law also would make it illegal to take any “adverse action” against an employee who requests or uses a reasonable accommodation in connection with her pregnancy. Such adverse actions may include failing to reinstate the employee to her original employment status or an equivalent position with equivalent pay and accumulated seniority, retirement, fringe benefits, and the like. Additionally, the new law would make it illegal to (1) deny an employee an employment opportunity based on the employer’s need to make such a reasonable accommodation, (2) require a pregnant employee to accept an accommodation she chooses not to accept, so long as the accommodation is not necessary to enable her to perform the essential functions of the job, (3) require an employee to take a leave of absence if another reasonable accommodation may be provided without undue hardship to the employer, and (4) knowingly refuse to hire a women because of pregnancy or any related condition, provided she is capable of performing the essential functions of the job with reasonable accommodation that does not impose an undue hardship to the employer. Like the Americans with Disabilities Act, the new law also would require the employer and employee to engage in a timely, good faith, interactive process to explore

Massachusetts Auto Dealer www.msada.org

and determine effective reasonable accommodations that would enable her to perform the essential functions of her job. That said, while an employer may require certain medical documentation about the need for an accommodation, it may not require such documentation to support the need for (1) more frequent restroom, food, and/or water breaks, (2) seating, and/or (3) limits on lifting over twenty pounds. Finally, the new law also contains a notice requirement. Written notice of the new law’s protections and requirements would have to be distributed “in a handbook or other means” to (1) new employees at the commencement of employment, (2) existing employees on or before January 1, 2018, and (3) any employee who notified the employer of her pregnancy and/or related conditions, within ten days after such notice. As this Act would amend the Massachusetts anti-discrimination law, Chapter 151B, violations would be subject to the same types of damages as other discrimination and retaliation claims, which may include lost wages, compensation for emotional distress, punitive damages, and reasonable attorneys’ fees and costs. We will advise you when and if the law is passed. t

Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher Phillips, LLP, a n a t i o n a l l a b o r a n d e mp l o y m e n t f i r m r e p r e s e n t i n g h u n d r e ds o f d e a l e r s h i ps in

Massachusetts

be reached at (617)

and nationally.

722-0044.

They

may

www.msada.org

Massachusetts Auto Dealer APRIL 2017

Sound Off

MSADA MSADA

The Dealer Owned Warranty Company By Mike Scolamiero, HarborFirst

The F&I department has evolved over the years and should now be one of the most successful profit centers in any dealership. The F&I industry, since its early beginnings in the Midwest forty-plus years ago, has continued to change each and every year. Although much of this change has been in response to laws being passed that aim to regulate an industry that Washington often fails to understand, there has also been a lot of growth in product offerings that brings value to customers and profits to dealerships. One thing that has remained a constant, however, are administrators continually trying to find new ways to attract dealers to their client base. The Dealer-Owned Warranty Company (DOWC) is becoming one of their biggest tools yet in that strategy, and one that is putting larger profits and greater assets into dealers’ hands. When this industry first began, profitable margins on product sales were considered found money. Dealers were happy with any amount that added to their PVR (per vehicle retail). In the 1980s though, administrators began floating the term “retro” around. With a retro, dealers were not only earning their store-level margins on their F&I product sales, but they now had an opportunity to participate in the unearned premiums. Administrators, in what some thought unthinkable at the time, were offering to share their profits with dealers in an effort to compete. Then, in the 1990s, some administrators took it one step further by offering to not only share in the unearned premiums, but to also allow dealers to participate in the investment income that was being generated while products were earning out. Administrators began setting up offshore reinsurance companies for dealers, reserves began ceding into them, and dealers sat back and watched their profits accumulate. There are four main components enabling administrators to profit when partnering with a dealer, and with reinsurance companies dealers now had half of the pie. The DOWC has actually existed for quite a while. The majority of dealers are either unfamiliar with it or have never been given a proper introduction. The reason for this is simple. Most administrators are not willing to offer it. For one thing, it can be a more difficult structure to administer, but, more importantly, their earnings potential is much less. With a DOWC, the administrator hands over three of the four pieces of the pie, leaving them with only the “admin fee”. So, what exactly is a DOWC? A DOWC is simply a U.S. domiciled “C” corporation,

which acts as the obligor on vehicle service contract products. It is completely independent of the dealer’s other business, meaning that their dealership’s entity will never have any obligations in relation to their DOWC. Lenders actually require an insurance company to stand behind the DOWC and fulfill its financial obligations should it be unwilling or unable to do so. This is known as a CLIP, or contractual liability insurance policy. The DOWC is designed to maximize the amount of profits generated from the sale of F&I products. One of the components used to accomplish this is that third piece of the pie that the administrator is handing over to the dealer: net operating losses. Anyone that tuned into the 2016 Presidential Election might be familiar with net operating losses, or NOL’s. Donald Trump was scrutinized over what many claimed was misuse of them, and which have continuously helped him avoid paying millions of dollars in taxes. In the service contract industry though, a DOWC takes advantage of the I.R.S.’s intended use of NOLs. When accounting, a DOWC recognizes expenses faster than revenue in its first few years, creating a build-up of NOLs. Due to the IRS tax treatment of “insurance-like” companies with long-term risk exposure, a prolonged tax deferral period (typically 8–10 years) is created where zero taxes are paid at the corporate level. Meaning, the DOWC can accrue investment income for years without having to pay taxes on it while it waits for its exposure to be fully realized. This presents the DOWC an incredible opportunity to generate additional profits over all other structures. Below is a list of other benefits dealers often receive when participating in a DOWC in comparison to reinsurance and retros: • Dramatically better investment income • Better tax treatment on distributed funds • Ability to borrow from the unearned reserves • No premium or excise tax (2% -5% savings per VSC before ceding) • No corporate tax on investment income for 8-10 years • 100% reserve requirement (102% -120% in reinsurance) • No Trust or Trust fees • No shared risk The benefits of a DOWC, when compared to a dealer’s particular retro or reinsurance program, should be discussed with his or her personal CPA or financial advisor. t Mike Scolamiero can be contacted at (617) 515-8415 or mike@harborfirst.com.

Have an opinion you want to share? Email rokoniewski@msada.org. MAY 2017

Massachusetts Auto Dealer www.msada.org

MSADA

Accounting

Social Engineering

By W. Jackson Shultz and Scott Goodwin O’Connor & Drew, P.C.

From the news media to government officials, everyone is talking about data breaches. But the real question is: How are these malicious individuals gaining access to the data? Social engineering is the act of masquerading as a trusted individual to convince a victim to either work on your behalf or divulge confidential information. According to an International Association of Privacy Professionals Daily Dashboard article from March, a recent Verizon report stated that ninety percent (90%) of data breaches had an element of phishing or social engineering involved. Dealerships are definitely a target of social engineers because of the sensitive personal and financial data that they possess. There are many kinds of social engineering, such as phishing and spear-phishing, among others. Social engineering tactics all have something in common -- utilizing strategies like open source intelligence (OSINT) makes them much easier to perform. OSINT is a strategy used to collect publicly available data from the internet and turns it into valuable information that can be used for a variety of tasks. Many times, however, hackers will use this collected information as part of their reconnaissance process when targeting a specific organization. The term “public domain” is synonymous with the accessible areas of the internet. This concept means that all publicly available data is readily accessible to

whomever may be searching for it, including malicious actors. Through the means of OSINT, they can collect massive amounts of data about your organization and employees to leverage their attacks. Both the good guys and bad actors monitor sites regularly visited by hackers, such as public forums and paste-style web pages. The idea behind these sites is that text or files can be uploaded anonymously by a visitor and are publicly available for all of the internet to see, visit, or download. Hackers will commonly release stolen information on these sites for a variety of reasons. Sometimes they want to take credit for a breach, entice buyers into purchasing a data dump of sensitive information, or just to heighten the impact of a breach to a target organization. If a data dump of usernames and passwords occurs on one of these sites, anyone scraping the web with this website in scope will now have a copy of these records. Hackers can use business email addresses collected from these sources to perform targeted phishing attacks, otherwise known as spear-phishing. Additionally, when business email addresses and passwords are released due to a third-party breach, there is an even greater risk to the dealership. This could lead to attempted usage of the employee’s leaked credentials to gain unauthorized access to the dealership’s environment. Social media and professional networking websites also pose a risk to companies because of the information that employees share online. Using tools that crawl social media websites and extract their data, hackers can compile a list of all employees who claim to work for a specific dealership. At this point the hackers will try numerous combinations of email naming conventions to identify active email addresses on the dealership’s email domain: @dealershipdomain.com. Eventually, they will find a way to email the targeted dealership’s staff. A third method tried and tested by attackers is to utilize free, open source software designed for the purpose of OSINT collection. Some software can provide its

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user with a chart of all data it can find on the internet surrounding user input, whether this be a requested name, email address, website, phone number, account name, etc. The application will then return relationship information about a person, a dealership, or a website. Because the software is free and relatively simple to navigate, it is a big hit with malicious actors and security researchers alike. Other kinds of software can either grab data from web ports or help users gain a better understanding of an organization’s internet footprint. It is important to monitor the web for information that is being uploaded about your dealership, and remind employees of the risk of social media and the internet. Many dealerships should be sure to implement and require employees to sign social media and acceptable use policies. Additionally, annual security awareness training and phishing testing are a must. Find a vendor with expertise in this area and let them simulate a hack on your network. It is good to pinpoint which technical areas within your infrastructure are vulnerable. Using any of these methods, bad-acting social engineers have simplified their process of sending malicious payloads or attachments to dealership employees in an attempt to fool them into visiting an infected website, clicking a link or attachment and downloading malware on their computer, or sharing sensitive information with the attacker. Whatever the hacker’s goal, there is no question that open source intelligence collection from the public domain has shortened the time that it takes hackers to compromise an organization. It is time for us to recognize the new threats and work to mitigate risk among our dealerships. t W. Jackson Shultz, CISA, is a Senior IT Audit & Security Consultant at O’Connor & Drew. He can be reached at jshultz@ ocd-tech.com. Scott Goodwin is an Experienced IT Security Analyst at O’Connor & Drew. He can be reached at sgoodwin@ocd-tech.com. Massachusetts Auto Dealer MAY 2017

AUTO OUTLOOK

MAY 2017

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COVER STORY

2017

MSADA With over 200 people gathering

at the Mandarin Oriental in Boston

Chris Connolly

for the 2017 Massachusetts State Automobile Dealers Association

MSADA President

Annual Meeting, dealers rubbed

New MSADA President Chris Connolly opened this year’s meeting by highlighting the legislative efforts that MSADA helped lobby for over the past year, and to promote the community outreach program and the Dealer Day on the Hill. He emphasized the impact that 427 dealerships and 25,000 employees have with the community and the towns is vital to the health of the Commonwealth. “What I want us to do is to help you with things you do have control over,” Connolly said, as he looked toward the goals for 2017. “In addition to the partnerships that we already have that safeguard you with government compliance issues with workplace safety, we’re trying to bring some partnerships in this year that should help you generate revenue to help your bottom line.”

elbows with industry experts,

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legislators, regulators, and others presenting their ideas on the state of automotive retail.

MSADA “What I want us to do is to help you with things you do have control over,” –Chris Connolly, MSADA President

Annual Meeting The event focused on the

changing economy and the growth of technology within the industry, finding ways to use these changes to the benefit of dealers and customers alike. The following are highlights from presentations in the day’s program.

Don Sudbay NADA Chairman

NADA Director Don Sudbay addressed the meeting about how the change in presidential administration affects the dealers in Massachusetts. While he found that used car values steadied, it is his hope that the economy going in the right direction will keep that stable, since it is “those type of issues that affect people’s ability to buy cars.” Sudbay also noted the relaxed pressures from the Consumer Finance Protection Bureau. “The CFPB is not focusing on the automobile business like they were. They are going after some other things,” he said. “Obviously, with the change in the administration, that’s been helpful. So the pressure is a whole different environment than what we were dealing with a year or two ago. Our ability to obtain discounted rates for our customers was really in jeopardy.” The biggest concern he found was with the Border Adjustment Tax, as so much of the automotive industry involves the import of parts and products. A potential BAT rate of 50% “could be very dangerous to our industry.” www.msada.org

Massachusetts Auto Dealer MAY 2017

2017 MSADA ANNUAL MEETING Sharon Kitzman

Government Affairs Report

Robert O’Koniewski MSADA Executive Vice President

Peter Brennan MSADA Staff Attorney

While the less regulation on the industry the better things are for dealers, legislators don’t really like being told not to do anything, Robert O’Koniewski, MSADA Executive Vice President said. With the changes in automotive technology legislative focus is now more properly on autonomous vehicles and modernizing lemon laws. “We have a long way to go in Massachusetts before this autonomous vehicle issue bears fruit,” O’Koniewski said. O’Koniewski reviewed the Association’s legislative agenda for the year and also stressed the need for dealers to continue donating to the Association’s Political Action Committee. “We’re very appreciative of the support,” he added. “And even though our delegation can be very liberal as a whole, on our issues they’re willing to step up to the plate.” Staff Attorney Peter Brennan gave the Commonwealth kudos for their efforts in pushing the zero emissions standards and helping create a framework for the expansion of the market for electric vehicles. While Brennan finds that Northeast winters might be more open to hybrid technology than 100% electronic vehicles, the EV rebate program has been successfully re-funded in $4 million increments by the governor’s office repeatedly since its implementation in June of 2014. MAY 2017

General Manager, Dealertrack

Dealertrack’s Sharon Kitzman gave a presentation called “Stronger Dealerships Through Change, Not Chance” at the conference. While Dealertrack claims to add 50 dealerships each month to their system, she spoke about taking best advantage of whichever technologies that you use to make things as efficient to help all of your employees and customers have the best experience as possible. Her primary recommendation is getting your leadership on board. Reminding dealers to “talk to them about why you decided to make the change. What was the original need about why you went out and looked for other options?” She noted that, while technology helps make everything work well, it can be a challenge to achieve the results you need without everyone working to the same end. “Change is hard, change is tough, change goes through a process, but change comes out the other end with hopefully some efficiency and benefits to all that are involved.”

Erin Deveney REGISTRAR, Massachusetts Registry of Motor Vehicles

RMV Registrar Erin Deveney affirmed that their focus is now properly on their customers and making the operations of the RMV as easy as possible for people on all sides of the business. Their upgrades are all about “being more thoughtful about who our customers are.” The governor helped them guide their focus and they realized that the simple answer to ‘How do you define customer service?’ -“it is about helping people.” The RMV has upgraded much of its systems and spaces and now has Business to Business centers where dealers can deal with four transactions at a time. “We recognize that if you have to send someone to a Registry of Motor Vehicles, that’s money out of your pockets and its time wasted so you should have a reasonable expectation of when you can get service back from us.” The Registrar also discussed how she worked with MSADA to get new dealership inspection facility licenses and how she will continue to work to assist dealers to make RMV transaction more smooth.

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MSADA

Glenn Anderson Dealer Creative

Glenn Anderson stressed the importance of the internet in modern automotive sales. Where television and radio ads have been working traditionally in drawing people’s attention, the internet has a different level of hooks that can sink into people. Taking advantage of pre-roll ads that pop up on screen when people visit your site and then can provide cookies so that those same ads show up in spaces on other websites help draw people to your site. There, they can learn about your dealership’s history and build trust, as well as scroll through pages of inventory without having to walk the lot. Anderson said that the ‘why buy’ video that people encounter when they look for a dealer on the internet is “the most important video that any dealership should have on your website. There are customers shopping you long before you even know they are in the market. They haven’t contacted you, but they are checking you out.”

Jason Stein Publisher and Editor of Automotive News

Automotive News’ Jason Stein painted a picture of the current state of the automotive industry. While there’s lots of speculation of promise, the market is fraught with uncertainty after the recent golden era when truck and SUV sales helped create a massive boon for dealers everywhere. This, of course, was a rebound from the stress the industry had seen in 2008 and 2009, and the foundation for his 3 R’s: Recovery, Renaissance, and Reality. He compares the current state of things to knife juggling and said, “We know how to grow and we know how to decline, but we don’t know how to plateau and how to build through a plateau.” Economic indicators and a future with automated vehicles makes the current reality a great question, Stein said. “The big chase and the even bigger splashdown is one that we’re most concerned about right now.”

Massachusetts Governor Charlie Baker Massachusetts Governor Charlie Baker spoke on issues of transportation, energy, and growth. Baker said the importance of not letting political divisions prevent action is vital, because partisan divisions do not lead to progress. His administration has hired across the aisle as Baker said, “personalities don’t get stuff done.” At a recent conference for governors, a survey found that 35 of them said that the biggest impediment to growth is matching people to the right skills. Massachusetts has worked hard to invest more than $40 million in skill building initiatives at technical and vocational schools, while also working with the Commonwealth’s correctional system to train former prisoners to fill a demand for auto technicians. While mentioning efforts to work with Canadian energy providers to help bring clean and cheap electricity to the state, it was a focus on cleaning up the mess that was the administration of the MBTA that was central to his presentation. Innovation in train lines that were older than Baker himself is central to modernizing the way people get around and helping to ease the stress on the streets of municipalities. “I can’t think of a more boring thing in the world than making big investments in signals and switches and transformers and electronics and power systems and tracks and infrastructure, but the simple truth is that is where the opportunity is to create a reliable, dependable and affordable public transportation system for the 21st century.” t www.msada.org

Massachusetts Auto Dealer MAY 2017

MSADA MSADA MSADA 2017 MSADA ANNUAL MEETING

Thank You to Our Annual Meeting Sponsors

ACV Auctions Silver Sponsor

Auto/Mate Dealership Systems Bronze Sponsor

Blum Shapiro Bronze Sponsor

Burns & Levinson Bronze Sponsor

Cox Automotive

Lunch Sponsor & Silver Sponsor

Downey & Company Break Station Sponsor

Easy Care New England

Friend of the Association Sponsor

GW Marketing Services

Friend of the Association Sponsor

Leader Auto Resources Silver Sponsor

Murtha Cullina

Cocktail Reception Sponsor

Northeast Dealer Services Bronze Sponsor

Oâ&#x20AC;&#x2122;Connor & Drew Silver Sponsor

TrueCar

Gold Sponsor & Welcome Gift Sponsor

Zurich

Bronze Sponsor

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

NEWS the Horn

NORTHAMPTON

Country Hyundai Supports Baystate Children’s Hospital Giving back to the community is second nature to Country Hyundai President Carla Cosenzi. For the sixth year in a row Country Hyundai partnered with Baystate Children’s Hospital to raise money. During the month of March, Country Hyundai donated $10 for every Elantra test drive and $100 for every Elantra purchased to Baystate Children’s Hospital. Thanks to customer involvement, Country Hyundai was able to donate $1,950 towards the work and well-being of Baystate Children’s Hospital. In addition to the monetary donation, Cosenzi donated 3 brand new iPads for the hospital. To date, the team has raised over $16,500. “Country Hyundai’s generous donation to Baystate Children’s Hospital, our local Children’s Miracle Network Hospital

and our continued partnership with Carla Cosenzi throughout the years is a perfect example of her enthusiasm to keep funds local and the Country Hyundai team understanding the impact it has on our pediatric patients and families in the community. We so much appreciate their commitment to Baystate Health Foundation and continuing to use us as their charity of choice,” said Briana LaChappelle, Manager of Fundraising Events from Baystate Health Foundation.” “I try to spend time supporting organizations like these and many others. In my mind, it’s just a logical habit. I feel like, as a business owner, it’s my obligation to give back to the community. Thanks to this event, we’re able to help make a difference,” said Cosenzi.

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Around the Horn NEWS fromSERVICES DEALER

MSADA

BOSTON

Santander Cuts Ties to More than 800 Dealerships, Rewards Chrysler Dealers Santander Consumer USA has terminated more than 800 dealerships since 2015, based on “performance-related issues,” leaving the lender with more than 15,000 dealership customers nationwide. “We believe there’s a direct connection between strong consumer practices, a culture of compliance, and the creation of shareholder value,” CEO Jason Kulas said. “Simply stated, the companies that embrace and execute on these concepts will be more successful than those who do not.” Last year, Santander added “qualitative” metrics, including negative publicity, false documents, and consumer complaints. Besides weeding out underperforming dealers, Santander Consumer said it is trying to reward Fiat Chrysler (FCA) dealers who meet the dealer performance management standards. Dealers are rewarded with payouts for growth in new-vehicle volume for FCA, plus “highly competitive incentives” for floorplan dealers. As of January 1, FCA had 2,440 U.S. dealerships in its VIP Program, which was launched in 2016, according to the Automotive News Data Center. Santander Consumer and FCA US launched Chrysler Capital in 2013, under which Santander Consumer provides retail loans, leases, dealer floorplan, and commercial loans for dealers under the Chrysler Capital brand. The private-label arrangement makes Santander Consumer the closest thing FCA has to a captive finance company. Kulas said that Santander Consumer, in releasing its first-quarter results, also was providing more detail about its dealer performance management system “in response to several investor inquiries” regarding dealer performance, and also recent settlements Santander Consumer reached with regulators in Massachusetts and Delaware. In March, Santander Consumer agreed to pay $25.9 million to resolve investigations by the attorneys general in those two states into its financing and securitization of subprime auto loans. Starting in 2013, Santander monitored dealer performance quarterly, based on quantitative metrics such as loss performance vs. expectations. In 2014, it created a monthly dealer performance management process. The process applies to all dealerships, not just FCA stores. In 2015, it created a separate Dealer Services department, responsible for dealer oversight and management. MAY 2017

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MSADA TAUNTON

Automobile Sales continue to Fall Nationawide The US economy has been bolstered the past seven years in part due to the steadily expanding auto industry. Dealers have been racking up billions in profit and paying workers hefty bonuses, all while consumers flocked to dealerships and drove sales to record heights. In May, automakers reported the fourth straight monthly retreat in sales of new cars and light trucks, the longest stretch of declines since 2009, when the industry was embroiled in crisis and bankruptcies. The slump underscores the view of many that auto sales have peaked and are set to trend downward. “The market is tapped out,” said Adam Silverleib, vice president of Silko Honda, a dealership in Taunton. “It’s no longer expanding at the rate the manufacturers thought it would.” He added that the more optimistic consumer sentiment recorded since Trump’s election “hasn’t translated into what’s happening in dealerships where we’re trying to sell cars.” All of the top six automakers in the US market reported declines from their April sales a year ago, and in every case the falloff exceeded analysts’ forecasts. Wall Street took notice:

Shares of Ford Motor and Fiat Chrysler Automobiles were down more than 4 percent, and General Motors shares fell almost 3 percent. In April, automakers sold 1.43 million cars and trucks, down from 1.5 million a year ago. But even before those totals were reported, automakers had started preparing to trim the number of vehicles they are making, which almost always means jobs are eliminated. Some 1,100 workers at a General Motors plant in Lansing, Michigan, are being laid off this month and will be out of work for at least the next five months, although about 700 of them are expected to be rehired by the end of the year. Three other GM plants are eliminating shifts, moves that will idle more than 3,000 other workers. “We are very cognizant that we operate in a cyclical industry, and we are in the eighth year of expansion,” the company’s chief financial officer, Chuck Stevens, said in a conference call last week after the company reported first-quarter earnings. “We are very focused on acting like we are in a downturn.”

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Around the Horn NEWS fromSERVICES DEALER BILLERICA

WOBURN

In Memoriam Robert C. Olsen Robert C. Olsen, founder of Woburn’s R. C. Olsen Cadillac, died at the age of 96 on May 5. Born and raised in Minneapolis, Minnesota, Olsen graduated from the University of Minnesota in 1941 and served in the Army as a lieutenant and tank commander in the tank division under General George Patton in Germany. After the war, he joined Buick Car Division of General Motors, where he quickly rose to Boston Regional Zone Manager. In 1953, he set out on his own, creating the Cadillac dealership north of Boston. He celebrated 50 years in business in 2013. The dealership currently operates in Woburn as Colonial Cadillac, having been sold this year to Lawrence Gordon. Olsen was an avid semi-pro tennis player and enjoyed the thrill of skiing, having been a ski jumper in his youth in Minnesota. His greatest loves were his wife, Lois, and golf. He was a member of Winchester Country Club and Captain of the Summer Twilight League at Winchester for many years. He and Lois were members at Oyster Harbors Country Club on Cape Cod as well as wintering in Stuart, Florida, at Pipers Landing Golf Club.

Founded in 1964, Channel Building Company has a rich history of designing and constructing automotive facilities throughout New England. Specializing in construction management and general contracting solutions from pre-construction, design-build approaches to conventional design-bid-build and re-construction services.

WE’RE DRIVEN TO EXCELLENCE channelbuilding.com | 978.657.7300 | info@channelbuilding.com

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Tragedy at Lynnway Auto Auction On May 3, several hundred customers and staff had gathered for the Lynnway Auto Auction in Billerica, when tragedy struck as a Jeep sped out of control, killing five and injuring seven others in attendance at the event. “At about 10:13 this morning police received a call of a vehicle that had gone out of control,” Middlesex District Attorney Marian Ryan told reporters. Several hundred customers and staff had gathered for the weekly auction, where employees drive cars up and down lanes to be viewed for sale. A Jeep Grand Cherokee “suddenly accelerated and traveled through the building at high speed,” said Ryan. It struck members of the crowd before crashing into a cinder block wall at the far end of the warehouse. Rhode Island residents Brenda Lopez, 48, and Pantaleon Santos, 49, and Leezandra Aponte, 36, of Lowell, were killed on the scene. Elliott Rowlands Jr., 50, of Buzzards Bay, died at Lahey Hospital in Burlington six days after the tragedy. Four days later Ruben Espaillat, 55, of Methuen died as a result of the injuries incurred at the accident. At an auction following the accident, owner Jim Lamb said safety would continue to be a priority. “We will increase the first responder details and the civilian safety team,” he said. “We also plan to meet with the drivers to reinforce safety practices and make sure that an overabundance of caution is maintained at all times.” t

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Get Engaged with Online and Sell More Cars How to capture and convert leads before you even know they’re shopping By Glenn Anderson Dealer Creative

The Google Automotive Path to Purchase Study showed us that consumers are visiting less dealerships (only 1.5 on average) and taking less test drives (56% took one test drive or less) than in years past. Therefore, in the words of Google, “your website is your new showroom.” We also learned that 76% of your customers’ research time is spent on digital. The two areas fueling this growth in auto research time are mobile phones and video. Just look around and you can see that people are spending more time on their mobile phones and they are watching videos everywhere. Did you know that, in 2016, the time spent watching automotive videos was up over 220% from the prior year? So what does this mean for you and your dealership? It means that people are shopping you long before you know they are in the market and thus you need to figure out how to engage them and convert them into leads.

How do you do that? Online video content is extremely effective at leading customers from the shopping process to the buying process at your dealership. 1. Capture their interest Start with vehicle videos that will capture someone’s interest early in the buying

process and lead them to your dealership’s website. • It is the vehicle that initially gets people’s interest (before they think about where to buy it) • If they click on your video ad they are instantly at your dealerships’ website (a.k.a. your new showroom). This strategy can be highly effective online (rather than in traditional media). Using pre-roll advertising on YouTube, Facebook, and over 60,000 websites, you can reach your local customers early in the funnel, direct them to your website, and then continue to market to them through retargeting. 2. Move them through the buying cycle Once you capture a lead online, whether it originated from a video pre-roll ad, SEO, PPC, display ad, etc, there are many opportunities to engage these potential customers with additional video content to move them through the buying cycle. There are two key stages in the buying process that need to factor into your online video strategy: 1. The Research Stage: When customers are in the research stage they are looking for information to help them make a decision. Informational product videos or comparison videos are a great way to persuade someone that your brand or a particular vehicle is right for them. Some manufacturers provide videos like this, but if not they can also be written and produced using manufacturer footage. 2. The Trust Stage: Once someone has decided on a particular vehicle, the next step is to choose a dealership to buy it from. With today’s technology, people can easily shop dealerships in a 50-mile or even 100-mile radius of where they live. So it is imperative that you earn their trust and persuade www.msada.org

them why to buy from you when they go online to research dealerships and look at inventory. Price is always going to be important, but your dealership should have a “Why Buy” or “Value Proposition” video that is easy to find on your website. It can be on your home page, ‘about us’ page, or with the right video platform it can also be served up on your VDP’s and SRP’s while someone is searching your inventory. This video should cover the top few reasons why someone should buy from you and trust you with their next big purchase. In addition, you could have a suite of videos on a variety of topics that will educate consumers and prove to be a good resource for them as well. I will cover these and other stages of the online buying cycle in another article. Bottom line, all this online shopping is happening before the customer identifies themself to you. Engaging them and persuading them with the right information in the right places will lead to more conversions. Once they call, contact your BDC online or come in to your dealership, that is where you and your team can finally take over to do what you do best. t Glenn Anderson is a marketing veteran with over 20 years experience in local advertising and marketing. Glenn is the Director of Sales and Marketing for Dealer Creative, a full-service creative company that has written and produced over 15,000 TV commercials and online videos for hundreds of auto dealers throughout the U.S. and Canada. Glenn can be reached at Glenn@DealerCreative.com or (919) 247-6658. Massachusetts Auto Dealer MAY 2017

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MSADA JANUARY 2016

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MSADA

TRUCK CORNER AUTO OUTLOOK

Step Up Your Spring Training with ATD With more than 2,260 heavy- and medium-duty truck dealerships contributing tens of billions of dollars to the U.S. economy, there is no doubt that America’s truck dealers are leaders. We are smart and strong, working in an industry that moves 70 percent of all the freight tonnage annually, while employing more than 9 million people in jobs across the entire U.S. commercial truck industry. As challenges in our retail market get tougher and demands on us become Baltimore Potomac harder, it can’t hurt to pump some iron, break a sweat, Truck Centers and flex those business muscles before summer arATD Chairman rives. So how are you getting buff at your dealerships? If you have not yet signed up for a specific regimen, take advantage of our ATD products that can keep you in the best business shape of your life. Consider ATD/ NADA headquarters in “Every ATD member Tysons Corner, Virginia, your personal gym. dealership has access The ATD Academy and Plus program offer to complimentary year-long courses that include six intensive, online education week-long instructorled classes. The curricand training at ATD/ ulum includes classes on financial manageNADA University ment, parts, service, vehicles, Online.” pre-owned new vehicles and business leadership. There are also opportunities for OEM and allied industry staff to participate in the Academy. Just as professional baseball players hit the field for spring training each year, every successful workout plan includes long-term goals. That is why every ATD member dealership has access to complimentary online education and training at ATD/NADA University Online. This is a great resource for: • New-hire training: helps new employees learn the business and develop core skills to succeed in the retail industry; • Cross-training: develops employees’ skills and explores how their roles support the dealership’s overall operation; and • Training for career advancement: builds your staff

By Steve Parker

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from within through successful advancement opportunities and leadership training. ATD’s online webinars are presented by industryleading subject matter experts and focus on solutions for issues affecting today’s dealerships. ATD members can view past webinars on-demand at no charge. And the ATD Driven guides are created to improve dealership performance. They are your personal library -- always complimentary -- and available to download. ATD’s interactive online courses are as close as you can get to hands-on learning without being in a physical classroom. Courses incorporate real world simulations. Interactive courses are developed by ATD/NADA Academy instructors and ATD/NADA 20 Group Consultants to incorporate best practices. If you’d like ‘platinum status in our gym,’ enroll in the ATD Academy. The programs are world-class, designed for current and future operators of truck dealerships. Our programs feature the latest in industry trends and developments, while being deeply rooted in the fundamentals needed to operate a successful and profitable business. Academy instructors are renowned industry leaders recognized for their expertise. The Academy offers intensive sessions from general dealer management and dealer group training to certifications and allied industry programs. So, whether you are a beast at the gym or just a beginner, do not hesitate to enroll in ATD’s training programs. We are here to make your business leaner and stronger for the year ahead. Visit www.nada.org/ academy for more details. Finally, our annual ATD Congressional Fly-In is June 21-22, at the Trump Hotel, in Washington, D.C. If you want to participate in this event, contact Barbara Robinson at the ATD office by email at atd@ nada.org. t Steve 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 full-service commercial truck dealership locations with Mack, Volvo and Hino Trucks franchises in Maryland and Virginia.

NADA Update

By Don Sudbay

Working Toward Fairness

As manufacturers squeeze dealers on stair-step programs, NADA is helping level the playing field.

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 hope all of you who had the opportunity to join me at the wonderful Mandarin Oriental earlier this month had a fantastic time, as I did. The MSADA Annual Meeting is the best chance we dealers have all year to get together for time to share stories and figure out a path forward for our industry in Massachusetts. As I said during my remarks at the Annual Meeting, one of NADA’s signature missions is ensuring that dealers are treated fairly by manufacturers. That includes pushing back on the onerous stair-step programs some of us have found ourselves facing. In the commentary below, our Chairman, Mark Scarpelli, outlines the issue as it stands today.

Commentary: Stair-Steps Are the Elephant in the Room That Can’t Be Ignored By Mark Scarpelli, NADA Chairman There is an elephant in the room when it comes to the retail auto industry, and it’s named “stair-step incentive programs,” particularly the unfair and indiscriminate kind. We all know how the elephant was born: Automakers rolled out dealer incentive programs in the form of escalating bonuses if sales targets were achieved. Their intention was straightforward: Provide dealers with a carrot to sell harder and push more and, consequently, wrest back market share or boost key models. These programs are inherently tied to the modern dealership business. The programs were a novel incentive. Or so we thought. When these programs are implemented they often negatively affect our businesses, the value of our brands, and our collective integrity. Moreover, they lead to multitier pricing and tend to be more disruptive than beneficial to the marketplace. Most importantly, we know that they’re incredibly detrimental to the customer experience and customers’ trust

in the brand. The National Automobile Dealers Association is confronting this issue head-on. The ongoing proliferation of market strategies -- such as indiscriminate price coupons and others -- is extremely complicated and not consumerfriendly. And some programs are not available to everyone, so dealerships of different sizes or in different locations can be at an extreme disadvantage compared with dealerships that use these programs. There is no doubt that auto retailers all want a healthy outcome -- dealerships brimming with sales and happy customers and moving inventory. But at what cost? I am asking our automakers: How many of the gains are you really willing to offset through counterproductive methods that move us back to where we started? If these programs run afoul of everything our customers care about -- trust, fairness and transparency -- then it’s not really worth it anymore. America’s dealers and manufacturers should have the same goal, achieved in the right way: Selling our inventory in large volume and at competitive prices while maintaining the integrity of the brand and creating a great customer experience. Throughout the year, our two camps meet to discuss our challenges, successes, and goals. Addressing these issues requires a deep, insightful dive into how we market and sell. NADA is ready and willing to navigate these choppy waters. We will continue to have important discussions with manufacturers to express our concerns and find ways to produce an outcome that truly benefits us all, including our partners, investors, shareholders, and -- above all -- our customers. This year, America’s franchised new-car dealers are poised to sell 17.1 million vehicles. That’s a lot of inventory. Let’s make sure it’s moving off our lots in the best way possible. Let’s move this elephant out of our room.

OSHA Delays Injury and Illness Electronic Reporting Date The Occupational Safety and Health Administration (OSHA) is delaying the July 1, 2017, deadline by which certain dealerships must electronically file their 2016 employee workplace injury and illness records. Dealerships required to report electronically by filing Form 300A or equivalent include: www.msada.org

Massachusetts Auto Dealer MAY 2017

NADA Update • Commercial truck dealerships with 20 to 249 employees at a single “establishment.” “Establishment” is defined by OSHA as a single location where business is conducted or where services or industrial operations are performed. • Light-duty and commercial truck dealerships with 250 or more employees at a single “establishment.” [Note that light-duty dealerships with fewer than 250 employees at a single “establishment” are required to record workplace injuries and illnesses, but are not required to submit Form 300A to OSHA.] Until a new deadline is announced, covered dealerships should not file any Form 300As. OSHA may be considering the possibility of doing away with the electronic reporting mandate altogether. For more information on existing federal injury and illness recordkeeping and reporting mandates, visit NADA’s injury and illness recordkeeping page. For more information, contact NADA Regulatory Affairs at regulatoryaffairs@nada.org.

NADA’s “A Dealer Guide to the FTC Used Car Rule” Now Available “A Dealer Guide to the FTC Used Car Rule (L12)” is now available at NADA University Online. It provides an overview of the revised federal Used Car Rule, includes details about the revised Buyers Guide, instructions on properly completing the Buyers Guide form, and with a number of templates and other examples. The guide is available to NADA and ATD members only (at no charge). Members needing assistance accessing the guide should call NADA customer service at (800) 557-6232.

MSADA • Legal and Regulatory Compliance • Employee Recruiting, Hiring and Retention • Fixed Operations (Parts, Service and Body Shop) • Variable Operations (Sales, Business Office and F&I) For more information or to apply for booth space, visit www.nadashow.org or send an email to expo@nada.org or call (703) 821-7141.

Two New Driven Guides Now Available at NADA University Online Driven guides are one of the most valuable complimentary benefits of NADA membership. These 100-plus publications discuss crucial aspects of dealership operations, as well as up-to-date legal compliance requirements. Two new guides have just been added to NADA University Online. • “Credit and Collection Checklists (BM7).” How’s your bottom line? These checklists were designed to help dealers protect their dealerships’ financial health. They list sound practices to follow to get a grip on cash, checks, credit, billing and collection. • “A Dealer Guide to Maintenance Menus (SP15).” Using maintenance menus benefits dealerships and customers alike. Menus can make the service advisor’s job easier, increase revenues in the service department, and help customers become more informed about their vehicles. This guide covers printed and electronic menus, and the onboard diagnostics (OBD) system that service staff can use to access to provide customers with maintenance schedules specific to their vehicles.

NADA Show 2018 Now Accepting Online Applications for Exhibit Space

American Red Cross Seeks Sponsors, Volunteers to Install Home Smoke Alarms in 100 Cities

NADA Show 2018 (formerly the NADA Convention & Expo) is now accepting online applications from auto industry suppliers to reserve booth space. The exhibit dates at the 2018 show, which will be held at the Las Vegas Convention Center, are Friday, March 23, to Sunday, March 25. “The NADA Show is an ultimate venue for exhibitors to showcase their brands, launch and promote new products and services in front of thousands of retail-auto decision makers representing U.S. new-car dealers and their top managers,” said Connie Mikels, NADA Show director. “We anticipate an early sell out.” NADA is also looking for experts to present on workshop topics that are relevant to new-car dealers and their managers. The deadline for submitting a proposal is 11:59 p.m. on June 26. Here are the workshop tracks: • Dealer/Executive • Digital and Traditional Marketing

This fall, the American Red Cross is planning to install 100,000 free smoke alarms in high-risk homes in 100 U.S. cities through its “Sound the Alarm. Save a Life” campaign, which runs from September 23 to October 15. Each year the Red Cross responds to nearly 64,000 disasters, which are mostly home fires. On average, seven people – mostly children and the elderly – die each day from a home fire and 36 people suffer injuries; more than $7 billion in property damage occurs every year. To achieve its goal of reducing fire-related deaths and injuries by 25% in 2020, the Red Cross is asking local businesses to get involved through sponsorships, volunteerism, and raising awareness through traditional and digital/social media outreach. For a detailed plan on how to get involved in your community, send an email to Amanda Lepof, executive director of corporate programs, Red Cross, at amanda.lepof@redcross.org. t

MAY 2017

Massachusetts Auto Dealer www.msada.org

MSADA