MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
auto M a s s a c h u s e t t s
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
February 2018 • Vol. 30 No. 2
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Dealer of the Year
Frank Hanenberger
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 Jean Harris Administrative Assistant/ Membership Coordinator jharris@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 Bellavia Blatt & Crossett, P.C., 21 BlumShapiro, 20 Boston Herald, 32 Ethos Group, 2 Lynnway Auto Auction, 23 O’Connor & Drew, P.C., 31 Southern Auto Auction, 22 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
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Ta b l e o f C o n t e n t s
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From the President: Enhancing Our Future ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: MSADA Bills on the Move legislative scorecard TROUBLESHOOTNG: Mass. Legislature Takes Swing at Data Breaches ACCOUNTING: Making Cents of Tax Reform AUTO OUTLOOK
16 Cover Story: Frank Hanenberger, Dealer of the Year
20 24 25 26 28 29
NEWS From Around the Horn Mass. Auto Tech Competition LEGAL: How Will the #MeToo Movement Affect Your Dealership? nada Market Beat TRUCK CORNER: ATD’s Spirit of Leadership Continues into 2018 nada update: Looking Back, and Ahead
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer FEBRUARY 2018
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From the President
MSADA
Enhancing Our Future
Building a better business tomorrow means investing in education for young technicians today.
By Chris Connolly, MSADA President Technology has always been intertwined with the automotive retail business, but the past 10 years have seen the vehicles coming to our lots jump light years ahead of the metal our grandfathers knew. Increasingly, we are being challenged with finding qualified technicians who ensure our operations run smoothly and our customers are served personally and professionally. The solution is simple: Train more techs. The process involved in recruitment and education, however, can be complicated and expensive. As you will see in this month’s magazine, MSADA works to help our dealership community by sponsoring an auto tech competition for local high schoolers in addition to providing scholarship funding for promising students. We always need to be doing more as a dealer community, however. I hope that this year our dealer members will prioritize the tech shortage that has affected us all -- do you have ideas about how to find new talent? Could your manufacturer being doing more, or are changes needed to a program they have in place? Do not suffer in silence. We need to do whatever we can to ensure the flow of technicians into our service bays continues. The Commonwealth has been coming to the aid of our industry (and its drivers) as well. Our Executive Vice President, Robert O’Koniewski, wrote in the Boston Business Journal recently that the Commonwealth is looking to amend current law to help more students find their way into auto tech classrooms. He writes, however, that “for this amendment to succeed, society needs to adjust attitudes about postsecondary education and the many paths available to high school graduates for career success.” He points out that there is a gap between the degrees our college students are getting and the work that is available to be done. The age-old problem of what to do with a degree in, say, art history is only becoming more pronounced as dealerships struggle to find people to take high-paying and rewarding technician jobs. The same cannot be said for art museum positions. Bob adds: “It is clear that to meet the needs of industry and help more students find success, we must change perceptions and recognize the value of quality technical education programs that give students relevant skills that lead to good jobs.” So we have work to do as dealers to help change these perceptions. Please be thinking about what our Association can do to help in this quest, and please reach out with any ideas. In the meantime, MSADA will continue to expand its commitment to technical education and the highlighting of our dealerships’ lucrative, exciting, and widely available careers in our industry. t
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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 [Open]
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 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt & 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 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 C-4 Analytics LLC Rob Stoesser (617) 250-8888 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 Mike Otis (315) 382-3675 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Jane Webb (800) 304-3341 DealerSocket Shelly Del Rosario (949) 900-0300
Downey & Company Paul McGovern (781) 849-3100 Eastern Bank David Sawyer (617) 897-1125 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 Tom Foster (832) 628-1916 GW Marketing Services Gordon Wisbach (857) 404-0226 Harbor First Ron Scolamiero, Michael 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 Todd Stratford, (617) 777-0365 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 Tim Whelan (303) 802-3019 Leader Auto Resources, Inc. Curt Murray (978) 201-4797 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
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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 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 Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank 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 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
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The Roundup
MSADA Bills On the Move By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Legislative Reporting Date – February 7 Under the rules of the Massachusetts Legislature, all committees needed to make a report on each piece of legislation within their jurisdiction by February 7. Under the so-called “Joint Rule 10 Day” reporting deadline, committees had several options at their disposal: give the bill a Favorable or an Adverse recommendation; discharge the bill to another committee; keep hold of the bill, in a committee extension order; or put the bill into a study order (a gentlemanly way to most likely killing a bill, but does leave open the possibility of action at a later date). This session your Association has a number of legislative proposals alive in the process. On the reporting date, the Joint Committee on Transportation reported out favorably House 2733, An Act Relative to Temporary Registration Plates. The “temp tags” bill, sponsored by Rep. Tom Golden (D-Lowell), would direct the Registrar of Motor Vehicles to design, issue, and regulate the use of temporary license plates. For decades temporary registration plates have been legal under Chapter 90, Section 2D, of the Massachusetts General Laws. However, a string of successive Registrars has refused to issue the plates. Temp tags, which are used in the vast majority of other states, would provide considerable flexibility to the increasing number of automobile dealers that sell to out-of-state customers. Due to the prevalence of today’s internet economy, dealers cannot afford to ignore online sales, and the current system in place for delivering an automobile across state lines is burdensome to the dealFEBRUARY 2018
Massachusetts Auto Dealer www.msada.org
er and the consumer. The issuance of temp tags would greatly enhance dealer’s ability to compete in the multi-state marketplace. Two other issues remain alive, as well. On the reporting day the Joint Committee on Consumer Protection and Professional Licensure placed into an extension order our two Chapter 93B franchise law bills – Senate 146, filed by Sen. Marc Pacheco (D-Taunton), and House 1976, sponsored by Rep. Brendan Crighton (D-Lynn). The two committee chairs continue to contemplate action on various pieces of these two bills. Further, the Joint Committee on Financial Services placed into an extension order two bills dealing with increasing the insurance reimbursed labor rate paid to auto body repairers. This issue is a key priority of Rep. Lou Kafka (D-Sharon) and Sen. Jim Welch (D-West Springfield). Other bills continue to move in the process. In late January the Senate Committee on Ways and Means reported out favorably Senate 2269, An Act Relative to the Used Vehicle Record Book, which would reform the 100-year old obligation dealers must comply with in maintaining a written log book. And, then, on February 1, the full Senate approved the bill, sponsored by Sen. Mike Rush (D-West Roxbury/Boston), on a 36-0 vote. The House subsequently referred the bill to the House Ways and Means Committee, which is chaired by Rep. Jeff Sanchez (D-Jamaica Plain/ Boston). Senate 2269 would allow a dealer to comply with the law, in the alternative of keeping a hand-written book, by maintaining the required information in the dealer’s DMS, in a form and
MSADA format approved by the RMV. The reform of this outdated provision will not impair the ability of the dealer to make this information immediately available upon request by RMV or law enforcement officials, as it replaces the current, outdated requirement to maintain handwritten records that no longer reflects the realities of today’s modern business technologies. The House and Senate each approved this legislation in the last legislative session, but it died during a procedural delay in the House on the last day of that session. Another bill we are pushing is Senate 2261, An Act Providing for the Licensing of Certain Motor Vehicle Inspection Stations, which the Senate Committee on Ways and Means reported out favorably in late January. The bill was originally filed several years ago to address the situation in which new franchised dealerships were not able to obtain vehicle inspection licenses to conduct the sticker process prior to vehicle delivery to their customers. Senate 2261 would create a statutory requirement for the Registry of Motor Vehicles (RMV) to grant an inspection facility license, regardless of the saturation of vehicle inspection station licenses within the locale, to any franchised new car dealer that abides by the appropriate rules and regulations and invests a threshold dollar amount of $2.5 million in a new facility or the rehabilitation of an existing facility. On January 25 the full Senate passed this legislation, and the House referred it to the House Ways and Means Committee. (Similar legislation was passed by the Senate in the last legislative session but died in the House.) We will continue to advocate on these issues and will keep you informed of developments as they occur.
2018 Auto Tech Competition On February 10 MSADA hosted ten two-person senior teams from eight technical high schools (as well as four two-person junior teams from four schools) at Universal Technical Institute in Norwood for the hands-on portion of
our annual automotive technician competition that decides the Massachusetts representative to the national contest. The January 19 written test, at which 160 students participated, winnowed down the contestants to the top two-person senior class teams from each school and the top four two-person junior teams from the whole group. Based on the hands-on testing, our first place senior winners were Shane Clark and Jacob Horsman from Bristol-Plymouth Regional Technical High School. Their instructor is Steve Ribbe. They will travel to the national competition in April at the New York Auto Show in NYC. The team will be tested on a Subaru. We wish them the best of luck in the City So Nice They Named It Twice. Check out our photos on page 24 for more details on our competition results.
MSADA Dealer Support Programs Re-Approved for 2018 Since 2014 your association has administered a program in which we subsidize the cost of certain compliance efforts dealers go through at their stores. Through this program, we have supported dealers’ use of Fisher Phillips for employment law services, such as pay plans, employee handbooks, etc.; KPA and Furrh Associates for OSHA and environmental compliance; and O’Connor & Drew for tax compliance and cybersecurity protections. Your Board of Directors voted at its December board meeting to continue these programs for 2018. In addition to the compliance assistance, your Board voted to reauthorize the community outreach program for 2018, in which we will assist dealers’ efforts for up to $1,500 this year. Did you take advantage of our community outreach program last year? If not, why not? The following is the list of dealers that were involved in this program in 2017: Ashley Ford Sales Baker Cadillac www.msada.org
Balise Auto Group Bedard Brothers Auto Sales Berkshire GMC Bill Dube Hyundai Bouchard Auto Sales Burke Chevrolet Cape & Islands Mitsubishi Clark Chrysler Jeep Dodge Ram The DeLuca Family Dealerships Dillon Chevrolet Expressway Toyota Herb Connolly Acura Honda Cars of Boston Jack Madden Ford Johnson Ford Lundgren Honda Marty’s Chevrolet MetroWest Subaru Planet Chrysler Jeep Dodge Planet Subaru Salvadore Chevrolet Sentry Ford Stoneham Ford Sudbay Motor Group Toyota of Braintree Wellesley Mazda Do not hesitate to contact us regarding these programs so you do not lose out on these services supported by your association.
Military Lending Act Update NADA is continuing its vigorous advocacy efforts to address the Department of Defense’s (DOD) problematic December 2017 Military Lending Act (MLA) Guidance concerning GAP and other credit-related products that are included in vehicle financing transactions with active duty military personnel and their dependents. Regarding compliance with the MLA, some companies have marketed to dealers MLA compliance programs that purport to allow dealers to continue to offer GAP and other credit related products to covered borrowers provided dealers conduct a Military Annual Percentage Rate (MAPR) calculation to ensure the transaction does not exceed a MAPR of 36%, provide required written and oral disclosures to covered borrowers, and abide by
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The Roundup certain contractual restrictions. However, some of these programs do not flag the possibility that the DOD regulation that implements the MLA prohibits creditors from taking a security interest in the vehicle being financed. This is a critically important issue which any dealer considering signing on to such a program should discuss with its legal counsel. The NADA legislative office continues to press for a fix with targeted Members of Congress, and several Members are assisting by contacting the Pentagon to urge a timely resolution. Let me know if you have questions or if additional information would be helpful.
2018 NADA Dealership Workforce Now Open The 2018 Dealership Workforce Study (DWS) is now open for enrollment. NADA and ATD members that complete a questionnaire and submit their payroll records by April 30, 2018, will receive two complimentary reports and a one-year subscription to the DWS Database and Search Tool. The two complimentary reports are: • Automotive Retail: National & Regional Trends in Compensation, Benefits & Retention, which is the industry’s top resource for helping dealers meet their No. 1 challenge of attracting and retaining productive employees. It contains a clear analysis of employment trends, including national and regional data for 60 light-vehicle and commercial-truck dealership career positions as well as data on pay, benefits and turnover and more; and • Compensation, Benefits and Retention: How Your Dealership Compares, which is an individualized comparative report for each participating dealership. Dealerships that participate in the study will also receive access to the entire online DWS Database and Search Tool, which includes more than 1.6 million payroll records from over 10,000 dealerships. The Search Tool categories include: report type (compensation or tenure), FEBRUARY 2018
franchise/brand, sales volume, geographic location (national, regional and state), dealership department, and job title. For example, a dealership can compare compensation for all service positions in neighboring states by using the Search Tool. Enroll today at www.nadaworkforcestudy.com. For questions, contact Dorenda Fisher at (703) 556-8583 or email workforcestudy@nada.org.
MSADCF Auto Tech Scholarships Available Applications for the Massachusetts State Auto Dealers Charitable Foundation’s 2018-2019 Auto Tech Scholarships are now available on our website at www. msada.org. The Foundation’s auto tech scholarship program awards scholarships to eligible applicants for use at post-secondary educational institutions that offer auto tech training programs. Since its inception in 2003, the Foundation has awarded over $1 million to more than 200 students. A scholarship award is worth $6,000-$13,000 each over two years. Eight years ago the Foundation’s scholarship program expanded to include not just manufacturer-backed programs but also general automotive technology programs at a greater number of colleges in the Massachusetts area. This gives dealers an even greater chance to capitalize on a highly skilled base of potential employees. To obtain additional information on the scholarship program, contact Jean Fabrizio at MSADA at (617) 451-1051 or by e-mail at jfabrizio@msada.org. The application deadline is Friday, May 25, 2018.
2018 Dues Invoices Earlier this month your Association sent out 2018 dues invoices to all our dealership and associate members. Our members’ dues help fund the Association’s activities on their behalf, including our lobbying on Beacon Hill and in Washington, our member counsel services, and our education and training activities. Over the last several years we have witnessed quite a bit of economic disruption
Massachusetts Auto Dealer www.msada.org
in our industry, including governmental over-regulation. More than ever, our dealers need a strong MSADA. MSADA will continue to lead on the various issues that threaten the viability of our dealerships. We will strive tirelessly to keep you informed of developments in our industry and how they will play out in Massachusetts. These efforts also include working closely with NADA to better serve our members. Our strength lies in our members. With your continued support and membership renewal, we can build on our current foundation and begin to enhance your Association’s core purposes of communication, advocacy, and education.
Save the Dates: Leadership Summit – March 8, Natick; Annual Meeting – May 4, Boston; Dealer Day on Beacon Hill – May 23; Dealer Hall of Fame Ceremony – October 3-5, Chatham We have a number of important events lined up for our members in 2018. On March 8 at the Verve Hotel in Natick, we will conduct our third annual leadership summit in conjunction with our F&I partner, Ethos Group. Your Association will conduct this year’s Annual Meeting on Friday, May 4, at the Mandarin Oriental Hotel, in Boston. We are lining up a number of exciting industry speakers for the day. Be on the lookout for our invitation and registration materials. Also, be sure to circle Wednesday, May 23, for our annual Dealer Day on Beacon Hill, when we schedule meetings for our attending dealers with their legislators at the State House, to lobby on the important issues of the day for dealers and our industry. Finally, in order to honor those who have been titans within our industry in Massachusetts, your Association will conduct its inaugural Dealer Hall of Fame ceremony October 3-5 at the Chatham Bars Inn on Cape Cod. Be on the lookout for nomination materials. t
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Troubleshooting
MSADA
Mass. Legislature Takes Swing at Data Breaches By Peter Brennan, Esq.
MSADA
Staff Attorney When credit reporting agency Equifax announced a massive data breach last Fall that affected more than 145 million Americans, the Massachusetts Legislature seemed poised to act quickly to pass legislation that would punish the company and prevent future breaches. Sensing the opportunity for some positive press, several legislators pounced on the opportunity and claimed that they would have a bill passed before the Legislature took a brief repose for the Thanksgiving holiday. Several months later, the legislative ideas that were hatched after the Equifax breach have morphed into something greater – a wide ranging bill that includes an update of Chapter 93H of the Massachusetts General Laws, the state’s data breach and security law. Chapter 93H presently requires that, in the event of a data breach to a business that owns or licenses the personal information of Massachusetts residents, the business must notify the affected resident as well as the Attorney General and the Office of Consumer Affairs and Business Regulation (OCABR). Regulations codified pursuant to Chapter 93H require businesses to take certain steps to prevent the unauthorized access of their customers’ personal information, including maintaining a comprehensive Written Information Security Program (WISP) that applies to all records owned or licensed by the dealership that contain personal information about a Massachusetts resident. The current law also allows MassachuFEBRUARY 2018
setts residents to freeze their credit. Credit reporting agencies (CRAs) may charge five dollars for the freeze, except in cases where the customer is the victim of identity theft and has a valid police report, in which case the freeze is free. The bill, House 4241, which was recently passed by the House and is now in the Senate Committee on Ways and Means, contains several provisions which may have broad implications for Massachusetts dealers. While the bill will have to clear the Senate and the Governor’s desk before becoming law (with a likely pit stop in a conference committee), several ideas in the legislation have support amongst both legislative branches and are worth knowing. House 4241 would require that a business obtain the written, verbal or electronic consent of a consumer before obtaining the consumer’s credit report. Currently, the issue of when a business may obtain the credit report of a consumer is governed by the Federal Fair Credit Reporting Act (FCRA), which allows a business to pull a consumer’s credit report when there is a “permissible purpose” to do so. The Federal Trade Commission (FTC), which is charged with enforcement of the FCRA, has previously advised that a permissible purpose exists for a dealer to pull a consumer’s credit if the consumer expresses an interest in buying a vehicle on credit. However, the FTC has also warned that such permissible purpose does not exist where a salesperson pulls the credit report of a “window shopper” or of a consumer that merely wishes to test drive a vehicle. For these reasons, your MSADA has generally recommended that dealers obtain a consumer’s written consent before requesting the consumer’s credit report, although it is not technically required by law. The FTC has advised that, if a dealer first obtains the customer’s written consent, then the “permissible purpose” test is clearly satisfied. Doing so also eliminates the possibility that a consumer will have an actionable claim against the dealer if there is a dispute. Under House 4241, fail-
Massachusetts Auto Dealer www.msada.org
ure to obtain the written, verbal or electronic consent of the consumer before requesting the consumer’s credit report will constitute an “unfair practice” under M.G.L. 93A, the Massachusetts Consumer Protection Act, the severe penalties of which dealers are doubtless aware. The bill would also allow any Massachusetts residents to freeze his or her credit at no cost, which could increase the number of consumers who decide to institute a credit freeze. In the legislation, the timing with which CRAs must act to place or remove a freeze currently varies between fifteen minutes and thirty days, which will presumably be clarified before the bill progresses any further in the legislative process. The number of consumers that take advantage of the credit freeze provisions currently in Massachusetts law is low. Consumers are more likely to place a fraud alert on their credit, allowed pursuant to federal law, which requires a business to note the alert and take steps to confirm the consumer’s identity before obtaining the consumer’s report from a CRA. Under current Massachusetts law, CRAs have three days to remove a freeze, and the clock doesn’t start running until the customer jumps through several hoops to prove their identity. If CRAs are ultimately given a longer time period (like thirty days) to remove a consumer’s credit freeze in the final legislation, then there is a risk that vehicle transactions could be disrupted by unwitting consumers who do not remove the freeze before coming to the dealership. As always, your MSADA will advocate on behalf of our members as this bill continues through the process. t If you have questions regarding this or any other issue please contact Robert O’Koniewski, MSADA Executive Vice President, at rokoniewski@msada.org, or Peter Brennan, MSADA Staff Attorney, at pbrennan@msada.org, or by phone at (617) 451-1051.
ACCOUNTING
MSADA
Making Cents of Tax Reform
By Ryan McDonell O’Connor & Drew
By Ryan Crawford O’Connor & Drew
Although Congress and the President have stated that tax reform changes would simplify the tax code, businesses are quickly discovering that the changes are anything but simple. Dealerships must determine which changes will most affect their tax bills starting in 2018. Here is a high-level look at some of the key areas of interest for auto dealers:
Section 179 Section 179 allows businesses to fully expense the cost of qualifying property, instead of depreciating it over several years. The deduction decreases taxable income and defers tax liability by expensing capital assets. Tax reform legislation nearly doubles the expense limitation to $1 million while increasing the phase-out threshold to $2.5 million. Businesses may immediately expense up to $1 million of qualifying purchases, if purchases do not exceed $2.5 million. The legislation now includes roofs, HVAC systems, fire protection and alarm systems, and security systems as qualifying property. Section 179 remains available for auto dealers.
Bonus Depreciation and Floor Plan Indebtedness Bonus depreciation allows accelerated depreciation equal to 50% of the cost of capitalized assets plus regular depreciation. Tax reform increases bonus depreciation to 100% for assets placed in service after Sep-
tember 27, 2017. The 100% bonus is available until 2023, at which point, the percentage decreases until reaching zero in 2027. Under the new legislation, businesses with floor plan financing indebtedness, like many auto dealers, may not use bonus depreciation. However, while interest expense for most businesses cannot exceed 30% of the business’ adjusted taxable income, interest expense related to floor plan financing remains fully deductible.
C corporation Tax Rate and 20% Deduction for Passthroughs Entities In response to the C corporation tax rate being slashed from 35% down to 21%, Congress created a new 20% deduction on qualified business income (QBI) from passthrough entities and sole proprietorships. This essentially levels the playing field between C corporations and passthrough entities. However, the deduction has complexities, and professionals are still waiting on guidance from the IRS on specific treatment of items. Taxpayers with taxable income of less than $315,000 married filing jointly, or $157,500 for other filers, may deduct 20% of the income from passthroughs against overall taxable income. The deduction is calculated on an entity-by-entity basis and will be reported on an individual’s income tax return after adjusted gross income (AGI), as a “below the line” deduction. Paired with the newly-reduced individual tax rates, the tax rate on passthrough income may be as low as 29.6%. Taxpayers with taxable income above these amounts are subject to limitations based on the business’ wages expense and the unadjusted basis of the business’ depreciable assets.
Passthrough Business Losses Cumulative business losses totaling more than business income plus $500,000 (married filing jointly) will not be deductible in the year of loss, but will be carried forward to offset future passthrough income. For example, if passthrough A has taxwww.msada.org
able income of $500,000, and passthrough B has a taxable loss of $2,000,000, resulting in a net loss of $1,500,000, the taxpayer will only be allowed to deduct a loss of $500,000 to offset other income (wages, interest, dividends, etc.). The remaining $1,000,000 loss will be carried forward indefinitely to offset future income.
Other Notable Changes • Entertainment expenses, except employee holiday parties, are no longer deductible. • Improvement property (qualified leasehold, restaurant, and retail improvement property) are now combined into a new 15-year class life eligible for bonus and Section 179, called Qualified Improvement Property. • UNICAP is not required for entities meeting the small business gross receipt test of not having average annual gross receipts exceeding $25 million for the three previous years. Auto dealers meeting this test may also take bonus, regardless of floor plan financing. • F&I captive insurance companies benefit from the reduced 21% corporate rate, including 831(b) investment income and controlled foreign corporations (CFC) with domestic election. • Corporate net operating losses generated in 2018 or later are limited to 80% of taxable income, may be carried forward indefinitely, and the carryback option is repealed. In summary, there are numerous tax reform changes that can impact your auto dealership. To ensure that your dealership is ready this time next year, it is imperative to act now. Discuss these changes with your CPA firm and have them perform a detailed analysis of your dealership to maximize your bottom line potential. t Ryan and Ryan are tax supervisors at O’Connor & Drew, P.C. They may be reached at RMcDonnell@ocd.com and RCrawford@ocd.com.
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COVER STORY
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Frank Hanenberger has taken a circuitous path to becoming a leader among auto dealers FEBRUARY 2018
Massachusetts Auto Dealer www.msada.org
MSADA MSADA
ealer of the Year
Engineering A Better Customer Experience
By Steve Macone Frank Hanenberger has a foot planted firmly in both the past and future of the automobile industry. But right now, he is presently enjoying something of a moment. Hanenberger, dealer principal at MetroWest Subaru in Natick, has been named Massachusetts Dealer of the Year. He will head to Las Vegas to represent the Massachusetts State Automobile Dealers Association in the national competition as one of 47 dealers nominated—out of more than 16,500 nationwide—for the 2018 TIME Dealer of the Year award.
Engineering Success Hanenberger followed in the footsteps of his father, who started as an entry level employee at General Motors and retired 46 years later as a group vice president. “Growing up our conversation around the dinner table was always focused on automotive related things. I was enthralled, quizzing my dad about the day-to-day operations where he worked.” “From an early age, I inherited my father’s passion,” Hanenberger says. As a high school student who loved math and science as well as cars, Hanenberger decided to pursue a degree in mechanical engineering. “It was a natural decision for me.” Hanenberger received a B.S. cum laude from Kettering University in Flint, Michigan, in 1994, and started at GM as a coop student while still in school. Beginning his career in earnest after graduating, he worked as an engineer for GM on a task force to develop and deploy throttle-by-wire technology for the next-generation Corvette.
“General Motors at the time was the first domestic manufacturer to bring this technology to market, which is now virtually standard in the industry,” he said. With the successful launch of the product, his team was awarded the company’s highest corporate award, the GM President’s Council Honors. But Hanenberger soon learned he did not want to remain on the engineering side of things forever. “It was one of those things where you start practicing it in the real world, and I quickly figured out within a year or two that it wasn’t something I wanted to do for the rest of my life.” So Hanenberger went on to receive an M.S. from Stanford University in 1995 and his M.B.A. from Harvard Business School www.msada.org
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DEALER OF THE YEAR
in 1999, excelling in his studies and earning membership in the honor societies Phi Eta Sigma, Tau Beta Pi, and Pi Tau Sigma. By 1999, Hanenberger shifted to sales and marketing within
the Ford Motor Company. He quickly became enamored. “I just fell in love with the retail end of the business,” he said.
Finding the Retail Side In 2005, Hanenberger opened his first dealership, MetroWest Subaru. In 2009, he added Brattleboro Subaru in Vermont. “Owning and operating my own two stores is now a dream come true.” “I wanted to own my own business but still be in an industry that I love,” he said. “That was what kind of drove it. Becoming an auto dealer enabled me to blend two of my passions.” Hanenberger is proactive when it comes to designing the dealership experience. “My mission statement is to empower and support our team members in producing an unforgettably great customer experience. Hearing from my employees that we are able to accomplish this is what is most rewarding.” He also works to further industry initiatives by serving as a FEBRUARY 2018
Massachusetts Auto Dealer www.msada.org
director on the MSADA board and participating in MSADA’s Dealer Day on Beacon Hill, an annual meeting of dealers and legislators at the Massachusetts State House focusing on retail automotive issues. “During my career, I have been extremely fortunate to work in so many areas of the automotive industry: from product design and development, to validation and manufacturing, to national and regional sales and marketing and now on the retail end,” he said. “I think this has given me a unique perspective on the vast complexities of our wonderful business. The interaction with and feedback from my employees and customers are the most rewarding aspects of being an automotive retailer.” Hanenberger also makes sure his company gives back to his community. “Whether that involves purchasing a new solar-powered scoreboard for the local Little League team, supporting the Natick Service Council to ensure that every kid has a backpack and sufficient school supplies to be a successful student, or being a lead sponsor of the hospital’s charity walk, we are able to contribute to making the lives of the less-fortunate in our community just a little bit better,” he said. Hanenberger serves on the board of The Center for Arts in
MSADA MSADA Natick (TCAN), a theater and arts education venue located in a historic firehouse. He has also served on various committees at the Second Church, a United Church of Christ, in Newton, Massachusetts. “Frank has been a positive member of our dealer community -- serving on our Board, communicating with legislators on key issues, working to improve the communities around him,” said MSADA Executive Vice President Robert O’Koniewski. “His activity in all these areas made Frank an easy choice to be our Dealer of the Year for 2018.”
An Eye Towards the Future Hanenberger pays close attention to the current and future challenges in the retail automotive industry. A tightening labor market, with unemployment at record lows, is not without its difficulties. “It’s a people-driven business. Finding enough people and the right people has always been a challenge. It’s a lot of hours, with commission-based payment plans. It’s also challenging to convince the younger generation that there is a lot of room for growth,” he said. “There’s a lot of opportunity in this business. People think of it as an old-fashioned sales job. It’s really more like being a product consultant rather than a sales person. Pricing has become so transparent that a lot of the old haggling that dealerships had the reputation for has been taken out. Cars are coming with more advanced technology and it takes a tech savvy person to explain the cars to a customer.” Whereas about 80 percent of the as-
sociate’s time with a customer was once spent before the purchase decision, talking about pricing and test-driving, that has almost reversed, Hanenberger says, with the majority of time now spent after the decision, showing customers how to synch their cell phones and use other features. Longer term, Hanenberger says he sees the role of auto dealers as ushering in a new era with a different type of car ownership. Hanenberger is interested in determining what the retail model looks like if consumers transition to autonomous, electric vehicles. “I don’t think automobile ownership is ever going to go away,” he said. “People might not have two cars in the garage anymore, as ride sharing or sharing ownership becomes more accepted. There’s a lot of changes that are being thrown around right now. I don’t think it’s a question of if it’s going to happen; it’s a question of when. And I think we dealers have to be ready for it. We can actually help the transition, and not let just let the wave wash over our heads. We have to built the boat ride the wave.” As the in-store experience changes, Hanenberger sees the role of MSADA as a strong advocate for the best customer experience. “One of the main drivers of customer dissatisfaction is the amount of paperwork,” he says. Hanenberger hopes to see some changes soon, if not something as quick as Amazon’s one-click shopping, then at least a significantly streamlined process. “We have to open the eyes of state leaders to make [the car buying process] more customer friendly. The end goal is to make a better experience for the customer.” t
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NEWS from the NEWS from Around Around the Horn Horn from Around
NEWS the Horn
GLOUCESTER
In Memoriam: Donald E. Sudbay, Sr. Longtime Massachusetts auto dealer Donald E Sudbay, Sr. passed away in February, surrounded by his family. Born in Gloucester on April 10, 1927, Sudbay enlisted in the United States Navy during World War II. After finishing his Navy Tour, he returned to Gloucester to earn his high school diploma from Gloucester High School. Sudbay entered the automobile business in 1949, where he spent his entire career. Starting as a parts manager at Reilly Motors on Washington Street in Gloucester, he quickly moved up the ranks to service manager. Sudbay was promoted to salesman in 1955, and, in 1960, owner Raymond O’Connell entrusted his entire business to Don by naming him General Manager. In 1965, the opportunity arose to purchase Reilly Motors. Sudbay and his wife, Phyllis, took the risk and started Sudbay Pontiac Cadillac Buick, which celebrated its 50th year in business in 2015. Nelson Bragg, the local radio morning host, called Sudbay “The Gentleman of the Automotive Business,” as he was known for making sure that
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his customers as well as his employees were treated fairly. Sudbay was an active member of the Cape Ann community throughout his life. He was a 59-year member of the Gloucester Rotary Club, as well as a trustee for the Addison Gilbert Hospital for many years. In the ’70s, Sudbay used his sales skills in the campaign to build the Steele Wing at the hospital. He was named a Lifetime Trustee in 1980. Named a trustee of the Cape Ann Savings Bank in 1968, Sudbay held this position for almost 50 years, thoroughly enjoying his association with Cape Ann Savings. As a longtime member of the Cape Ann Chamber of Commerce, he was honored as the recipient of “The Small Business Person of the Year” in 1984. Throughout their 66 years of marriage, Don and his wife Phyllis, led a very active life with their children, grandchildren, and many friends they met along the way. Skiing, boating, and golf were among their various recreational pursuits, with Don skiing well into his 70s.
Massachusetts Auto Dealer www.msada.org
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DEALER SERVICES BOSTON
BOSTON
Ray Ciccolo Featured in Ward’s Auto
Senate Passes Inspection Bill
National automotive magazine Ward’s Auto caught up with Village Automotive owner and former Massachusetts NADA Director Ray Ciccolo in January, asking about how his beginnings as a dealer in the 1960s compared to the business today. “Back then, you could throw a franchised dealership in a gas station,” Ciccolo explained. “You could get into the business with very little money. Nowadays, between (a manufacturer) checking you out thoroughly and having to have lots of money and good credit, it requires a tremendous effort to get in this business now.” Ciccolo, whose take on the current state of Volvo is often sought by the media given his long investment with the brand, noted that Volvo is well positioned under the ownership of Chinese manufacturer Geely Automotive. “Geely’s owner put the skills of the Swedes to best use,” he told the magazine. “They were working on a lot of good products when Geely bought Volvo. The more they expand and acquire, they will have greater economies of scale and do things Volvo itself in Sweden was unable to do.” Read the full interview at www.wardsauto.com.
The Massachusetts State Senate passed a bill in January to make it easier for auto dealers to provide vehicle inspections at newly constructed dealerships. “Auto inspections are a fact of life for Massachusetts auto dealers and their customers,” Senate President Harriette L. Chandler (D-Worcester) told Cape Cod Today. “This legislation allows Massachusetts auto dealers to perform inspections quickly and to better serve their clients.” The bill creates a statutory requirement for the Registry of Motor Vehicles (RMV) to grant an inspection facility license to any franchised new car dealer that meets the rules and regulations established by the Registrar and invests at least $2.5 million in a new facility or the rehabilitation of an existing facility. “Massachusetts’ new car and truck dealers represent a significant portion of the retail economic activity in the Commonwealth,” said Senator Vinny deMacedo (R-Plymouth) the primary sponsor of the bill. “These business owners are making significant investments in our communities by constructing or rehabilitating facilities and it is only fair that we respect that investment by facilitating this important aspect of their customer service model.” Read the full article at www.capecodtoday.com.
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NEWS from Around the Horn BOSTON
BURLINGTON
MSADA Column Addresses Workforce Programs
Herb Chambers Honda Earns President’s Award
MSADA Executive Vice President Robert O’Koniewski authored a recent column featured in the Boston Business Journal, advocating for continued investment in workforce development programs that bring critically needed automotive technicians to dealerships. “Here in Massachusetts, the common perception is that the labor skills gap mainly afflicts the software development, engineering, and life-science industries,” O’Koniewski writes. He counters that, in fact, it is middle-skill jobs such as auto technicians whose gaps are widest and getting worse. “For the more than 425 employer-members of the Massachusetts State Automobile Dealers Association,” he adds, “the inability to find automotive and diesel technicians is the biggest issue they face.” The full column is available at www.bizjournals.com/boston.
Herb Chambers Honda of Burlington has earned the prestigious President’s Award by American Honda Motor Co., Inc. for the fourth year in a row and the seventh year overall. The award recognizes dealerships for excellence in sales performance, sales experience, service performance, and business operations. “The Honda President’s Award recognizes dealers who honor their relationships with our customers by achieving excellence throughout their sales and service operations, and Herb Chambers Honda of Burlington does just that,” said Henio Acrangeli, Jr. senior vice president of the Automobile Division for American Honda. “In taking care of its customers Herb Chambers Honda of Burlington has set the standard for other dealerships across the country to follow.” “It is truly an honor to have our Burlington location recognized with such a prestigious award for the fourth consecutive year,” said Herb Chambers, president of The Herb Chambers Companies. “Earning this award is a testament to the dedica-
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Massachusetts Auto Dealer www.msada.org
MSADA tion of our great team, which works so hard every day to provide a premier customer experience. It is our employees who have made this the best Honda dealership in the country.” BOSTON
Toyota ‘Tire Event’ Lawsuit Dismissed A Toyota “Tire Savings Event” lawsuit filed last year in federal court in Massachusetts was dismissed in February after the plaintiff could not prove his claims concerning a tire sales deal that offered “three tires at regular price, fourth tire for one dollar.” Plaintiff Joseph Presti filed the proposed class-action lawsuit against Toyota alleging unjust enrichment and deceptive practices under Massachusetts and New Hampshire consumer protection laws. In September and October 2016, Toyota advertised a “Tire Savings Event” at dealer locations throughout the U.S. that said customers could buy three tires at regular price and get the fourth tire for only a dollar.
Presti made the trip to a New Hampshire Toyota dealer after seeing an advertisement where he was offered three tires at $173 each and a fourth tire at $1, bringing the total price of the four tires to $520. However, the plaintiff claims the price of $173 per tire was not the “regular price” because the tires had previously been sold at $149.30 per tire prior to the promotion. Presti complained of this discrepancy to the dealer and received a $35 “loyalty” payment/discount, but the plaintiff claims the price of the tires was “reduced to under $150 each” after the promotion ended. In its motion, Toyota told the judge the plaintiff failed to plead a “legally cognizable injury” and didn’t allege such harm. The lawsuit alleges the tires were “regularly” sold at a price of $149.30 per tire, which would total $597.20 for four tires compared to the $485 he paid for four tires. Toyota, therefore, claims Presti’s only proposed injury is deception, nothing else. The automaker says Presti does not plausibly contend the value of the four tires is $448.90, and there is no basis for the argument the identical fourth tire is worth $148.30 less than the others. As Toyota points out, “price and value are not synonyms.” t
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NEWS from Around the Horn
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AUTO TECH COMPETITION Starting with 160 students from 17 high schools on January 19 with the written test, the MSADA Auto Tech Competition winnowed down student competitors to the top ten two-person senior class teams and the top four two-person junior teams from the group. These teams competed on February 10 at the hands-on test at Universal Technical Institute’s auto tech educational facility in Norwood. The schools competed to be the Massachusetts representative at the national auto tech competition at the NY auto show in April.
Auto Tech Competition Results Senior Teams First Place: Second Place: Third Place: Highest Written Test Score:
Shane Clark and Jacob Horsman Bristol-Plymouth Regional Technical High School Jacob Marinelli and Fabio DaSilva Assabet Valley Regional Technical High School Cameron Leonard and Jeremy Estavam Bristol-Plymouth Regional Technical High School Shane Clark Bristol-Plymouth RTHS
Junior Teams
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First Place:
Blackstone Valley Technical High School
Highest Written Test Score:
Wilfred Ouellette III Upper Cape Cod Regional Technical High School
Massachusetts Auto Dealer www.msada.org
MSADA
Legal By Joseph W. Ambash and Jeffrey A. Fritz
How Will the #MeToo Movement Affect Your Dealership? The #metoo movement is all over the news these days. Aggrieved individuals, mostly women, have been making public allegations of sexual harassment like never before. The media has been running with story after story about individuals harassed (or worse) by a number of high-profile and/ or powerful men. With the issue of harassment such a hot topic, the impact this very public dialogue will have on employers remains an open question. As you may know, before filing a lawsuit, an aggrieved employee first must file a charge with the U.S. Equal Employment Commission or the Massachusetts Commission Against Discrimination, or (as is most frequently the case) both. The EEOC reports that, in its 2017 fiscal year, it received some 25,605 charges of sex discrimination. And the MCAD reports that, in 2016, it received some 875 charges of sex discrimination. Many of these charges are accompanied by retaliation charges, claiming the employee experienced an adverse action for complaining about the harassment. What affect will the #metoo movement have on those numbers in 2018 and beyond? On the one hand, the public dialogue about sexual harassment in recent days may increase the sensitivity of women in your workforce to conduct by managers and/ or coworkers they deem (and very well may be) inappropriate, and could result in them being more vocal about their perceptions—either internally or externally with the above-noted agencies. Accordingly, it is possible that, in the short term, reports of alleged harassment increase. On the other hand, individuals (mostly men), who may have been less focused on their conduct (and, perhaps more importantly, how it could be perceived by others), may experience a heightened awareness of these issues, and may be more likely to govern themselves accordingly, to avoid the unwanted consequences frequently reported. In this respect, the #metoo movement could
act to recalibrate expectations of potentially offending employees as to what may be unacceptable in the workplace and, accordingly, cut down on instances of harassment. The fact that sexual harassment is such a prominent issue affords employers a perfect opportunity to review their policies concerning sexual harassment, review their procedures for handling such issues, train their managers to be able to identify potential issues before they become more serious, and reiterate their no-tolerance policies to their workforce. This is equally as important with respect to harassment generally, based on any protected status (i.e., race, national origin, age), and abusive workplace bullying, all of which also could expose employers to significant liability. In addition to a general policy prohibiting harassment and workplace bullying, you should also have a sexual harassment policy in your handbook. Under Massachusetts law, employers of six of more employees must have a sexual harassment policy that includes (1) a statement that sexual harassment in the workplace is unlawful, (2) a statement that it is unlawful to retaliate against an employee for complaining about sexual harassment or for cooperating in an investigation such a complaint, (3) a description and examples of sexual harassment, (4) a statement of the range of consequences for employees who are found to have committed sexual harassment, (5) a description of the process for filing internal complaints about sexual harassment and the work addresses and telephone numbers of the person(s) to whom complaints should be made, and (6) the identity of the EEOC and MCAD, along with directions on how to contact them. Massachusetts law also requires that this policy be given (1) to each employee, upon hire, and (2) to all employees, annually. Having every employee acknowledge receipt, in writing, upon each such distribution is a good idea. But a policy is only as good as those individuals administering and/or enforcing it. www.msada.org
Managers, in particular, need to be trained to recognize (even mildly) inappropriate conduct and address it before it continues and, potentially, gets worse. And your managers need to know they can be held personally liable for harassment and retaliation. Human Resources employees should be trained on how to deal with any internal complaints that arise—how best to conduct investigations into such reports to both address any inappropriate conduct and minimize risk of liability for your dealership. While employers are generally responsible (and liable) for their managers’ misconduct, prompt and appropriate remedial action can reduce the risk of liability when the alleged harasser is merely a coworker. Managers and HR should work collaboratively to mete out appropriate discipline in a consistent manner. And employees need to understand that they must come forward with any allegations of harassment so they can be addressed and, if substantiated, remedied. In the end, employers should view the #metoo movement and media coverage as an opportunity to review and reinforce their sexual harassment policies, to redouble their efforts to stamp-out any inappropriate conduct, and, ultimately, to minimize the risk of sexual harassment claims against them. t
Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
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MSADA
NADA MARKET BEAT
JANUARY 2016
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ATD’s Spirit of Leadership Continues into 2018 By Steve Parker
Baltimore Potomac Truck Centers ATD Chairman Steve Parker is chairman of ATD, a division of NADA, 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.
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I hope fellow truck dealers, their families, and employees enjoyed Presidents’ Day weekend—a time to appreciate the great leaders who build the foundation of our country. Over the past two years serving as ATD chairman, I have realized that good leadership is consistent, unwavering, and, most of all, a collaboration among everyone involved. So in that spirit, let us continue to reach out to our leaders throughout the year for the mutual benefit of our industry. 2018 is another election year, presenting more opportunities for dealers to meet with members of Congress either in their district offices or at our own dealerships. The congressional recesses throughout the year give truck dealers the opportunity to strengthen communication with their legislators on our home turfs. We saw the advantage of building this bridge throughout 2017’s complex and expedited legislative process. Because of our existing relationships, ATD was able to quickly and effectively present our issues to lawmakers, while other trade associations struggled to have a seat at the table. Thanks to truck dealers’ grassroots efforts and hard work, ATD saw significant progress on Capitol Hill, including enactment of comprehensive tax reform that includes preserving full deductibility of floor plan interest; significant estate tax reform to help the viability of our family-owned businesses; and a reduction in corporate and pass-through taxes. This would not have been possible had we not established the groundwork early on and taken the time and effort to make phone calls, extend invitations, and sit down with members of Congress face-to-face and inform them about our business model. However, this is no time for complacency, as we must address other issues critical to our industry. We must continue to collaborate and work on repealing the harmful federal excise tax on
heavy-duty trucks. Please tell your representative in Congress to cosponsor H.R. 2946, introduced by Rep. Doug LaMalfa (R-Calif.). We must stay informed on the newest legislation, such as the infrastructure bill, and understand how technology and resources will affect the truck industry in the future. I encourage all ATD members to remain engaged and take the opportunity to influence key policy issues so that the commercial-truck industry stays strong. Finally, strength does not come from just our leaders, but from the team that supports them as well. As for me, I have been privileged to work alongside the best team in the commercial-truck industry for two years. The ATD staff has worked tirelessly to make sure leaders hear our priority issues and that members have more resources and communication tools than ever before. Our 20 Groups are growing with more truck moderators, and we are offering more truck economic data for our members as well. Please continue to read ATD Insider, which now has 11,000plus subscribers. I’ve also strengthened our lines of communication throughout the industry and with our OEMs, suppliers, and allies—like the American Trucking Associations—which I’ve been proud to work with on a regular basis. Finally, while the foundation of our country rests in the Constitution, ATD’s rests in our Strategic Plan. We’ve worked extremely hard to solidify our four pillars: participation and engagement; legislative and regulatory advocacy; industry relations; and education. So in the spirit of good leadership, I pledge to remain constant, unwavering, and collaborative with all of you throughout ATD. Let us all continue to build a strong foundation for our commercial-truck industry. t
“Thanks to truck dealers’ grassroots efforts and hard work, ATD saw significant progress on Capitol Hill.”
Massachusetts Auto Dealer www.msada.org
NADA Update
By Don Sudbay
Looking Back, and Ahead 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). This will be my final column after serving six years as your Director from Massachusetts. A lot has happened over those six years, but, fortunately our franchise system remains strong. I hope you all understand that our businesses have been under attack during these six years, whether it be from the government or our manufacturers. We have battled in the areas of CFPB, recall legislation, and tax reform, to name a few of the areas in the government sector where we have prevailed. On the manufacturer dealer relations arena, NADA has brought renewed focus to unfair manufacturer incentive programs, including “stair-step” incentives. There is a lot of work ahead, and I know that NADA will be there to watch our back. I want to thank you all for your support. It was truly an honor and privilege to represent the Massachusetts auto dealers. Working with MSADA’s staff, Executive Director Robert O’Koniewski, and the Board of Directors was a particular pleasure throughout. I know that my successor, Scott Dube, will do a great job as our new Director. Scott will take over in late March at our board meeting at the Convention in Las Vegas. Scott led us well in his term as our President of our Association, and I know he will continue to be a strong advocate for all dealers. Again, thanks to all of you for allowing me to serve you at NADA.
The Reality of EVs By Peter Welch, NADA President and CEO This is an incredibly exciting time to be in the transportation industry. New cars and trucks are safer and more efficient than ever. Automakers are introducing new technologies every day and will be deploying scores of new models with technologically advanced drivetrains and other features in the coming years. Partnerships on highly autonomous vehicle deployment abound between technology companies and OEMs. And all of this is happening while we are seeing ma-
jor advances in internal combustion engine (ICE) vehicles. For nearly 30 years, automakers have spent billions of dollars on the development and deployment of battery electric (EV), hybrid, plug-in hybrid, and fuel-cell vehicles. It started in 1990, when California adopted its zero emission vehicle (ZEV) mandate, requiring 2 percent ZEVs in 1998, 5 percent in 2001, and 10 percent in 2003 and subsequent model years. Yet despite a variety of government incentives, take-up has been slow, with EVs representing only 0.6 percent of new-car sales nationally in 2017 and 2.6 percent of new-car sales in California. There are a host of reasons why consumers aren’t buying EVs at the rate regulators have tried to force-feed them, including expense, range, recharging speed, residual value uncertainty, utility, performance, and insufficient recharging infrastructure. Most Americans won’t consider a vehicle that compromises their convenience or current mobility needs, let alone pay more for one—especially when today’s advanced ICE vehicles and their hybrid variations present affordable and convenient alternatives. However, the pendulum is beginning to swing in the other direction. In the past two years, EV sales increased significantly, and we expect those sales to increase sevenfold by 2027 to around 4 percent nationwide. In the next 10 years, the price of EV battery packs with ranges of 250 miles or more are expected to drop significantly, to $100 per kWh. This could, for the first time, put the cost of EVs on a price parity with ICE vehicles. And dozens of new EVs in popular segments like crossovers will be introduced in the next decade. Indeed, many traditional automakers have said they believe the future of the vehicle is “all electric.” Local dealerships are excited about being a part of that future and know that replacing America’s fleet of 266 million ICE vehicles with EVs could be a sales bonanza unlike any the industry has ever seen. But even as prices are coming down and other obstacles are being addressed, prospective customers continue to ask pointed questions about the practicality of owning an EV— especially questions about recharging access and recharging speed, because most Americans don’t have their own garage or a dedicated nightly parking spot. While owners of ICE vehicles and hybrids take refueling for granted, EV owners simply don’t have that luxury. There are 168,000 filling stations across America—many with 10 or more pumps—that dispense 40 million fill-ups every single day, so you can quickly and easily extend your vehicle’s range, over and over again, without ever thinking about it. But battery technology and infrastructure are simply not widely ready for fast charging. That’s why the U.S.
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NADA Update Department of Energy’s Office of Renewable Energy has identified “the ability to refuel quickly or to fast charge” as a critical obstacle to wider adoption of EVs. Even in the face of these real-world realities, some say dealers should do more to push EVs on their customers. That’s not how it works. According to a recent survey by
MSADA Cox Automotive, 74 percent of today’s vehicle buyers purchased the vehicle they selected online prior to visiting a dealership. Local dealers are merchants; they stock, sell, and service what their customers want to buy, own, and drive—and they always will. t
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