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The official publication of the Massachusetts State Automobile Dealers Association, Inc
FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
April 2019 • Vol. 31 No. 4
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 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: jfabrizio@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 BlumShapiro, 22 Nancy Phillips, 22 O’Connor & Drew, 32 Southern Auto Auction, 2 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org
Quarter Page: $450 Half Page: $700 Full Page: $1,400
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
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From the President: Preserving Our Way of Life ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: MSADA Tech Team Competes at National Competition in NYC LEGISLATIVE SCORECARD AUTO OUTLOOK
16 Cover Story: Competing with the Best
20 24 25 26 28 29 31
NEWS From Around the Horn LEGAL: Paid Family and Medical Leave Update IT SECURITY: Three Document Storage Mistakes Auto Dealers Should Avoid nada Market Beat TRUCK CORNER: Tax Season and Truck Dealers nada update: Moving Forward as One TROUBLESHOOTING: New Model Voluntary Protection Products
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
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From the President
MSADA
Preserving Our Way of Life By Chris Connolly, MSADA President As the flowers finally bloom, your Association is working every day to ensure the future of our franchised dealer auto industry. That means taking the lead on issues that affect all of us -- from your offices to your service bay. We began the month by visiting Washington for a dealer fly-in meeting with AIADA, where a number of issues critically important to our Massachusetts community were put in front of our elected representatives. Your Association is also busy preparing for the MSADA Annual Meeting on May 3 — please complete the registration form that has been sent if you have not already done so. More details about what to expect from the day can be found in Executive Vice President Robert O’Koniewski’s column. MSADA once again sponsored a team from our Commonwealth, repeat state champion Blackstone Valley Technical High School, to appear in the National Automotive Technology Competition in New York City. They placed a very respectable 17 out of 30 teams. I congratulate them on this impressive accomplishment! You can read more about their hard work in this month’s cover story. Developing the future workforce that we will utilize in our dealerships is one of the great challenges and opportunities we face as Massachusetts dealers. We are making great strides with Gov. Charlie Baker in encouraging the allocation of more resources to focus on technical education across the Commonwealth. And we continue to look for more opportunities to work with partners to put more young people in the classrooms that will someday find them at our stores. The need for this activity is clear. More than a decade ago, we were talking as a group about how cars were becoming more like computers. At the dawn of the next decade, the cars on our lot are computers on wheels. And while technology increases, we must continue to hammer home that dealers are the ones best positioned to make sure that technology does not forget the needs of the consumer. Going forward, Massachusetts techs should be among the most qualified in our country to help lead this revolution. But it is up to us to work toward that goal by getting more students in classrooms and nurturing early career techs in our dealerships. While these are issues we are looking to get in front of in the long term, there are, of course, the more immediate items we will gather to discuss on May 3. I look forward to seeing you there for a day of camaraderie and learning from one another. As always, I hope you will reach out to me if you have any questions, concerns, or ideas about any of the initiatives we are undertaking as an Association. We are here to serve you. 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 Don Sudbay, Sudbay Motors
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 [Open]
NADA Director
Scott Dube, Bill Dube Hyundai
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 Bernstein Shur PA Ned Sackman (603) 623-8700 Blum Shapiro John D. Spatcher (860) 561-4000 BMO Harris Bank Steve Gagnon (813) 447-1723 Boston Globe Anthony Merullo (617) 929-2337 Boston Magazine Noreen Murray (617) 275-2012 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Daniel Garces (703) 394-1313 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
Eastern Insurance Group William Gross (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Enterprise Rent-A-Car Timothy Allard (602) 818-3607 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 Hireology Kevin Baumgart (773) 220-6035 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 JP Morgan Chase Bank Alex Khademi (404) 375-4504 Key Bank Mark Flibotte (617) 385-6232 KPA Tim Whelan (303) 802-3019 Leader Auto Resources, Inc. Curt Murray (978) 201-4797 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 McWalter Volunteer Benefits Group Shawn Allen (617) 483-0359 Micorp Dealer Services Robert Calhoun 617-285-4833 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000
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Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 NEAD Insurance Trust Charles Muise (781) 706-6944 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Dale Ducasse (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 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 Rockland Trust Co. Manny Silva (781) 982-6806 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Chris Peck (508) 314-1283 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Service Credit Union Dave Pasternak (603) 812-8967 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 SunPower Christie McCarthy (408) 457-2357 Kristin Hodges (707) 694-7759 SunTrust Bank Michael Walsh (617) 345-6567 TD Auto Finance Marc Gerhart (781) 697-1525 TradeRev Amy Davis (617) 512-7033 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Windwalker Group Herby Duverne (617) 797-9316 Zurich American Insurance Company Steven Megee (774) 210-0092
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The Roundup
MSADA Tech Team Competes at National Competition in NYC By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Congratulations goes out to this year’s Massachusetts team from Blackstone Valley Regional Technical High School for representing us at the National Automotive Technology Competition at the New York International Auto Show. The annual competition, sponsored by the Greater New York Auto Dealers Association, was held April 22-24 in conjunction with the start of the NY auto show. The team comprised seniors Aidan Luetkemeyer and Nick Uhlman from Blackstone Valley Tech. Their instructor at the school, located in Upton, is Paul Perrault. Aidan and Nick were tested in NYC on a Subaru Legacy. They competed against 29 other teams sent by state and metro dealer associations from around the country. As a result of test results recorded over the two-day competition, the Luetkemeyer-Uhlman team finished in 17th place. We owe thanks to Long Subaru in Webster for assisting the team in its preparation. This was the second time in three years that MSADA was
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represented by Blackstone Valley Tech. As for Aidan and BVT, they were coming off a win at our state competition in the junior class division last year. The Luetkemeyer-Uhlman team was selected after winning the statewide competition at our New England International Auto Show in mid-January. At that time, they bested nine other two-person senior class teams that were selected for our state finals as a result of the written test we held for over 200 students and 16 schools last November in Marlborough. In NY, Day One of the national competition consists of a number of stations in which the teams are evaluated and scored in solving various generic vehicle problems as well as navigating through a mock job interview - no easy task for even veteran techs. The intensity of Day Two, where the students must fix a host of problems with their assigned car and hopefully get the vehicle started, can make or break the spirits of any team. Frustration can easily set in as teams are enticed to chase fake issues, eating up valuable time while the clock ticks down its three-hour deadline. This year, only four teams were able to start their assigned vehicle. This year’s championship team, sponsored by the Pennsylvania Automotive Association in Harrisburg, were repeat victors from last year, and were represented by a team from the same high school as last year—an auto tech juggernaut in the making. This year’s NY auto show was especially dedicated to the advancements in electric vehicle
MSADA technologies, vehicle design, and expanded offerings put into the marketplace by vehicle factories. In keeping with the increased commitment to EVs by our franchisor factories, the tech competition made a concerted effort to concentrate on the future developments for highly trained techs in this field. At the welcome dinner, competition hosts presented attorney Alisa Reinhardt, director of regulatory affairs for the California New Car Dealers Association, who detailed in her keynote address the growing need for techs in the EV footprint as these more technologically advanced vehicle offerings grab increased market share each year. The theme of the night was further bolstered by representatives of Mercedes-Benz, the dinner sponsors, who discussed at length advancements in their own EV technologies and the need for highly qualified technicians to work on those vehicles.
Finally, at the final day’s award ceremony, the event honored two young technicians – twin sisters Jacqueline and Nathalie Mische – graduates of Lincoln Technical Institute, another competition sponsor, who work for our own MSADA member, Peter Wirth, at Mercedes-Benz Springfield. They told a fascinating story of their journey from cosmetology school to the auto tech world. Quite an inspiration for any young person trying to figure out the difference between what you want
to do versus what others want you to be. Regardless of where a team places, no student or instructor goes away empty-handed. For their finishing spot in the competition, Aidan and Nick, as well as their instructor, received the following: For the Students: • Snap-on Tool Bag compliments of Snapon Tools • Lincoln Technical Institute $3,000 Scholarship • Official Competition Shirt & Hat from GNYADA • New York International Auto Show Backpack from GNYADA • Gifts from Lincoln Technical Institute • Gifts from NGK Spark Plugs (USA), Inc. • Gifts from Permatex • Gifts from Slime Tire Sealant • Stupid Fast Racing Hat • Gifts from Subaru For the Instructor: • Snap-on 2 Piece Wide Radiator Hose Pick Set compliments of Snap-on Tools • Official Competition Racing Shirt & Hat from GNYADA • New York International Auto Show Backpack from GNYADA For more information on their NY experience, check out our cover story on page 16
Annual Meeting – May 3, Boston Gov. Baker to Speak Don’t Delay – Register Today Have you registered yet for our upcoming annual meeting? Your Association will conduct this year’s meeting – our 79th – at Boston’s premier spot, the Mandarin Oriental Hotel. Our speakers’ lineup so far includes our keynote address from Massachusetts Governor Charlie Baker; Jason Stein, publisher of Automotive News; Guido Vildozo of IHS Automotive Group; attorney Paul Metrey, who heads regulatory affairs activities for NADA, discussing voluntary protection products; Marcos Miranda of North East Dealer Services, on the Culture of Accountability; and Herby Duverne and Jim Helein of Windwww.msada.org
walker Group, who will discuss how dealerships can access state grants to improve workforce development and training. In addition, we will provide a state legislative and regulatory update as well as reports from your MSADA president, Chris Connolly, and our NADA director, Scott Dube. We start the day at Noon with registration and a buffet lunch, and our Speakers Program will run from 1:00 p.m. to 5:00 p.m. There will be a Cocktail Reception immediately after the program. We have sent out our invitation and registration materials via email and snail mail. We will again this year provide a hotel room at the Mandarin for any member dealer who desires one for Friday evening. Be sure to register before hotel space runs out. Contact Jean Fabrizio to register at jfabrizio@msada.org or (617) 451-1051.
Dealer Day on Beacon Hill May 22 A great opportunity for dealers and their key managers to get involved in the legislative process is our annual “Dealer Day on Beacon Hill”, which will be held on Wednesday, May 22, in Boston. Materials have been sent to you via email and snail mail. We are asking our member dealers and their key employees to convene at the Parker House Hotel in Boston beginning at 10:00 a.m. in preparation of walking up to the State House to meet with their representatives and senators to discuss those issues in the automotive industry that dealers are presently confronting. We will have an issues briefing to get dealers in a proper frame of mind to provide legislators a dealer’s perspective on their economic footprint locally and throughout the state in the aggregate. For those dealers we know who will be attending, we will schedule your legislative appointments for you. In the past session, our dealers’ lobbying efforts helped secure two legislative wins for their fellow dealers – reform of the used vehicle record book and opening up the process for allocating vehicle Massachusetts Auto Dealer
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The Roundup inspection station licenses to franchised dealerships that have been long-neglected in the licensing process. This session, we have filed bills dealing with franchise law amendments, temp tags, insurance-paid labor rates to auto body repairers, and diminished value. It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspec-
It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t get in the normal course of their activities. No one knows your business better than you. tive they don’t get 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, hence our Dealer Day on Beacon Hill. Please circle the date and plan on visiting Boston on May 22.
Economic Impact Study Survey Form – Please Complete and Submit Fax to (610-640-2907) or Email to AUTOOUTLOOK@ICLOUD.COM Once again we are asking you to assist us in creating our annual Economic Impact Report, which we use with legislators and opinion makers to demonstrate the real dollar and cents economic impact that dealers have on our Commonwealth and in their cities and towns. People not involved in our industry, including lawmakers, are consistently surprised by the fact that our dealers’ businesses account for almost 20 percent of the total retail
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economic activity in Massachusetts. Getting these figures out is crucial to raise awareness of our industry’s importance, especially as legislators ponder various new methods of raising revenue. Dealers and our customers’ purchases are consistently made targets of revenue initiatives that hurt the economy and our customers’ pocketbooks. But facts do not lie, and we need to make it difficult for those who look to businesses to bear the burden during tough budgetary times to justify cutting us off at the knees more than they already have. Please take a few minutes and complete the survey form included on page 10 at the end of my Roundup column for each of your dealerships. This form has been emailed to you several times as well as snail mailed. Once completed, either fax it to Auto Outlook at (610) 640-2907 or email it to autooutlook@icloud.com. Your submitted survey is strictly confidential. We need returns from at least half our members for our survey to be accurate. We will be collecting the surveys over the next several weeks. Thank you for your assistance in this project. Should you have any questions, please do not hesitate to contact me.
AIADA Washington Summit Earlier this month MSADA representatives traveled to Washington, D.C. for the American International Automobile Dealers Association’s (AIADA) Twelfth Annual International Auto Industry Summit. AIADA annually gathers international nameplate franchised dealers in DC to hear from auto industry and political speakers and to meet with members of the dealers’ congressional delegations on Capitol Hill to discuss legislative and business issues facing the international nameplate community, especially pending global trade-related legislation. This year’s Summit had a certain level of urgency to it, as AIADA felt the need to address Washington’s continued interest in the implementation of tariffs on materials and finished motor vehi-
Massachusetts Auto Dealer www.msada.org
cle products, which are beginning to hit dealers and consumers in the pocketbook. In 2017, AIADA and its member dealers were successful in heightening awareness of the potential adverse impacts a border adjustment tax (BAT) would have on vehicle and parts pricing, and such lobbying ultimately helped defeat the BAT. In making our Capitol Hill rounds, your Association’s contingent, including MSADA President Chris Connolly from Herb Connolly Acura and George Albrecht from Woburn Foreign Motors, visited the following Members of Congress and/or legislative staff: Rep. Jim McGovern (D-Worcester), Rep. William Keating (D-Bourne), Rep. Katherine Clark (D-Melrose), Rep. Lori Trahan (D-Lowell), Rep. Joseph Kennedy (D-Brookline), Rep. Richard Neal (D-Springfield), and Senator Ed Markey, another Democrat. During our meetings, we found receptive ears and in-depth questioning. We did not hear of any support for tariffs in these meetings. (Tim Bruno of Route 44 Toyota also attended the Summit.) As Congress continues to ramp up its focus on these issues, if you want to get more involved with the process, including hosting a Member of Congress at your dealership, please contact me.
MSADA Dealer Support Programs Re-Approved for 2019 – Are You Using Them? 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, Furrh Associates, and Ethos Group (newly added in 2019) for OSHA and environmental compliance; and O’Connor & Drew for tax compliance and cybersecurity protection. Your Board of Directors voted at its December board meeting to continue these programs for 2019, with a vendor addition: Piper Consulting was added to
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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. the list of workplace/environmental services vendors. In addition to the compliance assistance, your Board voted to reauthorize the community outreach program for 2019, in which we are assisting dealers’ charitable efforts up to $1,500 annually. Directors made a change here, too: Beginning this year, each single/anchor store will be eligible for a $1,500 reimbursement, and each additional member affiliate store will be eligible for an additional $250 per store, with a cap of $2,000 total for a dealer group (anchor store + two affiliates). Do not hesitate to contact us regarding these programs so you do not lose out on these services supported by your Association.
NADA 2019 Workforce Study Enrollment Still Open; Submission Deadline is May 15 The NADA/ATD 2019 Dealership Workforce Study is now open. Dealers are encouraged to enroll now at www. nadaworkforcestudy.com to participate in the 2019 Dealership Workforce Study. NADA provides this annual report so both car and truck dealers can use it to fine-tune employee compensation and benefits and promote retention. Only through robust participation does this report allow for valuable information and statistical analysis. Following dealer feedback, NADA has redesigned the survey to obtain more insight into compensation plans for variable operations positions. This will only further assist participants and users of the study in their decision-making with regards to pay structure. All participating NADA/ATD members will receive a complimentary custom re-
port for their store. This exclusive report will give you a Workforce Management Scorecard that compares and ranks your dealership against peer-level dealerships on key metrics related to compensation, retention, and turnover. In addition, all participants will receive a complimentary copy of the 2019 Dealership Workforce Study National and Regional Trends in Compensation, Benefits and Retention Report. Participants will also be granted access for up to one year to the Database Search Tool where they will find all of the data submitted for each of the past workforce studies. Once enrolled, the deadline for submitting all required data is May 15, 2019. For any questions please contact Joe Fleming at 703-448-5891 or workforcestudy@nada.org.
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 jfabrizio@msada.org. The application deadline is Friday, May 24, 2019.
Save the Date: Dealer Hall of Fame Ceremony October 2-4, Chatham In order to honor those who have been titans within our industry in Massachusetts, your Association will conduct its Second Annual Dealer Hall of Fame ceremony October 2-4 at the Chatham Bars Inn on Cape Cod. We will be sending out nomination materials by email and snail mail. If you know a dealer or dealers who
MSADCF Auto Tech Scholarships Available Applications for the Massachusetts State Auto Dealers Charitable Foundation’s 2019-2020 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 over two years for each student selected. Ten years ago the Foundation’s scholarship program expanded to include not just manufacturer-backed programs but also general automotive technology programs at more colleges in the Massachusetts area. This gives dealers an even greater
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should be recognized in our next Hall of Fame class, please submit the nomination form to us when you receive it. Criteria upon which dealers should base their nominations include, but are not limited to, the following: commitment to the industry and the Association; time in the business; community involvement; and overall positive impact on the industry. We are looking forward to our members’ input to help with the selection process. t
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Troubleshooting
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New Model Voluntary Protection Products By Peter Brennan, Esq. MSADA
Staff Attorney At any dealership, the sale of voluntary protection products is an integral part of the business model. These products can be a profit center for a dealership, but their sale is highly scrutinized by regulators. Dealers, therefore, need to tread carefully to ensure that the F&I office does not turn from a profit center to a liability. Recently, NADA, in conjunction with NAMAD and AIADA, released the Driven Guide to Voluntary Protection Products: A Model Dealership Policy, which is worth seeking out and available to NADA members at www. nada.org/voluntaryprotectionproducts. “Voluntary protection product” (VPP) is a broad designation that includes various products designed to protect a customer against some occurrence beyond their control, such as acts of God like fire, flood, hail, or other damages to the vehicle, as well as personal afflictions that may befall the customer, such as disability, unemployment, or death. These products help give customers peace of mind during what is generally one of the most important financial decisions that they will make in their lives - the purchase or lease of a vehicle. The availability of various VPPs allows the customer to minimize his, or his surviving family’s, exposure on a vehicle lease or purchase should certain circumstances arise. According to a 2017 study conducted by the job site CareerBuilder, 78% of Americans live paycheck to paycheck. A 2016 survey by the Brookings Institution found that 76.3% of Americans drive alone to work, while an additional 9% carpooled.
Given those numbers, it is likely that the next person to lease or purchase a vehicle at your dealership will need that vehicle to get to work. That same customer would probably be in financial dire straits if they lost the vehicle, through theft or damage, and did not receive a large enough insurance payout to replace it. In such a case, Guaranteed Asset Protection (GAP) coverage, which can supplement the payout a customer receives from comprehensive or collision insurance, would be extremely helpful to the customer. GAP is especially beneficial to customers that make a small down payment or take a loan term of 48 months or longer when they purchase a vehicle. As the average loan term on a new vehicle purchase nationally is now at 72 months, having a product like GAP available to your customers is an easy choice. After all, the customer can always decline to purchase any additional coverage. This has not stopped legislators, regulators and consumer advocates throughout the country from taking aim at GAP and other VPPs. In 2017, the National Consumer Law Center published a report titled, “Auto Add-Ons Add Up: How Dealer Discretion Drives Excessive, Inconsistent, and Discriminatory Pricing”. In the report, the NCLC questioned the value of products such as GAP and encouraged the Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Reserve Board, and state attorneys general to bring actions against dealers where a review of dealer reserve on add-on products showed discrimination against protected classes through everyone’s favorite legal theory: disparate impact. Dealers have also faced legal scrutiny for the aggressiveness of their F&I office in marketing these products. In Massachusetts, Attorney General Maura Healy brought a lawsuit alleging predatory practices against used car chain JD Byrider, based in part on alleged aggressive and misleading marketing of service contracts. www.msada.org
The NADA/NAMAD/AIADA Model Dealership Voluntary Protection Product Policy is designed to protect dealers from legal liability resulting from the sale and marketing of VPPs, and it is broken down into three sections: Section I of the Model Policy provides a poster template that can be prominently displayed to customers, stating that the purchase of VPPs is optional under all circumstances and that the dealership is committed to transparency in providing the customer with the terms and price of the VPP. By displaying the poster and providing a customer with all pertinent information before they make a decision, the dealership can protect itself against claims of misleading practices. Section II of the Model Policy is designed for dealership employees and states the dealership’s commitment to compliance with all laws in the marketing of VPPs and in contracting with third-party providers of VPPs, including all state and federal laws and regulations. This section also states that the dealership will conduct training on VPP compliance and proper record retention related to VPP sales and marketing. Section III deals with VPP product selection and sets forth specific criteria that a dealership should use in determining whether various VPPs should be offered at the dealership. Again, the Model Policy can be found at www.nada.org/voluntaryprotectionproducts for NADA members. The Model Policy should be reviewed with legal counsel and personalized for your dealership. As the sale of VPPs continues to come under the legal and regulatory microscope, the Model Policy can help your dealership avoid unnecessary headaches. t If you have a question on this or any other legal topic, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org, or Peter Brennan, MSADA Staff Attorney, pbrennan@ msada.org, or by phone at (617) 451-1051. Massachusetts Auto Dealer
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RACE TO THE FINISH COVER STORY
“The future of o depends on edu and hiring, the techs at our de
–Robert O’Koniewski, MSADA Executiv
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our industry ucating, e best young ealerships.”
ve Vice President
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Competing with the Best Blackstone Valley Regional Vocational Technical High School makes a third appearance at the National Automotive Technology Competition By Jeff Breeze Usually, Blackstone Valley Regional Vocational Technical High School represents students in the 13-town region of south central Massachusetts between Worcester and the Rhode Island border. From April 22-24 at the Jacob Javits Center in New York City, two students from the school represented the entire Commonwealth as they competed against the best automotive technology students in the country. Blackstone Valley Tech Automotive Technology seniors Nick Uhlman and Aidan Luetkemeyer earned their spot in the 2019 National Automotive Technology Competition following the state qualifying event held by the MSADA this past winter. About 200 students in the state of Massachusetts took a written test last November to determine the top scores from each school. The top 10 two-person teams from the schools then competed at the MSADA’s Car Show in Boston on January 19. “That was a hands-on thing, and my students got to compete and luckily we came out on top this year,” Blackstone Valley Tech’s Automotive Technology Vocational Instructor Paul Perreault said. Uhlman and Luetkemeyer’s success earned them a three-day trip at the national competition in New York City sponsored by MSADA. www.msada.org
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RACE TO THEWITH FINISH COMPETING THE BEST Repeated Success
Down to the Wire
Perreault has about 60 students in The competition happened one his Auto Tech classes split among all floor below the New York Intergrades who alternate a week in the national Auto Show and brought shop with a week in the classroom. the nation’s best high school auWatching his students grow and matomotive technicians to test their ture through their four years is reskills, measure their knowledge, warding to Perreault, as he finds that and challenge their ability to dithe foundation in Auto Tech can lead agnose and repair vehicles. not only to a life as a service techSixty students from across the nician but also become the basis for country descended upon Manmany technical careers. hattan in hopes of proving them“For me, on a personal level, it is selves best in the country and “As opposed to your very satisfying to know that it justifies showing that the next generation hammer-and-chisel what I am doing is right, and I am on of automotive technicians is in point when I have some good kids,” good hands. With new cars there guy, now it is more of he explained. “If they apply themto test their mettle on, this contest a diagnostician with selves, they learn a lot here.” is designed to be relevant in toa laptop working on Perreault has taught at Blackstone day’s technologically advanced Valley Tech for seven years, and this automotive industry. computer circuits.” is the third time that he has sent a The first day of the contest fea– Paul Perreault team to the national competition. He tured tests on Uhlman and LuetBlackstone Valley Regional has continued to work service on the kemeyer’s knowledge of tools, Vocational Technical weekends as much to keep up with the measuring instruments, specific High School ever-changing technology as anything vehicle components, and job inelse. He finds that the comparison beterview skills. tween the world where his students will enter the workforce and “There are thirteen different stations that test the kids on indiwhen he did to be a major shift. vidual skill sets,” Perreault noted, “like electrical and electron“It is definitely more complicated, especially with all of the ics, braking and measuring of an engine, and all of the mechansafety features like lane departure and automatic braking, and ical stuff.” hybrid systems. It is way more technically advanced than back Wednesday’s program on the second day of testing is a differin 1982 when I started. The level of the student needs to be ent beast as the two students are given a car to repair. This year much better. As opposed to your hammer-and-chisel guy, now they worked on a 2019 Subaru Legacy. The vehicle had been it is more of a diagnostician with a laptop working on computer determined a month and a half ago, so Perreault had focused circuits.” Uhlman and Luetkemeyer on that vehicle. Long Subaru in Webster generously offered a car up for the students to study during the week leading up to the competition. With an allotted amount of time in which to diagnose and repair several preassigned problems under a car’s hood, each correctly repaired issue is worth a set number of points depending on the level of difficulty.
A Bright Future By the end of the competition, both Uhlman and Luetkemeyer were pushed to their limits. Perreault and their parents, while eager to be in New York City with them as support, kept their distance to allow them to focus. From a distance, all were beaming. “He loves his shop, he loves what he has learned,” said Leanne Luetkemeyer, Aidan’s mother. She also gave credit to Mercedes-Benz of Shrewsbury for taking him on as an intern, furthering his interest in the field. APRIL 2019
Massachusetts Auto Dealer www.msada.org
MSADA MSADA Scholarships Help Meet Demand for Technicians
“He loves this career path.” Supporting the group throughout the competition was MSADA Executive Vice President Robert O’Koniewski. “MSADA is proud of its long-running involvement in both our own auto tech competition and our support for the National Auto Tech Competition,” O’Koniewski said. “The future of our industry depends on educating, and hiring, the best young techs at our dealerships. This is just one of the ways the Association shows that support each year, and we are proud of Blackstone Valley Tech’s accomplishments here in the Big Apple. Regardless of where a team places, all these students can take pride in the fact that in this year, 2019, they are the best in the country at their academic level.” t
In 2003, the Massachusetts State Auto Dealers Charitable Foundation began its Automotive Technician Scholarship Program. The Foundation is the charitable arm of the Massachusetts State Automobile Dealers Association. More than 200 students have benefited from almost $1,000,000 in scholarships. Massachusetts Bay Community College has been a long-time partner and has the most extensive partnership (scholarships) with the Foundation in the state. Students from colleges, including Benjamin Franklin Institute of Technology, Springfield Technical Community College, and Massasoit Community College, have also received scholarships from the Foundation. The Scholarship Program is competitive. A twoyear scholarship ranges from $6,000 to $13,000 per year. Less than 10 percent of the students who apply are accepted. Students must maintain a 3.0 average in their tech courses, and they must have secured a co-op appointment in a Massachusetts new car dealer repair shop (dealership). A co-op is technically an internship and students are paid, offsetting the cost of tuition of the program at MassBay. The tuition for the automotive technician program is $16,000. The field of auto mechanics is changing dramatically. Today’s mechanic needs to know how to operate a keyboard as well as a stick shift. As cars with sophisticated onboard computers become the rule rather than the exception, the profession is becoming more white-collar, and technicians now need to be computer- as well as mechanically-savvy. Auto mechanics are now called technicians, and for good reason. While they may still sometimes get their hands dirty, more often than not, they turn to computers to help them diagnose a problem and perhaps even give them the repair instructions. MassBay, part of the state’s community college system, is training this new breed of automotive technicians at its state-of-the-art automotive center in Ashland. MassBay’s Automotive Center is known for having one of the best programs in the Northeast. Its strong partnerships with area dealers ensures that its students get to work and train on the latest models.
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NEWS NEWS the NEWSfrom from Around Around the Horn Horn from Around
NEWS the Horn MSADA
HADLEY
Cosenzi Makes a Difference
donated more than $950,000 to Dana Farber Cancer Institute, positively impacting the lives of the Institute’s patients. From this tournament her philanthropic mission continued to grow, with the Tom Cosenzi scholarship fund. And it did not stop there; TommyCar Auto Group began to empower their employees to decide what charities in the community they felt
Among the six recipients of the 2019 Difference Maker Award was Carla Cosenzi, President of TommyCar Auto Group. The honorees were announced in February and celebrated at the Business West 2019 Difference Makers Event held at the Log Cabin in Holyoke in March. The award was created in 2008 as a symbol of excellence and dedication to improving quality of life in Western Massachusetts. Since the very beginning, this recognition program has shown conclusively that there are a great many ways to make a difference. It has recognized individuals and organizations making a positive difference, and celebrated their contributions, value, and positive influence on improving the Western Massachusetts community. According to the presenters, Cosenzi inspires others as a business leader and an individual by always looking for different ways 2019 Difference Maker Carla Cosenzi (center) with the contingent from TommyCar Auto Group. to give back to her community strongly about. Her motivation is simple: “To carry on Tom’s and making the region a better place to live, work, and run a values and legacy with all of her employees through the dealbusiness. She was honored to be presented with the 2019 Diferships.” ference Maker award alongside so many local doers. “It is truly exciting to see such an unbelievable response to these deserving, continued Difference Makers. We are so fortunate in this BOSTON community of Western Massachusetts to have so many great and deserving people who can clearly be labeled as Difference If you told people that Kia Motors was founded in 1944, you Makers,” stated Cosenzi. would be technically correct, but at that point they were merely At a very young age, Cosenzi’s father taught her the suca manufacturer of steel tubing and bicycle parts. It was not until cess he had was enhanced by giving back to the community and 1962 that they started manufacturing trucks and 1974 started teaching others to give back, and that it is necessary to balance building cars. After partnering with Ford, they opened their first profit-making with contributing to and benefiting society. He American dealerships in Oregon in 1994. Since then, Hyundai also taught her that your company is only as extraordinary as took over that controlling stake in Kia, and the company has your people. When he passed away in 2009, she could not stop consistently increased their market share. thinking of how to carry on her father’s legacy. The idea of givWith the forthcoming 7-passenger SUV, the 2020 Kia Teling back and teaching others to give back while having the most luride, ready to start arriving at dealerships this spring, Kia has extraordinary employees became foundational. taken to celebrating the dealerships that have been with them It manifested itself in the Tom Cosenzi Driving for the Cure for twenty years or more. Among the list of dealerships that Charity Golf Tournament, which grew from an employee tourhave been working with Kia for two decades include two Masnament to a tournament that remembered and honored his memsachusetts dealerships: Quirk Kia in Braintree and Commonory by raising money for Dana Farber Cancer Institute. The wealth Kia in Lawrence. Tom Cosenzi Driving for the Cure Charity Golf Tournament has
Kia Dealers Celebrate 20 Years
APRIL 2019
Massachusetts Auto Dealer www.msada.org
NEWS from Around the Horn
MSADA
LINCOLN
Heisman Hero and Car Auction Manager Bellino Dies Joe Bellino was sitting in an electrical engineering class at the Naval Academy in November 1960 when he was summoned by the school’s superintendent. Thinking he was in trouble, Bellino instead found the office was filled with people, including two sports reporters and an admiral, who read a telegram from the Downtown Athletic Club that began: “Congratulations Midshipman Bellino.” At that moment, the former Winchester High School three-sport athlete realized he had won the Heisman Trophy, college football’s highest individual honor. Longtime Bedford resident Bellino died of stomach cancer in March at the age of 81. The Heisman-winning Navy halfback was nicknamed the “Winchester Rifle,” after his suburban Boston hometown. He played a few seasons in the NFL after serving his four years in the Navy, and remained in the Naval Reserve, ultimately serving 28 years and reaching the rank of Captain before retiring to Bedford. For 18 years Bellino was the manager of the Framingham-based Car Auction operating out of the old General Motors plant. His office was plastered with photos of the full life he lived, including flipping a football in the Oval Office next to a President, and fellow Navy man, John F. Kennedy. “Joe was a gentleman,” said Bob Moran of Concord, a longtime friend of Bellino. They met in the auto business; Moran owns a Toyota dealership in Acton. “Joe was a first-class guy. He would listen to people and get both sides of the story before making a decision. He helped me in the business. He was like a mentor to me.” At the time of his death, Bellino was a director of Northern Bank & Trust in Woburn and a longtime executive with ADESA Boston, an automobile auction company. “Joe was like a second dad to me and a mentor to many people in the automobile business,” said Tom Caruso, ADESA’s former CEO. Patriots coach Bill Belichick’s dad was an assistant coach at Navy, and young Bill was said to have idolized Bellino. Years later, Belichick would have Bellino come in and talk to his rookies. Bellino would tell the Patriots’ rookies not to spend $150,000 buying a car (or let a friend drive it), trying to instill a sense of responsibility, and encouraged them to take care of their money. “Joe was my first hero and football inspiration. His standard
of excellence was a great example for me,” Belichick said in the Academy press release. Belichick added that when he graduated, Bellino gave him his midshipmen’s hat, and “50 years later, I gave it back to him because it belongs in his family.” Bellino was friends with many celebrities and often said Bob Hope wanted him to marry his daughter. The two did help get the Senior Golf Tour started up in the 1980s, and the first tournament was held at Marlborough Country Club with Bellino and Hope there for the opening ceremonies. “Joe inspired everyone who knew him, and always found time to share his wonderful personality and embracing smile,” Naval Academy athletic director Chet Gladchuk Jr. said in a press release. A senior All-American, Bellino also received the Maxwell Award as College Player of the Year and is enshrined in the National Football Foundation’s College Hall of Fame. A 1960 Sports Illustrated cover story noted that “with a football in his hands and the bulging, muscular posts that serve him as legs drumming down a football field, Joe Bellino becomes something special.” In his three college varsity seasons, Bellino scored 31 touchdowns, rushed for 1,664 yards on 330 carries, returned 37 kicks for 833 yards, and set 15 school records. In addition, he was an outstanding catcher and outfielder on the Navy baseball team and was team captain in 1961. Before his senior year of college he came home to find two men sitting at the family’s kitchen table. A professional baseball scout arrived with a lucrative bonus offer, and a Naval Academy representative was awaiting word on whether Bellino would return to the Academy and commit to four years of military service. He turned down the money. “I felt I owed the Navy something for what it had done for me,” he told the Boston Globe in 1965. “I thought I had an obligation to fulfill.” In 1961, he married Ann Tansey, a former high school classmate. Their wedding announcement was featured in the Globe’s Society column featuring a photo of Ann adjusting Bellino’s ensign cap. While serving as a lieutenant on the minesweeper USS Albatross in the South China Sea during the Vietnam War in 1965, Bellino received cables from the Redskins and the Patriots asking him to come to training camp. He stuck around on the Patriots roster for three seasons, but, at 5-foot-9 and183 pounds, he spent most of his time as a kick returner.
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NEWS from Around the Horn BOSTON
Exeter Finance Pays $6M in Loan Violation Agreement Subprime auto lender Exeter Finance agreed in April to pay more than $6 million for financing auto loans that the lender knew or should have known were unfair. Both Massachusetts and Delaware say the loans violated state law. The settlements resulted from a joint investigation by the states’ attorneys general offices. In Massachusetts, Exeter agreed to pay $4.7 million to harmed borrowers and $825,000 to the state. In a separate agreement in Delaware, Exeter agreed to pay $550,000 to affected customers and $50,000 to the state. The office of Massachusetts Attorney General Maura Healey said Exeter facilitated auto loan originations that it “knew or should have known were unfair and in violation of the state Consumer Protection Law,” while the office of Delaware Attorney General Kathleen Jennings said the lender “knew or should have known” that the loans violated state laws. Financing is illegal if lenders do not have a basis for believing that customers will be able to repay loans as scheduled, the Massachusetts attorney general office said in a statement. “This company’s loans put Massachusetts car buyers in economic danger,” Healey said. The Massachusetts attorney general’s office also accused Exeter of violating debt collection regulations through mishandling servicing and collection of auto loans. Both attorneys general offices also said the settlement is part of the offices’ ongoing review of securitization practices in subprime auto lending industrywide. As part of the agreements, Exeter will waive deficiencies on certain subprime loans in its portfolio and will request that the major credit bureaus “wipe all trade lines for involved subprime loans” on affected consumers’ credit reports, according to the statements. An Exeter spokeswoman told Automotive News the company is “pleased to have resolved this matter.” She added, “Exeter is committed to ensuring the highest standards of customer service in its business when delivering vital auto financing options to consumers.” Delaware and Massachusetts previously partnered to crack down on deceptive subprime auto lending. In March 2017, Santander Consumer USA Holdings Inc. agreed to pay $16 million to more than 2,000 Massachusetts car buyers and another $6 million to the state for originating auto loans based on customer incomes that were “incorrect and often inflated.” In a separate settlement, the Delaware Department of Justice secured $2.9 million in consumer relief from Santander. Massachusetts had settled with the lender in 2015. APRIL 2019
Massachusetts Auto Dealer www.msada.org
MSADA DETROIT
Chevrolet Unplugs the Volt The last Volt was built with little ceremony in February, at a Detroit factory that is now slated to close. Sales averaged less than 20,000 per year, not enough to sustain the costly undertaking. The end of a more than decade-long effort by General Motors executives to counter its gas-guzzling image by pointing the way to transportation of the future: an electric car with a gas-engine backup that could travel anywhere. “While it was a financial loser, it did what was intended,” said retired GM Vice Chairman Bob Lutz, who shepherded the Volt into production. “We viewed it as a stepping stone to full electrics, which were totally out of reach due to the then-astronomical cost of lithium-ion batteries.” The Volt was not the first electric car, but it was the first to conquer anxiety over range at a reasonable cost. The Volt was among the first plug-in hybrids, many of which can go only 20 or so miles on electricity before switching to the gas engine and have not gained much popularity among consumers. Unveiled in 2007 at Detroit’s Auto Show, the Chevrolet Volt was merely a concept car, with GM engineers not knowing yet whether they had the technology to pull off a major breakthrough in battery-powered vehicles. Four years later, the first Volt — a longer-range version of a plug-in hybrid — rolled off the assembly line. GM had hopes that customers would be ready for a car that could go 38 miles on electricity before a small internal combustion generator kicked in.
BOSTON
Aptiv Releases Data to Promote Increased Safety In an effort to spur greater research into self-driving car safety, automotive tech firm Aptiv is releasing a massive data set to the public. Called NuScenes by Aptiv, it is made up of sensor data from Aptiv self-driving cars harvested during testing on public roads. Aptiv claims it is the largest data set of its kind to be made available to the public. “We appreciate the importance of transparency and building trust in AVs [autonomous vehicles],” Karl Iagnemma, president of Aptiv Autonomous Mobility, said in a statement. The kind of data being released “has traditionally been kept confidential with academic communities, cities, and the public at large,” he said. The NuScenes by Aptiv data set includes 1.4 million imag-
Originally, the Volt was to be a sleek, futuristic five-seat vehicle built to hold a battery and a new three-cylinder engine to generate electricity. Because of GM’s financial problems, the project was scaled back and became a modified version of the Chevrolet Cruze compact car, with only four seats and many parts from other existing GM vehicles.
The Volt led to advances in lithium-ion batteries similar to those that power smart phones and computers. However, it was these same advances that ultimately led to the Volt’s demise as now there are fully electric vehicles that can go 200 or more miles per charge. GM now has the Chevrolet Bolt, which can go 238 miles on a single charge, and it has promised many more electric vehicles in the future.
es, 390,000 lidar sweeps, and 1.4 million 3D “human annotated bounding boxes,” according to Aptiv. The data is organized into 1,000 “scenes” representing real-life driving scenarios from the streets of Boston and Singapore, the company said. To date, over 1,000 users and 200 academic institutions have registered for access to the data set, according to Aptiv. The fact that data comes from Boston and Singapore indicates it was collected by NuTonomy, an autonomous-driving tech startup bought by Aptiv predecessor Delphi in 2017. NuTonomy launched a pilot autonomous-taxi service in Singapore in 2016, and also worked with Lyft on an autonomous ride-sharing pilot in Boston, its hometown. A novel point of the Boston pilot is that it uses modified Renault Zoe electric cars — a model not sold in the United States. The French cars were originally confined to a small area of Boston’s waterfront, but are now free to roam throughout the city. t www.msada.org
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MSADA
By Joseph W. Ambash and Jeffrey A. Fritz
Paid Family and Medical Leave Update
In June 2018, Massachusetts became the sixth state to enact a paid family and medical leave (“PFML”) law. While potential benefits to employees do not go into effect until 2021, you need to know about certain requirements that go into effect this year, some as early as May. Beginning January 1, 2021, the PFML law entitles eligible employees to: (1) up to 12 weeks of paid leave (in any benefit year) for the birth, adoption, or foster care placement of a child, or because of a qualifying exigency arising out of a family member’s active duty in the Armed Forces; (2) up to 20 weeks of paid leave for his/ her own serious health condition; and/or (3) up to 26 weeks of paid leave to care for a covered-service-member family member’s serious health condition. Beginning July 1, 2021, the PFML law entitles eligible employees to up to 12 weeks of paid leave to care for any family member’s serious health condition. That said, the PFML law only entitles eligible employees to an aggregate total of 26 weeks in a single benefit year. As it currently stands, the maximum weekly benefit will be $850 (which will be subject to change year to year). Like its federal counterpart, the PFML affords employees job protection during their leaves, and prohibits retaliation and discrimination. Nuances exist under the PFML, however, that do not exist under federal law. PFML will be funded by employer (and employee) contributions to the newly-created Massachusetts Department of Family and Medical Leave (“DFML”). Employers must remit their contributions to the DFML quarterly, through MassTaxConnect, along with a report of gross wages and other payments to employees. The first such payment and quarterly report (for July through September contributions) are due October 31, 2019. Employers certainly are free to pay for this new tax themselves, which currently is set at 0.63% of an employee’s first $132,900 in wages. That said, the PFML law permits a portion of the obligation to be passed through to employees in the form of APRIL 2019
payroll deductions. Beginning July 1, 2019, employers must pay at least 0.312% per pay period (or the equivalent of $3.12 per $1,000 an employee earns) and, accordingly, may deduct the remaining contribution requirement (at most, 0.318%, or $3.18 per $1,000) from employee wages.
May 31, 2019 Written Notice and Poster Requirement The PFML also requires employers to provide written notice to all employees and independent contractors by May 31, 2019. Such notice must contain: • an explanation of PFML benefits and rights, including rights to reinstatement and continuation of health insurance; • the employee’s contribution amount; • the employer’s contribution amount; • the employer’s name and mailing address; • the identification number DFML assigned to the employer; • instructions on how to file a claim for benefits; • the DFML’s mailing address, email address, and telephone number; and • any other information DFML ultimately deems necessary. The notice, which may be issued electronically or in writing, must provide employees the ability to acknowledge receipt or indicate a refusal to sign, and a signed copy of the acknowledge or an electronic version should be placed in each employee’s personnel file. To assist employers, the DFML has drafted a sample notice that is compliant with the law. You can download a copy here: https://www.mass.gov/info-details/informing-your-workforce-about-paid-familyand-medical-leave (“Employer notice to employee”). We strongly recommend that you download a copy of this notice, provide a copy to each employee as soon as practicable, and require them to sign it (or acknowledge their refusal) on or before May 31, 2019. The PFML also requires employers to post (yet another) poster (also by May 31,
Massachusetts Auto Dealer www.msada.org
2019) in a conspicuous place, outlining the key dates for contributions and benefits, describing who is covered by the law, and explaining the rights and benefits under the law (which you may need to post in multiple languages). You can access the poster at the same link above (“Paid Family and Medical Leave mandatory workplace poster”). We strongly recommend that you download a copy of this poster and post it alongside your others as soon as practicable.
Payroll Deductions Begin July 1 Assuming you want to pass along a portion of this new tax to your employees, you should begin making appropriate deductions July 1, 2019. And you should track such deductions to allow your dealership to submit accurate and appropriate reports along with your quarterly contribution payments to the DFML. The DFML is slated to issue final regulations shortly. We will certainly report back with any additional guidance they offer. In the meantime, you should (1) ensure compliance with the notice and poster requirements by May 31, 2019; (2) ensure you are ready to make appropriate payroll deductions beginning July 1, 2019; (3) have your handbook and/or applicable policies updated to reflect the PFML law’s new rights and obligations; and (4) train your managers and HR staff accordingly. 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.
IT Security Three Document Storage Mistakes Auto Dealers Should Avoid By Brad Bass Dealer DOCX
Brad Bass, senior vice president of sales at
DealerDOCX,
can
be reached at brad@ dealerdocx.com.
Auto dealers, like any other organization, need to have a strong document management system. The cost of an inefficient document management system can be high. Without proper records, a company risks paying hefty fines due to noncompliance with legislative requirements. That is why document management should be an important consideration for all types of
“A strong record retention process will ensure total compliance with all necessary regulatory requirements.� businesses, including auto dealers. Let us take a look at some of the mistakes that auto dealers commonly make regarding the storage of confidential company data.
Mistake 1 Not Having a Document Storage Policy Many auto dealerships do not have a document storage policy. They do not deem it worth the time and effort to craft a policy for storing documents. The fact is that a document storage policy is critical for effective document management. The policy should include the pro-
cess of storing and retrieving documents. It should also include security measures to ensure the protection of documents. A detailed document retention policy will help in proper storage and protection of documents. It will ensure that the document storage process meets the legal requirements for document retention. The result will be reduced risk of a fine or penalty due to noncompliance. Moreover, it will ensure the protection of documents against loss, pilferage, or theft.
Mistake 2 Not Making Digital Copies Every paper document should be scanned and saved in a digital format such as PDF, DOCX, or JPEG. However, a lot of auto dealers simply file away the paper documents with little thought given to keeping a digital copy. A digital copy will ensure a permanent record of a paper document. This will prevent a lot of legal trouble in the future. Paper documents can become misplaced or destroyed by accident. Having a digital copy will ensure that the file is saved and recovered whenever required. Keeping a digital copy is particularly important for documents that need to be retained for a long period. These include company permits, tax records, shareholder agreements, leases, board meeting minwww.msada.org
utes, and bylaws. Also, consider making a digital copy of job applicant information, employment files, and bank statements.
Mistake 3 Not Opting for a Cloud Storage Solution Most auto dealers keep a digital copy of the records on the local servers. This is a grave mistake that you should definitely avoid. Cloud or online storage will not just save you storage costs, but it will also ensure maximum protection of documents. You will not have to maintain backup servers for storing legal documents that will save you a lot of costs. Also, keeping files online will ensure that your files remain perfectly protected. Online storage service providers rely on the best security practices to secure customer data. They also make a regular backup of data. This ensures that your files will be recovered promptly in the event of a system failure. Documents are an integral part of a business’ workflow. A strong record retention process will ensure total compliance with all necessary regulatory requirements. Make sure that you keep the documents secured by avoiding the mistakes highlighted in this column. t Massachusetts Auto Dealer
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
APRIL 2019
Massachusetts Auto Dealer www.msada.org
MSADA
NADA MARKET BEAT
JANUARY 2016
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TRUCK CORNER
Tax Season and Truck Dealers
By Jodie Teuton Chairwoman, American Truck Dealers ATD Chairwoman Jodie Teuton is vice president of Kenworth of Louisiana and Southland Truck Leasing in Gray, Louisiana.
APRIL 2019
Benjamin Franklin wrote in 1789: “In this world nothing can be said to be certain, except death and taxes.” I do not think even Franklin could have envisioned the Tax Cut and Jobs Act of 2017, the most complex and comprehensive tax bill of the past 30 years. With our federal taxes due to be paid back on April 15, we were sure to make all ATD members aware that the new tax law contains many provisions that affect our businesses. Business owners, including commercial truck dealers, navigate some of the most complex tax regulations each year, and the recent tax code changes made the process of filing taxes even more overwhelming. While the 2017 tax reform bill preserved 100 percent deductibility of floor plan interest, the IRS has yet to determine if dealers who utilize floor plan may also take advantage of 100 percent bonus depreciation—a vital deduction for all truck dealers. ATD is continuing to pursue this issue. At this point, NADA and ATD have submitted comments on both bonus depreciation and floor plan regulations. We are requesting the IRS to issue favorable regulations that will let dealers, who do not deduct more than the 30 percent of adjusted taxable income cap, to utilize bonus depreciation. We are currently waiting for the IRS to issue final regulations, which are expected in May or June. The new tax code also: • Maintains 100 percent deductibility of advertising expenses; • Reduces the burden of the federal estate tax by doubling the exclusion to about $22.4 million per couple; • Preserves the last-in, first-out (LIFO) method of accounting; • Reduces the tax rate—from 35 percent to 21 percent—for dealerships that use C-corporations; and
• Pass-through dealerships get rate relief through a 20 percent deduction of pass-through income and a lower top rate on personal returns. ATD can provide you with tax information if you have not yet submitted your taxes for the year. To review more comprehensive information, I direct all ATD members to NADA’s Driven guides. The guides are a complimentary member benefit available on nada.org. They are updated when necessary and are created by the best subject matter experts in the industry, along with information from NADA Data and the Dealership Workforce Study. Driven guides provide information on a wide range of dealership issues, including taxes. Search for A Dealer Guide to the Tax Cuts & Jobs Act of 2017. Take advantage of this excellent resource to review all the tax changes that affect your business. On Capitol Hill, ATD continues to fight for improving tax laws impacting truck dealers. ATD is steadily moving forward in the battle to repeal the federal excise tax (FET). The FET is the highest percentage tax levied by Congress on any product. The tax continues to deter the purchase of newer, safer, and more fuel-efficient trucks. ATD formed a new coalition, Modernize the Truck Fleet (MTF), to fight this tax. I am happy to say two more members have joined MTF. They are the National Trailer Dealers Association (NTDA) and the National Tank Truck Carriers Association (NTTC). ATD, along with coalition members, will continue to aggressively advocate for the repeal of the FET as part of a comprehensive infrastructure bill. Nobody likes taxes. But we can make the process less painful when we share our knowledge and resources with each other. I wish all ATD members a successful 2019 tax season! t
“Nobody likes taxes. But we can make the process less painful when we share our knowledge and resources with each other.”
Massachusetts Auto Dealer www.msada.org
NADA Update
By Scott Dube
Crunching Numbers Scott Dube, President of Bill Dube Hyundai and MSADA Immediate Past President, represents NADA’s Massachusetts members on the NADA Board of Directors. He can be reached at scott@dubecars.com.
As we leave tax season and get the second quarter of 2019 into gear, your NADA has spent time analyzing the numbers and figuring out what the road ahead might look like. You will see below just a few pieces of that analysis that are important to understand when advocating for dealerships in front of your legisators. The bottom line: Auto dealers are assets in every community not only in tax revenue, but also jobs. As we take some of our OEMs to task about a variety of issues, we cannot lose sight of this important fact, as government continues to look for ways to squeeze our bottom line. You will hear more from me on this at our Annual Meeting on May 3 -- I look forward to seeing you there!
Employment and Payroll Up at New-Car Dealerships Employment and payroll at U.S. new-car dealerships continued to rise in 2018, according to the latest report released by the National Automobile Dealers Association. In 2018, the nation’s 16,753 franchised new-car dealerships employed 1,136,600 workers, up 0.5% from the previous year, according to NADA Data 2018. “Direct employment at new-car dealerships once again topped 1.1 million employees at the end of 2018,” said NADA Senior Economist Patrick Manzi. “In addition to direct employment provided by new car dealerships, hundreds of thousands of other jobs in local communities are dependent on dealerships.” Payroll at new-car dealerships topped $66.5 billion in 2018, up 1.9% from the previous year. On average, dealership employees earned $1,134 per week, up 1.8% from 2017. “For the past several years, dealership employees have seen steady increases in their incomes as well as their total compensation,” Manzi added. “Dealership jobs offer compensation that is significantly higher than other retail sectors, and dealers continue to boast one of the highest average salaries of all industries.” Other highlights from NADA Data 2018 include:
• For the second consecutive year, total sales, which includes new and used car sales, service, parts, F&I, and more, topped $1 trillion. • At the end of 2018, the average selling price of a new and used vehicle sold at franchised new-car dealerships was $35,608 and $20,586, respectively. • Net pre-tax profit per dealership as a percentage of total sales (new and used vehicle sales, service, parts, F&I, and body shop) continued to decline: 2016 (2.5%); 2017 (2.3%); and 2018 (2.2%). • Since 2009, service and parts sales on average per dealership increased by 5.5% per year on an annualized basis.
NADA Economist Offers First Quarter Insight Patrick Manzi, senior economist with NADA, issued an analysis of U.S. auto sales following the end of the first quarter in 2019: What happened in March 2019? Manzi: Consumer preferences continued to shift from cars to light trucks. We expect light truck market share to inch closer to 70 percent of the overall new light-vehicle market, up roughly two points from this time last year. New vehicle sales were up from February, but down compared to March 2018. The first quarter of 2019 will end with sales down between 2 and 3 percent compared to the first quarter of 2018. We expect that the year-to-date seasonally adjusted annual rate (SAAR) of sales to come in at 16.8 million units for the first quarter, right in line with our forecast for 2019. What happened in first quarter of 2019? Manzi: The first quarter began the year with a sluggish start to new vehicle sales because of several weather-related events, the federal government shutdown, and increasing competition in the used vehicle market. Transaction prices on both cars and light trucks continued to rise. According to the latest NADA Average Dealership Financial Profile Series from January 2019, the average new vehicle transaction price was $36,410, up 3.3 percent compared to this time last year. Transaction prices on used vehicles sold by franchised dealers have also risen. The average used vehicle transaction price in January was $20,797, up 4.3% compared to this time last year. The average monthly payment gap between new and used vehicles continues to increase, which will likely result in more consumers shifting to the used market. Incentive spending is down compared to the same period a year ago. We expect more discipline from automakers with incentive spending throughout the year. According to J.D. Power, average incentive spending per unit is down www.msada.org
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NADA Update $119 to $3,821 through March 2019. Incentive spending has been reduced more on car models than light trucks. If inventory levels get too high, we may see incentive spending pick up to help clear out dealer lots. What are some key trends for the rest of the year and notable headwinds and tailwinds? Manzi: Inventory levels of off-lease vehicles are expected to peak in the coming months, but there will still be a steady supply over the next few years. As prices continue to climb on the new vehicle side, more and more consumers will consider the used vehicle market. The Fed has signaled that we may not see any interest rate increases in 2019. This will help slow the monthly payment creep that we saw in 2018. Payments will still likely increase throughout the year because of rising vehicle costs, but we will not have the added pressure of cost increases coming from rising interest rates. We have seen credit standards tightening in recent months with a larger share of auto loans being made to more credit worthy customers. We expect that this will continue throughout the year as well. What are some macroeconomic indicators that could impact auto sales? Manzi: Consumer confidence is waning, but it remains high and indicates that consumers will still be willing to make large purchases. Economic growth is slowing and is expected to return to a more long-term trend level of growth around 2%. Unlike last year, the positive effects of tax cuts will be less pronounced this year. There’s uncertainty surrounding the implementation of tariffs on imported autos and auto parts. However, job gains have been steady, and wage growth has been accelerating in recent months, which are both net positives for auto sales. Are you sticking to your original forecast of 16.8 million light vehicle sales in 2019? Manzi: Yes. New light-vehicle sales will likely continue to decline for the rest of the year compared to 2018, but we remain confident, barring any unexpected shocks, that the auto industry is on track to sell 16.8 million new light vehicles in 2019. The downside risks to our sales forecast include the fallout from trade disputes, including potential tariffs on autos and auto parts, and the Fed changing course and continuing to increase interest rates.
NADA Partners with Junior Achievement What if we told you there was a way you could inspire and prepare the next generation of your customers and employees? Meet Junior Achievement. NADA and NADA Women Directors connected with Junior Achievement USA (JA) in 2017 by engaging autoAPRIL 2019
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MSADA mobile dealers as JA volunteers to build financially literate customers and communities. Given JA’s focus on providing financial literacy programs to students in kindergarten through 12th grade, NADA embraced the relationship as a way to mobilize the dealer member network for a greater local impact. What began as a small organic initiative has turned into a relationship that continues to build momentum, evident by the engagement in the 2017-18 school year, which included more than 375 NADA members who served as JA volunteers contributing over 2,250 volunteer hours, impacting 3,020 students in 122 classrooms and experiences across the country. “Through JA, I have had the opportunity to provide financially-focused curriculum to students in our local school district in Cuyahoga Falls, Ohio,” said NADA Board Member Michelle Primm of Cascade Auto Group. “Junior Achievement makes it easy with their “meeting in a box” materials, allowing for a rewarding volunteer experience that fits in with my busy schedule.” Local Junior Achievement staff work closely with volunteers and educators to identify the ideal JA experience for volunteers. Local JA Area staff also provide handson volunteer training, JA program materials, and access to resources as well as ongoing support to JA volunteers throughout the duration of the experience. Volunteer experiences range from one hour to multi-hour and one day to multi-visit programs. In addition to attracting support from NADA members, Junior Achievement USA has established strong relationships with original equipment manufacturers, such as Daimler AG, Ford Motor Company, General Motors, American Honda Finance Corporation, and Toyota Motor Company, who all contribute countless volunteers, service hours, and support to JA. The NADA Financial Literacy Program was officially launched in January 2017 during NADA’s 100th Annual Convention in New Orleans. Since then, Junior Achievement has been featured at NADA Legislative Conferences, NADA Shows, and numerous NADA communications. Junior Achievement considers it an honor and a privilege to continue our relationship with NADA members across the USA. The opportunity to impact local communities and reach future customers by volunteering for JA is endless and your industry is well positioned to influence young people with JA’s hands-on and experiential learning programs and experiences focused on financial literacy, work readiness, and entrepreneurship. To connect with your local JA Area office, contact Laura. Goodman@ja.org. t
Troubleshooting
MSADA
New Model Voluntary Protection Products By Peter Brennan, Esq. MSADA
Staff Attorney At any dealership, the sale of voluntary protection products is an integral part of the business model. These products can be a profit center for a dealership, but their sale is highly scrutinized by regulators. Dealers, therefore, need to tread carefully to ensure that the F&I office does not turn from a profit center to a liability. Recently, NADA, in conjunction with NAMAD and AIADA, released the Driven Guide to Voluntary Protection Products: A Model Dealership Policy, which is worth seeking out and available to NADA members at www. nada.org/voluntaryprotectionproducts. “Voluntary protection product” (VPP) is a broad designation that includes various products designed to protect a customer against some occurrence beyond their control, such as acts of God like fire, flood, hail, or other damages to the vehicle, as well as personal afflictions that may befall the customer, such as disability, unemployment, or death. These products help give customers peace of mind during what is generally one of the most important financial decisions that they will make in their lives - the purchase or lease of a vehicle. The availability of various VPPs allows the customer to minimize his, or his surviving family’s, exposure on a vehicle lease or purchase should certain circumstances arise. According to a 2017 study conducted by the job site CareerBuilder, 78% of Americans live paycheck to paycheck. A 2016 survey by the Brookings Institution found that 76.3% of Americans drive alone to work, while an additional 9% carpooled.
Given those numbers, it is likely that the next person to lease or purchase a vehicle at your dealership will need that vehicle to get to work. That same customer would probably be in financial dire straits if they lost the vehicle, through theft or damage, and did not receive a large enough insurance payout to replace it. In such a case, Guaranteed Asset Protection (GAP) coverage, which can supplement the payout a customer receives from comprehensive or collision insurance, would be extremely helpful to the customer. GAP is especially beneficial to customers that make a small down payment or take a loan term of 48 months or longer when they purchase a vehicle. As the average loan term on a new vehicle purchase nationally is now at 72 months, having a product like GAP available to your customers is an easy choice. After all, the customer can always decline to purchase any additional coverage. This has not stopped legislators, regulators and consumer advocates throughout the country from taking aim at GAP and other VPPs. In 2017, the National Consumer Law Center published a report titled, “Auto Add-Ons Add Up: How Dealer Discretion Drives Excessive, Inconsistent, and Discriminatory Pricing”. In the report, the NCLC questioned the value of products such as GAP and encouraged the Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Reserve Board, and state attorneys general to bring actions against dealers where a review of dealer reserve on add-on products showed discrimination against protected classes through everyone’s favorite legal theory: disparate impact. Dealers have also faced legal scrutiny for the aggressiveness of their F&I office in marketing these products. In Massachusetts, Attorney General Maura Healy brought a lawsuit alleging predatory practices against used car chain JD Byrider, based in part on alleged aggressive and misleading marketing of service contracts. www.msada.org
The NADA/NAMAD/AIADA Model Dealership Voluntary Protection Product Policy is designed to protect dealers from legal liability resulting from the sale and marketing of VPPs, and it is broken down into three sections: (1) Section I of the Model Policy provides a poster template that can be prominently displayed to customers, stating that the purchase of VPPs is optional under all circumstances and that the dealership is committed to transparency in providing the customer with the terms and price of the VPP. By displaying the poster and providing a customer with all pertinent information before they make a decision, the dealership can protect itself against claims of misleading practices. (2) Section II of the Model Policy is designed for dealership employees and states the dealership’s commitment to compliance with all laws in the marketing of VPPs and in contracting with third-party providers of VPPs, including all state and federal laws and regulations. This section also states that the dealership will conduct training on VPP compliance and proper record retention related to VPP sales and marketing. (3) Section III deals with VPP product selection and sets forth specific criteria that a dealership should use in determining whether various VPPs should be offered at the dealership. Again, the Model Policy can be found at www.nada.org/voluntaryprotectionproducts for NADA members. The Model Policy should be reviewed with legal counsel and personalized for your dealership. As the sale of VPPs continues to come under the legal and regulatory microscope, the Model Policy can help your dealership avoid unnecessary headaches. t If you have a question on this or any other legal topic, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org, or Peter Brennan, MSADA Staff Attorney, pbrennan@ msada.org, or by phone at (617) 451-1051. Massachusetts Auto Dealer
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