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
January 2019 • Vol. 31 No. 1
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Dealer Summit & Charity Gala
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
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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Table of Contents
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From the President: Another Successful Show Season ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Busy January Kicks Off 2019 TROUBLESHOOTNG: Blocking and Tackling - Used Car Rule Compliance AUTO OUTLOOK DEALER SERVICES: ‘I Have Got That Handled’
Cover Story: 16 The Road Ahead 20 22
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.
ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109
Ad Directory BlumShapiro, 32 Ethos Group, 2 Hub International, 33 Leader Auto Resources, 39 O’Connor & Drew, P.C., 40 Southern Auto Auction, 31
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MSADA Dealer Summit
CASINO NIGHT GALA NEW ENGLAND INTERNATIONAL AUTO SHOW
AUTO TECH COMPETITION
ACCOUNTING: Threat Intelligence: Leveling the Playing Field LEGAL: How to Handle Amorous Relationships between Employees NEWS From Around the Horn nada Market Beat TRUCK CORNER: ATD Show 2019: Truck Dealers at Our Best nada update: The Big One Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
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From the President
MSADA
Another Successful Show Season By Chris Connolly, MSADA President During my time as President of your Association, the biggest thrill has been seeing the excitement increase for our Annual Charity Gala at the Auto Show and the preceding Dealer Summit. While I have no doubt it has much to do with MSADA’s dedicated staff who work to make each event better than the last, this night in January marks the anticipation of a new year and a celebration of the success hard-won the year before. Our industry is not for the faint-of-heart. It takes a strong will to sign on to a business model that has as high of a risk and reward as we see every day. This annual time we carve out to pop the cork and let loose is heard-earned. By bringing our celebration to the Auto Show, it is a moment when customers, dealers, and everyone else in the industry is united by a sense of optimism and the thrill of a new batch of metal. These new models create excitement no matter what your day-today relationship is with them. We just happen to have a front row seat, which is why no one is more excited to be there than we are. Every year I am impressed beyond words when I move around the Auto Show floor. It is our dealer community’s time to shine. And we have the numbers that show, that among the thousands who stream through the doors, there are also thousands of future customers who are scoping out their next purchase. Among the many key messages we can take away from the public’s excitement about the new models is that our industry thrives when it moves forward. We face constant challenges, day in and day out, and the only similarity is that every day adds something new. The Auto Show is a great time to remind the general public, lawmakers, and maybe even ourselves that this industry is international, national, and local down to our Main Street businesses. Whether it is a company with headquarters in Michigan or Germany or Japan, it is up to us to get these exciting machines in the hands of customers. It is a proud moment, and a great reminder of how lucky we are to be the gear that keeps this industry moving forward. I hope you had a great time during our gala, which we hosted to support our Charitable Foundation. It was wonderful seeing so many of you, along with your family and friends, having a great time while supporting a great cause. I would also like to take a moment to thank our Gala sponsors. Each of them understands our commitment to helping the next generation of automotive technicians, and their support helps us further that goal. We could not do the event each year without them, and it is a privilege and a pleasure that so many have worked with us for more than a decade. A full list of sponsors is available on page 27. If you are a vendor in our industry and do not see your name there, I would encourage you to reach out to us and get involved by contacting Executive Vice President Robert O’Koniewski (rokoniewski@msada.org). t JANUARY 2019
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 Bellavia Blatt, PC Leonard A. Bellavia, Esq (516) 873-3000 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 Leah Palone/Dave Garland (617) 275-2021 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 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 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 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. Mark Puccio (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 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 Chris Peck (508) 314-1283 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 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 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 Deb Hogan (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
Busy January Kicks Off 2019 By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Auto Show – Charity Gala – Dealer Summit On Friday, January 18, your Association and the Massachusetts State Auto Dealers Charitable Foundation held its 22nd Auto Show Charity Gala to celebrate our 62nd edition of the New England International Auto Show at the Boston Convention and Exhibition Center. We feted over 500 guests, including our dealers, sponsors, and other industry representatives, to raise funds for our auto tech scholarship program. Party-goers were entertained by the rockin’ sounds of Joe Barger and the Soul Providers. Based on our previous years’ successes and enthusiasm, we again ran a casino party room where attendees could roll the dice and play cards to win great prizes, all for a worthy cause – our tech scholarships. Congratulations to our big winners, in order of finish: Steve Sewell, Johna Cutlip, Kerry Arenson, Jesse Pearce, Troy Potter, and Josh Tobin. Gala attendees had access to the auto show floor, including five “ride and drive” offerings. This month’s magazine has a full recap of these events. Prior to the evening’s party, we held our sixth annual Dealer Summit where dealers and their key managers heard presentations from Robby Riggs of Sano Sano Consulting (“Stop Complaining – Start Acting! How to Overcome the Generational Challenges in the Workplace”); Alan Powell of
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Clutch Technologies at Cox Automotive (“Dealership Subscription Services and Other Developing Trends in the Auto Retail Industry”); Eric Cahill of Plug-In America (“Seizing the Opportunities and Confronting the Hurdles of the EV Marketplace”); Shawn Allen of McWalters Benefits Solutions (“Saving Money on Your Health Insurance Costs”); Fisher Phillips attorney Jeff Fritz (“Employment Law Outlook for 2019”); and NADA’s Steve Park (“NADA’s Educational Offerings to Meet Your Business Needs”). Finally, we owe a huge debt of gratitude to our generous sponsors for these events. Many of our associate members purchased sponsorships and event tickets, and we have detailed their levels of participation in this month’s magazine on page 27. As always, we ask our member dealers to keep our associates and sponsors in mind when they seek various services. Our Dealer Summit and Auto Show Charity Gala would not be the successes they were without this outside support. Thank you to all our sponsors.
Put It in the Books – 102nd NADA Convention a Success On January 24-27, the National Automobile Dealers Association held its 102nd celebration of automotive capitalism at its best in San Francisco, California, at which franchised dealers, their key managers, vehicle factories, vendors, and media got down to business with the latest trends
MSADA in technology, auto selling and servicing, educational and compliance tools, and just about anything else associated with our industry. The “Show”, as NADA now markets it, saw over 16,000 industry reps from across the globe engage in the basic celebration of what has made this country great since the early 1900s, including the employment of millions through the years and the winning of two world wars. As for our piece of it, over 90 Massachusetts dealers and their key employees found their way to the Bay City and had access to over 120 workshops, including scores of new topics, and over 600 vendors exhibiting their wares on a record amount of sold-out floor space. There was plenty of time for non-industry learning and entertainment, too. Guest speakers included Dana Carvey, the Emmy Award-winning actor and comedian; Kat Cole, COO and President of FOCUS Brands North America; and Major Dan Rooney, USAF, a fighter pilot, PGA professional, patriotic philanthropist, and author, who presented at the inspirational program on Sunday. Dealers also heard from outgoing NADA chairman Wes Lutz, a DodgeChrysler-Jeep-Ram dealer in Michigan, and incoming chairman Texas dealer Charles Gilchrist, president of Gilchrist Automotive, which includes Buick-Chevrolet-GMC, Chrysler-Dodge-Jeep-Ram, Ford, Nissan, and Volkswagen franchises at five dealership locations in the Dallas-Fort Worth area The convention proved special for one of our member dealers as well. Don Sudbay, Jr., of Sudbay Motor Group in Gloucester, carried the honor of Massachusetts TIME magazine Dealer of the Year into the competition against 53 other representatives from across the country. The state honor is based on a compilation of works on behalf of the state association, efforts for social and charitable organizations, and commitment to the community. Although Don did not receive the national
award announced at Friday’s session, he and his colleagues on the stage that day are all winners for the successes on behalf of their fellow dealers and fellow citizens where they live and work.
Following Saturday’s convention session, we held our annual state cocktail reception at the Intercontinental Hotel, jointly sponsored by our accounting partner O’Connor & Drew, where MSADA President Chris Connolly welcomed Massachusetts dealers, their spouses and families, and our associate members in town for the festivities. Since its founding, NADA has experienced many major milestones, and so have its dealers. Each dealer’s story is an integral part of the NADA story, espe-
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cially since so many generations of dealers have been steadfast NADA members. These stories range from store openings and mergers to dealers meeting with their members of Congress on Capitol Hill. Many dealerships were originally blacksmiths or wagon makers before selling automobiles. The NADA has established the Century Award to celebrate those dedicated dealerships that have been in the transportation business for 100 years or more. To apply for the award, visit nada. org/centuryaward. Also as part of the 2019 Show, the American Truck Dealers (ATD) held their annual convention, at which time their chair, Louisiana truck dealer Jodie Teuton, announced the launch of a new coalition of industry stakeholders that aims to repeal the federal excise tax on commercial truck sales. The coalition, called Modernize the Truck Fleet, includes ATD; the Truck and Engine Manufacturers Association; the Association for the Work Truck Industry; and the Truck Renting and Leasing Association. The excise tax was first passed into law 102 years ago to help fund the US’s efforts in World War One and now continues, set at an exorbitant rate, to effectively discourage the sale of today’s safer, cleaner, and more fuel-efficient heavy-duty trucks. A Kenworth dealer, Jodie, elected as chair last year, is the first woman to hold that position at ATD. ATD also named Trey Mytty, president and CEO of Truck Center Companies in Omaha, Nebraska, as its 2019 Dealer of the Year. (For more on the ATD convention, check out this month’s Truck Corner column.) Kevin Holmes of
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The Roundup Tri State Truck Center in Shrewsbury sits on the ATD board of directors representing the Freightliner dealers. Finally, prior to the NADA convention, the Automotive Trade Association Executives (ATAE) held its winter meeting. ATAE, housed in NADA’s Virginia headquarters, works with NADA on its national dealer organization programming and matters of federal advocacy on dealer issues, including participation in the annual Washington Conference; the ATAE network consists of the CEOs of over 100 state and metro new car dealer associations in the United States and Canada, including this writer. This year’s winter meeting included presentations and discussions on a number of legislative and regulatory issues, such as various assaults on the dealer franchise system. Although this is the last time for a while before we get back to San Francisco as Dallas is added into the Show rotation (for 2023) that also includes New Orleans and Las Vegas for now, be sure to mark your calendar for the 2020 NADA/ATD Show, February 14-17 in Vegas.
Legislative Update – 2018 Ends; 2019 Starts In Massachusetts, there is no legislative rest for the weary. With the smash of the Speaker’s gavel late into the evening of New Year’s Day (Tuesday, January 1, 2019), the 2017-2018 session came to a rambling end, and then, mere hours later, the crack of that same gavel brought to life the official start of the 2019-2020 session. The same constitutional exercise played out on the Senate side as well. While the House and Senate rushed to meet this year’s January 1 deadline, legislators and legislative staff struggled to complete their work on numerous items of mutual agreement in an effort to avoid having to start all over again should a bill miss its completed round. Alas, many a bill suffered the fate of the proverbial book report, waiting to be written at the last second, as the school bells were chiming the start of day. JANUARY 2019
Fortunately for us, two bills we were pushing for aggressively crossed the finish line well before the scythe of legislative Death could strike them down. Used Vehicle Record Book Reform: As we reported previously, Massachusetts Governor Charlie Baker, on October 24, signed into law legislation to reform the manner in which dealers are required to maintain the used vehicle record book. The new law, Chapter 276 of the Acts of 2018, “An Act Relative to the Used Vehicle Record Book”, can be found at: https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter276. The new law will allow a dealer to comply with the current used vehicle recording process, in the alternative of keeping a hand-written book, by maintaining the required information in the dealer’s computer-based DMS, in a form and format approved by the RMV. The reform of this outdated provision, first passed into law when Woodrow Wilson was president and our troops were fighting the Kaiser, will not impair the ability of a dealer to make this information immediately available upon request by the RMV or law enforcement officials, with a mere click of a mouse, as it replaces the current, outdated requirement to maintain hand-written records that no longer reflects the realities of today’s modern business technologies. Your Association has been working with the RMV to implement this new reform in as expeditious a manner as possible so that we can be done with the anachronistic hand-written book. Soon this vestige of the quill pen era will be relegated to the junk heap of history. Until the new rules are issued, please maintain your current used vehicle record keeping procedures, including recording all used vehicle transactions in the book. The Registry of Motor Vehicles will need to issue new regulations regarding the maintenance of used vehicle transaction records pursuant to the new law, so be on the lookout for communications from MSADA regarding any new rules. Inspection Station Licensing: In the
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last hours of 2018, the House and Senate approved Senate 2261, “An Act Providing for the Licensing of Certain Motor Vehicle Inspection Stations”, which will direct the Registry of Motor Vehicles to issue, upon request, an inspection station license to any franchised auto dealer that has invested a specified threshold amount ($2.5 million) towards the construction of a new dealership and service facility or the reconstruction/rehabilitation of an existing facility. (The ultimate timing of the late-night passage did enable me to get home with minutes to spare to see the ball drop with my 11-year old boy and catch some annual Three Stooges madcap hijinks. A fantastic day for all.) After an intense Dealer Call to Action effort in which scores of dealers contacted Governor Baker asking him to sign the bill into law, the Governor did just that on January 10. The provisions of the new law – Chapter 436 of the Acts of 2018, “An Act Providing for the Licensure of Certain Motor Vehicle Inspection Stations” – can be found at this link:https://malegislature. gov/Laws/SessionLaws/Acts/2018/Chapter436. This new law will enable dealers lacking an inspection license to obtain the necessary licensure to inspect motor vehicles for their sales and service customers. Over the twenty-plus years that the current inspection program has been in place, franchised dealers have spent millions of dollars to build new dealerships or reconstruct or rehab existing facilities, only to be told they could not have a license to inspect vehicles they are selling or servicing for their customers. The state has operated under a phantom license cap that, they say, prevents them from issuing any new licenses to those that need them. After years of attempting to work directly with the RMV to address this problem with no comprehensive resolution, your Association decided to pursue a legislative fix, which garnered considerable support from our state senators and representatives and culminated in the legislation
MSADA being passed in both chambers without opposition. The multi-year effort to pass this law owes its success to our member dealers who lobbied their legislators and those legislators who aggressively worked the process on behalf of their constituents. Bill sponsors Sen. Vinny deMacedo (R-Plymouth) and Reps. Chris Markey (D-Dartmouth) and Steve Howitt (R-Seekonk) worked tirelessly on this issue into the waning hours of the 2018 session. We also express our appreciation to Governor Baker for recognizing the need for dealers to be appropriately licensed and signing this bill into law. We now will work with the RMV to ensure proper implementation of the new law. Vehicle Rental Contracts: This is the proverbial buzzing gnat that cannot be swatted. In mid-2018, as part of a supplemental budget, the Legislature created a new $2 fee per vehicle rental contract to fund police training programs. However, in its rush to do the bill, they did not include any language to cover who would be in charge of implementing the fee or by what process the fee would be assessed. As the session drew near to its end, the Legislature passed a bill, which the Governor signed, to authorize and direct the state Department of Revenue to be in charge of the new fee. As a result of the new law, the state could properly implement the fee, and, of course, they were ready to go to start the New Year in grand fashion. As of January 1, 2019, any vehicle rental transaction in Massachusetts with a duration of more than 12 hours and not more than 30 days, must include a $2 surcharge to be collected by the vendor. The surcharge was created in combination with and to benefit the Massachusetts Municipal Police Training Fund, while any funds collected through the surcharge in excess of ten million dollars will revert to the Massachusetts general fund. The Massachusetts Department of Revenue will administer the surcharge law.
The DOR has issued information regarding the surcharge at this link: https://www. mass.gov/info-details/surcharge-on-vehicle-rental-transactions-for-police-training-in-massachusetts and has published draft regulations that are available here: https://www.mass.gov/technical-information-release/working-draft-tir-18-xxpolice-training-surcharge-on-vehicularrental. Any Massachusetts dealership that maintains a separate, for-profit, rental car business should now be assessing the $2 surcharge on every rental vehicle contract. However, unless the DOR states otherwise in further regulations, dealerships do not have to collect this fee when issuing a repair customer a “loaner” vehicle and using a rental agreement document with no charges on it. At the time that the legislation creating the surcharge was passed, public officials assured your MSADA, as we attempted to amend the bill to exempt loaner contracts, that the surcharge was intended only for rental companies and customers that were entering into a traditional rental agreement, not repair customers that were issued a loaner vehicle on a rental contract. However, it is sometimes the case that legislators and regulators may not fully understand the real-world impact of the laws that they pass and implement, and it remains to be seen if the DOR will address loaner vehicles in its final regulations on the subject. To summarize, if you maintain a traditional rental business where members of the general public can rent vehicles, you now must collect the $2 surcharge on every rental contract in a manner approved by the DOR. However, unless the DOR states otherwise, the $2 surcharge does not need to be collected on loaner arrangements. We are working with the DOR to obtain additional clarification and guidance on this pestering gnat of an issue. And, by the way, on Thursday, January 3, Governor Charlie Baker was inaugurated to his second four-year term in office, along with his Lieutenant Governor, www.msada.org
Karyn Polito. This followed the opening day of legislative action on January 2, at which Senator Karen Polito (D-Ashland) was re-elected as Senate President and Speaker Robert DeLeo (D-Winthrop) was re-elected Speaker, making him the longest running speaker in the Commonwealth’s history. The three legs of the legislative process are now complete, and ready to take on the priorities of each of the legislative troika for 2019 and beyond. More on that as we get into the year.
AIADA 49th Annual Meeting The American International Automobile Dealers Association, which represents the international nameplate dealers, held its 49th annual meeting in San Francisco on January 27 in conjunction with the NADA Convention. At that time, AIADA announced that Howard Hakes, president of Hitchcock Automotive Resources, a group of three Toyota dealerships in Southern California, will serve as its 2019 chairman. He replaced the now Immediate Past Chairman, Brad Strong of Salt Lake City, Utah. Also during the annual meeting AIADA president Cody Lusk presented Newport Beach, California dealer Dave Conant with the 2019 David Mungenast, Sr. Lifetime Achievement Award. Bob Carter, Executive Vice President – Sales, Toyota Motor North America, gave the keynote address after lunch. The primary topic of discussion throughout the annual meeting was trade and the various impacts on international nameplate vehicle sales and costs potentially resulting from the Trump Administration’s efforts on existing and prospective trade deals, including its announced schedule of tariffs, NAFTA negotiations, and on-going talks with China, Japan, and South Korea. Needless to say, these dealers and their franchisor factories are quite concerned as to anything that will adversely affect consumer product price and material availability and costs. AIADA has its annual Washington, DC
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The Roundup fly-in on April 9-10, 2019. Members can register at www.aiada.org.
MSADA Auto Tech Competition Picks Team for NYC On January 19, on the floor of the BCEC during Saturday’s surging crowds of our auto show, MSADA hosted ten two-person senior teams from eight technical high schools (as well as four two-person junior teams, two of which from two other schools) for the hands-on portion of our annual automotive technician competition that decides the Massachusetts representative who will be sent to the national contest. The November 19, 2018, written test, in which almost 200 students participated, winnowed down the contestants to the top ten two-person senior class teams and the top four two-person junior teams from the group. Based on the hands-on testing, our first place senior winners were Aidan Luelkemeyer and Nick Uhlman from Blackstone Valley Technical High School in Upton. Their instructor is Paul Perreault. They will travel to the national competition in April at the New York Auto Show in NYC. Also at the awards ceremony we announced that Wilfred Ouellette, a senior at Upper Cape Cod Regional Technical School, achieved the highest score on the written test administered in November. We wish Aidan and Nick the best of luck in the City So Nice They Named It Twice. Check out our photo spread on page 26 for more details on our competition results.
MSADA Dealer Support Programs Re-Approved for 2019 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
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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 2019, with a vendor addition: Piper Consulting is now on 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.
2019 Dues Invoices In January your Association sent out 2019 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 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 As-
Massachusetts Auto Dealer www.msada.org
sociation’s core purposes of communication, advocacy, and education.
Save the Dates: Annual Meeting May 3, Boston Dealer Day on Beacon Hill May 22 Dealer Hall of Fame Ceremony October 2-4, Chatham We have a number of important events lined up for our members in 2019. Your Association will conduct this year’s Annual Meeting on Friday, May 3, at the Mandarin Oriental Hotel, in Boston. We are lining up a number of exciting industry speakers for the day. We will be sending out via emails and snail mail our invitation and registration materials. 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. Also, be sure to circle Wednesday, May 22, 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 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 should be recognized in our next Hall of Fame class, submit the nomination form to us when you receive it. Criteria upon which dealers should base their nominations should include, but not be 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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Blocking and Tackling – Used Car Rule Compliance By Peter Brennan, Esq. MSADA
Staff Attorney The blocking and tackling of legal and regulatory compliance are the fundamentals that each dealership needs to master in order to build an operation-wide system that can keep pace with the myriad of state and federal laws designed to trip you up. One of the most basic and cost-saving areas where the blocking and tackling approach can be applied is through compliance with the Federal Trade Commission’s Used Car Rule. A revision to the Used Car Rule that went into effect in 2018 made non-compliance a very risky endeavor, as rule-breakers can now be assessed a fine of $41,484 per violation of the FTC Act. Talk about sticker shock. In an industry where employee turnover is common, it is imperative to review dealership procedures from time to time to ensure that all essential employees are well-coached on the Used Car Rule and how to comply with it. The most ubiquitous aspect of the rule is, of course, the Buyers Guide, or “window sticker”, that the FTC requires be placed on each used vehicle, in a way that both sides of the guide are readily readable, if the car is being offered for sale. The term “window sticker” is a remnant of the past, when the guide was required to be affixed as a sticker to the inside of the driver’s side window. Although the guide may still be attached to a window,
so long as both sides are readily readable, no specific method of attaching the guide is required by the law. Most commonly, dealers choose to put the guide in a plastic sleeve attached to the outside of the vehicle or hung from the rear-view mirror. Importantly, the guide must be affixed to a vehicle before a vehicle is displayed for sale or a customer can inspect the vehicle. The guide may be removed for a test drive so long as it is replaced when the test drive is over. Under the rule update that went into effect in January 2018, the Buyers Guide must now include the following disclosures: (i) whether the vehicle is being sold “as-is” or with a warranty, (ii) what percentage of the repair costs a dealer will pay under warranty, (iii) that oral promises are difficult to enforce, (iv) that the consumer should get all promises in writing, (v) that the consumer should keep the Buyers Guide for reference after the sale, (vi) a description of the major mechanical and electrical systems on the car, as well as some of the major problems that consumers should look out for, (vii) that the consumer should ask to have the car inspected by an independent mechanic before they buy, (viii) that the consumer should visit ftc.gov/usedcars for information on how to get a vehicle history report and safercar.gov to check for safety recalls, and (ix) a statement, in Spanish, that alerts the consumer to request a Spanish Buyers Guide if the sale is conducted in Spanish. The Buyers Guide must also list relevant information, such as the description of the car and the dealer’s name and address. If a dealer so chooses, they may include a signature line that the consumer must sign to acknowledge receipt of the Buyers Guide. However, if a dealer includes the signature line, they also must www.msada.org
include a disclosure near the acknowledgment that states, “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale”. The terms of any applicable warranties must also be listed on the Buyers Guide. Certain states, such as Massachusetts, do not allow the sale of “As-Is” vehicles in most cases, so a statement detailing the implied warranties that are included must be expressly stated. If a used vehicle sale is conducted in Spanish, then a Spanish language Buyers Guide must be posted on the vehicle prior to the vehicle being offered for sale. A dealership in an area with a high concentration of primarily Spanish-speaking residents should display both the English language Buyers Guide and the Spanish translation on every vehicle that is offered for sale. Under the rule change, dealers could use any remaining stock of Buyers Guides for one year after the effective date of the amended rule, which was January 28, 2018. Consequently, all dealers must now ensure that they are using a Buyers Guide that is compliant with the amended rule, or face a potential fine of $41,484 per infraction. Your Association sells the new Buyers Guide through its forms program with Reynolds & Reynolds. To order, call (800) 344-0996 or visit www.ReySource. com. “Fillable” versions of the Buyers Guide are available at FTC.gov. 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.
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AUTO OUTLOOK
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‘I Have Got That Handled’
Annual Warranty Labor Rate Increase By Joe Jankowski Armatus Dealer Uplift
Joe Jankowski is Managing Partner at Armatus Dealer Uplift. He can be reached at 888-259-4471 or info@dealeruplift.com. kcarnes@ocd.com.
As a dealer, you should ask yourself three basic questions in regard to your annual warranty labor rate increase: 1. Do I have my annual warranty labor rate anniversary date recorded, and do I have a process in place to make adjustments prior to it, in case I do not have adequate data to support an increase? 2. Am I certain that the person responsible for the increase performed the work timely, so that we did not forfeit any profits? 3. Is the rate I submitted my best possible rate, and do I have evidence to give me the confidence that I did not leave anything on the table? If you cannot answer “yes” to all three of these questions, it is costing you money. Our team has been in the retail automotive world for over 30 years, so we realize the annual warranty labor rate increase typically looks something like this: Someone in the dealership may or may not be tracking the annual due date, or more properly stated, opportunity date, that the rate increase is due. Once someone decides it is time to submit, a decision then has to be made as to who is going to do the work. After that, someone has to interrupt his or her duties, taking time away from customers, inventory, employees, etc., to perform the grunt work of putting the re-
quest together. And in the event that there are issues with the manufacturer, which there sometimes are, they have to be dealt with. All in all, it makes for a less than desirable set of circumstances. Case in point: we worked with a New England import dealer who had been trying to get his labor increase for over six months, and still did not have an approval. His service manager put together the request, and his field rep said “why not just let me come in and pull the ROs for you?” Needless to say, the rate dropped from the service manager’s calculations. Further confusion was caused by the request being submitted to the region, but referencing the state law. The dealer was flat out denied by the Zone, and told to call the national warranty hot line to discuss a statutory submission. At this point,
Even those utilizing the various service data analysis tools are working with less than perfect science.
and after over 30 pages of correspondence, the dealer threw his hands up, and proceeded to secure professional help to rectify the situation. Now, this is a pretty extreme case, but we hear these stories in various forms all the time. Having worked with over 4,600 dealers in 48 states, we can assure you that your annual warranty labor rate increase is much less controlled than it could be. We recognize that you have confidence in your managers. However, let us be realistic; this is a “side-bar” focus at best. A better process would definitely give you www.msada.org
the assurance that this area is completely buttoned-up. Even those utilizing the various service data analysis tools are working with less than perfect science; these folks are reliant on the precise set-up and usage of op codes by the advisors to determine the best rate. We can assure you that nothing but detailed analytics on the underlying data, combined with a full audit, can yield the best possible result. And when it comes to a statutory submission, well, let us just say it is a complicated process requiring knowledge of the law and the manufacturer’s protocols. And, by the way, if you are not evaluating both the factory and statutory submission methodologies, you do not have perfect information in deciding on which direction is best. There is a lot of misinformation in the marketplace. By and large, factory reps only know about submissions performed in accordance with their Service Policies & Procedures manual. They rarely know much, if anything, regarding a statutory submission. In order to perform a proper submission, you must have knowledge of your state statute, the manufacturers rules, both written and unwritten, and have an ability to achieve an optimized rate. It is rare that in-house personnel possess all three of these requirements, so in most cases, dealers are leaving money on the table. Just like your lawyer or CPA in their respective highly specialized areas, a professional services firm, employing superior technologies and a highly trained audit staff, focused solely on retail warranty reimbursement, can give you peace of mind with this critical income opportunity. We think in most cases it would make sense to at least explore what true professionals can do to ensure you are getting the best, most timely result possible. t
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TheRoad msada Ahead Dealer As the Boston Convention and Exhibition Center began percolating with excitement with a plethora of new cars to explore as part of the New England International Auto Show, a conference room above was filled with talks of what would be appearing on that floor below in years to come. The theme for this years MSADA Dealer Summit was The Road Ahead, and a variety of speakers presented different aspects of the future of the automotive sales business. The event was held on Friday, January 18, and moderated by MSADA Executive Vice President Robert O’Koniewski, with MSADA President Chris Connolly of Herb Connolly Acura giving an opening welcome address. The day’s speakers talked about electric cars, subscription models, employee engagement, training, health care, and the ever changing legal climate.
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MSADA Alan Powell Clutch Technologies
Summit Eric Cahill Plug-In America
First up was a discussion of electric vehicles with Eric Cahill of the electric car advocacy group Plug-In America. With technology moving by leaps and bounds, the landscape is quickly changing with EVs being able to travel further on a single charge and looking to become a truly “Disruptive Product.” While cars travel on the same roads, these new vehicles are fundamentally different in the way that both customers and dealers interact with them as they rely upon a new infrastructure for basic travel. With state and federal mandates in place to shift the market to an electric model, dealers must find ways to ease the pain points for customers, who see “too much work for too little reward.” Dealers need to understand not only how to sell the car in traditional fashion but also explain the incentives for doing so, while understanding the utility information so that customers can have a base for charging vehicles at home and understand the relative expense. It needs to be as simple as explaining that the charge for a vehicle is the same as “paying x for a gallon of gas.” Cahill revealed that the top seller in the state was Quirk Automotive, whose 1106 EVs sold dwarfed all other dealers in the past year. www.msada.org
Next up was Alan Powell, the Senior Vice President for Clutch Technologies at Cox Automotive. His Atlanta-based company has created software to be able to try to predict the demands of the market, figure out how to make the best use of the stock help on a lot, and make it meet the needs of the consumer base through subscription service. In a world where the digital model has primarily become a subscription model, Clutch has figured out how to adapt that model to the automotive industry. “When so much is changing, the only constant is the consumer,” Pow-
ell said. Change leads the way with flexibility in how to create the ideal model for any given consumer. Some need a car only part of the time, and the software has helped model a subscription car service that provides fraction access. He presented the example of a buyer who wanted an EV for city commuting, but who had the chance to use a traditional gas powered vehicle for a family road trip. The potential for different usage is there as long as dealers are open to change.
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Jeff Fritz
Fisher Phillips LLP “Get ready for 2019,” warned attorney Jeff Fritz in his employment outlook presentation. Lots of the employment regulations in the Commonwealth are in a state of flux. Fritz was there to make sure that dealers had all of the proper information as these changes are implemented. Minimum wage in the state is on a steady increase over the next five years when it will reach $15 per hour on January 1, 2023. At the same time premium pay for Sundays and holidays is being phased out inversely. Family and medical leave issues are also a major concern for companies with over 50 employees. For employees that take advantage of FMLA time, employers are susceptible to a presumption of retaliation if there is adverse action within six months. For dealers looking to stay ahead of the curve, they should conduct a pay audit to take advantage of affirmative defense and make sure they are signed up for the MSADA Subsidized Compliance Program, which will help defray some costs.
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Robby Riggs Sano Sano Consulting
Robby Riggs outed himself quickly as a millennial. His ideas showed how to bridge the gaps within your dealership as employee retention rates are at an all time low. Riggs determined that “People join companies, People quit managers.” Millennials are not the problem; employers’ resistance to change is, and you need to make your interactions relational not generational. He and his father wrote a book called “Counter Mentor Leadership: How to Unlock the Potential of a 4-Generation Workplace,” and he presented the ideas within to help implement positive change to the benefit of everyone. The ideas revolve around creating open channels of communication that may take more time in the implementation process, but will pay dividends in both time and money once they are operational. Quoting former Patriots wide receiver Danny Amendola on his coach, Riggs said a team must “know his expectations.” For a dealer that means to assume positive intent from his employees and make sure that people think, execute, and communicate together. The Counter Mentor 1-on-1 meeting is the first step, followed by listening to your results. While you may think you are on the right track, you need to be sure to tailor the conversation so that you must be demanding and empathetic and that your accountability process adapts, but know that ultimately “it’s not what you preach, it’s what you tolerate.”
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Steve Park
National Auto Dealers Association The best thing that anyone looking to sell cars can have is information, and Steve Park, as a leader at the NADA Academy, was the person there to show the power and importance of education to building strong management. Building from its base in Tysons, Virginia, NADA has recently opened five new centers to help the process, with new facilities in Seattle, Chicago, Milwaukee, and two in California. NADA offers online training resources, over 400 assets, driver guides, webinars, convention workshop, and online courses. With a mission to strengthen the financial position of any dealership, there is a 4-tiered system that can help folks at various stages in their employment. Professional Series helps people break into the industry with mid-level management training with core focus in office, parts, sales, or service. Seminar Certificate is the next level with week-long courses that offer a deep dive into a specific department like finance, leadership, new vehicles, parts, service, and used vehicles. The Academy is for those on a dealership track and are looking to become an expert in all aspects, with 6 intensive week-long classes over a year (over the past 42 years, more than 10,000 have graduated from this program). The top tier is the 20 Group, which is a peer group designed to share knowledge from industry leaders, or as Park said, “learn from the legends.”
Shawn Allen McWalters Benefits Solutions For the final talk of the day, Shawn Allen came in to describe the workings of Alliance Healthcare Coalition and how they can help cut into the amount of money that you are paying for health care for your employees. Alliance brings an aggregate purchasing power that helps lower costs by working from a massive base of organizations that contribute and then are able to benefit from dividends at the end of each year. In 2017, those dividends were $3.2 million, and last year they were nearly $6 million. Alliance takes advantage of discounts, rebates, and benefits provided by pharmaceutical companies. However, a lot of what they do is try to simplify the process by helping to teach employees. As a result they try to keep folks out of the hospital, by knowing when to use urgent care centers instead and relying on independent nurse care management. the benefits of persuading your employee base to biometric screening is essential. With 10-20% of employees responsible for 80-85% of claims, a yearly physical can detect issues before they become major problems. While people are worried about their access to particular doctors, Allen says that “I can always duplicate your coverage” but ‘’Until you affect their pocket, no one will make new decisions.” t
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RACE THE FINISH NEW TO ENGLAND INTERNATIONAL AUTO
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RACEROAD TO THE FINISH THE AHEAD
Auto Tech Competition Starting with almost 200 students from 17 high schools on November 19, 2018, 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 Jan-
uary 19, 2019, at the hands-on test at the Boston Convention and Exposition Center in Boston during the Saturday session of our New England International Auto Show. The schools competed to be the Massachusetts representative at the national auto tech competition at the NY auto show in April.
Tech Competition Results Senior Teams
First Place: Blackstone Valley Technical High School Aidan Luelkemeyer and Nick Uhlman Second Place: Cape Cod Regional Technical High School Thomas Eldridge and Brett Meservey
Third Place: Upper Cape Cod Regional Technical High School Wilfred Ouellette and Michael Poulin
Junior Teams First Place: Blackstone Valley Technical High School Justin Carnaroli and Ryan Johnson Highest Written Test Score: Wilfred Ouellette
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Than k You! From the New Car Dealers of Massachusetts and the Auto Tech Scholarship Students you have helped, we thank our event sponsors. ROCKET FUELED TrueCar TURBO CHARGED Cox Automotive HIGH OCTANE Albin, Randall & Bennett Armatus Dealer Uplift DealerDOCX Eastern Insurance Fisher Phillips Northeast Dealer Services TD Auto Finance
FULL BAR SPONSORS American Fidelity O’Connor & Drew
SHOT-OUT-OF-CANNON FAST Adesa Blum Shapiro CVR Downey & Company JP Morgan Chase KPA Services Reynolds & Reynolds CASINO ROOM SPONSOR Ethos Group VALET SPONSOR ACV Auctions
FOOD STATION SPONSORS American Tire Distributors Burns & Levinson Santander Bank Southern Auto Auction Zurich DESSERT STATION SPONSOR Murtha Cullina Wells Fargo
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PARTING GIFT Eastern Insurance FRIENDS OF THE SCHOLARSHIP PROGRAM Automotive Search Group Bank of America/Merrill Lynch Broadway Equipment GW Marketing Hub International Huntington Bank Key Bank McWalter Benefits Group Performance Management Group
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ACCOUNTING
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Threat Intelligence: Leveling the Playing Field Scott Goodwin OCD Tech
Scott Goodwin is a Senior Information Security Analyst at OCD Tech. He can be reached at sgoodwin@ocd.com.
On a weekly basis, it seems there is breaking news related to cyber-attacks and data breaches. State-sponsored hackers are trying to influence politics and take over critical infrastructure. Independent, sophisticated hacking groups are targeting financial institutions, and “script kiddies” are going after everyone else. While a robust security program and the proper toolset can help to identify and prevent a breach, there is no silver bullet, and there is no perfect defense. If your organization is not under attack already, it will be soon. You can count on it. The current trend of widescale malware and phishing campaigns, in conjunction with targeted attacks, have changed the game. That means new strategies are required to effectively repel the newest generation of intricate attacks. Organizations that cling to the antiquated notion that some free antivirus software is all they need to protect their data are most likely to suffer at the hands of an anonymous attacker. Even worse, many organizations assume that “it will not happen to us” or “they are not after us”. It is time to take responsibility for the security of your employees, systems, and data, and that means embracing these threats and learning about the enemy. Cyberthreat intelligence is a phrase which, up until now, had been relegated to use in hindsight. This is because most did not have access to information regarding cyberthreats until after they were atJANUARY 2019
tacked. And after the attack, no other entities had access to that newly acquired information. Unfortunately, this means that we had been gathering very little usable intelligence about the strategies and techniques used by hackers worldwide. The concept of threat intelligence is not a new one, not even in the world of cybersecurity. Luckily, the mechanisms for obtaining and leveraging this information have never been easier. There is a wealth of information available to you and the people responsible for your information security…right now. When new types of attacks, viruses, or fake email scams emerge, you could (and should) be using this information to help better secure your systems and employees. Let us take a step back and consider how “cyberthreat intelligence” became a mainstream concept. On December 18, 2015, the Cybersecurity Act of 2015 was signed into law. This legislation promoted information sharing between previously disparate sources of cyberthreat intelligence, including various government agencies. Even more importantly for us, the private sector also would have access to this information sharing network. In order to implement this threat sharing program, government agencies and independent organizations spent a significant amount of time developing the standards used to describe cyber threat intelligence data. By standardizing the language, intelligence can be shared at machine speed, and automatically leveraged by tools within an organization to identify and eradicate potential threats. To put it simply, the private sector can now subscribe to automated “feeds” containing threat intelligence information. If your organization uses modern security monitoring hardware and software, then it is likely these feeds can be ingested and used to scour your network for the existence of known threats. Consider looking into the Department
Massachusetts Auto Dealer www.msada.org
of Homeland Security’s Automated Indicator Sharing (AIS) program to get information directly from DHS. Additionally, many security software vendors also publish threat intelligence feeds, including Anomali and AlienVault. If this all sounds simply too technical or complex to implement, there are simpler options to stay abreast of changes to the current threat landscape. This influx of usable threat intelligence has spurred the creation of multiple Information Sharing Analysis Centers (ISAC). The purpose of these organizations is to facilitate the collection and sharing of threat intelligence across an industry. While they do often publish threat intelligence feeds, they also provide curated threat intelligence via newsletters, bulletins, and advisories. ISACs exist for many industries, including FS-ISAC for the financial sector, and R-CISC for the retail industry. In fact, a dedicated ISAC exists for the automotive industry – Auto-ISAC (automotiveisac.com). Additionally, the FBI has created a joint partnership with the private sector in the form of InfraGard (Infragard.gov) in order to share key threat intelligence information. By simply joining one or more of these organizations and signing up for the available communications, you can put your organization in a much better position with respect to emerging threats. These advisories contain a wealth of information about newly discovered vulnerabilities and attack tactics, which can be used to secure your network. Organizations all over the world are under attack. Now there are mechanisms available to learn from these attacks, rather than just reading about them in the news. If you have concerns regarding the myriad of attack vectors putting your organization at risk, consider leveraging threat intelligence, and start getting educated! t
Legal
By Joseph W. Ambash and Jeffrey A. Fritz
How to Handle Amorous Relationships between Employees In the late second century A.D, Emperor Claudius II, believing marriage was bad for war, prohibited soldiers from getting hitched. Love being what it is, of course, this did not stop soldiers from wanting to marry, nor did it stop one priest—Valentine—from performing wedding ceremonies in secret. Once discovered, he was beheaded. Centuries later, Hallmark makes millions of dollars annually selling cards in his name. Emperor Claudius likely was right about love being bad for war. In many ways, the same is true of employment: Amorous relationships amongst your employees, especially between supervisors/managers and rank-and-file employees, are rife with heightened risks for your dealership.
What’s the Risk? James is a seasoned Salesperson at your dealership. After Mary is hired, also as a Salesperson, James takes an immediate shine to her, and asks her out for drinks after work. Mary accepts. Over the next several months, James and Mary’s relationship blossoms, and they become a couple. Their business, right? Well, yes, but also yours. In a perfect world, James and Mary go about their amorous business, and it has no impact whatsoever on your business. In reality, that is rarely the case. More often than not, the relationship sours at some point, leading to strained, uncomfortable interactions and potential problems for your dealership. Let’s assume Mary breaks it off but James is intent on winning her back, making repeated, now-unwanted sexual advances toward her. If your dealership fails to take prompt, appropriate, remedial action under these circumstances, such as instructing James to knock it off, and disciplining him accordingly (and in degree commensurate with the nature and frequency of his conduct), your dealership could be on the hook for a sexual harassment claim. The situation is even more risky assuming James is Mary’s manager, increasing the likelihood of a lose-lose scenario for your dealership. Indeed, when the amorous side of the relationship is going well,
your dealership risks a claim by James’ other subordinates of favoritism toward Mary and/or unfair treatment toward them. And if and when the relationship sours, all sorts of potential problems present themselves. First, assuming James, now scorned, continues engaging in now-unwanted sexual advances, like the example above, your dealership could face a sexual harassment claim, but, because James is a manager, prompt, appropriate, remedial action (which you absolutely, and in any event, should take) will not inoculate your dealership from a claim. Second, James might decide to engage in even more desperate measures: He might tell Mary she has to continue their amorous relationship or he will give her a bad performance review or terminate her employment. This is what is known as quid pro quo (“this for that”) sex harassment and it also is illegal. Third, James’ now-strained relationship with Mary simply could inappropriately impact his assessment of her performance, leading to disparate treatment and, perhaps, termination. All of these situations present significant risk to your dealership. They also are likely to impact productivity negatively, both of James and Mary, and of their coworkers, who may be distracted and/or uncomfortable by all the drama.
What’s the Fix? While no silver bullet exists, your dealership can take certain measures to minimize both the risk of these types of claims and the liability associated with them, including, but not limited to, lost wages, emotional distress damages, and attorneys’ fees (yours and the aggrieved employee’s). First, you should have a clear policy governing personal relationships in the workplace (sometimes referred to as a fraternization policy). Such a policy can (and should) distinguish between personal relationships between non-supervisor co-workers and supervisors/managers and rank-and-file employees, and should make clear that your dealership may need to take www.msada.org
action, depending on the circumstances. Second, you should train your supervisors and managers on (1) your expectations as to their own conduct, (2) the potential consequences of engaging in amorous relationships with other employees, and (3) identifying and appropriately handling amorous relationships amongst their subordinates. While your dealership should reserve the right to discipline employees as it sees fit under the circumstances, you can consider consequences less than employment’s equivalent of a beheading, termination. While not without risk, you can consider transferring a supervisor/manager to another department and/or requiring the parties to enter into a “love contract” (wherein, the two employees signify in writing the consensual nature of their relationship, and outline expectations going forward) as a condition of further employment. That said, a love contract will not prevent an employee from maintaining, after the fact, that she did not enter into it voluntarily. Finally, you should train your entire workforce on sexual harassment, acceptable and unacceptable conduct, and the avenues your dealership offers for employees to address any issues that may arise. Ideally, you should conduct such training for each employee upon hire, and, in some form (even if just a written acknowledgment), annually. 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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In Memoriam: David Massad By the time he died at age 90 in December, no one could remember just where the nickname came from, but David G. “Duddie” Massad was an icon in Central Massachusetts. Mr. Massad was perhaps best known as the owner of Duddie Ford, one of the biggest dealerships in the Worcester area. The former dealership in Westboro bore his childhood nickname. “Duddie Massad was a self-made businessman and a generous leader who always remembered his Worcester roots,” Lt. Governor Karyn Polito said in a statement. “His contributions will be felt by many throughout all of Central Massachusetts for years to come.” The Grafton Hill native started out at age 8 working odd jobs to help support his mother and older sisters after the death of his father. As a teenager, Mr. Massad landed a job at the long-departed White City Amusement Park where he guessed peoples’ weight. At the next booth, guessing customers’ age, was Bette Melnikoff, who would become Mr. Massad’s wife. Next, Mr. Massad entered the auto business, opening up a used car lot on Park Avenue called Duddie’s Cadillac City. He acquired a Ford dealership in Westborough in 1969 and called it Duddie Ford. In 1979, he acquired Diamond Chevrolet on Park Avenue in Worcester. By the 1990s his reach expanded and Mr. Massad decided to get into the banking business, buying Commerce Bank in 1993 and re-infusing it with capital. Commerce grew from $180 million to $2.2 billion in assets and to become the largest privately owned community bank in Central Massachu-
setts, before being sold to Berkshire Hills Bancorp in May 2017. Along the way, Mr. Massad invested in real estate, amassing a vast portfolio. “He had a reputation for being a shrewd businessman and great entrepreneur, but what people didn’t see about him and I saw firsthand was his humanitarian side,” recalled former Worcester County Sheriff Guy Glodis, who was a former employee and friend of Mr. Massad. In 2005, after a $12.5 million donation, the emergency and trauma center at UMass Memorial Medical Center-University Campus was named in Mr. Massad’s honor. A $1 million donation toward the renovation of Foley Stadium in Worcester yielded a name change to Commerce Bank Field at Foley Stadium in 2007. Other charitable beneficiaries included Our Lady of Mercy church in Worcester; the Boys and Girls Club of Worcester, where he was a member of the Alumni Hall of Fame; St. Jude Children’s Research Hospital; and the Hole in the Wall Gang Camp.
“Duddie Massad loved Worcester, its people and our community,” Worcester County Sheriff Lewis G. Evangelidis said. “His success and generosity were only matched by his humility. What I most loved about Duddie was his belief in the unlimited potential in each person and his compassion in giving second chances to those who needed it the most. His service to our community and as a Worcester County Reserve Deputy are irreplaceable.” “He had a saying, ‘As you wander through life, whatever may be your goal, keep your eye upon the doughnut and not upon the hole,’” recalled Mr. Massad’s son, David Massad II. JANUARY 2019
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Herb Chambers Infiniti of Boston Makes a Mystic Move The Herb Chambers Infiniti of Boston dealership is now actually a few towns north after their recent move from Commonwealth Avenue in Boston to 60 Mystic Avenue in Medford. The move was part of an upgrade to a much larger and more convenient facility. This location in Medford is one of two Herb Chambers Infiniti franchises in Massachusetts, joining Herb Chambers Infiniti of Westborough. “We are very excited about the next chapter at Infiniti of Boston, and our upgraded facility in Medford,” said Herb Chambers, President of the Herb Chambers Companies. “Customers will instantly notice the benefits of this bigger, better dealership - and the upgraded amenities that come with it. But, we’re not done improving. A major renovation is currently underway to ensure that this dealership will provide the highest
level of customer service possible in the very near future.” The larger dealership site can now accommodate an even greater level of customer service, while offering more selection and better amenities. Herb Chambers Infiniti of Boston now features covered drive-in service lanes, a much larger showroom, a fully furnished customer waiting area and ample off-street parking. The move to Medford is ‘step one’ in a multi-stage improvement process. By the end of 2019, customers can expect even further enhancements – and the debut of a state-of-the-art facility featuring the very best that Herb Chambers and Infiniti have to offer. Once unveiled, the renovated dealership will have additional service capacity, an express service center – with dedicated express lanes; an upgraded customer waiting lounge; a larger showroom; updated interior and exterior features, and much more.
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NEWS from Around the Horn SPRINGFIELD
RMV: A Waiting Room If you spent time in a Massachusetts Registry of Motor Vehicles line in 2018, it was probably more than you had expected. With the blossoming of the internet, wait times recently had been on a steady decline. However, new federal rules for identification cards marked a sharp spike in the amount of time that customers took at the RMV. The Massachusetts Department of Transportation wrote, “The introduction of federally mandated Real ID presented challenges for the RMV and for customers” in their annual scorecard. New federal rules require customers to present proof of residence and citizenship status in order to get a Real ID, a type of license that will be valid to use as a federal identification card. Customers had to be aware of the change, and RMV staff had to be trained to recognize and scan different types of documents. The state also implemented a new computer system to comply with the Real ID requirements. In Springfield, for example, from July 2017 through February 2018, the RMV had been serving at least 84 percent of customers in less than 30 minutes. In March, when the state started issuing Real ID licenses, the Springfield RMV served
just 56 percent of customers in less than 30 minutes. The number of customers served in less than 30 minutes ranged from 44 percent to 65 percent in Springfield from March through June of 2018. Callers to the state’s RMV call center for assistance waited an average of 19 minutes in fiscal 2018, a slight increase over the previous year. Transportation officials instituted a number of changes when Charlie Baker became Governor that significantly decreased RMV wait times. Between November 2014 and 2015, the percent of RMV customers were served in less than 30 minutes rose from 59 percent to 74 percent, according to the MassDOT report. By 2017 that number has risen to 80 percent, but that number dropped to 70 percent in fiscal 2018, despite a target of 80 percent. The report found that 12 percent of customers had to wait longer than an hour, exceeding the state target of 10 percent and tripling the 4 percent of customers who waited that long in fiscal 2017.
BOSTON
Fiat, Chrysler, and Bosch Pay $5.6 Million For Cheating Emissions Tests On January 10, Massachusetts Attorney General Maura Healey announced that Fiat Chrysler, its Italian and American subsidiaries, and Bosch, a global auto supplier, have agreed to pay more than $171 million to states in connection with their roles in developing and installing software in vehicles to cheat diesel emissions tests. Massachusetts is slated to receive approximately $5.6 million as part of the settlements. The proposed consent judgment with Fiat Chrysler Automobiles N.V., its U.S. subsidiary FCA US, LLC, its Italian affiliate V.M. Motori S.p.A. and V.M. North America, Inc. (Fiat Chrysler), resolves a lawsuit that alleges Fiat Chrysler violated consumer protection and environmental laws by installing illegal “defeat device” software and undisclosed Auxiliary Emissions Control Devices in 20142016 Jeep Grand Cherokee and Ram 1500 diesel vehicles it marketed, leased and sold nationwide, including approximately 1,000 in Massachusetts. The proposed consent judgment with Robert Bosch continued on next page JANUARY 2019
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BOSTON
Fiat, Chrysler, and Bosch Pay $5.6 Million For Emissions Cheating from previous page GmbH and Robert Bosch LLC (Bosch), a major supplier in the global automotive industry, resolves a lawsuit that alleges Bosch violated state laws when it helped its clients – Volkswagen and Fiat Chrysler – program Bosch-supplied engine control software to cheat on federal and state emissions tests. Both settlements were filed in Suffolk Superior Court and are subject to court approval. “Fiat Chrysler and Bosch worked together to falsify environmental tests and trick Massachusetts drivers into buying dirty cars that pollute our air,” Healey said. “We will continue to work with our partners to pursue auto industry companies that pollute the environment and lie to consumers.” The settlements announced follow earlier settlements reached between Massachusetts and other state, federal and private parties and Volkswagen, Audi and Porsche for equipping, marketing, selling and leasing more than 570,000 diesel vehicles with illegal defeat devices. Under those settlements, Volkswagen paid Massachusetts more than $40 million in civil penalties, fixed or repurchased the affected vehicles, paid tens of millions of dollars in restitution to Massachusetts consumers, and funded a national trust providing $75 million in funding for emission reduction
projects in the state. The company is also making a $2 billion nationwide investment in electric vehicles. The lawsuit – the result of a nearly two-year investigation by the multi-state coalition – alleges that Fiat Chrysler cheated emissions tests by calibrating the software in their “Eco-Diesel”-branded Jeep SUVs and Ram 1500 trucks to pass the emissions test, while allowing the vehicles to emit illegally high levels of harmful nitrogen oxides (NOx) in real-world driving. Fiat Chrysler further misled consumers by falsely claiming these vehicles were environmentally friendly and compliant with laws in all 50 states. The settlement requires Fiat Chrysler to pay Massachusetts more than $1.89 million, including $1 million in penalties for the alleged violations of state consumer protection and environmental laws and additional funds to help mitigate the air pollution harm caused by the alleged misconduct in the state. Nationwide, excluding the separate penalties the company will be required to pay to the federal government and California under related settlements, the multi-state agreement reached by the coalition of attorneys general is expected to result in payments of $72.5 million to 49 states, Puerto Rico, the District of Columbia and Guam. t
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34 DECEMBER 2018
Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
JANUARY 2019
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NADA MARKET BEAT
JANUARY 2016
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TRUCK CORNER
MSADA MSADA
ATD Show 2019: Truck Dealers at Our Best 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.
JANUARY 2019
The American Truck Dealers (ATD) Show 2019 was a resounding success. The passion, dedication, and hard work of our association shined bright in San Francisco last week. The show included the ATD Industry Roundtable, workshops, make meetings, and special industry and networking events with hundreds of truck dealers and guests from across the country. Here are some of the show highlights: ATD’s week, along with NADA, began with a $50,000 donation to the San Francisco-Marin Food Bank to assist with the purchase of a new refrigerated commercial box truck. We wholeheartedly support the food bank so its dedicated workers can transport meals to residents in need. This is a wonderful example of how trucks continuously move critical products and the important role truck dealerships play in communities across the country. We also launched the NADA Foundation’s Workforce Initiative on January 25. After speaking and collaborating with the White House last June, it’s clear the entire nation is experiencing a crisis in the job force, and our dealerships are not immune. Truck dealerships will need thousands of skilled technicians within the next 10 years or our service departments and customers could be impacted. The workforce initiative is designed to promote the benefits of dealership jobs, and we are targeting future technicians through a national campaign and new website, NADAFoundation.org. This website is the only place where prospective technicians can find out the locations of training centers and schools in one place regardless of the OEM; learn about all potential scholarships in every state; and through videos gain insight from other technicians about what their jobs and lifestyles are like. I encourage all ATD members, and OEMs and suppliers, to get involved because we all have a stake in the future of the industry. Along with this initiative, attendees at the ATD Show heard an engaging address from Ron Armstrong, CEO of PACCAR. During Friday’s general session, Armstrong acknowledged mutual concerns concerning the shortage in technicians at truck dealerships. PACCAR for Kenworth and Peterbilt donated $50,000 to the NADA Foundation in support
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of our great cause to attract, recruit, and retain technicians throughout our industry. I was honored to speak to you—ATD friends and family—about the exciting and fast-paced year we had. Truck dealers are tireless, tough, and optimistic. In the past year, we experienced the high points of a robust market. Because of your hard work and resilience, our sales soared in 2018. Retail truck sales hit historic levels, and we are selling the cleanest, most fuel-efficient, and advanced trucks ever. I want you to know ATD is working fervently on your behalf on the steps of Capitol Hill. We are continuing our push to repeal the federal excise tax (FET) once and for all. We announced the launch of an industry-wide coalition, Modernize the Truck Fleet, to end the FET. The coalition includes ATD; the Truck and Engine Manufacturers Association (whose members are Daimler Trucks North America, Navistar, PACCAR, Volvo Group North America and Cummins); NTEA – The Association for the Work Truck Industry; and Truck Renting & Leasing Association. We are united behind the goals to repeal the harmful FET and find an acceptable replacement for lost revenue so that there is a long-term solution for funding our highways and modernizing America’s fleets. Please stay up-to-date on this issue since it will be our No. 1 priority this year and we need each of you to help. Also, Save the Date -- our annual ATD Congressional Fly-In is June 19-20, in Washington, D.C. Most of all, I would like to thank ATD members who took time out of their busy schedules to attend the ATD Show in San Francisco. I appreciate your engagement throughout the past week, because it would not have been a celebration without you. I also thank every sponsor and exhibitor who worked so hard on the expo floor, the OEMs at make meetings, and all who attended the ATD events to make this a great show. Finally, I thank all our guest speakers and special presenters, including our ATD team, who presented at Saturday’s general session. This is a team effort. Let us continue this momentum in 2019. ATD will be with you every step of the way. t
NADA Update
By Scott Dube
The Big One 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 go to press, we just emerged from another successful NADA Show and, of course, our own New England International Auto Show the week before. This is a fantastic time of year for us to look ahead to the wants and needs of our customers. Jennifer Colman outlines the vital role auto shows still play in the auto marketplace below. NADA is looking ahead to a great year. I am excited to share more takeaways from San Francisco, as we process the exciting information sharing that took place there.
Do Auto Shows Sell Cars? The Answer is a Resounding ‘Yes’ By Jennifer Colman, ATAE President For Jake Matthews, it was a chance to see the old-school, classic hot rods. For first-timer Grace Li Marie, it was the chance to sit in all the new 2018 cars. For Sherry Van Ness, it is all about carrying on a family tradition with her sons. While for Tony Staszak, it’s a chance to spend some time with his wife—and shop for a new car. While many of last year’s attendees to the Philadelphia Auto Show offered up different reasons for going to the show, there was one reason that came up time and again: Convenience and the ability to shop and compare several different models and manufacturers all under one roof. Pamela Capello of Mantua, New Jersey, has been going to the Philadelphia Auto Show for more than 15 years, but she says she’s always surprised and pleased with the huge variety of manufacturers represented, including some who weren’t even on her radar. “I do use it as a car purchasing tool,” said the married mother of two. “We love to look at all the cars, the exotics, etcetera, but we also use it as a shopping tool. It’s great because all the different [brands] are under one roof so it’s an easy way to kind of do a pre-screening.” Capello and her husband are a two car family—“one SUV and one commuter car”—and they replace one of their cars every three years. She test drove a Kia Sportage at the 2017 auto show—“my first experience with a Kia”—and went to
her local dealership soon after. “Basically, we were pretty sold before we got there.” That element of surprise is one reason why Capello prefers to do her car shopping prep work at the auto show. “It’s still so much easier to just walk around and see everything available and again, even something you don’t expect. You actually open your eyes to something you hadn’t previously considered. Especially if you don’t know what you want or you want to look for something new, it’s great because they’re all there.” Capello admits that seeing a car in person at the auto show can sway her opinion. “If I have a preconceived bias against a brand, but if I saw a car there and liked the look of it, that would turn me. For bringing new buyers into your brand, it’s the best place you can be. Commercials? Nobody’s watching those anymore, you know?”
“Auto shows are the only marketing platform that I know of where potential customers are paying a ticket price to come in and interact with the product. The enthusiasm people have for cars is definitely seen and heard on the auto show floor.”
Wes and Loraine Severson had a similar motivation. When the retired couple wanted a one-stop shop to research a new car to replace their current model, they knew just where to go—the San Diego International Auto Show. Going to the local auto show is a tradition for the Seversons. “I’ve been going to auto shows since the late 1950s,” said Wes, an 80-year-old, retired business owner. “Just seeing all the new models and how the technology has changed, I like that stuff.” “We go pretty much every year, even when we’re not actively looking for a car,” noted Loraine, a former real estate agent. “We went this last year because we knew it was time for Wes to buy a new car.” Furthermore, the purchasing ef-
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NADA Update fect lasts far beyond the days and weeks after the auto show. Foresight’s study found that two out of three attendees said they intend to purchase a new car within 12 months. “I say the auto show is the gift that keeps on giving all year long,” said Ed Witt, a Lincoln dealer in San Diego. “Just in the last two weeks, we’ve sold cars to people who came to the auto show in December. It really works.” That was certainly the case with the Seversons, who bought a Lincoln MKZ from Witt Lincoln in September, a full nine months after attending the San Diego Auto Show. “We didn’t realize it at the time,” said Loraine. “But when it was time to start looking seriously, we remembered Mr. Witt. Once he got us in the store, we were sold. But we never would have gone into the store if he hadn’t talked to us and been so kind. It’s definitely the auto show that sold that car to us.” The ability to get the consumers in the car and excited about the product is exactly why manufacturers participate in auto shows, said Rachel Roe, Lincoln Global and Regional Auto Show Marketing Manager at Ford Motor Company. “From a marketing perspective, the majority of things OEMs do are partnerships, sponsorships, or events they create. Auto shows are the only marketing platform that I know of where potential customers are paying a ticket price to come in and interact with the product. The enthusiasm people have for cars is definitely seen and heard on the auto show floor.”
“While there are many places where people can do their car research, the auto show is still the place where potential customers can get up close to the vehicle and compare the different brands.”
Lincoln participates in 56 shows a year, while Ford is active in 80 shows. “For us, it’s just about quality over quantity,” Roe said about Lincoln’s auto show participation. But with marketing budgets stretched over numerous advertising and marketing platforms, manufacturers are constantly assessing the value of auto shows and dealers have a major impact on those decisions. “They have a seat at the table for sure,” Roe said. “As we’re evaluating whether we go into a JANUARY 2019
MSADA market, we need to know they’re there and can follow up on the leads generated by the show.” Witt, who said he spends eight hours a day at San Diego’s five-day auto show, agreed that dealers need to take a personal interest in the auto shows that are in their market. “Lincoln and Ford Motor Company are putting so much money into these shows and they don’t have to do it,” Witt said. “There are some manufacturers who are opting out, who are choosing to advertise in other ways. I would really be unhappy if Lincoln wasn’t at the auto show.” While there are many places where people can do their car research, the auto show is still the place where potential customers can get up close to the vehicle and compare the different brands, something the Seversons said they really value. “If you’re going to look for a car, it’s really nice to go down and get a feel,” Wes said. At the end of the day, auto shows provide the best results in terms of direct sales, something brands won’t get from any other marketing medium, Witt said. “The proof is in the results we get. We know you can put an ad in the paper, or on TV, or the radio, but people go to the auto show because they have an interest in cars, whether they just like them or because they want to see what’s out there or they’re in the market, or will be. If you look at the numbers, the volume of people who go to the auto show, it’s insane to think you don’t want to be there.”
#WomenInAutomotive Video Contest: Share Your Story for a Chance to Win Following record engagement from last year, we are pleased to announce round two of the #WomenInAutomotive video contest. While women currently represent only about 19 percent of dealership employees in the United States, there have never been more opportunities for women to create lasting, impactful careers in automotive retail. Are you a woman who works in automotive retail? If yes, please share a quick video talking about your experience, and join us in encouraging other women to consider pursuing automotive careers! We need to do a better job sharing this story. And to do that, we need your stories. Share a little about who you are, what you do and why you would encourage other women to pursue similar careers. What do you want other women to know about why a career in a dealership might be right for them? What do you wish you knew before you started your own dealership career? What are the top three benefits to working at a dealership that women probably don’t know about? Post the video publicly on Facebook, Instagram, LinkedIn or Twitter, and be sure to include the hashtag: #WomenInAutomotive. t
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