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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
December 2020 • Vol. 32 No. 12
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Kinder, Gentler, and
HighVolume
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
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Table of Contents
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From the President: Pressing Onward ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: This Too Shall Pass – Are You Ready for What’s Next? LEGISLATIVE SCORECARD TROUBLESHOOTING: Stay on the Nice List Going into 2021 AUTO OUTLOOK
14 Cover Story: Kinder, Gentler, and HighVolume
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Ad Directory BlumShapiro, 19 DealerShop, 17 Ethos, 2 Nancy Phillips, 19 O’Connor & Drew, 28
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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
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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NEWS From Around the Horn INFORMATION SECURITY: What Is This WISP Thing? LEGAL: COVID-19 Vaccinations: Employer Rights and Obligations nada Market Beat TRUCK CORNER: Demand for Trucks Strengthens in December BUSINESS OPS: State of the Auto Dealership Buy/Sell Market nada update: Finding Common Ground with OEMs
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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Massachusetts Auto Dealer
DECEMBER 2020
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From the President
MSADA
Pressing Onward
Your Association is here for its member dealers as the new year turns and uncertainty continues
By Chris Connolly, MSADA President
Msada Board
One of the most exciting times of the year as MSADA President comes with the Annual Dealer Summit and Charity Gala at the Auto Show every January. By bringing our celebration to the Auto Show, it is a moment when customers, dealers, and everyone else in the industry are united by a sense of optimism and the thrill of a new batch of metal with new technology. These new models create excitement no matter what your day-to-day 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. Unfortunately, as with the rest of the world, mass gatherings this year are on hold, and we must discover new ways to connect and find that same thrill we usually get in sharing our passion for the automobile industry. Our industry is not for the faint-of-heart. It takes “While we are a strong will to sign on to a business model that has changing the as high amount of a risk and reward as we see every definition of day. This is supposed to be the pause we take every year to pop the cork. It is difficult to have faced the normalcy to some downs and ups of 2020 and still not be able to gathdegree, we know er as a group. Adding to those difficulties is the confusion crethat normalcy ated by our government, with rollbacks and restricwill return. tions that sometimes do not make sense and certainly place excruciating strain on the economy. As And dealers are Operation Warp Speed begins to get vaccines to our prepared for most vulnerable population there is hope that this will steer our country and Massachusetts into safer whatever may waters. While we are changing the definition of normalcy come.” to some degree, we know that someday normalcy will return. And dealers are prepared for whatever may come. Our MSADA membership can be confident that their Association has their backs. As we get ready for 2021, know that we will continue to work with the manufacturers and show organizers to determine the most effective and safest way to develop plans for an Auto Show. We will be in constant contact with you on our progress and hope to be able to announce something in the very near future. In the meantime, as a grassroots organization, we continue to rely on your feedback. Please always feel free to contact me or Executive Vice President Robert O’Koniewski (rokoniewski@msada.org). I wish you and yours a safe and happy New Year. t DECEMBER 2020
Massachusetts Auto Dealer www.msada.org
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 Chrysler Dodge Ram Jeep 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, Steve Sewell Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian
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 America’s Auto Auction Boston Jim Lamb (781) 596-8500 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 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 Rick Parmelee (860) 982-9307 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 Chase Auto Alex Khademi (404) 375-4504 Coastal Outsourced Solutions Andrea Vieira (508) 979-4733 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cooperative Systems Scott Spatz (860) 250-4965 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dave Cantin Group Woody Woodward (401) 465-7000 DealerShop Ken Grove (248) 444-6283 Brian Fleischman (716) 864-0379
Downey & Company Paul McGovern (781) 849-3100 DP Sales Distributors Andrew Prussack {631) 842-7549 Eastern Bank David Sawyer (617) 620-3484 Eastern Insurance Group John Berksza (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 Direct Sean Wiita (508) 414-0706 Michelle Salas (508) 599-0081 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Mike Sims (817) 689-1735 GW Marketing Services Gordon Wisbach (857) 404-0226 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank Mark Flibotte (617) 385-6232 KPA Abe Cohen (503) 902-6567 LocaliQ Automotive Jay Pelland (508) 626-4334 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 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004
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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 Pro-Vigil Sasha Lam-Plattes (408) 569-2385 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. Joseph Herzog (508)-830-3241 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 TradeRev Dennis Finkel (508) 397-2702 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
This Too Shall Pass – Are You Ready for What’s Next? By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
When we reach the end of the calendar year and approach the advent of the next, the cultural custom has been to yell “Good riddance!” to the former and cheer on hopeful successes for the latter. I have, frankly, never been one of those people. Really just another day. New Year’s Eve has been cheeseburgers, fries, and The Three Stooges. New Year’s Day – college football, all day. Change the calendar, who’s in the Rose Bowl? Who do you like in the Sugar Bowl? Society treats the change in years as a sort of psychological cleansing, perhaps with an inventory of where you just left. What we saw in 2020, with its pandemic impacts of economic shutdowns, at-home quarantines, infections, deaths, a crazy election season, social unrest, historical re-writes that somehow have declared Abraham Lincoln a bad person, all certainly will not end on December 31 with a clean slate starting on January 1. I am not sure what cleansing we can experience when the Coronavirus continues thrusting its reach into all our lives. Moving forward, I am focusing on a few key points. First, crises and extraordinary challenges create opportunities for change, adaptive behavior, personal/professional improvement. Our members’ dealerships certainly had to adjust to a shifting economic landscape throughout the crisis in order to confront a myriad of problems out of their control. On our end, how did we handle the year’s challenges? As an association, did we do our best to provide the services, guidance, and
DECEMBER 2020
Massachusetts Auto Dealer www.msada.org
tools that our members need to be successful? What did we do well? What can be improved? Standing in place is never a viable option. Second, the overreach of the long-arm of government arguably has made certain situations worse with inconsistent and nonsensical shutdown rules which seemingly changed at bureaucratic whim in isolation of any conversation with affected parties. For over nine months we have had various levels of shutdowns, social distancing rules (really, the virus stops at six feet?), curfews (who knew the virus comes out in force after 10 p.m. and heads home at 5 a.m.), mask wearing (some work, some do not) – yet the virus infections and hospitalization numbers grow unabated. What is the end game here? Is government looking to get to zero infections before we return to some sense of the old normal? How quickly can vaccines get to people who are not politicians or prisoners? More importantly, will the long-arm of power exerted by government ever retract to its 2019 station? Probably not, as politicians truly love the power they can exert over the citizenry. This will be a great test run for the next crisis – perceived or actual. Third, but not the last of a non-finite list, how will we all operate once the crisis reaches an endpoint? Will people drive more and shun public transportation and its potential petri dish of infection? Will there be less reliance on office space as employers and employees realize they can be just as (maybe even more) efficient working at home
MSADA without the stress and inconvenience of time-eating commutes? Will your business grow a greater virtual/internet footprint to compete more proficiently in the post-pandemic economy or will there be a return to your old habits? At some point, the Coronavirus crisis will pass. As we take stock of how we worked through the challenges, I would hope to be a better person for it. I would hope our association can be stronger and more meaningful for our members for it. I would hope that each of your businesses and dealership teams have developed the tools to be more competitive in the business realm and more charitable to your communities’ needs. We are resilient, adept people. Regardless of the extent of the virus crisis on all of us, it is on each of us to take hold of how we are going to grow from what we saw in 2020 and be better for it on all levels moving forward in the coming months of 2021. Come the end of the day, no calendar date change can dictate your own personal responsibility to your family, business, job, and community.
MSADA Officers Elected At its most recent meeting on December 18, your association’s Board of Directors re-elected Chris Connolly of Herb Connolly Acura as our MSADA President for 2021-2022. The board also elected Steve Sewell of Westborough Chrysler Dodge Jeep Ram as Vice President, Jack Madden, Jr., of Jack Madden Ford as Treasurer, and Charles Tufankjian of Toyota of Braintree as Clerk. Congratulations to our slate of officers for their commitment to our members over the next two years.
Mass. House Elects New Speaker On December 29, Rep. Robert DeLeo (D-Winthrop) ended his 12-year run as House Speaker when he submitted his resignation, stating his desire to take a job at Northeastern University, his alma mater.
DeLeo was the longest serving speaker in the chamber’s history. He had represented the north of Boston Winthrop-Revere district for 30 years. He had just been re-elected for another two-year legislative term in the recent November election. He gave his farewell remarks on December 29 during the House’s formal session, albeit in a sparsely attended chamber due to Coronavirus restrictions that have been in place since the Spring. On December 30, the House elected Majority Leader Ron Mariano, a Democrat from Quincy, as the new Speaker. The current legislative session ends on Tuesday, January 5. The House is then expected to re-elect Speaker Mariano the following day at the start of the 2021-2022 session. Rep. DeLeo always had an open mind and willing ear when it came to dealership and business issues. Members also may recall the times he has spoken before our annual events. His balanced leadership style will be missed in the State House. Our Association wishes him the best of luck in his future endeavors, wherever that road my take him.
Gov. Baker Issues Emissions Roundmap As we were going to press, in the classic move of “here’s where I want the state to be in 30 years but I won’t be around for it,” Gov. Charlie Baker on December 30 released its 2050 emissions roadmap and 2030 Clean Energy and Climate Plan, which seeks to implement his decarbonization framework he issued in January. Gov. Baker wants to see the Commonwealth achieve a net-zero emissions target by 2050 with a clean energy portfolio that includes significant offshore wind resources, greater interstate transmission abilities for clean power produced elsewhere like in Canada, and widespread electrification of transportation and building heating with significant changes to the building code. As far as we are directly concerned, the Baker plan calls for a requirement that
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all new cars and passenger trucks sold in Massachusetts be zero-emission vehicles starting in 2035. This would mirror a plan announced by the California governor in late September. Goals are nice, but, as we addressed in several press inquiries after the governor’s announcement and in previous writings on the subject, there are significant pieces to the puzzle that need to be addressed in an all-electric, no fossil fuels society, such as the source of all this new electricity generation to power a successful economy and meet our personal needs such as heat in the Winter and air conditioning in the Summer; consumer reception to ZEVs as the factories churn out a more-EV based menu of vehicle choices; EV affordability versus comparable internal combustion cars and trucks; the need for considerable charging infrastructure across the state; and the fact that current goals are not even close to being met with government throwing millions of dollars in incentives at consumers. As we dig into the roadmap and the review process, stay tuned for updates to this story.
Stay On Top of MSADA Communications The COVID-19 pandemic has spurred the creation of considerable federal and state laws, orders, and regulations impacting all elements of your dealership operations. We have issued this year almost 150 bulletins covering all aspects of these laws, regulations, and government edicts. We do not see an end to government’s actions affecting businesses as the pandemic continues and a new federal administration is inaugurated on January 20 that is dedicated to higher taxes, more regulations, and more pandemic restrictions. Buckle up for 2021. If you or someone at your dealership needs to be added to our distribution list, please let me know. Here’s wishing you a safe and successful new year for your family and you. t
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MSADA Troubleshooting L EGISLATIVE S CORECARD DECEMBER 2020
BILL#
SPONSOR
SUBJECT
S179 H262
Sen Pacheco Rep Hunt
Amendments to Ch. 93B, the auto dealer franchise law.
SUPPORT
The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Redraft reported favorably on Feb. 5, 2020; referred to Senate Ways and Means.
H3558 S658
Rep Kafka Sen Welch
Creates process to increase the insurance reimbursed labor rate paid to auto body repairers.
SUPPORT
The Joint Committee on Financial Services held public hearing on September 26, 2019. Placed into study.
H1087 S576 H956 S625
Rep Puppolo Sen DiZoglio Rep Donahue Sen Moore
Protects dealers from OEMs’ restrictions on selling non-OEM service contracts.
SUPPORT
The Joint Committee on Financial Services held puplic hearing on October 22, 2019. Redraft S2804 reported favorably; sent to Senate Ways and Means. Redraft H4810 reported favoably; sent to House Scheduling.
H960 S629
Rep Driscoll Sen O’Connor
Creates administrative process to seek diminished value of damaged vehicle.
SUPPORT
The Joint Committee on Financial Services held public hearing on September 26, 2019. Placed into study.
S110 S2416
Sen Braunsberger Redraft
Places burden of recall information to car owner or vehicle inspector.
OPPOSE
The Joint Committee on Consumer Protection held public hearing on July 15, 2019; reported redraft favorably, S2416; referred to Senate Ways and Means.
H3031 H3049 S2133
Rep Golden Rep Howitt Sen Rush
Creates statutory process for allowing temp tags for out-of-state sales.
SUPPORT
The Joint Committee on Transportation held public hearing on May 14, 2019; Committee reported H3031 and S2133 favorably to each’s respective Ways and Means Committee.
H234 H206 S172
Rep Finn Rep Chan Sen O’Connor
Creates process to appeal improperly issued Class 1 license.
SUPPORT
The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Placed into study.
H282
Rep Linsky
Allows an OEM to open a factoryowned store, without a dealer, if there is no same line-make dealer in the state. (The so-called “Tesla Exemption.”)
OPPOSE
The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Placed into study.
H220 H4307
Rep Cusack Redraft
Clarifies licensure to finance small loan contracts with negative equity.
SUPPORT
The Joint Committee on Consumer Protection held public hearing on May 13, 2019; reported redraft favorably, H4307; referred to House Steering, Policy and Scheduling. Placed on House calendar.
S2498
Sen Barrett
Creates ZEV rebates program.
SUPPORT
The Joint Committee on Telecommunications, Utilities and Energy held public hearing on July 23, 2019. S2498 passed by Senate on Jan. 30, 2020, and referred to House Ways and Means.
H3997
Speaker DeLeo
Creates $30 million ZEV rebates program.
SUPPORT
House passed the bill on July 24; refeered to Senate Ways and Means Committee. Senate Bonding Committee held hearing on Feb. 25, 2020.
H356 H4310
Rep Vincent Redraft
Lemon Law mileage, dollar amount changes.
OPPOSE
Joint Committee on Consumer Protection held public hearing on July 15, 2019; reported redraft favorably, H4310; referred to House Steering, Policy and Scheduling.
H4122 H4302
Rep McMurtry Init. Petition
Amends Right to Repair law [17 bills filed].
OPPOSE
The Joint Committee on Consumer Protection held public hearing on January 13, 2020. Bills placed into study. IP approved on Nov. ballot.
S120
Sen Creem
Consumer Data Protection Act, based on CAL law.
OPPOSE
The Joint Committee on Consumer Protection held public hearing on October 7, 2019. Placed into study.
H4113
Rep Ehrlich
Mandates automatic shutoff for keyless start vehicles.
OPPOSE
The Joint Committee on Transportation held public hearing on January 2, 2020. Reported favorably and referred to House Ways and Means.
H4754
Rep Jones
Sleepy’s-related affirmative defense.
SUPPORT
The Joint Committee on Labor and Work Force Development held public hearing on June 12, 2020. Placed in extension until October 27, 2020.
H5115
Rep Chan
Updates three-day right of cancellation.
SUPPORT
The Joint Committee on Consumer Protection held public hearing on Nov. 20, 2020; reported redraft favorably, H5167; referred to House Steering, Policy and Scheduling.
DECEMBER 2020
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Massachusetts Auto Dealer www.msada.org
MSADA
Troubleshooting
Stay on the Nice List Going into 2021 By Peter Brennan, Esq. MSADA
Staff Attorney 2020 was a year that felt like a decade. Since March, the legislative, legal, and regulatory response to the COVID-19 pandemic has been evolving rapidly at the local, state, and federal levels. There is a considerable mountain of information to keep track of, but ignorance is no defense to an enforcement action or employee lawsuit. One law that has flown under the radar for some employers is the Families First Coronavirus Response Act (FFCRA), which went into effect on April 1, 2020, and includes a mandate on employers to provide expanded paid family and medical leave to employees in certain Coronavirus-related circumstances. The FFCRA was designed to sunset on December 31, 2020, but on December 27, 2020, President Donald Trump signed into law legislation that extends some provisions of the Act, while other provisions of the law, such as the employer mandate, will expire. Beginning on January 1, 2021, employers are no longer required to provide expanded paid sick and family leave under the FFCRA. However, the refundable payroll tax credits that employers receive for providing expanded paid leave have been extended to March 31, 2021, and will be applied as if the employer mandate was still in place. Consequently, employers may choose to provide paid sick and family leave to employers that are eligible under the FFCRA and will receive offsetting payroll tax credits if they do so through March 31, 2021. While the employer mandate is being phased out, employers should review their
sons related to COVID-19; and (iii) up to compliance with FFCRA thus far, as federan additional 10 weeks of paid expanded al enforcement actions can be brought for family and medical leave at two-thirds the the covered period even after provisions employee’s regular rate of pay where an of the Act have expired. The U.S. Departemployee, who has been employed for at ment of Labor’s Wage and Hour Division least 30 calendar days, is unable to work is tasked with enforcing the law and has due to a bona fide need for leave to care for been busy pursuing enforcement actions a child whose school or child care provider against employers, including franchised is closed or unavailable for reasons related dealers, for improperly denying employee to COVID-19. leave requests under the law. Any eligible employee that requested The DOL recently investigated an emFFCRA leave prior to December 31, 2020, ployee claim against Lamar Ferrell Chevromust have been allowed to do so even if let Inc. in Decatur, Georgia, and found that the employee had accrued other unused the dealership violated the requirements of paid leave – an employee cannot be rethe FFCRA by denying paid family leave quired to use earned PTO instead of FFto an employee who missed work to care CRA leave. If, after review, you determine for a child whose place of care closed due that an eligible employee was required to to the Coronavirus pandemic. After being use PTO instead contacted by the DOL, the deal“To finish 2020 in a strong of being offered paid leave under ership agreed to position and start 2021 the FFCRA, you pay the employoff correctly, review your should consult ee back wages of $7,880 and compliance with the FFCRA with an attorney. Going forward, comply with the and stay alert.” even if an emFFCRA’s reployee has exhausted all leave under the quirements in the future. Dealers should FFCRA, the employee may be entitled review Coronavirus-related leave requests to regular unpaid leave under the Family made by employees during the covered peMedical Leave Act (FMLA), and employriod to ensure that all requests were haners should consult with counsel when dedled in compliance with the Act. termining leave eligibility. As a refresher, from April 1, 2020, It is likely that President-elect Joe Biden through December 31, 2020, the FFCRA will seek to expand COVID-19 relief meaincluded an employer mandate that resures, including employee protections. quires covered employers to provide to eliMany federal legislators, moreover, are algible employees: (i) up to 80 hours of paid ready discussing yet another stimulus packsick leave at the employee’s regular rate of age for early 2021. To finish 2020 in a strong pay where the employee is unable to work position and start 2021 off correctly, review because the employee is quarantined (puryour compliance with the FFCRA and stay suant to Federal, State, or local government alert. Most importantly, have a happy and order or advice of a health care provider), healthy new year. and/or experiencing COVID-19 symptoms t and seeking a medical diagnosis; (ii) up to If you have any questions regard80 hours of paid sick leave at two-thirds the ing this column, please contact Robert employee’s regular rate of pay if the emO’Koniewski, MSADA Executive Vice ployee is unable to work because of a bona President, at rokoniewski@msada.org or fide need to care for an individual subject Peter Brennan, MSADA Staff Attorney, to quarantine, or to care for a child (under at pbrennan@msada.org, or by phone at 18 years of age) whose school or child care (617) 451-1051. provider is closed or unavailable for reawww.msada.org
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AUTO OUTLOOK
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AUTO OUTLOOK
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RACE TO THE FINISH COVER STORY
Kinder, Gentler, a Patriot Subaru has earned national recognition for its high employee satisfaction — and the sales numbers have followed. By Tom Nash Adam Arens, like most dealers, is hard to pin down for even a few minutes. And as December takes hold, one holiday party at his Patriot Subaru store in North Attleboro has become, instead, a series of meetings of six employees at a time. This is not just going through the motions amid pandemic safety measures or forced-fun. Arens is handing out year-end bonuses at the end of what his GM, Mark Perryman, calls “the craziest time of my career.” Most of us, regardless of industry, could probably say the same. What makes 2020 different for Patriot Subaru -- including one other point each in Maine and New Hampshire -- is that “crazy” has translated into accolades and banner-year sales numbers. As the year came to a “We came to close, the dealership group the realization earned a prestigious designation from Automotive that we are News in their annual ‘Best redefining Dealerships to Work For’ survey. The award runs on super heroes — polls and interviews with single parents dealership employees -trying to teach pulled from dealerships across the country. Patriot school and Subaru North Attleboro placed 36th out of 100 provide for top-tier dealerships natheir families tionally (which included the New Hampshire and at the same Maine stores). time.” Arens and Peryman credit the Automotive News –Adam Arens, Owner DECEMBER 2020 Massachusetts Auto Dealer www.msada.org
‘Best Dealerships to Work For’ wins across all three points to a few core principles. The pandemic, they said, gave the pair a chance to prove they were not just going through the motions.
A Renewed Pairing A Dallas, Texas native, Perryman got his start in the business at a Buick-Pontiac store in 1978 as a high school sophomore. There, he learned early lessons in treating employees with the same fairness often reserved for customers. He met Arens in 1989 through NADA, and at one point they worked together under the JM Family umbrella. The pair eventually wound up on opposite ends of the East Coast, with Perryman working at various Nissan stores in Tampa Bay through the late ‘90s until Arens gave him a call. Arens had heard Perryman was about to buy a dealership. His pitch: Come up to Massachusetts and work as GM at his Subaru store. “I said, ‘Brother, I am not moving to Massachusetts. Are you out of your mind?’” Perryman recalls. “We visited in May, and we thought it was so beautiful. And during our first snowfall we were excited -- until I saw plows at the store.” Asked why Arens made a call to Florida to find a GM, and
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why Perryman would accept it over buying a store in the South, both say it came down to trust. Their reconnection became the first model of hiring that they have emulated ever since. The pairing has worked well, and the key to success is simple. “We talk about things,” Arens says. “And we do not try to do things the same way just because that is how we have always done them.”
Love, Serve, Care One of Patriot’s slogans is deceptively simple: “Love, Serve, Care.” Fulfilling all three keeps Arens and Perryman busy, but never too busy to be transparent with everyone from sales managers to shuttle drivers. “We have a short, distinct, clear mission statement to serve our customers, our communities, our families, and each other,” Perryman says. “We do not use a top-down type of decision making process here. When we hire people, it is pretty grueling to go through the interview process. “We are slow to hire and slow to terminate,” he adds. “You have to look in the mirror and know you have done everything you can. And if you have not, there is more work to do.” Being slow to hire, Perryman says, also means looking outside the norms. It means hiring the sales veterans alongside someone who may not have even walked into a dealership before. “We have a young woman who works here in sales, and twoand-a-half years ago she was a waitress,” he says. “She is going to sell 150 cars this year.” Another key tenet: A dealership should reflect the community it serves. Nearly half of the employees at Perryman’s store are women. Alongside reflecting the community, the voices of those working at the store are also prioritized, “especially if I am having a bad day, because the fish rots from the head down. People have the freedom to say what they think. That is empowering, and why people enjoy working here.” Compared to an NADA-estimated national employee turn-
www.msada.org Massachusetts Auto Dealer DECEMCBER 2020
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RACE TO GENTLER, THE FINISH KINDER, AND HIGH-VOLUME over rate of 67%, a 9% turnover rate at Patriot Subaru is one way of measuring that enjoyment. “I attribute a lot of that [number] to Adam and his belief system,” Perryman says. And while it mostly boils down to “love, serve, care,” Perryman has a few dozen aphorisms that explain it a little more deeply, including: “If you make deposits in your people six days a week, you are allowed to withdraw one day a week. But not on a Saturday morning.”
The New Normal COVID-19 has required more deposits, and withdrawals, than anyone would have expected. Patriot Subaru’s navigation of the pandemic has managed to turn even the most challenging times that dealerships have faced in generations into a bright spot. After meetings started in February across all three dealerships, the decision came that closing would not be an option. “We cannot live with any of this spreading it around,” Arens says. “That is how our organization thinks. An organization of mutual respect is our mission statement and guiding light through this.”
The rules have been strict. If a customer makes an appointment, it has to be the customer’s first stop of the day or the customer is sent home. Shuttle drivers are on sanitization duty. Anyone who believes they may have been exposed, or has symptoms, stays home. As a result, only three cases have occurred in nine months, and none has spread at the dealership itself.
Forging Ahead
That has meant an edict to not lay off a single employee, no matter how much it costs. And it has meant allowing employees with higher risk or with childcare needs to stay home as long as they need. “We came to the realization that we are redefining super heroes -- single parents trying to teach school and provide for their families at the same time,” Arens adds. DECEMBER 2020
The other results also speak for themselves. While they will not give exact numbers, both Arens and Perryman say 2020 has been a very good year. As Perryman prepared to hand out year-end bonuses, he said another GM had expressed surprise they could manage that in the current climate. “Show me a man’s pay plan, and I will show you his agenda.” The key to success in the coming year and beyond, Perryman says, remains as simple as when he started in the business in the ‘70s. “Know what leadership looks like. I hire people with the understanding that they will do it my way, and let me teach them what I know. I do financial statement review meetings with any associate in our store.” Ultimately, he adds, his work is about paying his own success forward. “I am just a Texas country boy that knows how to milk a cow. Someone gave me a shot. My purpose is to make sure everyone who works in our organization has an opportunity to have my chair.” t
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NEWS NEWS the NEWSfrom from Around from Around Around the Horn Horn NEWS
NEWS the Horn
HADLEY
Cosenzi Receives BusinessWest Award Carla Cosenzi, co-owner of TommyCar Auto Group’s five car dealerships in western Massachusetts, recently received a 40 Under Forty Alumni Achievement Award from BusinessWest. A previous recipient of a 40 Under Forty award in 2012 and a Difference Maker award in 2019, she received the latest award for professional success and community service. Cosenzi took the reins of TommyCar Auto Group in 2009 after the death of her father, Tom Cosenzi. The business grew from three locations to five, the most recent a Volvo dealership in Northampton. The Tom Cosenzi “Driving for the Cure” Charity Golf Tournament, now in its 12th year, has awarded more than $1 million to support brain tumor research at Dana-Farber Cancer Institute. A scholarship program in her father’s name has also awarded more than $10,000 to local high school students since it originated in 2012.
with critical-care needs such as stroke, heart attack, and trauma. “The fact is we have one of the busiest emergency centers in New England and thanks to this profoundly generous gift from Charlie and Elizabeth Daher, our ability to deliver emergency care is about to be greatly enhanced,” Deborah Wilson, president and CEO at Lawrence General Hospital, said in a statement. “With this Daher family donation, Lawrence General is able to move forward with a new Dedicated Treatment Unit in our Emergency Center.” NORWELL
Village Automotive Earns National Recognition for Porsche Restoration Several months of work by a team at Porsche Norwell saw a 1983 911 SC Targa restored to better-than-new condition, earning national accolades in the process.
LAWRENCE
Commonwealth Motors Owner Donates $250k to Hospital Commonwealth Motors owner Charlie Daher recently suffered a heart attack and was treated at Lawrence General’s Emergency Center. He credits their quick action with saving his life. Just before Christmas, he donated $250,000 to help fund a new hospital unit. “I firmly believe that if not for them, the right place at the right time, I would not be here right now,” Daher said in a Lawrence General video. The new Dedicated Treatment Unit will help the hospital rapidly evaluate, assess, and treat patients with low- to mid-acuity medical complaints — while also increasing capacity for the patients
After a complete teardown and rebuild, Porsche North America announced the ride as the winner of its national restoration contest. BOSTON
Massachusetts Legislators Push for Auto Insurance Premium Relief Five senators and seven House lawmakers, led by Sen. Barry Finegold (D-Andover), wrote a letter to Massachusetts Insurance Commissioner Gary Anderson this month urging him to order auto insurance companies to deliver another round of premium relief to drivers in light of reduced travel and accidents as a result of the COVID-19 pandemic. Insurance companies covering 98% of the market offered drivers premium reductions in the Spring as a result of people quarantining at home to avoid the virus and not driving as much. But the lawmakers said that relief was not commensurate with
DECEMBER 2020
Massachusetts Auto Dealer www.msada.org
MSADA
NEWS from Around the Horn
the reduction in risk to insurers, who they said continue to benefit from people working from home and observing COVID-19 precautions. The unadjusted rates, they said, also disproportionately impact lower-income communities that have been hit hard by COVID-19 and typically pay higher insurance premiums. “Drivers are effectively being punished for heeding public health guidelines and staying off the roads,” said Finegold, who represents Lawrence, one of the state’s lower-income communities with high COVID-19 infection rates. The letter was signed by Finegold and Sens. Diana DiZoglio, Brendan Crighton, Sal DiDomenico, and Harriette Chandler, and by Reps. Christina Minicucci, Marcos Devers, Frank Moran, Steven Ultrino, Carol Doherty, Carole Fiola, and Antonio Cabral. NORTHAMPTON
TommyCar Auto Group Presents $7,000 to DanaFarber Cancer Institute TommyCar Auto Group joined forces with the Hampshire County Sheriff’s Office and Sheriff Patrick Cahillane for their ‘No Shave November’ campaign to raise awareness and funds for the Dana-Farber Cancer Institute. This year, the Sheriff’s Office raised $2,500, which was matched by TommyCar. In addition, customers of TommyCar were able to donate their TommyCar rewards points (which can be earned through vehicle servicing and spent toward a new car), adding another $2,235 for a grand total of $7,235. This is almost $2,000 more than was raised last year, which was also donated to Dana-Farber. “We are grateful to have had this opportunity to partner with the Hampshire County Sheriff’s Office again and to raise even more money than last year for such a deserving cause,” said Carla Cosenzi, who co-owns TommyCar Auto Group with her brother, Tom. “The Dana-Farber Cancer Institute provided outstanding care to our father. This campaign is part of our ongoing commitment to honor his memory. We really hope this donation can go to help more people like our father.” No Shave November is devoted to increasing cancer awareness while raising funds to support cancer prevention, research, and education, as well as those fighting the battle. It is a monthlong effort in which participants forgo shaving and grooming to evoke conversations about cancer awareness. Throughout the month of November, deputies and staff at the Hampshire County Sheriff’s Department had the opportunity to opt out of the dress code and grow out their facial hair with a donation of $20 to TommyCar Auto Group’s Tom Cosenzi Driving for the Cure Charity Golf Tournament. Over the past 12 years, the annual tournament has raised more than $1 million to support brain-tumor research at Dana-Farber. t www.msada.org
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Information Security
What Is This WISP Thing? Don Lander OCD Tech
If you read the title of this article and are thinking the same thing, you may want to read on to understand what a WISP - Written Information Security Procedures - is and why it is so important to your dealership. If you have a WISP but have not reviewed it lately, you may need to review and make updates to it, especially since the auto dealerships’ business model has gone through some significant changes due to the current pandemic. A WISP is a required document for any business that handles confidential customer information and acts to ensure the security and confidentiality of that information. Confidential information includes but is not limited to: SSN, DOB, driver’s license information, bank information, and/or credit card information. In Massachusetts, it is the law that any business handling customer confidential information must have a WISP. According to Massachusetts regulations at 201 CMR 17.00, the WISP will “ensure the security and confidentiality of customer information in a manner fully consistent with industry standards.” One may ask, “Okay, so it is the law. But what happens if I do not have one or my existing one is inadequate because it has not been updated in a while?” When my son was 10, I coached his hockey team. I noticed one day he was being a little chippie when the referees were not looking. I told him what he was doing
was a penalty. He looked at me and said, “Dad it is only a penalty if I get caught.” Needless to say, we had a long conversation after the game about his perspective regarding penalties. Like hockey rules, the law is also the law whether or not you think someone is looking. Usually, a penalty in hockey is for two minutes, but the penalty for not having an updated WISP is much more severe and includes monetary losses, a negative impact on your reputation, and (potentially) customer identity theft. A WISP is not a complicated document filled with plenty of legal language or
tomers’ information on their computer screen in the showroom? 3. What is your policy for the destruction of customer confidential information? One thing that is often overlooked is the education of your employees regarding the details of the WISP. Education is a very important part of the WISP. Since your employees handle customer confidential information, it makes sense that everyone involved understands how and why that information is handled. A few of the technical questions that a WISP may address are: 1. How are you protecting confidential customer information while in flight or stationery? 2. Does your free WIFI allow those who should not have access to confidential information (both employees or non-employees) the ability to access data that they should not? 3. What steps have you taken to protect your infrastructure containing customer confidential information? Are there other things that you can do to further strengthen your infrastructure from hostile actors? Often small businesses will outsource their technical needs because understanding technology may not be a priority or strength. If you do not understand technology, you are putting much trust in the person to whom you are outsourcing. It may make sense to at least have someone else do a sanity checkup to make sure you are getting what you pay for. If you do not have a WISP or if you have one that needs to be refreshed, be sure to address your situation promptly. t OCD Tech is a division of O’Connor & Drew, P.C., a full-service accounting, tax and business consulting firm. If you have any questions regarding this article, Don can be reached at dlander@ocd-tech.
“If you do not understand technology, you are putting much trust in the person to whom you are outsourcing.”
DECEMBER 2020
technical terms. It is more of a checklist about how to protect your customer information. Similar to a disaster recovery plan, a WISP details how to prevent a situation, and, if that fails, what to do if a situation occurs. The main part of the WISP is about preventing a breach of customer information. A WISP focuses on the physical and technical ways to handle confidential customer information throughout the entire lifecycle of the information. Some of the transgressions that a WISP will cover relate to how customer confidential information may be handled in the following situations: 1. Are forms left lying around on desks or in trash containers that are easily accessible to anyone? 2. Do sales or finance people leave cus-
Massachusetts Auto Dealer www.msada.org
LEGAL
MSADA
By Joseph W. Ambash and Jeffrey A. Fritz
COVID-19 Vaccinations: Employer Rights and Obligations On December 16, 2020, the U.S. Equal Employment Opportunities Commission (EEOC) issued guidance on vaccinations, and whether and under what circumstances employers can require employees to get them. Can Massachusetts Employers Require Employees to Get Vaccinated? The answer is a firm “yes, but ...” Generally speaking, employers can require vaccination under the Americans with Disabilities Act if and when a worker poses a “direct threat” to themselves or others by their physical presence in the workplace without being immunized. Implicit in the EEOC’s guidance is the fact that, given how COVID-19 is transmitted, an unvaccinated employee (who may unknowingly be a carrier) may be a direct threat to other employees and, accordingly, employers generally can require vaccination as a condition of employment. What, then, can an employer do if an employee refuses to comply? The answer depends largely on the reason for his or her refusal. What if an Employee Refuses Because of a Disability? If an employee says s/he cannot comply with your policy because of a disability, the question becomes whether you can provide a reasonable accommodation (absent an undue hardship). Generally speaking, this inquiry typically requires an interactive dialogue between the employer and employee (and employee’s health care provider, to verify the limitations of the condition at issue) to determine whether a reasonable accommodation exists. Can the employee work in an isolated area at the workplace? Can the employee work remotely? Can the employer grant the employee an unpaid leave of absence (assuming the employee is not entitled to paid or unpaid leave under some other law or policy)? Is the rate of prevalence so low (or of vaccination so high) in the area so as to justify a simple exception from the policy? These are some examples of questions
that must be explored to ensure you do not run afoul of the ADA or Massachusetts law. Employers cannot simply and automatically exclude such employees from the workplace or take any other negative action against them without exploring these avenues. What if an Employee Refuses Because of a Religious Belief? If an employee says s/he cannot comply with your policy because of his or her religion, a similar inquiry is likely required. While this issue does not implicate the ADA, it does implicate Title VII of the Civil Rights Act, which provides that employers must give a reasonable accommodation if an employee’s sincerely-held religious belief, practice, or observance prevents them from getting vaccinated—unless it poses an “undue hardship” insofar as it would have more than a de minimis cost or burden. Generally speaking, employers should tread lightly in questioning the religious and/or sincerely-held nature of the belief, practice, or observance (but may ask for substantiation or additional information if an objective basis exists to question it). Assuming that it is the case, employers should engage in a similar inquiry as above, to minimize the risk of a claim of religion discrimination. What if an Employee Just Does Not Want to Vaccinated? Generally speaking, if an employee refuses to comply with your policy requiring COVID-19 vaccination as a condition of employment not based on some medical condition or sincerely-held religious belief, then, while they have a right not to get vaccinated, they do not have a right to continued employment with your dealership. That said, we recommend that you nonetheless listen to your employees’ concerns (and reason(s) for not wanting to get vaccinated), and consider any reasonable alternatives to termination of employment. That said, to the extent you make any exceptions to policy, you should ensure they are applied uniformly to all simwww.msada.org
ilarly-situated employees, as uneven enforcement of policies is the stuff of which lawsuits are made. Can Employers Require Proof of Vaccination? In short, yes, you can require employees to provide proof that they were vaccinated. Keep in mind, however, that if an employee does not provide such proof and an employer asks why not, such an inquiry may be deemed a disability-related inquiry under the ADA, and may only be asked if it is “job-related and consistent with business necessity.” Make sure to keep any employee medical information in a confidential medical file consistent with ADA requirements (and not, for example, in their personnel files). You should not reveal employee medical information (including vaccination status) to anyone without a legitimate business need to know. The laws surrounding COVID-19 are ever-changing, so it is imperative that all employers stay on top of all developments in the law and make any necessary adjustments to policy or practice. Pay attention to MSADA’s bulletins and legal alerts, which provide timely and useful information. Train your managers to ensure they are implementing your policies and procedures in a manner that reduces the risk of legal problems down the line. When in doubt, consult competent counsel. t
Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
New light-vehicle sales fell slightly in November. November 2020’s SAAR of 15.6 million units represents a decline of 8.4% from November 2019 and 4.5% from October 2020. Through 11 months of the year, new light-vehicle sales are down 16.7% compared with the same period last year. November 2020 had a calendar quirk that resulted in only 23 selling days and one fewer selling weekend than November 2019, which had 26 selling days. After adjusting for selling days, retail sales are expected to fall by 1% year-over-year following two months of year-over-year gains, according to Wards Intelligence. After months of year-over-year declines in fleet sales, some manufacturers experienced success with their fleet volume in November, but fleet sales were still down 25% from November2019. In a normal year a 25% decline would be viewed negatively, but this is actually an improvement compared with the average monthly fleet sales decline of 53% seen from March through September 2020.
DECEMBER 2020
According to J.D. Power, average incentive spending per unit is expected to top $3,800 in November. This would mark the third straight month of incentives remaining below $4,000 per unit. Incentive spending typically increases in the last month of the year, but manufacturers may change course from recent months and boost their incentive spending in December as part of a year-end sales push. For 2020, we expect that new light-vehicle sales will total 14.2 million units. There may be some regional ups and downs in sales as the country deals with spikes in COVID-19 cases throughout the winter months. Still, recent news suggests that widespread vaccine deployment is on the horizon in the first half of 2021. Once a majority of Americans can return to their pre-pandemic lives, we could be in for quite an economic boom, which would certainly be a positive for franchised dealers and the entire auto industry.
Massachusetts Auto Dealer www.msada.org
MSADA
NADA MARKET BEAT
JANUARY 2016
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TRUCK CORNER
MSADA MSADA
Demand for Trucks Strengthens in December By Steve Bassett Chairman, American Truck Dealers Steve
is
the
dealer
General Truck Sales in Muncie, Indiana. He also has locations in Indianapolis, I ndiana , and T oledo , O hio . H e sells V olvo , Isuzu, H ino, and M ack trucks. principal
of
As sales grow, we must continue to keep our colleagues and customers safe
December 2020 marks a time that most truck dealers did not expect to see in the earlier part of the year: strong growth. We have been through the most turbulent and challenging year of our lives. And we have risen to the occasion. I have told fellow truck dealers that if we showed resilience and optimism through these times, we would be able to look forward to more robust sales ahead. The holiday season is delivering just that. As of the first half of December, Class 8 orders have surged to their fourth-highest monthly volume ever. This surge is due to a mix of soaring freight
There is also a proactive spirit on the part of all truck dealers to make sure we have the products that our customers need heading into the new year. While our supply chains are looking better than before, this is not the time to be complacent. Dealers will have a hand in charting our path forward. No matter how strong the current sales forecast is, we must not lose sight of a more critical metric: We must continue to keep our customers, employees, and colleagues safe through a raging pandemic. I urge all ATD members to download important health and safety guidance from NADA’s Corona-
“While our supply chains are looking better than before, this is not the time to be complacent. Dealers will have a hand in charting our path forward.” rates, fewer available production slots, and pent-up demand during the pandemic. ACT research reports that North American orders for Class 8 trucks reached nearly 52,000 in the month of November, marking a 33% increase compared to October and a 197% improvement from this time last year. Overall, Class 8 orders for the past 12 months continue to increase and now stand at 250,000 units. There is an obvious desire throughout the commercial truck industry to capture a sense of normalcy and make up for the lag in the earlier part of the year. Research also shows that the increase in volume can be credited to several large fleets placing orders for the entirety of 2021, in the event supply becomes short next year. DECEMBER 2020
Massachusetts Auto Dealer www.msada.org
virus Hub. There is a wealth of information that will keep your dealership safe, including: • FAQs: Dealership Health and Safety Concerns During a Pandemic; • Safely Operating your Dealership During a Pandemic Driven Guide; • ATD and NADA Webinars in the Dealership Lifeline Series. On behalf of ATD, I want to acknowledge the men and women of our industry for never giving up, and for protecting the well-being of the people around them. We have been through a crisis, but we are coming out stronger. Let us mark 2020 as a year of challenges and forge a better path ahead in the new year! t
BUSINESS OPS
MSADA
State of the Auto Dealership Buy/Sell Market Paul McGovern Downey & Company LLP
As a member of the National Alliance of Auto Dealer Advisors, our firm participated in their Fall dealer conference. NAADA is an association of dealer CPA firms from across the nation. In one of the webinars, we were updated on the state of the auto dealership buy/sell market by Erin Kerrigan of Kerrigan Advi-
June of 2019. Investors are finding dealership investments highly attractive as compared to returns in traditional financial markets. This has driven up the demand for dealerships. As a result, dealership valuations and “blue sky” multiples have grown significantly. According to Kerrigan Advisors research, OEM support has been strong, likely due in large part to the strength of the financial markets buttressed by a Federal Reserve committed to keeping funds flowing and credit markets functioning. More important for auto dealers, actions taken by the Federal Reserve have driven interest rates to near zero. This is critical as the auto dealer industry is very
“Investors are finding dealership investments highly attractive as compared to returns in traditional financial markets.” sors, creators of the Blue Sky Report and the Kerrigan Index. The pandemic has had a profound impact on the buy/sell market for auto dealerships. Let us take a look at what the industry can expect as we close out 2020 and open 2021.
How the Auto Dealership Buy/ Sell Market is Recovering The auto dealership industry has made a drastic recovery following the economic shutdown. Kerrigan Advisors data shows that earnings jumped to an alltime record high for the month of June, with an increase of 89% compared to
sensitive to interest rates. Lower interest rates reduce the monthly loan/lease cost to the end buyer; this helps spur sales, and dealership floorplan expense declines.
What Are the Characteristics of Buyers and Sellers During this Time? There are a few common characteristics of auto dealership buyers following this crisis: • They are ignoring the economy and flocking to dealerships because of the opportunity in ROI. • They are looking to invest alongside www.msada.org
management or invest outright. • With access to low-cost financing and lower cost of capital, investors are better positioned to meet seller’s pricing expectations. • Potential buyers have successfully navigated the crisis with significant cash on hand. • Buyers are seeking creative acquisitions where they can employ new cost savings from scale and digital retailing to enhance profits and increase returns. • According to Kerrigan, many buyers are focused on southern markets in the U.S., likely due to population growth in those markets and a favorable climate. Internally, we have seen the publics and large chains pursuing stores in the Northeast as well. Why dealers are being driven to sell is also coming to light: • The fun has been taken out of the business. Many dealers have faced a horrifying experience with the pandemic and realized scale will be a success driver in the future. • Greater access to capital on the part of large/public dealers makes it difficult for small dealers to compete. • Larger groups are effective in managing expenses and inventory, placing smaller dealers in a challenging position. • Concern exists over future tax rates going up under a new presidential administration. Although 2020 has been a tumultuous year for everyone, auto dealership buy/ sell transactions have increased, and Kerrigan Advisors believes 2020 will be the most active buy/sell market for the auto industry yet. t If you have any questions regarding this article, please contact Paul McGovern at 800-849-6022 or at PMcGovern@ DowneyCoCPA.com.
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NADA Update
By Scott Dube
Finding Common Ground with OEMs 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 NADA Chairman Rhett Ricart says in his column below, dealers are used to unpredictability. We adapt and we thrive based on our own abilities. With the new year, your NADA will continue its work in advocating for dealers to be at the center of conversations around facilities and process. It is likely that these dealership mausoleums are wasteful, inefficient, costly, and completely unnecessary. Manufacturers seem to know no limits when it comes to what it means for us to invest in them, but have some pretty solid ideas about what they will spend their money on. I do not know about you, but I am immensely proud of my own team -- and the franchise dealer network as a whole -- in the way 2020 has been handled. Most of us have remained in business, if not thrived, during what is the most difficult time in memory. Hats off to my fellow dealers and my own Bill Dube team for persevering and making the most of what we were given to deal with. Can you imagine what this would have looked like without our franchise system? Many of the factory teams have not left the house since March, save the hardworking men and women who build these cars and trucks. Despite what some seem to think, this game is still being played on the field. No amount of remote control or wishful thinking is going to change that. This country’s dealers once again have saved the industry, and maybe even the economy. Time will tell! We hope you will take advantage of the upcoming virtual NADA Show. Full details are available at www.nada.org, and, as always, feel free to contact me with any questions. Wishing you and yours a happy holiday season and a healthy, prosperous 2021.
Adapting Dealer and OEM Priorities in Light of COVID-19 By Rhett Ricart, 2020 NADA Chairman
In November, I had the opportunity to speak virtually to members of the Automotive Press Association about what the post-COVID environment looks like for dealers, customers, and OEMs. 2020 has been a year of incredible change for the entire auto retail industry. DECEMBER 2020
Dealers and OEMs alike have adapted operations to remain successful in the Coronavirus environment, and we have all learned that further adaptation will be necessary post-pandemic to maintain success. Dealers, in particular, have been resilient through the unpredictability, and dealers will continue to adapt to whatever is thrown at them. We have for over 100 years! As we near the end of 2020 and look to the year ahead, the biggest obstacles to success are not corruption, obstruction, and disruption that I have discussed throughout my chairmanship. Rather, the biggest obstacle, in my mind, is regression. Over the past year, the entire industry has made so much positive and productive progress. Our customers, on the whole, are happier and more satisfied now than they have ever been before as measured by the OEMs themselves. Unfortunately, most of our members believe that signs of regression by some of our automaker partners threaten to diffuse the strides our industry has made during this critical period of growth and progress. Thanks to a NADA survey conducted over the Summer, we heard from more than 11,000 dealers and learned more about these signs of regression. We learned about dealer sentiment toward changes – prompted by the pandemic – in the sales and service process, and about what is driving customer satisfaction under this new normal. We also gleaned important insights from dealers about operating a dealership and working with OEMs in a post-COVID world. In our survey, we found that 82% of dealers believe the digital sales process is here to stay. While that means a great deal, it does not mean that these digital services will work for every customer in every instance. While the pandemic accelerated customer adoption of a fully digital sale, many customers will still want to start the sales and financing process online and complete their transaction in our stores. Our survey also asked dealers about the importance of six aspects of their physical store in a post-COVID environment. Dealers rated convenience and location for customers as number one, with service center size and capacity, and co-location of sales and service facilities and on-premises customer amenities, following in the number two and three positions, respectively. This told us that facility preferences have evolved for most dealers and their customers during the Coronavirus pandemic. Furthermore, it shows that most dealers believe that, as the digital retail experience evolves, OEMs need to rethink their costly and ever changing image programs to better align with the evolving consumer. The size of a dealer’s showroom is not a reflection on the quality of the prod-
Massachusetts Auto Dealer www.msada.org
MSADA uct they sell or of their dealership. And it does little to influence today’s customer, who places a far higher premium on flexibility and convenience than they do the opulence of a dealership showroom. Most dealers believe that OEMs may want to consider carefully whether continually changing and expanding their retail space representation really serves the best needs of the customer. Our survey also found when asking in which areas they would like additional focus from their respective OEM partners, 64% of dealers want manufacturers to simplify incentives to support and amplify digital retailing. To be successful and credible with digital retailing, the sales process must be transparent to the consumer. For the benefit of the consumer, OEMs need to make dealership incentives as simple and non-complex as possible. For example, unfair stair step programs do not, and will never, provide the transparency our customers are expecting and dealers are embracing in this ever-changing landscape. Customers are going to be more price-conscious because dealers are going to be more transparent to respond to customer needs. Dealers have to be able to right-size their business model to be able to meet for what our customers are asking. That is all we are asking of manufacturers. We want to work with our OEM partners to ensure that the customer satisfaction that is at record levels stays that way. It is never been more evident that people find comfort and safety in car ownership – comfort and safety that cannot be replaced by anything else. Dealers are vital to ensuring that customers have access to personal transportation, and that they have a positive brand and sales experience along the way.
NADA Show 2021 is Coming Soon NADA Show 2021 is bigger, better, and jam-packed with keynote speakers, workshops and education sessions from which the entire dealership can benefit. How can everyone benefit? For the first time ever, NADA Show will be hosted virtually, and it will be an experience like nothing you have seen before. To register everyone at your dealership for a group discount or individual registrations, go to www.nada. org. This event regularly attracts more than twenty thousand of the best and brightest folks in the auto retail industry, including broad representation from OEMs and allied industry representatives. It is the single best opportunity to learn, network, browse exhibits, and engage with the overall industry each year. And with the host of new technologies combined into our state-of-the-art virtual event platform, this is one NADA Show that you will not want to miss. Along with an impressive list of keynote speakers, a live stage, and a virtual Expo with hundreds of exhibiting companies, the following are a few more highlights to look for-
ward to: • Franchise meetings will offer the opportunity to speak directly to automakers dealerships’ concerns during Q and A sessions and provide a chance to get to know other successful dealers under your brand. • Workshops Sessions will feature intensive education opportunities with more than 60 sessions covering topics for every dealership department. • The Virtual Exchange will facilitate peer-to-peer discussions bringing dealers together to brainstorm and problem-solve the most pressing issues in auto retail today. • The Distinguished Speaker Series will provide dealership managers with five dynamic sessions, which will go beyond the traditional workshop tracks to discuss key topics in Leadership, Dealership Culture, Team Building, and Personal Success. • The Super Session will focus on “Diversity in Auto Retail,” bringing together a diverse group of experienced, next-generation automotive professionals to start a conversation on what it will take to grow and diversify our industry for the future. This year’s Show takes place Tuesday, February 9, through Thursday, February 11. We encourage you to reserve time on your calendar by registering early and sharing this info with colleagues so they can do the same.
Live Stage Excitement Returns to NADA Show 2021 For the last five years, NADA Live Stage has been a hub of information, education, and activity related to the auto retail community and auto business professionals attending the annual NADA Show. This year, we are doing something new. Like the rest of NADA Show 2021, we are bringing the Live Stage to you. Hosts Maggie Clark and Madison Alexander will anchor all three days of the virtual NADA Show. They have a full slate of interviews, informational segments, and special guests to keep us up to date on the current topics and trends in the auto retail industry. You will meet key auto industry players, hear dealer stories, and get an inside look at the Show as the Live Stage guides you through the Auto Industry Event of the Year. Reach out to us on Twitter to share your favorite Show experiences from 2020, and we may include your story in our Live Stage broadcast! Be sure to tag us @NADAupdate and use #NADASHOW when you share your favorite Show moments. We will meet you at the virtual Live Stage, starting February 9, at 10:30 a.m. ET, as we kick off this year’s first-ever virtual NADA Show. Register at www.nada.org.
www.msada.org
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