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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
November 2020 • Vol. 32 No. 11
The official publication of the Massachusetts State Automobile Dealers Association, Inc
MAGAZINE
2021 Massachusetts Dealer of the Year
Christine Alicandro-Karnolt
MA S S A C H U S E T T S
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S TA F F D I R E C T O R Y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org AUTO DEALER MAGAZINE Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jfabrizio@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
AD DIRECTORY BlumShapiro, 21 DealerShop, 17 Ethos, 2 NADA Show 2021, 18 Nancy Phillips, 21 O’Connor & Drew, 28
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
TABLE OF CONTENTS
4 5 6 9 10
FROM THE PRESIDENT: MSADA Meets with Registrar Tesler ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: A 50-50 Country? No Trump Anchor on the GOP TROUBLESHOOTING: Remember the CFPB? AUTO OUTLOOK
14 COVER STORY: Dealer of the Year: Christine Alicandro-Karnolt
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LEGAL: Good Riddance 2020. What Is in Store for 2021?
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NEWS From Around the Horn NADA MARKET BEAT TRUCK CORNER: America’s Truck Dealers Show Resilience During Toughest Year Yet
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BUSINESS OPS: How Did You Do and Are You Ready for the Next Challenge?
26
NADA UPDATE: Going Full Digital
ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Back Cover: $1,800 Quarter Page: $450 Inside Front: $1,700 Half Page: $700 Inside Back: $1,600 Full Page: $1,400
Join us on Twitter at @MassAutoDealers www.msada.org
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From the PRESIDENT
MSADA
MSADA Meets with Registrar Tesler By Chris Connolly, MSADA President Earlier this month, your Association’s leadership met with RMV Registrar Jamey Tesler and his team to discuss on-going dealership matters. Here is a brief summary of the several topics we covered in our meeting. • We thanked the Registrar and his team for (1) smoothly implementing the vehicle inspection facility license law so that franchised dealers who needed the inspection license were able to obtain the license and (2) being open for business and very responsive to issues as they arose while dealers navigated the Coronavirus crisis and various levels of state shutdown. • Used Vehicle Record Book elimination was discussed at length. It has been two years since we successfully got a law passed to eliminate the book’s handwritten recordkeeping requirement, to be replaced with maintaining the info in our DMS. Parties within the agency have been reluctant to implement the law. They have had discussions with DMS vendors about creating a separate system within the DMS. We were adamant in not wanting dealers to have to pay for additional services from any vendor for such an outdated requirement. The Registrar suggested that the State Police needs to be brought into the next meeting to understand what it is they want specifically and how all the information they might need is already in the dealer’s DMS. • Temps Tags continue to be an ongoing issue. We have language in several bills in the legislative process to fully implement the law, which was passed in the mid-1970s. Our bill addresses the insurance requirement issue. We also discussed the need to address other insurance issues in a vehicle sale such as improving the process for meeting the need of the insurance agency stamp – maybe replace it with a vehicle insurance card. • Branch Availability. We have been working with the RMV to get branches open in western Mass. and on Cape Cod. There have been drop-off centers opened in North Adams and Greenfield, and they hope to have services improved at South Yarmouth. • E Titles. The RMV team is going to look into how other states allow transactions to be done without paper titles, e.g. Florida and Arizona. On a positive note, Scott Dube, our NADA rep, commented that Mass. has done a very good job making sure that titles have been issued in a timely manner during the virus crisis, much more so than some other states. • E Signatures vs. Wet Signatures is still an issue in progress. Customers are still not totally embracing the online process. People want to see the car and drive the car and get their trade appraised. But there are some in the population who want to purchase a car completely online. Carvana and Vroom growth in the pandemic are some examples of this. Also, the RMV committed to looking at the issue of allowing for the use of a power of attorney to get the signature on the back of the title. Finally, we are pushing legislation to help us with the current law on the three-day right of cancellation on deals signed via a dealership’s internet website portal. If there are any issues you wish us to address with the RMV, please contact Executive Vice President Robert O’Koniewski at (617) 451-1051 or at rokoniewski@msada.org. t NOVEMBER 2020
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 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, 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 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
A 50-50 Country? No Trump Anchor on the GOP By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
With the completion of the November 3 election, and the subsequent certification thus far of final vote tallies in enough states to grant him at least 270 electoral votes, Joe Biden sits poised to be inaugurated our 46th President on January 20, 2021. Although the legal team for President Donald Trump is challenging election results in a number of battleground states that went by slim margins to Biden, as of this writing there does not appear any reason to think that when the Electoral College meets in early December anything will change the 306-232 margin in electors that Biden has in his favor. Based on this year’s federal election results, it is easy to characterize our nation as being as polarized as it has been in a while, at almost a 50-50 split in many accounts. Although Biden has virtually the same split in electoral votes in his favor as Trump did four years ago, he achieved that with 51.1% of popular vote, having attained over 80 million votes, in winning 25 states and the District of Columbia. Of course, Trump won the other 25 states. In fact, if you look at two states that prognosticators call for the Democrat in every recent election the minute the polls close there – California and New York – they account for Biden’s margin of victory in the popular vote (along with 84 electoral votes). Throughout the election season, pundits kept pushing the narrative that President Trump would be an anchor around the necks of Republican incumbents and candidates. That did not appear to happen, as incumbents, even those deemed to be in trouble, for the most part won handily. For example, look at Maine’s Sen. Susan Collins, the only NOVEMBER 2020
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Republican from New England in Congress. She never led in any polls yet managed to win re-election by eight points. As things stand with the U.S. Senate, the GOP controls 50 seats, the Democrats claim 48, and all eyes are riveted on the January 5 runoff elections in Georgia which will decide its two seats. Although the GOP lost two incumbents (Arizona, Colorado), the Democrats lost one incumbent (Alabama), for a net gain of one to them. In the U.S. House, Republicans racked up a bushel of unexpected victories. The Democrat majority shrunk to 222 as the GOP picked up 11 seats to settle at 212, with one election to be decided in upstate New York, where the Republican challenger leads by a handful of votes. Of the 27 toss-ups that Charlie Cook touted along with a coming blue wave at his NADA Washington Conference presentation, the GOP won all 27. There was no blue wave. In fact, no sitting Republican lost in a House election across the country. This will be the smallest Democrat majority in the House since the 1940s and the tightest gap between the parties since Speaker Newt Gingrich had control for Republicans in the 1990s. As one drills down to the state governors and legislatures, the Republicans made gains there, too. In 11 governor races, all incumbents won as the GOP won two open seats in Montana and Utah. This gives the GOP 27 governorships to the Democrats 23. Despite quite a bit of Democrat rabble-rousing, the Republicans held all the legislative chambers they controlled and picked up the New Hampshire House and Senate. The GOP now controls both chambers in 30 states, the Democrats in 18
MSADA (including Massachusetts), and Minnesota is split (Senate to the GOP, House to the Democrats). Nebraska is a unicameral legislature, and legislators are elected in a nonpartisan manner. After November 3, three-fourths of states have governors and legislatures of the same party – the GOP with 23 and the Democrats at 15. This is good news for the GOP as they have such control in those states that will gain seats in the 2020 Census and redistricting lines are drawn for the 2022 federal and state elections. Here in Massachusetts, the Democrats once again swept all the federal elections. Although he increased his raw vote and percentage here over the 2016 numbers, Trump still got creamed by Biden, 65.9%32.3%, losing by over 1.2 million votes of 3.5 million cast. U.S. Sen. Ed Markey easily beat Republican Kevin O’Connor, 66.7%-33.3%. We have not had a GOP Senator since Scott Brown a decade ago. Of our nine House members – all Democrats – four faced GOP opponents and easily beat these upstarts. U.S. Reps. Jim McGovern (Worcester), Katherine Clark (Melrose), Seth Moulton (Salem), and Bill Keating (Bourne) were rewarded by constituents with an average 30-point margin of victory. Reps. Richard Neal (Springfield), Lori Trahan (Westford), Ayanna Pressley (Boston), and Steve Lynch (South Boston) won unopposed. Finally, we have a new Congressman-elect, Jake Auchincloss (Newton), who will be replacing Joseph Kennedy in the Fourth District; Kennedy had vacated the seat to unsuccessfully challenge Markey in this year’s Senatorial primary.
Mass. Legislature – A Little Bit Bluer At the State House, there were no statewide races this year. With the conclusion of the elections, the Massachusetts General Court became a little more blue, as Democrats expanded their margins in the House and Senate. Nineteen individuals appear set to join the Legislature for the 2021-2022 session. Most of the new incoming members
won open seats, though four toppled incumbents in either the primary or general election. Some did not face opponents outside their own party and have been the presumptive winners since the September 1 primary. Voters in two Republican-held districts and one Republican-held Senate district selected Democrat candidates in the general elections, while the GOP flipped a House seat represented previously by a Democrat. However, Democrats had already flipped three other seats – one House, two Senate – in special elections earlier this year to replace lawmakers who resigned for other opportunities, so the Democrats legislative ranks will be five members larger for the 2021-2022 session than at the start of the current session. Three-quarters of the Legislature, totaling 150 (out of 200) lawmakers across both chambers, sailed to re-election with no opposition. Excluding eight open districts, only two of the 42 representatives and senators who had general election challenges – Sen. Dean Tran from Fitchburg and Rep. William Crocker from Barnstable, both Republicans – lost their bids for another term. Just two Democrat incumbents, Sen. James Welch (Springfield) and Rep. David Nangle (Lowell), had lost in the September primaries, ultimately replaced by their primary vanquishers. As we head to the January 6, 2021, swearing in date for the next Legislature, we will be looking at House and Senate chambers with more Democrat members. The House will consist of 129 Ds (+2), 30 Rs (-2), and one independent. The Senate will start with 37 Ds (+3) and just 3 Rs (-3). Incoming Senators: • John Cronin (D-Lunenburg) defeated incumbent Republican Sen. Dean Tran of Fitchburg. • Springfield City Councilor Adam Gomez (D-Springfield) beat incumbent Sen. Jim Welch of Springfield in the Sept. 1 Democrat primary. Incoming Representatives: • Rob Consalvo (D-Hyde Park, Boston) won the Democrat primary and will be replacing the retiring Rep. Angelo Scacwww.msada.org
cia, who has served in the House since 1973. • Former professional boxer Kip Diggs (D-Barnstable), the only candidate to defeat a House incumbent, beat GOP Rep. William Crocker. • Patricia Duffy (D-Holyoke) is replacing her boss, Rep. Adam Vega, who is retiring. • Revere City Councilor Jessica Giannino won the Sept. Democrat primary and will be replacing Rep. RoseLee Vincent, who is retiring. She had no GOP opponent. • Vann Howard (D-Lowell) beat Rep. David Nangle, a member of House leadership, in the Democrat primary. • Former State Rep. Sally Kerans (D-Danvers) is replacing the man who succeeded her, Rep. Ted Speliotis, who is retiring. • Meg Kilcoyne (D-Northborough) defeated a GOP opponent to replace her boss, Rep. Harold Naughton, who is retiring. • Michael Kushmerek (D-Fitchburg) beat a GOP opponent to replace Rep. Stephen Hay, who is retiring. • Brandy Fluker Oakley (D-Boston) won the Democrat primary and will be replacing Rep. Dan Cullinane, who is retiring. • Jake Oliveira (D-Ludlow) edged out a GOP opponent and will be replacing Rep. Tom Petrolati, who is retiring. • Steven Owens (D-Watertown) won the Democrat primary and had no November opponent, to replace Rep. Jonathan Hecht, who is retiring. • Kelly Pease (R-Westfield) will be filling a vacant seat created when former Rep. John Velis (D-Westfield) won a special election for the state Senate. • Ted Philips (D-Sharon) won the Democrat primary and had no November opponent to replace his boss Rep. Lou Kafka, who is retiring. • Springfield City Councilor Orlando Ramos won the Democrat primary and then the general election to replace Rep. Jose Tosado, who is retiring. • Adam Scanlon (D-North Attleborough) won the election to replace GOP Rep. Elizabeth Poirier, who is retiring. • Erika Uyterhoeven (D-Somerville), an avowed Democratic Socialist, will be
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THE ROUNDUP replacing Rep. Denise Provost, who is retiring. • Steven Xiarhos (R-Barnstable) is replacing GOP Rep. Randy Hunt, who is retiring.
State Legislative Update The General Court finally decided to hunker down and pass an appropriations act for FY2021, which actually began on July 1, 2020. The state has been operating under a series of 30-day spending plans until the governor and legislators could figure out what COVID-impacted revenues would look like and if the Congressional cavalry would be delivering any bailout funds to the state. The $46 billion spending plan is presently before a House-Senate conference committee where various policy and program earmarks can be hammered out. In addition to (finally) resolving the FY21 spending plan, there are a number of major bills that have been in a conference committee since the Spring, including the transportation project bill. The transportation bill is of interest to us as it contains language to fully implement the state’s temp tags law, which was originally signed into law by Gov. Ed King in the mid-1970s. Never implemented by a long string of RMV registrars since then, we have used the legislative route to force action on the current law. In other matters, on November 20, we testified before the Joint Committee on Consumer Protection in favor of House 5115, An Act Relative to Consumer Protection on Online Automobile Franchise Transactions, which would modernize the vehicle purchase process and the statute covering off-site sales to deem contracts that are executed via an automobile dealership’s online portal to be considered as executed as part of the dealership’s physical place of business. An old law from the era of the traveling salesman that provides a 3-day right of cancellation if a sale is finalized away from the brick-and-mortar store of the retailer now has overlapped into the on-line space; this, of course, was never imagined NOVEMBER 2020
when the law was first created. This law made sense in the context of a bygone era when contracts were physically written down on paper (or parchment), and people were justifiably weary of traveling salesmen. During the on-going COVID-19 pandemic, more consumers have executed sales via dealership online processes. This legislation would align current in-person wet signature requirements on sales contracts with the online process that has become increasingly more common. The vehicle purchase process involves agreements that are finalized between a consumer and an automobile dealer through the dealership’s online portal or other electronic means, and our laws must adapt to meet the changing face of retail sales. In order to address this problem, and to bring consumer vehicle purchase processes into the 21st century especially in light of consumer behavior during the COVID-19 pandemic, the proposed language would modernize our state law governing contracts completed virtually/online in place of a ‘wet-signature’ at the physical site of the auto retailer. The “new normal” of the COVID-19 pandemic has shifted vast new areas of commerce to a digital platform. Contracts that are not executed electronically today most likely will be converted within the next year as businesses continue to adapt to a virus-stressed economy. The law should evolve to recognize the new reality of contracting in our industry in the Commonwealth.
Mass. Voters Approve RTR/ Vehicle Data Law On Election Day Massachusetts voters approved overwhelmingly Question #1, an initiative petition that requires motor vehicle owners and independent repair facilities be provided with expanded access to mechanical data related to vehicle maintenance and repair. Under our state constitution, the approved law takes effect 30 days from its passage. On November 20 the Alliance for Au-
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MSADA tomotive Innovation, which is the trade association for the vehicle manufacturers, filed a lawsuit in federal district court in Boston challenging the new law and requesting an injunction to prevent the law from going into effect until the lawsuit can be resolved. Your Association has begun to reach out to legislators in an attempt to amend the law, as it is impossible for the factories and franchised dealers to comply with the Model Year 2022 kick-in date of the law. MY22 vehicles can potentially show up on dealer lots as soon as January 2021. The question saw upwards of $25 million spent by each side of the question fight – 99.9% of the money all coming from outside the state – with the franchisor manufacturers fighting the petition put forth by the big box automotive parts and repair entities and aftermarket parts and product manufacturers. A true battle of big corporations and multi-national corporations shrouded by the YES camp in a cloak of fighting for the interests of momand-pop repairers and car owners. There will be more to this story as the federal court and our Legislature take on the task of cleaning up this mess.
Jeff Breeze, RIP This month the Massachusetts Auto Dealer family lost a key member of our team with the sudden death of Jeff Breeze. He left us way too early, at the age of 47. Whether it was writing our cover stories or coordinating the monthly content or just serving as a sounding board as we would flesh out our issue each month, Jeff was an important cog in our Association’s communications. Jeff was a talented writer and could be seen lurking around our events, surreptitiously attempting to capture photos for our publications. He was an accomplished musician. He produced a weekly music program at MIT radio. He wrote a blog touting his love of ice cream. He was an all-around good guy. The world will miss this hidden treasure whose realm extended far beyond this publication. t
MSADA
TROUBLESHOOTING
Remember the CFPB? By Peter Brennan, Esq. MSADA
Staff Attorney At the time of this writing, former Vice President Joe Biden has been declared President-elect and, pending vote certifications, will have secured more than the 270 Electoral College votes needed to be president, with inauguration to occur January 20, 2021. This article is the first in a series to explore what a Biden Administration may have in store for our industry. One of the signature policy achievements of the Obama-Biden administration occurred a little over ten years ago when the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. Dodd-Frank was introduced in response to the financial crisis that gripped the nation in 2008, and one of the main legacies of the legislation was the creation of the Consumer Financial Protection Bureau (CFPB). As you may recall, the CFPB is the brainchild of Elizabeth Warren, prior to becoming U.S. Senator, who ultimately endorsed President-elect Biden this year after her own quest for the presidency crashed and burned. From its inception, the CFPB placed franchised dealerships squarely in its regulatory crosshairs through back-door means, despite, or because of, the fact that automobile dealers are exempt from the CFPB’s regulatory authority (thanks in no small part to the considerable lobbying of Congress by your Association). Instead of targeting dealerships, the CFPB pursued enforcement actions based on shaky legal theories against banks that provided the loans that dealers offered
to their customers. These enforcement shakedowns netted the CFPB millions in settlement monies and consumer-friendly headlines but led to political fallout. In 2015, Republican members of the House Financial Services Committee released Unsafe at Any Bureaucracy: CFPB Junk Science and Indirect Auto Lending, a report which criticized the CFPB for the statistical methods the agency used to allege racial discrimination in the auto lending industry. The agency’s use of the “disparate impact” legal theory was widely panned, but many lenders decided to settle enforcement actions without admitting guilt rather than fight. When Donald Trump took over the reigns of the executive branch in January 2017, he immediately followed through on a campaign promise to reel in the CFPB. The Trump Administration backed a lawsuit brought by a law firm being investigated by the CFPB, Seila Law v. the Consumer Financial Protection Bureau, which challenged the bureau’s constitutionality. In its decision, the U.S. Supreme Court upheld the agency’s continued existence, but determined that the single CFPB director must be removable by the President at will, not solely for inefficiency, neglect, or malfeasance, as the legislation that created the bureau had originally stated. The decision was received as a win by the Trump Administration and opponents of the CFPB but may now be seen in a different light. The current CFPB director, Kathy Kraninger, is serving a five-year term that will expire in December, 2023, unless she is replaced by the new President. Prior to the Seila Law decision, Ms. Kraninger could only have been removed for inefficiency, neglect, or malfeasance. Post Seila, President-elect Biden will be free to choose a new CFPB director immediately. Dealers should expect the CFPB to step up its enforcement activities under the Biden Administration. One area that is expected to draw increased regulatory attention is the sale of voluntary protection www.msada.org
products (VPP), a broad designation that includes various products designed to protect a customer against some occurrence beyond their control, such as acts of God like fire, flood, hail, or other damages to the vehicle, as well as personal afflictions that may befall the customer, such as disability, unemployment, or death. These products help give customers peace of mind during what is generally one of the most important financial decisions that they will make in their lives - the purchase or lease of a vehicle. State and federal regulators have been increasingly focused on regulating the sale of VPPs, a trend that is expected to accelerate. In 2018, the CFPB reached a settlement with Santander in which the lender was fined approximately $12 million for failing to properly describe the benefits and limitations of its GAP product. In the bureau’s September 2019 Supervisory Highlights report, the areas of automotive loan origination and abusive acts and practices when selling GAP products are highlighted. One should assume that the agency will increase the resources it dedicates to enforcement in these areas under a new director. To prepare, dealers should review the NADA/NAMAD/AIADA Model Dealership Voluntary Protection Product Policy, which is designed to protect dealers from legal liability resulting from the sale and marketing of VPPs. The Model Policy can be found at www.nada.org/voluntaryprotectionproducts for NADA members. The Model Policy should be reviewed with legal counsel and personalized for your dealership. As the sale of VPPs continues to come under the legal and regulatory microscope, the Model Policy can help your dealership avoid unnecessary headaches. . t If you have any questions regarding this column, please contact Robert O’Koniewski, MSADA Executive Vice President, at rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, at pbrennan@
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RACE TO THE FINISH COVER STORY
Dealer of the Year
Christine AlicandroKarnolt By Gabi Gage and Tom Nash Massachusetts TIME Dealer of the Year Christine Alicandro-Karnolt brings a tenacious, “can-do” approach to challenges and dedication to her community that has made her a leader in the industry. Alicandro-Karnolt, dealer principal at Marty’s Buick GMC in Kingston and Marty’s Chevrolet in Bourne, is one of 40 automotive dealers nationwide nominated for the 2021 TIME Dealer of the Year Award. “My first reaction was, ‘Wow!’” says Alicandro-Karnolt, who follows in the footsteps of her father and mentor, Martin “Marty” Alicandro Jr., who left a legacy of hard work and giving that continues to inspire her. “I grew up in this industry. I saw this category of dealers as a young child and could tell these were people that really had an impact and gave back to their community.” “To be honored and put at that same level is pretty humbling and astonishing. To know that this community thinks so highly of me is pretty impactful.” MSADA Executive Vice President Robert O’Koniewski has known Alicandro-Karnolt for nearly two decades, saying, “Chrstine brings considerable passion, enthusiasm, and expertise to everything she does in our industry - from working for all dealers as one of our Board directors, to serving the community through her extensive charitable activities, to lobbying local legislators and administration officials to address important issues at the State House.”
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MSADA “Everything she brings to the table is bolstered by life experiences that provide a perspective others might not have,” he added. “She effectively uses those experiences to improve all that she touches -- family, business, and community. She is truly a worthy representative for us on the Dealer of the Year stage.”
A Can-Do Approach
stand what it is they voted for and the risks.” Alicandro-Karnolt is up to the task and working on new ways to educate customers. For her, the leadership and collective work of the Association helps dealers navigate new industry challenges “whether it is regulatory changes or re-evaluating pay structures for sales staff.” As in any industry, there will always be obstacles, but the exciting opportunities in the industry continue to inspire her. “The cool thing about our industry is that it is constantly evolving. There is no such thing as status quo or stagnant in the auto industry,” says Alicandro-Karnolt. “Whether it is mandated things from the government or highway safety or technologies or autonomous cars or traffic, we are always truly evolving.”
Alicandro-Karnolt’s father bought a GMC dealership in Kingston in 1967, and it was the place that Alicandro-Karnolt realized that she wanted to be. She now serves as head of a car and truck empire that includes Marty’s Buick GMC in Kingston, Marty’s Chevrolet in Bourne, and Marty’s Isuzu Trucks in Kingston. “I always wanted to do this,” she says. “In fact, I did not want to go to college, because I knew I wanted to do this. My father made me go to college. But I knew ever since I was little, I always aspired to be a dealer, and I always aspired to be the best dealer.” As a woman in predominantly male industry, she has worked tirelessly to build successful enterprises and to open doors for others along the way. Her advice to other women starting out in the industry: “Never, ever give up. There are so many times when you will be faced with challenges or situations that may make you question what you are doing. Those are times when you regroup and look at what things are in your control to change and what you can do to make your outcome different.” “And always follow your gut,” she adds. Her sales instincts, busy acumen, and can-do approach has rewarded her with success, the ability to give back, and now unique recognition among her peers. She also has served as a long-time board member of the Massachusetts State Automobile Dealers Association, helping to work to tackle industry challenges facing all dealers. “I have always been one to attack something head on. Figuring out ‘what can we do’ instead of dwelling on ‘what we cannot do.’ That “I could not be any prouder of the is my motto.” people I work with and how they The newest challenge is collectively figuring out how to handle the recent passage of “right to rehave handled the pandemic.” pair” legislation and its mandated access to vehicle telematics. Since 2012 she has worked with Massa“I also think of my kids and wonder, what sort of transportachusetts state legislators to modify and mitigate the right to retion will they be operating in the future, 20 or 30 years down the pair law’s impact on manufacturers and dealers. line? It is exciting to think about.” Now that the New Vehicle Data Law has passed, she says it The ongoing COVID-19 pandemic has also brought challenges. is time to adapt to the new reality: “How do we secure our data “We assessed the situation, adjusted, and adapted. We continfor our consumers? This is an issue for me, knowing that their ued on. We never shut our doors,” says Alicandro-Karnolt. “We privacy is at risk.” did everything we could do to support our team members wheth“How do we now educate consumers so that they understand er they were actively in the dealerships, working from home, that this data is available to anybody? It has already passed, so or furloughed. We focused on communication and sending out now the Association has an obligation to help consumers under-
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2021 DEALER OFFINISH THE YEAR RACE TO THE detailed weekly communications so that employees felt secure and knew that we were being forward-thinking to face whatever else is coming our way.” “It really has been a team effort. More than half my staff has been with me for a very long time, so collectively we were working hard and smart together. I could not be any prouder of the people I work with and how they have handled the pandemic.”
Prioritizing Charity In addition to running successful businesses, advocating for dealers in the industry and raising two children, Alicandro-Karnolt also finds time to support more than 100 different charitable causes a year. “Every month I am looking for something new. I am always thinking about ways to help and get my staff involved.” In October, her team created “Pink Trunk or Treat Halloween” at its Bourne dealership to raise money and awareness for breast cancer research. She is also a regular contributor to smaller charities like “To The Moon And Back,” a nonprofit dedicated to helping children born with in utero opioid substance exposure and their families. “Women and children’s safety and security are very important to me.” Alicandro-Karnolt has also taken that same approach to challenges in adapting her charitable work to pandemic challenges. She has figured what she “can” do and found new ways of helping out. Growing health safety concerns prompted the cancellation of America’s Hometown Thanksgiving Celebration in Plymouth, an event that normally includes a food drive and train along the parade route, collecting 6,000 pounds of donations. Instead, her team helped organize a large-scale, month-long food drive and has partnered with a local charity to create neighborhood liaisons to manage donation sites and coordinate pickups at every major shopping center in the area.
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“I do not think there is a dealer out there that does not work hard and contribute,” says Alicandro-Karnolt. “I just think some of us make it our mission and have more of a passion for making a difference and having an impact on our communities. That is what the TIME award is about.” Association President Chris Connolly says that over the years he has known Alicandro-Karnolt, he has continued to be impressed by her commitment to her local community and the dealer community across the Commonwealth. “Christine has been there for so many important moments in our industry as a stalwart presence,” Connolly says. “As an Association, we continue to benefit from her expertise and unique perspective as a car and truck dealer. Her receiving this award and accompanying national spotlight is well-earned recognition. We look forward to her continued leadership for years to come.” t
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Massachusetts Auto Dealer
OCTOBER 2020
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LEGAL
By Joseph W. Ambash and Jeffrey A. Fritz
Good Riddance 2020. What Is in Store for 2021? Last year at this time, we wished “Good Riddance” to 2019 and asked “What is in Store?” for 2020. Little did we know how much worse 2020 would be. If we assume 2021 will be even worse, perhaps it will exceed our expectations. The following, in any event, are some things to keep in mind as we enter 2021. Minimum Wage Increase In late June 2018, the “Grand Bargain” established a schedule to increase the Massachusetts minimum wage each year, until 2023, when it will be $15 per hour. Consistent with this schedule, effective January 1, 2021, the Massachusetts minimum wage will increase to $13.50 per hour. This yields an overtime rate of $20.25 based on the minimum wage. In light of the Supreme Judicial Court’s May 8, 2019, decision in Sullivan v. Sleepy’s, we recommend paying your “100% commission” employees $20.25, separate and apart from their commissions, for all time worked over 40 hours in any workweek, and/or on a Sunday/premium pay holiday. Sunday/Holiday Pay “Phase Out” As we have reported, the “Grand Bargain” also included a supposed phase-out of the Sunday/holiday premium pay requirement under the Massachusetts Blue Laws. It is slated to be phased out completely by 2023 (although a drafting error inadvertently failed to include New Year’s Day, Columbus Day, and Veterans’ Day – so those are not yet slated to be phased out at all). According to the “Grand Bargain” schedule, effective January 1, 2021, the premium pay rate for Sundays and Memorial Day, Independence Day, and Labor Day technically decreases to 1.2x an employee’s “regular rate” of pay. That said, another error in the drafting makes paying less than 1.5x risky when overtime also is at play, so we recommend continuing to pay Sundays and holidays at 1.5x unless and until the requirement is phased out completely, at least with respect to any week in which the employee also works overtime.
Sleepy’s Litigation Since the SJC’s decision, more than 135 lawsuits, mostly class actions, have been filed. The pace of these filings, however, understandably has slowed in recent months. Most dealers likely made any necessary adjustments to their pay plans in light of Sleepy’s, and we are now a yearand-a-half since the decision, which means potential exposure (for those who have not been sued) of only a year-and-half (as the statute of limitations period is three years). For those sued, some have settled; others have opted to continue to litigate, in the hope that either the courts or the legislature will right this wrong. COVID-19 has slowed the pace at which this issue might otherwise have wound through the courts and legislature. With respect to the courts, the hope remains that the issue of retroactivity (i.e., whether the Sleepy’s decision should apply retroactively) will get to the SJC and it will recognize the manifest injustice retroactive application would cause. With respect to the legislature, there has been proposed but not-yet enacted legislation both backward and forward-looking: providing (1) an affirmative defense for employers who paid their 100% commission-paid employees in conformance with DLS guidance, and (2) an exemption for 100% commission-paid employees going forward. Exactly what will happen in the courts or in the legislature remain unclear. Perhaps 2021 brings good news; perhaps not. Massachusetts Paid Family and Medical Leave As we noted in last month’s column, the substantive benefits under the Massachusetts Paid Family and Medical Leave commence in 2021. Beginning January 1, 2021, the PFML law entitles eligible employees to (1) up to 12 weeks of paid, job-protected leave (in any benefit year) for the birth, adoption, or foster care placement of a child, or because of a qualifying exigency arising out of a family member’s active duty in the Armed Forces; (2) up to www.msada.org
20 weeks of paid, job-protected leave for his/her own serious health condition; and/ or (3) up to 26 weeks of paid, job-protected leave to care for a covered-service-member family member’s serious health condition. And beginning July 1, 2021, the PFML law entitles eligible employees to up to 12 weeks of paid, job-protected leave to care for any family member’s serious health condition. That said, the PFML law only entitles eligible employees to an aggregate total of 26 weeks in a single benefit year. And after such leave, the employer generally must return the employee to the same or equivalent position. You should review last month’s article for further details. COVID-19 Last but not least, there is the current pandemic crisis. Most employers have adjusted, to some degree, to the “new normal” by now, but the new normal, of course, includes the need continually to adjust to the ever-changing legal landscape. As we approach the winter months, expect infection numbers to continue to climb and governmental restrictions to increase. Pay attention to MSADA’s bulletin emails, which you can expect to provide timely and prompt guidance as these things develop. Hopefully 2021 brings good news on the vaccine front, and the beginnings of a return to the old normal, or as close as we get to it. 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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NEWS NEWS the from Around NEWSfrom from Around Around the Horn Horn NEWS
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November Sales Expected to Drop Because of Calendar Quirk With sales softening amid another surge in COVID-19 cases, a fluke of the calendar may make it look even worse, Automotive News reports. Car sales in November probably fell 12 percent, according to TrueCar and ALG. They project that Ford, Fiat Chrysler, Honda, Nissan, BMW, Mercedes-Benz, and the Volkswagen Group will all report sales declines of 15 percent or more. “It is going to look awful — like things have gone backwards pretty terribly — and that is not the case,” said Tyson Jominy, vice president of data and analytics at J.D. Power. Based on the first 17 days of the month, J.D. Power and LMC Automotive projected a 15 percent plunge in total light-vehicle sales. Adjusted for the number of selling days – three fewer than in November 2019 – the drop is more like 3.5 percent, with the more lucrative retail sales slipping only 0.7 percent. With supply limited, pricing is up. The average new-vehicle retail transaction price last month was expected to reach a record $37,099, J.D. Power and LMC projected. That is 0.9 percent higher than the previous record, set in October. BOSTON
Auto Manufacturers Sue Over ‘Right to Repair’ A group representing General Motors Co, Toyota Motor Corp, Volkswagen AG, and other major automakers filed suit on November 20 to block a new Massachusetts state ballot initiative that seeks to dramatically expand access to vehicle data. Earlier this month, voters in Massachusetts overwhelmingly approved an initiative to revise the state’s 2013 “Right to Repair” law to require automakers to provide expanded access to mechanical and electronic repair data and allow independent shops to repair increasingly sophisticated technology beginning with Model Year 2022 vehicles. MSADA Executive Vice President Robert O’Koniewski told Automotive News that it is “virtually impossible” for automakers and franchised dealerships to comply with the revised law at this time. “From the perspective of the manufacturers, I don’t know how they’re going to comply from the timeline because it’s just not realistic,” he told Automotive News. “It takes anywhere upwards of three to five years on development of a model-year vehicle.” Automakers can begin selling 2022 model-year vehicles as early as January 2. Dealers will almost certainly have some 2022 models on their lots by at least March, said O’Koniewski, who NOVEMBER 2020
has strongly opposed the ballot initiative. When Massachusetts’ right-to-repair law was enacted in 2013 and adopted a year later as a national standard by automakers and independent repair shops, the law applied to vehicles starting with the 2018 model year. “I advised legislators and other interested parties on that fact: that manufacturers just do not put together a model-year vehicle the year before,” O’Koniewski continued. “There is three to five years of research, development, planning, engineering, and manufacturing that goes into it.” The Alliance for Automotive Innovation trade group said if the law takes effect “years of manufacturers’ work and billions of dollars in investment to protect and secure vehicle data will effectively be obliterated.” The court battle may help determine who will control the $390 billion U.S. auto data aftermarket in the digital age. The auto group asked a U.S. district court judge in Boston to block the law, which is set to take effect in the 2022 model year. The Massachusetts attorney general’s office declined to comment. Unprecedented advancements in modern vehicles and crash avoidance systems have prompted many automakers to limit information and warranties to only parts and repairs from authorized dealers to ensure safety and privacy. They argue such data is complex and sensitive, and that using content to repair modern cars requires extensive training by those with proprietary technology. Independent repair groups have rebuked those restrictions as an attempt to seize control of the lucrative repair market and a way to force consumers into more expensive manufacturer-affiliated dealer shops. They are also concerned by automakers increasingly pushing for wireless repair data transfers, which will limit third-party access. The National Highway Traffic Safety Administration said in July the measure “requires vehicle manufacturers to redesign their vehicles in a manner that necessarily introduces cybersecurity risks, and to do so in a timeframe that makes design, proof, and implementation of any meaningful countermeasure effectively impossible.” DEDHAM
Former Green Beret Remains in Prison Over Ghosn Escape Michael Taylor, a former Green Beret who resides in Harvard, Mass., remains in prison awaiting possible extradition to Japan over his role in helping indicted former Nissan CEO Carlos Ghosn escape to Lebanon. “There is only one positive in this, which is that I helped save a man’s life,” Taylor told The Wall Street Journal in a November interview. “I wish I was never involved.”
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NEWS from Around the Horn FRAMINGHAM
McGovern Auto Group Takes on Ford Dealership
Michael Taylor
His son, Peter, also remains in custody following a plot that saw the pair fly to Japan to meet Ghosn and smuggle him to Lebanon aboard a private plane -- hidden in a musical instrument case. The pair was arrested at home in May by federal officials. The father and son maintain they broke no Japanese laws in helping Ghosn escape. The former Nissan and Renault executive faced charges of financial misconduct. Ghosn remains free in Lebanon, which does not have an extradition treaty with Japan. t
McGovern Auto Group celebrated their re-opening of Framingham Ford in late November. “The dealership will remain very familiar to our loyal customer base, but they will see some great changes in inventory offerings and prices, along with some new faces,” Ben Muenzberg, general manager for McGovern Ford of Framingham, told the Framingham Source. “The owner saw great potential with the Ford brand and the great location here in Framingham.” This is the group’s second Ford dealership. Framingham Ford was founded in 1971 by Jerry Chase. His son, Jerry Chase Jr., took over the business in the early 2000s and recently sold it to the McGovern Automotive Group, which owns 14 dealerships in Massachusetts, New Hampshire, and New York.
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OCTOBER 2020
Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
The new light-vehicle sales volume in October equated to a SAAR of 16.2 million units, the second straight month with a SAAR above 16 million units. This is down 0.6% from the September SAAR of 16.3 million units. Through the first 10 months of the year, new-vehicle sales are off by 17.5% from the same period last year. Raw sales volume in October totaled 1.345 million units—up about 1% from October 2019. Light trucks continue to be hot sellers, representing 77% of new vehicles sold in October and 76% of new vehicles sold so far this year. Retail sales are expected to post year-over-year gains for the second straight month, while fleet sales are still weak. According to Wards Intelligence, fleet deliveries in October are likely to be off by 41% compared with October 2019. Fleet activity has been depressed because several major rental car companies cancelled large orders early in the COVID-19 pandemic. But
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this fleet demand may soon increase, as many Americans—currently wary of air travel, public transit and ride sharing—have turned to rental car companies for their travel needs. According to The Wall Street Journal, both Avis and Enterprise have said they plan to resume purchasing new vehicles for their fleets after having downsized earlier this year. Manufacturers pulled back on incentive spending in October. According to a preliminary estimate from ALG, average incentive spending per unit for the month is expected to be $3,869, up slightly from October 2019 but down a bit from September 2020. Tight inventory on dealer lots has allowed manufacturers to reign in incentive spending in recent months while maintaining strong retail sales at record-high transaction prices. We expect new light-vehicle sales to continue at levels similar to September and October for the remaining two months of the year and for sales to close out 2020 at 14.1 million units.
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NADA MARKET BEAT
JANUARY 2016
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TRUCK CORNER
MSADA MSADA
America’s Truck Dealers Show Resilience During Toughest Year 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
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A few months ago, an article in the Harvard Business Review highlighted one specific attribute that is critical to surviving the kinds of stressors we have had this year: Resilience. When applied to the business sector, resilience can be defined as “a company’s capacity to absorb stress, recover critical functionality, and thrive in altered circumstances.” The truck dealers of America have demonstrated this adaptability throughout the obstacles of 2020. We must continue to show resilience, as the country continues to face the challenges of a global health pandemic and moves past a contentious presidential election. On behalf of ATD, I recognize all that we have been through in our dealer community. Prior to March 2020, we had been dealing with the stresses of disruptions to our industry and our supply chains. Truck dealers everywhere were busy adapting to changes stemming from alternative fuels, federal regulations, and industry regulations. We also were bracing for a market slow-down and a drop in build rates for trucks pre-COVID. And let us not forget that we were already under the strain of a diesel technician shortage that promised to impact our customers and dealerships if left unchecked. And then the novel Coronavirus hit, shutting down most of the country (and most businesses) for the better part of four months. But it was in moments like this that dealers nationwide rose to the challenge and exemplified the resilience that only fire-tested entrepreneurs can. Rather than handing the fate of our businesses over to the virus, ATD and NADA went directly to the White House and fought for dealership service centers to remain open as essential businesses. We were successful. Despite a down economy and unprecedented layoffs, truck dealers stood their ground and today are seeing pent-up demand pushing truck orders to their strongest levels. Fleets are gaining more confidence, and we are seeing consecutive gains in medium- and heavy-duty truck orders for the first time this year. And despite a contentious presidential election that threatened to break the bonds that unite us, I have seen more unity than division in our truck dealer community. We are moving forward despite Massachusetts Auto Dealer www.msada.org
a “changing of the guard,” because we all know business must continue no matter who is in the White House. I am proud of the ATD team that has worked hard to keep all of us resilient during these times. I urge you to continue visiting the NADA Coronavirus Hub for the latest updates and health guidance that will continually keep our people healthy through our fight against COVID-19. Being part of a strong association is more important than ever, and NADA is bringing its 2021 Show directly to us, virtually, Tuesday, February 9, through Thursday, February 11. NADA has lowered the registration cost for dealers and managers so that more of our employees can benefit. The virtual platform allows for unprecedented attendance, easy access, and convenience, without the cost of travel and hotel accommodations. Attendees will be able to access renowned educational offerings to help improve job performance and build resistance into the future. In the meantime, ATD is hard at work developing our own brand-new Show. We look forward to its reveal in 2022. I said this when I became chairman and cannot emphasize it enough: Take advantage of all that your membership offers. This includes joining an ATD 20 Group or sending promising employees to ATD Academy. Take advantage of online workshops and catch up on industry issues with ATD Insider. And do not forget that the 2020 ATD Supplier Dealer Attitude Survey is open now. Be sure to complete the survey by Thursday, December 3. The survey information is vital for ATD to effectively communicate important dealer issues with suppliers. Now is the time to stay proactive and do what we can to build our immunity against elements that wreak havoc on our businesses. In a way, the Harvard Business Review did not tell me anything I did not already know. Resilience is in the DNA of those who are strong enough to build their own businesses, build up their local economies, and have enough left over to give back to their communities. Despite everything that has taken us to our breaking point, we have survived. And I know we will come out of 2020 as resilient as ever. t
MSADA
BUSINESS OPS
How Did You Do, and Are You Ready for the Next Challenge? By Christopher Peck, Christopher Ernest, and Kevin Carnes During these “unprecedented times,” how did your dealership do? Dealers with solid balance sheets and surplus liquidity fared well. They were able to support their employees, maintain relationships with key vendors, remain flexible with their customers, and increase their community outreach. We expect these dealerships to have a better capacity for strategic purchases and investments, attract quality staff, and continue to increase their loyal client base. Undoubtedly, everyone learned something during these unprecedented times, and the number of lessons learned could fill a bookshelf. Here are a few of our favorites: • Write down all the best practices, mistakes, remedies, and “wish lists” from this economic crisis and compare the list with your top managers and advisors. These notes may become invaluable in the future and should become part of your corporate guidebook. History does repeat itself. So particularly for the mistakes made, consider what you would do differently now if given the choice. Also, work towards fulfilling your “wish list” items. This way, you will be more prepared next time. • Review your corporate communications, not only what internal and external messages were delivered, but how they were delivered and ultimately received. • Remember and recognize the staff that “shined” during the crisis. Are these stars appropriately employed, recognized, and compensated? • Consider your liquidity and the levers you could pull to improve it. • Remember your best sources of information and how accessible they were. • Remember your response time and “trigger.” Can this turnaround be improved, or was it too quick? We found that the nimble/agile dealerships fared better. • Keep your commercial finance company,
attorney, and CPA close, and request all regular updates that they can offer (that you might now know). • Know the market value of your company, other relevant assets (dealership real estate), and all your current and contingent liabilities. • Invest in the development and implementation of tools to streamline the buying process and allow for online purchasing. This approach is the way of the future. In a recent corporate survey, 45% of respondents expected a “W” shaped recovery, meaning another downturn is expected before a full recovery. So, keep these “favorites” handy moving forward, as it is very likely that most dealerships will increase their staffing levels over the coming months, as well as what they spend on other systems and services. But the driving question should be, “How soon should these investments be made?” Seasonally Adjusted Annual Rate (SAAR) is unlikely to hit 17MM units this year, and consumer spending habits will be affected for some time to come. This will drive a dealership’s product mix, Finance and Insurance (F&I) success, typical Repair Order spend, etc. As a result, dealers should remain disciplined with operating expenses and think critically about what expenses to restore. Many cuts were made during the quarantine months, which led to healthy bottom lines this summer. During this rebound/ growth, efficiency and value should be key words in the decision-making process. Taking these considerations to another level: As this industry gets back in stride, what changes would you make, if any, as to how you operated beforehand? • At what Sales & Service level was your best ROI? • Are your goals for the dealership the same? Can/should you refine them? • Is your executive team working towards www.msada.org
these goals? Does the staff buy in? Your vendors? • Would you reallocate how you spend your capital towards the goal? Many readers of this article may say: “My business was fine up until March. How could anyone prepare for something like this? Give this a little more time, and it will be better than ever.” Remember, the next challenge is inevitable since the past 35 years have brought many business black swan events: 9/11, the New England commercial real estate collapse of the late ‘90s, the Great Recession, Black Monday, and Brexit. Each impacts how business is conducted today. However, unlike any of these events, this pandemic forced business closures for extended periods, and some businesses will never recover. “Those who do not learn from history are doomed to repeat it,” said George Santayana. The term “new normal” is overused. However, maybe the operating expense structure of your dealership in June/July 2020 are your new goals. And while sales demand and used car values will wane, new decisions based on efficiency and value will be key. We anticipate remaining dealerships to have a better capacity for strategic purchases and investments, be able to attract quality staff, and increase their loyal client base for some time to come. Congratulations are in order for many dealerships. Are they ready for the next chapter in the story? t Christopher Peck is Director of Business Development, Dealer Commercial Services, Santander Bank, N.A. Christopher Ernest, CPA, MSM, is a Partner at blumshapiro. Contributing writer Kevin Carnes, CPA, is a Principal at O’Connor & Drew.
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NADA Update Update
By Scott Dube
Going Full Digital
As dealers adjust to the realities of COVID-19 retail, customers remain happier than ever
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 take the time to gather this holiday season either virtually or safely while following CDC guidelines, it is around now that we usually begin taking stock of the year we have had. For 2020, when every week feels like a year in itself, it can be difficult to remember that the calendar pages are actually turning. We will move past our troubles, and better times will come. We are doing everything we can to make sure all of us get there, and we will always remember those who COVID-19 took from us. Optimism has always been key to our industry and community of dealers, and throughout this year it has been important to remain examples for our communities at large. I hope you had a restful Thanksgiving, and let us not forget why we are doing what we do as we look to cross that finish line into 2021.
Ricart Addresses Media on Auto Industry Earlier this month, NADA 2020 Chairman Rhett Ricart virtually addressed members of the Automotive Press Association about the impact of COVID-19 on the auto retail industry and the adaptations required for dealers and OEMs to remain successful in a post-COVID world. Ricart’s remarks were informed by an NADA dealer survey taken between July 6 and 30, 2020, which garnered key insights on dealers’ business model adaptations and areas of focus for auto manufacturers post-crisis. “While we know the pandemic accelerated customer adoption of a fully digital sale, we also know that many, many customers will still want to do what they have done before, which is start the sales and financing process online, but come to the store at some point to complete the transaction,” said Ricart, who represents new-car dealers in Ohio on NADA’s board. “This does not mean that these digital services will work NOVEMBER 2020
for every customer in every instance. But it does mean that dealers should have the capability to make these services work for every single customer that wants to capitalize on them.” Ricart highlighted additional customer demand shifts related to the vehicle sales process and stressed that to be successful and credible with digital retailing, the sales process must be flexible and transparent to the consumer. “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 – a customer that places a far, far higher premium on flexibility and convenience than they do on rigidity and opulence,” added Ricart. “These mausoleum mandates do nothing to help dealers or the customers they serve.” Ricart stressed the importance of simplifying OEM in-
“Our customers are reporting that they have never been happier with the sales process that they are getting at their franchised dealerships. By the millions.”
centives to support digital retailing: “64% of franchised dealers said simplifying incentives has to be the top thing their automaker partners embrace in order to effectively embrace and harness the change that is happening in customer preferences all across America. 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.” While operating in the Coronavirus environment, Ricart praised dealers’ ability to adapt quickly and support the transportation needs of customers across the county while simultaneously exceeding customer satisfaction. “In a pandemic, when dealers have had to change so many elements of the store on the fly, with inventory lev-
Massachusetts Auto Dealer www.msada.org
MSADA els at historic lows, with new and used car prices at record highs, our customers are reporting that they have never been happier with the sales process that they are getting at their franchised dealerships. By the millions. That is a testament to the work the dealers have done to meet their customers where they are comfortable – physically and logistically. And with flexibility and transparency.”
be posted by Friday, January 15, 2021, shared publicly on Facebook, Instagram, LinkedIn, or Twitter, and include the following hashtags: #WomenInAutomotive and #NADAcontest (do not forget to include both). Find more information on NADA’s Women Driving Auto Retail initiative, and stay up to date on events by following us on Facebook.
NADA Announces 4th Annual Women Driving Auto Retail Contest
Franchise Meeting Schedule Announced for NADA Show
2020 has been a year full of uncertainty for the country given the Coronavirus pandemic. NADA knows that dealers across the country have been impacted and have adapted quickly to operating in the new environment, and we want to know how women working inside dealerships have adjusted. While it is definitely not business as usual, NADA is pleased to announce the fourth annual Women Driving Auto
NADA has just announced the 2021 schedule of dealer franchise meetings taking place at this year’s NADA Show, Tuesday, February 9 through Thursday, February 11. Check for the schedule at www.nada.org. Just as with our in-person shows, this year’s dealer franchise meetings will offer dealers and dealership managers the chance to learn the latest updates and changes happening with your franchise directly from its senior leadership.
The virtual format of this year’s show means that dealers can access all the best of NADA Show from the comfort of their own homes or dealerships. Retail video contest celebrating women who work in all areas of car or truck dealerships, specifically during this trying year. If you are a woman working in the auto retail industry, we want to know about your experience during COVID. Share how you have adapted as a woman inside your dealership and why the auto retail industry is still a great career path. In three minutes or less, tell other women who you are, what you do, why you love it, and what you have learned during the pandemic. For inspiration, view past video entries here. The videos we have received in the past have been truly inspiring, and we know that this year will be no different. NADA will announce 10 video semifinalists on Friday, January 29, 2021. The grand-prize winner will be announced during the Women Driving Auto Retail Virtual Happy Hour held in conjunction with NADA Show 2021 on Wednesday, February 10. Semifinalists will receive a $500 gift card. The grandprize winner will receive a $1,000 gift card plus complimentary registration to NADA Show 2022 in Las Vegas. Read the contest rules and submit your video at www. womendrivingautoretail.org. To be eligible, all videos must
This is your opportunity to not only hear from but also to speak directly to your automaker about your dealership’s concerns during Q&A sessions and get to know other successful dealers under your brand. The virtual format of this year’s show means that dealers can access all the best of NADA Show from the comfort of their own homes or dealerships. The franchise meeting sessions will only be available during the live Show, February 9-11, and will not be available for future viewing. You will need to tune in at the designated times to get this valuable information. Register for NADA Show 2021 today and start planning your meeting schedule along with more than 60 workshop sessions, insights from industry leaders on the Main Stage, thousands of products, live product demos and one-on-one meetings with exhibiting companies at NADA Expo, and networking opportunities across the entire automotive industry. Plus, register early at www.nada.org and enjoy no cancellation fee before January 11.
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Massachusetts Auto Dealer
NOVEMBER 2020
27