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M a s s a c h u s e t t s
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An Electric Timeline
The official publication of the Massachusetts State Automobile Dealers Association, Inc
FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
February 2021 • Vol. 34 No. 2
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, 19 Ethos, 2 Nancy Phillips, 19 O’Connor & Drew, 28 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
4 5 6 10
From the President: Electric Will Take Teamwork, Not Mandates ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Givers Always Sleep Better AUTO OUTLOOK
14 Cover Story: An Electric Timeline
18 20
NEWS From Around the Horn TROUBLESHOOTING: More TCPA Troubles Every Day
21 22 23 24
LEGAL: Employee Vaccinations: What Employers Should Know
25 26
TRUCK CORNER: ATD Works to Secure Truck Dealer Landscape
nada Market Beat ACCOUNTING: The Tax ‘Tail’ AIADA Brief: A Fresh Start and New Challenges for International Nameplate Dealers
nada update: There is No Playbook
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers
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Massachusetts Auto Dealer
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From the President
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MSADA
Electric Will Take Teamwork, Not Mandates This decade will bring widespread electric vehicle adoption
By Chris Connolly, MSADA President While Massachusetts increases regulations around electric vehicles, dealers are here to support the needs of our customers. As outlined in this month’s cover story, the needs of those customers remain basic at their core: reliable and affordable transportation. As we move into the 2020s, it is clear that for the first time that many OEMs are prepared to deliver those needs through electric vehicles. We dealers have remained skeptical of government mandates for non-internal combustion engine vehicle sales. The point has always been that we should not be put in a position of being forced to sell products that consumers do not want to buy. That simple fact can now stand in contrast with the vehicle lineup being offered by a host of manufacturers as this decade continues onward. The buzz around electric has transformed from simple curiosity to true desirability for some models. In other words, the story is changing from simply “electric vehicles are coming” to “desirable vehicles that happen to be electric are attracting customers.” Moving forward, your Association remains dedicated to ensuring that the OEMs’ increasing push toward electric vehicles does not burden dealers inequitably as business partners. As dealers, our continued commitment to our franchises comes alongside our commitment to our customers, something not always top-of-mind for manufacturers. We will continue to push for increased infrastructure, increased mileage range, and affordable pricing through tax credits for EV purchasers and natural market adjustments. Stay involved, reach out to your representatives, listen to your customers and what they want, and convey that message! MSADA’s continued commitment to our members is that the bedrock of the dealer-franchise system remains intact as these industry-wide changes take hold. Dealer input on the day-in-day-out reality of this business is critical as manufacturers make these big moves. And it will ultimately be up to us to make sure the promises of this technology are delivered for our customers.
Renewed Congratulations to Our Dealer of the Year As we saw at this year’s NADA Show this month, our own Christine Alicandro-Karnolt was named as a top-four finalist in this year’s TIME Magazine Dealer of the Year event. We have known for many years that Christine’s business acumen and dedication to her community are unparalleled. As an Association, we are beyond proud to see her illuminated in this national spotlight. t . FEBRUARY 2021
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, 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 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 Bellavia Blatt Leonard Bellavia (516) 873-3000 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
www.msada.org
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 Zurich American Insurance Company Steven Megee (774) 210-0092
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The Roundup
Givers Always Sleep Better By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
A couple of years back I had an opportunity to tour the St. Jude’s Children’s Hospital in Memphis. Founded by actor/entertainer Danny Thomas almost sixty years ago, it focuses on treating children with severe diseases such as cancer and researching potential cures for such. The kicker to it all – parents are not charged for the care of their children. The tour guide said that it costs almost $3 million per day to run the facility. Leaving the site, I saw a quote attributed to Mr. Thomas, who put the arm to all his best friends and associates, all well-off themselves, to raise the necessary seed money for his vision of a children’s hospital: “The world is made up of givers and takers. The takers may sometimes eat better, but the givers always sleep better.” It is quotes like that which always pop into mind each year when it comes time to select and honor our TIME Dealer of the Year. Since 1970, TIME has been recognizing dealers nominated by state and metro dealer associations for their commitment to their communities through charitable giving and service. Each year we nominate a charitable superstar in our dealer community for his or her proper recognition on the national stage at NADA’s annual convention and our state cocktail reception on Saturday evening. Since the COVID-19 pandemic indiscriminately caused the shutdown of all live events, including the 2021 NADA Show, TIME and Ally were forced to conduct a virtual ceremony for this year’s forty nominees. Gone were the pomp and circumstances of a live on-stage event in front of thousands of show attendees in a cavernous hall. Missing was the individual introduction and walk onto the stage that each nominee so unselfishly deserved. Somehow that all did not matter. Watching our FEBRUARY 2021
Massachusetts Auto Dealer www.msada.org
own Dealer of the Year Christine Alicandro-Karnolt named as one of the four finalists did not lessen our excitement and joy watching our colleague receive the recognition she deserves. You had the sense that her late father and mentor Marty Alicandro, who left a legacy of hard work and giving that continues to inspire her, was espying his daughter’s honor from above. Although TIME and Ally could only award one winner, it was great to see Christine as a national finalist, albeit through the science of Al Gore’s internet. Regardless of whether it is the 40 honorees this year or the thousands of dealers here and across the country who answer the phone every time a hospital, or a homeless shelter, or a veterans services center, or the youth sports coordinator calls asking for a couple of bucks to bring in some ventilators, or new beds, or some badly needed facility repairs – it is the franchised dealer who is the first on everyone’s call list. Because of their giving attitude, you know they all sleep better than most, night in and night out. Congratulations to Christine, and thank you to all our dealers for what you do in your communities to make life a little bit better each day for your neighbors.
Legislative Slog Begins
Since the commencement of the 192nd General Court on January 7 with the re-election of Rep. Ron Mariano (D-Quincy) as House Speaker and Sen. Karen Spilka (D-Ashland) as Senate President, the two leaders subsequently in February made their appointments to the numerous legislative committees. This included the re-elected Republican leaders in each chamber – Sen. Bruce Tarr (R-Gloucester) and Rep. Brad Jones (R-North Reading) – adding
MSADA their minority members to each committee. Additionally, Sen. Michael Rodrigues (D-Westport) and Rep. Aaron Michlewitz (D-Boston’s North End) retained the chairmanship of each of his chamber’s Ways and Means Committee. February also saw the two chambers develop rules to govern each’s respective body as well as joint rules dictating how the two bodies will conduct themselves, especially as to how the joint committees will hold public hearings, vote on bills, and interact with the public. As of this writing, the House and Senate do not have a set of agreed-upon joint rules, as matters to be decided include whether committee votes will be made public, whether hearing testimony can be made available to the public, and hearing procedures. Regardless of how these matters are resolved, at some point there will be public hearings and members of the public will be allowed to participate to some degree. There are three standing joint committees (comprising House and Senate members) that have jurisdiction over most of our issues – Consumer Protection and Professional Licensure, Financial Services, and Transportation. The Joint Committee on Consumer Protection and Professional Licensure has jurisdiction over such issues as the new- and used-car Lemon Laws, our 93B franchise law, the 93A Consumer Protection Act, doc fees, proposals like the Car Buyers Bill of Rights, customer data protection, and the so-called “right to repair” act. If there is an issue that touches a consumer, one can find it in this committee. As the 2021-2022 session commences, most of the 17 committee members will be new to the committee, including the Senate chair, Susan Moran of Falmouth, who will be the fourth Senate chair of the committee in as many sessions. Here are the committee members with their party and hometown (* indicates returning committee member): Rep. Tackey Chan, House Chair (D-Quincy)* Rep. Mary Keefe, House Vice Chair (D-Worcester) Rep. Rady Mom (D-Lowell)
Rep. Tricia Farley-Bouvier (D-Pittsfield) Rep. Joan Meschino (D-Hull) Rep. Tami Gouveia (D-Acton)* Rep. David Henry Argosky LeBoeuf (D-Worcester)* Rep. Danillo Sena (D-Acton) Rep. Jacob Oliveira (D-Ludlow) Rep. Joseph McKenna (R-Webster)* [ranking minority] Rep. Steven Howitt (R-Seekonk)* Sen. Susan Moran, Senate Chair (D-Plymouth) Sen. Paul Feeney, Senate Vice Chair (D-Foxborough)* Sen. Michael Brady (D-Brockton) Sen. Brendan Crighton (D-Lynn) Sen. Edward Kennedy (D-Lowell) Sen. Bruce Tarr (R-Gloucester) [ranking minority] Another committee that has oversight of our issues, such as activities by the Registry of Motor Vehicles, is the Joint Committee on Transportation, chaired once again by Sen. Joseph Boncore (D-Winthrop) and Rep. William Straus (D-Mattapoisett). This will be their third term together as chairmen of this committee; however, just slightly half of last session’s committee members are returning. Here are the 20 committee members with their party and hometown (* indicates returning committee member): Rep. William Straus, House Chair (D-Mattapoisett)* Rep. Marcos Devers, House Vice Chair (D-Lawrence) Rep. Paul Tucker (D-Salem)* Rep. Natalie Blais (D-Sunderland)* Rep. Peter Capano (D-Lynn)* Rep. Lindsay Sabadosa (D-Northampton)* Rep. Susannah Whipps (D-Athol) Rep. Brandy Fluker Oakley (D-Mattapan) Rep. Sally Kerans (D-Danvers) Rep. Rady Mom (D-Lowell) Rep. Steven Howitt (R-Seekonk)* [ranking minority] Rep. Norman Orrall (R-Lakeville)* Rep. David DeCoste (R-Norwell)* Sen. Joseph Boncore, Senate Chair (D-Winthrop)* www.msada.org
Sen. John Keenan, Senate Vice Chair (D-Quincy) Sen. Harriette Chandler (D-Worcester)* Sen. Eric Lesser (D-Longmeadow)* Sen. Susan Moran (D-Falmouth) Sen. Michael Rush (D-West Roxbury) Sen. Patrick O’Connor (R-Weymouth) [ranking minority] Finally, the third committee that will have oversight of our issues, such as banks and banking, credit unions, lending, and insurance, is the Joint Committee on Financial Services, with a returning House chair but a new Senate chair – Sen. Brendan Crighton (D-Lynn) and Rep. James Murphy (D-Weymouth); further, most of the 18 committee members will be new to this assignment, too. Here are the committee members with their party and hometown (* indicates returning committee member): Rep. James Murphy, House Chair (D-Weymouth)* Rep. Bruce Ayers, House Vice Chair (D-Quincy)* Rep. David Henry Argosky LeBoeuf (D-Worcester) Rep. Richard Haggerty (D-Woburn)* Rep. Kate Lipper-Garabedian (D-Melrose) Rep. Smitty Pignatelli (D-Lenox) Rep. Megan Kilcoyne (D-Northborough) Rep. Sally Kerans (D-Danvers) Rep. Steven Owens (D-Watertown) Rep. Jay Barrows (R-Mansfield)* [ranking minority] Rep. Nicholas Boldyga (R-Southwick) Sen. Brendan Crighton, Senate Chair (D-Lynn) Sen. Michael Moore, Senate Vice Chair (D-Millbury)* Sen. Joseph Boncore (D-Winthrop) Sen. Edward Kennedy (D-Lowell) Sen. Susan Moran (D-Falmouth) Sen. Ryan Fattman (R-Sutton) [ranking minority] Here in our Commonwealth, no one is going to accuse our legislature of getting off to a fast start to its full two-year session. Once the legislative process gets into gear and the public hearings unfold as bills
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THE ROUNDUP are sent to committees, the individuals on these three committees will be reviewing some of the most important legislation for dealers.
Bill Filings for 2021-2022
The bill filing deadline for the current session was February 19. There were over 6,000 bills filed. Of that number, we usually see upwards of 300-500 bills that could affect dealership operations in some form. The House and Senate clerks eventually will provide a number to each bill filed by members of their respective chambers and then assign each bill to a committee for review, including a public hearing, which is mandatory for every bill. The issues being addressed by the Association’s legislative proposals are the following: • 93B Amendments. The Legislature last approved amendments to our auto dealer franchise law in 2012. Those amendments included strengthening our warranty reimbursement law by establishing a formula for the parties to rely on to ensure dealers receive actual retail-level reimbursement for warranty and recall work and parts. Last session, the Consumer Protection Committee reported a redraft out favorably. It, however, died in Senate Ways as Means, as Coronavirus shut down the legislative process for all but several major items. Issues addressed in this year’s bill, which was filed by Sen. Brendan Crighton, Sen. Marc Pacheco (D-Taunton), and Rep. Daniel Hunt (D-Dorchester), include the following: – Prohibits vehicle surcharges by the manufacturer to pay for warranty reimbursement at the statutorily-required retail rate; – Limits how often the manufacturer can request a facility upgrade; – Prohibits a manufacturer from requiring a dealer to purchase goods or services from a vendor selected, identified, or designated by a manufacturer or distributor by agreement, program, incentive provision, or otherwise without making available to the dealer the option FEBRUARY 2021
to obtain the goods or services of substantially similar quality from a vendor chosen by the dealer; – Protects dealer’s customer data from OEMs and other third parties; – Prohibits an OEM from arbitrarily or unreasonably altering the geographic area of responsibility within which it measures the dealer’s performance; – Protects dealers from manufacturers’ using export chargebacks to penalize dealers for cars that get exported without the dealer’s knowledge; – Prohibits manufacturers from placing a surcharge on the vehicle invoice as a means of recouping warranty reimbursement costs directly from dealers; – Prohibits the factories from competing with its franchised dealers through subscription services; – Prohibits the manufacturers from restricting a dealer’s menu of service contract offerings [filed as separate legislation as well]; – Addresses various dealer- and consumer-related issues surrounding recalls, including compensation for parking cars while waiting for parts and disclosure of open recalls to consumers; and – Addresses two aspects of the new rightto-repair law: moves out to MY2025, from MY22, when the law takes effect and changes the onus to the factory, from the dealer, to provide telematics information to the vehicle buyer. [This last item is filed also as separate legislation by Rep. Mike Finn (D-West Springfield).] • Motor Vehicle Service Contracts. This refiled legislation would prohibit OEMs from requiring dealers to exclusively sell OEM-only extended service contracts or extended maintenance plans; filed by Sen. Diana DiZoglio (D-Methuen) and Rep. Angelo Puppolo (D- Springfield). • Insurance Labor Rates Paid to Auto Body Repairers. Refiled by Rep. Paul McMurtry (D-Dedham), Rep. Ed Phillips (D-Sharon), and Sen. Mike Moore (D-Millbury), this bill would establish a process for setting insurance-reimbursable labor rates paid to auto body repairers that is in line with the current
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economics of the industry in Massachusetts. The average rate presently paid by insurance companies to repairers is the lowest in the country. • Temp Tags. Refiled by Rep. Brian Golden (D-Lowell), Rep. Steve Howitt (R-Seekonk), and Sen. Michael Rush (D-West Roxbury). A temp tag law already exists, authorizing the RMV registrar to issue such tags; the law, however, has never been implemented. This bill would create a statutory process for allowing temp tags, especially for out-of-state purchasers. • Diminished Value. Refiled by Rep. William Driscoll (D-Milton) and Sen. Patrick O’Connor (R-Weymouth), this bill would create an administrative process for vehicle owners to appeal to get diminished value of damaged vehicles returned to the vehicle owner. • Class 1 License Appeals. This bill would create a process for a party to appeal the alleged improper issuance of a class 1 franchised dealer license by a municipality to an entity. Filed by Rep. Tackey Chan (D-Quincy), Rep. Michael Finn (D-West Springfield), and Sen. Patrick O’Connor (R-Weymouth). • Sleepy’s Affirmative Defense. Re-filed by Rep. Brad Jones (R-North Reading), this bill would provide employer defendant’s in Sleepy’s-related lawsuits the ability to argue in their lawsuits the affirmative defense of crafting pay plans in accordance with long-held state guidance. • Reform Off-Site Contracts. Re-filed by Sen. Crighton, Rep. Jack Lewis (D-Framingham), and Rep. Maria Robinson (D-Framingham), this legislation would reform the three-day cancellation law to clarify that dealership-customer contracts executed via the internet are not to be considered as “off-site” transactions. Please note that these are bills we asked legislators to file for us so that we can address these issues. As we dig deeper into the 6,000 bill filings, expect to receive communications on important matters that will require our attention, such
MSADA as legislative efforts to repeal the sales tax trade-in allowance and bills to cap dealer documentary preparation fees. We will keep dealers informed as to the date of the public hearings on these bills in order to mobilize our grassroots of dealers to contact legislators. Should you require any additional information on these items or wish to volunteer to get involved in the process, please do not hesitate to contact me.
“Coffee with Coopsys”: IT Compliance and Best Practices Webinars
Beginning on February 9, our new associate member Cooperative Systems, rolled out a series of six, 15-minute webinars regarding IT compliance issues and dealership best practices. “Coffee with Coopsys” will be held on the second Tuesday of each month, 10:00 a.m. – 10:15 a.m. Registration is complimentary for all MSADA members. The schedule of remaining topics is as follows: • Tuesday, March 9: Secure Methods To Access Your Dealership’s Primary Applications While Remote • Tuesday, April 13: How To Manage A Proper PCI Compliance Program Within Your Dealership • Tuesday, May 11: How Cloud-Based Telephone Systems Can Provide More Value To Your Dealership Than Traditional Premise-Based Systems • Tuesday, June 8: Why You Should Be Using Multi-Factor Authentication (MFA) Across All Of Your Dealership’s Technology System • Tuesday, July 13: Controlling Your IT – Should You Outsource IT, Hire Internally, Or Have a Hybrid?
Compliance, Community Outreach Programs Re-Upped for 2021
Your Association’s Board of Directors re-approved for 2021 our compliance assistance subsidy program as well as our community outreach assistance program. Under our compliance assistance program, we will support your compliance efforts, from $500 up to $1,000, for your
participation in OSHA/environmental workplace compliance services offered by Furrh Associates, KPA, Ethos, or Piper Consulting; employment law services offered by Fisher Phillips; and tax compliance and cybersecurity protection services offered by O’Connor & Drew. Additionally, under our community outreach program, we will support your community giving up to $1,500 in the year as a single point store and up to $2,000 total with $250 per two affiliate stores. Do not miss out on these programs. If you need information or the application for these programs, please do not hesitate to contact me.
Chris Connolly on AIADA Board
Congratulations to MSADA President Chris Connolly of Herb Connolly Acura for his ascension onto the board of directors of the American International Automobile Dealers Association. AIADA represents the economic interests of the international nameplate franchised dealers. As we have discussed previously, its primary focus is trade issues. Chris has been a long-time active participant in AIADA events.
2021 NADA/ATD Dealership Workforce Study Now Open
The Dealership Workforce Study provides valuable compensation and retention data on over 60 dealership positions. All data submitted is confidential and no identifiable information is shared. This annual study is unique as it will provide insight into the pandemic’s effect on our industry’s workforce across the country. Previously, this study included a questionnaire. NADA/ATD will release this as a separate report in the second quarter of 2021. How to Participate: 1. Enroll at nadaworkforcestudy.com; 2. Read the instructions emailed to you upon enrollment; 3. Complete the payroll template provided; 4. Upload the file. (Upload link provided in the instructions email.) Participants will receive an electronic copy of a Custom Comparison report for their store. This exclusive report prowww.msada.org
vides a Workforce Management Scorecard that compares and ranks your dealership against a peer group of participating dealerships based on key metrics related to compensation, retention and turnover. Additionally, participants will receive an electronic copy of the 2021 NADA & ATD Dealership report. Participants also will receive the Compensation & Retention Report. This report provides a national and regional analysis of dealership workforce compensation and retention data in 2020. Lastly, participants will receive access for one year to the Database Search Tool; an online based customized search tool with archived compensation and tenure data for 60+ positions from all Dealership Workforce Studies! Enroll now at nadaworkforcestudy. com to participate in the 2021 Dealership Workforce Study! The study will CLOSE April 15, 2021. Any questions or issues, please contact workforcestudy@nada.org. To enroll you will need your store or group NADA Member ID number. Contact the NADA customer service team at (800) 557-6232 to request your ID.
2021 Dues Invoices
In January your Association sent out 2021 dues invoices to all our dealership and associate members. Our members’ dues help fund the Association’s activities on their behalf, including our lobbying on Beacon Hill and in Washington, our member counsel services, and our education and training activities. MSADA will continue to lead on the various issues that threaten the viability of our dealerships. We will strive tirelessly to keep you informed of developments in our industry and how they will play out in Massachusetts. These efforts also include working closely with NADA to better serve our members. Our strength lies in our members. With your continued support and membership renewal, we can build on our current foundation and enhance your Association’s core purposes of communication, advocacy, and education. t
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RACE TO THE FINISH COVER STORY
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An Ele
MSADA
ectric Timeline As more states issue electric vehicle mandates, manufacturers are dropping industry-shaking bombshells
By Tom Nash The chaos of 2020 did not end with the New Year of course, but 2021 is proving to be a time when manufacturers are making bold moves to reclaim a narrative of innovation. In 1921, the internal combustion engine was becoming known as the boldest technological step forward the planet had known. A century later, governments large and small across the world, from Massachusetts to the United Kingdom, have settled on the 2030s as the decade for when that era would end. While the mandates have dripped in steadily, it was General Motors’ bombshell announcement in late January that made front page headlines across the world: By 2035, all of its vehicles sold will be zero-emissions. “For General Motors, our most significant carbon impact comes from tailpipe emissions of the vehicles that we sell — in our case, it’s 75 percent,” GM CEO Mary Barra said in the announcement. “That is why it is so important that we accelerate toward a future in which every vehicle we sell is a zero-emissions vehicle.” The public relations coup saw other major manufacturers reiterate their own commitments over the next decade, with some clearly pushing news out to match the fervor generated by GM. “We are not going to cede the future to anyone,” Ford CEO Jim Farley told CNBC in response to GM’s announcement. “Our electric strategy is very specific. We are going to invest in segments where we are the dominant player and we have scale.” Meanwhile, for dealers the question will always be: “What do the customers want?” MSADA President Chris Connolly has one quick answer: “Choice.” “Government mandates rarely work,” Connolly said. “But things change in time, and I suspect customer demand for electric vehicles will, too. If people can get an electric car that has a 500-mile range, and there is a substantial increase in the charging station infrastructure, those will be the keys to consumer adoption.” MSADA Past President and Tuck’s Trucks GMC owner Jim Boyle adds another to the list: A hot product. The second gen-
eration Hummer was once held up as the ultimate symbol of a “gas guzzling” vehicle even as its popularity soared in the early 2000s.
“The problem for electric vehicles was not dealers or manufacturers, but whether the market was willing to start over again.” –Jim Boyle, Tuck’s Trucks GMC
Twenty years ago, it would have been inconceivable that Boyle would already have 30 pre-orders for an electric version that is not available until Fall 2021. “The problem for electric vehicles was not dealers or manufacturers, but whether the market was willing to start over again,” Boyle says. “So, what a great way to start by taking the Hummer and going electric.” While GM has dominated headlines, a survey of plans across OEMs shows similarly strong commitments to making the next decade the era of the electric vehicle. We have broken
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Massachusetts Auto Dealer
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RACE TO THE TIMELINE FINISH AN ELECTRIC down a timeline of key events manufacturers have said would occur during the next decade:
2021
• GM released the 2022 Chevrolet Bolt Electric Utility Vehicle and revised Bolt in February. GMC Hummer electric production starts in Fall. • Chrysler debuts 10 hybrid or electric models across its brands (including a plug-in Jeep Wrangler). • BMW debuts the first all-electric M badge car. • Jaguar Land Rover tests a hydrogen fuel-cell prototype.
2022
• Ford starts production of an electric F-150 by the middle of the year. • Mercedes introduces 10 new electric vehicles through its EQ brand by the end of the year.
2023
• A Honda electric vehicle built in partnership with GM begins production. • Mazda debuts at least two plug-in hybrids. • Nissan launches eight electric vehicles.
2024
• An Acura electric vehicle built in partnership with GM enters production. • Land Rover debuts its first all-electric vehicle.
• Toyota launches 60 new hybrid, electric, or fuel-cell vehicles and will reach the goal of selling 5.5 million partial-to-full-electric vehicles. • Volkswagen produces 1.5 million electric vehicles across all brands. • Volvo will put 1 million hybrid or electric vehicles on the road by the end of the year, and estimates 50 percent of its global sales to come from electric vehicles.
2030
2025
• Audi reaches 20 full-electric vehicle models available. • BMW expects hybrid and electric vehicles to account for 15 to 25 percent of global sales. • Ford will have invested $29 billion in electric vehicles. • GM will have invested $27 billion in electric vehicles. The company will have 30 electric vehicles on the market, 20 of which will be available in the U.S. • Hyundai offers 23 electric models worldwide. • Jaguar will be all-electric. • Land Rover will offer six electric models. FEBRUARY 2021
• A U.K. ban on the sale of internal combustion cars goes into effect. • Kia estimates electric vehicles to account for 40 percent of production. • Mazda offers a hybrid or electric variant for every nameplate in its lineup. • Mitsubishi will see 50 percent of its global sales from hybrid or electric vehicles. • Subaru estimates 40 percent of global sales from hybrid or electric vehicles. • Volkswagen will see 60 percent hybrid or electric vehicle sales in the European market.
Massachusetts Auto Dealer www.msada.org
MSADA Affordability and infrastructure remain the question marks left by the rollout timeline, the $112,000 electric Hummer being an outlier. “This is not a case of ‘build it and they will come,’” Dube said. This is ‘build it and make sure people can afford it.’”
If You Build It... The timeline as laid out in 2021 reveals a stark case for the 2020s becoming the decade when electric cars are increasingly synonymous with new vehicles. Massachusetts NADA Director Scott Dube says that, while he is supportive of greener energy, the market question raised by Connolly remains primary for dealers. “It is interesting that the manufacturers are suddenly all-in. It perplexes me more than anything,” Dube says. “While I very much enjoy the technology -- and I drive one a lot myself -- the market is not there yet.”
On top of this manufacturing push, he says, there needs to be a thorough infrastructure plan to avoid the scenario of unwanted vehicles dumped on lots. “We need to work to make sure we are not just willing the law of unintended consequences away.” MSADA Executive Vice President Robert O’Koniewski noted current events outside of the automobile industry point to how far the U.S. has to go before every vehicle on the road can be powered by only electricity. “Goals are always good. Goals can be a foundation for success,” O’Koniewski said. “But are we talking about goals of possibility or goals of delusion? We know one thing for sure: Gasoline is a product of a finite resource — petroleum — which will not be around forever. “Moving to the next generation of propulsion -- electric -- that gains widespread consumer acceptance will depend on many factors: affordability; product choice; battery charge life; charging infrastructure; length of time to charge; and, most importantly, a dependable electric grid. We need not look further than California’s problems last year and the shutdown of the Texas electric grid this month with their once-in-a-lifetime Arctic blast of bad weather. “There are quite a few members of this choir, and we all need to get on the same page of the hymnal to make this work.” t www.msada.org
Massachusetts Auto Dealer
FEBRUARY 2021
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NEWS NEWS the NEWSfrom from Around from Around Around the Horn Horn NEWS
NEWS the Horn
KINGSTON
Alicandro-Karnolt Named Among Four Finalists in TIME Dealer of the Year Competition For only the fourth time in the 52-year history of the award, a Bay State dealer was named as a finalist in the national TIME Dealer of the Year competition. Christine Alicandro-Karnolt, owner of Marty’s Buick GMC in Kingston and Marty’s Chevrolet in Bourne, was named among four finalists at the NADA Show this month. As a finalist, she was able to select a charity to receive $8,000 in prize money. To the Moon and Back, a nonprofit organization dedicated to helping children born with in utero substance exposure and their families by providing support, education, and advocacy for the littlest victims of the opioid epidemic, was her charity of choice. “I am so excited that they are going to get this money, especially when they were not able to have their annual fundraiser, which is a prom that really brings in a majority of their donations,” Alicandro-Karnolt told The Kingston Reporter. “That is the best part of it. That is what we do it all for.” To the Moon and Back will receive a total of $8,000, including $5,000 from exclusive sponsor Ally Financial for being one of the four dealer finalists, $1,500 the nonprofit has already received, and another $1,500 from her local Ally bank. BOSTON
Prime Automotive Ensnared in $1.8 Billion Fraud Case Through Majority Owner After former Prime Automotive CEO David Rosenberg sounded the alarm about new owners GPB Capital Holdings’ business practices following a 2017 takeover, that company’s CEO now faces major fraud charges. David Gentile, former CEO of New York-based investment advisor GPB Capital Holdings, pled not guilty this month to FEBRUARY 2021
charges that his firm defrauded investors of some $1.8 billion through a Ponzi-type scheme. Gentile and five other co-defendants were accused of defrauding 17,000 retail investors over several years by, among other things, using investments made by newer clients to pay earlier investors with the 8% annual returns they were promised GPB told prospective investors that it would purchase, among other assets, income-producing auto dealerships and waste management businesses with capital from investors, promising them 8% returns, but instead “falsified financial statements to generate fictitious income,” according to prosecutors. New York Attorney General Letitia James’ office is seeking more than $700 million of restitution. The defendants were also accused of spending investor money on luxury items, such as private planes and vacations, as well as a Ferrari FF car valued at $355,000 for Gentile. Seven other U.S. states, including Texas, as well as the Securities and Exchange Commission have opened civil proceedings against Gentile and defendants related to the fraud case. GPB, which is not a defendant in the criminal case but is a defendant in civil proceedings, has denied the allegations and last week said Gentile was stepping down as its CEO “until current matters are resolved.” Meanwhile, Rosenberg says he was fired from his role at Prime after he aired concerns about GPB’s handling of dealership business. Automotive News reported this month that the future of the dealership group remains unclear amid the charges. BOSTON
Baker Administration Adds Medium- and Heavy-Duty Trucks to MOR-EV Program Gov. Charlie Baker is expanding the eligibility for an electric vehicle program rebate to include medium- and heavy-duty vehicles, hoping to capture some immediate environmental benefits while taking a step towards a future in which all vehicles sold in Massachusetts are zero-emissions vehicles. Vehicles roughly weighing 8,500 pounds and up — think large pickup trucks and vans, delivery trucks, box trucks, and longhaul delivery trucks — are now eligible after Baker’s announcement for a state financial incentive through the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program. The expansion is made possible by a December 2019 allocation from the Legislature, $10 million of which will go toward the medium- and heavy-duty vehicle incentives. “There is an incredible amount of interest in this specific sector — delivery trucks — from some of the larger owners of these vehicles from Amazon to the Postal Service and what it can do to lower operating costs and provide cleaner air,” Pat-
Massachusetts Auto Dealer www.msada.org
MSADA
NEWS from Around the Horn
rick Woodcock, commissioner of the Department of Energy Resources, told State House News Service. “So we want to be at the vanguard of this and help companies that want to do their part to be part of the net-zero future.” Under the MOR-EV program, consumers can be eligible for a rebate of $2,500 on the purchase of an all-electric passenger vehicle or $1,500 for a plug-in hybrid with a range of at least 25 miles on a battery charge. The vehicle must also have a sticker price under $50,000. As the program expands to include medium- and heavy-duty trucks, rebate values will vary by vehicle weight rating, from $7,500 for pickup trucks up to $90,000 for tractor trailer trucks. For the trucks program, the sticker price of the vehicle must be greater than $50,000. The value of the rebates will decline over time, which the Baker administration said is in recognition of “the anticipated cost declines of the emerging battery-electric and fuel-cell electric truck sector.” HARVARD
Father and Son Appeal Extradition to Japan in Nissan Chairman Case A Town of Harvard-based father and son accused of helping former Nissan Motor Co Ltd. Chairman Carlos Ghosn flee trial in Japan have asked U.S. Secretary of State Antony Blinken to halt their impending extradition to the East Asian country. A letter to Blinken obtained by Reuters from the Taylors’ lawyers said, “We do not believe there is any good reason to surrender these two American citizens.” The letter suggested the charges “are explained by the government of Japan’s desire to save face, or at least to be perceived to be doing something to address their embarrassment.” The letter asked that, at a minimum, the extradition be delayed until the men received their second COVID-19 vaccine doses. A federal appeals court in Boston declined to prevent the Taylors’ extradition while they appealed lower-court rulings. The U.S. State Department approved their extradition in October. The Taylors were arrested in May at Japan’s request after being charged with helping Ghosn flee trial in Japan. In December 2019, the former executive escaped by hiding in a box and on a private jet before reaching his childhood home, Lebanon, which has no extradition treaty with Japan. Ghosn was awaiting trial on charges that he had engaged in financial wrongdoing, including by understating his compensation in Nissan’s financial statements. Ghosn denies wrongdoing. Prosecutors said the elder Taylor, a 60-year-old private security specialist, and Peter Taylor, 27, received $1.3 million for their services. t www.msada.org
Massachusetts Auto Dealer
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Troubleshooting
MSADA
More TCPA Troubles Every Day By Peter Brennan, Esq. MSADA Staff Attorney
The number of class action lawsuits filed under the Telephone Consumer Protection Act (TCPA) continues to rise across the country. If this sounds somewhat familiar, it should. TCPA lawsuits have been a frequent topic of this column and MSADA legal bulletins. Members of the plaintiffs’ bar have been looking for targets as they pursue big class action settlements based on TCPA violations. Franchised dealerships have become a popular target for these lawsuits throughout the country. The TCPA, initially enacted in 1991, prohibits marketing communications without prior consen. The original statute was intended to protect consumers from unwanted marketing phone calls and faxes. The Federal Communications Commission (FCC) has implemented rules and regulations enforcing the TCPA and considers a text message sent to a telephone number associated with a wireless device to be a “phone call”. As we have repeatedly advised, it is a violation of the TCPA to call, fax, or text to anyone without receiving their prior express consent. If the call/fax/text is an “autodialed” marketing message, you cannot send it to a person unless you have his or her prior, express, written consent. The potential liability for TCPA infractions is massive, as the statute allows a private right of action and either actual or statutory damages of $500 to $1,500 per violation, with each call/fax/text sent in violation of the law considered an individual infraction. For dealers facing a TCPA class action, the potential liability is well into the millions of dollars. TCPA FEBRUARY 2021
case law continues to evolve as new marketing technologies emerge and the line between a call/fax/text sent “manually” or using autodial technology continues to blur. To confuse matters further, cases involving faxes are treated somewhat differently than those involving calls/texts on the issue of consent, although the $500 minimum damages per violation applies to every unsolicited message regardless of the medium. If you or a vendor working under your direction is using autodialer technology to text/call/fax customers, you need to have the customer’s prior, express, written consent. Here is an example of the language the customer should expressly agree to in order to receive a marketing communication sent using auto-dialer technology: “I hereby consent to receive autodialed and/ or pre-recorded telemarketing calls and/ or text messages from or on behalf of [DEALER] at (___)___-____ [telephone number]. I understand that consent is not a condition of purchase.” Make sure that the customer signs the statement, and maintain the record in your files. If a dispute concerning consent arises, the dealer bears the burden of proof to demonstrate that a clear and conspicuous disclosure was provided, and that the consumer unambiguously consented to receive telemarketing calls to the number specifically provided. Accordingly, consent forms should be maintained by the dealership for at least four years. If you receive a demand letter or lawsuit based on an alleged TCPA violation, contact MSADA and consult your attorney. In conjunction with those steps, consult your commercial insurance policy, as your policy may cover the defense of any TCPA claims, should a lawsuit be filed. Sometimes the plaintiff’s attorney will not have done his or her due diligence, so pushing back and demanding proof of the violation will be the best initial strategy to fight the frivolous claim. If you are unlucky enough to find yourself a defendant in a TCPA lawsuit, do not
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abandon all hope. TCPA cases are currently a legal battleground as new marketing technologies that are designed to be TCPA compliant are tested in court. Recently, Fiat Chrysler of America (FCA) won a major legal victory in the Eleventh Circuit of the U.S. Court of Appeals in a TCPA case, Grigorian v. FCA US LLC, and avoided litigating a class-action lawsuit against 89,000 potential plaintiff class members. The case was dismissed because the court determined that the lead plaintiff had not suffered an injury that would give her standing to bring the case. In Grigorian, the named plaintiff alleged that FCA had contracted with a third-party to send her a prerecorded advertisement for a minivan through a “ringless” voicemail. The plaintiff alleged that, while she incurred no financial harm, she suffered injuries because she was not able to access her phone while listening to the voicemail and lost time in which she should have been studying for the bar exam. The court upheld a lower court’s dismissal of the plaintiff’s claims and held that the plaintiff “suffered no concrete injury despite what might be seen as a technical violation of the statute.” The court held that the plaintiff did not submit evidence that the voicemail rendered the plaintiff’s phone “unavailable to receive legitimate calls or messages for any period of time”, but noted that a plaintiff that receives several ringless voicemails may have a stronger case that would require a different analysis. While the defendant dodged a bullet in Grigorian, you might not be so lucky – review your TCPA compliance and keep an eye on your third-party marketers. 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@msada.org, or by phone at (617) 451-1051.
MSADA
LEGAL By Joseph W. Ambash and Jeffrey A. Fritz
Employee Vaccinations: What Employers Should Know The post-holiday spike in COVID-19 infection rates in Massachusetts was significant. New cases went from 842 on November 2, 2020, to 5,918 on January 13, 2021. On a good note, however, the numbers again are on the decline, down to 1,520 on February 21. And, fortunately, vaccinations began in mid-December 2020 and are ongoing. As of February 21, some 1,686,160 vaccines have been shipped to Massachusetts, with 1,413,889 doses having already been administered. And the widespread availability of vaccines is expected to occur by April. This begs the question, what should Massachusetts employers know about COVID-19 vaccinations?
CDC Quarantine Requirements Relaxed for Vaccinated Individuals On February 10, the Centers for Disease Control and Prevention (CDC) announced relaxed quarantine requirements for individuals who have been vaccinated. More specifically, if an individual (1) has been fully vaccinated (i.e., it has been at least two weeks since the second dose in a twodose series or since receipt of one dose of a single-dose vaccine), (2) is within three months following receipt of the last dose in the series, and (3) has remained asymptotic since the current COVID-19 exposure, s/ he need not quarantine after exposure to someone with a suspected or confirmed case. This means that (unless and until this guidance changes) once an employee is three months post-vaccination, s/he is no longer exempt from quarantine requirements. (Note that people who have tested positive for COVID-19 within the prior three months and have recovered similarly do not have to quarantine, or get tested again, after exposure so long as they do not develop new symptoms.) Notwithstanding the relaxed requirement for vaccinated individuals, all employees should continue to follow current guidelines to protect themselves and others, including wearing a mask, staying at least six feet away from others, avoiding crowds, avoiding poorly-ventilated spaces, covering coughs
and sneezes, and washing hands often.
CDC Quarantine Requirements Remain in Place for Others Of course, anyone who does not meet the foregoing criteria should continue to follow current quarantine guidance after any such exposure. Exposure means s/he (1) was within six feet of someone who has COVID-19 for a total of fifteen minutes or more, (2) provided care at home to such an individual, (3) had direct physical contact with such an individual, (4) shared eating or drinking utensils with such an individual, or (5) was sneezed or coughed on by such an individual. The CDC recommends any such individual quarantine for 14 days after his/her last contact with an infected person and should watch for symptoms. Under Massachusetts guidance, such an individual may end quarantine after ten days with no symptoms or after seven days with a negative test. Employers may want to consider requiring employees to keep them apprised of their vaccination statuses. While this is permissible, employers should avoid follow-up questions that might elicit additional medical information (which might render the inquiry a “disability-related inquiry” under the Americans with Disabilities Act, and subject to heightened scrutiny).
Can Employers Mandate Vaccines? Vaccination can be a controversial subject. In a recent Gallup poll, only 71% of those surveyed indicated they are willing to get vaccinated (which is up from 65% in late December). Nonetheless, can employers mandate that all employees, as a condition of employment, get vaccinated? The answer, at least currently, appears to be “yes” (subject to potential reasonable accommodation requirements for certain medical or religious reasons). That said, a majority of employers appear to have decided not to go this route.
Can Employers Encourage Vaccines? In short, “yes.” As an employer, you can www.msada.org
encourage your employees to get vaccinated and provide appropriate educational material as to testing logistics, potential side effects, and benefits. Employers can even incentivize employees to get vaccinated, such as through cash, gifts, and/or additional paid time-off. Keep in mind, however, a number of risks may exist in the event an employer decides to go this route under the ADA, Title VII, HIPAA, and the FLSA. Educating employees, providing paid-time-off for all workers to get vaccinated, or offering a de minimis incentive for those who get vaccinated are all relatively low-risk options. Providing paid time-off only for those who get the vaccine, providing compensation to cover “costs” associated with the vaccine, and/or making vaccine recipients eligible for prize drawings are of medium risk. That said, offering an incentive of greater value (i.e., not de minimis) for those who get the vaccine may be of a higher risk. You should consult competent counsel before implementing any medium or high-risk options, so you can understand both the risks they present, and any options that may exist to reduce such risks. As always, CDC and Massachusetts guidance remains subject to change as circumstances change. As an employer, therefore, it is imperative that you stay up-todate on such guidance and make any necessary changes to your policies or practices. 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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FEBRUARY 2021
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
New light-vehicle sales in January started off the year at a strong pace. While the January 2021 SAAR of 16.63 million represents a decline of 1.4% from January 2020, it was the highest monthly SAAR since the start of the pandemic. In January, all light-truck segments gained market share, while all car segments lost share. Light trucks represented 77.8% of all new vehicles sold. As in
FEBRUARY 2021
recent months, light-vehicle retail sales outperformed fleet sales. According to Wards Intelligence, retail sales are estimated to have increased by 7% from January 2020, as fleet sales dropped by 24%. Retail sales have been up year over year in four of the last five months, while fleet sales have declined for 13 straight months. t
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MSADA
ACCOUNTING
JANUARY 2016
The Tax “Tail”
By Mark Dow O’Connor & Drew, P.C.
For over two decades, the New England Patriots were famous for eliminating distractions, dealing with those things they could control, and executing their game plan. Eye-popping statistics and superior athleticism on the other side of the ball were never enough to take away their focus or cause them to fret. This reminds us of one of the two things you can count on in life … taxes. Later this year, talk in Washington will once again return to this favorite of topics. Ah yes, taxes, taxes, taxes; we all wish we could cause so much emotion and receive so much attention! Despite their position under the spotlight, income taxes may be more of a distraction than anything else. Of course, everyone wants taxes to be low and the free market to thrive and generate tax receipts based on growth in business activity, rather than high tax rates. That is crystal clear. What is not as clear is the direct impact on your business and your long-term plan. Down in Washington, there will be lots of questions, speculation, and calculations. But what about the big picture? What about all your other business issues? Which has a greater impact: the management of the business or the management of your taxes? Let us take a look at history to help provide insight.
Income Taxes
The fact is that since 1994, income tax rates of all types have wavered significantly; some years higher and some years lower. Just like you do not invest money for one year and base your investment decisions solely on today’s return,
you should not base long-term business decisions on the current tax rates in favor. They come and go just like the political party that has control. One conclusion is that over time, you can “count” on what the tax bite will be. When the debate does get going, there are a few significant provisions to keep an eye on other than rates.
QBI
Since 2018, qualifying “pass through” operating businesses (think S-Corps, LLCs, and Partnerships) have enjoyed a reduction of their flow-through income of up to 20%. This is known as the qualified business income deduction (QBI). Most operating businesses that have significant payroll and are not providing professional services or consulting can qualify for this deduction. It shows up on your personal Federal tax return as a reduction of your taxable income. Translation: An operating dealership that makes $500,000 and is taxed as a flowthrough, with income reported at the individual level, will generally get a $100,000 deduction against this income under the current laws. While everyone will be focused on the income tax rate, you should follow the proposed changes to “QBI.”
Federal Estate Tax Exemption
Way back and for many years, an individual could only exclude $600,000 from their taxable estate. The exclusion grew to $2 million, then $3 million, and landed at $5 million in 2017. In 2018, the new tax law doubled the per person exemption and, after inflation adjustments, the current exemption for 2021 is $11.7 million! Talk of this being cut in half is out there. So keep an eye on this as you consider your long-term planning.
Deductibility of State Income Taxes
Until a few years ago, your state income taxes were an itemized deduction against your federal taxable income. When the deduction for all state and local taxes was capped at $10,000, this went out the window. There is talk of restoring www.msada.org
this deduction and removing the limitations, but will it be allowable for all income levels? All that being said, the bigger piece of the “success” pie will be the management of your business.
Managing the Business
• Set a financial budget and operating plan for the year. When you are way off, make changes. • Consistently manage the details of each department. Set clear expectations and periodically inspect the results. • Institute expense control by requiring management approval for expenditures over a predetermined dollar amount. • Maintain accurate, conservative books. Deal with aged items promptly. Review the major account schedules and reconciliations monthly. Check your internal controls. • Properly train the staff. Over communicate to all personnel. Recognize and reward great work. • Invest wisely in facilities, systems, and technology. • Strategize on the service and parts business. How can you combat better made cars, fewer miles being driven? How well do we “invite” customers to come in? One conclusion: Most years the incremental impact from taxes has a 10% impact on your financial results, the overall economy 20%, your brand 20%, and the management of the business 50%. Business owners are entrepreneurs. They are competitive. I do not believe that they significantly alter their plans based on tax rates. Rather, they see them as just an additional hurdle or an “expense” that fluctuates from year to year within a certain range. The point: Do not let the tax tail wag the dog. t Mark Dow works extensively with auto dealer entities and is primarily focused on commercial for-profit and highnet-worth clients. He can be reached at mdow@ocd.com.
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AIADA Brief
MSADA MSADA
A Fresh Start and New Challenges for International Nameplate Dealers By Cody Lusk AIADA President & CEO
In January, after a long and divisive election season, Americans finally saw a new Congress and presidential administration inducted into the halls of power in Washington, D.C. For the first time in a decade, Democrats will control the White House, the House of Representatives, and, narrowly, the Senate. For us at AIADA, an advocacy organization dedicated to promoting global trade and protecting the interests of international nameplate auto dealers, the new balance of power presents both fresh challenges and opportunities. No matter what lies ahead, I am confident that AIADA is in good hands with our 2021 Chairman Steve Gates from Kentucky and our active and engaged dealer board of directors, including one of our newest board members, Chris Connolly, President of Herb Connolly Acura of Framingham. If you have not already, I encourage you to watch our Virtual Annual Meeting at AIADA.org/VirtualMeeting. Get to know Steve, hear from our 2020 Chairman Jason Courter about what it was like to lead through a pandemic, and listen to our exclusive Q&A with Toyota North America’s Bob Carter. Our priority this year will be getting to know the new players in D.C., and more importantly, making sure they know all about our dealer members and the tremendous value they bring to their communities and local economies. Fortunately, we have an annual Economic Impact Report that lays out, in rich detail, exactly how many Americans our dealers employ, how many vehicles FEBRUARY 2021
they sell, and how much they contribute in taxes. It is vital that we use these numbers to give new Members of Congress a crash course in the auto retailing business and ensure they understand there is absolutely nothing foreign about so-called “foreign” auto retailers. Some highlights: • International automakers, dealers, and suppliers support nearly 2.5 million American jobs. • International nameplate dealers are responsible for 56 percent of new vehicle registrations in the U.S. • Economic activity by international automakers and dealers in America gen-
“the new balance of power [in D.C.] presents both fresh challenges and opportunities.” erated $67 billion in federal, state, and local tax receipts and other revenues. Massachusetts is a national leader in dealership investment with 247 international brand franchises and 14,384 employees. You can access, download, and share the report at AIADA.org/trade. I hope you take the time to check it out and possibly learn something new about how international automakers and dealers are investing in America. In addition to highlighting the impressive numbers and facts generated by our industry, AIADA is also working hard to make sure you can build a personal relationship with your legislators. Over the years, those connections have proved invaluable, whether we were pushing back against vehicle tariffs or fighting to include dealerships as essential businesses eligible for emergency PPP loans. If you have not already, I encourage you to
Massachusetts Auto Dealer www.msada.org
reach out to your Member of Congress today through our dealer visit program at AIADA.org/visit. Held either in person at your store or virtually, these visits are more important than ever in light of the current lockeddown status of the United States Capitol. If we cannot go to our lawmakers, we have to be creative and persistent in making sure they can come to us. As far as looking ahead into 2021 and forecasting how policy and legislation will unfold, dealers certainly learned last year that even the best predictions are subject to unforeseen events. That said, common sense tells us that a few major policy changes will go into effect almost immediately. Regulatory barriers will soon spring up on everything from arbitration to vehicle emissions. We will see a newly empowered CFPB back in the spotlight and back in your F&I departments. Tax legislation will absolutely be a priority of this 118th Congress, and issues like the Estate Tax and LIFO will be on the table. America’s trade policy, of course, will have a very different captain at the helm in President Joe Biden. The implementation of the USMCA agreement and an urgently needed U.S.-E.U. agreement are both in his crosshairs. It is essential for our industry that trade once again be made a global priority, instead of a bargaining chip. That battle remains one of AIADA’s most pressing this year. Until we can meet again in person, rest assured that AIADA will be fighting on your behalf in Washington, D.C. t Cody Lusk is President and CEO of the American International Automobile Dealers Association (AIADA). Founded in 1970, AIADA represents all of the American automobile dealerships that sell and service international nameplate brands.
MSADA
TRUCK CORNER
ATD Works to Secure Truck Dealer Landscape A new administration means renewing our battles against overzealous taxes
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
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One of ATD’s greatest strengths is its ability to advocate for all truck dealers, no matter who is in office. There has undoubtedly been a seismic shift in Washington, D.C. with the new Biden administration. ATD will continue to advocate for the nation’s truck dealers and the priorities that help secure the future of our businesses. Knowledge is power, and I want all ATD members to be aware of significant changes ahead as the commercial truck industry adapts to a new political environment. Despite slim Democrat majorities in each chamber of Congress, President Biden’s agenda can still pass using reconciliation, a special type of bill that cannot be filibustered and requires only simple majorities to pass. President Biden is also making liberal use of executive orders, issuing more of these directives in his first two weeks in office than Presidents Bush (the son), Obama, and Trump combined. We have all been awaiting the latest infrastructure bill, and we have made it clear in the past: FET is not the solution! This year, Congress will consider a must-pass highway reauthorization bill. ATD will renew its efforts to repeal the FET on heavy-duty trucks and will oppose legislation that threatens to ground heavy-duty trucks under open recall on a dealer’s lot. ATD is also focused on tax policies that will impact truck dealers, such as the estate tax and lastin, first-out (LIFO) accounting method. The Biden campaign proposed a reduction of the estate tax exemption to $3.5 million per person and an increase of the top rate to 45%. Currently, the estate tax rate is set with an exemption of $11.7 million per person and a maximum 40% rate. ATD will oppose congressional efforts to repeal the LIFO account-
ing method. Moreover, ATD is seeking LIFO relief since many franchised dealerships using LIFO are experiencing a decrease in inventory. This could potentially trigger a significant tax liability due to LIFO recapture. We have no shortage of challenges that affect our day-to-day business, and we cannot make a positive impact on the dealer landscape without your support and participation. Registration for the 2021 ATD Truck Industry Forum will soon be open. Consider joining us June 22-23 in Washington, D.C., where we will highlight the policy and regulatory issues that matter to our industry. While politics in the nation’s capital may be partisan, truck dealers are more united than ever advocating for their customers, employees, and dealerships. Our industry has a critical role to play in the decisions coming in the months ahead. I urge our members to get involved and stay engaged. The future is in our hands!
“While politics in the nation’s capital may be partisan, truck dealers are more united than ever.”
ATD Show Reminder
There are some new and exciting changes coming to ATD’s annual show. The ATD Show was not held in 2021. Instead, our best and brightest event will return in 2022 in Las Vegas in conjunction with the annual NADA Show. A few things to note: This schedule change has been under consideration for some time and is not in response to the pandemic. ATD anticipates that the reschedule will result in a strong ATD Show that is responsive to the business climate in today’s commercial truck industry, offering America’s truck dealers the highest value, and preparing dealers for the next generation of operations. Watch this space and www.atdshow.nada.org for more news as it breaks. t
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NADA Update
By Scott Dube
There is No Playbook 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. Greetings from the first - hopefully last - fully online edition of the NADA Show. We have worked diligently to deliver the best experience possible in a virtual environment, and the information we have provided our dealer members is more crucial than ever. As you will read below, the transition between NADA Chairmen Rhett Ricart and Paul Walser comes amid unprecedented challenges in our industry, completely in line with the world at large. But we dealers know how to push ahead. Our industry is built on generations of determined effort in the face of all manner of challenges. As outgoing Chairman Rhett Ricart told us, we are a band of brothers and sisters that is stronger than it was a year ago. Let us continue to work together to serve our customers and our communities as we look to the light 2021 will bring. I am excited to take the reigns of the next NADA Show as the Show Committee Chairman. I would encourage you to let me know what you think would make the 2020 convention the best NADA Show we’ve ever had. I am working with other NADA leaders and staff to make that dream come true. Do not hesitate to get in touch with me on this important issue.
Outgoing Chairman Ricart Praises Dealers For Getting Through 2020 “Stronger, Tougher, And Wiser” In his final remarks to dealers as NADA chairman, Rhett Ricart, who led the organization through one of the most tumultuous years in recent memory, had a simple message: “Never forget what we went through, because it shaped who we are today.” Ricart took over as NADA chairman at the 2020 NADA Show in Las Vegas in mid-February. Less than a month into his tenure, the Coronavirus pandemic upended everything in the auto industry, including the priorities of the organization Ricart was tapped by his fellow dealers to lead in 2020. Even though “no playbook was ever written for the challenges we faced in 2020,” Ricart said, NADA rallied immediately and refocused on the single goal of steering America’s franchised auto dealers through the pandemic. “This association has never fought harder, worked faster, FEBRUARY 2021
or given so much of itself so that business owners, like you and me, had a franchise that remained valuable and protected,” Ricart said at the opening session of NADA’s first-ever virtual Show. From advocating for dealerships to be deemed essential businesses, to helping dealers navigate Coronavirus-related regulations, to maintaining dealership workforces, Ricart reminded auto dealers nationwide of the importance of NADA’s efforts on behalf of, and hand-in-hand with, franchised dealers. “We have lived through a year we have never witnessed before, but NADA rose to the occasion,” Ricart said. “It is a forcefield that covers every dealer. I am in awe of the NADA staff, our state associations, and their leadership. Everything they did, they did on our behalf.” And Ricart, president and CEO of Ricart Automotive Group, credited his fellow dealers for their perseverance, determination, and flexibility in the face of a constantly changing and ever-challenging business environment. “Despite the darkest days, we kept people on the payroll, we reformulated our business model, we prioritized the health of customers, employees, and our families, and we continued to sell and service cars,” Ricart said. “Through the chaos, I saw the strength of auto dealers like I never have before. Dealers became life preservers, contortionists, and survivors.” Ricart urged dealers to stay vigilant and remain confident in their ability and thrive in the face of adversity. And he reiterated his belief that the challenges dealers survived in 2020 will leave them better positioned to succeed well beyond 2021. “After the year we have been through, I know one thing for sure: We are a bulletproof band of brothers and sisters who are stronger, tougher, and wiser,” Ricart said.
NADA 2021 Chairman Paul Walser Says Dealers Must “Look at Things Differently” to Succeed and Strengthen Franchise System Paul Walser, in his first remarks as NADA 2021 Chairman, urged dealers to look inward, think differently, and take on new challenges in order to promote and strengthen the franchise system during a pivotal year for the industry. “This is an important moment for dealers everywhere, because the truth is we do not live in the same world we used to,” Walser said during his keynote address at the virtual NADA Show 2021. “If we want to improve; if we, as an industry, are serious about becoming stronger; and if we want to have a sustainable shield against the disruptions of the world, we need to start looking at things differently,” Walser said. “Sometimes you just need a clean sheet of paper to evaluate how we
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MSADA would do things without the usual playbook, as if we were starting over.” Walser, the CEO of Walser Automotive Group in Bloomington, Minnesota, rallied dealers to focus on diversity and inclusion efforts, dealer-OEM relationships, and becoming more involved in their trade associations, including NADA. Regarding a renewed commitment to diversity and inclusion, Walser explained that it is the right thing to do, it is good for business, and it will strengthen the franchise system. “This year I want to challenge all of us to make this a priority,” he said. “Let’s find the path to attract a more diverse workforce. Then let’s implement training to help them succeed.” On the topic of dealer-OEM relationships, Walser said, “We must look at everything through the lens of the customer: the sales process, the online process, the way we advertise, the way we interact in showrooms, in our service centers, and after the sale.” “Every time we touch a customer, we ought to think about how our decisions impact them,” he said. “At the end of the day, customers want three things: speed, transparency, and control in the process.” Finally, Walser urged dealers to become more active and engaged in the work of advocating for their businesses and the auto retail industry. Dealers across the country “must get more involved with your state legislators, with your members of Congress, and with your state and national trade association, because our elected officials don’t always understand our business. So we need to help them understand what we do, and why it’s important,” Walser said. “If we can improve what we do and how we work, if we create a culture where more of us can succeed, and if we all take accountability for our industry, then there will be no question about the franchise system – that it is, in fact, a system that people do want, and that they will always need,” he said.
NADA Names Winner of 4th Annual Women Driving Auto Retail Video Contest NADA named Morrie’s Automotive Group as the winner of the 4th annual Women Driving Auto Retail Video Contest. The Minnetonka, Minnesota, dealership was announced as the Contest winner during NADA’s first-ever Women Driving Auto Retail Virtual Happy Hour held in conjunction with NADA Show 2021 this month. “I’m proud to see all of the amazing submissions received during the four years of the Women Driving Auto Retail Video Contest,” said Cascade Auto Group Managing Partner and NADA Board Member Michelle Primm, who announced the winner. “This is where we get to witness how women have been making strides in auto and truck dealer-
ships across the country. The stories we receive are nothing short of inspiring.” Launched in August 2019, the video contest is part of NADA’s Women Driving Auto Retail initiative, which highlights the current voices of women working in dealerships and encourages other women to pursue automotive careers. The video contest celebrates women who work in all areas of car or truck dealerships and aims to encourage more women to pursue a career in auto retail. “The auto industry is so rewarding. So what I would say to anybody considering it: Try it. You probably will fall in love with it,” said Jaime Drabzcak, General Manager of Morrie’s Automotive Group, in the dealership’s video submission. Given the pandemic impacting the country and the auto retail industry, this year’s contest asked women working in dealerships to share their experience and how they have adapted during COVID. In a video of three minutes of less, entrants were also asked to share why the auto retail industry is still a great career path. “I think 2020 challenged us in ways that really, at first, we thought we wouldn’t overcome, but no matter how hard it got, people kept showing up,” said Lisa Thorton, Director of Human Resources at Morrie’s Automotive Group. “I think that speaks to the resiliency of this business. It speaks to the resiliency of our people.” The winner will receive a $1,000 gift card plus complimentary registration to NADA Show 2022 in Las Vegas, while the other nine semifinalists announced in late January will receive a $500 gift card.
Assurant Donates $25,000 for NADA Foundation’s Emergency Relief Fund at NADA Show Assurant, Inc., a global provider of lifestyle and housing solutions that support, protect, and connect major consumer purchases like automobiles, donated $25,000 during the recent NADA Show for the NADA Foundation’s Emergency Relief Fund. During NADA’s first-ever virtual Show, Assurant celebrated along with the NADA Foundation with a virtual check presentation on February 11 to support the Emergency Relief Fund’s mission. Started in 1992, the Emergency Relief Fund offers financial help for auto and truck dealership employees who have been impacted by natural disasters. In 2020 alone, more than $430,000 was distributed to 433 dealership families devastated by Hurricanes Laura and Sally in Alabama, Florida, Louisiana, and Texas, as well as impacted by wildfires in Oregon and the powerful derecho in Iowa. For more details about the NADA Foundation’s Emergency Relief Fund, visit www.nadafoundation.org. t
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