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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
January 2021 • Vol. 34 No. 1
The official publication of the Massachusetts State Automobile Dealers Association, Inc
New Metal, New Hope
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
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From the President: A New Direction ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Stay Positive & Test Negative TROUBLESHOOTING: State Enforcement Actions Could Increase in ‘21 AUTO OUTLOOK
14 Cover Story: New Metal, New Hope
18 20 21 22 24 25 26
NEWS From Around the Horn ACCOUNTING: Has COVID-19 Changed The Way We Do Business? LEGAL: Political Speech (and Actions) In the Workplace nada Market Beat BUSINESS OPS: Benchmarks of Value in 2020 TRUCK CORNER: New Year Brings Change and Opportunity for America’s Truck Dealers nada update: Charging into 2021
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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From the President
MSADA
A New Direction
Now is the time to prepare for whatever 2021 throws our way
By Chris Connolly, MSADA President
Msada Board
While 2021 gets off to a rocky start, and hospitalizations from COVID-19 remain high, it can be difficult to remember that 2020 did have a few bright spots amid the chaos. As outlined in this month’s cover story, the last year presented innovation alongside the challenges. As dealers, we persevered and found new ways of doing business even in the worst conditions we have seen since the last World War. The vaccine rollout has certainly been one of the many elements of chaos we have dealt with on a daily basis as business owners and community members. But it does offer a glimmer of a future where the virus is in our rearview mirror. Possibly, we will have a Summer like those faraway days of 2019. As Summer brings us, hopefully, a break in the virus, we must stay alert for complacency. “We are here to The protocols we have put in place, the business answer your plans that kept us afloat, all of it needs to inform questions and how we plan for the next pandemic. As the Boy Scouts motto goes: “Be Prepared.” Your Association will certainly be prepared address your for whatever challenge presents itself in the concerns in coming months, whether that means supporting decision making in Washington, D.C. or on whatever facet of sane Beacon Hill. A new presidential administration your day-to-day always brings changes, many unpleasant, and we will remain vigilant in making sure the inoperations finds terests of our dealer community are represented. With the increasing vaccination rates, we will a snag in this hopefully soon begin to plan for resumed in-pernew ‘normal’” son activities such as an Auto Show and our Annual Member Meeting. While events such as the upcoming NADA Show have been educational in online mode, nothing can replace the glimmer of metal and the sound of a one-nightonly casino at the Boston Convention and Exhibition Center. I join the rest of MSADA’s staff and Board of Directors in being eager to bring that experience to our members very soon. As we hunker down through this Winter, please remember that we are here to answer your questions and address your concerns in whatever facet of your day-to-day operations finds a snag in this new “normal.” We remain ready to help navigate whatever may come your way. t JANUARY 2021
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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
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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 Zurich American Insurance Company Steven Megee (774) 210-0092
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The Roundup
Stay Positive & Test Negative By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Just before Christmas I received one of those goofy pop-up ads for a T-shirt proclaiming a message one would have never really expected to hear before: “Stay Positive & Test Negative”. I suppose, given the past year’s events, it is a worthy mantra to which to dedicate one’s being, albeit easier said than done. Everywhere one turned there was nothing but negativity thrown at us – economic shutdowns, business closures and bankruptcies, forced unemployments, in-house quarantines, lockdowns, travel bans, and skyrocketing COVID positive tests, hospitalizations, and deaths. There were not enough cute puppy and kitten videos to go around, and cold weather golf just does not cut it. Toss in one nasty election season and there was sufficient misery to make one stay in bed all day. But with the new year now upon us, the problems still exist with a potential light at the end of the tunnel which first shone last month – COVID vaccinations. Under the Trump administration’s Operation Warp Speed, COVID vaccines were developed, tested, and approved, and we saw the start of vaccine distribution and shots in arms – around 900,000 per day by the time Trump decamped from the White House for the warmer climes of South Florida. Unfortunately, our expectations of immediate vaccinations is bumping up against the reality of governments’ faulty distribution. Throughout the crisis our dealers have adapted to stringent government rules regarding social
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distancing, masking, and cleaning at their stores in order to stay in business and help to keep the economy going. After all, from the trucks delivering food and medicine to hospitals, grocery stores, and pharmacies, to the doctors, nurses, first responders, and sales folks at those hospitals, stores and pharmacies, the American economy depends on the wheels to keep rolling. To their credit, I have not heard of any clusters or major infections being traced to any of our franchised dealers in Massachusetts. Kudos go out to the men and women of our industry who have been committed to making their dealerships safe for employees and customers alike. Short of foreign invasion, there is nothing that can beat down the adaptability, resilience, and unbounded optimistic spirit of the dealership industry in the face of the COVID adversity and the tragic circumstances in our communities. As vaccinations increase throughout the populace to mitigate the virus spread, this too shall pass. In the meantime, you do not need a T-shirt to tell you to “Stay Positive & Test Negative”. You all have been practicing that for almost a year.
Buckle Up – How Far Will Government Go? This month saw the swearing in, after much political chaos, of a new administration of the federal government. Unfortunately, the combination of a Democrat White House with a Democrat-controlled Congress, albeit by the thinnest of margins,
MSADA does not bode well for the small business community and our industry. Where the previous administration committed fully to the deregulation of the U.S. economy, thereby unleashing, pre-pandemic, economic growth and extraordinary job gains in all demographic sectors, the incoming administration is dedicated to an aggressive re-regulation of business and the animal spirits of the market economy that drive economic activity and success. Here in Massachusetts, the first Wednesday of January has brought us the start of a new two-year legislative session. Missing at the helm of the House will be Robert DeLeo, who resigned his twelve-year hold on the speakership, to be replaced by Majority Leader Ron Mariano (D-Quincy), who immediately stated he had no interest in hanging around in the job for twelve years. Karen Spilka (D-Ashland) remains as Senate President, while Charlie Baker will be looking to close out his second term as governor, with no statements yet as to his intentions to run for re-election in 2022. As we move through 2021, there are pending federal and state issues of which we need to be aware and ready to address: 1. Consumer Financial Protection Bureau. The CFPB is the brain child of our senior senator, Elizabeth Warren. It is no secret the new federal administration, along with a Democrat Congress, seem hell-bent committed to a progressive agenda. Back in the day, your Association successfully lobbied Congressional leaders for a dealer exemption to the CFPB during its creation. This not only upset Warren, but also encouraged the Obama CFPB to attempt to get at dealers through back-door mechanisms. With the Democrats in charge, we can expect the CFPB to go after dealerships and such things as voluntary protection products (VPPs) while progressives in Congress may take a run at amending the CFPB law, including potential elimination of the dealership exemption. As dealers know all too well,
VPPs can offer customers valuable protections against unexpected and potentially costly events such as floods, hail damage, theft, vandalism, vehicle accidents, mechanical breakdowns, or the customer’s death, disability, or unemployment. Dealers should always strive to develop VPP policies to ensure these products are offered, sold, and administered in a professional and consumer-friendly manner. Check out NADA’s Driven guide and policy template on VPPs to protect your dealership. 2. Federal Transportation Priorities: Highway Trust Fund Solvency; Gas Tax; Federal Excise Tax on Trucks; EVs. It is not really clear to me what expertise the new federal secretary of transportation brings to the table other than a strong progressive philosophy as he demonstrated in his brief run for president (the small Indiana city he was mayor of certainly does not pose considerable transportation challenges), but there are issues that need to be addressed – e.g., solvency of the Highway Trust Fund – and those that the progressives want to inflict on the rest of us – e.g., elimination of fossil fuels; subsidization of electric vehicles and EV infrastructure. The Trust Fund has been in trouble financially for at least a decade while Congress has kicked down the road any attempt to bolster revenues. If there will be an infrastructure bill this session, look for Congress to tackle funding issues also, especially as there will be less gas tax revenues with more EVs on the road. Further, a major priority of NADA/ATD for a number of years has been the elimination of the FET on heavy-duty trucks. The imposition of the tax, originally created to help fund our effort in World War One, arguably stifles the sale of cleaner, safer trucks as fleet owners and others hold onto older trucks for as long as possible rather than face the huge expense of the FET add-on to each truck purchase. As California, and now Massachusetts, commit to forcing
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consumers to buy only electric and other no-emission vehicles by 2035, look to the federal government (and your factories) to get into the act as well. 3. The Right to Repair Data Law. As a result of the citizens’ passage in November’s election of the new RTR Data Law, the vehicle factories are required to build into each vehicle for sale in Massachusetts a two-way process for data to be communicated between the vehicle and independent repairers as designated by the vehicle owner. The first problem – no such technology exists today. The second, and most onerous, problem – the technology is required to be in Model Year 2022 vehicles. There are MY 2022 vehicles ready for delivery to dealerships as we write this. With the federal lawsuit initiated by the factories making its way through the district court here in Boston, enforcement of the law is pushed off for at least the next several months. However, the factories are holding off delivery of any MY22s until they see if the law will be overturned by the federal court. Potential legislative amendments may be necessary if the law survives the court challenge. 4. State Taxes; Sales Tax Trade-In Allowance. This week Gov. Baker filed his FY22 budget proposal with the legislature. As the saying goes, “The governor proposes; the legislature disposes.” The legislature will need to hash out a final spending plan by the July 1 start of FY22. The governor’s $45.6 billion budget contains no new taxes for residents and would rely on a one-time infusion of $1.6 billion from the state’s rainy day fund. (The FY21 budget signed into law in December includes $1.7 billion from the rainy day fund.) Although the governor’s budget reflects a $300 million reduction from the FY21 budget, due to reduced MassHealth spending by $600 million, the budget includes a 3.5% increase in all other accounts over FY21 levels, thereby demonstrating that, while businesses and taxpayers have been
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THE ROUNDUP hammered by the pandemic, state government and its employees feel no pain. In early 2020, the pre-pandemic legislature was teeing up personal and business tax hikes. The one good thing to come out of the Coronavirus crisis was the shelving of any tax hikes. Unfortunately, the progressives’ calls for higher taxes is gaining momentum. In addition to potential hikes in the income, sales, and gas taxes, a Senate working group is also looking at increasing the state’s corporate tax and the capital gains tax. The legislature also needs to take one more vote of approval in order to move the millionaires tax – a 4% surtax on annual incomes over $1 million – on to the November 2022 ballot. Finally, just like the feds, the state legislature will be exploring once again various funding mechanisms, including new tolling and a gas tax hike, to fund state transportation infrastructure projects. Last session we were able to beat back efforts to eliminate the vehicle sales tax trade-in allowance. Look for that fight to continue again in this session. 4. Unemployment Insurance. Prepandemic, on a good day, the state’s UI system was a mess and financially upside down. As a result of COVID shutdowns and business disruptions, the system is a disaster. The system demands reform. Because of COVID’s impacts, business owners are looking at a 60% increase in UI taxes this year. The governor late last year filed legislation to freeze rates and create some reforms to lessen the impact on business owners. The legislature, of course, never found time to take up the proposal, even as they extended their formal sessions past the July 31 cutoff date through the end-of-year holiday season. The governor’s legislation, while freezing the UI rates, would allow the state to go to the bond market to refill the trust fund’s reserves. In the worst case scenario, legislative inaction will drive up employer UI taxes, thereby forcing reductions in businesses’ other overhead accounts, quite possibly including more layoffs, exacerbating the UI crisis additionally. 5. State Paid Family and MediJANUARY 2021
cal Leave. The legislature created this program, you may recall, as part of the Grand Bargain in 2018, which also established a schedule for increasing the minimum wage to $15 per hour by 2023 and phased out Sunday/holiday premium pay for retail workers on the same schedule. Employers and employees have been paying into the system since the Fall of 2019. Employees are eligible to take advantage of the program beginning this month. The business community is anxious to see what problems are exposed in its construction. In the post-COVID world, if there is a rush of workers taking leave, thereby causing the program funding to be underwater, the governor and legislature could increase the share paid by business to fill all or part of the gap.
New Wage-Hour Guide for 2021 This month we emailed a pdf copy of the 2021 Wage-Hour Guide to our member dealers. The new Guide is also available on our website at www.msada.org. If you have an issue gaining access to the Guide on the website with your membership log-in password, please contact Jean Fabrizio at jfabrizio@msada.org. Should you have questions or comments regarding the content in the Guide, please email Robert O’Koniewski at rokoniewski@ msada.org or Peter Brennan at pbrennan@msada.org.
“Coffee with Coopsys”: IT Compliance and Best Practices Webinars Beginning on February 9, our new associate member Cooperative Systems, will be rolling 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 complementary for all MSADA members. The schedule and topics are as follows: • Tuesday, February 9: Top 5 Ways To Protect Your Dealership From A Ransomware Attack • Tuesday, March 9: Secure Methods To
Massachusetts Auto Dealer www.msada.org
MSADA 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.
Mass. COVID Vaccinations Gov. Baker and his health team seemingly make adjustments to the state’s COVID-19 vaccinations plan on a daily basis. For the most up-to-date vaccinations info for Massachusetts, the plan can be found at: www. mass.gov/covid-19-vaccine. t
MSADA
Troubleshooting
State Enforcement Actions Could Increase in ‘21 By Peter Brennan, Esq. MSADA Staff Attorney
Despite some bumps along the way, on January 20, 2021, Joseph Robinette Biden, Jr., was sworn in as the 46th President of the United States. With the peaceful transfer of executive power completed once again, we as a nation and, more specifically, as an industry will soon see what policies the new presidential administration plans to pursue. One thing is certain: Many progressive state attorneys general, who cumulatively filed over one hundred and forty lawsuits against the Trump administration, are currently in search of a new nemesis. Our Commonwealth’s own Attorney General, Maura Healey, was involved in over one hundred of these lawsuits. It is expected that the U.S. Justice Department under President Biden will withdraw from many of these lawsuits, freeing up time for many assistant attorneys general for other projects. It is possible that the Massachusetts attorney general’s office will file briefs in support of President Biden’s executive actions, should they face litigation, but this will presumably be less time consuming than preparing and filing more than two new lawsuits per month in response to the president’s policies. If you think that the Office of the Massachusetts Attorney General is going to reduce its staff to reflect the thousands of attorney hours that will presumably not be spent suing the Biden administration, then you are not familiar with Massachusetts politics or the state payroll. Instead, those attorneys will be reassigned and redirected to pursue enforcement actions likely to generate monetary settlements for the
Commonwealth. Consequently, it would be wise to stay out of the crosshairs of the attorney general’s office as it looks for targets to replace the white whale that the office had been pursuing. If you are looking for a place to start, try the following:
1. Review Your Pay Plans Dealers would be wise to review their pay plans to ensure compliance with the 2019 Sleepy’s decision as well as the new minimum wage, which increased to $13.50 per hour on January 1, 2021. Additionally, in the new year, the premium pay multiplier for Sunday and holiday premium pay dropped to 1.2x an employee’s regular rate of pay. As a bonus, the Massachusetts legislature finally got around to correcting a previous drafting error and eliminated mandatory premium pay for non-exempt employees for the New Year’s Day, Veterans’ Day, and Columbus Day holidays.
2. Review Your Doc Fee Compliance Dealers need to practice restraint and discretion when setting their doc fee so as to avoid prosecution or lawsuits under the Massachusetts Consumer Protection Act (MGL Chapter 93A). The fee is allowed for cost recovery; it is not intended to be a “profit-making” component of the vehicle purchase. The “Documentary Preparation Fee” can be passed on to the consumer but only if it is (1) part of the total purchase price advertised to the customer, and (2) a fee associated with legitimate costs that you incur. In Massachusetts, unlike other states, there is no maximum amount set in law that a dealer can charge for a “doc fee.” However, you must make sure that any doc fee charged to a customer has some reasonable relationship to the actual costs you incur in preparing the necessary documents for the customers, except for titling and preparation of finance-related documents. Cost recovery consists of passing on to the customer the costs incurred in doing the following, for example: preparing a motor vehicle purchase contract, an appraisal www.msada.org
document, odometer statements, insurance verifications, etc.; storing or archiving documents; and personnel and computer costs associated with these tasks. The “doc fee” charged to customers should be uniform in amount. If you are aggregating your costs and apportioning these costs to each of your customers on a pro rata basis, excluding a customer will throw the formula off and strengthen a customer’s argument that the fee is arbitrary. Be sure you can justify the fee’s total amount that you are charging a customer on the MVPC. (You are not, however, required to put an itemization on the MVPC. It is sufficient to have an explanation available if you are asked by a customer to justify the “doc fee.”) Dealers must also NEVER represent to customers that any portion of the “doc prep” fee is required by or remitted to the RMV or any other state agency. Finally, the doc prep fee is part of the taxable amount of the vehicle sale or lease transaction.
3. Lemon Law Stickers Compliance While the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) conducts Lemon Law sticker audits, the office of the Attorney General pursues enforcement actions against violators. Dealers should make sure that the state Lemon Law stickers are on all your new and used vehicles being offered for sale to the buying public. These stickers can be purchased directly from Reynolds & Reynolds through our MSADA-Reynolds forms purchasing program, the LAW Massachusetts F&I Library. Call a sales representative at 800-344-0996 or visit www.ReySource.com. 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.
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RACE TO THE FINISH COVER STORY
New Metal, New Hope As auto dealers enter 2021’s pandemic-impacted landscape, product innovation and customer enthusiasm remain the same as ever. By Tom Nash For the first time in more than 60 years, the silence that replaced the flood of auto enthusiasts descending on the New England International Auto Show for a new model year is one of many disruptions brought on by the COVID-19 pandemic. As two vaccines make their way across the country, the millions already distributed have not nearly kept hospitals empty. At first glance, uncertainty and a continual virus seem to be the only constants remaining from 2020. The Massachusetts franchised auto dealer community, however, has a few other constants built in over a century of accumulated experience. Chief among them is resilience, with optimism a close second. Those with whom Auto Dealer spoke had more than a few reasons to see 2021 as a turn onto a smoother road. JANUARY 2021
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The Vaccine’s Arrival “I am looking forward to getting back to close-to normal,” NADA Director Scott Dube said. “Having people vaccinated and less guarded about the pandemic will make things easier as a country and, of course, at dealerships.” If nothing else, he said, “an end to the rolling human resources chaos will be nice.” “You always have some group of your people out,” he added. “Not because they contracted the virus, but because they were exposed. I am looking forward to that ending.” While there is some reason for optimism, the vaccine and virus numbers remain concerning. Massachusetts has administered more total COVID-19 vaccine doses than any other New England state, but it trails the region on the number of doses given per 100,000 residents, according to data collected by Bloomberg. Gov. Charlie Baker and Health and Human Services Secretary Marylou Sudders have said publicly available vaccination data lags behind the actual number of shots in arms. Bloomberg says the roughly 151,000 doses administered thus far works out to about 2.2 per 100 people, and the state has used about one-third percent of its supply.
A Summer Vision With the vaccine’s rollout, MSADA President Chris Connolly is counting on Summer to be the first season to feel close to “normal” for customers. “I expect that by Summer we will see the new daily case numbers dwindle down to almost nothing and will get into the ‘new’ normal,” Connolly said. “If that happens, then I think the Summer and Fall will be robust and busy.”
Part of that robustness will come from pent-up demand. Village Automotive Group owner and former longtime NADA Director Ray Ciccolo notes that our current historical moment echoes the last pandemic from when the auto industry was
just getting started. “The roaring ‘20s came after Influenza and World War I, and people were ready to break out,” Ciccolo said. “It did not take many years after the last pandemic. People are ready.” Analysts agree. In mid-January, NADA predicated 15.5 million vehicles would be sold in 2021, an increase of 7.2% from 2020 (see this month’s NADA column for details). Part of that readiness, Ciccolo says, is a vehicle lineup across the industry that will inspire customers to make the move into something new. Among many new model headlines, the finally-released Ford Mustang Mach-E will likely add some increased adoption in the
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RACEMETAL, TO THENEW FINISH NEW HOPE electric market. Meanwhile, stalwarts such as the Hyundai Elantra recently earned 2021’s North American Car of the Year distinction. For Hyundai-dealer Dube, that welcome news does not feel the same without the ability to gather at the Convention Center. He is hopeful for Summer. “I know we all missed the Auto Show this year. As an association, we missed the in-person networking and the camaraderie. We do not get together except for these types of events, and it is a shame. Hopefully soon. ” MSADA Executive Vice President Robert O’Koniewski noted that, even as in-person dealer meetings have been missed, association members fostered a stronger community as the pandemic became the overarching facet of life in 2020. “By now everyone should have adapted to a pandemic experience while still maintaining effective business practices,” O’Koniewski said. “Yes, COVID-19 has caused considerable economic disruption, but our dealers are still able to sell and service cars and trucks. My heart goes out to everyone who owns or works in bars, restaurants, gyms, hotels, museums -- many of whom have had to shut down for good and probably will not be coming back. I feel for everyone who has lost a friend or family member to the virus.” “Moving forward, however, the resilience and adaptability of our dealers will shine through,” O’Koniewski added. “Dealers have become more efficient in an online world. A fully distributed vaccine will open the floodgates of pent-up economic fervor. And hopefully government will step aside and follow the Hippocratic Oath: ‘First, do no harm.’ Certainly 2021 cannot be any worse than 2020.”
MSADA
cus throughout 2021. “People just are not driving much at all these days, and their vehicles then do not require as much maintenance or repairs. This is going to be an issue for a long time, as many companies have changed their business plans permanently and will continue to have their employees work from home even after the pandemic is over.” Being nimble will remain key, Ciccolo says. By realigning duties, “we have moved how we take care of customers five years ahead, maybe more.”
Lessons Learned
While the human toll of the pandemic remains out of the scope of recent history, dealers spent 2020 adjusting rapidly and producing best practices that are likely here for the long haul. Throughout 2020, dealers found new ways to offer online services that have otherwise been slowly rolling out for years. Dealership roles have also shifted and may stay at least partially realigned as volume increases. Connolly adds one note of caution: As people have been driving less, service work will continue to need reimagining and foJANUARY 2021
In 2020, volume in his dealerships rose even as in-person contact plummeted. His perfect scenario in 2021 will see the thousands absent from the Auto Show back in showrooms while keeping volume at the higher levels he enjoyed in 2020. Ciccolo adds: “I am looking forward to a terrific year.” t
Massachusetts Auto Dealer www.msada.org
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NEWS NEWS the NEWSfrom from Around from Around Around the Horn Horn NEWS
NEWS the Horn
SHREWSBURY
Town Officials Welcome Boch Land Acquisition Town and economic officials welcomed the news that Boch Shrewsbury-Worcester had purchased land along Route 9 and are looking forward to any potential developments on the property. Boch bought more than 25 acres along Route 9 for $8.35 million, according to NAI Glickman Kovago & Jacobs, which handled the transaction. The property is on the westbound side of Route 9 after Price Chopper and South Street. It primarily consists of woods. “We are looking forward to working with the new owner and to understanding what they will put on the property,” Shrewsbury Assistant Town Manager Kristen Las told The Worcester Telegram & Gazette. Prior to the purchase, Las said the pieces of land had been on the market for a while, and she said she was looking forward to welcoming Boch to Shrewsbury. Beth Casavant, chairman of the Shrewsbury Board of Selectmen, said the town welcomes the opportunity to see its economic base develop. “We are always looking to increase our economic development base,” Casavant said, “We have a small area of land available for economic development, so every parcel of land is extremely important for developing our community.”
SUDBURY
Herb Chambers Completes Jaguar Land Rover Renovation The Herb Chambers Companies completed in January its renovation project transforming Herb Chambers Jaguar Land Rover Sudbury into a state-of-the-art luxury dealership. Herb Chambers Jaguar Land Rover Sudbury now boasts an ample parking lot, a new two-lane heated service drive with two indoor delivery bays, and waiting areas featuring espresso and latte coffee stations. In light of COVID-19, sanitized work stations with protective dividers populate the location while all cars and loaner vehicles are fully sanitized and disinfected.
BOSTON
Attorney General Fights to Dismiss the Alliance’s Right To Repair Suit The Alliance for Automotive Innovation, a trade association for the automotive manufacturers, recently filed a lawsuit in Massachusetts federal court aiming to block enforcement of the new Right to Repair law, which was passed by state voters as a ballot initiative in the November 2020 election. Massachusetts Attorney General Maura Healey defended the recently passed Right to Repair law in a memorandum of law to support a motion to dismiss, and argued that the state law does not conflict with any federal statutes and that voters already rejected the suit’s claims. Healey also stated in the memorandum that the Alliance’s complaint should be dismissed in its entirety. “Neither it nor any of the Alliance’s other pre-emption claims establishes an actual conflict between state and federal law, much less satisfies the heavy burden required for facial, pre-enforcement challenges established by the Supreme Court and First Circuit,” a portion of the memorandum reads. A bench trial is set for June 2021. JANUARY 2021
BOSTON
Former Dealer Offers Cash to Service Industry Ernie Boch Jr.’s 2021 has gotten off to a charitable start. The businessman-philanthropist, who has in years past been named one of the top 50 richest people in the state, is credited with handing out six $2,021 tips to servers at half a dozen restaurants in Boston in January, news outlets reported. The cash was left in mysterious envelopes with the car dealer’s well-known name written on them. The words “thank you” were also included, WHDH reported. “It was so dead that I had this idea, why not go into Boston and hit all these different bars and give some support,” Boch told the news outlet.
Massachusetts Auto Dealer www.msada.org
MSADA
NEWS from Around the Horn
ACTON
Dealership Group Reaches Settlement over Unemployment Claim Allegations Colonial Automotive Group has agreed to pay $1 million to settle allegations that it exploited the state unemployment system during the COVID-19 pandemic, Attorney General Maura Healey announced this month. Healey’s office said the company, which operates 16 dealerships across the region, encouraged furloughed employees to apply for unemployment benefits during a state-mandated closure of car dealership showrooms. However, they also allegedly asked those employees to continue to work without pay. “The COVID 19 pandemic created an existential business threat,” a spokesperson for the Colonial Automotive Group wrote in a statement. “We acted in good faith effort to survive as a business and save employees’ jobs while complying with the law. We did not require any employees to engage in sales activities while furloughed. We do not feel we are involved in any violation of law and settled with the Commonwealth to put the matter behind us.” Under the terms of the agreement, the $1 million from Colonial will go into the state’s general fund. SPRINGFIELD
Balise Opens New Mazda Dealership The Balise Auto dealerships have widened their footprint in the city’s South End with a new Mazda store. A company spokesman said the new Mazda site is in keeping with the Balise commitment to further development in the South End of the city. The neighborhood is also home to their Chevrolet and Buick dealerships. The Balise family of auto sales have also recently extended south to Fairfield, Connecticut, and in Hyannis.
www.msada.org
Massachusetts Auto Dealer
JANUARY 2021
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ACCOUNTING
MSADA
Has COVID-19 Changed The Way We Do Business? By Jeffrey J.Caruso Principal, O’Connor & Drew, P.C.
2020 has been an interesting year, to say the least. COVID-19 will undoubtedly lead to paradigm shifts in how we go about our daily lives and how we operate our businesses. However, some things will also remain the same. If 2020 has taught us anything it was to be ready to adapt when necessary but also to not lose sight of other things that have always been good business practices. Here we examine three areas of your business and outline key points to consider, some of which are in part driven by COVID-19 and others that are not new but continue to be key pillars of strong business practices.
Operations Production delays limiting available supply have undoubtedly impacted profit margins during the year. Barring another widespread shut down of manufacturing within the supply chain, inventories eventually will creep back up. Whether or not demand will increase as well is anybody’s guess. There are still large parts of the economy that have yet to get back on track. Consider the following items as you develop your plans for 2021: • Meet with your sales management team to discuss your sales strategy and how to adjust as the supply and demand equation begins to shift back. • Review your internal new vehicle ordering process to determine the criteria for accepting additional vehicle allocations. A careful review of what really sells, the impact of lower floorplan interest rates, plus pricing methodology as new vehicles age, should all be given consideration. JANUARY 2021
• Consider creating a clear pricing policy for used cars. Some dealers mark down vehicles at certain aging points, without exception. If a vehicle does not move in 30-45 days, its value is dropping. Therefore, find the strategy that will move it quickly at an acceptable price, turn it into cash, and use that cash to acquire another unit at a better value. Follow an unbiased wholesale process when used vehicles cannot be sold at retail. • Consider increasing chargeback reserves on products sold. As government stimulus funds run out, the likelihood for cancellations increases. Review the need to accrue for chargebacks to avoid overstating current income. • Ensure that your compensation plans follow the most updated regulatory guidance. This will continue to be a hot topic. • Maximize warranty parts and labor rates from the manufacturer.
Accounting and Fraud Deterrence With or without a COVID-19 environment, safeguarding assets should always be a top priority. The following internal controls have stood up to the test of time and have deterred many fraud schemes: • The Dealer Principal or General Manager should sign all checks, open the bank statements, and review all cancelled checks and credit card statements each month. • Hire a full-time cashier to collect all customer payments for all departments. The custody of the deposit should be segregated from the accounting staff. • The Dealer Principal or General Manager should review the payroll register on a quarterly basis to identify unauthorized pay increases, unreasonable bonuses and commissions, and ghost employees. • Perform monthly physical counts of new and used car inventory as well as perform periodic parts bin checks. The individuals performing the counts should not be individuals within those
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departments. • Schedule an annual parts physical inventory and reconcile the physical to the general ledger. Monthly parts inventory reconciliations should continue throughout the year. • All discounts should be limited to both a percent and dollar value threshold with all exceptions approved by the service manager. • The service manager should provide an open repair order list to the Dealer Principal or General Manager monthly with explanations for all open repair orders. • Review the approved vendor list at least annually for fictitious vendors and remove any vendors the Dealership no longer does business with.
Cybersecurity On a daily basis one can read articles about recent data breaches. Hackers are constantly at the doorstep trying to get in. As with accounting internal controls, you should also implement controls in your information technology environment. • Consider implementing two-factor authentication as this makes it much more difficult to gain access to an online account. • Be sure to protect devices that are attached to your network (e.g., mobile phones and cameras). • Provide employees with regular IT security and phishing awareness training. • Have a documented incident response plan to help staff detect, respond, and recover from security incidents. • Periodically test your backups to make sure data can be fully recovered without an issue. The economic output of 2021 is anyone’s guess; however, taking stock in the items above will surely help you navigate any disruptions that may come your way. t Jeffrey Caruso, CPA, is a principal at O’Connor & Drew, P.C. Contact Jeffrey at jcaruso@ocd.com.
MSADA
LEGAL
By Joseph W. Ambash and Jeffrey A. Fritz
Political Speech (and Actions) In the Workplace They came to Washington; they stormed the United States Capitol; they took selfies and posted them on social media; and their employers took note—and, in many instances, took action. Indeed, the list of those individuals who have lost their jobs based on their participation in the events of January 6, 2021, is growing by the day— which begs the question, what are employers’ rights when it comes to politically-motivated speech or actions in and outside the workplace? As a preliminary matter, and notwithstanding what some armchair experts may say on social media, this is not a First Amendment issue. While some states (such as Connecticut) have statutes that confer certain free speech rights on employees (which limit, in certain ways, what private employers may do as a result of such speech), Massachusetts does not. In short, while the First Amendment places limits on what the government (and public employers) can do, it does not apply to private employers in Massachusetts. No doubt mixing work and politics (unless you work in politics, of course) can only lead to problems. Political discussions amongst employees can (and likely will) impact productivity; sow division, hostility, and outright disdain (now more than ever) amongst coworkers; and, in a seemingly growing number of instances, lead to threats and physical altercations. Mixing work and politics also can negatively impact your business—as a customer who, perhaps, does not share your salesperson’s view, if expressed, about the current or former president, may decide to take her business elsewhere. And what happens outside of the workplace can—and invariably will—bleed into the workplace, especially given the prevalence of political speech (and documented actions) on social media. Fortunately, employers’ rights on these issues in Massachusetts are pretty broad. Generally speaking, employers can prohibit political speech (as broadly construed) at work. They also, generally speaking, can
take adverse action against an employee for engaging in political speech (or even based on his or her political views or leanings) outside of the workplace. In short, there is no such thing as illegal “political discrimination”; employers generally are free to discriminate against employees based on their political views, speech, and/or actions. (And, obviously, employers are free to discriminate against employees whose political views cause them to engage in threats, violence, or criminal conduct, such as what recently occurred in Washington.) You should know, however, one glaring exception exists to the “no politics at work” adage. The National Labor Relations Act gives all workers (including non-unionized employees) the right to engage in “concerted activities” for their “mutual aid or protection.” A possible example might be workplace politicking to support a candidate’s promise to raise the minimum wage or bar immigrant workers thought to suppress those wages—any political speech where a direct connection exists between “terms and conditions of employment” and the subject of the campaign. While the distinction between such speech and general political speech may, at times, be blurry, employers need to know it exists, or run the risk of an NLRA charge. Moreover, Massachusetts has a statute that prohibits employers from (1) threatening adverse (or promising favorable) action to attempt to influence employees to vote (or not vote) a certain way or give (or not give) a certain political contribution, or (2) take any such adverse or favorable actions because an employee voted (or did not vote) a certain way, or gave (or did not give) a political contribution. Violations of this statute are punishable by a fine of not more than $1,000 or six months in jail. Having a policy governing political discourse in (and outside of) the workplace is a great idea. Any such policy, of course, should make clear it does not impact employees’ rights under the NLRA (and explain how and when such rights may be exercised). And should your policy allow www.msada.org
for political discussions at work, limiting their political content is not advised, unless a good business justification exists for such a limitation. That said, your policy can and should require that all such speech be respectful and remind employees that bullying, intimidation, harassment of any kind, discrimination, retaliation, and/or threats of (or actual) violence will not be tolerated and will be promptly investigated and seriously addressed. Indeed, your employees need to know that just because speech may relate to politics, the rest of your rules about discrimination (and prohibitions on inappropriate comments) apply. At seventy-eight years old, Joe Biden is now our nation’s oldest president. Comments by employees based on a stereotypical view about older people (i.e., that they slow down and should retire) ultimately can lead to harassment and discrimination claims by older workers. Consider, for example, a manager’s repeated focus on President Biden’s age and perceived blunders and missteps, then having to terminate an older worker’s employment (for reasons having nothing to do with his age). The complaint that the former employee might submit to the Massachusetts Commission Against Discrimination virtually writes itself. In short, make sure your managers and employees steer very clear of discriminatory comments based on an individual’s protected class. 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.
Massachusetts Auto Dealer
JANUARY 2021
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22 DECEMBER 2020
Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
JANUARY 2021
Massachusetts Auto Dealer www.msada.org
MSADA
NADA MARKET BEAT
JANUARY 2016
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BUSINESS OPPORTUNITIES
MSADA MSADA
Benchmarks of Value in 2020 By Nancy Phillips
Nancy Phillips Associates has been selling auto dealerships throughout New England and New York State for 30 years. Documenting and studying dealership transactions have proven to be a reliable way to anticipate and project future dealership values. Every month we receive numerous calls from dealers asking what the current multiples are for their franchise. The flaw with this method is that a dealership losing money may in fact be worth the same as a profitable one. We have found that value is often more accurately interpreted when business value (goodwill) is defined as a percentage of total dealership revenues. This method also requires careful analysis of dealership financial statements, recasting of true net profit, and concise adjustments for rebranding requirements in order to ensure that the dealership’s unique potential is clearly understood. The three key elements to dealership value are franchise, market area, and facility. Profitability may be an enhancement; however, loss or under average profitability should not be a deterrent. While there have been exceptional increases in the amount of business value paid for certain franchises, overall fluctuations have been moderate. They are neither as low as you might have expected during bad years, nor do they skyrocket in better years. That is because buyers in difficult markets pay based on better futures and those buying at the top of a market do so with an eye toward the next down turn. There are very few buyers, regardless of size, who will substantially overpay without a quantifiable return. JANUARY 2021
The Market Today
Yes, the market is strong today, but nothing lasts forever. The current surge may be short lived. Despite the ongoing pandemic, dealers did very well in the second half of 2020. Profits were up, expenses were down, and more dealerships than normal changed hands. Quite simply, the current state of our economy and the world at large contributed to the thinking that investing in auto dealerships is safer than other investment opportunities during this volatile time. We believe that 2021 will see many dealers addressing concerns for the future of their dealerships. Continued economic downturn, increasingly conservative lending perimeters, and increased taxation could mean that the opportunity to sell for a strong number may not survive into 2022.
A New England Trend Due to the pandemic and concerns about changes in our demographics, there is one new and very interesting trend that has occurred throughout Greater New England: an increase in the desirability of secondary market area dealerships. The migration to smaller cities and communities incentivized by the pandemic and its ramifications in major metro areas have caused many strong buyers to take a look, for the first time, at a different type of market area. When they did, they found a lower cost of entry, more moderate real estate values, longer term employees, reduced expense structures, higher used vehicle sales, and more loyal customers. In fact, the number of secondary market area dealerships in Greater New England sold to regional dealership groups has never been higher. We believe this new wave of dealership acquirers that are willing to purchase in areas they would have previously ignored bodes well for the value of secondary market area dealerships.
More About Values We believe that the incremental increase in dealership values over the last few years
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has a great deal to do with the investment in new buildings and expensive facility upgrades that dealers have recently made. Some dealers found these investments could not be absorbed by their operations, and their dealerships became unprofitable or much less profitable as a result. This developed into a higher number of brand compliant facilities with desirable franchises being offered for sale. There is an enormous cost involved in acquiring a non-compliant dealership, and the benefit of a new facility is a great incentive to today’s regional buyer. The time it takes for a well planned turnaround versus a major construction project can be analyzed and determined in advance so that a reliable and bankable decision can be made about the viability of the acquisition.
When to Consider Buying or Selling Taking these factors into consideration, you should consider selling if: • Your dealership is not profitable; • You are facing a significant facility upgrade; • You are not meeting your sales performance criteria; • Your floor plan lender does not want you; • You have serious health problems and no legacy plan; • You do not wish to go through another economic downturn; • Your contiguous market is being overtaken by larger dealer groups. You should consider buying if: • An opportunity becomes available in your market area; • Your franchise is up for sale in a contiguous market; • You wish to keep an outside group out of your area; • You have multiple adult kids in your business; • You have good General Managers who may leave you if you do not provide an equity position. View our full 2020 report at www.nancyphillips.com. t
MSADA
TRUCK CORNER
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New Year Brings Change and Opportunity for America’s Truck Dealers
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
With a new year comes renewed hope and optimism for business owners everywhere. Our commercial truck industry is eager for a resurgence as dealers continue to recover from the challenges of the past year. I would like to highlight many of the new developments that our ATD members should be aware of in January 2021. The Paycheck Protection Program (PPP) was established following the onset of the COVID-19 pandemic, and it has served as a lifeline to millions of business owners and their employees. The Small Business Administration has re-opened the PPP this month, and $284 billion has been made available to new borrowers and certain existing borrowers. The PPP portal fully re-opened to all participating lenders on January 19. All dealers interested in a second loan should understand their eligibility. Borrowers are eligible for a second loan if they: • Have no more than 300 employees; • Received a first draw PPP loan and will use, or have used, the full amount only for authorized uses; and • Demonstrated at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The SBA is expected to issue additional guidance on the PPP. ATD urges all truck dealers to consult with their accountants and meet critical deadlines for loan forgiveness. For more information, please review ATD’s newsletter and NADA’s all-dealer email, “SBA Standing Up New PPP Loan Program,” and the subsequent email updates. Despite the difficult conditions brought by the pandemic, our industry began this year on an optimistic note. I am proud to announce the year-end market numbers from ATD’s latest issue of Truck Beat. Commercial truck sales closed out 2020 with total sales just shy of 410,000 units. According to ACT Research, orders for Class 8 trucks in December 2020 reached their fourth-highest level ever and marked the second straight month with orders greater than 50,000 units. Full-year orders in 2020 also beat 2019, reaching 278,400 for the year. Orders for medium-duty trucks also ended the year at a strong pace. Preliminary December orders for Class 5-7 trucks hit 31,500, marking their second-highest monthly total on record and the highest since March 2006, when orders topped 41,000
units. I commend all truck dealers for working hard through COVID-19 and continuing to drive the industry forward. Perhaps the most significant change of 2021 is a transfer of power to the Biden administration. ATD and NADA will continue to work for the betterment of the dealer landscape, no matter who is in the White House. I urge all ATD members to stay engaged and stay informed on our latest issues. There will be many challenges that affect your day-to-day business, and we cannot make a positive impact without your support and participation. To that end, please put the new 2021 ATD Truck Industry Forum on your radar. ATD will host this important forum in Washington, D.C., June 22-23. This two-day event is our opportunity to bring together—for the first time in a year— truck dealers, OEMs, suppliers, allied industry, and state dealer associations. I urge dealers to attend and understand the issues that will impact us for the coming year. Registration opens February 22. Finally, NADA Show 2021 is right around the corner. And for the first-time ever, the auto industry event of the year will be coming directly to you. The Show’s new all-virtual platform will allow a record number of dealers and staff to attend conveniently and cost-effectively. Please register, if you have not already, and attend the Show, February 9-11 (discounts are available for groups of 10 or more.) This event will provide everything you have come to appreciate about the NADA Show, including renowned NADA workshops; a 100% virtual Expo floor; and special segments with industry leaders. Remember to check out the commercial truck dealer-focused sessions happening at the Show: “Position Your Dealership for the Next Pandemic and Tap into the Consumer of Yesterday, Today and Tomorrow.” 2021 is truly a year of change! We have pulled through one of the most challenging times of our lives, and I am confident that we are well-positioned to take advantage of the new year’s opportunities. I urge our truck dealer community to stay in sync with ATD, and I look forward to seeing you in person later this year at our Forum in D.C.
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t Massachusetts Auto Dealer
JANUARY 2021
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NADA Update
By Scott Dube
Charging into 2021
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 the NADA Director for Massachusetts, my chief goal is to make sure my fellow Bay State dealers are represented at the national table. On a secondary basis, I am always looking to get more of our fellow dealers to come see what makes NADA so special in person. The NADA Show is the premiere event for automotive retail, and this year is the year to check it out if you have never done so. Quite simply, there is no reason not to give our online format a chance. We are doing our best to ensure we can provide a holistic and “real” experience in a virtual environment, and I encourage you to join me there from February 9-11. Register at www.nadashow.org, and please let me know if you have any questions about doing so.
Check out Expo Specials at NADA Show 2021 The prospect of saving money can be a major incentive in encouraging dealership buying teams to explore the virtual NADA Expo for specific products and technologies. NADA wants to make it easy for Show attendees to search for special deals and product discounts while connecting with their current providers or when exploring new vendors that want the opportunity to highlight their product innovations and solutions to new dealership customers. Attendees will be able to search specifically for all available Show Specials with just one click at www.nadaconvention.org. Quickly identify companies that are offering show specials when doing a general search of a company name or product category inside the Expo hall, by noting the “Show Specials” icon on the Exhibitor list (a small green price tag). This new virtual show environment offers a seamless and intuitive connection between buyers and sellers like never before.
In addition to Show Specials, event attendees will also get easy one click access to Retailing Companies, OEM Partners, First-time Exhibitors, Sponsors, and any company that Operates in International Markets.
NADA Predicts 15.5 Million Vehicles To Be Sold in 2021 NADA has issued its 2020 analysis of U.S. auto sales and the economy. “The coronavirus pandemic certainly impacted new light-vehicle sales in 2020, not to mention the U.S. economy as a whole,” said NADA chief economist Patrick Manzi. “Our forecast at the start of 2020 estimated new light-vehicle sales would fall by one to two percent compared to 2019 for a total of 16.8 million units sold, but once COVID hit, we knew this would be a different year than anticipated.” 2020 came to a close with new-light vehicle sales of 14.46 million units, down 14.7% compared to 2019. Despite the lowest monthly SAAR on record of 8.7 million units in April, signs of the new-vehicle sales recovery began in the second half of the year as retail consumers returned to dealer lots. While the overall new-vehicle market fell by 14.7%, consumer retail sales only declined by an estimated 9%. Given a stronger than anticipated sales recovery, manufacturing facility shutdowns, and robust new-vehicle demand, most U.S. dealerships faced significant inventory constraints on popular models and popular segments during the second half of the year, including crossovers and pickups. By mid-summer, tight inventory meant that OEMs and dealers pulled back incentive spending. Coupled with consumer preferences for more expensive lighttrucks, this pushed average transaction prices to record highs throughout the year. In March, the Federal Reserve slashed interest rates to the 0% to 0.25% lower bound, helping vehicle buyers with their monthly payments and dealers with their floorplan costs. In November 2020, the average interest rate on new-vehicle financing was 4.4%, down about 90 basis points compared to the same time last year. At the macro level, real GDP rebounded at an annualized rate of 33.4% in Q3 of 2020, following an annualized 31.4% contraction in Q2 of 2020; NADA anticipates GDP will de-
“While the coronavirus was something that no one in the auto industry expected, the industry rallied and adapted to the new state of play.”
JANUARY 2021
Massachusetts Auto Dealer www.msada.org
MSADA cline by around 4% for 2020 with 4% growth in 2021. In the labor market, unemployment peaked in April at 14.7% and has fallen each month since as workers have returned to their jobs or left the labor market. At the end of November, the unemployment rate was 6.7% and is expected to continue to fall throughout 2021 as COVID-19 vaccines are administered around the country and more Americans return to work. Moving into 2021, NADA anticipates new-vehicle sales of 15.5 million units – an increase of 7.2% from 2020. Headwinds for the vehicle market in 2021 include continued increases in COVID-19 cases, which could lead to production disruptions along the vehicle supply chain; a global shortage of semiconductor microchips used in many facets of auto production; and tight inventory on dealer lots, particularly for pickup trucks. Alternatively, tailwinds for 2021 include a potential economic boom in the second half of the year, once a coronavirus vaccination is widely available and Americans are able to return to work; continued consumer preferences for personal vehicle ownership over rideshare services and public transportation; low interest rates; and a gradual return of fleet demand for new vehicles. “While the coronavirus was something that no one in the auto industry expected, the industry rallied and adapted to the new state of play,” said Manzi. “Looking forward, we are optimistic about the continued recovery of the new light-vehicle market.”
NADA Names New COO NADA named John Beckman as the organization’s next Chief Operating Officer (COO). Beckman takes over as COO for Mike Stanton, who became NADA’s President and CEO on January 1. Beckman’s appointment is effective immediately. Beckman has been NADA’s Senior Vice President of Dealership Operations since he rejoined NADA in October 2019. Steve Park, NADA Vice President of Dealership Operations, has been promoted to Senior Vice President and will take over the Dealership Operations department for Beckman. “John and Steve have led the Dealership Operations team to an exceptional year in 2020, and they have contributed tremendously to NADA’s support of franchised dealers during an incredibly challenging year,” said Stanton in announcing the promotions. “John is incredibly talented, innovative and dedicated, and he will be an invaluable asset in the role of COO as NADA continues the work of helping dealers succeed, and of promoting and enhancing the franchise system.” Beckman brings more than 25 years of automotive industry experience to his new role, having held numerous executive-level marketing, brand/product and operations
management positions at NADA, J.D. Power, Keystone Automotive, and Navy Federal Credit Union. He has extensive experience in both the for-profit and non-profit sectors. He earned his BS in marketing from George Mason University. Steve Park has led the NADA/ATD Academy and 20 Group operations – part of NADA Dealership Operations – since joining NADA in 2018. Prior to joining NADA, Park led the 20 Group, financial composite and dealership consulting business segments at CDK Global. His 25-year career in the auto industry has included executive and leadership positions in vehicle sales and marketing, finance, purchasing, and government and commercial fleet sales. Park earned an MBA from Case Western Reserve University and a BA in economics from the University of Michigan, and he is an NADA Academy graduate.
NADA Appoints New Vice President of Education and Training NADA has appointed Camron Wilson to Vice President of Education and Training. In this newly-created role, Wilson will lead all of NADA’s education and training efforts, including professional series, tailored training and program development, and oversee operations of the NADA/ATD Academy. Michael Hayes remains the NADA Academy Chair and will work closely with Camron in her new role. Wilson joined NADA in 2014 as the organization’s Director of Training and Business Development. Since joining NADA, she has led the launch and growth of the NADA Professional Series, an educational program targeting new and high-potential managers among four dealership department disciplines – sales, office, parts, and service. “Camron brings a wealth of knowledge and proven track record to NADA’s dealer education offerings,” said NADA President and CEO Mike Stanton. “She has been integral to the Dealer Operations department and to the highest levels of the organization. Her talent and dedication make her a natural addition to our leadership team.” Wilson has nearly 20 years of auto industry experience. Previously she served as Business Development Manager at Chicago-based Dealer Product Services, where she worked with dealers on traditional and digital marketing focused on the automotive customer lifecycle. Additionally, Wilson spent a decade with Ford Motor Company assisting dealers in the company’s regional sales, service, and marketing office in Memphis, supporting more than 250 dealerships in seven states. “Dealers are the backbone of the auto industry,” said Wilson. “My goal is to educate and prepare the next generation of auto dealers and employees to run profitable dealerships, and to help dealers build employee career paths in order to entice newcomers into compelling dealership careers.” t
www.msada.org
Massachusetts Auto Dealer
JANUARY 2021
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