MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
M a s s a c h u s e t t s
auto D
E
A
L
E
R
The official publication of the Massachusetts State Automobile Dealers Association, Inc
FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
June 2021 • Vol. 34 No. 6
When the Chips Are Down
Ma s s a c h u s e t t s
auto D
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 A u t o D e al e r M A g a z in e 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 DealerShop, 17 Ethos, 2 Nancy Phillips Associates, 19 NEAD, 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
E
A
L
E
R
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
4 5 6 8 9 10
From the President: Chipping Away at the Problem ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: More Money Than They Know What to Do With LEGISLATIVE SCORECARD TROUBLESHOOTING: Do Not Let Inventory Influence Your Compliance AUTO OUTLOOK
14 Cover Story: When the Chips Are Down
18 20 21 22 24 25 26
NEWS From Around the Horn LEGAL: Another COVID-19 Leave Mandate Comes to Massachusetts ACCOUNTING: Framework for More Tax Reform nada Market Beat AIADA Brief: “Buy Union” Policies Unfair and Un-American TRUCK CORNER: The Fly-In Report nada update: Demand for Supply
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
JUNE 2021
4
From the President
MSADA
Chipping Away at the Problem
No matter the issue, dealers will find a solution that keeps things moving.
By Chris Connolly, MSADA President To flip an old adage around, sometimes it can feel as though a door and a window are slamming shut at the same time. First, the COVID-19 pandemic ripped an entire globe’s pace of life to shreds. In addition to the still-climbing human toll, I can think of only very few industries that have benefitted from most of the world staying cloistered in their homes. As Summer arrives, finally, and much (but not all) of the world resumes a pace that resembles normal, we find yet another tidal wave of trouble on our doorstep. You can read all about the computer chip shortage that has slashed through our vehicle supply in this month’s cover story. Our industry is built on resiliency. We are fiercely competitive but know that it takes teamwork to confront the problems that affect all of us. Manufacturers are, unfortunately, acting against our interests in more ways than ever. It is crucial that as something as serious as this parts shortage hits, we dealers remember that, too often, it is our own business partners who appear to be gunning to become our competition. That is just one reason why you will read constantly in these pages that your Association continues to fight the fights that keep the automotive franchise model intact and ready for subsequent generations. Whether it is pursuing “Right to Repair” across the ballot box and the courtroom, and wherever it will continue to pop up, or keeping a tight lid on 93B laws that OEMs such as Tesla seek to undermine, MSADA remains at the forefront of protecting our interests as a dealer community. As the pandemic winds down, we continue to pursue these avenues while also looking for ways to have us gather again in person. Because a large part of being a dealership community is, in fact, gathering as a community. And the same goes for the appeal of a live and in-person New England International Auto Show. We look forward to bringing that back as soon as practically possible. While we continue to work on these in-person events, I want to take a moment to appreciate just how resilient we are as an industry. Whether you are first generation or third, this is a tough business that seems to have the weight of the world’s issues on its back day-in and day-out. It is not an easy path. But as we emerge on the other side of a once-in-a-hundred-years pandemic and, hopefully, near the end of a critical parts shortage, the thrill remains unique. When it comes down to it, those precise pain points are exactly what makes this industry special. We help keep the world moving, whether it is easy or not. t
JUNE 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 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 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 CDK Global Rob Steele (508) 564-1346 Chase Auto Alex Khademi (404) 375-4504 Clifton Larson Allen Rick Parmelee (860) 982-9307 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 DealersSocket Troy Potter (877) 340-2677 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 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 LotLinx Brad Bass (978) 766-9000 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 NEAD Insurance Trust Charles Muise (781) 706-6944
www.msada.org
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, 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 SunTrust Bank Michael Walsh (617) 345-6567 The Towne Law Firm P.C. James T. Towne, Jr. (518) 213-0707 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Windwalker Herby Duverne (617) 797-9316 Zurich American Insurance Company Steven Megee (774) 210-0092
Massachusetts Auto Dealer
JUNE 2021
5
6
The Roundup
More Money Than They Know What to Do With By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Dial back a year ago in your time machine when we all were coming to grips with the Coronavirus crisis. The Baker administration and legislative leaders expressed such considerable angst about the state’s budget and revenues that they managed to push off until late 2020 passage of the fiscal year 2021 budget, which should have been in place by July 1 of last year. Halfway through FY21, the politicians finally figured out, based on the surplus tax revenues the state was collecting, that there would be no budget crisis; that, in fact, we would be holding a considerable surplus, not wringing our hands over a deficit. Fast forward to this year and the Commonwealth is awash in greenbacks. Amid an international pandemic that involved 17,000 deaths here and the implementation of severe economic restrictions under an emergency declaration in March last year, the Massachusetts economy and her taxpayers are sending considerably more money to the state than it planned on needing, by a rather comfortable margin. On top of that, Congressional largesse resulting from the American Rescue Plan Act (ARPA) has sent even more extra funds to Massachusetts, which has sparked a spending fight between the Legislature and Gov. Baker. FY21 ends on June 30. Keeping in mind that legislators did no budget cutting during the full throttle of the pandemic but engaged in substantial spending hikes, including a $1.1 billion draw out of the state’s rainy day fund to help cover the $44 billion budget, respected analyses now state that the FY21 budget surplus could fall between $1.13 billion and $1.48 billion in extra discretionary funds. Add on top of that another $1.5 billion in capital gains taxes flowing by law into state reserves and $800 million in unspent appropriations, JUNE 2021
Massachusetts Auto Dealer www.msada.org
all of a sudden FY21 is looking real nice. Here’s another way to look at it: With the second half of June still to be counted, the state has collected $32.5 billion in tax revenue so far in FY21. That is $3.4 billion more than the Baker administration’s most recent estimate for the full 12-month fiscal year and $1.3 billion more than the pre-pandemic estimate of $31.2 billion in tax revenue for FY21 on which the $44 billion budget was based. (Federal monies and other state non-tax revenue sources account for the full budgeting.) The number is also $2.3 billion more than the consensus revenue agreement of $30.1 billion the governor and the legislature used to create their FY22 budget proposals, beginning in March. FY22 begins on July 1, a deadline the legislature has barely sniffed at in recent years as the pages of the calendar are peeled away. It has been quite some time since the state began the fiscal year on the day it is supposed to constitutionally. In fact the legislature has already passed a $5 billion temporary budget to cover spending for July 2021, knowing that the July 1 deadline is a mirage in the haze of the Summer heat wave. In the middle of all this, Gov. Baker and legislative leaders have skirmished over the $5.3 billion the state has received under (ARPA), with the governor wanting to spend it on immediately identifiable priorities like helping communities of color, while the legislature has vowed to conduct public hearings to determine its priorities. Nevertheless, the legislature has won this round, since the governor signed legislation placing most of the funds into a separate account, to be divvied up by legislators at some later date. The House and Senate have been locked in a conference committee since June 8, wrangling
MSADA over how to resolve the differences between each’s own $47.7 billion spending plan for FY22. There is about $300 million in spending unique to both chamber’s budgets. Knowing that they have considerable revenue wiggle room, look for the decision makers to cast all spending restraint aside. As for our particular interests, the Senate’s funding plan included amendments regarding two issues: • Auto Body Repair Labor Rates Special Commission. Section 99 of S.2465 would create a 12-member special commission to study the rate level at which auto insurance companies reimburse auto body repairers for the labor component for repair work. We have the lowest reimbursement rate in the country. The commission would be required to hold at least two public hearings and issue its findings and recommendations, including proposed legislation or regulatory actions, by December 31, 2021. • Limited Utilization of Affirmative Defense for Following State Guidance in Specific Wage and Hour Litigation. Sections 101, 102 and 141 of S.2465 would enable retailers to utilize an affirmative defense for following longstanding state guidance in wage and hour litigation commenced against them because of the May 8, 2019, Supreme Judicial Court’s decision in Sullivan v. Sleepy’s LLC. The inclusion of this language would avoid grave unfairness to employers and, by encouraging employers to follow regulatory guidance, ultimately strengthen the authority of the Department of Labor Standard (DLS) to enforce the Commonwealth’s wage and hour laws. We are actively lobbying the conferees, especially the House’s and its leadership, stressing the need for these riders, since it is the House that did not take it up. If you have an interest in these two issues, you can help your business and those in our industry by taking ten minutes of your time to pick up the phone to call or write an email to your legislators, asking that they support these two initiatives. If you know your legislators personally, it is even more imperative that they hear from
you on these issues. If you are unsure of who you should contact, please contact us and we can direct you to the legislators in your district. You can even use this link to identify your legislators: https://malegislature.gov/Search/ FindMyLegislator. Finally, you may ask, “Bob, just why are you boring us with all these facts and figures?” It is because there is one thing noticeably lacking in all these fiscal discussions – just how much is going to get sent back to taxpayers. So far, I would suggest this: “Pick your favorite round shaped pastry with that hole in the middle.” For months the business community has asked legislators to use some of the funds to fill the COVID-caused unemployment insurance fund gap for which employers will be hit with another assessment – for the next twenty years. Legislature’s short answer: “Not on our radar screen.” This month, Gov. Baker suggested using $900 million of the extra monies to fund a two-month sales tax holiday. The immediate reaction from Democrat legislative leaders and progressive advocacy groups: snickers, guffaws, and howls of outrage. We know how this movie will end as we are in yet another sequel in this budget drama: Programs grow larger, new ones get created with demands for more spending later on, nothing gets cut or eliminated, and the taxpayer gets crumbs, if anything. (Do not forget the latest entitlement I wrote about last month: COVID-Related Paid Time Off, which started on June 7.)
Compliance, Community Outreach Subsidy Reminder for Dealers Remember to take advantage of 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 www.msada.org
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. If you need information or the application for these programs, please do not hesitate to contact me.
Happy 245th Birthday, U.S.A.! This year, the greatest country in the history of mankind celebrates its Independence Day, July 4, a state and federal holiday, on a Sunday. Under state law, for business opening and worker compensation purposes, a holiday that falls on a Sunday is recognized on the following Monday (this year, July 5). Further, Independence Day is considered a partially restricted holiday. This means: • Dealership may be open – no permit required. • Employees cannot be required to work. • An employee cannot be punished or penalized for choosing not to work the day. • Based on job description, holiday premium pay may be owed to an employee who works the day. This year, the premium pay rate for any hours worked on the day is set at 1.2 times the employee’s regular rate of pay. • For employees who do not work the holiday, there is no legal requirement to provide a paid holiday. However, be sure to review your holiday policies in your Employee Handbook to determine whether you have previously agreed to paid holidays. If you have, you will need to follow the policies until they are revised. On Sunday, July 4, if open for business, a non-exempt employee who works the day would need to be compensated Sunday premium pay at 1.2x the employee’s regular rate of pay. On Monday, July 5, if open for business, a non-exempt employee who works the day would need to be compensated holiday premium pay at 1.2x the employee’s regular rate of pay. t Massachusetts Auto Dealer
JUNE 2021
7
MSADA L EGISLATIVE S CORECARD
8
JUNE 2021
BILL#
SPONSOR
SUBJECT
S183 S239 H407
Sen Crighton Sen Pacheco Rep Hunt
Amendments to Ch. 93B, the auto dealer franchise law.
SUPPORT
In the Joint Committee on Consumer Protection; no hearing scheduled yet.
H365 H400
Rep Finn Rep Howitt
RTR Law amendments to fix Model Year start date and consumer notice.
SUPPORT
In the Joint Committee on Consumer Protection; no hearing scheduled yet.
H336 H361 S234
Rep Chan Rep Finn Sen O’Connor
Creates process to appeal improperly issued Class 1 license.
SUPPORT
In the Joint Committee on Consumer Protection; no hearing scheduled yet.
S180 H421
Sen Crighton Rep Lewis
Modernize on-line purchase process.
SUPPORT
In the Joint Committee on Consumer Protection; no hearing scheduled yet.
H282
Rep Linsky
Allows an OEM to open a factoryowned store, without a dealer, if there is no same line-make dealer in the state. (The so-called “Tesla Exemption.”)
OPPOSE
In the Joint Committee on Consumer Protection; no hearing scheduled yet.
H1152 H1178 S711
Rep McMurtry Rep Phillips Sen Moore
Creates process to increase the insurance reimbursed labor rate paid to auto body
SUPPORT
In the Joint Committee on Financial Services; no hearing scheduled yet.
H1183 S657
Rep Puppolo Sen DiZoglio
Protects dealers from OEMs’ restrictions on selling non-OEM service contracts.
SUPPORT
In the Joint Committee on Financial Services; no hearing scheduled yet.
H1070 S719
Rep Driscoll Sen O’Connor
Creates administrative appeal process for vehicle owners to seek diminished value of damaged vehicle returned to vehicle owner.
SUPPORT
In the Joint Committee on Financial Services; no hearing scheduled yet.
H3477 H3494 S2372
Rep Golden Rep Howitt Sen Rush
Creates statutory process for allowing temp tags for out-of-state sales.
SUPPORT
In the Joint Committee on Transportation; no hearing scheduled yet.
H2004
Rep Jones
Sleepy’s-related affirmative defense.
SUPPORT
In the Joint Committee on Labor and Workforce Development; no hearing scheduled yet.
JUNE 2021
STATUS
Massachusetts Auto Dealer www.msada.org
Troubleshooting
MSADA
Do Not Let Inventory Influence Your Compliance By Peter Brennan, Esq. MSADA Staff Attorney
Current market conditions have created inventory problems for many franchised dealers. The global microchip shortage is reducing the number of vehicles on dealer lots just as a wave of pent-up, post-pandemic demand is being unleashed on the marketplace. With limited inventory, some dealers are justifiably turning to creative methods to maximize the return on each vehicle that they sell. But before pursuing a bold new idea to increase ROI, dealers need to remember to review any promotions and advertisements for compliance with all state and federal laws. While creativity in the advancement of capitalism is the lifeblood of the American economy, some recent advertisements and promotions that have been brought to our attention would appear to be over the line.
Different rules for out of state customers There are several reasons why a dealer with limited inventory would prefer to sell to a local buyer, including the probability that the customer will return to the dealership for service, the increased paperwork necessary when finalizing out-of-state deals, and adherence to factory mandates to serve a specific area of responsibility. Some dealerships have a blanket prohibition on retailing a vehicle to an out-of-state customer, which is fine so long as it is applied universally, and the decision not to sell to a particular customer is made only on the basis of their residency, not on any other factor such as religion, race, gender, etc. The MSADA legal office has heard of dealerships imposing an additional fee on
out-of-state buyers. This “out-of-state fee”, if not included in the advertised price of the vehicle, would likely constitute an unfair and deceptive practice under the Massachusetts regulatory code at 940 CMR 5.02(3). If the fee is not properly disclosed to the consumer, or is charged in an inconsistent manner, it could constitute other violations of state and federal laws and regulations as well.
Mandated vehicle financing through the dealership To maintain F&I income with low inventory, some dealers have explored mandating those customers who wish to purchase a vehicle either finance the transaction through the dealership (or a captive) or pay an additional fee as part of the transaction. This policy could conceivably be implemented in a way that complies with state and federal law, but, as a practical matter, it is probably best left in the idea room. For example, if the financing requirement causes customers to pay more than cash customers on substantially similar transactions due to hidden finance charges, or certain disclosures are not provided, then the dealership could face an FTC enforcement action for Truth in Lending Act (TILA) violations. If disclosures are provided, there are no hidden finance charges, and cash buyers pay more than those that finance through the dealership on substantially similar transactions (due to the “non-financed fee”), then the FTC will probably not come knocking. However, the state attorney general might, depending on how the advertisements are worded. An example of a legally sound advertisement in the current scenario would have the vehicle price including the “non-finance fee” with a discount available to qualified finance customers. The obvious downside here is that the inclusion of the fee will make the vehicle price less competitive. It might be possible to use the normal price of the vehicle in said advertisement, but only if the ad contained clear and conspicuous disclosures of the details www.msada.org
of the transaction that would be required to get that price. If the disclosures are insufficient, and the dealership refuses to honor the stated price for cash buyers, then the dealership could face exposure to a state or federal enforcement action or a lawsuit under the Massachusetts Consumer Protection Act. When reviewing your advertising, remember that any deceptive advertisement is going to be illegal under state and federal statutes. Generally, an advertisement is deceptive if it makes false, misleading, or unsubstantiated claims, or if it omits information necessary to prevent the advertisement from being deceptive. To determine whether an advertisement is deceptive, you must consider the advertisement from the consumer’s perspective and weigh the overall impression that the advertisement would give to a consumer. A collection of true statements can still be deceptive if the overall net impression is deceptive. Different advertising mediums will naturally have different requirements for disclosures, so make sure to review the disclosure requirements specific to your advertising medium in both state and federal statutes. The first step in any advertising campaign should be a careful review of the Massachusetts Motor Vehicle Advertising regulations at 940 CMR 5.00 and NADA’s Dealer Guide to Federal Advertising Requirements. The FTC also offers compliance tips for dealers on its website. You should consult your legal counsel prior to pursuing a new strategy that includes the imposition of fees on certain customers and remember that advertising agencies are generally not attorneys and may not be familiar with all motor vehicle advertising laws. 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. Massachusetts Auto Dealer
JUNE 2021
9
10
AUTO OUTLOOK
JUNE 2021
Massachusetts Auto Dealer www.msada.org
MSADA
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
11
12
AUTO OUTLOOK
JUNE 2021
Massachusetts Auto Dealer www.msada.org
MSADA
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
13
14
RACE TO THE FINISH COVER STORY
When the Chips Are Down
Dealers respond to shortages with creativity while putting customers first
U
By Stephanie Power ncertainty caused by the global microchip shortage has many auto dealers across the Commonwealth scrambling. Managing low inventory and high consumer demand, dealers are relying on their creativity, online presence, and some old fashioned pandemic-born wisdom to get by. “This too shall pass,” said Scott Dube, NADA Director and president of Bill Dube Hyundai in Wilmington. “Dealers need to trust their instincts; we will be through this sooner than we know.” He estimated most dealers have less than 40 to 50 percent of their normal new and used car inventory, adding that, though his dealership has managed to get through this so far, he expects some shortages coming. “There is greater demand than there is supply in most lines,” he said. “We are pre-selling a lot of incoming stuff and giving customers the chance to buy in-bound cars.” The semiconductor shortage is a complex global conundrum affecting multiple high-tech industries all vying for limited supply that is driving up chip prices, said MSADA Executive Vice President Robert O’Koniewski. “Only about five percent of the manufactured microchips are
JUNE 2021
Massachusetts Auto Dealer www.msada.org
slated for automotive use, but how the vehicle factories made decisions for chip acquisition have had outsized impacts on specific line makes and models,” O’Koniewski said. “Unfortunately for franchised dealers of certain brands, their economic viability relies on manufacturer decisions -- albeit very bad ones -- for which they have very little path of recourse. Dealership plans get thrown out the window as the factories fail to deliver needed cars and trucks.” Manufacturers of laptops, 5G Smartphones, and Playstation gaming consoles swooped in to pick up chips left on the table by auto manufacturers who cancelled their orders in the first quarter of 2020 in response to COVID-19 shutdowns. As vehicle sales rebounded in late 2020, auto plants for Ford, Honda, Volkswagen, and Toyota were forced to temporarily halt production at several plants around the world as a result.
MSADA Finding a Way Through MSADA President Chris Connolly of Herb Connolly Auto Group said each manufacturer handled last year’s shutdowns differently. “We saw Hyundai and Kia all put the pressure on Samsung to build as many chips as possible and fulfill their orders, and it paid off for them,” he said. “Our Hyundai store has seen minimal disruption in inventory because of Hyundai’s inventory resilience.” Connolly said his Acura franchise saw a big dip in inventory in Spring 2021 but that numbers for July production seem
“If customers can be flexible about color and a feature here and there, it is a great time to purchase.” –Carla Cosenzi, TommyCar Auto
robust. His Chevrolet inventory is down the most from GM’s cancelled chip orders last year and said the Big Three have suffered for their short sightedness. TheVerge.com reported automakers such as Ford and Volkswagen have said production will take a hit this quarter. Ford said in their quarterly investor call they expect to make half as many cars as originally planned, while Volkswagen boss Herbert Diess is quoted saying “We are, for sure, in crisis mode.” Forecasters predict that output of more than 1.3 million vehicles could be lost in 2021. Dealers, however, are optimistic by nature. TommyCar Auto’s Carla Cosenzi believes it is an exciting time whether you are in the auto industry or looking to buy a car. Cosenzi said she is seeing educated consumers who understand the current market. “Interest rates are at an all-time low, and there have been a ton of new model launches,” she said. “Our Hyundai store’s unit and growth numbers have doubled in the past four or five months. If customers can be flexible about color and a feature here and there, it is a great time to purchase, especially with high trade-in values.”
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
15
16
RACE TO THE FINISH WHEN THE CHIPS ARE DOWN None of our worst business fears came to pass, so the worst you can imagine is probably not going to happen.” –Scott Dube, NADA Director
Cosenzi owns five dealerships, mostly in the Hadley area. Operating with less than half of their usual supply, TommyCar is prioritizing online marketing to add precious inventory to their lots. Running for the past four months, the “TommyCar Trade-In” boasts buy-back prices up 25% from last year. The promotion offers a guaranteed cash offer instantly, without sellers having to leave home to complete the deal. “It has been successful,” Cosenzi said. “We are getting really creative about how to acquire inventory. We have also been swapping cars with other dealers.” Dube agrees marketing online is crucial. “Your website is your window,” he said. “If you are not displaying cars online then you are not getting the traffic.”
From Bad to Worse to Better Microchips are made through a multi-tiered supply chain that, since the pandemic, has become more concentrated and revealed significant vulnerabilities. The world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Company, produces about 70 percent of all automotive microchips, according to IHS Markit. Automotive JUNE 2021
Massachusetts Auto Dealer www.msada.org
chips, however, account for only 4 percent of TSMC’s annual revenues, indicating plenty of competition. IHS Markit also reported a first quarter 2020 ice storm in Texas shut down three American semiconductor plants and syphoned production of chemicals and raw materials commonly exported for chip production. A fire at a Japanese chip plant in March 2021 further dwindled supply. Dube points to a lack of communication from manufacturers that makes it difficult to project into an uncertain future. He said his dealerships are working at about a 90-day schedule. “We re-evaluate every month, every week, to make more tactical and strategic positions to impact the market in the next 30 days,” he said. “We are flying by the seat of our pants.” Cosenzi says the main message from manufacturers is the obvious one: make sure you are careful with your inventory; know what is coming in, and do not sell short. According to global business-research company Gartner, Inc.’s website, the shortage will “persist through 2021, and is expected to recover to normal levels by the second quarter of 2022.” Dube said that his path forward is to take a long-minded view. “It is amazing to me that a year and three or four months ago we wondered seriously if we would be in business at all,” he said. “None of our worst business fears came to pass, so the worst you can imagine is probably not going to happen.” He also believes dealers are the most creative, resilient entrepreneurs on the planet. “Take care of the customer; take care of your co-workers; and don’t stop believing.” t
17
www.msada.org
Massachusetts Auto Dealer
MARCH 2021
18
NEWS NEWS the NEWSfrom from Around from Around Around the Horn Horn NEWS
NEWS the Horn
BRAINTREE
Quirk Plans New Buick GMC Dealership Auto dealer Dan Quirk is planning to bring a new car dealership to Quincy Avenue, The Patriot Ledger reports. Frank Marinelli, a lawyer representing Quirk, appeared before the appeals board in June seeking a variance that would allow for wall signs at a new Buick/GMC dealership at 444 Quincy Avenue. Marinelli said the new dealership would take over the space that had been occupied by Quirk’s Subaru dealership, which is moving into new quarters on the adjacent site of the former Viking Club on Quincy Avenue. He said Quirk Chevrolet would remain in its current location. Quirk also operates a Chrysler/Jeep, Kia, and used car dealerships along Quincy Avenue. The appeals board approved the variance for the sign without any opposition. BOSTON
‘Right to Repair’ Lawsuit Goes to Trial A group representing General Motors Company, Fiat Chrysler Automobiles NV, and other automakers went to trial in June in a bid to block a Massachusetts voter-approved measure that would expand access to vehicle data and allow independent shops to repair increasingly sophisticated automotive technology. Executives with the trade group Alliance for Automotive Innovation and its member companies took the witness stand to testify before U.S. District Judge Douglas Woodlock in Boston, who will decide whether federal law preempts the state measure. The group sued in November after voters approved a ballot initiative to revise the state’s 2013 “Right to Repair” law to require automakers to provide expanded access to mechanical and electronic repair data. Unprecedented advancements in modern vehicles and crash avoidance systems have prompted many automakers to limit information and warranties to only parts and repairs from authorized dealers to ensure safety and privacy. The group’s lawyers in a brief filed in June argued that if allowed to take effect, the law, by expanding the universe of who can access a vehicle’s diagnostic system will “make serious cyberattacks much more likely and deadly than the attacks on pipelines and meat processors currently in the news.” The Alliance’s attorneys at Mayer Brown and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo contend that the law would require them to degrade cybersecurity controls related to safetyand emissions-critical vehicle functions. JUNE 2021
Massachusetts Auto Dealer www.msada.org
And, because those functions are governed by the National Traffic and Motor Vehicle Safety Act and the Clean Air Act, the group claims the Massachusetts measure unconstitutionally conflicts with those federal laws. Much of the early testimony was conducted behind closeddoors, such as that from Kevin Tierney, the vice president of global cybersecurity at General Motors. In an affidavit filed ahead of the trial, he said that the law’s “requirements run directly counter to GM’s cybersecurity approach, and would seriously compromise vehicle safety and emissions control.” Steven Douglas, the vice president for energy and environment at the Alliance for Automotive Innovation, also testified and faced questions by a state attorney that went to what extent the industry could not comply with the law. Massachusetts Attorney General Maura Healey, who is defending the law, in court papers noted the measure allows manufacturers to establish a standardized system run by a third-party to authorize access by independent repair shops to diagnostic systems. Assistant Attorney General Julia Kobick in questioning Douglas noted the National Automotive Service Task Force (NASTF), whose board Douglas sits on, already helps manufacturers authorize locksmiths to create increasingly technical new keys. But under questioning by Jason Linder of Mayer Brown, Douglas said NASTF, in facilitating such authorizations, had avoided ever creating a central database of all of the companies’ data. Douglas said that doing so would put the vehicle security information of 280 million vehicles at risk by putting it all in a central location. “That would presumably become the focus point of every hacker, every ransomware hacker, every vehicle thief, and every crime syndicate in the world,” he said. “There is just no possible way that NASTF could maintain that kind of security or that kind of data.” BOSTON
RMV Glitch Causes Slowdown A Registry of Motor Vehicles computer system had a “slowdown” in June that gummed up all registry transactions, the RMV said. The ATLAS system’s 40-minute slowdown began on June 2, at 11:43 a.m., RMV spokeswoman Judith Reardon Riley said in an email. “We have been having problems this morning,” an employee at Herb Chambers Honda in Boston told the Boston Herald. “The system’s down, so you can’t process any registrations.” “Some transactions took longer than normal to process,” the RMV’s Reardon Riley said. “Services were immediately re-
MSADA
NEWS from Around the Horn
stored, and no further issues are anticipated to occur. We apologize for any inconvenience that may have been caused during this brief time frame.” Other dealers complained that registrations they used to get for customers within a few days months ago now take twice as long to get, leaving both customers and dealers frustrated. This is not the first time the RMV has encountered problems. Most gas stations and auto-repair shops that perform motor vehicle inspections were unable to do them until April 17 after a March 30 cyberattack on a registry vendor, Applus Technologies of Shrewsbury. LOWELL
Ernie Boch Jr. Helps High School Recover After Flood Thousands of dollars worth of musical instruments and drama equipment was destroyed and discarded following a flood inside Lowell High School. The flood was the result of a break in the main water supply line for the fire suppression system inside the nearly 100-year-old high school building. The music and drama programs were soaked under feet of water. “I saw that there was a flood at the Lowell High School on social media,” Ernie Boch Jr., the founder of the Music Drives Us Foundation, said. “I saw it, and I’m looking at the picture, and I said, ‘Oh, wow, this is crazy.’” Through his foundation, Boch has offered to replace the instruments and restore the space. “It is right in Music Drives Us’ wheelhouse, so we are trying,” Boch said. “I have already met with the head of school, and the head of the music department at the high school, and we’re working it out now.” BOSTON
Village Automotive Hosts Red Sox All-Star Dustin Pedroia Ray Ciccolo recently had the opportunity to meet Boston Red Sox AllStar Second baseman Dustin Pedroia at a Boston Volvo Village of Brighton customer appreciation event that raised money for The Red Sox Foundation. Pedroia signed autographs and chatted with fans in what Ciccolo said was the largest event for the Red Sox Foundation so far in 2021. t
“Run by Dealers for Dealers” • Dental and Vision Benefits • No Minimum Dealer Contribution • No Waiting Periods • Dental Maximum $1,750 • Vision Network Locations include: J.C.Penny, Costco, Walmart, Target, Pearl, Visionworks **Dental & Vision benefits provided by The Guardian Life Insurance Company The New England Automobile Dealers Insurance (NEAD) Trust was established in 1950 Charlie Muise Managing Trustee cmuise@neadInsurancetrust.org • 781-706-6944
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
19
20
LEGAL
MSADA
By Joseph W. Ambash, Jeffrey A. Fritz, and Joshua Nadreau of Fisher Phillips, LLC
Another COVID-19 Leave Mandate Comes to Massachusetts By all measures, the COVID-19 pandemic appears to be waning. Vaccinations are up, cases are down, and the economy is re-open and booming. Not to be outdone, however, the Massachusetts Legislature enacted yet another paid leave mandate on the Friday before Memorial Day weekend. The good news? It is temporary and paid for by either the state or federal government. The bad news? Most Massachusetts employers now need to manage 40 more hours of paid leave for their employees. Fortunately, this leave entitlement expires on either September 30 or when the fund created for reimbursement is depleted, whichever comes first.
How Much More Leave?
The law requires employers to provide up to 40 additional hours of paid leave to employees who are unable to work due to COVID-19. The amount of paid leave an employee is entitled to depends on the number of hours they work in a given week: ▪ employees regularly working 40 or more hours per week are entitled to 40 hours; ▪ employees regularly working fewer than 40 hours per week are entitled to leave equal to the number of hours that the employee works on average over a 14-day period; and ▪ employees working varying hours from week to week will receive leave equivalent to the average number of hours they worked each week over the six-month period immediately preceding the date on which they take the leave. Notably, employers who are already offering additional COVID-19 leave voluntarily may not have to offer additional leave to comply with the new law. While the new law requires employers to supplement otherwise available sick time, employers who, voluntarily or otherwise, offer federal Emergency Paid Sick Leave may be compliant, so long as the state mandate is met in full, including 40 hours (or a prorated amount for part-time employees) beginning May 28.
What Can Employees Use the Leave For?
Employees may use the leave for the following reasons: ▪ to self-isolate and care for themselves because they have been diagnosed with COVID-19; ▪ to get a medical diagnosis, care, or treatment for COVID-19 symptoms; ▪ get or recover from a COVID-19 immunization; ▪ complying with a quarantine order from a public official, health authority, the employer, or a healthcare provider; or ▪ an inability to telework due to COVID-19 because they have been diagnosed with COVID-19 and the symptoms inhibit their ability to telework. Employers also must provide leave for employees to care for family members under the following circumstances: ▪ caring for a family member who: (i) is self-isolating due to a COVID-19 diagnosis; or (ii) needs medical diagnosis, care or treatment for COVID-19 symptoms; or JUNE 2021
Massachusetts Auto Dealer www.msada.org
▪ caring for a family member due to a quarantine order from a public official, health authority, the family member’s employer, or a healthcare provider. The leave can be used continuously or intermittently.
Protections for Employees
Retaliating against employees for using leave is prohibited. This means employers cannot subject anyone using the leave to adverse action, such as discipline, suspension, or termination. Employers must also retain the same employment benefits for employees using COVID-19 leave while they are on leave. These benefits include group life insurance, health insurance, disability insurance, sick leave, annual or vacation leave, educational benefits, and pensions. Similarly, employers cannot compel employees to use other paid leave provided by the employer before using COVID-19 leave, such as paid time off or statutory sick leave. Finally, employers cannot require, as a condition of taking leave, that an employee search for or find a replacement worker to cover their shifts while the employee is out on COVID-19 leave. The law also requires that notice of the law’s protections be posted and or provided to all employees.
What Will This Cost Employers?
Employees using COVID-19 leave are entitled to full wage replacement, up to a cap of $850 per week per employee. In other words, any employee who earns less than $850 per week will receive full pay during their COVID-19 leave. The law requires that employers make these payments and seek reimbursement from either the state or federal government. Employers with fewer than 500 employees are not eligible to be reimbursed by the state unless the COVID-19 leave does not qualify for reimbursement under federal law, such as if an employee took intermittent leave or if the employer has already received the maximum reimbursements from the federal government.
Parting Thoughts
This new leave mandate is yet another burden on dealerships emerging from the COVID-19 pandemic and adds compliance costs to your bottom line. That said, the reasons for leave and entitlements are relatively straightforward, and either the state or federal government will reimburse the costs of the leave. Given the novelty of the law, we also expect the state to issue additional guidance to what has already been posted here: https://www.mass. gov/info-details/covid-19-temporary-emergency-paid-sick-leaveprogram. Hopefully, due to declining cases and improving vaccination rates, your employees will not have a reason to use the leave. t Joe Ambash, Jeff Fritz, and Josh Nadreau are Partners at Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at (617) 722-0044.
MSADA
ACCOUNTING
Framework for More Tax Reform Ryan J. McDonell, CPA
The Biden Administration released its fiscal year 2022 budget proposal at the end of May. The budget contains items related to the American Jobs Plan and American Families Plan infrastructure proposals previewed months earlier. This article outlines some standout tax policies in the FY22 budget. These are just a framework at this point, subject to (and likely to) change before Congress votes. Other bills in Congress propose similar policies to the Biden budget. Deliberation is ongoing, and the passage of new legislation is not expected until later in the year, possibly in the Fall.
Raise C Corporation Income Tax Rate to 28% The C corporation income tax rate decreased to 21% as part of the Tax Cuts and Jobs Act (TCJA) in 2017. The FY22 budget proposes raising the tax rate to 28%, effective in 2022.
Raise Top Personal Income Tax Rate to 39.6% The top personal income tax rate decreased from 39.6% to 37% as part of the TCJA, with the decrease set to expire at the end of 2025. The FY22 budget looks to raise the top rate back to 39.6% in 2022.
Increase Long Term Capital Gains Rate on Income Over $1 Million Long term capital gains are currently subject to graduated preferential tax rates with a 20% top rate. The FY22 budget proposes subjecting capital gains to ordinary
income tax rates when a taxpayer’s income exceeds $1 million. As previously mentioned, the budget proposes a top ordinary rate of 39.6%, which could nearly double the top capital gains rate. The proposal is retroactive for gains recognized after the date of announcement, which may be as early as April 28, 2021, when the American Families Plan fact sheet was released.
Taxable Gifting Currently, when a donor gifts an appreciated asset to a donee, the gifting is not a taxable event, and the donee takes a carryover basis equal to the donor’s basis (i.e., the cost at which the donor acquired the asset). Tax on the increase in value of the asset is deferred until the donee disposes the asset in a taxable transaction (i.e., a sale). The FY22 budget proposes making gifting a taxable event starting in 2022, whereby the donor pays tax on the difference between the basis and the fair market value of the asset at the time of gifting.
Taxable Transfers at Death Currently, when a decedent dies, appreciated assets are transferred to the decedent’s heir at fair market value as of the date of death (or alternate valuation date). If the heir sells the inherited asset shortly afterwards, the heir will realize little to no gain, since the heir’s basis and the selling price will be approximately the same (fair market value). The FY22 budget proposes making death a taxable event starting in 2022, whereby the decedent pays income tax on the difference between the basis and fair market value of the asset at the time of death. Taxpayers will have a $1 million dollar per-person exclusion, portable to a surviving spouse. Therefore, a married couple will not have to pay income tax on the first $2 million of asset appreciation held at death. The proposal also includes other exceptions such as an exclusion for gain on a principal residence, special rules for family-owned businesses, and a 15year payment plan for the tax. www.msada.org
Other Proposed Changes
The FY22 budget proposes several other significant tax changes that taxpayers should keep an eye out for, including, but not limited to: expansion of plug-in electric vehicle and charging station credit; routine recognition of unrealized appreciation for assets held in noncorporate entities; expanding income subject to net investment income tax; limit like-kind exchange gain deferrals to $500k per taxpayer; and make permanent recent changes to various tax credits such as the child tax credit.
Not Mentioned but Not Forgotten The FY22 budget also omitted several Biden campaign proposals and party favorites that could make their way into future legislation, including, but not limited to: phaseout of the 20% QBI deduction; resume social security tax on wages above $400k; modify benefit of pre-tax retirement contributions; repeal or adjust SALT itemized deduction cap; and reduce estate exemption and increase estate tax rate.
So Now What? Simply put, it is too early to make any rash decisions. Before jumping to restructure your businesses or overhaul your estate plan, give some time for Congress to negotiate. After the dust settles, consult your advisor and come up with a plan of action as to how to best operate within the new environment. Some proposed changes may be unavoidable while others may be mitigated with careful planning. Ultimately, each taxpayer’s best course of action will come down to everyone’s favorite answer: “It depends.” t Ryan joined O’Connor & Drew in 2014, providing tax and accounting services for a variety of clients, focusing on individual and corporate taxation. He can be reached at rmcdonell@ocd.com. Massachusetts Auto Dealer
JUNE 2021
21
22 MAY 2021
Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
New light-vehicle sales remained strong in May but fell slightly from April’s highs. May’s SAAR totaled 17 million units, as April’s SAAR was revised upward to 18.8 million units. May 2021’s SAAR was up 40.3% from May 2020’s, when light-vehicle sales had just begun to turn around from April 2020’s pandemic lows. In a normal year, a 17 million-unit SAAR would be considered quite solid. But given current market conditions, May’s drop in sales highlights the effects of a supply and demand imbalance. t
JUNE 2021
Massachusetts Auto Dealer www.msada.org
MSADA
NADA MARKET BEAT
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
23
24
AIADA Brief
MSADA MSADA
“Buy Union” Policies Unfair and Un-American By Cody Lusk AIADA President & CEO
In Washington, D.C., politicians come and go. Political movements come and go. But there is one thing you can always count on, sure as the sun rising over the U.S. Capitol: someone, somewhere in this city, is making political hay by advocating for a Buy American policy. Buy American legislation is the result of a nearly century-old idea that the government can and should prioritize the purchase of American-made goods. It is a concept that has been packaged and repackaged countless times since Herbert Hoover passed the first Buy American Act of 1933. It sounds good in a political commercial, but do Buy American policies work? Not really. Domestic content requirements are an additional, complicated burden for U.S. companies to navigate while bidding on federal contracts. The policies do not seem to meet their stated goal of increasing U.S. jobs (just look at the steel industry), and they can prove costly to taxpayers while limiting options for vital agencies like the Department of Defense. Finally, they serve as an inducement to other countries to expand their own protectionist policies, which make it difficult for American companies to compete
globally. But why let facts get in the way of a good stump speech? Facts did not stop President Trump from signing a number of mostly toothless Buy American executive orders, and they have not stopped President Biden from doing the same in his first few weeks in power. Additionally, in his $2 trillion infrastructure plan, the president heavily emphasizes Buy American priorities. Alarmingly, Congress recently took things one giant step further. Democrats on the Senate Finance Committee voted
we are also supposed to support a Buy Union policy that elevates some American workers above others, values some American auto plants above others, and gives preferential treatment to some automotive brands. That is plainly un-American, and a slap in the faces of America’s 570,000 international nameplate dealership employees. If this legislative language feels like a blatantly transactional handout from politicians to the unions that supported them in the last election, well, you are probably right. It is certainly not a coherent or well-thought out policy that benefits American manufacturing or workers. It definitely will not benefit the environment, despite having been shoe-horned into a “clean energy” bill. If you want to make your voice heard on this issue, and remind your elected officials that ALL American workers matter, please visit AIADA. org/UnAmerican to read more from AIADA Chairman Steve Gates and send your own letter to Washington, D.C. You can also get involved by joining our Summer advocacy program “Dealers Make an Impact.” Check out AIADA.org/Impact for resources, tools, and videos offering you new opportunities to be an advocate for your business. Unfortunately, Americans may never be free of persistent, wasteful Buy American legislation. However, I believe that by working together we can kill this new Buy Union effort before it grows larger and creates further divisions in our country.
“If this legislative language feels like a blatantly transactional handout from politicians to the unions that supported them in the last election, well, you are probably right.”
JUNE 2021
in support of language in the Clean Energy for America Act to raise electric vehicle incentives from $7,500 to $12,500. That increase comes with a catch: Consumers are eligible for a $7,500 tax credit if they buy an EV, an additional $2,500 if the vehicle is assembled in the U.S., and another $2,500 if it is assembled in a plant whose workforce is represented by a union. So now taxpayers are not just subsidizing ineffectual Buy American policies,
Massachusetts Auto Dealer www.msada.org
t
TRUCK CORNER
MSADA
The Fly-In Report 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
Our voices in D.C. are more needed than ever “Truck dealers continue to face challenges as overly broad regulations, harmful taxes, and unreasonable mandates impact our businesses, customers, and employees.”
Greetings from the first virtual ATD FlyIn. If there ever was a moment for political engagement and dealer participation, it is now. And while we are not currently getting together in person in our nation’s capital for this year’s fly-in, we are making our presence known and our voices heard to legislators through our virtual platform. Truck dealers continue to face challenges as overly broad regulations, harmful taxes, and unreasonable mandates impact our businesses, customers, and employees. After enacting a $1.9 trillion spending bill, Democrats continue to push an aggressive agenda on comprehensive infrastructure legislation and new tax increases. But what lawmakers sometimes don’t know is that dealers are some of the first to feel the pain of complicated federal regulations. So we must have a seat at the table. This ATD virtual fly-in is an opportunity to have a say in the rules and regulations that impact your operations.
Repeal the FET Week First and foremost, ATD is determined to repeal the outdated 12% federal excise tax (FET) on heavy-duty trucks and trailers, a senseless tax that grossly inflated the price of a new truck and delays fleet turnover. As Congress works to modernize highway funding, FET repeal is possible as part of the expected trillion dollar-plus bill. But we need your voice to see this battle through!
The last week in June was dedicated as ATD’s “Repeal the FET” week. This was an opportunity to tell our members of Congress that repealing this tax is a good thing: It will help protect U.S. jobs; replace older trucks with newer and greener trucks; and modernize America’s truck fleet in a way that makes sense. I urge ATD dealers to join this battle and support repeal of the FET. As ATD chairman, I was pleased to welcome you to our event along with Marty Murphy, executive vice president of the Automobile Dealers Association of Indiana. I thank Sen. Todd Young (R-Ind.) for joining us and sharing his perspective on our commercial truck industry and what we can expect from the federal side. And I thank our virtual industry panel for discussing future truck technologies, and the challenges facing the trucking industry from the perspective of next generation truck dealers. As always, I thank the ATD legislative staff that was here to help us with every virtual step of the way to Capitol Hill. They remain ready to help you schedule meetings with your members of Congress any time of year.
A Reminder Because we are accustomed by now to virtual meetings, I want to remind our membership that the ATD Show returns in-person in the great city of Las Vegas from March 10-13, 2022. Learn more at atdshow.nada.org. t
www.msada.org
Massachusetts Auto Dealer
JUNE 2021
25
26
NADA Update
By Scott Dube
Demand for Supply
As we resume normal, a new challenge springs forth 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. While the world, or at least our corner, gets back to life as we knew it before the pandemic, new challenges are always presenting themselves to entrepreneurs who sit at the cutting edge of technology. The chip shortage that has slowed vehicle deliveries to our lots will pass, and at NADA we are doing everything possible to ensure dealers’ needs are understood and advocated for at the highest levels. It will not be long and the NADA 2022 Show will open for registration! I am hearing from everyone just how big they expect this event to be this year. As you might know, I am this year’s Show Chairman and would love your support in Las Vegas this year. We are planning a fantastic show and will announce a very big surprise soon that will make this a must attend event this year. Stay tuned for that! As always, please feel free to reach out if you have questions or concerns stemming from your relationship with your OEM, officials, or any other moving part of our complicated industry. We are here to serve.
Buy, Sell, or Hold Seminar Are you considering a dealership buy/sell? Join us at NADA headquarters from July 7-9 for this informative seminar. This course will teach you methods for determining the value of your dealership. Learn how to estimate your blue sky multiple and the intangible value of the dealership, determine the tangible assets valuation, and complete an adjusted pro forma for your store. Other key takeaways • An overview of the current buy/sell market. • Estimate your current dealership value using your own financial results and three time-tested methods: Income approach; market approach; asset-based or cost approach. • Understand tangible versus intangible valuation. • Calculate financial statement adjustments to more accurately represent current operations. • Prepare an adjusted pro forma for your store. • Consider your OEM’s approval process and your methods to manage submissions and documentation. JUNE 2021
Massachusetts Auto Dealer www.msada.org
• Define the ownership structure and how the transaction will be financed. • Identify potholes in the road during the valuation and buy/ sell process. Register at www.nada.org.
The NY Auto Forum Returns After a year hiatus, the NY Auto Forum is roaring back into New York City this Summer with a new date and a new location. The 11th annual Automotive Forum – hosted by the National Automobile Dealers Association (NADA), J.D. Power, and the New York International Auto Show (NYIAS) – will take place on Wednesday, August 18, in New York’s largest convention center, the Javits Center. Held on the eve of press days at the New York International Auto Show, the Auto Forum brings together automotive executives, new-car dealers, thought leaders, and other industry stakeholders for a full day of speaker presentations and panel discussions on current industry and economic conditions that will shape the future of the automotive market. The OEM speaker lineup for 2021 includes: • Jose Munoz, Global COO/President CEO, Hyundai North America • Josh Tavel, Executive Chief Engineer, Battery Electric Trucks, General Motors • Bob Carter, Executive Vice President of Sales, Toyota Motor North America Other speakers include NADA Chairman Paul Walser, President and CEO Mike Stanton, and Industry Relations Committee Chairman Geoff Pohanka; J.D. Power President, Data and Analytics Division and Chief Product Officer Thomas King; and Greater New York Automobile Dealers Association President Mark Scheinberg; The Alliance for Automotive Innovation President and CEO John Bozzella and Chairman Chris Reynolds; Citi Research Director Itay Michaeli; and BoA Merrill Lynch Managing Director John Murphy. The registration fee includes a networking breakfast and lunch, the forum’s keynote and panel sessions, and a credential to attend press days at the auto show. Meanwhile, New York Governor Andrew Cuomo recently announced the return of the New York International Auto Show at full, pre-pandemic attendance levels. After keeping the doors closed in 2020 due to the COVID-19 pandemic, the show got the green light to go ahead at the Javits Center, Friday, August 20, through Sunday, August 29. More than 1,000 vehicles in one million square feet of ex-
MSADA
hibit space at the newly renovated Javits Center, including an entire floor dedicated to electric vehicles. Sponsored by ConEdison and the New York Power Authority, the EV Hall will have five indoor test tracks to give show attendees the opportunity to experience first-hand the feeling of an all-electric vehicle or a micro-mobility option such as an e-bike or an e-scooter. Nine OEMs will be participating in this multibrand EV demonstration. The expansion also means that all the OEMs will be on the
same level and have more exhibition space. Subaru’s exhibit is 50% larger than previous years, while Toyota and Chevy’s exhibits will both be 30% larger, according to Chris Sams, a spokesman for the show. “The participation from OEMs has been phenomenal,” Sams said. Longtime fan favorites including Camp Jeep and Toyota’s Outdoor Ride and Drive will also return to NYIAS, bringing the total of test tracks up to seven. t www.msada.org
Massachusetts Auto Dealer
JUNE 2021
27