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August 2021 • Vol. 34 No. 8
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Charging Forward
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 Ethos, 2 Nancy Phillips, 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
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
4 5 6 8 9 10
From the President: Leading Vegas ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Summertime Not So Easy LEGISLATIVE SCORECARD TROUBLESHOOTING: Dealer Plate Usage and Window Stickers AUTO OUTLOOK
14 Cover Story: Charging Forward
17 18 20 21 22 24 25 26
ACCOUNTING: Cost Savings: A Never Ending Battle NEWS From Around the Horn ACCOUNTING: Cash Management LEGAL: Vaccines, Masks, and Accommodations nada Market Beat AIADA Brief: To Meet EV Goals, the Auto Industry Must Work as One TRUCK CORNER: ATD Applauds Rep. Chris Pappas’ FET Letter nada update: The Show Returns to Vegas
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
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From the President
MSADA
Leading Vegas
Our own Scott Dube is chairing the largest dealer event in the world in March
By Chris Connolly, MSADA President As you have read in these pages in the past few issues, NADA Director and MSADA Immediate Past President Scott Dube is chairing the NADA Show 2022 Committee. This is an important honor for one of our own, but more importantly, a moment in the sun for our Commonwealth’s dealer community. I want to use this opportunity to especially encourage anyone who has not made the trip to an NADA Show to please make this the year. As much as we are excited to get back to our MSADA Charity Gala at the New England International Auto Show, and as much work as it takes to put that event on, I want you to imagine for a second the scale of the undertaking Scott has put on his shoulders. In case you are unfamiliar with the event, the NADA Show 2022 edition March 10-13 will include an exciting and engaging event, full of networking opportunities, world-class education, and the latest industry updates. A few highlights: • Welcome Kickoff Reception at Allegiant Stadium, featuring Train. Enjoy the Grammy Award-winning band as they perform at an epic, tailgate-style celebration in this brand-new, state-of-the-art football stadium. • In-person Expo experience. Engage in face-to-face business at the Expo, with the latest products and services. • Industry-leading education. Discover the best tools and solutions to bolster your business—from top industry experts. • Franchise meetings with OEMs. Hear directly from automakers about the latest updates and outlooks. • Renowned keynoters. Learn all about future-focused leadership from well-known speakers. • The MSADA/O’Connor & Drew party on Saturday night to honor our 2022 Massachusetts TIME Dealer of the Year. Registration opens on September 13, and I hope you will reach out to Scott if you are on the fence for any reason. As you will see in this column this month, NADA is taking every precaution to ensure the event is held safely. In addition to being an incredibly fun time, the NADA Show is an important demonstration of our national business community’s importance within the larger automotive industry and our American economy. Walking the halls of our nation’s Capitol is an important way to do this -- but the NADA Show puts the full power of our industry on display for the world to see. Even if you only make the trip once, it is important to make that one trip. And if you have been waiting for a reason to finally go, we are in great hands with Scott’s leadership. I hope to see you there! t
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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. Kathleen Weisenbach (402) 523-5945 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) 452-1800 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
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The Roundup
Summertime Not So Easy By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
As the Gershwin tune goes – “Summertime, and the livin’ is easy” – certainly did not have 2021 in mind. That song certainly may harken back to a more tranquil time. This August, maybe not so much. Higher COVID numbers as the Delta variant spreads. More business and personal restrictions coming from government. Disputes as to how schools should open for live learning. Rising price inflation, shrinking the power of the paycheck. Chip shortages and disappearing vehicle inventories. Uncontrolled wildfires and tropical storms. The southern border free-for-all. Tax hikes and Congressional in-fighting. And then came the Afghanistan pullout. We all learned a long time ago to worry about only those things you can control. Unfortunately events on the local, national, and world stages continue to play havoc with our dealerships’ operations. As the Delta numbers spike – and who knows what the Lambda variant will bring – government’s only solution seemingly is to take steps backwards and return to the onerous restrictions we faced in 2020. Congressional progressives keep thrusting personal and business tax hikes in our face, but the Democrats cannot even agree amongst themselves on the level of harm they wish to inflict on their constituents, making any future planning impossible. Regardless of the reasons as to why there is a shortage of microchips for vehicles, the lack of inventory on dealer lots can be unsettling for dealership operations and consumers alike. The international news is now dominated by the chaos wrought by an apparently feckless exit plan for Afghanistan, shrinking our stature on the world stage. AUGUST 2021
Massachusetts Auto Dealer www.msada.org
Labor Day soon approaching may be the traditional end of Summer, but it is difficult to envision a quick end to these problems. The one thing our dealers can control is their own businesses and their approach to their customers. Those relationships can be long lasting and need to be nurtured to ensure long-term success. Through wars, economic disruption, and the infliction of all kinds of governmental harm, the dealer-customer relationship drives short-term and long-term success. Dealers cannot afford to have their customers fall by the wayside throughout all the chaos. Besides, football season is right around the corner.
UI Relief on the Way? This month Governor Charlie Baker proposed using a large chunk of the FY21 budget surplus to provide relief for employers who are being hit with a new COVID assessment to address the deficit in the state’s unemployment insurance fund. Gov. Baker filed legislation that would dedicate $1 billion of the state’s $5 billion in surplus monies toward reducing the $7 billion deficit the state incurred in its UI fund when the unemployment rate skyrocketed to 17% last year during the early months of the COVID pandemic. What goes left unsaid quite often is that the spike in unemployment was caused by severe government restrictions that caused numerous businesses to cease operations, many of them permanently, thereby preventing able-bodied workers from doing their jobs. Earlier this year, to address the UI situation, the Legislature and Gov. Baker approved legislation that will enable the state to borrow $7 billion to fill the UI gap and then create a process for issuing
MSADA the regular UI assessments for employers and also a separate COVID assessment to cover the deficit borrowing, payable for the next 20 years by surviving businesses plus any new businesses coming on line. As we have advocated to legislators and the governor previously, it is ridiculous to expect businesses to pick up the tab for a problem state government created – a state government, I might add, that saw no job layoffs or pay cuts, unlike the private sector, and instead quietly used taxpayer money to issue thousands of dollars of “work-fromhome” bonuses to legislative staffers. It is unclear as to how quickly the Legislature will take up the governor’s proposed close-out budget for FY21. The state comptroller needs the close-out budget to be enacted and signed by the governor before he can close the books on FY21, which is supposed to happen by October 31. (Readers may recall last year the dispute to close out FY20 continued embarrassingly into December.) In addition to the $5 billion surplus in FY21 that needs to be dealt with, the Legislature is still sitting on $5.3 billion in discretionary federal monies as part of the state’s distribution of American Rescue Plan Act (ARPA) monies. The Legislature and Gov. Baker have been in conflict as to how those monies will be spent. Hence, the Legislature has been slow-walking the process, as it will continue public hearings after Labor Day to take testimony from interested parties on how the ARPA monies should be used. While the governor is at least advocating for some relief for employers on the UI front, many legislators and progressive public interest groups see that as nothing more than a business-bailout. If life was fair, and it most certainly is not, surplus monies should be used to cancel the full amount of the pandemic-caused UI debt. Finally, as you receive your Q2 and Q3 UI bills, be sure to scrutinize them carefully to make sure that your assessments are correct. As you may recall, your Q1 assessments were too high, and the monies pulled from your accounts or you paid separately
were reduced as a result of the revised UI law. You should have been credited back any overpayments. Double and triple check your numbers with your controller or payroll vendor to make sure your billings, assessments, and payments are accurate. Never trust, and always verify.
COVID Paid Leave Extension Earlier this year the Legislature and governor created a COVID paid leave program to supplement the similar federal paid leave program. We issued a number of writings on this new law to distinguish it from the federal rules. Now comes talk from key legislators that they may seek an extension past the September 30, 2021, cutoff in order to accommodate state employees who will need to take time off to meet Gov. Baker’s new mandate that all state employees in the executive branch receive the COVID vaccine by October 17. The law was created to help all workers with up to one week of paid time-off to isolate, get a vaccine, deal with the shot’s side effects, or care for a family member with the virus. As the Delta variant works its way through the populace, look for our elected officials to extend current programs or create new procedures to assist the vaccination effort.
American Fidelity to Expand Offerings Our MSADA-endorsed employee benefits partner American Fidelity Assurance Company is committed to understanding the benefit landscape for auto dealership employees in Massachusetts, including how the state’s paid family and medical leave plans work and how these create specific needs for both younger employees and those looking to retire. We are working with American Fidelity as it seeks to introduce new Group Disability Income Insurance that meshes with the Massachusetts PFML benefits, provides enhanced benefit options, and allows many employees to pay less for disability coverage. Beginning in September, American Fidelity will be reaching out to all Massachusetts dealerwww.msada.org
ship clients to discuss these expanded offerings during the Fall enrollment period.
“Coffee with Coopsys”: IT Compliance and Best Practices Webinars Beginning earlier this year we rolled out with our associate member Cooperative Systems a series of 15-minute webinars regarding IT compliance issues and dealership best practices. “Coffee with Coopsys” is held on the second Tuesday of each month, 10:00 a.m.-10:15 a.m. Registration is complimentary for all MSADA members. The schedule of topics for the remainder of 2021 is as follows: • September 14 - What are the IT Policies and Procedures You Should Have in Place within Your Dealership? • October 12 - Social Engineering & the Importance of Security Awareness Training • November 9 – How to Manage a Proper PCI Compliance Program within Your Dealership • December 14 - Microsoft Licensing Compliance & Office365 Subscription Plans Check our bulletins for registration information for our future “Coffee” webinars for the remainder of the year.
September Webinars We will be offering a number of complimentary webinars for our members to cover compliance and business operations topics. Look for registration information in future bulletins. • Tuesday, September 14, Noon - EV/ Solar Infrastructure for Massachusetts Dealerships • Tuesday, September 21, Noon - Review Your Health Care Insurance Purchasing Program: Can You Do Better and Save Money? • Thursday, September 23, Noon - State and Federal Employment Law Updates • Monday, September 27, Noon - Voluntary Protection Products Compliance If there is a topic you think we should cover in a future webinar, please forward any suggestions to me. t
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MSADA L EGISLATIVE S CORECARD
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AUGUST 2021
BILL#
SPONSOR
SUBJECT
S183 S239 H407
Sen Crighton Sen Pacheco Rep Hunt
Amendments to Ch. 93B, the auto dealer franchise law.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
H365 H400
Rep Finn Rep Howitt
RTR Law amendments to fix Model Year start date and consumer notice.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
H336 H361 S234
Rep Chan Rep Finn Sen O’Connor
Creates process to appeal improperly issued Class 1 license.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
S180 H421
Sen Crighton Rep Lewis
Modernize on-line purchase process.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
H345
Rep Cusack
Clarifies licensure to finance small loan contracts with negative equity.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 12, 2021.
S226
Sen Moore
Amends definition of heavy-duty trucks under RTR law.
SUPPORT
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
S245 H470
Sen Velis Rep Walsh
Open safety recalls notifications.
OPPOSE
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
H423
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
Joint Committee on Consumer Protection held public hearing on July 19, 2021.
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.
H3321 H3368
Rep Hill Rep Roy
Promote sale of EVs.
SUPPORT
Joint Committee on Telecommunications, Utilities, and Energy held public hearing on July 28, 2021.
AUGUST 2021
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Massachusetts Auto Dealer www.msada.org
Troubleshooting
MSADA
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Dealer Plate Usage and Window Stickers By Peter Brennan, Esq. MSADA Staff Attorney
Having seen many dealer-plated vehicles on the roads of the Commonwealth this Summer with no visible window stickers, it seems that a quick refresher on the proper usage of Dealer Plates is in order. For starters, the following individuals, and only those individuals, may have unrestricted use of a dealer-owned motor vehicle being operated with the general registration plate assigned to the dealer: • a dealer; • the spouse of the dealer; • a co-owner of the dealership (a person who holds at least a 40% proprietary interest in the dealership); • the spouse of a co-owner; and • any employee who works at least 20 hours per week as a salesperson for the dealership. Do not forget the window stickers! A dealer-owned vehicle that is to be driven with a dealer plate is technically part of the dealer’s inventory and, thus, available for sale or lease. Current state and federal laws dictate that certain stickers be affixed to vehicles offered for sale. Therefore, under the Massachusetts dealer plate law, these required vehicle stickers must be displayed on any vehicle being operated with a dealer plate. Such stickers, based on being a new or used vehicle, are variously required as described below. The following stickers are required on new vehicles: • The “Manufacturer’s Suggested Retail Price” label (the “Monroney Label”), required by federal law to be placed on
the windshield or side window of passenger vehicles, station wagons, passenger vans, and recreational vehicles. It is not required on pick-up trucks, although manufacturers voluntarily have chosen to place it on them. • The EPA Fuel Economy label, which may be included in the MSRP label, is required by federal law to be placed on the windshield or side window of passenger vehicles, station wagons, passenger vans, recreational vehicles, and pick-up trucks. • The “New and Lease Car Warranty Law” yellow sticker is required by state law (MGL Ch. 90, §7N½, and 201 CMR 11.23), and provides information on a purchaser’s new vehicle warranty rights. The following stickers are required on used motor vehicles: • The “Used Car Buyer’s Guide” sticker, required by the Federal Trade Commission, informs a potential purchaser of the warranty protection that accompanies the sale of the used vehicle by that dealer. The Buyer’s Guide must be posted prominently and conspicuously on or in a vehicle when a car is available for sale. It must be in plain view and both sides must be visible. You can hang the Guide from the rear-view mirror inside the car or on a side-view mirror outside the car. You can also place it under a windshield wiper or attach it to a side window. A Guide in a glove compartment, trunk, or under the seat is not conspicuous because it is not in plain sight. You may remove the Guide for a test drive, but you must replace it as soon as the test drive is over. • The “Used Vehicle Warranty Law” yellow sticker is required by state law (Ch. 90, §7N¼, and 201 CMR 11.22), and informs a consumer of his or her rights under the state used vehicle warranty law. This sticker must be affixed to a window or placed on the dashboard. • The “Refund Rights” Sticker is required when you ultimately sell a dealer-plated www.msada.org
used motor vehicle to a customer who intends to use it for personal or family use. This sticker is required under state law, MGL Ch. 90, §7N, and advises the buyer to have the vehicle inspected within 7 days after purchase. This sticker must be displayed in the left front window of the used motor vehicle at the time of delivery to the buyer. (No law prohibits you from placing this sticker on sooner if you choose to do so.) Providing a vehicle with the above New Motor Vehicle and Used Motor Vehicle stickers as required by law may create a visibility hazard on some vehicles when being driven. The law, however, does not create an exception for these circumstances. If you want to operate with a dealer plate, the required stickers must be on or in the vehicle. Failure to do so will likely result in a traffic citation and an RMV “Section 5” hearing, which may result in the suspension or revocation of one or more of your Dealer plates. One additional sticker reminder: The Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) regularly visits franchise new-car and used car dealerships across the state to assess compliance with state motor vehicle warranty notice laws, especially as they relate to those yellow Lemon Law stickers dealers must have affixed to vehicles offered for sale. 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. While the practice was suspended during the pandemic, OCABR is overdue for a visit. 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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AUTO OUTLOOK
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Charging Forward As 2021 continues to be dominated by shortages, the metal that is heading to dealerships is making the promise of electric vehicles real. By Stephanie Power Supply is still low, but the good news is that people are excited by what is making its way to dealer lots. While this may be the Summer dealers and customers remember for how difficult it was to get their hands on the wheel, the products are breaking new ground. For Village Automotive Group President Ray Ciccolo, this is the electric Summer. “The future is now, and it is electric,” Ciccolo said. “Thanks to the microchip shortage and electric vehicles that were already in the supply pipeline, more people who wouldn’t have considered electric cars before are being converted.” Ciccolo believes the hype. He said he AUGUST 2021
Massachusetts Auto Dealer www.msada.org
wanted to have the electric experience himself in order to better represent them for customers, who sometimes still talk about “range anxiety,” a fear of losing battery power on the road and being stranded. Ciccolo drove a Porsche Taycan this Winter and said the technology is intuitive and equipped to keep drivers moving. Manufacturers factor in extra mileage capacity before a battery bottoms out, Ciccolo noted, and recharging times are much faster than you might expect. “Public charging networks are popping up more and can be found as easily as using an app on your smartphone,” he said. With the $7,500 federal tax grant offered to buy an electric vehicle and the Massachusetts legislature working on a similar rebate of $2,500, Ciccolo thinks electric makes sense. “The more you learn about electric vehicles, the more comfortable you become and
MSADA convinced. They are just fabulous,” he said. Across the board, manufacturers are responding to calls for zero and low emission vehicles with longer battery range, artificial intelligence that complements consumers’ digital lifestyles, and high power performance that can be breathtaking for adrenalin lovers while offering maneuvering capabilities that ensure a safe ride. Since reporting on the future of electric in January, the landscape continues to grow. Jaguar says it will only sell electric by 2025, and GM will go fully electric by 2035. Jeep promises a 4xe model, their plug-in hybrid design, in every SUV segment by 2025, also committing that 70 percent of all Jeeps sold will be electric by then. With all the specifications, trends, and imagination to satisfy, here are some of the most buzzworthy models:
Jeep Cherokee 4xe
Pairing impressive off-road capability with on-road refinement, the 2022 Jeep Cherokee gasoline-electric hybrid will introduce a more modern design in the classic SUV, with a tworow body style and a shorter wheelbase. According to Car and Driver’s website, the electrified Cherokee will feature the same hybrid powertrain motor that powers the 2021 Jeep Wrangler 4xe, though Jeep has yet to confirm this. SPECS: EPA Range: 22 miles Combined Range (MPGe): 49 Looking Ahead: Jeep brand CEO Christian Meunier said in a July 8, 2021, Youtube marketing video the Wagoneer and Grand Wagoneer will eventually get the 4xe treatment, too.
Hyundai Ioniq 5 The 2022 Hyundai Ioniq 5 is a new, all-electric compact crossover. Originally earmarked as a Hyundai sub-brand, the Ioniq name has also been added to many of upcoming EV models. The Ioniq 5 is expected to make it to lots in the Fall. SPECS: EPA Range: 290 miles HP: 320 Starting Price: $45,000
SPECS: EPA Range: 290 miles HP: 320 Starting Price: $45,000
Ford Mustang Mach-E and Bronco Ford has stated that its goal is for 40 percent of its global volume to be electric vehicles by 2030. A May 26, 2021, tweet by Ford spokesperson Mike Levine hinted that the company is designing an all-wheel drive, cross-model electric architecture for “cargo vehicles, pickups, and rugged SUVs.” Bronco fans will note, according to Motor Authority’s website, the Bronco is a rugged SUV. www.msada.org
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Volkswagen ID.4 For now, the Mustang Mach-E is Car and Driver’s pick for 2021 Electric Vehicle of the Year. SPECS: EPA Range: 270 miles Starting Price: $43,995 Combined Range: 90 MPGe Combined Power: 346 hp Combined Torque: 428 lb-ft
Polestar 2
2021 World Car Awards Car of the Year An electric crossover compact SUV, the ID.4’s clean aerodynamic lines make for a striking presence on the road. Plenty of room inside makes for a comfortable cabin that will transform how you think about EVs. SPECS: EPA (Battery Only) Range: 260 miles Starting Price: $39,995 Estimated Charging Time (at a public DC fast charger): 62 miles in about 10 minutes
Volvo XC40 Recharge
Jointly owned by Volvo and Zhejiang Geely Holding of China, Polestar makes luxury cars that connect to the largest worldwide charging network, according to polestar.com. Polestar 2 is a highly customizable, all-wheel drive, four-door sedan featuring hands-free Google Assistant and a panoramic glass roof. According to Ciccolo, who just opened the first Polestar showroom in New England, the momentum is “unbelievable.” Polestar 3 is an even larger electric SUV set to come out in 2022 and will be manufactured in South Carolina. SPECS: EPA Range: 233 miles Starting Price: $45,900 Bragging Rights: 0-60mph in 4.5 sec for dual motor modAUGUST 2021
Massachusetts Auto Dealer www.msada.org
With two electric motors, the XC40 Recharge has 402 horses, employs user friendly Google software with voice recognition, and leaps to 60 mph in 4.3 seconds. Volvo is offering a unique return offer. If after five months on a two-year lease subscription a customer is not satisfied, the customer can return the XC40 and cancel the remaining subscription with no consequence. SPECS: EPA Range: 208 miles Combined Range: 79 MPGe (Miles per Gallon of Gasoline-Equivalent) Starting Price: $55,085 t
ACCOUNTING
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Cost Savings: A Never Ending Battle Make sure you are taking advantage of these opportunities to reduce what you owe.
Todd Merriam O’Connor & Drew, P.C
The old saying “Nothing is certain but death and taxes” should be updated to include cost increases. Especially over the last year, shortages in various consumer goods have driven the price of everything. While our industry has profited handsomely due to inventory shortages, cost management should always be at the forefront of any dealer principal’s mind. John Corcoran of Rinn Advisors specializes in helping businesses reduce costs on a contingent basis. John has worked with several auto dealers in New England on implementing plans to reduce costs. According to John, the top five opportunities he has seen with auto dealers are as follows: 1. Workforce Training Grants Massachusetts has training-grant funds for businesses to increase profitability and help employee retention. Companies can receive up to $250,000 for each EIN. These funds can be used to hire trainers or utilize classes that can improve your employees’ service writing skills, sales techniques, safety, accounting, time management, and other topics which can help improve employee skillsets and ultimately the bottom line. Recently, some clients have been able to utilize these funds for trainings offered by NADA.
2. Rooftop HVAC Retrofits HVAC rooftop units drain power as fans in most rooftop units run 24/7. The electric utilities have efficiency programs to retrofit these units with variable speed motors which turn the fans on and off as needed. These motors use sensors to determine the actual heating/cooling need rather than constantly running. This vastly improves efficiency and can reduce your utility bill by up to 15-20%. Utilities often have special programs where these can be retrofitted at zero cost to you.
enough negotiation time. By negotiating and reviewing early, dealerships have found opportunities to reduce your premiums while maintaining equal or better coverage. 5. Class-Action Payouts Many dealerships have received significant checks from the Auto Parts class action suit in recent years. There are other pending large B2B class action potential payouts that dealerships can receive proceeds from:
“While our industry has profited handsomely due to inventory shortages, cost management should always be at the forefront of any dealer principal’s mind.” 3. Credit Card Fees Escalating and added fees are the norm with relationships with credit card processors. Each month there is fine print notifying you of new or heightened fees starting the next cycle. These fees always go unchecked and eventually add up to a significant profit for the processors. Compare your first statement with a processor to your most recent statement; if there is a large jump in fees, it may be time to negotiate. 4. Insurance policies Insurance is an area that dealerships can look to for cost savings. Insurance renewal costs have continued to increase with time. As much as they are trusted advisors, insurance agents are commissioned sales representatives. As one of the largest expenses in a dealership, negotiation discussions should start six months before the renewal to ensure www.msada.org
• CDK/Reynolds and Reynolds. Any dealership with R&R/CDK Dealer Management Systems after April 2014; • Credit Cards. Any Visa/MasterCard/ AMEX card processing after January 2004; • Nextgear. Any dealer using Nextgear floorplan financing 2005-2013; • Television Advertising. TV ads since January 2014; and • Blue Cross Blue Shield. Any company which had BCBS after 2008. While we hope the profitable times of the last few months continue to last, it’s always a good idea to keep an eye on all vendor invoices for cost increases. t For further information on cost reduction strategies, contact Todd Merriam at tmerriam@ocd.com or John Corcoran at j.corcoran@rinnadvisors.com.. Massachusetts Auto Dealer
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NEWS NEWS the NEWSfrom from Around from Around Around the Horn Horn NEWS
NEWS the Horn
In Memoriam
William P. ‘Bill’ DeLuca, Jr. Family man, self-made businessman, philanthropist William P. “Bill” DeLuca, Jr., 87, passed in late July, surrounded by his family at High Pointe Hospice House in Haverhill. He was the husband of Kathleen M. (Manning) DeLuca for 67 years. Born and raised in Lawrence, the son of the late Dolores (Roy) and William P. DeLuca, Sr., Bill graduated from Lawrence High School, class of 1951. He enlisted in the United States Navy and proudly served his country until his honorable discharge in 1954. Having married Kathleen in March of that year, Bill was happy when he and Kathleen returned home and began their new adventure. Before long, Bill became the owner of a local gas station in Lawrence. With a passion for cars, he soon began selling used cars as well. In 1960, his first new car franchises were Jeep and MG. In 1965, he became the Dodge and Jeep Dealer in Haverhill. By 1970, he had sold the Dodge franchise and became the owner of a Chevrolet franchise also located in Haverhill. In 1975, he had the opportunity to purchase Woodworth Motors and has continued to own that franchise. In the early ‘60s, he was one of the first to lease automobiles and at one point was hired by Chrysler to train all their new car franchises on leasing. In 1978, he formed a daily rental company called Mr. RentA-Car-Lease-A-Car. Bill ran and operated that business having over 25 locations with local franchises. Eventually that business wound down when the need for consumer financing for those with subprime credit was realized called Auto-Use. As an offshoot of that business, he started a floor plan company lending money to used car dealers throughout the United States. In 1995, he was instrumental with the start of two more businesses. He began the Auto Auction of New England, a wholesale auto auction for only new and used car dealers to trade and sell automobiles. Later that year, he incorporated Southern New Hampshire Bank and Trust, and has since changed the name to Bank of New England, and grown the bank to nine branches and $1.2 billion in assets. All companies combined today employ almost 500 people, most of which are longtime employees that have been with him for years. A hard worker by nature, Bill was always looking to improve the experience of his customers and earn their respect. While not at work, he focused on family,
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Massachusetts Auto Dealer www.msada.org
always present for them and eager to offer a helping hand. He loved his time spent with his family, their meals together, their company during the holidays, a barbecue, or time spent together on their family trips. Bill cherished those memories. Evenings of playing 45s, bowling, playing tennis, and golfing offered him the opportunity to spend time with his many friends, which he enjoyed so much. He loved football and became friends with early Patriots’ legends Babe Parelli, Gino Cappelletti, and Larry Eisenhower. He was a lifetime season ticket holder and went to every Super Bowl game. He loved his annual trips to Las Vegas and Puerto Rico with his friends. In 1970, he became personal friends with NHL Hall of Famer John Bucyk and his wife Ann and traveled to their summer home in Canada. His favorite charity was the Greater Lawrence Boys and Girls Club. As a member himself at a young age, he wanted to give those kids an opportunity. Even after passing on his automotive business to the next generation, Bill made a hobby of traveling to auto auctions. His son, Bill DeLuca III, recalls: “At one point, we found a 1959 Cadillac 62 series convertible, his dream car that he was always looking for, and we surprised him with it for his birthday. He was happy, but also disappointed. It was always more about the thrill of the chase for him, and less about the car.” In addition to his parents, Bill was predeceased by his son, Joseph. He is survived by his children, William P. DeLuca, III and his wife Maz, Marybeth Finn and her husband Paul, and Lisa A. Drew and her husband Robert Drew, Jr.; grandchildren, William P. DeLuca, IV and his wife Julianna, Kristen R. Picardi and her husband Anthony, Anthony J. DeLuca and his wife Ashley, Steven J. DeLuca and his wife Allison, Marisa K. DeLuca, Hayley Finn, 1st LT. Brian Finn USMC, Garrett Finn, Jack Finn, Nicholas R. Drew, Robert M. Drew, Annalisa Drew, Jacqueline R. Drew; siblings, Marie Parker, Dolores Collier, Bernadine Joyce Marcin and her husband Billy Dean Cornelius, Albert DeLuca and his wife, Joyce, Laureen Terry and her husband Thomas, Nanci Caughlin and her husband Kevin; twelve great-grandchildren; and many cousins, nieces, and nephews.
MSADA
NEWS from Around the Horn
HYANNIS
Copeland Buys Prime Automotive Subaru and Chevrolet Dealerships Copeland Automotive has finalized the purchase of two dealerships from Prime Automotive Group in Hyannis. Copeland now owns Subaru and Chevrolet stores that had been owned by Prime since 2018. “We are seeing more full-time residents on Cape Cod,” owner Todd Copeland told The Cape Cod Times. “We are here to grow with it.” BOSTON
Six Dealers Earn Nissan Award of Excellence Six Massachusetts dealers received the 2021 Award of Excellence from Nissan. “We are thankful to have such a talented and dedicated team moving us forward,” the company said in a statement. “Your work has made this year an exciting one, and with everything that is set to come we know the thrill has just begun.” Awardees include: Brian D. Kelly, Kelly Nissan of Woburn Jeffrey J. Batta, Milford Nissan John L. Sullivan, Sullivan Bros. Nissan in Kingston George T. Albrecht, Marlboro Nissan Edward Kardon, Nissan 24 in Brockton Daniel S. Dagesse, Boch Nissan South in North Attleborough SOUTHWICK
Carvana Withdraws Plans for Processing Facility Contractors have requested to withdraw their special permit application for a large Carvana car processing facility in Southwick. In a letter, developers informed the Southwick Planning Board of their request to withdraw without prejudice the plans for the proposed Carvana car processing facility, hours before a scheduled public meeting where residents were expected to oppose the project. Traffic was a big concern for residents, as the massive facility would have brought 2,600 vehicle trips and 90-car carrier trips to and from the site daily. “Carvana is not welcome in Southwick,” Zoe Falken of Southwick said. “So if any of you are watching, you are not welcome. Please do not ruin our community.” t www.msada.org
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ACCOUNTING
Cash Management
Some buckets to consider for your balances
Bart Haag Albin, Randall & Bennett
Eighteen months ago, it would never have crossed my mind to write this article. I would have written about opportunities to raise more cash. I would have thought we would be advising clients on how to survive in this downturn. However, the opposite happened. We are now advising clients what to do with their excess cash and how to manage it in anticipation of a delayed downturn. Thanks to the Paycheck Protection Program and a stronger than expected business environment, we are working with dealers on a plan to withstand inventory shortages and ways to take advantage of the situation in which we now find ourselves. Many of our clients, depending on their size, are separating their cash reserves into short-term, mid-term, and long-term needs. We base our plan on filling the following buckets with their cash balances: • Bucket.0: The short-term bucket includes cash on hand and other highly liquid cash equivalents, such as savings accounts. These balances generally bear no interest or small amounts of interest and are available for operations. • Bucket.1: This is another short-term bucket, which includes cash deposited in floorplan offset accounts and cash used to pay-down floorplan balances. The amounts used to pay down actual floorplan balances are usually due to excess funds being available for the offset account. Because the offset accounts are usually a percentage of floorplan, AUGUST 2021
for example, the bank might allow the dealer to “offset” 50% of their floorplan balance in this account. This takes some management because every dollar used to pay down the floor plan balance also reduces the amount available in the offset account. With a little planning, however, these balances are manageable, especially when more than one floor plan source is used. These cash balances earn interest, usually at the floor plan rate, and are highly liquid. • Bucket.2: This mid-term bucket generally includes mid- or long-term investments in a brokerage account. With some
cludes investments that cannot be liquidated easily. They are usually invested with a minimum time horizon of three to five years, but could be longer, and include investments in private equity funds or other long-term investments. • Other bucket: The other bucket is usually where you would list lines of credit and other investments that will give you quick access to cash to take advantage of opportunities or capital improvements until more long-term financing can be obtained. Each of these buckets should include a plan for a target balance and should
With a plan, dealers should be able to manage their cash and maintain enough cash to take advantage of opportunities and weather any storms created by inventory shortages. planning, the owner of these accounts can generally establish a line of credit against the balance, so it is accessible when there is an immediate need for cash. The investments in this account will dictate the amount of cash available through this line of credit, but it can be as high as 90% of the investment balance. The expectation is that these balances will earn a higher rate of return than the balances in bucket.1. The time horizon for these funds is generally around three years or more. • Bucket.3: This long-term bucket in-
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be monitored on a weekly basis. During a cash management meeting, the participants should come prepared to discuss transitioning from one bucket to the next and managing working capital to ensure manufacturer and bank compliance. With a plan, dealers should be able to manage their cash and maintain enough cash to take advantage of opportunities and weather any storms created by inventory shortages. t
MSADA
LEGAL
Vaccines, Masks, and Accommodations By Joseph W. Ambash, Jeffrey A. Fritz, and Joshua Nadreau of Fisher Phillips, LLC When we wrote about loosening COVID-19 restrictions back in May, we hoped COVID-19 would soon be in our rearview mirror. Vaccines were plentiful, masking orders were rescinded, and the economy was roaring back to life. Fast forward four months and the Delta variant is causing more headaches for employers. In the absence of government mandates, dealers are questioning whether to require vaccines, and, if so, how to handle legitimate requests for accommodations. Can my Dealership Require Vaccination? According to the Equal Employment Opportunity Commission (EEOC), you may require vaccinations and can legally exclude unvaccinated individuals from your workplace, with some exceptions. Excluding an employee from the workplace does not mean the employee may be automatically terminated, however. You may be required to provide reasonable accommodations to employees who are unable to take the vaccine due to certain medical or religious reasons. Because your basis for requiring the vaccine will affect how the accommodation process may unfold, you should consider your policies and rationale thoughtfully. If you make any vaccine mandatory, you should ensure your policies fully inform employees of how to seek an exception as an accommodation. You must also be prepared with a full accommodation procedure. (This should already be in place, but if it is not, now is a great time to implement one.) You should also have policies and procedures in place addressing whether the time non-exempt employees spend getting a vaccine will be treated as “hours worked.” If the vaccine is required, this time should certainly be paid. In fact, this is the position of the Massachusetts Attorney General. If the vaccine is not required, the time would not necessarily have to be paid, though treating it as time worked would likely increase the employee vaccination rate.
Whether you mandate vaccinations is up to you. Many employers, however, are choosing to encourage rather than mandate the COVID-19 vaccine. Such a policy will often permit a vaccinated employee to work without a mask, while requiring unvaccinated employees to continue masking. Other employers have offered financial or other incentives to employees willing to get the vaccine. If We Require (or Encourage) Vaccination, What Proof Can We Collect? You should ask your employee to provide documentation from the immunization source showing the dates the vaccine was administered, i.e. the employee’s CDC vaccination card or other reliable proof. To avoid potential legal issues related to this process, you should affirmatively inform employees they do not need any additional medical or family history information. Like other employee medical information collected from time to time, proof of vaccination should be treated as a confidential medical record and securely stored separately from personnel information. How Should We Handle Employee Requests for Accommodations? A tremendous amount of misinformation exists about whether and to what extent you must grant an accommodation or exception to a mandatory vaccination policy. To start, only accommodation requests based on disability, pregnancy, medical condition, or sincerely held religious beliefs require an employer to potentially alter its vaccination policy. Requests for accommodations based on political beliefs, conspiracy theories, or what the employee read on Facebook are insufficient. Legitimate requests should be handled just as you would handle similar requests for accommodation. You must engage in the interactive process with the employee to determine whether a reasonable accommodation exists that will not cause your business undue hardship. To further this www.msada.org
process, you should adopt (if you have not already) a reasonable accommodation policy, along with accommodation request forms. Sample forms drafted by Fisher Phillips are available at www.fisherphillips. com. These forms will provide you with the information necessary to make an informed decision about the request. In some cases, allowing an unvaccinated employee to continue working while wearing a mask and maintaining appropriate social distancing may be a reasonable accommodation. In some instances, however, it may not. Such a decision must be made (and thoroughly recorded) on an individualized basis. You should take into account factors such as community spread, current CDC or Massachusetts Department of Public Health guidance, the type of work environment, such as: whether the employee works alone or with others or works inside or outside; the available ventilation; the frequency and duration of direct interaction the employee has with other employees or customers; the number of partially or fully vaccinated individuals already in the workplace; whether other employees are wearing masks or undergoing routine screening testing; and the space available for social distancing. If, however, you reach a conclusion that you cannot accommodate the unvaccinated employee in the workplace, you should consider alternative accommodations, such as telework or an unpaid leave of absence. You are strongly encouraged to seek the advice of counsel as you navigate the accommodation process. Guidance on these subjects continues to change on a daily basis as all levels of government assess the current state of the Delta variant and its spread. While Massachusetts has not reverted to a state-wide mask or imposed a vaccine mandate applicable to private businesses, several communities have. Dealers are encouraged to keep up-to-date with the rapidly evolving guidance and to contact counsel with any questions. t
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JULY 2021
Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
Tight inventories continued to limit new light-vehicle purchases in July, with sales falling for a third consecutive month to a SAAR of 14.8 million units. The SAAR in July was roughly flat compared with July 2020, but was down 12% from July 2019. Retail sales are expected to account for over 90% of total sales volume in July, as OEMs continue to prioritize production for retail customers. Market share for most major segments changed little from June 2021.
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Massachusetts Auto Dealer www.msada.org
Yet share for the popular and profitable large-pickup segment did continue to fall, since many OEMs have had to limit production because of the ongoing microchip shortage. According to Wards Intelligence, the large-pickup market share was 13% in July, down from 15.2% in July 2020 and the lowest share for big trucks since July 2016. t
MSADA
ACCOUNTING
www.msada.org
Massachusetts Auto Dealer
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AIADA Brief
MSADA MSADA
To Meet EV Goals, the Auto Industry Must Work as One Snubbing international nameplates will not help accomplish the Biden administration’s plans.
By Cody Lusk AIADA President & CEO
In my experience as an auto association executive, there are times that call for soft words and negotiation, and there are situations that require a more direct tone. As far as the latter, those truths can often be best expressed by the deal-
emission vehicles. It is a big and bold plan, designed to generate headlines, but is it feasible? “Even to an optimistic third generation auto dealer like me, the answer is only ‘maybe.’ Unless the Biden administration can accept that a few preferred automakers are not going to accomplish this goal on their own, his plan is doomed. “Why am I so skeptical? It is not because I do not believe in an electric future or climate-saving technology. I want to sell what Americans want to buy, and I believe the time is now for powerful leadership on climate change. What makes me doubt the success of Biden’s plan is his unyielding adherence to the old-school
You cannot pretend we do not exist whenever it is convenient, and then demand that we quietly work behind the scenes to make your moonshot announcement a reality. ers themselves. For a prime example, please read on to get AIADA Chairman and Kentucky dealer Steve Gates’ take on what our federal government needs to do if it wants to stop playing politics and get serious about promoting electric vehicles. “On August 5, President Biden stood on the White House lawn, flanked by Detroit-based automotive CEOs and UAW officials, to announce an ambitious (but non-binding) pledge to ensure 40-50 percent of all auto sales in 2030 are zero AUGUST 2021
politics of generations past. He clearly believes that unions brought him to the White House and unions will keep him in power. He has zero interest in working collaboratively with non-union manufacturers, no matter how many good-paying American jobs they generate or how critical they are to achieving his zero-emissions vision. “Do not take my word for it. When reporters asked White House Press Secretary Jen Psaki why GM, Ford, and Stellantis were invited to the White House but
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not Tesla, the leading seller of EVs in the U.S., she said, “Well, these are the three largest employers of the United Auto Workers, so I will let you draw your own conclusions.” That snub presumably extends to all international nameplate brand manufacturers, who collectively have 31 U.S. manufacturing plants, 131,000 employees, and a 55 percent market share of America’s new vehicle sales. “Personally, I am fed up with this administration’s diminishment of the investment international nameplate brands and dealers make in America. You cannot pretend we do not exist whenever it is convenient, and then demand that we quietly work behind the scenes to make your moonshot announcement a reality. It is insulting, and it is not going to work. Biden is pandering to a Democrat pro-union base that is rapidly shrinking, even announcing his support for EV incentives provided only for union-built vehicles. He needs to update his political playbook and look around at the reality of U.S. auto manufacturing today. We are a global industry, as evidenced by his friends from Stellantis, a Dutch-domiciled corporation created from a merger between the Italian-American conglomerate Fiat Chrysler Automobiles and the French PSA Group. “If we want to create a bold new electric future for automotive, the Biden administration needs to stop living in the past. America’s international nameplate manufacturers are not unionizing and they are not going anywhere. Get used to it and work with us, or good luck achieving that (non-binding) EV pledge on your own.” t
MSADA
TRUCK CORNER
ATD Applauds Rep. Chris Pappas’ FET Letter 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
Congressman calls for repeal of 12% excise tax on heavy-duty truck dealers In late July, U.S. Rep. Chris Pappas (D-New Hampshire) sent a letter to the Democratic leaders of the U.S. House of Representatives calling for repeal of the 12% federal excise tax (FET) on new heavy-duty trucks and trailers. Rep. Pappas’ letter, signed by 30 House Democrats, including Massachusetts Rep. Lori Trahan (D), was sent to Speaker Nancy Pelosi and House Democratic leaders urging them to include FET repeal in upcoming infrastructure legislation and replace the tax with an equitable funding mechanism for the Highway Trust Fund (HTF). In his letter, Rep. Pappas highlights that repeal of the FET will help America’s truck fleets replace older heavy-duty trucks with newer, safer, and greener trucks, and ensure a more consistent revenue source for the HTF. “New heavy-duty trucks today have the latest emission control and safety technologies and are cleaner, safer, and more fuel efficient. With more than half of the Class 8 trucks on the road over 10 years old, repealing the FET would benefit the environment and improve highway safety by accelerating fleet turnover,” the letter stated. The FET was first enacted by Congress in 1917 to help fund our effort in World War I and is the highest excise tax on a percentage basis that Congress levies on a product, often adding over $20,000 to the price of a new heavy-duty truck. The tax has also increased more than 300 percent since it was first enacted. And
the tax, coupled with recent regulatory costs, makes it more difficult for small businesses to afford a new truck, especially alternative-fueled trucks, which have higher up-front costs. Congressional support for repeal of the excise tax is gaining steam because lawmakers recognize that the outdated FET impedes deployment of the next generation of commercial trucks. Newer trucks incorporate the latest in efficiency and safety technology. Repeal of the excise tax would give businesses more money to invest in cleaner, safer, and more fuel-efficient equipment, including adoption of technologies such as lane departure and collision mitigation systems, as well as idle reduction systems and aerodynamic equipment. On behalf of the trucking industry, we thank Congressman Pappas for his efforts to promote the adoption of newer, greener trucks and to protect the 1.3 million jobs supported by Class 8 truck and trailer manufacturing. On July 22, Sens. Todd Young (R-Indiana) and Ben Cardin (D-Maryland) introduced bipartisan legislation, S. 2435, to repeal the FET and modernize America’s heavy-duty truck fleet. The full text of Rep. Pappas’ letter and a list of House Democratic signatories can be found at www.nada.org/atd. For more information on the FET, an infographic and a one-page issue brief is available at the same website. t
“Repealing and replacing the FET will speed up the adoption of newer, cleaner, and safer trucks on the road by making them more affordable.”
www.msada.org
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NADA Update
By Scott Dube
The Show Returns to Vegas
As excitement builds for the next NADA Show, we affirm that safety is No. 1 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. Earlier this month, I joined CBT News host Jim Fitzpatrick to discuss the 2022 NADA Show coming back to Las Vegas on March 10-13. As NADA Show Committee Chairman, I discussed the return of the NADA Welcome Kickoff Reception on the first night of Show, which will be headlined by Grammy Award-winning band Train. This exciting reception will be held at the brand-new Allegiant Stadium, home of Las Vegas professional football. Featuring all the energy of a rousing football tailgater, the reception kicks off with a spirited performance by Drumbots, the official drum line of the NHL Vegas Golden
“If you attended our 100th anniversary celebration in New Orleans, this is going to look like that on steroids.” Knights, followed by an energetic VJ playing top hits for a festive vibe. Reception attendees will have access to the field and various lounges within the venue, which will be decorated with festive sports decor and full of gourmet food and top-shelf beverages. Attendees are encouraged to bring their team spirit—and wear their favorite football jersey— to the stadium for this once-in-a-lifetime experience. I can promise that it is going to be exciting. As I told CBT, if you attended our 100th anniversary celebration in New Orleans, this is going to look like that on steroids. The facility is absolutely beautiful; the talent that we have selected is fantastic. It is very exciting to be back in Las Vegas. I also want to underscore NADA’s commitment to hostAUGUST 2021
ing a safe and responsible event. No matter what happens, we are going to do the right thing and run a responsible, safe Show. Whatever that means, whatever that takes, we are prepared to do. Stay tuned for more updates as NADA Show 2022 returns to Las Vegas. We cannot wait to welcome you back! Online registration and hotel selection opens Monday, September 13. For more information or to register for NADA Show, visit www.nadashow.org.
Five Dealership Safety Tips in Response to OSHA Safe + Sound Event The health and safety of the workplace remains front and center since COVID-19 has disrupted business operations around the globe. Dealerships have risen to the occasion by adjusting their operating procedures to ensure the safety and health of their customers and employees while keeping their doors open. As operating in the coronavirus environment is the new normal, August marks the Occupational Safety and Health Administration’s (OSHA) Safe + Sound event, recognizing the successful workplace safety and health programs that keep America’s workers safe and is an opportune time to ensure your dealership has the tools to manage and mitigate workplace hazards before problems arise. In celebration, NADA has compiled the tips below to assist dealerships across the country in maintaining a safe workplace. 1. Build a culture of safety. Empower dealership staff to help find solutions to workplace safety issues. When dealership employees are trained and familiar with all the latest workplace safety standards, they are ready to identify unsafe conditions, avoid accidents, and respond quickly and correctly if they happen. 2. Immediately clean and report any potential hazards or unsafe conditions. Addressing unsafe conditions (spills, leaks, fire hazard obstacles, etc.) and preventing injury starts with all employees. Employees must report unsafe conditions to their managers as soon as they notice something is not right. From wet floors to a broken handrail and more, make sure employees speak up to create a safe workplace for all. 3. Follow the latest safety standards and procedures. Whether there is a change in safety standards or a new health and safety risk (e.g., a pandemic), stay plugged into the lat-
Massachusetts Auto Dealer www.msada.org
MSADA est health and safety standards to protect your employees, customers, and business. NADA, along with dealership state associations, can provide guidance and resources to stay on top of changes and compliance challenges. 4. Ensure employees dress appropriately and wear necessary protective equipment. Proper workwear and safety gear (e.g., seat belt or protective eyewear) is a must when it comes to workplace safety, whether employees are operating machinery or working with hazardous materials. Proper footwear is just as necessary as it prevents slipping or falling. Understand what the proper protective gear and clothing is needed for each job task. 5. Set and Follow Emergency Protocols. Emergencies like fires, floods, or tornados typically do not announce themselves. Prepare for everything that can disrupt the safety of the company, employees, and customers. Identify risks. Ensure your insurance is in check. Create an emergency management plan. Make sure your employees complete relevant emergency training.
A Guide to Claiming the Employee Retention Tax Credit Congress created the Employee Retention Tax Credit (ERTC) in March 2020 to provide financial relief to small businesses during the pandemic. Here are some key facts about the ERTC and how to benefit from it. What is the Employee Retention Tax Credit? The ERTC is a credit against certain employment taxes for eligible employers that were shut down due to COVID-19 or that had business reductions in 2020 or 2021. Eligible employers may qualify for up to $5,000 per employee for 2020. For 2021, eligible employers can receive as much as $7,000 per employee per quarter for up to four quarters or up to $28,000 per employee. Because the ERTC has expanded over time, it can be tricky to figure out. When the CARES Act was passed in March 2020, eligible employers had to choose between taking an SBA-backed Paycheck Protection Program (PPP) loan or the ERTC, which meant that only a small number of dealerships considered the ERTC at first. That is no longer the case. To date, Congress has amended the ERTC twice – in December 2020 as part of the Coronavirus Response and Relief Supplemental Appropriations Act and in March 2021 as part of the American Rescue Plan Act. The goal of both legislative fixes was to allow more employers to take advantage of the credit and to clarify that they may be eligible for both forgivable PPP loans and ERTCs. Which Businesses Qualify for an ERTC? The ERTC requires that employers meet certain eligibility requirements. Specifically, an employer may be eligible for an ERTC if its business was fully or partially suspended
by a COVID-19 related government order; or • For 2020, its gross receipts fell by 50% or more versus the comparable quarter in 2019. When an employer’s gross receipts rose above 80% or more versus a comparable quarter in 2019, it did not qualify for an ERTC for that quarter. • For 2021, its gross receipts for the current or preceding quarter are below 80% of the comparable quarter in 2019. When an employer’s gross receipts go above 80% of the comparable quarter, it will not qualify for an ERTC in the next quarter. How to Calculate Your ERTC For 2020, eligible employers may claim a refundable tax credit against what they pay in Social Security tax on the “qualified wages” paid in an eligible quarter between March 12 and December 31, 2020. The credit is capped at 50% of $10,000 in qualified wages paid per employee (or $5,000). Any amount of an ERTC that exceeds an eligible employer’s Social Security tax owed may be directly refunded. For 2021, eligible employers may claim a refundable tax credit against what they pay in Social Security tax on the “qualified wages” paid in an eligible quarter between January 1 and December 31, 2021. The credit is capped at 70% of $10,000 in qualified wages paid per employee per quarter (or $7,000) for up to four qualifying quarters. For example, a dealership with a 20% reduction in gross receipts in Q1 2021 versus Q1 2019 may seek a tax credit of up to $7,000 per employee for the first quarter of 2021. If that eligibility continues through the rest of 2021, an ERTC may be claimed for each quarter in 2021. For a dealership with 50 employees, total 2021 credits could be up to $1.4 million. “Qualified wages” include health plan expenses (including any health plan expenses paid for furloughed employees). As noted earlier, eligible employers may include those that also took out forgivable PPP loans; however, PPP borrowers may not claim an ERTC for the same payroll costs used to qualify for PPP loan forgiveness. Another change: Employers with 500 or fewer employees may request an advance payment of the ERTC by filling out IRS Form 7200. Talk with a Tax Expert About ERTC Knowing whether the ERTC is right for your dealership and determining how much a credit is worth can be complicated. If you think your dealership is eligible, speak to your accountant, your payroll preparer, and (if necessary) your tax legal counsel before moving ahead. If you took out a PPP loan, your accountant and payroll preparer will help make sure you properly allocate payroll and nonpayroll costs for PPP loan forgiveness and ERTC purposes. t
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2021 Auto Dealer Symposium You are cordially invited to attend our 5th Annual Auto Dealer Symposium.
Learn the latest in Operational, Tax, and IT best practices geared specifically to dealerships just like yours.
Tuesday, October 19, 2021 10:30am - 2:00pm Sheraton Hotel, Needham, MA RSVP Online at: www.ocd.com/ads
Accounting • Tax • Business Consulting