August 2014 MSADA Auto Dealer by Massachusetts State Automobile Dealers Association, Inc

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

auto M A S S A C H U S E T T S

FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216

August 2014 • Vol. 27 No. 8

The official publication of the Massachusetts State Automobile Dealers Association, Inc

‘No Other Event Like This’

RECALL R E A D I N E S S

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 Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator mguerra@msada.org

The official publication of the Massachusetts State Automobile Dealers Association, Inc

TA B L E O F C O N T E N T S

4 6 10 11

FROM THE PRESIDENT: Looking Out for No. 1 THE ROUNDUP: Recall Madness TROUBLESHOOTNG: Post-Sale Exports LEGAL: A Retaliation Refresher: What Managers Need To Know

AUTO DEALER MAGAZINE Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator macdonaldcs8@gmail.com

Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: mguerra@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.

AUTO OUTLOOK

14 COVER STORY: Recall Readiness NEWS From Around the Horn NADA UPDATE: ‘Engage’ in Opportunities NADA MARKET BEAT

AD DIRECTORY Internet Sales 20 Group, 2 BlumShapiro, 19 Boston Herald, 28 Lynnway Auto Auction, 20 M&T Bank, 18 Nancy Phillips Associates, Inc., 19 Schlossberg, LLC, 22 O’Connor & Drew, P.C., 27 Southern Auto Auction, 17 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

Join us on Twitter at @MassAutoDealers COVER PHOTO: Crash Test Facility/MotorTrend.com

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Massachusetts Auto Dealer AUGUST 2014

from the PRESIDENT

by Scott Dube, MSADA President

Looking Out for No. 1 Why your Association is taking your case to Capitol Hill

s I write this, MSADA is ers, who are working tirelessly “We can never stop making sure our gearing up for the annual NADA day in and day out to make their representatives know who we are, what Washington Conference Sepbusinesses succeed. They’re we do, and how vital our contribution is tember 9-10. It’s our chance to putting food on the table for to the economy.” make sure our representatives their families, and by extension in Congress understand that we continue to struggle under the are doing the same for as many as 50 men and women in their weight of a inconsistent economy, and that the policies they purcommunities. They don’t have time to make a trip down to Washsue should be focused on making it easier to do business instead ington, and that’s why we feel privileged to speak on your behalf. of more difficult. While most of us are going to be going about our business that The more things change in Congress, the more they stay the week, it’s important to remember we all have the ability to play same. Each year it seems the same general principle is under atan important part. Our state Political Action Committee is a great tack: free enterprise. Of course, the scope of that problem is well way to make a big impact, and so is writing or calling your repbeyond any one industry. We keep our punch list short and stick resentative to check in. There doesn’t have to be some big issue with making sure our legislators understand that tax increases at hand. Simply saying hello, and inviting your representative to and regulatory changes may seem sensible while dreaming them come visit, will help immeasurably the next time a potentially up in their offices, but back in Dedham or Northampton or Hyandifficult piece of legislation crosses their desk. nis the small businesses that make up the fabric of those commuGet Ready for the Sept. 22 Internet nities are being stretched thin by the unintended consequences of Sales 20 Group their noble intentions. But we can never stop putting effort into making sure our repI hope you have already made plans to attend our upcoming resentatives know who we are, what we do, and how vital our Internet 20 Sales Group, which will take place at the Newton contribution is to their districts. Building these relationships Marriott Hotel from September 22-24. Internet sales guru Sean means that it becomes more difficult to write-off real business Bradley’s dynamic presentation along with a lot of other very acconcerns. Instead, we’re putting faces to names and doing the complished presenters such as Jim Zeigler, Scott Pechstein from best we can to establish some level of trust. Autobytel and others too numerous to mention promises to help We may not agree on every issue, but as folks such as NADA attendees set new benchmarks and develop individualized action Director Don Sudbay, ATD Chairman Dick Witcher and Direcplans. We’ve booked a block of rooms and invite you to join your tor Jim Boyle have proven these past couple of years, when the fellow dealers for a information packed conference. Please conchips are down the time put into establishing these relationships tact Executive Vice President Bob O’Koniewski with questions can really pay off. at rokoniewski@msada.org or (617) 451-1051. All of this work is done for the benefit of our member dealt

AUGUST 2014

Massachusetts Auto Dealer www.msada.org

MSADA

MSADA BOARD Barnstable County Gary Beard, Dick Beard Chevrolet

Berkshire County Brian Bedard, Bedard Brothers Auto Sales

Bristol County Richard Mastria, Mastria Auto Group

Essex County William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin County Jay Dillon, Dillon Chevrolet

Hampden County Jack Sarat, Jr., Sarat Ford

Hampshire County Bryan Burke, Burke Chevrolet

Middlesex County Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai 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 Mitsubishi Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]

Immediate Past President James G. Boyle, Tuck’s Trucks

NADA Director Don Sudbay, Jr., Sudbay Motors

OFFICERS President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian

A ssociate M ember D irectory Name Contact Telephone ADESA Boston Chris Carli (508) 270-5403 ADP Dealer Services Maria Trezza (973) 404-4466 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Tom Trudell (413) 885-5477 AutoAlert Don Corinna (949) 398-7008 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly (617) 929-8373 The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Cars.com Heidi Allen (312) 601-5376 CitNOW Jack Gardner (617) 221-8008 CloudDOCX Michael DeCarlo (585) 704-6826 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Inc. Mike Douglas (770) 246-9724 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance John Ballard (859) 312-9896 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 Key Bank James Q. Moretti (781) 558-5132 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Brendan J. Murphy (518) 878-6341 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Bosch (617) 312-2100 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp Dealer Services Frank Salkovitz (508) 832-9816 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 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Ping Weiner (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 Sovereign Bank Richard Anderson (401) 432-0749 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Steve White (774) 392-2904 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092

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Massachusetts Auto Dealer AUGUST 2014

The Roundup

Recall Madness by Robert O’Koniewski, Esq. MSADA Executive Vice President U.S. DOT/NHTSA Rollout Online Lookup Tool for Vehicle Recalls Over the last several months we have written extensively on dealers’ obligations when confronting the overwhelming number of recalls receiving coverage in the media. These responsibilities cannot be taken lightly, especially when state and federal consumer protection laws are at play. This month in our cover story we provide an overview of what the numbers mean and how manufacturers and dealers are coping. In a further step to bring additional transparency to the recall phenomenon for consumers and dealers alike, the U.S. Department of Transportation’s National Highway Traffic Safety Administration announced the launch of a new online tool to identify cars and light trucks with uncompleted recalls. By allowing Vehicle Identification Numbers (VIN) based searches, the lookup tool will help dealerships determine if particular used vehicles have any unremedied safety recalls. The lookup tool can be used prior to making a purchase or taking in a trade, for used vehicles in inventory, or to help provide consumers with useful safety recall information on their vehicles. In announcing its new tool, NHTSA specifically mentioned that it is “working with the National Automobile Dealers Association to help ensure that franchise dealerships across the United States become aware of and understand how to use the new VIN search tool.” NADA worked with NHTSA to prepare the document, “Dealer Tips for VIN Lookup and Vehicle Recalls.” NADA has also updated its document, “Safety Recalls Q&A for Franchised Deal-

AUGUST 2014

Massachusetts Auto Dealer www.msada.org

ers,” which provides guidance on how to handle recalls impacting new and used inventory and service vehicles. Dealers and consumers can access the new NHTSA tool at www.safercar.gov/vinlookup, where a consumer FAQ and other recall-related information also are available. Questions on vehicle safety recall issues or the new VIN-searchable database may be directed to NADA Regulatory Affairs at regulatoryaffairs@ nada.org or (703) 821-7040.

MSADA Compliance Program Update We have written previously about our new employment law/OSHA compliance program, which your Association is subsidizing partially on behalf of our member dealers. Since our rollout of the program in June, so far 23 dealer principals at 46 dealerships have taken advantage of this program. Are you one of them? If you are seeking assistance on employment law compliance, pay plan review, employee handbook and job application review, management training, or occupational and environmental safety, check out the materials we have sent you previously or contact me at rokoniewski@msada.org and we can get you in touch with the appropriate people at Fisher & Phillips, KPA, and Furrh Associates. Further, in continuing with our roster of Education and Compliance Seminars, we conducted an employment law compliance seminar with attorneys Joe Ambash and Jeff Fritz of Fisher & Phillips, on Wednesday, August 27, at the Beechwood Hotel, in Worcester. These are presented at no cost to our members and are a great way for dealer prin-

MSADA cipals, GMs, and HR personnel to receive updates on compliance issues in this area of the law. Be on the lookout for a seminar coming to your area. For a couple of hours in the morning attendees can get an overview of what needs to be done to keep their stores out of harm’s way.

Internet Sales 20 Group-Boston Fast Approaching On September 22-24, at the Marriott Newton Hotel, we will be joining forces with DealerSynergy to provide our member dealers and other affiliated industry entities throughout New England the opportunity to participate in a three-day series of workshops billed as “Internet Sales 20 Group – Boston”. DealerSynergy has conducted five similar events around the country, most recently in Atlantic City, with increasing attendance and success at each one. Register today at www.internetsales20group.com. Use the MSADA Member code to receive a reduced price ticket. This event will provide you with everything you need to move your dealership’s needle in the right direction. Learn more than just the information. Learn how to evaluate, strategize, and execute a solid action plan to rise above your competition.

Consumer Affairs’ Survey of Lemon Law Window Stickers Recently we heard from dealers who were visited by representatives of the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) several weeks ago. A follow-up phone call to OCABR confirmed that such visits did occur at a random sampling of new and used car dealers across the state. Readers may recall that OCABR conducted similar onsite visits at new-car and used car dealerships in 2009 and 2010. As part of its vast realm of responsibilities, OCABR administers the Massachusetts Lemon Law and Used Vehicle Warranty Law arbitration programs. OCABR

conducted a number of field visits at dealerships to assess compliance with state motor vehicle warranty notice laws, especially as they relate to those yellow stickers dealers must have affixed to vehicles offered for sale. On Monday, August 25, your Association attended an informational session held by OCABR regarding the field survey. According to OCABR, all dealerships that were surveyed have been informed of their results by letter. Additionally, the compiled survey results will soon be made available to the Association. Dealers should accept this as a reminder that, in addition to the various notices/ stickers required by federal and state law, Massachusetts law requires dealers to comply with the following two sticker requirements when offering vehicles for sale: 1. New and Lease Car Warranty Law sticker. For new motor vehicles and those used motor vehicles still within the term of protection which are sold, offered for sale, or displayed in Massachusetts, dealers must post on the vehicle the Massachusetts Lemon Law notice, as required by MGL Chapter 90, Section 7N½ and the regulations at 201 CMR 11.23. This is a yellow sticker and details a purchaser’s new vehicle warranty rights under state law. 2. Used Vehicle Warranty Law sticker. For every used motor vehicle covered by the warranties established under MGL Chapter 90, Section 7N¼ that a used car dealer sells, offers for sale, or displays in Massachusetts, dealers must affix to the vehicle’s window or the dashboard the Massachusetts Used Car Warranty Law notice, as required by MGL Chapter 90, Section 7N¼ and the regulations at 201 CMR 11.22. This is a yellow sticker and details a purchaser’s used vehicle warranty rights under state law. Each of these stickers can be purchased from Reynolds & Reynolds through our MSADA-Reynolds forms purchasing program. Call a sales representative at 800-344-0996 or 800-896-2886.

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Electric/Zero Emission Vehicles Special Commission On July 11 the governor signed into law the FY2015 budget totaling $36.5 billion. As previously reported, the budget plan includes an outside section creating a special commission on electric vehicles/zero emissions vehicles. The 27-member special commission includes two slots for Class 1 franchised dealers who sell electric vehicles as a segment of their vehicle inventory. The commission will study the economic and environmental benefits and costs of increased use of electric and other zero emission vehicles in Massachusetts, including making recommendations for policies to further expand access to electric and fuel cell vehicle infrastructure, encourage the purchase and lease of electric and fuel cell vehicles, and indentify strategies for removing barriers to electric and fuel cell vehicle deployment. An action plan will be created by September 2014 and draft legislation filed with the legislative clerks by April 2015. This proposed special commission is partly in reaction to eight states – California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island, and Vermont – coming together to create a plan to reduce greenhouse gas emission levels by encouraging consumers to purchase more electric-powered vehicles. The states seek to promote the sale of over three million zero emission vehicles by 2025 through a combination of consumer incentives and regulatory actions. (Presently there are only 200,000 nationwide.) The project aims to install recharging stations at workplaces, expand cash/ non-cash incentives for buying electric cars, and push dealers to promote electric vehicles. Robert Boch of Expressway Toyota and Scott Dube of Bill Dube Hyundai have volunteered to submit their names to the governor’s office for appointment to represent new car franchise dealers on the commission.

Massachusetts Auto Dealer AUGUST 2014

The Roundup Reminder on Other State EV Initiatives for Dealers Since mid-June the Commonwealth of Massachusetts has been administering the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program. Funded by the Executive Office of Energy and Environmental Affairs’ Department of Energy Resources (DOER), the MOR-EV program is part of the MultiState Zero-Emissions Vehicle Program, which was created in October 2013 through a Memorandum of Understanding entered into by the governors of the aforementioned eight states. Massachusetts drivers can now apply for rebates of up to $2,500 for the purchase or lease of new electric vehicles, including battery electric, plug-in hybrid electric, fuel cell electric vehicles, and zero-emission motorcycles. Applicants must apply for the rebate directly within three months of the completed transaction, and the approved applicants will receive their checks directly from the state. There is no action required on the part of the dealer. Rebate amounts are based on vehicle type and are available in the following amounts: • $2,500 rebate for fuel cell vehicles and plug-in electric vehicles with large batteries; • $1,500 rebate for plug-in electric vehicle with smaller batteries; and • $750 rebate for electric motorcycles. For a complete vehicle list, please visit https://mor-ev.org/eligible-vehicles-list. In order to be eligible, applicants must meet the following requirements: • Purchase or lease an eligible vehicle on or after the program start date of June 18, 2014; • Choose a lease term of at least 36 months, where applicable; and • Apply for the rebate within three months of vehicle purchase or lease date. Your Association has been working with the MOR-EV program administrators on the program’s roll-out. For more program details and requirements, dealers can: • Visit the MOR-EV program website at www.mor-ev.org; • Directly contact the Center for SustainAUGUST 2014

able Energy, the program administrator, by e-mail at mor-ev@energycenter.org or by phone at (866) 900-4223; or • Contact MSADA attorney Peter Brennan by e-mail at pbrennan@msada.org or by phone at (617) 451-1051. Provisions have been made by the Commonwealth to provide free materials and on-location orientation to sales managers and staff at dealerships. If you are interested in receiving a supply of program brochures and/or having a representative from the outreach program team provide an orientation at your dealership, please contact Eric Skelton at eskelton@nescaum.org or by phone at (617) 259-2028. Finally, dealers are reminded that the Massachusetts Department of Environmental Protection (DEP) is accepting grant applications from employers interested in installing electric vehicle charging stations at their business. Massachusetts employers with 15 or more employees in non-residential places of business are eligible, and the Commonwealth will provide 50% of funding (up to $25,000) of hardware installation costs for accepted applicants. Applications are processed on a first come, first served basis until all program funding is expended. Massachusetts Electric Vehicle Incentive Program (MassEVIP): Workplace Charging is a DEP open grant program that provides incentives to employers for the acquisition of Level 1 and Level 2 electric vehicle charging stations. Massachusetts employers with 15 or more employees in non-residential places of business are eligible. DEP will provide 50 percent of the funding (up to $25,000) for hardware costs to employers installing Level 1 and Level 2 charging stations. Workplace charging refers to the electric vehicle charging infrastructure or electric vehicle supply equipment (EVSE) which is available for electric vehicles at or near places of employment. According to the DEP materials, workplace charging: • Allows access to EV charging for employees who do not have charging at home; • Demonstrates the employer’s leadership to employees, customers and the

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surrounding community; • Furthers employer goals for improving employee commuting practices and reducing greenhouse gases and other vehicle emissions; and • Enhances employee benefits packages and helps employers recruit and retain employees. According to the program guidelines, DEP will review all employer applications for completeness and eligibility. The agency will, within 30 days of receiving an application and finding it satisfactory, issue to the successful applicant a Grant Application Approval, including an EndUser Agreement that defines the terms and conditions of the grant award. After returning its signed End-User Agreement to DEP, an approved employer will have up to 180 days to complete the acquisition and installation of its charging station(s). DEP will provide incentive payments directly to charging station vendors on state contract. Interested dealers are encouraged to review additional information and download the grant application at http://www. mass.gov/eea/agencies/massdep/air/ grants/workplace-charging.html.

DealersEdge Webinars Are you taking full advantage of our weekly educational and training seminars provided to you through our partnership with DealersEdge Management Training? Are you receiving our weekly e-mails announcing upcoming webinars and registration information? If not, you are missing out on an incredible bargain that will add value to your employees knowledge and skills, and ultimately to the success of your stores. DealersEdge annually provides more than 45 live weekly webinars that feature timely, topical information delivered by an incredible roster of presenters that are experts in various fields. The live courses, and more than 100 pre-recorded webinars (and growing), are available to MSADA members in two ways. Members can elect to register for a live webinar or purchase a pre-recorded course on an a la carte basis with MSA-

MSADA DA’s member discount of $149 per course OR you can sign up for the MSADA VIP Season Ticket. For just $800 annually, a dealership can use the VIP Season Ticket to register up to 10 team members to access all programming, both live and recorded. That’s more than $30,000 worth of training for JUST $800! If you aren’t already, we hope you will consider this extremely cost-effective and time-saving method of training your management staff on the latest information in their area of expertise. If you have any questions, please don’t hesitate to contact DealersEdge at 800-321-5312 or me at rokoniewski@msada.org. The upcoming schedule of webinars for the next several weeks is as follows: • Thursday, September 4, 1:00 p.m. EDT – Jeff Sacks: The Habits and Practices of the Exceptional General Manager. • Thursday, September 11, 1:00 p.m. EDT – Kevin Kiernan: Best Practice Hiring and Training for the Automotive BDC. • Thursday, September 18, 1:00 p.m. EDT – Steve Kwiatkowski: How to Create a Professional Image on the Service Drive…Improve Retention, CSI, Sales and Profits. • Thursday, September 25, 1:00 p.m. EDT – Steve Nickelsen: The Habits and Practices of the Exceptional Used Vehicle Manager.

butions, the PACs help us to remain strong politically as we advocate for our dealers’ interests in the political process. If you have not yet given to the PACs this year, please contact me at rokoniewski@msada.org and we can make sure your contributions happen. Thank you.

Our PACs - DEAC & NCDPAC

On Tuesday, September 9, voters can go to the polls to participate in the Republican and Democrat Parties’ state primaries to select their candidates to compete in the final election on November 4. Unenrolled voters who have chosen not to join either party are allowed to pick a party ballot that day and participate in that party’s primary. There are choices throughout the ballots, from governor on down to state rep and senator. The race getting all the attention, obviously due to its importance for the Commonwealth and her taxpayers, is that amongst the various candidates running for governor. On the Democrat side, voters will choose from attorney general Martha Coakley, state treasurer Steve Grossman,

We appreciate the contributions thus far received from our member dealers who have answered our calls for donations to our PACs. Each year MSADA expresses itself politically through NADA’s federal PAC, Dealers Election Action Committee (DEAC), and through our state PAC, the New Car Dealers Political Action Committee (NCDPAC). We depend on contributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Contributions to our PACs are an inexpensive insurance policy. Since by law we cannot use our membership dues or other association revenues for political contri-

Save the Date – 2015 Auto Show, Dealer Summit & Auto Show Charity Gala MSADA’s 58th edition of the New England International Auto Show will run January 15-19, 2015 at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers need to circle Friday, January 16, on their calendars – you are invited to attend our Eighteenth Annual Auto Show Charity Gala at the BCEC, 5:00 p.m. to 9:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program. As we have done previously, prior to the Charity Gala we will conduct a Dealer Summit at the BCEC from 2:00 p.m. to 5:00 p.m., at which we will have several speakers discuss on-going events in our industry. Be on the lookout for our registration materials.

Primary Day – Tuesday, September 9

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and former federal official Don Berwick. Republicans will be selecting between Charlie Baker, the GOP standard bearer four years ago who lost to Governor Deval Patrick, and businessman Mark Fischer. People complain all the time about what government is doing to them. Here’s an opportunity for you and your employees to get involved and begin to elect politicians who support the economic footprint dealerships bring to the table in communities across the state.

Tech Scholarships Update In July our Charitable Foundation’s Auto Tech Scholarship Committee met to review this year’s applications for what will be our Class #12 group of scholarship recipients, comprising two years/ four semesters: Fall 2014 through Spring 2015, and Fall 2015 through Spring 2016. The Foundation awards two types of scholarships: full and partial. In the first year, a full scholarship can total up to $3,250 per semester, and a partial scholarship can total up to $1,000 per semester. In the second year, a full scholarship can total up to $3,250 per semester, and a partial scholarship can total up to $2,000 per semester. This year’s recipients are Mason Burns of Hopedale, Xiang Yang Chen of Quincy, Simon Hailu of Waltham, Joseph Maguire of Burlington, Nicholas Tine of Stow, and Kenneth Witts of Dracut. We extend our congratulations to them and wish them the best of luck in their upcoming studies.

Welcome Marta Guerra Please extend a warm welcome to Marta Argueta-Guerra, our newest staff member. Marta will serve in the capacity of administrative assistant and membership coordinator. She also will be responsible for processing our members’ requests for DRT-1 forms. She replaces Paul Fellows, who has moved on to pursue political organizing efforts in Kentucky. Marta can be reached by e-mail at mguerra@msada. org. If you get a chance, welcome her aboard to your Association.

Massachusetts Auto Dealer AUGUST 2014

Troubleshooting

MSADA

Post-Sale Exports By Peter Brennan, Esq.

Staff Attorney, MSADA Buying new luxury automobiles in the United States and exporting them for sale in Asia or the Middle East is big business these days. Companies are hiring straw buyers in markets all over the country to purchase the automobiles and deliver them for export. In some cases, the automobile is towed directly from the dealer’s lot to the port from where it will be shipped. The impetus behind this seemingly complicated transaction is simple: in some foreign markets, a luxury automobile might fetch three times the price that it would retail for in the United States. This price discrepancy makes it worthwhile for some entrepreneurs operating in a gray area of the law to work out the logistics. That may soon change, however, as the United States Secret Service and the Department of Homeland security began targeting export brokers in a widespread crackdown in 2013. Several car export firms have been the target of recent investigations, and many of these firms have had their assets, including bank accounts and automobiles thought to be scheduled for transport, seized as part of the investigations. While the federal government may have stopped a few shipments and interrupted the exporters’ business, the legality of the scheme is far from clear. The exporters argue that there is nothing inherently illegal with their business model, and that the federal government AUGUST 2014

overstepped its authority by intervening in what is essentially a commercial dispute between the automobile manufacturers and the exporters. In April, Automotive Consultants of Hollywood, a Los Angeles-based exporter, won a key victory in a forfeiture action before the United States District Court for the Southern District of Ohio. The Court ruled that the federal government had to return to Automotive Consultants of Hollywood a $1.16 million Wells Fargo bank account that the government had frozen, as well as two automobiles. While the underlying case against Automotive Consultants of Hollywood was not dismissed, the ruling is still significant because it is the first of its kind in an exporting case and is likely to set a precedent for other cases where the federal government has seized exporter assets. The federal government is currently pursuing forfeiture actions against exporters in Florida, New York, South Carolina and Texas. The reason for the federal government’s involvement is unclear, although officials have cited a suspicion that foreign buyers are using the transactions as a means to launder money. However, advocates for the exporters allege that the federal government is acting in response to complaints by automobile manufacturers. The connection to automobile manufacturers is an easy one to make. As our member dealers know all-too-well, many manufacturers include language in franchise agreements that punish the dealer if a vehicle is exported within a certain time period after the sale. In April, California Mercedes-Benz dealers received a notice from the manufacturer announcing a revised “Export Policy”, which stated in relevant part that: “Dealers found to have a total number of exports in a calendar year equal to more than 3% of the Dealer’s total net retail sales during that calendar year… shall be subject to sales audit and impo-

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sition of the charges in accordance with the applicable Export Policy.” The Mercedes-Benz Export Policy, as written, seemed to be in clear violation of the California automotive dealer franchise law, which puts the onus on the manufacturer to prove that a dealer knew or reasonably should have known of a customer’s intent to export a vehicle at the time of the sale before they can pursue any punishment against the dealer. Mercedes-Benz USA is hardly alone in seeking to take its export-related frustrations out on dealers. Jaguar Land Rover North America recently revised its export policy to include new penalties for dealers that sell a vehicle which is later exported. Jaguar sought to place the burden on dealership employees to determine whether a buyer is an export risk before agreeing to a sale. From the dealer’s perspective, selling a car meant for export represents a loselose proposition: Not only does the dealer risk being penalized by the manufacturer if the vehicle is found to have been exported after it left the lot, but the dealership also misses out on the opportunity to service the vehicle in the future. The federal government estimates that over 35,000 vehicles are exported every year, and the high profit margins are allowing export operations to grow more sophisticated. Dealership employees must be educated on the potential risks of dealing with known exporter companies, as several New York area dealership employees are facing criminal prosecution for taking bribes from exporters to arrange sales. If you require any additional information regarding export laws, or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org or by phone at (617) 451-1051.

Legal

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

A Retaliation Refresher: What Managers Need To Know Retaliation is the most frequently asserted discrimination-related claim against employers. Indeed, in 2013, 41.1% of the 93,727 charges filed with the U.S. Equal Employment Opportunities Commission (EEOC) included a retaliation claim. Understanding exactly what a retaliation claim is, and how it works, is essential to minimizing the risk of such a claim. What is Retaliation? Webster’s Dictionary defines “retaliation” as the doing of “something bad to someone who has hurt you or treated you badly” or “to get revenge against someone.” In the employment context, however, legally-actionable “retaliation” has a much narrower definition. Retaliation under the anti-discrimination (and other employment) laws is when an employer takes an “adverse action” against an employee for engaging in “protected activity.” What is Protected Activity? An employee engages in “protected activity” under the anti-discrimination laws when s/he (1) opposes a practice that s/he in good faith believes to be unlawful discrimination (i.e., when s/he complains about discrimination); (2) participates in an employment discrimination proceeding (i.e., when s/he files a charge of discrimination with a state or federal agency, testifies at such a proceeding, or cooperates in an internal investigation involving discrimination); or (3) requests a disability-based or religious-based accommodation. Of course other activity may be protected under additional laws (i.e., whistleblower laws). What is An Adverse Action? In the retaliation context, an “adverse action” is any action that would deter or dissuade a reasonable worker from opposing discrimination or making or supporting a charge of discrimination. This includes, of course, terminating an employee’s employment, denying an employee a promotion, and refusing to hire an applicant. It also includes threats, unjustified negative evaluations, and increased surveillance. Petty slights and annoyances

or stray negative comments, however, do not rise to the level of actionable “adverse actions.” Regardless of the nuances of the definition, managers should never take any action against an employee because s/he engaged in “protected activity.” Employees Also Must Prove Causation. So an employee complains to Human Resources that he believes his manager is treating him unfairly because of his race. Two months later, the employee’s employment is terminated. We have “protected activity.” We have an “adverse action.” To prove retaliation, the employee also would have to offer evidence of causation: that the employer took the “adverse action” because of his “protected activity.” Employees generally attempt to prove causation by two methods: (1) direct evidence (i.e., comments by managers demonstrating causation) and (2) circumstantial evidence. The most common type of circumstantial evidence used to support retaliation claims is that of timing. The more strong the temporal connection, the more strong the retaliation claim. Employers Must Have Legitimate, Non-Retaliatory Reasons. Assuming an employee can show that his employer took an “adverse action” against him because of his “protected activity,” the burden in retaliation claims then shifts to the employer, to show that it took the “adverse action” for a legitimate, non-retaliatory reason or reasons. Assuming the employer can make such a showing, the burden then shifts back to the employee to prove that the reason the employer proffers for the “adverse action” is merely a pretext or cover up for illegal retaliation. Some Employees Take Advantage Of Anti-Retaliation Laws. We all agree that having laws in place prohibiting retaliation is a good thing. Sometimes, however, employees abuse those laws as a form of job protection. For example, an employee may see the writing on the wall—his performance is not up to snuff and his manager www.msada.org

has indicated that his failure to improve could result in termination—and, as a result, he may complain about “discrimination” to make his impending termination a less attractive option for his employer. Unfortunately, the employee is correct: taking an “adverse action” against an employee after s/he complains about alleged discrimination is more risky. What Can Employers Do? To minimize risk of retaliation claims, employers should train their managers not to do or say the wrong thing after an employee complains about them and to refer any complaints about discrimination to Human Resources. Employers also should investigate any such complaints, instruct the target(s) of the complaints not to retaliate, and inform the complaining employee of the results of the investigation and the company’s antiretaliation policy, and ask him/her to report any alleged violation of that policy. Further, employers should document well the legitimate, non-retaliatory reason(s) for taking any “adverse action.” Finally, employers should seek legal advice when taking an “adverse action” against an employee after s/he complains about discrimination—especially when the “adverse action” occurs shortly after the complaint.

Joe Ambash is the Managing Partner and Jeff Fritz is counsel 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.

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AUTO OUTLOOK

AUGUST 2014

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COVER STORY

RECALL R E A D I N E S S MSADA presents a dealer ’ s toolkit for safety recalls

by Catherine MacDonald Dealers all over Massachusetts are handling the consequences of safety recalls. Nearly 44 million vehicles have been recalled in the U.S. this year, according to the National Highway Traffic Safety Administration. While millions of vehicles become subject to NHSTA safety recalls each year, a relatively small percentage of these recalls involve “stop operation” or “stop sale” notices. Luckily, there is more accessible information for dealers than ever before. In August, the NHTSA rolled out a VIN-searchable safety recall data base on www.safercar.gov. NHTSA issued a list of available manufacturers and details on the capability and functionality of the data base, which is mandated by the Moving Ahead for Progress in the 21st Century Act, the transportation bill enacted in July 2012.

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What the new NHTSA VIN search tool covers: • Safety recalls that are incomplete on a vehicle; • Safety recalls conducted over the past 15 calendar years; and • Safety recalls conducted by major light auto automakers, including motorcycle manufacturers.

What the new NHSTA VIN search tool does NOT cover: • Completed safety recall information; • Manufacturer customer service or other non-safety recall campaigns; • International vehicles; • Very recently announced safety recalls for which not all VINs have been identified; • Safety recalls that are more than 15 years old (except where a manufacturer offers more coverage); and • Safety recalls conducted by small vehicle manufacturers, including some ultra-luxury brands and specialty applications.

MSADA Highlighting the VIN search tool, the NADA has provided a list of FAQs designed to respond to questions dealers are asking about how best to handle recalls impacting new and used inventory and service vehicles. MSADA has updated that information here. Questions concerning federal safety recalls or the new VIN-searchable data base may be directed to NADA Regulatory Affairs at regulatoryaffairs@nada.org or 703-821-7040.

Safety Recalls: a Q&A for Franchised Dealers

What is a federal motor vehicle safety recall?

A: The National Traffic and Motor Vehicle Safety Act (the Act) gives the NHTSA authority to set safety standards for new motor vehicles built for the U.S. market. When it is determined that a motor vehicle is not in compliance with one of the hundreds of safety standards NHTSA has issued or that it has a safety-related defect, a recall may be initiated. The vast majority of safety recalls are initiated voluntarily by vehicle manufacturers (OEMs), with a minority influenced or ordered by NHTSA. In a typical year, tens of millions of motor vehicles and motor vehicle parts are recalled. Given their expertise, training, and investment in necessary tools and information, franchised dealers remedy almost all safety recalls, thereby helping to promote the safety of the motoring public.

How does federal law restrict the sale of new vehicles subject to a safety recall? A: Federal law imposes a “stop sale” on all new, undelivered vehicles and parts subject to a safety recall. Once a dealer receives notice of a safety recall, affected new vehicles or parts may not be delivered until the defect or noncompliance is remedied. However, the Act also mandates that OEMs both reimburse dealers for the cost of remedying recalls and provide additional compensation of at least one percent per month of the manufacturer’s (or distributor’s) selling price, prorated from the date of a recall notice until the date a motor vehicle recall is remedied.

Does federal law restrict the sale of used vehicles subject to a safety recall? A: No. The Act does not prohibit the sale (by dealers or anyone else) of used vehicles

subject to safety recalls. It does, however, prohibit the sale of used parts subject to re-

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Available Manufacturers in the NHTSA VIN Search Tool Acura Audi BMW BRP Can-Am Buick Cadillac Chevrolet Chrysler Dodge FIAT Ford GMC Harley-Davidson Honda Honda Motorcycles Hummer Hyundai Infiniti Jaguar Jeep Kia Land Rover Lexus Lincoln Mazda Mercedes-Benz Mercury MINI Mitsubishi Nissan Oldsmobile Pontiac Porsche ProMaster RAM Saab Saturn Scion SMART Subaru Suzuki Motorcycles Toyota Triumph Volkswagen Volvo

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Recall Readiness call. Despite the lack of a federal used-vehicle sales prohibition, dealers should consider the following: Given that dealer service departments are authorized, trained, and equipped to remedy safety recalls for the brands the dealer represents, all used inventory of those brands should be checked routinely for unremedied safety recalls and any found should be performed prior to resale. Dealers considering the resale (at retail or wholesale) or lease of such a vehicle prior to performing the remedy should consult with legal counsel about the advisability of doing so. Dealers may periodically receive OEM “stop sale” notices covering used vehicles in inventory. Other dealers (both franchised and independent) may learn of such OEM “stop sale” notices through other means (e.g., via the media). It is most prudent for a dealer with actual knowledge of an OEM “stop sale” to refrain from selling (at retail or wholesale) or leasing a covered vehicle until the recall is remedied. Alternatively, a dealer with actual knowledge of an OEM “stop sale” could sell or lease covered vehicles if accompanied by a clear and conspicuous disclosure of the “stop sale” acknowledged by the purchaser/lessee. However, any dealer considering this latter approach should consult legal counsel (and perhaps its insurance carrier) as to whether such disclosure provides sufficient protection under state liability laws. Dealers should also discuss with counsel whether sales/leases contrary to an OEM “stop sale” may violate the terms and conditions of a franchise agreement and/or undermine the OEM’s product liability indemnity. On occasion, dealers may receive OEM recall notices with “stop drive” precautions applicable to certain used vehicles in inventory. As with “stop sales,” other dealers (both franchised and independent) may learn of a “stop drive” notice through other means (e.g., via the media). Any dealer with actual knowledge that certain used vehicles are subject to a “stop drive” should not resell (either at retail or at wholesale) or lease such vehicles until the recall is remedied.

Is there a single source of information listing the safety recall status of any vehicle?

A: The NHTSA website www.safercar.gov allows anyone (owners, lessees, prospective purchasers, dealers, etc.) to search safety recalls by model year, make, model, and vehicle identification number. Previously, the site only allowed safety recall searches by model year, make and model. This new VIN-search function reflects information gathered from the VIN-searchable publicfacing safety recall websites established by each light-duty OEM selling more than 25,000 vehicles per year in the U.S. OEMs must post recall status information on their websites concurrently with the creation of each new recall letter recipient list, must display a description of each unremedied safety recall applicable to a particular VIN dating back at least 15 years, and must update AUGUST 2014

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their sites at least once every seven days. Once a vehicle subject to recall is reported as remedied, it will no longer appear on an OEM or the NHTSA data base.

Does the new NHTSA VIN-searchable site impose additional requirements on dealers? A: No. The new NHTSA VIN-searchable site does not directly impose new mandates on dealers. However, prudence dictates that dealers consider checking the NHTSA VIN-searchable site (or applicable OEM-specific VIN-searchable sites) prior to purchasing or reselling used vehicles. Dealers should also consider periodically rechecking the safety recall status of used vehicles in inventory for more than seven days. It is expected that most dealer management systems and other dealership information vendors will offer products designed to assist dealers with running used-vehicle safety recall VIN searches. Prudence also dictates that, at the least, dealers disclose to purchasers and lessees the existence of any unremedied safety recall information discovered with a VIN search (although it may be necessary to include in such disclosures disclaimers regarding the information’s accuracy). NOTE: Given the potential for liability under state law, dealers should consult with their legal counsel concerning what additional impact these new VIN-searchable tools may have on their operations.

What’s the best course of action to take when a service customer, informed of an outstanding safety recall, refuses to authorize the work? A: You can’t force customers to have safety recall remedies performed. In fact, for any given safety recall, many owners/ lessees opt not to have the defect or noncompliance remedied, despite the best efforts of OEMs and dealers to get them to do so. It’s best not to do the work surreptitiously. Instead, when a service customer refuses to have the work done, dealers should document that fact by asking the customer to acknowledge on the repair order that repair of the recall at issue was refused.

NEWS

from Around the Horn

AUBURN

Langway Ford Buys Former Yankee Drummer Site The owner of Langway Ford in Auburn has acquired the former site of the Yankee Drummer Motor Inn and is considering building a new dealership on the location. James F. Langway, owner of Langway Ford Inc., said, “It took a long time, but we finally closed last week.” The former site of the Yankee Drummer Motor Inn was sold by Lowe’s Companies Inc., three years after Lowe’s announced that it would not be building on the site. Langway told the Worcester Telegram & Gazette he is not certain what his future plans for the site will be. “My intention is to build a new dealership there. I have designs for a beautiful Ford Trustmark building, but my phone has been ringing off the hook by people, including some major national companies, who want to

buy the site. I had five inquiries in a week,” he said. Langway said he was under agreement with Lowe’s three years ago, when another buyer offered more for the site, but that recently fell through. “Lowe’s was tremendous to deal with and showed great integrity. Once they contacted me, I closed on the property in about four months. It was a quick closing. It’s a great site. I’m excited. I can’t lose either way,” Mr. Langway said. Langway said his purchase of the Lowe’s property in no way means business is not good at his current dealership on Route 20. “When we took over, Millbury Ford averaged 20 car sales a month. Business is good for us in Auburn. We average 250 to 270 cars per month. The market in Worcester has been great,” he said. Any decisions he makes on the future of the former Yankee Drummer site will be the best for his family, Mr. Langway said. His son, Jimmy Langway, 19, works with him every day and “loves the business.”

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NEWS from Around the Horn PEABODY

MINI Countryman Is Lone Small Car to Earn Top Rating in Latest IIHS Test Small cars are increasingly receiving criticism for their inability to protect drivers in a newly explored crash scenario, but one vehicle bucked that trend during evaluations from the Insurance Institute for Highway Safety (IIHS) last month. In the IIHS’ latest round of crash testing, the 2014 MINI Countryman was the only one of 12 small cars to earn a top rating of “good” in the small-overlap front test. The Countryman’s quality performance in the demanding test helped the fourdoor compact crossover receive an IIHS Top Safety Pick designation for the fourth consecutive year.

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Introduced in 2012, the small-overlap front crash test sends a vehicle toward a rigid wall at 40 mph so that 25 percent of the front end on the driver’s side strikes the obstacle. According to the IIHS, this type of crash accounts for nearly a quarter of severe frontal crashes in the United States, but it is difficult for automakers to design against because the barrier bypasses most of the vehicle’s frontal crush zones. The Countryman achieved Top Safety Pick honors by not only earning a “good” rating in the small-overlap front test, but also by receiving the same designation in the IIHS’ moderate-overlap front, side, roof-strength, and head restraints and seats evaluations. Tellingly, 13 of the 32 small cars now tested by the IIHS for the 2014 model year have failed to be named a Top Safety Pick at least in part because they rated less than “acceptable” in the small-overlap front crash test. “Designing safe small cars is a major challenge for all automakers, especially with the IIHS constantly raising the bar of safety with new tests and criteria, but MINI has risen to the challenge year-in and year-out with its Countryman,” said Marshal Cabot, general manager of MINI of Peabody. “Though it may offer go-kart-like handling when it’s time to have some fun out on the road, the Countryman is built like a rigid crossover when it comes to safety.”

MSADA BOSTON

Register Today for the Internet Sales 20 Group Workshop Registration is now open for IS20G Boston, September 22-24, 2014. The event includes partnerships with MSADA, Toyota and more. With the industry’s

best and brightest, a curriculum that is sure to impress, and members to collaborate with throughout the year, this is not an event to miss. Seats are filling fast – this event will sell out, so register today. Register at internetsales20group.com. For more information call 866-314-2597, or email info@internetsales20group.com. BEVERLY

All-New 2015 Ford Transit Arrives at US Dealerships With its taller and more versatile roof options, the all-new 2015 Ford Transit full-size van required a special rail car to even make it to U.S. dealerships, but now that it has arrived, businesses have an unprecedented set of solutions for meeting their transportation needs. Slated to gradually replace Ford’s best-selling E-Series, the Transit comes in van, wagon, chassiscab and cutaway body styles while offering three roof heights, three body lengths and two wheelbases. High-roof Ford Transit models provide 81.5 inches of cargo height, allowing a six-foot-four-inch-tall person to stand up straight while they load up to 487.3 cubic feet of cargo. That amount of space is an improvement of nearly 80 percent compared to the most voluminous E-Series model, and more than twice the cargo room of the standard E-Series. Across all Transit models, the rear cargo doors open up to 270 degrees, making it easier to load larger equipment. “The new Ford Transit can be a real game-changer for small businesses because it is more spacious, more fuel efficient and more comfortable than other large vans on the market,” said Jeff Klein, general sales manager of Thomas Ford, a Ford dealership in Bevwww.msada.org

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NEWS from Around the Horn

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erly. “Also, the Transit has a short front end and a tight turning radius, so it’s surprisingly maneuverable despite its longer lengths and taller roof heights.” RAYNHAM

Led by Redesigned Models, Subaru Earns Best-Ever Monthly Sales in July Subaru received a big sales boost following the redesign of its Forester compact SUV for the 2014 model year, and now its sales appear destined for the stratosphere after the launches of the redesigned 2015 Subaru Legacy and Outback. The automaker attracted its best-ever monthly sales last month, with five of its vehicles setting either July or all-time sales records. Currently Subaru’s best-selling vehicle, the Forester moved 14,524 units in July to secure record monthly sales, while the popular XV Crosstrek had its best sales month since debuting for the 2013 model year, totaling 6,603 units. The Legacy and Outback each rode their recent redesigns to July records along with the affordable Subaru BRZ, which hit the market for the 2013 model year as the automaker’s first rear-wheel-drive sports car.

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“In recent years, Subaru has released a constant stream of either new or redesigned models that have quickly impressed car shoppers, and that has helped the automaker achieve 32 straight months of year-over-year sales growth,” said Chris Dunn, general manager of Mastria Subaru. “Each vehicle redesign has broadened the brand’s appeal by significantly improving fuel economy, spaciousness and ride quality without sacrificing Subaru’s signature all-wheel-drive capability in the process.”

MSADA NADA Update by Don Sudbay

‘Engage’ in New Opportunities Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your

questions

and

concerns

(donsudbayjr@sudbay.com). Make plans now to attend the 2015 NADA Convention in San Francisco. If you have never been to a convention before, this one will be one that you will not want to miss. San Francisco is a great place to visit and between the workshops, vendors on the floor, industry speakers, and networking, you will find this convention a truly worthwhile investment in your time and money. Don’t wait, as the hotels are filling up quickly. I look forward to seeing you there.

A Special Note from NADA Chairman Forrest McConnell: “Rising car sales are leading the economic recovery. Dealers are hiring. And for the first time since the Great Recession, new-car dealerships across the country now employ more than 1 million people. “The forecast this year calls for sales of about 16.4 million new cars and light trucks. Next year, the forecast is even brighter with sales of nearly 16.8 million new vehicles. “Now is the perfect time to engage in your future. “Looking ahead to 2015, the NADA Convention & Expo in San Francisco next January offers dealers and their managers, as well as the entire auto industry, a premiere forum to exchange ideas and learn new ways to improve business operations.

“The [NADA Convention] events are second-to-none. They’ll make you and your dealerships leaner, smarter, and ready to tackle the challenges for 2015 and beyond.” —NADAChairman Forrest McConnell

“And even if you’ve been to the NADA convention in the past, there’s always something new to learn. If you’ve never been to the convention before, what are you waiting for?

“The 24 dealer-manufacturer franchise meetings, 59 new workshop topics, and 126 workshop sessions and numerous networking events are second-to-none. They’ll make you and your dealerships leaner, smarter, and ready to tackle the challenges for 2015 and beyond. “Engage in new technology and social media. New to the workshop program in 2015 are the Super Sessions on Thursday, January 22, which includes a panel of successful NADA NextGen dealers who will share their insight on how emerging technologies are reshaping auto retailing, as well as a DrivingSales.com presentation on best practices to win digital buyers; and on Sunday, January 25, the Technology Town Halls feature Q&A sessions with key executive staff from eBay, Google, and others on how they can help dealers sell more cars. “We’ve also expanded the Expo, which will include nearly 500 companies exhibiting in more than 600,000 square feet at the Moscone Center. “The keynote speakers are former Florida Governor Jeb Bush, Jay Leno, and inspirational speaker Beck Weathers, as well as NADA Vice Chairman Bill Fox and me. “The four-day event, dubbed the ’Automotive Industry Event of the Year,’ runs Thursday, January 22, to Sunday, January 25, at the Moscone Center. “Online registration is open. Dealers and their managers should make their reservations as soon as possible. Hotels rooms are filling up quickly. Attendee registration is at its highest pace since 2007. Fourteen hotels have already sold out. “Join us in San Francisco, and Engage in new opportunities. “We look forward to seeing you there!”

NADA Statement on New NHTSA Search Tool for Vehicle Recalls In response to the National Highway Traffic Safety Administration’s new Vehicle Identification Number (VIN) look-up tool for vehicle recall information, Forrest McConnell, chairman of the National Automobile Dealers Association and a Honda/Acura dealer in Montgomery, Alabama, issued the following statement: “The new online look-up tool will help new-car dealerships identify whether a used car or light truck has an unremedied safety recall prior to making a purchase or taking in a trade. It will also help dealerships to determine whether used vehicles in inventory are under recall and to provide used-car shoppers with useful safety recall information. “To improve vehicle safety, NADA urges every car owner who receives a recall notice from a manufacturer to visit his or her local new-car dealership to have the vehicle inspected, and if necessary, fixed at no charge. Historically, about www.msada.org

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NADA Update MSADA

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75 percent of all recalled vehicles get fixed. Our goal is to see 100 percent of those vehicles remedied.” Dealers and consumers can access the new tool from NHTSA at www.safercar.gov/vinlookup.

NADA: Used-Car Prices Will Fall Gradually Is a sharp correction in used-vehicle prices imminent? The National Automobile Dealers Association expects used-vehicle prices will indeed start to fall—but gradually, not all at once. After the Great Recession, a sharp decrease in new-vehicle sales greatly reduced the supply of late-model used vehicles. At the same time, price-conscious consumers opted for more affordable used vehicles rather than new vehicles. These two factors helped lift used-vehicle prices by 17% from 2007 to 2013, according to NADA. Prices have grown another 2% so far this year to an all-time high of $16,560. Now, an improving economy and increased employment have brought new-vehicle sales back up to pre-recession levels, which in turn has increased the supply of late-model used vehicles. Ultimately the additional volume of used vehicles and an increasingly competitive new-vehicle market – both in terms of pricing and consumer demand – will decrease used-vehicle prices. All these factors greatly reduce the risk of an impending collapse in used-vehicle prices. To be sure, automaker actions will play a key role in determining how far prices will fall in the coming years. The current level of incentive spending is as high as it’s been since 2010. With North American production scheduled to increase 9 percent through 2017, this raises the potential for incentive spending to grow even further if new-vehicle sales don’t live up to expectations. But, while incentives likely will continue to rise, NADA doesn’t expect spending (and cash discounts in particular, or the form of incentive with the most direct and immediate impact on usedvehicle prices) to return to the destructive levels of the last decade—at least in the near-term. Taking current market trends into consideration, NADA expects used-vehicle prices to finish the year roughly on par with 2013, before dropping by 3.5 percent to 4 percent in 2015 and 2016. Notable, yes, but even with the cumulative 8 percent decline factored in, prices will still be well above levels recorded in the decade and half leading up to the last recession.

Toyota’s Jim Lentz to Keynote NADA/J.D. Power Western Automotive Conference in LA Jim Lentz, CEO of Toyota North America, and Gorden Wagener, vice president of design for Daimler AG’s Mercedes-Benz division, are the featured keynote speakers at the 2014 Western Automotive Conference in Los Angeles in November.

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The half-day conference, presented by the National Automobile Dealers Association and J.D. Power, follows a group luncheon and includes a cross-section of speakers and panel discussions featuring automaker executives covering topical industry issues with a special focus on the marketplace in Los Angeles and California. The conference theme, “Connecting with Gen Y,” includes presentations by John Humphrey, senior vice president of global automotive for J.D. Power, and Joe Vitale, global automobile industry leader for Deloitte Touche Tohmatsu Limited, and a panel session, “The Retailers Perspective,” moderated by NADA President Peter Welch. Hosted by the Los Angeles Auto Show and in partnership with Greater Los Angeles and California new-car dealer associations, the conference will be held on Tuesday, November 18, at the L.A. Hyatt Hotel Downtown—on the eve of press days at the auto show. The conference closes with a networking reception.

NADA Rebuts Misguided New York Times Editorial on Auto Lending The Times’ editorial, “When a Car Loan Means Bankruptcy,” is an unfair and unfounded attempt to portray the auto lending industry as a hotbed of deceptive practices and a harbinger of insolvency that could lead to another recession. Nothing could be further from the truth. Auto loan defaults are at historic lows (less than 1 percent in June). Franchised new-car dealers deliver widely available and low-priced credit to a broad array of consumers, including those most in need of a car to start their way up the economic ladder. Before demonizing such a valuable and consumer-friendly system, let’s check the facts: • During the Great Recession, auto loans were one of the best performing asset classes. Auto loan default rates never went higher than 2.74 percent, versus first mortgage default rates that hit 5.67 percent. • Extending credit for the purchase of a car – which rapidly depreciates in value – is not profitable unless it’s repaid, so putting consumers in car loans they can’t afford is not a sustainable business model. • New-car dealerships provide a valuable financing option to consumers. Credit offered by new-car dealers routinely carries lower interest rates than credit offered by other lenders for similar borrowers. • It’s illegal to misrepresent a borrower’s credit background, and a lender who does so is liable for any default. Enforcement of existing laws against a small minority of bad players is in everyone’s interest, but smearing an entire industry for the misdeeds of a few is just plain wrong.

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NADA Update

MSADA MSADA NADA Convention Expands Expo to Meet Demand for Booth Space The floor plan of the 2015 National Automobile Dealers Association Convention & Expo in San Francisco has been increased to accommodate a large number of requests for exhibit space. “There has been an overwhelming response from companies applying for booth space,” said Steve Pitt, NADA vice president of conventions and expositions. “So far, we’ve received more than 500 requests from companies that want to exhibit, and the expansion will allow us to accommodate most of them.” The NADA Convention runs Thursday, January 22, to Sunday, January 25, at the Moscone Center. The NADA Expo, which runs January 23-25, will now occupy more than 600,000 square feet of exhibit space in the lower levels of Moscone South, Moscone North, and Levels 1 and 2 of Moscone West. “In addition, 10 out of 42 hotels sold out during the first week of attendee registration,” Pitt added. The keynote speakers are former Florida Governor Jeb Bush and NADA Chairman Forrest McConnell, III, on Friday, January 23; Jay Leno and NADA Vice Chairman Bill Fox on Saturday, January 24; and inspirational speaker Beck Weathers on Sunday, January 25. Considered the “Automotive Industry Event of the Year,” in addition to the Expo, the NADA Convention includes dealer-manufacturer franchise meetings, hundreds of educational workshops for dealers and their managers and numerous networking events. Online registration is now open. Dealers and their managers are encouraged to make their hotel reservations as soon as possible because rooms will fill up quickly. Early bird registration ends September 12, which includes a $100 discount from the onsite rate. For more information or to register, visit www.nadaconvention.org.

Illinois Auto Dealers Association Selects NADART as its Preferred Retirement Plan Provider NADART and the Illinois Automobile Dealers Association (IADA) announced a new strategic partnership. As IADA’s preferred retirement plan provider, NADART will provide customized retirement plans to its member dealers and dealership employees. “We are excited to partner with NADART,” said IADA President Peter Sander. “Together we share a commitment to all franchised car and truck dealers in Illinois. NADART will provide the services and support needed to and help employees save for a successful retirement.” NADART, the retirement plan and financial services divi-

sion of the National Automobile Dealers Association, delivers a selection of investment and employee benefit options specifically designed for dealer businesses. “We look forward to providing our core retirement plan offerings to support IADA and its member dealers. NADART’s retirement plan offerings are unique to the marketplace,” said Betsy Piper/Bach, NADART vice president and chief operating officer. Illinois joins 11 other state dealer associations, which include Alabama, California, Colorado, Georgia, Louisiana, New York, North Carolina, Ohio, Oregon, Pennsylvania, and South Carolina that have recently selected NADART as their preferred retirement plan provider.

NADA: New-Car Sales Gain from Low Interest Rates, Stronger Housing Market, and Rising Employment Low financing rates for auto loans, rising home values, and an improving employment outlook are key factors contributing to a resurgence in new-car and light-truck sales through the first seven months of the year, says Steven Szakaly, chief economist for the National Automobile Dealers Association. “Looking ahead, there is no sign that these fundamental drivers will change this year,” Szakaly said. “Many consumers have delayed making a new-car purchase, and with the improving economy, they are now looking at trading up their cars for something newer.” Szakaly added that there is a lot of upside potential for

“Many consumers have delayed making a new-car purchase, and with the improving economy, they are now looking at trading up...” new-vehicle sales during the final five months of the year. Earlier this year, he forecasted 16.4 million new-vehicle sales for 2014, a 5.8 percent increase from 2013. Szakaly is predicting a rise in sales to 16.77 million new vehicles in 2015. “We’ve had an agonizingly slow recovery that has in many ways been led by the automotive sector, but the overall economy is finally picking up,” he said. “The housing market is stronger, gasoline prices have been relatively stable, and interest rates – while rising recently – are still low compared to historical levels.” “Five years since the recession, consumers are finally starting to believe the worst is over and are spending again.”

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NADA Market Beat

Produced by NADAâ&#x20AC;&#x2122;s Industry Analysis Group â&#x20AC;˘ Angela Lisulo, Economist

Review of New Light Vehicle Sales Overall

There were 1.4 million light-vehicle sales in July 2014. This sales figure was down 1.0 percent from June 2014, and it was up 9.1 percent from July 2013. July 2014 YTD light-vehicle sales amounted to 9.6 million, up 4.9 percent from a year ago. The

July 2014 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 16.4 million. This month marked the fourth time for the SAAR to exceed 16.0 million, thus far, this year. In July 2014 YTD figures, car sales held a market share of 47.8 percent with sales up 60 basis points from a year ago, while corresponding figures for light trucks put the lighttruck share at 52.2 percent with sales up 9.1 percent from a year ago. See Figure 1.

Companies/Brands

Companies with a geographic base in the Asia/Pacific region held the largest market share of light-vehicle sales for July 2014 at 47.2 percent of the market. This was followed by companies based in North America (Detroit 3 and Tesla Motors) at 44.2 percent and then companies based in Europe at 8.6 percent. In July 2014 YTD terms, companies with a AUGUST 2014

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base in the Asia/Pacific region also held the largest share of lightvehicle sales in the U.S. at 45.9 percent, up from a share of 45.3 percent a year ago. The corresponding share held by companies based in North America was 45.5 percent, down from 45.7 percent a year ago, and that for the Europe-based companies was 8.6

MSADA percent, down from 9.0 percent a year ago. All company categories by geographic bases â&#x20AC;&#x201C; North America, Asia/Pacific and Europe â&#x20AC;&#x201C; experienced growth in light-vehicle sales in July 2014 YTD figures from last July with the Asia/Pacific region in the lead with 6.1 percent growth. From the Detroit 3 companies, Fiat Chrysler experienced the most growth in July 2014 YTD sales, from a year ago, at 13.3 percent, followed by General Motors at 3.5 percent; Ford experienced a contraction in sales over the same period with sales down 50 basis points. From the group of Asia/Pacific-based companies, Isuzu experienced the most growth in July 2014 YTD sales from last July at 81.6 percent, followed by Mitsubishi at 28.9 percent. From the group of Europe-based companies, Audi experienced the most growth in July 2014 YTD sales from a year ago at 13.3 percent, followed by Jaguar Land Rover at 10.7 percent. See Figures 2, 3 and 4.

Segments

The cross utility vehicle (CUV) segment held the largest share of July 2014 YTD sales at 26.6 percent; this was an increase from its corresponding share of 25.0 percent last year. In terms of market share, this segment was followed by both the small car and the middle car segments, as they each held the same share of light-vehicle sales at 19.2 percent for July 2014 YTD sales. The share held by the small car segment was down from 19.7 percent a year ago, while that for the middle car segment was down from 20.4 percent a year ago. Within the CUV segment, the middle CUV subsegment was the largest sub-segment, holding 64.5 percent of July 2014 YTD CUV sales. Sales in this sub-segment were up 13.8 percent from last year. Within the CUV segment, the small luxury CUV sub-segment held the least share of sales with 1.4 percent of July 2014 YTD CUV sales. Sales in this sub-segment were up 6.3 percent from a year ago. All the segments apart from the middle car and large car segments experienced growth in YTD www.msada.org

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NADA Market Beat sales since last year. The sport utility vehicle (SUV) segment experienced the most growth in July 2014 YTD light-vehicle sales, since last year, with a figure of 12.1 percent. See Figures 5 and 6.

Power source

As a power source, gasoline held a market share of 93.5 percent of July 2014 YTD light-vehicle sales, which was up slightly from its corresponding share a year ago at 93.4 percent. The market share held by the diesel category rose to 2.9 percent, in YTD terms, from its value of 2.7 percent last year. The market shares held by electrics and plug-in hybrids each grew compared to last year, in YTD terms, while those for hybrids and light vehicles powered by fuel cells and natural gas declined over the same period. For the alternative power category, in July 2014, the following light vehicles were sold: 5,560 electrics, no units powered by fuel cell technology, 44,575 hybrids, 67 units powered by natural gas, and 5,743 plug-in hybrids, amounting to 55,945 total light-vehicle sales. See Figure 7.

Models

There were seven light trucks and eight cars in the list of 15 best-selling light vehicles for July 2014 YTD. The list comprised of models from the following companies: General Motors, Ford, Fiat Chrysler, Toyota, Honda and Nissan. Fiat Chrysler and Nissan each contributed one model; the Fiat

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Chrysler model was the Ram pickup (light truck), and the Nissan model was the Altima (car). The other companies each had models that fell into both the car and light-truck categories. From the list of the 15 best-selling light vehicles for July 2014 YTD, seven out of 15 models were from companies based in the Asia/Pacific region, while the rest were from the Detroit 3 companies. See Figure 8.