MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
auto M a s s a c h u s e t t s
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Dealer Year
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Gary Johnson
FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
February 2017 • Vol. 29 No. 2
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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 Jorge Bernal Administrative Assistant/ Membership Coordinator jbernal@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: jbernal@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 Blum Shapiro, 21 Boston Herald, 32 Ethos Group, 2 Reynolds & Reynolds, 11 Lynnway Auto Auction, 20 O’Connor & Drew, P.C., 31 Leader Auto Resources, 23 Southern Auto Auction, 19
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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 From the President: Covering All Corners 6 THE ROUNDUP: Legislature Moves at Its Own Pace 10 TROUBLESHOOTNG: FTC Updates the Used Car Rule 12 AUTO OUTLOOK 14 SOUND OFF: Colon Cancer Awareness Month 16 Cover Story: Dealer of the Year
19 24 25 26 28 29
NEWS From Around the Horn LEGAL: A Leave Law Refresher ACCOUNTING: Positive Cash Flow Takes No Sides nada Market Beat TRUCK CORNER: A Convention for the History Books nada update: Channeling our Efforts
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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from the President
MSADA
Covering All Corners Our member dealerships leave a footprint across the entire Commonwealth
By Chris Connolly, MSADA President
Msada Board
As we leave the unusually warm Presidents’ Day sales season behind, now is a good time to think about how even our individual accomplishments reflect well on all of us. Take, for example, our TIME Dealer of the Year candidate Gary Johnson. We have put him forward in front of the entire country as the best representation of what we are about as Massachusetts dealers. As you’ll see in this month’s cover story, his record of community service and industry leadership is one we can all be proud of. His family’s efforts to raise funds for the United Way is the kind of work to which many of us fellow dealers relate. Gary being recognized at the NADA “MSADA is always Convention was an exciting time not just working diligently for him, his family, and employees but the entire Massachusetts dealer community. to inform the MSADA is always working diligently to public that our inform the public that our dealer members are neighbors just as much as they are busidealer members are nesses. Getting an opportunity to see Gary neighbors just as on a national stage is a chance for all of us to feel proud of the work we do every day much as they are as a group. It’s a reminder that the work we businesses.” do every day is part of the essential fabric that makes up Main Street America. Then we have the numbers that show our impact as a collective unit. Here’s just a glimpse at how deep it runs: • New car dealerships employ more than 50,000 people in the Commonwealth. • Total earnings for Massachusetts residents attributable to dealership operations were $2.95 billion in 2014. • Average dealership payroll expenses (including fringe benefits) totaled $4.14 million that same year. • Total state and local taxes collected or paid amounted to $541.8 million. • The total federal payroll taxes came to $436.8 million. Too often our industry makes it into the headlines because we’re opposed to something. We need to make sure that we’re spreading awareness about why it matters when we collectively speak out. Our industry ranks among the most important in the Commonwealth, and we have the hard numbers that prove it. As we continue to do more than most to help drive our communities forward, let’s remember we’re able to show the effects in just about any way you can imagine. t
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Barnstable County
Brad Tracy, Tracy Volkswagen
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group
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 Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President Scott Dube, Bill Dube Hyundai
NADA Director
Don Sudbay, Jr., Sudbay Motors
Officers
President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell
Associate Members
MSADA A ssociate M ember D irectory ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 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 and Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Cars.com Heidi Allen (312) 601-5376 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Glenn Anderson (919) 247-6658 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen (401)-742-1959 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Greg Gomer (617) 967-0303 Ethos Group, Inc. Drew Spring (617) 694-9761
F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (857) 404-404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank Mark Flibotte (617) 385-6232 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 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 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400
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PreOwned Auto Logistics Anthony Parente (877) 542-1955 ProActive Leadership Group Bill Napolitano (774) 254-0383 Quik Video Jack Gardner (617) 221-5502 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (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 Santander Richard Anderson (401) 432-0749 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 SPIFFIT Sean Ugrin (303) 862-8655 Sprague Energy Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 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 Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092
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The Roundup
Legislature Moves at Its Own Pace By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers When last we left you, the majority Democrats in the two legislative chambers had elected their leaders – Rep. Robert DeLeo (D-Winthrop) as House speaker and Sen. Stan Rosenberg (DAmherst) as Senate president. The General Court’s Republicans, albeit in a smaller capacity, elected, too, their own leaders; Sen. Bruce Tarr (R-Gloucester) and Rep. Brad Jones (R-North Reading) were chosen by their peers to lead the minority caucus in the Senate and House, respectively. No contest had a surprise ending. Having cleared that procedural hurdle, the legislators were now ready to get down to work – pass rules to govern legislative sessions, and to raise their own pay. Since legislative base pay is set by constitutional amendment, to be adjusted based on a gubernatorial review of how personal income grew (or did not) in the previous economic cycle and a subsequent recommendation from our leader in the Corner Office, the solons occupying the 200 seats in the General Court cannot touch their own annual base pay, currently $62,000. What our elected legislators can do is adjust the level of pay for those in leadership positions as well as the actual number of individuals to receive such augmented compensation. Chairmen pay was doubled from $15,000/$7500 (based on the committee) to $30,000/$15,000. The new stipends for those higher up the leadership totem poles ranged from $30,000 for floor leaders and others to $80,000 for the speaker and president. The constitutional officers also were beneficiaries of the legislators’ post-Christmas largesse – but,
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to Governor Baker and Lt. Governor Karyn Polito’s credit, they both said they would not take the additional compensation. Although the governor did veto the pay hike bill, it ultimately became law. The House overrode his veto 116-43, and the Senate followed suit by a 31-9 tally. The key thing to keep in mind about this rush is the legislators also included a pay hike for judges. A well calculated move, since judicial compensation cannot be the target of repeal through a referendum ballot question. Once the speaker and senate president completed this task, the next move on their agenda was to name their respective leadership teams, committee chairs, and committees’ membership. One of the committees that has oversight of issues of considerable import to us is the Joint Committee on Consumer Protection and Professional Licensure. This committee has jurisdiction over such issues as the new- and used-car Lemon Laws, our 93B franchise law, the 93A Consumer Protection Act, doc fees, proposals like the Car Buyers Bill of Rights, and the so-called “right to repair” act. If there is an issue that touches a consumer, one can find it in this committee. As the 2017-2018 session commences, 10 out of the 17 Committee members will be returnees from last session’s composition, including the two chairs – Rep. Jennifer Benson (D-Lunenburg) and Sen. Barbara L’Italien (D-Andover). Further, the two vice chairs were elevated from rank and file positions on last session’s committee.
MSADA Here are the committee members with their party and hometown (* indicates returning committee member): Rep. Jennifer Benson, House Chair (D-Lunenburg)* Rep. Dan Hunt, House Vice Chair (D-Dorchester)* Re. Ruth Balser (D-Newton) Rep. James Arciero (D-Westford)* Rep. William Smitty Pignatelli (D-Lee) Rep. Jay Livingstone (D-Boston) Rep. Jonathan Zlotnik (D-Gardner)* Rep. Jose Tosado (D-Springfield)* Rep. Juana Matias (D-Lawrence) Rep. Steven Howitt (R-Seekonk)* Rep. Joseph McKenna (R-Webster)* Sen. Barbara L’Italien, Senate Chair (D-Andover)* Sen. James Timilty, Senate Vice Chair (D-Walpole)* Sen. Michael Brady (D-Brockton) Sen. Sal DiDomenico (D-Everett) Sen. Jennifer Flanagan (D-Leominster) Sen. Ryan Fattman (R-Webster)* Once the legislative process gets into gear and the public hearings unfold as bills are sent to committees, these individuals will be reviewing some of the most important legislation for dealers. Another committee that has oversight of some of our issues, such as activities by the Registry of Motor Vehicles, is the Joint Committee on Transportation, chaired by Sen. Thomas McGee (D-Lynn) and Rep. William Straus (D-Mattapoisett). This will be their third term together as chairmen of this committee.
Bill Filings for 2017-2018 For this year’s legislative session, your Government Relations Committee, chaired by John Hartman of the Ira Motor Group, developed a number of proposals to address lingering issues affecting franchise dealers in Massachusetts. Other members of the GRC are Chris Connolly,
Herb Connolly Motors; Jack Madden, Jack Madden Ford; and Charles Tufankjian, Toyota of Braintree. The bill filing deadline for the current session was January 20. At some point, the House and Senate clerks will provide a number to each bill filed by members of their respective chambers and then assign each bill to a committee for review, including a public hearing, which is mandatory for every bill. The issues being addressed by the Association’s legislative proposals are the following: • 93B Amendments. The Legislature last approved amendments to our auto dealer franchise law in 2012. Those amendments included strengthening our warranty reimbursement law by establishing a formula for the parties to rely on to ensure dealers receive actual retail-level reimbursement for warranty and recall work and parts. Issues addressed in this year’s bill, which was filed by Senator Marc Pacheco (D-Taunton), a long-time ally of franchise dealers, and Rep. Brendan Crighton (D-Lynn), include the following: • Prohibits vehicle surcharges by manufacturer to pay for warranty reimbursement at the statutorily required retail rate; • Limit how often the manufacturer can request a facility upgrade; • Prohibits a manufacturer from requiring a dealer to purchase goods or services from a vendor selected, identified, or designated by a manufacturer or distributor by agreement, program, incentive provision, or otherwise without making available to the dealer the option to obtain the goods or services of substantially similar quality from a vendor chosen by the dealer; • Protects dealer’s customer data from OEMs and other third parties; • Prohibits an OEM from arbitrarily or unreasonably altering the geographic area of responsibility within which it
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measures the dealer’s performance; • Protects dealers from manufacturers’ using export chargebacks to penalize dealers for cars that get exported without dealer’s knowledge; • Clarifies the current limit on the manufacturer ownership of dealerships and direct sales of vehicles by manufacturers; and • Addresses various dealer and consumer related issues surrounding recalls, including compensation for parking cars while waiting for parts and disclosure of open recalls to consumers. • Licensure of Inspection Stations. Filed by Sen. Vinny deMacedo (R-Plymouth) and Reps. Steve Howitt (R-Seekonk) and Chris Markey (D-Dartmouth), this would require the RMV registrar, regardless of any internal restriction the agency has in place, to approve a license for an inspection facility to any new car dealer that requests one and who has invested a threshold amount in constructing a new dealership or re-doing an existing store. • Motor Vehicle Service Contracts. This legislation would prohibit OEMs from requiring dealers to exclusively sell OEM-only extended service contracts or extended maintenance plans; filed by Sens. Jim Timilty (D-Walpole) and Kathleen O’Connor Ives (D-Newburyport), and Rep. Angelo Puppolo (DSpringfield). • Repeal the Used Vehicle Record Book (aka the Police Log), filed by Rep. John Rogers (D-Norwood) and Sen. Michael Rush (D-West Roxbury). • Insurance Labor Rates Paid to Auto Body Repairers. Filed by Reps. Lou Kafka (D-Stoughton) and Joe Wagner (D-Chicopee), and Sen. Jim Welch (DSpringfield), this bill would establish a process for setting insurance reimbursable labor rates paid to auto body repairers that is in line with the current economics of the industry in Massachusetts. The average rate presently paid by insur-
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The Roundup ance companies to repairers is the lowest in the country. • Te m p Ta g s . F i l e d b y R e p s . B r i a n Golden (D-Lowell), Jim Arciero (DWestford), and Howitt, and Sen. Jennifer Flanagan (D-Leominster). A temp tag law already exists, authorizing the RMV register to issue such tags; the law, however, has never been implemented. This bill would create a statutory process for issuing temp tags for out-of-state purchasers. • Diminished Value. This bill would create an administrative process for vehicle owners to appeal to get diminished value of damaged vehicles returned to the vehicle owner. Filed by Rep Chris Walsh (D-Framingham). • Class 1 License Appeals. This bill would create a process for a party to appeal the alleged improper issuance of a class 1 franchised dealer license by a municipality to an entity. Filed by Rep. Tackey Chan (D-Quincy) and Sen. Patrick O’Connor (R-Weymouth). We will keep dealers informed as to the date of the public hearings on these bills in order to mobilize our grassroots of dealers to contact legislators. Should you require any additional information on these items or wish to volunteer to get involved in the process, please do not hesitate to contact me.
Save the Date: Dealer Day on Beacon Hill – May 24 A great opportunity for dealers and their key managers to get involved in the legislative process, our annual “Dealer Day on Beacon Hill” will be held on Wednesday, May 24, in Boston. We are sending out information on this event. We are asking our member dealers and their key employees to convene at the Parker House Hotel in Boston beginning at 10:00 a.m. in preparation of walking up to the State House to meet with their representatives and senators to discuss those issues in the automotive industry that dealers are presently confronting. We will have an issues briefing and a keynote
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address to get dealers in a proper frame of mind to provide legislators a dealer’s perspective on your economic footprint locally and throughout the state in the aggregate. For those dealers we know who will be attending, we will schedule your legislative appointments for you. It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. No one knows your business better than you. That knowledge needs to be conveyed to your legislators in an environment and manner they understand, hence our Dealer Day on Beacon Hill. Please circle the date and plan on visiting Boston on May 24.
Gary Johnson Dealer of the Year One of the top honors bestowed upon any franchised dealer is the designation as TIME Dealer of the Year. As you may recall, this year at the NADA Convention in New Orleans we recognized Gary Johnson, Johnson Ford Lincoln in Pittsfield, as our Massachusetts Dealer of the Year. Gary was one of 49 fellow dealers from around our nation to be on the stage before convention attendees. Although Gary did not receive the national award, congratulations to Gary and his family for their strong commitment to our dealer body and their community. Every time we have asked Gary to help us, regard-
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less of the issue, he has never hesitated to step into the breach. We owe Gary a great debt of gratitude for his service over the decades. Check out this month’s cover story on Gary’s life.
MSADA Dealer Support Programs Re-Approved for 2017 – Are You Using Them? Since 2014 your association has administered a program in which we subsidize the cost of certain compliance efforts dealers go through at their stores. Through this program, we have supported dealers’ use of Fisher Phillips for employment law services, such as pay plans, employee handbooks, etc.; KPA and Furrh Associates for OSHA and environmental compliance; and O’Connor & Drew for tax compliance and cybersecurity protections. Your Board of Directors voted at its December board meeting to continue these programs for 2017. In addition to the compliance assistance, your Board voted to reauthorize the community outreach program for 2017, in which we assist dealers’ efforts for up to $1,000 annually. Do not hesitate to contact us regarding these programs so you do not lose out on these services supported by your association.
2017 Auto Tech Competition On February 4 MSADA hosted ten two-person senior teams from seven technical high schools (as well as four two-person junior teams from four schools) at Massachusetts Bay Community College for the hands-on portion of our annual automotive technician competition that decides the Massachusetts representative to the national contest. The January 14 written test, at which over 100 students participated, winnowed down the contestants to the top
MSADA you can adjust your pay plans, work policies, employment practices, etc., so that you are in position to attract and retain the finest workforce in your marketplace. Deadline to participate is April 28. To enroll in the free survey, go to www.nadaworkforcestudy.com. Participants will need their member (company) ID. Call (800) 447-6232 or email WorkforceStudy@nada.org with any questions.
2017 Dues Invoices
two-person senior class teams from each school and the top four two-person junior teams from the whole group. Based on the hands-on testing, our first place senior winners were Tyler Dencer and Bailey Martin from Blackstone Valley Regional Technical High School. Their instructor is Paul Perreault. They will travel to the national competition in April at the New York Auto Show in NYC. The team will be tested on a Mazda3 in NYC. We wish them the best of luck in the City So Nice They Named It Twice.
NADA 2017 Work Force Study Open The NADA/ATD 2017 Dealership Workforce Study (DWS) is now open. Your chance as a NADA/ATD member to participate ends on April 28. Employees are a dealership’s single largest expense and its single biggest advantage over the competition. With the Dealership Workforce Study, NADA and ATD members have the opportunity to find out if they have the best tools to attract and retain the best employees in their markets. Whether it’s compensation, benefits, work schedules, or even the company culture, dealers need to fine-tune these to get it right. This is the sixth annual DWS NADA has conducted. The DWS collects data on
compensation, employee benefits, retention and turnover, as well as work schedules, and hours of operation, and reports these as well as demographic issues such as the gender and generational gaps in the dealership workforce. Only NADA and ATD members can participate in the DWS. It is free to participate, and participation involves enrolling, completing a survey, and uploading payroll data. Just for participating, members receive two valuable complimentary reports: (1) the Basic Report, which is anything but basic, as it is customized to the individual participating dealership, comparing that store’s numbers to the aggregate numbers of peers in the individual dealer’s own region and the entire country; and (2) the Industry Report, which provides overall analysis and trends, and statistics for every region of the U.S. Participants are also eligible to purchase the Enhanced Report, which compares the individual dealership’s numbers to peers who sell the same brand in the same state. By “numbers,” we are talking compensation for 60 job positions; retention, turnover, and tenure; benefits; work schedules; and hours of operation. The NADA/ATD Dealership Workforce Study is the most comprehensive study available of the retail workforce. With the data dealer-participants receive, www.msada.org
Earlier this year your Association sent out 2017 dues invoices to all our dealership and associate members. Our members’ dues help fund the Association’s activities on their behalf, including our lobbying on Beacon Hill and in Washington, our member counsel services, and our education and training activities. Over the last several years we have witnessed quite a bit of economic disruption in our industry, including governmental over-regulation. More than ever, our dealers need a strong MSADA. MSADA will continue to lead on the various issues that threaten the viability of our dealerships. We will strive tirelessly to keep you informed of developments in our industry and how they will play out in Massachusetts. These efforts also include working closely with NADA to better serve our members. Our strength lies in our members. With your continued support and membership renewal, we can build on our current foundation and begin to enhance your Association’s core purposes of communication, advocacy, and education.
Save the Date: Annual Meeting May 5, Boston Your Association will conduct this year’s Annual Meeting on Friday, May 5, at the Mandarin Oriental Hotel, in Boston. We are lining up a number of exciting industry speakers for the day. Be on the lookout for our invitation and registration materials. t
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Troubleshooting
MSADA
FTC Updates the Used Car Rule By Peter Brennan, Esq.
MSADA Staff Attorney The Federal Trade Commission (FTC) recently made long-awaited amendments to the Used Car Rule (UCR), including revisions to the Used Car Rule Buyers Guide that must be displayed on each used vehicle. Changes to the UCR were first considered by the FTC in 2012, but the final changes were only recently approved in November, with the amended rule going into effect on January 27, 2017. This date is important, as dealers may use their remaining stock of old Buyers Guides until the dealer exhausts his or her current supply, but only until January 27, 2018, when the new Guide must be used. The FTC views the UCR as a way to protect consumers from misinformation during transactions involving a used vehicle. The most prominent way that the FTC accomplishes this goal is by mandating that dealers display a Buyers Guide on all used vehicles. The FTC recently increased the maximum potential penalty for non-compliance with the UCR from $16,000 to $40,000 per violation, meaning that a lot full of used vehicles with missing or non-compliant Buyers Guides could easily bankrupt a dealership. The Buyers Guide is sometimes referred to as the “window sticker” due to its normal placement on the vehicle’s window. The Buyers Guide can also be hung from the rear view or either side mirror, or under a windshield wiper, so long as it is conspicuous and visible from FEBRUARY 2017
both sides of the outside of the vehicle. Putting the Buyers Guide in the backseat, trunk, glove compartment, etc., will not cut it in this regard, even if the customer ultimately receives it. Under the updates to the UCR, the Buyers Guide must now include, in addition to the information currently on the form, the following: (i) a statement that directs consumers to visit ftc.gov/usedcars for information on how to obtain a vehicle history report and visit safercar. gov to check for open safety recalls, and (ii) a statement, in Spanish, on the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish. The updated Buyers Guide includes the following additional changes: An updated description of an “As Is” sale; additional boxes that dealers can check to indicate whether a vehicle is covered by a third-party warranty, whether a service contract may be available, and a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies. The form also provides a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide. Some of these changes may be confusing to dealers that are used to the previous format. If a dealer is offering any kind of warranty on the vehicle themselves (as opposed to a manufacturer’s warranty) then they must disclose this by checking the “Dealer Warranty” box located in the upper third of the form and then list the information on what is covered by the warranty and the duration of the warranty in the appropriate space. Below the “Dealer Warranty” boxes are three boxes titled “Non-Dealer Warranties For This Vehicle”. This section is optional and the dealer is not under an obligation to disclose OEM warranties that still apply, especially if they are unsure on the coverage details. If the deal-
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ership offers a service contract, which can be purchased on top of the price of the vehicle, then the last box on the Buyers Guide, titled “Service Contract”, must be checked. The UCR prohibits dealer misrepresentation, and it is considered a deceptive act or practice under the UCR to (i) misrepresent the mechanical condition of a used car, (ii) misrepresent the terms of any warranty offered in connection with the sale of a used car, or (iii) represent that a used car is sold with a warranty when, in fact, the vehicle is sold without any warranty. Additionally, it is an unfair act or practice for the dealer to, prior to the sale of the vehicle, fail to disclose that a vehicle is sold without any warranty or fail to provide the terms of any written warranty that is offered on the vehicle. Certain states, such as Massachusetts, do not allow the sale of “As-Is” vehicles in most cases, so a statement detailing the implied warranties that are included must be expressly stated. Finally, if a used vehicle sale is conducted in Spanish, then a Spanish-language Buyers Guide must be posted on the vehicle prior to the sale. In order to best protect oneself, dealerships in communities with high Spanish-speaking populations should post both versions on each used vehicle. Updated versions of the Buyers Guide can be purchased through Reynolds and Reynolds or downloaded from the FTC website at https://www.ftc.gov/tips-advice/business-center/guidance/buyersguide. t If you require any additional information on these wage and hour issues 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.
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AUTO OUTLOOK
FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
MSADA
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Sound Off
MSADA
An important message from your Association in conjunction with Nancy Phillips Associates Colon cancer is the second most common cause of death from cancer with one out of every 20 people at risk. With 100,000 new cases diagnosed each year, you probably know at least one victim personally. March is Colon Cancer Awareness month and we are asking you to help prevent this dreaded disease by delivering the important message on the attached poster to your employees, customers, friends and family. While this silent killer is ominous, it is also 100% curable if detected early on. As Auto Dealers, you are in a position to help your employees, customers, friends and family by providing this vital information about cancer screening and early detection. You may never know whose life you save when taking the simple step of sharing this poster on the opposite page – but there is a very strong chance that you just may make the ultimate difference for someone out there. There are several ways to obtain this poster: Go to our website at nancyphillips.com and click on the banner at the top of our home page to download and print a PDF version yourself. The poster will also be highlighted and available for download under the “Community: Current Project” section of our website. Contact Sonia Hamel of Nancy Phillips Associates at Sonia@nancyphillips.com and we will be pleased to send you glossy professionally printed posters free of charge while our supply lasts. If you would like a large quantity or a bigger size, you may order directly from Infinite Imaging by calling Charles Davieau at (603) 436-3030 or emailing him at charles.d@infiniteimaging.com. Make sure to mention Nancy Phillips Associates. How you can help: Fix the poster to the inside door of every bathroom stall in your dealership. Download the poster on our website, share on all your social media accounts and ask your friends to share. Print the poster and hand out to your customers throughout Colon Cancer Awareness Month. We hope you will join us in making more people aware of the importance of early detection and how it saves lives!
Have an opinion you want to share? Email rokoniewski@msada.org. FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
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Cybersecurity Is Not Just An IT Problem By Nick DeLena O’Connor & Drew, P.C.
Unless you’ve obtained cyber liability or data breach insurance, you most likely will not be protected under general liability, property, D&O, and other major lines.
www.msada.org
Massachusetts Auto Dealer FEBUARY 2017
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COVER STORY
Dealer
of the
B y Jeff Breeze
Fifty years in, Gary Johnson still shovels the snow.
2017
Like many auto dealers, for Gary Johnson the car business started as a youth chore that has grown with him for the past five decades. For the 2017 Massachusetts Dealer of the Year and chairman of the Pittsfield-based Ford and Lincoln Johnson Dealerships Inc., a quiet and determined work ethic has been ingrained since his father first put him to work as a child. “We lived on a farm, and my father was involved with a Cadillac-Olds business with his father,” Johnson recalls. “When I was 8 years old, he said it was time to go to work. I’ve been in the business all my life.” While he started out washing cars and sweeping floors, the now 72-year-old adds that he was “probably 10 or 12 years old when I sold my first car.” He is now joined in the business by both his son Chris, who is now the company president, and daughter Tary, who is the vice president. “They were washing cars and cleaning the lot when they were young, too,” Johnson added. Johnson, a 1962 graduate of Pittsfield High School in Pittsfield, earned an associate degree in business from the Newbury School of Business in Boston. After serving in the United States Army Reserve, he returned home to Western Massachusetts, where he has spent decades continuing his family’s legacy.
“When I was 8 years old, he said it was time to go to work. I’ve been in the business all my life.” – Gary Johnson Massachusetts Dealer of the Year
FEBRUARY 2017
Year
Massachusetts Auto Dealer www.msada.org
MSADA the age of 21, after the untimely passing of his father in 1967. The story began during World War I, when Arthur C. Johnson formed a partnership with Ralph M. O’Connell Auto Sales & Service. Five years later, the two built Berkshire Auto Co. Inc. to sell and service Cadillac, Oldsmobile, and GMC cars and trucks. That original building is now the entrance for the Colonial Theater -- above the doors
Four-Season Dedication
Pittsfield is far closer to the New York border than to the hub of activity in the Commonwealth, but Johnson argues the region remains a vital part of the state’s economic activity. “A lot of people think Massachusetts ends at Worcester,” Johnson said. “Pittsfield is only about two hours and 15 minutes from downtown Boston— I don’t know why people think it’s so far.” Being in the midst of the Berkshire Mountains means that it’s a four-season enterprise, and the winter’s snow is just another chapter. In addition to the weather bringing people to the area’s ski mountains, Johnson added, “It helps us with the truck business. The landscapers use their trucks in the wintertime for plowing and sanding, and it’s no good if you don’t have the snow for them to take care of it.” Johnson remains hands on with the dayto-day activities of the business, admitting that he “was here the other day at 5:30 in the morning on a Monday plowing snow. I’m pretty much at the dealership all the time.” “I did buy a house in Florida 15 years ago, so now we try to go down 10 days a month,” he adds. “That’s long enough for me.”
Building a Legacy
In addition to being named Dealer of the Year, 2017 marks 100 years in the automotive business for the family. The dealership has undergone a variety of incarnations over the years, solidifying in 1964, when Johnson’s father Art purchased the local Lincoln-Mercury point. Gary took over the role as dealer principal at
you can still see the name in glass. Arthur’s son, Gary’s father, Arthur C Johnson Jr., joined Berkshire Auto Company in 1939, and after his father’s passing in 1958, Art became Vice President of Berkshire Auto
Co. In 1964, Art sold his interest in Berkshire Auto Co. to the O’Connell family and purchased the Lincoln-Mercury dealership from AJ Scarafoni, located on North Street in Pittsfield. Gary acquired the Ford franchise in 1980 and purchased a building across the street from the Lincoln-Mercury dealership. By then, the dealership included Budget Rent-A-Car. Shortly thereafter, in 1982, an opportunity arose to purchase the current location on East Street. A few years later, after they remodeled a small building to create a showroom, Johnson purchased a BMW franchise. Years later he sold it to Thomas Flynn Sr., and, in 1991, he acquired a Nissan franchise, which was sold in 2015. Along the way, the Johnson family dealerships became the continued on next page
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2017 DEALER OF THE YEAR “Gary Johnson and his family represent the best of what Massachusetts dealers have to offer our communities.” – Robert O’Koniewski MSADA Executive Vice President
oldest family-owned franchises in Western Massachusetts. “Gary Johnson and his family represent the best of what Massachusetts dealers have to offer our communities,” said MSADA Executive Vice President Robert O’Koniewski. “For any business to reach 100 years is a milestone – the fact that it has remained in this family’s hands and served as a successful bulwark in the community are truly remarkable feats.” Johnson insists that, even as both his dealership and NADA celebrate a centennial, he wants to keep the birthday low-key. “We’re advertising that we’ve been an automotive family for 100 years, but there [won’t be any] big centenary celebrations.” Instead, this year’s main focus will be a major renovation of the facilities, which will help modernize a location that hasn’t undergone a major overhaul since 1973. Otherwise, Johnson says they plan to continue with their regular community involvement, including supplying the United Way with a new car for a giveaway they have participated in for the past 17 years. Other local organizations that Johnson supports include the living history museum Hancock Shaker Village, Berkshire County Kids’ Place and Violence Prevention Center, and the famed Tanglewood summer music festival in Lenox. Johnson was among 49 dealer nominees from across the country honored at the NADA Convention and Exposition in New Orleans in January. He expressed his appreciation for the nomination after his return from the Big Easy. “I can’t emphasize how much of an honor it was to receive that nomination from my peers,” he concluded. “It’s really nice to have your peers think that much of you.” t Johnson (left) received the 2016 Ruth P. and Nicholas Boraski Leaders in Philanthropy Award from the Berkshire United Way in June 2016, award by Board Member Nicholas Boraski (right).
FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
NEWS the Horn
MSAMSAMSADA
MSADA
NEWS from the NEWS from Around Around the Horn Horn from Around MALDEN
Local Food Bank Receives Odyssey Donation from Honda Cars of Boston Bread of Life Food Pantry has a new vehicle to help deliver food to people in need. Partnering with Comcast, Honda Cars of Boston supplied a Honda Odyssey last month. The new van will increase Bread of Life’s ability to both pick up food donations from generous businesses and organizations in the community and to deliver meals to people in need. “We feel so strongly about supporting the good work of good people like the volunteers and employees at the Bread of Life and look forward to many more opportunities to support them and work with them,” said dealer Paul Giacchino of Honda Cars of Boston.
Bread of Life is a faith-based ministry founded in 1980 that serves the communities north of Boston. Based in Malden, it was incorporated as a non-profit in 1992 and brings together over 500 volunteers from 46 partner organizations to offer free food to hungry, homeless, and isolated individuals. The organization provides evening meals held four nights a week in Malden, works with food pantries in Malden and Everett, delivers groceries to senior citizens in public housing in Malden, Everett, Melrose, Medford and Wakefield, and delivers food to homeless families sheltered in local motels.
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NEWS from Around the Horn BURLINGTON
Moreno Opens World’s Largest Infiniti Dealership – In Florida For Mercedez Benz of Burlington owner Bernie Moreno, it seems that the call of the sun has finally taken root. While he also owns a string of dealerships in Massachusetts, Ohio, and Kentucky, it’s his latest venture, an Infiniti dealership in Coral Gables, Florida, that has helped him bring a childhood dream to life. Moreno has just opened the largest Infiniti dealership in the world, which took six years to build. As the first Infiniti dealership in the city, it boasts a coffee bar serving espresso and cappuccino from Ospina (a premium brand sold only in Europe for $130 a pound), a children’s play area, and a nail bar for manicures. “When you look here you don’t think you’re in a car dealership, you think you’re in a high-end hospitality area like a resort,” Moreno told The Brickell Tribune. “And it just happens that cars are the product. So for me, this is the fulfillment of that dream.”
FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
MSADA BOSTON
DANVERS
Drive Green Program Nets 60 Sales
International Cars Launches ‘Food for Friends’ Drive Officials for International Cars, Ltd. and its family of dealerships, including Honda North, Audi Stratham, Porsche of Stratham, Dover Honda, and Dover Chevrolet, announced their sixth annual “Food for Friends” campaign drive in February. Each ICL dealership collected non-perishable food items for Massachusetts and New Hampshire food pantries. “Our Food for Friends drive has become an annual tradition at all of our dealerships throughout the month of February,” said Richard Collins, CEO of International Cars, Ltd. “We encourage all of our customers and neighbors to drop off at our stores any non-perishable food items as together we can help those in need this winter.” Donations of non-perishable food items can be donated to any of the dealerships in Massachusetts and New Hampshire. All contributions will then be donated to food pantries within the dealerships’ communities. They are: St. Vincent De Paul Food Pantry in Exeter; Table of Plenty in Berwick, Maine; SCCA Outreach in Dover; and the Danvers People to People Food Pantry, Danvers, Massachusetts.
Last year, the nonprofit Mass Energy Consumers Alliance entered into agreements with 15 dealerships to participate in Commonwealth’s Drive Green program. To participate, each dealership offers a discount off the purchase price of an electric vehicle. The numbers are coming in. As of mid-January, Drive Green had resulted in more than 60 sales and leases, mostly of the Chevrolet Volt and Nissan Leaf. Additionally, about 250 people have put their names on Mass Energy’s waiting list for the new Chevy Bolt, which is not yet available in Massachusetts. The dealerships participating in Drive Green are Burke Chevrolet, Mirak Chevrolet, Quirk Chevrolet, Quirk Kia, Stateline Nissan (East Providence, Rhode Island), Marcotte Ford, Lannan Chevrolet, Kelly Motor Group, Marlboro Nissan, Milford Nissan, Muzi Chevrolet, Coastal Nissan, Quirk Ford, Quirk Nissan, and Central Chevrolet. In exchange for the discount, the dealerships get exposure on Mass Energy’s website and access to a pool of potential customers interested in electric cars. The discounts vary by model and dealership, and range from approximately $2,500 to $8,000, which is offered on top of the existing state rebate of up to $2,500 and federal tax credit of $7,500. LOWELL
Lowell Sun Profiles Presidents’ Day Sales Phenomenon In the lead-up to Presidents’ Day, The Lowell Sun checked in with local dealers and MSADA Executive Vice President Robert O’Koniewski for consumer tips. “People really need to look at the vehicle as a computer on wheels, quite frankly,” O’Koniewski told the paper. “They can just do about anything you need to do with them.” The article also checks in with Manny Nobrega, Internet sales manager at Drum Hill Ford, and Shah Ghandchi, general manager of 495 Chrysler Jeep Dodge Ram, about the latest tech advances. Peter Gervais, general manager at Gervais Auto Group, also spoke about the advantages of leasing. The full article is available at www.lowellsun.com. www.msada.org
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Around the Horn NEWS fromSERVICES DEALER
MSADA MSADA
BOSTON
Herb Chambers Kicks Madison Park Into Drive The Herb Chambers Companies kicked off a new initiative in February with some of the students and faculty from Boston’s Madison Park Technical Vocational High School. As part of this new initiative, The Herb Chambers Companies will lend support to local area tech and vocational schools by providing students with real life dealership experiences, newer model vehicles to learn on, and the latest in automotive equipment. The goal is to provide the students with firsthand experience from trained master technicians and access to all the tools necessary to help prepare them for their future. The partnership launched with a pizza party at Herb Chambers BMW of Boston while students received a career review by BMW Master Technician, Mark Keohane, and Corporate Server & Parts Director, Ed Clark. The students also had the opportunity to take part in some interactive demonstrations. The Herb Chambers Companies will be providing the school with a four-cylinder engine with electronic valves, an eight-speed transmission, and a nine-speed transmission for more hands-on training. Fredo Gonzalez PHOTO
FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
Fredo Gonzalez PHOTO
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Legal
MSADA
By Joseph W. Ambash and Jeffrey A. Fritz
A Leave Law Refresher
It’s that time of year again—flu season, during which employers typically see an increase in their employees’ need for time out of work. It is as good a time as any, therefore, to review some of the more common leave laws that apply to Massachusetts employers.
Family and Medical Leave Act If your dealership employs 50 or more employees, it will be a “covered employer” under the federal Family and Medical Leave Act (“FMLA”). That generally means if an employee (1) has worked for your dealership for at least 12 (not necessarily consecutive) months, (2) has worked for at least 1,250 hours during the 12-month period immediately preceding the commencement of any requested leave, and (3) is employed at a worksite where 50 or more employees are employed within a 75mile radius, that employee will be entitled to FMLA leave. Under the FMLA, an eligible employee may take up to 12 weeks of unpaid, job-protected leave during any 12-month period for (1) the birth of a child and/or to care for a newborn, (2) the placement of an adopted or foster child, (3) the care of his or her spouse’s, child’s, or parent’s “serious health condition,” (4) his or her own “serious health condition,” or (5) a qualifying exigency concerning his or her spouse’s, child’s, or parent’s active military service. The FMLA is a very intricate law, with a detailed statutory and regulatory scheme. Accordingly, if your dealership is a “covered employer,” you should ensure your HR employees have sufficient expertise in handling requests for FMLA leave.
Americans With Disabilities Act Even if your dealership is not a “covered employer” under the FMLA or an employee does not qualify for FMLA leave, he or she still may be entitled to unpaid leave under the federal Americans With Disabilities Act (“ADA”). Assuming an employee’s medical condition constitutes a “disability” unFEBRUARY 2017
der the ADA, your dealership would have an obligation to “reasonably” accommodate that condition, so long as it does not constitute an “undue” burden on your operations. Such an obligation may include affording an employee an unpaid leave of absence. If an employee requests a leave of absence for, or in connection with, a medical condition, you should engage in an interactive dialogue with him or her concerning his or her limitations, and consult appropriate HR employees or legal counsel.
Massachusetts Earned Sick Leave Law In 2015, the Massachusetts Earned Sick Leave (“ESL”) Law went into effect, allowing employees to accrue and use up to 40 hours of ESL during any calendar or benefit year to (1) care for his or her own, or his or her spouse’s, child’s, parent’s, or spouse’s parent’s, physical or mental illness, injury, or medical condition, (2) attend routine medical appointments, (3) address the psychological, physical, or legal effects of domestic violence, and/or (4) travel in connection with such issues. If your dealership has 11 or more employees, ESL must be paid. Like the FMLA, the ESL Law is complex and nuanced and you should seek appropriate guidance to ensure you are administering it appropriately.
Massachusetts Parental Leave Law In 2015, Massachusetts replaced its Maternity Leave Act with the Massachusetts Parental Leave Law (“PLL”), which expands the former and extends its application to male employees as well. In short, the PLL provides eligible employees with 8 weeks of leave for the birth or adoption of a child. Such leave may be paid or unpaid at the employer’s discretion.
Massachusetts Domestic Violence Leave Law In 2014, Massachusetts enacted “An Act Relative to Domestic Violence,” which,
Massachusetts Auto Dealer www.msada.org
while geared largely toward the criminal justice system, also impacts employers. In short, the law requires employers with more than 50 employees to permit employees impacted by domestic violence to take 15 days of unpaid leave in any 12-month period for purposes closely related to the abusive behavior at issue, such as to attend to medical appointments or legal matters.
Massachusetts Small Necessities Leave The Massachusetts Small Necessities Leave Act provides eligible employees with a total of 24 hours of unpaid leave during any 12-month period to (1) participate in school activities directly related to the educational advancement of his or her child, such as parent-teacher conferences or interviewing for a new school, (2) accompany his or her child to routine medical or dental appointments, or (3) accompany an elderly relative to routine medical or dental appointments or other appointments for professional services concerning the elder’s care. The federal and Massachusetts laws present a complex web of leave laws that are sometimes difficult to navigate. Make sure your handbooks are up to date and, when in doubt as to your obligations, consult a professional. Even innocuous mistakes can result in significant liability for employers. t
Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher Phillips, LLP, a n a t i o n a l l a b o r a n d e mp l o y m e n t f i r m r e p r e s e n t i n g h u n d r e ds o f d e a l e r s h i ps in
Massachusetts
be reached at (617)
and nationally.
722-0044.
They
may
Accounting
MSADA
Positive Cash Flow Takes No Sides could be closer to 100% depending on depreciation charges and other debt service requirements. It should not be needed for continued operations unless you are in a period of dramatic increase in sales. Taking it out of the operating account also forces office managers to continue to chase old receivables and keep the balance sheet lean. Communicate to the officer managers that the cash management account balance cannot be touched unless you give them approval. Review your outstanding balances in your contracts in transit, vehicle receivables, parts and service receivables, incentives, finance, and insurance and warranty claims. Do not forget about employee receivables (but let’s hope you do not have any). Review the aging of the balances; each receivable has an average number of days in which it should be collected. However, this does not mean you cannot shorten that time frame by speeding up the entire collection process. Speeding up the process starts when the receivable is generated. Make sure the documentation you have for the receivable is adequate. I take that back,
Let’s not forget that other folks in the dealership have likely been paid on this revenue, further impacting your overall working capital. Consider tying pay plans to cash collections. For example, finance CPA managers should only be paid commission if contracts are collected within a certain period of time. Review your credit policy and credit terms. Are they fair enough to offer some flexibility to cusJeffrey joined O’Connor & Drew, P.C. in tomers but tough enough so that you do 2002. In 2005, he left O’Connor & Drew, not end up holding bad receivables? P.C. to join a consulting firm that provides Another area of cash flow concern is infinance and accounting support to various Fortune 500 companies. In 2008, Jeffrey reventory. New and used vehicles and parts joined O’Connor & Drew, P.C. to continue inventory are your largest operating ashis career in public accounting. Jeffrey has sets. Make sure you have “control” over experience in auditing commercial accounts as well as in auditing not-for-profit organithem. Count inventory on a regular basis zations and higher education. and compare it to the general ledger. Reconcile the differences. Locate missing, damaged, or inaccurately priced items. At last the election is behind us and Implement and enforce internal controls we have a new President. While 50% of to limit opportunities for employee theft. the country believes the current adminisWith inventory under control, take tration will be great for the country, the a look at the aging and mix. Each day other 50% does not. My advice: Do not a vehicle sits on the lot the interest and get caught up in the minutia of day to day insurance costs add up. In addition, slow politics; stay the course and focus on what moving inventory reduces the benefit of you do best -- that is, maximizing profit factory assistance. Discounting the unit, and minimizing expense to generate posioffering in-house tive cash flow. incentives, or If your business “New and used vehicles and parts inventory wholesaling the unit is well capitalized, are your largest operating assets.” can move it, but also nearly every dollar understand how the of income should forget about adequate, these days it has to dealership ended up with this unit that is end up in your checkbook. A good capibe impeccable. The factory, banks, and problematic to sell. talization target is to have current assets in other customers are proactively looking Keep parts inventory lean. Monitor excess of 20% of your current liabilities. for reasons not to pay on time. Just look special order parts to ensure they are Keep in mind that your working capital at the “rules” of every facilities improvebilled out. Use the return allowance to get should be good working capital. If your ment support program out there. They are rid of these parts if they go unused. current assets include either a significant increasingly stringent. You will not be Formalize the ordering process, limitamount of receivables that will not be able to speed up the collection process if ing the number of individuals that can do collected or aged, slow moving inventhe documentation is not up to par. Poor it. Consider tying pay plans to inventory tory, then you really do not have enough documentation leads to aged receivables, benchmarks, such as days’ supply or cost capital to keep the operations running as well as your office manager or controlper vehicle. In the end, it does not matter smoothly. Receivables and inventory ler having to find the time to correct the what side of the aisle you reside, cash is need to be turned quickly. paperwork and resolve other issues in orgreen not red or blue. Review your workA well-capitalized dealer should be der to chase this money down. This takes ing capital today, and understand where able to deposit at least 80% of the prior them away from their other day to day the stress might be. month’s profit into a cash management t responsibilities. account or some other savings vehicle. It
By Jeff Caruso,
www.msada.org
Massachusetts Auto Dealer FEBRUARY 2017
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FEBRUARY 2017
Massachusetts Auto Dealer www.msada.org
MSADA JANUARY 2016
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TRUCK CORNER AUTO OUTLOOK
MSADA
A Convention for the History Books By Steve Parker
Baltimore Potomac Truck Centers ATD Chairman
FEBRUARY 2017
It was a NADA and ATD convention for the his- can be said about our combined workshops with 68 tory books, as NADA turned a century old and the topics and 182 sessions, which were led by the most truck industry came together in a colorful and com- knowledgeable experts in the industry. I welcome all memorative mass in the historic city of New Orleans. of you to download the educational materials via the I will do my best to paint you a picture if you did not convention app or NADA Online. Finally, on behalf of ATD, I would like to salute have the chance to attend. More than 23,000 combined attendees joined our leadership both past and present. On the last day us for the 100th anniversary celebration, including of the ATD convention, Immediate Past Chairman thousands of dealers from across the globe. I had Eric Jorgensen stepped down from the ATD board. the privilege of addressing our ATD members and Eric was a consummate leader at ATD and for our guests. In my keynote speech, I emphasized that we industry. He started on the board as the Peterbilt line representative are in a time of new in 2011, and I’ve births, heralded by had the honor of my own newborn “ATD will continue its learning from him grandson coming during my time as into this world early mission of outreach to vice chairman. We last year. prevent government will never forget all Truck dealers overreach, and it stands that he has done for will be called upon with NADA to protect and our organization. I to adapt to many would also like to challenges. There advocate for all the welcome Jodie Teuis a new president dealers we serve.” ton, our hometown in the Oval Office hero from New Oralong with his adleans, as our 2017 ministration; we are entering a new age of business, technology, and con- ATD vice chairwoman. I am eager to work with her and tackle the challenges ahead. sumer demands; and our products and technologies My final thoughts leaving New Orleans was that are evolving faster than ever. I assured our members that ATD will continue its mission of outreach to pre- ATD is stronger than ever. I saw the men and women vent government overreach, and it stands with NADA of this great industry look forward with optimism and a renewed energy for the upcoming year. As your to protect and advocate for all the dealers we serve. ATD held several successful events at the con- chairman, I am ready to stand by you and defend you, vention, including the Industry Roundtable discus- serve you, and advocate for you, and to help make this year the brightest it can be. sion on new Phase 2 commercial truck greenhouse gas and fuel efficiency rules. I want to thank all our t panelists from Paccar, Volvo, Daimler, Navistar, and Cummins engines. And speaking of manufacturers, truck dealers attended more than 20 franchise meetParker is chairman of ATD, a division of NADA ings with their respective OEMs. I’ve heard positive in Tysons Corner, Virginia., which represents 1,800 feedback that discussions this year were more proheavy- and medium-duty truck dealerships. He is ductive than ever. president of Baltimore Potomac Truck Centers in I want to thank the exhibitors who were present Linthicum, Maryland, which operates five fullthroughout the expo floor, and who provided our service commercial truck dealership locations members with the opportunity to shop for the latwith Mack, Volvo and Hino Trucks franchises in est and greatest products on the market. The same Maryland and Virginia. Massachusetts Auto Dealer www.msada.org
NADA Update
By Don Sudbay
Channeling our Efforts
As we move from celebration back to business, the border tax looms. 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). Happy Presidents’ Day to you all – I hope you had a great weekend as we dealers spent the holiday celebrating a uniquely Massachusetts sales tradition. As we continue to give thanks for the relatively warm temperatures, let’s continue to be on the lookout both on Beacon Hill and on Capitol Hill for new measures that could affect adversely our bottom line. As you’ll see from NADA Chairman Mark Scarpelli’s column, things are getting interesting down in D.C.
Every Dealer Should Have Concerns About a Border Adjustment Tax By Mark Scarpelli As all of you know, there’s been a lot of consternation in Washington, D.C., lately over the issue of the border adjustment tax, or “BAT.” Groups representing a number of businesses and different industries have all voiced serious concerns about the potential for a BAT to lead to higher costs for a wide range of good and services – costs that could ultimately get passed down to American consumers. Dealers have been front and center on these efforts. In December, NADA joined dozens of other business groups in sending a letter to the Chairman and Ranking Member of the House Ways and Means Committee voicing our concerns about the BAT provision that was included in the House Tax Reform Blueprint, and warning that “companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods, which would in turn likely result in reductions in employment, reduced capital investments, and higher prices for consumers.” That letter was just one part of a much larger effort we’ve undertaken to communicate to policymakers the seriousness of this issue, and to convey clearly that we would have real problems with any proposal that threatened vehicle affordability or otherwise translated into higher costs for our customers.
We have the very same concerns today that we had in December. In fact, if anything our concerns have grown given that President Trump has since indicated that he will release his own tax reform measure sometime this spring, which may or may not have provisions that favor American exports over imports. A BAT or – as President Trump has suggested – an import tariff could lead to: (1) higher costs for imported vehicles; and (2) higher costs for vehicle components (whether from Korea, Japan, Germany, Mexico or Canada). If imported auto parts included in domestically assembled vehicles are also subject to border taxes or tariffs, it could mean higher prices even for vehicles built in America. After all, even the most American-made vehicle – the Toyota Camry – contains only 75% American-made parts. Quite clearly, this is an issue for every dealer, because it could affect the vehicle affordability problem already confronting the vast majority of our customers. NADA’s position on any legislative or regulatory proposal that impacts the auto industry is straightforward: We are – and will always be – on the side of maintaining affordability for our customers. In our advocacy to policymakers in Washington, D.C., our objective is just as clear: We explain how proposed policies will affect our customers’ ability to find affordable transportation. Affordability generates fleet turnover, which drives a big portion of our economy. Our nation cannot afford to adopt any policy that causes demand destruction. We are well aware of the potential for a BAT or border tariff to negatively impact affordability, but quantifying that effect is difficult absent specific legislative language. As of today, no bills have been released by Congress or the Trump Administration, and no hearings have been set. However, the important questions about consumer impact are being raised. Sen. Orrin Hatch (R-Utah), the Chairman of the Senate Finance Committee (the Senate’s tax writing committee), who has taken no position on the BAT, has raised the key questions that must be addressed before proceeding. In recent remarks to the U.S. Chamber of Commerce, he called for “definitive answers” to the following questions: Who is going to pay the incidence of this tax – meaning who will pay the price of the tax? Consumers? Would this new tax structure be consistent with existing trade policies? Which sectors of our economy would be net winners and losers, and then who would be the winners and losers within those sectors? We have the exact same questions. And, frankly, so should
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NADA Update everyone. Every dealer, every retailer, every automaker, and every American consumer should be asking the same questions before even considering standing behind this idea. As always, we will apply the affordability test to any proposal – tax, trade, CAFE standards, or anything else – that is considered in Congress. And we will ensure that the sponsors of those proposals have applied that same test before we offer any support or opposition. And if a BAT or border tariff is included as part of tax reform, it will be incumbent upon those advocating for it to prove how such a proposal would benefit consumers and ease the affordability problem already facing millions of Americans looking for a new car or truck for their personal transportation needs. We look forward to seeing Congress schedule hearings on all the provisions of comprehensive tax reform once legislation is drafted and introduced. We will certainly use these hearings as an opportunity to drill down on our many questions. And in the meantime, I encourage every dealer to take
“I encourage every dealer to take advantage of opportunities to engage with their members of Congress.”
advantage of opportunities to engage with their members of Congress, either at home in their dealerships or in Washington, and put these questions to them directly. That is what is driving our engagement in Washington. When we ask Members of Congress to view policies through the lens of real customers spending real money, our grassroots engagement is more effective, and the resulting policies are more likely to generate positive economic outcomes for our local, state, and national economies. On behalf of each of our 16,500 dealers, you have my assurance that NADA will continue to work with the Trump Administration and Congress to advocate for tax policies that advance our interests, protect our businesses, and enable our consumers to be the driving force behind our success and the success of the U.S. economy.
2017 NADA Dealership Workforce Study Open for Participation With a retail workforce topping 1 million and the industry poised for growth, dealerships need to focus on hiring and keeping talented employees. The NADA Dealership Workforce Study (DWS) provides one-of-a-kind analysis FEBRUARY 2017
of dealership pay plans and benefit packages, retention and turnover, employee benefits, work schedules, and demographics. It is based on actual payroll data and questionnaire responses submitted by NADA and ATD members. The DWS is open for participation now through April 28, 2017, at www.nadaworkforcestudy.com. In return for participating in the study, dealerships will receive two complimentary reports: (1) Automotive Retail: National and Regional Trends in Compensation, Benefits and Retention and (2) a custom report, which includes comparisons of the dealership(s) to peers nationally, regionally, by state and brand. All data must be submitted by April 28, 2017. To participate in the study, go to www.nadaworkforcestudy.com to begin. For questions, email Workforce Study@nada.org.
FPF and NADA Launch Guide to Consumer Privacy in the Connected Car The Future of Privacy Forum (FPF) and the National Automobile Dealers Association (NADA) released a first-ofits kind consumer guide, “Personal Data In Your Car.” The Guide will help consumers understand the kind of personal information collected by the latest generation of vehicles, which use data to further safety, infotainment, and customer experience. The Guide will be made available to consumers by FPF, NADA, automakers, and dealers in order to explain the kinds of information that may be collected, the guidelines that govern how it is collected and used, and the options consumers may have.
NADA Launches MyDealership.org NADA has launched a new initiative designed to promote the benefits of local new car and truck dealerships for consumers, local communities, and manufacturers alike. The new MyDealership.org initiative includes a website and social media channels and features videos of real consumers and dealership staff voicing the benefits of local dealerships in their own words. “Local dealerships benefit consumers and local communities alike – through price competition that drives down prices, and good paying jobs that drive local economies,” said NADA Chairman Mark Scarpelli, who operates four dealerships near Chicago, Illinois. “But MyDealership.org doesn’t come from the perspective of dealers – it comes from the perspective of real consumers, dealership staff, and community leaders who have seen the benefits of local dealerships first hand.” NADA will be promoting the initiative throughout 2017 across its digital media channels, including Facebook, Twitter, Instagram, and LinkedIn. The initiative was launched as part of NADA’s 100th Anniversary. t
Massachusetts Auto Dealer www.msada.org
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