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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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
July 2013 • Vol. 26 No. 7
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Scott
Dube Moving Forward
Ma s s a c h u s e t t s
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St a f f D ir e ct o ry 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 Paul Fellows Administrative Assistant/ Membership Coordinator pfellows@msada.org Aut o D e a l e r M A g a z i n e Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: pfellows@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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.
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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
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From the President: What a Difference a Day Makes THE ROUNDUP: Legislature Begins Right to Repair Clean-up Legislative Scorecard INSURANCE: Disarmed Alarms Provide No Protection ACCOUNTING: My Job is to Steal Your Data AUTO OUTLOOK
14 Cover Story: Moving Forward with Scott Dube
17 18 23 25
LEGAL: Beware — Senate Resolves Filibuster Threat NEWS From Around the Horn TROUBLESHOOTNG: Despite Efforts, Lien Release and Title Issuance Problems Persist NADA UPDATE: A Franchise System Under Attack
Ad Directory BlumShapiro, 21 Boston Herald, 32 Lynnway Auto Auction, 20 Nancy Phillips Associates Inc, 21 O’Connor & Drew, P.C., 27 Southern Auto Auction, 18 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail tnash@msada.org
Join us on Twitter at @MassAutoDealers
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Massachusetts Auto Dealer JULY 2013
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from the President
by Scott Dube, MSADA President
What a Difference a Day Makes Plan now to represent your business at Dealer Day
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s I continue to serve in my role as president of MSADA, I am constantly reminded just how much information is out there that I need to keep tabs on. It’s been the most daunting part of the job so far, and luckily I continue to have more enthusiasm for representing my fellow dealers as time passes. Why exactly is there so much to follow? Because the regulatory and legislative environment our industry faces here in Massachusetts is more challenging than ever. Whether it’s shoring up our 93B franchise law or fighting back against other threats to our franchise system -- such as Tesla’s attempt at a dealer-free business model here -- there is no end to the amount of information to stay on top of. But here’s the thing: As hard as I work at this alongside Executive Vice President Robert O’Koniewski, our new team member Peter Brennan, and our lobbyists, we can only do so much. At the end of the day, if it comes down to only a handful of folks walking the halls of power, our elected officials and other decision makers are going to lose sight of the fact that we represent more than 400 businesses in this Commonwealth. In order to avoid looking like part of the furniture of the State House, which many organizations end up being, we need to rely on our strongest asset: you. As a dealer, you represent an important economic driver in your town. You employ on average 50 men and women at your store. You contribute to not only jobs but also untold hours to community service. In short, you are the folks legislators want to be hearing from. As a dealer, however, I know the score. You’re busy running your day-to-day operations and the idea of taking time to have to justify your existence may seem like a burden you’d rather
others carry. And that’s why we’re here. But, lest these folks on Beacon Hill forget, we thought it important that there be at least one day where a show of numbers help remind legislators that when they’re debating seemingly remote issues such as “Right to Repair” they’re actually juggling the fates of businesses in their district. So we have Dealer Day on Beacon Hill, which will take place on Wednesday, October 2. You should have received our save the date card in the mail. We’re letting you know so far in advance so that you’ll be able to hopefully carve out the time for making the trip into Boston and enjoying the camaraderie of your fellow dealers and strengthening your relationship with your legislators. We’ll have a prep session beforehand, where we’ll do our best to keep that stream of information concise and as simple as possible. If you have any questions about the day’s events, please feel free to contact me or Bob at rokoniewski@msada.org.
“I continue to have more enthusiasm for representing my fellow dealers as time passes.”
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Massachusetts Auto Dealer www.msada.org
Tell Us What Services You Need As a final note, our Executive Board is taking a look at the services we provide and evaluating what is working, what isn’t and what other options we should be thinking about. For example, other dealer associations offer safety and environmental site visits, insurance and a workers’ compensation trust, among other services similar to what we provide. I want to ask you to keep thinking about the services we provide and what you would find useful, and what you would like to see added or changed
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A ssociate M ember D irectory Name
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, 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 GMC
Middlesex County Chris Connolly Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai
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
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 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Maryanne Recupero (800) 991-1770 Bank of America Merrill Lynch Lawrence Corrente 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 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR Scott Herbers (800) 668-2332 DealerDOCX Merchon Brower (585) 451-3322 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company James Downey (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 Chris Welch (724) 766-6666 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Grant Thornton LLP Alan Oslomowski (508) 926-2200 Huntington National Bank John J. Marchand (781) 326-0823 Key Bank James Q. Moretti (781) 558-5132 Leader Auto Resources, Inc. John Ackermann (518) 857-8853 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp LLC Ryan Kim (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 Ray-Jurgen Richard Thibadeau (860) 585-0111 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Resource 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 Wells Fargo Dealer Services Christopher Peck (508-314-1283) Wicked Local Media Massachusetts Jay Pelland (617) 757-5571 Zurich American Insurance Company Steven Megee (800) 443-4513
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The Roundup
Legislature Begins Right to Repair Clean-up by Robert O’Koniewski, Esq. MSADA Executive Vice President When it rains it pours. As you may recall, 2012 unfortunately saw the passage of two, diametrically opposite, “right to repair” laws that is now vexing the affected parties. This at a time after we successfully fought back for over six years all attempts to get any law on the books. One law, a compromise deal passed by the Legislature on its last day of formal sessions on July 31 and signed into law by the governor a week later, had the support of all the stakeholders on the issue – independent repairers, consumers, auto manufacturers, and franchised dealers (as represented by your Association). It was a difficult process getting all the parties together, especially the recalcitrant manufacturers who waited to the last possible moment to come to the table and accept a deal. But it was a workable, acceptable deal nonetheless, created through the legislative process where anyone who wanted had a seat at the table and a voice in the discourse. It was that manufacturers’ delay, however, that pushed legislative passage past the time when the initiative petition could have been pulled from the November ballot. As a result, the voting public took their opportunity to approve by an 85%-15% margin the “right to repair” law the RTR Coalition initially put on the ballot, drafted notoriously anti-manufacturer and anti-dealer, as a tool to get the parties to the negotiation table. Their intent worked, but the manufacturers’ inability to read and understand the political tea leaves (even their hubris, if you will, in thinking they could defeat it at the ballot) created a problem we are struggling to resolve eight months later (and counting). To its credit, the Legislature has taken the first
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step in attempting to fix the problem of two competing laws existing on the books simultaneously. On July 23, the Joint Committee on Consumer Protection and Professional Licensure held a public hearing on two bills, although drafted differently, that would attempt to re-enact the legislative deal from July 2012. MSADA President Scott Dube and I testified at the hearing on behalf of your Association. House 184, filed by Rep. Garrett Bradley (DHingham), would seek to replace the two competing laws with the very language the Legislature approved in July. Bradley, a long-time RTR proponent and current member of House leadership, was party to last year’s structuring of the deal, and his bill has the full support of the RTR Coalition, vehicle manufacturers, and the franchised dealers. House 254, filed by Rep. Paul McMurtry (DDedham), alters certain language in the deal bill to address a “want” pushed by AAA. The sticking point – telematics. AAA seeks language that would allow their affiliated repairers to have access to any and all signaling that flows through a vehicle’s telematics system (such as OnStar) to the subscribing vehicle owner, the vehicle manufacturer, and the selling franchised dealer. The OEMs and we dealers, naturally, are strongly opposed to that as evidenced by the language we successfully got approved in the deal bill last year that limits the law’s treatment of telematics only to the flow of diagnostic and repair information. Everything else related to telematics systems is off limits. As your Association made clear in public testimony last year, what AAA is seeking is to break the proprietary relationship between the
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parties to have access to information that they are not entitled to through the subscription agreement and existing contractual law. As we stated at the July 23 public hearing, AAA’s efforts are merely a diversion to the task at hand – getting the Legislature to re-enact that which they have already approved last July. The Committee is chaired by Sen. Tom Kennedy (D-Brockton), who was instrumental in putting last year’s compromise together and getting it through the Legislature, and Rep. John Scibak (D-South Hadley), who is new to the Committee but in his sixth term as a House member. Prior to the hearing we asked our member dealers in the districts of the Committee members to contact their legislators to express support for House 184. As we work this bill through the process, we will continually reach out to our dealer grass roots asking you to contact your legislators to build support and momentum for fixing this conflict of the deal versus the ballot question. Our member dealers need to keep in mind that the key penalty provision in the ballot question, which is law today, would deny dealers the ability to sell vehicles, beginning in January 2014, if their manufacturers cannot, or choose not to, comply with the law. That is an intolerable situation legislators are well aware of and will prove an essential impetus for achieving the fix.
Budget Saga When we last left you, the July 1 start of FY2014 was going to arrive without a final state budget in place. The sticking point – Governor Patrick thinks the Legislature did not raise taxes high enough. As a result, he vetoed the Legislature’s revenue plan that hiked the gas and tobacco taxes and created a new tax on Internet and computer services in an effort to create over $500 million in new funds
dedicated to transportation projects. As we go to press this month, both the House and Senate have overridden the governor’s veto, thereby enshrining into law a permanent hike in the gas tax, never requiring any future additional legislative votes – the initial three cent gas tax hike, which takes effect the last week of July, will be pegged henceforth to inflation. One other troubling aspect of the transportation tax situation – all sales tax revenues derived from vehicle sales will be dedicated to the Transportation Fund. As we’ve seen many times before, once there are shortfalls in these types of funds the Legislature immediately looks to extend its grasp further into their source. As a result, we will need to be even more diligent to be sure that the trade-in allowance is not threatened as legislators eye a potential $150 million pool in (currently) lost monies.
U.S. Dept. of Labor Audits, Again As we were going to press I heard from several dealers who have been visited by U.S. Department of Labor (DOL) investigators to conduct payroll audits at their new car dealerships. This appears to be a continuation of the audits DOL conducted in the Boston area last year. The audits are part of a federal “initiative” to check wage-hour compliance at dealerships. The investigators implied that the audits were part of an internal “initiative” to check wage-hour compliance at dealerships. Therefore, it is likely that more dealerships will be faced with these investigations in the months ahead. In addition to other wage-hour compliance issues, this round of audits seems to be focused primarily on dealers’ use of and compensation to independent contractors, such as vendors providing vehicle cleaning and reconditioning services. The investigators have visited the dealerships on one or more occasions, reviewed
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payroll records for the past two years, and interviewed employees concerning their pay plans and the dealership’s payroll practices. Again, these investigators are only concerned with the dealership’s compliance with the federal law, not the Massachusetts law, which in most – but not all – cases is more stringent. We recommend that each dealership make a quick audit of its payroll to check its compliance. If you are not in compliance, you may want to consider making the necessary changes. If you receive a notification of an investigation, we recommend that you immediately contact an employment attorney familiar with the federal wage-hour law who can help you measure your compliance and advise you how to respond in a way that will minimize your liability.
Mass. Unemployment Rate Continues to Rise You may have missed the news, but on July 17 the state’s Executive Office of Labor and Workforce Development announced that the state’s unemployment rate rose to 7.0%. The rate has now risen from 6.0% in May 2012 as the governor keeps touting how well the state’s economy is doing, with hiring showing tepid job growth of a couple thousand a month offset by losses in other months. This is consistent with the New England economic condition reported recently by the Federal Reserve – “moderate growth but generally stagnant hiring.” Stats showing slim job growth attributable in part to people holding multiple part-time jobs provide further evidence of a lack of vitality in the labor market. Also, Associated Industry of Massachusetts’ Business Confidence Survey of employers shows “lower expectations for new hiring based on prevailing economic uncertainties and concerns about the robustness of growth through the rest of 2013.” continued on next page
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The Roundup from previous page
Obamacare Delay & the House Democrats’ Caucus
In our Bulletin #34 we reported how the Obama Administration announced it was delaying for one year the enforcement of the employer shared responsibility (aka “pay-or-play”) rules and reporting requirements. On July 9, the Internal Revenue Service made the delay official by issuing Guidance Notice 2013-45 detailing employers’ transitional relief for 2014. We advised our dealers to consult with their legal and/or accounting advisors when formulating compliance with government rules and regulations, even when enforcement is arbitrarily delayed. These rules have been delayed, not repealed, and they continue to represent a formidable compliance challenge. In an effort to put some permanency to the administration’s self-dictated delay, especially since the administration has no legal authority to implement unilaterally such a delay, the U.S. House held two roll calls, one to suspend the employer mandate and one to suspend the individual mandate. The suspension of the employer mandate vote was approved 264161, with 35 House Democrats voting in favor. The individual mandate delay was approved 251-174, with 22 Democrats joining the majority. It should be noted not one of the eight members of the Massachusetts House delegation, all Democrats, joined in the majority in either vote.
Dealer Day on Beacon Hill – October 2
Our annual “Dealer Day on Beacon Hill” will be held on Wednesday, October 2, in Boston. 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
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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 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 October 2.
profitability. But success is measured relative to dealership size by using benchmarks. Both large and small dealerships have been finalists or won the national TDYA. Dealers may nominate him/herself or another dealer. Since your Association’s leadership does the selection at the state level, the members of the MSADA Executive Committee are not eligible; neither are the TDYA Recipients for the last four years nor current NADA directors. The last four TDYA honorees were: Ray Ciccolo, Ann Regan, Bill DeLuca III, and Rick Mastria Jr. Please give this your careful consideration and e-mail me at rokoniewski@ msada.org with your nomination. Nominations must be received at our office by Friday, August 9. Thank you for your assistance on this matter.
TIME Dealer of the Year 2014
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. Every dealer should be contributing to both PACs every year. It is an inexpensive insurance policy. Defeating the original right to repair bill, which would have severely hurt your parts sales, and fighting for the dealer exemption to the federal Wall Street reform law are two great examples why we need to be strong politically. 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.
It is that time of the year again. The highest honor bestowed on a dealer each year at the NADA convention is the TIME Magazine Dealer of the Year Award (TDYA). The process begins with nominations from each state. At MSADA we consider the state nominee so important that he or she is also designated as the “Massachusetts Dealer of the Year”. Please help by nominating candidates for selection as the Massachusetts TDYA. Here are the qualities that the judges at the national level are looking for: • Community service. This can be civic, political, educational, or philanthropic. The more personally involved the dealer is, the better. • Industry leadership. This can be state or national association leadership, or involvement in dealer councils. • Quality businessperson. This means success as a dealer measured by awards, commitment to customer service, and
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Our PACs - DEAC & NCDPAC
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Frequently Cited OSHA Standards
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Insurance
MSADA
Disarmed Alarms Provide No Protection Detection devices are essential
By Steven Megee
Steven Megee is regional sales manager a t t h e F r a m i n g h a m R e g i o n a l O ff i c e f o r Z u r i c h N o r t h A m e r i c a C o mm e r c i a l ’ s P r o g r a ms & D i r e c t M a r k e t s ’ b u s i n e ss u n i t . He can be reached at steve.megee@zurichna.com.
It’s happening everywhere, from California to Georgia. In several recent theft cases, sophisticated thieves have disabled burglar alarms to prevent them from sounding a warning and alerting the local police department. In one case, the telephone line was cut at the junction box. In another instance, the phone line serving the alarm system was severed at the top of a telephone pole. With no burglar alarm system protecting the building, the thieves broke in and took all the time that they needed without fear of being caught. In still another case, an entire truckload of product was stolen when thieves simply hooked up a truck to a fully loaded trailer that was parked at the business dock and drove off. Make no mistake, these thieves are professionals. The heists were well planned and executed. Results in all three cases were similar — tens of thousands of dollars of stock, inventory, office equipment and vehicles — all stolen. These companies were left with empty warehouses, and no product to sell to their customers. Protecting your property, equipment, inventory and facilities against thieves requires you to be proactive with regard to security.
Burglar alarm basics It is important to understand how the typical burglar alarm system works, its strengths and its weaknesses. Burglar alarm systems may be activated by a wide range of detection devices including motion sensors, door/window contacts, glass breakage detectors, etc. There JULY 2013
are two general types of alarm systems. The first one sounds only a local alarm (on the property). The second system, a monitored system, sends an alarm to a central station monitoring service. The drawbacks of the local system are obvious. It is possible that nobody will hear it or that it will be ignored or disabled. The monitored system is more commonly used in commercial properties and provides a higher level of protection. The detection units send an alarm to a central station monitoring service. The central station contacts the local police department to respond to the intruders. The primary weakness in this case is
If you have anything of value that thieves want or can sell on the open
market, you are at risk. the method by which the system sends the alarm to the monitoring service – via telephone line. As noted above, in most cases, if the phone line is cut, the monitoring service either doesn’t know the alarm system is inoperable or it assumes a power outage or other technical problem is at fault. Either way, there is no police response. Detection devices are critical elements of burglar alarm “basics.” If your present burglar alarm system consists only of door and window contacts, it may not provide adequate protection. Thieves avoid these sensors and enter buildings without being detected by breaking holes in concrete block walls. Once inside they can “shop” at a leisurely pace and take what they want. A good system includes interior motion sensors in addition to door and/or glass breakage sensors. Infrared or photoelectric beams along docks or overhead doors are also a good investment.
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Backup communication equipment is the answer There are several options or features that can be added to an existing “central station” alarm system that will improve reliability and help ensure a prompt police response. The key is to make sure that your alarm system has an uninterruptible path to the central station or an alarm is sent if the phone line is disabled. Adding these features makes the existing burglar alarm system more dependable, and therefore provides better security for your facility: 1. A cellular telephone backup system is the best and most reliable equipment available. The telephone line is backed up by a cellular system that contacts the central station to report alarm activations. 2. The second choice is a radio backup system. It is less expensive but also less reliable. A radio is used to report alarms to the central station if the telephone line fails. 3. A “line cut monitoring” feature can also be added to most burglar alarm systems. This alerts the central station that the phone line is not functioning properly. There may be more false alarms with this service due to the many other problems that can affect the telephone line. 4. Install a battery backup on the alarm system itself if you don’t already have one. This will ensure that the detection system will continue functioning if electrical service to the building is lost. If you have anything of value that thieves want or can sell on the open market, you are at risk. General observation and former employees can provide all the information a thief needs to identify your weaknesses and put a plan into motion. Your goal is to make yourself as unattractive as possible and force them to consider other “targets.”
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My Job Is To Steal Your Data By Mike Hammond
M ike H ammond is D irec tor of IT A udit S ervices at O’C onnor & D rew, P.C. H e can be reached at mhammond @ ocd . com
And we are pretty good at it. But not because we are some highly skilled black hat hackers with secret knowledge of the digital underworld and advanced skills you only see in the movies. And we don’t trade in digital currency needed to buy zero day exploits that make the largest software vendors cringe. We are good at it because we exploit the simple, yet poor level of, security hygiene at the companies we are paid to test. Our job is to steal your data, or at least to try and see if we are detected. Our clients hire us to find weakness in their networks and computer systems to try to get to that most sensitive data. The information could be the financials, the customer lists, or employee personal data. Whatever the secret sauce, the crown jewels, or that most important data, our job is to find it. And, we normally come up with the goods. So, why are we so successful? Many businesses have a lack of general information technology security awareness. Cybercrime is skyrocketing, but IT security budgets are not keeping up, and some are even non-existent. They follow the mantra, “If it’s not broken, don’t fix it.” Your staff is able to get to the programs they need, so everything must be working correctly right? But, what you don’t know can hurt you. Our team finds computers with passwords written down on sticky notes affixed to the monitors and under keyboards, or in Word documents saved on the hardrive of the computer
or network. We find doors to sensitive rooms left unlocked or propped open. We find wireless networks using outdated security or even no security at all. We even employ social engineering techniques to trick people into letting us in the building. Sometimes, it’s as simple as dressing nicely, and saying “please” and “thank you.” Once we get a foothold into your network, we move around, usually undetected, quite easily. Below are our top five security risk areas that we encounter when performing our vulnerability assessments of cli-
password list”. Solution: Changing the default passwords should be a critical step before any device is added to the network. 4. Patching - The list of known vulnerabilities grows every day. Keeping upto-date is daunting, but it must be done. One way that we move around your network so easily is finding just one machine with a critical missing patch. Right now, JAVA and Adobe are the penetration tester’s vulnerability of choice. Exposing these allows us to pivot around your network easily. Solution: Run Microsoft Windows Update as often as your business allows, and also update the other vendor software. Microsoft’s Windows Update will not update your JAVA and Adobe software. You will need a third party patch management tool to cover more than just operating system patches. 5. Remain vigilant! - Keeping your data secure is not a set once and you’re done exercise. Solution: You should be proactive in identifying and fixing the vulnerabilities as quickly as your business process allows. The hackers with mal intent are not just targeting large business. Companies with large IT shops may appear to have more valuable data, but it is easier to get away with robbing a convenience store than robbing a bank. Don’t be the low hanging fruit thieves love to target, and stop making my job so easy! For more information about O’Connor & Drew’s IT Security Audit Services, contact Michael Hammond, CISA, CRISC, CISSP, at 617-471-1120.
“Many businesses have a lack of general information technology security awareness.” ent networks (with ways to fix it yourselves!): 1. Outdated wireless security - With wireless access, our team sits in the parking lot, often a block away, and runs through your network looking to steal your data. Solution: Upgrade the wireless networks to the latest encryption and ensure guest wireless networks are not inadvertently connecting to the office network. 2. Lack of a computer inventory - During our scans, we’ve found unused file servers with sensitive data; we located email servers which could be used to send data to employees and customers posing as key figures; we found wireless access points that not even the IT team knew about. Solution: Keeping an inventory of what should and should not be on your network is key to the next steps of removing these rogue devices. 3. Change default passwords - Volumes and volumes of Internet websites exist with the default user ID and passwords for computers, networking devices, and printers. Last time I checked, there were over 124 million results on Google just for the keywords “default www.msada.org
t About O’Connor & Drew, P.C. O’Connor & Drew, founded in 1949, is one of the most well-respected, full service accounting, tax and business consulting firms in New England with a specialty in servicing automobile dealerships. O’Connor & Drew thrives on fostering close business and individual client relationships and provides service that counts. www.ocd.com.
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AUTO OUTLOOK
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Massachusetts Auto Dealer www.msada.org
MSADA
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MSADA Cover Story
Moving Forward Whether it’s a plane, boat or MSADA, Scott Dube is comfortable at the helm By Tom Nash MSADA President Scott Dube is leading the Association through a new era of the auto industry, when new threats are constantly on the horizon. When the effects of economic crisis set in five years ago, the owner of Bill Dube Hyundai was an MSADA county director. At the time he said dealers should take the opportunity to adjust their business model and take a more active role in planning the future. Now, as dealerships face mounting legislative hurdles, Dube is able to use his platform as president to encourage dealers to take an active role in politics and make sure their voices are heard by elected officials. “The challenge for dealers is that there will always be people making it more difficult for us to do business,” Dube said. “We’ve learned over the past few years the more dealers who can get involved, the better off we are.” As his first year as president wraps up, Dube spoke to the MSADA about what challenges he faces, industry obstacles and his predictions and advice for Massachusetts dealers. JULY 2013
Massachusetts Auto Dealer www.msada.org
Back in Business
After two decades of a career in aviation and a year spent at sea with his family, Dube has been on dry land in the auto industry for just under 10 years. Dealerships are certainly not unfamiliar territory. His father, Bill Dube, has sold cars since the 1970s, and Scott grew up helping out at Bill’s dealerships. The elder Dube built a successful career selling early adopters on Toyota, including to his fair share of suspicious World War II vets. It was the entrepreneurial itch passed down by his father that led Scott to take on a Wilmington Hyundai franchise in 2004, and he hasn’t looked back. Now the dealer principal at Bill Dube Hyundai, Scott Dube served as MSADA vice president before taking on
MSADA
his new role. He said the new title grants him privileges he hadn’t experienced before. “I had the chance to speak with the registrar, whereas before I became president she probably didn’t know who I was. It’s gratifying to have that one-on-one contact in order to get our point of view out there. Going to the attorney general’s office, you get to spend time talking about dealer issues you wouldn’t normally get,” Dube said. He said fellow dealers are also more interested in connecting. “Everyone has something to tell you about,” Dube said. “I’ve gotten a lot of great feedback and had a lot of interesting conversations. The challenge is balancing that time so that you can say hello to everybody.” Dube says time management has proven to be the greatest challenge he faces in his new role. Juggling a full time job, absorbing the sheer amount of information needed to perform as president, and tackling issues on both Beacon Hill and Capitol Hill is daunting, he says. “It’s not a 9-5 arrangement for anyone involved.”
Facing the Future Back in 2008, Dube responded to the economic downturn with creative methods to cut costs. He switched to waste motor oil and recycled vegetable oil to heat his dealership. He used white rocks and pebbles – which require no watering – for landscaping. All this was a part of his theory that dealers need to be “a bit more nimble” to keep their heads above water in a financial crisis. continued on next page www.msada.org
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Scott Dube—Moving Forward
from previous page Today, as dealerships face an onslaught of legislative threats, Dube wants dealers to be nimble in other ways: by putting on their lobbyist hats. Officials have good reason to listen, Dube said. “The people on Beacon Hill and Capitol Hill recognize that business people are their constituency and without us there are no jobs. As much as they like to regulate us and get into our business, they recognize that without small business there’s no Main Street, there’s no jobs. We’re a large part of the economy – 20 percent of retail sales in Massachusetts – and they often are interested in what we have to say.” While five years ago the economy was at the forefront of everyone’s concerns, Dube says it’s legislative issues that will influence the future of the industry. He agrees with George Magliano, a senior principal economist at IHS Automotive who spoke at the MSADA Annual Meeting this year. Magliano said continued economic recovery is possible – if financial policy cooperates. “There’s a backdrop of continued and increasing hostility toward the business sector,” Dube warned.
JULY 2013
Massachusetts Auto Dealer www.msada.org
MSADA
He said the Affordable Care Act is going to become a front and center issue over the next few years. “We’re going to start to see the effects of the Affordable Care Act in terms of our cost. CFPB will most likely expand and we’ve got some real issues with them. The debt that we have as a nation has to be paid somehow, so I would expect it will be through additional taxation pressures. We’ve got some challenges despite increased sales.”
Reaping Rewards As his first year as president comes to an end, Dube says the role has given him the ability to have an overall positive impact on his industry’s franchises and businesses. He said it’s gratifying to help protect longstanding traditions. “Maintaining what we’ve had as the landscape changes is a rewarding part of this job -- being able to protect the business my family grew up in and other people’s families grew up in.” Long term, Dube says his goal is to do what’s best for the Association. “At this point, we’ve got to just keep working it and doing the best we can.”
t
Legal
MSADA MSADA
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By Joseph W. Ambash
Beware — Senate Resolves Filibuster Threat Employers to Get a Real NLRB
Sometimes the political process in Washington creates strange results. This is the story of how a fight over the filibuster process in the Senate led to an agreement to make appointments to the National Labor Relations Board (NLRB)— the federal agency which enforces the laws regarding unionizing. The result of this political deal will have a major impact on employers, since the NLRB will soon be in a position to make your life worse — legitimately. The NLRB has had a rocky history during the past several years. As we have noted in these pages before, the Democrat-dominated Board has embarked on a deliberate campaign to encourage unionizing and to impose new protections for non-unionized employees But the NLRB has had a major problem: Its legitimacy has been in question for years, because the Senate has not been able to agree on confirmation of a slate of candidates to fill the agency. As a result, the NLRB, which by law is supposed to have five members, has limped along at times with only two members, or the President has made “recess” appointments to fill slots that the Senate has refused to confirm. A “recess” appointment is an appointment by the President to an agency when the Senate is not in session. It is a device that has been used for decades by Presidents to fill positions when the Senate refuses or is unavailable to act. Several years ago, the agency issued over 600 decisions when it had only two members. Employers took it to court, claiming that the agency was required to have three sitting members in order to lawfully issue decisions. The Supreme Court finally ruled that the agency was required to have at least three members. That problem was temporarily resolved after President Obama made additional
recess appointments to the agency, and those new appointees rubber-stamped the earlier decisions. But the problem started all over again a couple of years later, when the Senate still could not agree on confirmation of nominees to the agency. President Obama again made recess appointments to the agency, and they continued to issue a barrage of pro-union decisions. Other employers took the NLRB to court again, and this year two U.S. Federal Courts of Appeal ruled that the recess appointments were unconstitutional. Hundreds more decisions were called into question, as well as the ability of the NLRB to function at all. In June, the Supreme Court agreed to decide whether the recess appointment process is constitutional. But the recess appointment controversy affected more agencies than the NLRB. In particular, the President had been unable to get the Senate to confirm the nomination of the head of the new Consumer Financial Protection Bureau, as well as his nominee for Secretary of Labor, among others. The standoff on these appointments was far more high profile that the fight over the NLRB, which could have languished for at least another year while everyone waited for the Supreme Court to decide if the agency was functioning lawfully. Because these other appointments became so high profile, the Democratcontrolled Senate threatened to use the “nuclear option” of voting to change the filibuster rules, which require a two-thirds vote to cut off a filibuster. If the Senate changed the rules to only require a majority vote to end a filibuster, the consequences for all legislation would be enormous. Hence, the Senate agreed to a compromise: The two-thirds filibuster rule would remain intact, and the Republicans agreed to confirm the appointments of the head
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of the Consumer Financial Protection Bureau, the Secretary of Labor, and four new appointments to the NLRB (two Democrats in addition to the lawfully-sitting Democratic chair, and two Republicans). By the end of the summer, there will be a fully-functioning five-member NLRB. With doubts about its legitimacy out of the way, the Democratic-controlled majority will likely continue the spate of employer-hostile decisions on key issues. Here are just a few of the developments you can expect: • More pro-employee rulings about the use of social media such as Facebook for “concerted activity” by non union employees; • Pushing for faster timing of union elections, thereby giving employers less chance to campaign; • Pushing for workplace notices to employees of their right to unionize; • Granting employees access to your email system for union organizing; • Outlawing rules in employee handbooks which the Board says “chill” concerted activity. Bottom line: We can’t emphasize too strongly that employers must train managers now about concerted activity and union organizing, and review handbooks and social media policies. Now that the political battle over the NLRB is over, vigilance must be the watchword.
t
Joe Ambash
is managing
Boston Fisher & Phil-
partner of the office of
lips, a national law firm representing
manage-
ment in labor and employment law.
He
can
be reached at jambash@ laborlawyers.com.
Massachusetts Auto Dealer JULY 2013
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NEWS
from Around the Horn
NORTHAMPTON
Burke GMC Buys Classic Chevrolet Franchise Burke GMC has purchased the Chevrolet franchise from Classic Chevrolet in Amherst and will move Chevy to Burke’s location on North King Street in Northampton. Todd M. Volk, the president at Central Chevrolet in West Springfield and Classic’s former owner, told The Republican the future of Classic’s garage in Amherst is uncertain. He said he’s working to help find jobs for the almost 20 Classic Chevrolet employees. Burke GMC owner Bryan Burke said he’s surrendering his GMC Truck franchise back to General Motors. He said he’s also evaluating how many new employees he’ll need with the added Chevrolet business. Burke used to have Pontiac and Cadillac in Northampton. But When General Motors went through bankruptcy in 2009, the automaker dropped Pontiac entirely and pulled all three Cadillac dealerships from the Pioneer Valley. Chevrolet also gives Burke the ability to sell Chevrolet Volt electric cars and the Corvette. Volk said GM was putting pressure on him to build a new building for Classic.
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Massachusetts Auto Dealer www.msada.org
Burke said he plans to reach out to Classic Chevrolet customers with advertising and offering shuttle to and from his service department. He’s also planning to bring in more car parts to his inventory. LYNNFIELD
New Cadillac, Lexus Dealerships Added to the Herb Chambers Auto Empire The Herb Chambers Companies. added two new luxury dealerships in Norwell and Lynnfield in June. Herb Chambers Cadillac of Lynnfield on Route 1 North features a drive-in service reception area with valet parking, lounges and snack bars. The company also opened a Lexus of Norwell dealership in a temporary space on Route 228. The dealership will be relocated to Derby Street in Hingham sometime within the next two years and plans include “state-of-the-art lounges and the modern designs throughout to pamper all customers,” the company said. Chambers purchased his first car dealership in 1985 and his company grown to become the largest car dealer in New England with 52 dealerships throughout Massachusetts and Rhode Island.
MSADA IN MEMORIAM
Gary Reynolds Sr., Connecticut NADA Director After a brief battle with cancer Gary Reynolds Sr. died peacefully at home, surrounded by family. Reynolds is survived by his wife of 45 years, Marilynn C. Reynolds, three children, Leland Thomas Reynolds and wife Shaleigh Reynolds, twins, G. Hayden Reynolds and wife Emily Reynolds, and Kathryn R. Wayland and husband Mark Wayland and a sister, Carleen Gerber, whom all reside in Lyme. He is son of the late Laura and Leland Reynolds of Lyme, Connecticut. Reynolds dedicated the majority of his time and talent to the community of Lyme and his family. He attended Peddie School after his parents could not keep him away from the family business. After completing a business degree from Babson College, Reynolds followed his passions and secured a job at The Ford Motor Company in Michigan. After two years he became ill and recognized the corporate culture was not for him and returned to Lyme. During his short hospital stay at Yale New Haven Hospital, Marilynn Collins, head nurse, caught his eye. Nine months later, on August 19th, 1967 they married. He and Marilynn settled in the home they built together and proudly raised three children in Lyme together. Reynolds began his civic contributions in 1977 on the Board of Finance for the Town of Lyme. With his strong leadership skills his contributions to the town of Lyme and the automotive industry continued strong until his death. His
BRAINTREE
Braintree Board OKs Grading Work on Quirk-Owned Property This month the Braintree planning board granted a grading permit to Daniel J. Quirk for a 10-acre parcel, which is on the east side of Quincy Avenue at the intersection of Hill Avenue. It is next to Quirk’s Fore River shipyard property and across the street from the Quirk Chevrolet dealership. Quirk’s attorney said his client has no immediate plans to build
accomplishments include: President and Owner of Reynolds’ Garage & Marine Inc., member of the Peugeot Advisory Board, Former past Chief and Committee Chair for the Lyme Fire Company, Chairman of the Lyme Board of Finance (37 years of service), Treasurer for the Lyme Congregational Church, member of the Hamburg Cove Yacht Club, Justice of the Peace, board member of The Essex Savings Bank, Connecticut Auto Retailers Association board member, NADA Director for Connecticut, Chairman of the Regulatory Affairs Committee and Executive Board Member for NADA, and Harbormaster for the town of Lyme. His passions included boating, traveling, NASCAR, tinkering on the Seagraves Fire Truck, and cherished being affectionately called “Pop-Pop” by his seven grandchildren Charlotte, Lillian, Izzadora, Julia, and Kaleigh Reynolds and Ted and Laura Lee Wayland. He enjoyed being an advocate for all auto dealers throughout the country and was passionate about all of the wonderful relationships he developed along the way. Donations in Reynold’s honor can be directed to The Lyme Ambulance, PO Box 911, Hadlyme CT 06439 or The Lyme Fire Company, 213 Hamburg Road, Lyme CT 06371.
anything there. Any proposed development on the site “has to come back to the planning board for site plan approval,” he said according to the Patriot Ledger. The plan calls for nearly 28,000 cubic yards of fill to be removed from the site. Melissa Santucci Rozzi, the town’s principal planner, said the work is subject to a series of conditions set by the board. A qualified professional will be on the scene to check for potential environmental problems, and fire department approval is needed before any blasting can take place, Rozzi said. Under the terms of the permit, the work is to be completed by September of 2014. www.msada.org
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NEWS from Around the Horn HAVERHILL
2014 Mercedes-Benz E-Class Coupe and Cabriolet Roll Out to Dealerships Typically, a vehicle’s mid-cycle refresh will involve relatively minor upgrades, but in an effort to gain an edge in the competitive midsize luxury-car segment, Mercedes-Benz has seemingly spared no expense with its revamped 2014 Mercedes-Benz EClass. Following the arrival of the 2014 Mercedes-Benz E-Class Sedan and Wagon in May, the new Coupe and Cabriolet models are currently rolling out to dealerships with more aggressive styling, refined interiors and innovative new technology. Donning a heavily revised front fascia, the 2014 MercedesBenz E-Class Coupe and Cabriolet both receive a single-rib grille that is flanked by new single-unit headlamps with LED technology in the main beams and daytime running lights. Underneath, larger air intakes give the models a bolder look that is echoed in the rear by newly sculpted fenders and sleeker wraparound LED taillights. “The 2014 E-Class Coupe and Cabriolet both have a distinctly athletic appearance, but the styling remains just as sophisticated
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Massachusetts Auto Dealer www.msada.org
as it has always been,” said James Buckley, general manager of Smith Motor Sales. “That modern-yet-classic mix is reflected on the inside, with a higher quality interior that now features some of the most advanced technology on the market.” A three-tube instrument cluster and analog clock are the new centerpieces of the 2014 Mercedes-Benz E-Class Coupe and Cabriolet, while a redesigned center console flows smoothly from the dashboard to in between the front sport seats. Mercedes-Benz stylists accomplished that nearly continuous design by moving the gearshift to the steering column, a change that opens up ad-
MSADA ditional storage space in the console as well. The latest Mercedes-Benz E-Class also benefits from new technology that was developed for the next generation of the luxury brand’s flagship sedan: the upcoming 2014 Mercedes-Benz S-Class. Debuting as an option throughout the 2014 Mercedes-Benz E-Class lineup, DISTRONIC PLUS with Steering Assist allows drivers to engage in radar-based cruise control that automatically maintains a safe distance from vehicles ahead at speeds of up to 120 mph. Meanwhile, the Steering Assist function uses a stereo camera to identify lane markings and keep the car centered in its lane, even through slight curves. “Mercedes-Benz could have held off and debuted DISTRONIC PLUS with Steering Assist in its flagship S-Class, but it is very serious about winning the luxury sales crown this year, and the 2014 E-Class could very well put the automaker over the top,” noted Buckley. “EClass buyers are getting head-turning style, an impeccable interior design and industry-leading technology, and all that is backed by the superior performance that they’ve come to expect from Mercedes-Benz.” SWANSEA
Swansea Selectmen Table Sales License for Online Car Dealer A new Class 2 auto sales license requested for 310 Wilbur Ave. was put on hold by the Swansea Board of Selectmen this month. The request was made by Michael Berube of Taunton, who wants to open R2D20, an Internet-based wholesale auto business. He said there would be no actual cars on the site; all business would take place online. Berube purchases vehicles online from sites like craigslist.com and carsforsale.com and then sells them online. According to The Herald News, he said he’s been in business for about three years in Fall River. Richard Hague of Somerset would be running the Wilbur Avenue site. Selectmen Chairman Robert Marquis said the virtual business, which uses a Class 2 auto sales license, is unfair to the other Class 2 license holders who must bear the expense and regulations of an actual auto sales business and lot. Marquis also said there might be a conflict: The Zoning Board had a request for a Class 2 license at 560 Wilbur Ave. in May, which was declined. That business would have been an actual auto dealership with a car lot. The area is not zoned for car lots, though some are grandfathered in. www.msada.org
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NEWS NADA from Around Horn Marketthe Beat PEABODY
2014 Range Rover Sport Climbs Pikes Peak in Record Time Rising 4,720 feet through 156 corners on 12.42 miles of asphalt, the Pikes Peak International Hill Climb course in Colorado presents an unforgiving challenge for even the most skilled driver. That is, unless that driver is behind the wheel of the redesigned 2014 Range Rover Sport, which recently raced to the course’s 14,110-foot apex in just 12:35.61, a new record for a production SUV. Driven by Pikes Peak specialist Paul Dallenbach, the new Range Rover Sport maintained an average speed of 59.17 mph as it climbed to an altitude where the air holds just 58 percent of the oxygen found at sea level. While those conditions can significantly diminish engine performance, the SUV’s 510-horsepower 5.0-liter supercharged V8 proved more than up to the task. The only modifications made to the Range Rover Sport from its production model were the required roll cage and harness seatbelts to meet safety protocol. “Land Rover has touted its 2014 Range Rover Sport as the fastest, most agile and most responsive version yet, and the model’s record ride up Pikes Peak offers solid proof of those claims,” said Dave Edwards, general manager of Land
Rover Peabody. “Any number of capable SUVs could climb Pikes Peak, but to do it quickly, you need a vehicle that is extremely nimble through the turns. Fortunately, the next-generation Range Rover Sport is very light on its feet with its new frame.”
PEABODY
Acura Repeats as Edmunds. com’s Best Retained Value Among Luxury Brands Savvy car buyers know that the true value of their purchase won’t be fully known until they trade in their vehicle years down the road, but Edmunds.com uses its expertise to predict how much drivers might get back when that time comes. For the second straight year, Acura topped all luxury brands in the autoresearch site’s Best Retained Value Awards, with its models projected to maintain 45.1 percent of their original price on average after five years of ownership. Edmunds.com’s five-year residual values are determined using its True Market Price tool as a baseline, starting with what buyers are actually paying for their vehicles instead of the suggested retail prices. Only models that sold at least 100,000 units in the United States last year were considered for the brand-level awards. Among luxury brands, Acura beat out runners-up Lexus and Infiniti to claim its Best Retained Value Award. JULY 2013
Massachusetts Auto Dealer www.msada.org
“Acura continues to solidify its reputation for offering the best value of any luxury brand, but at the same time, it has been refining its lineup to appeal to drivers’ hearts just as much as their wallets,” said Joel Avery, general manager of Acura of Peabody. “The brand is accomplishing that goal by executing its design, engineering and production all from within the United States, and the new 2014 Acura MDX is the linchpin of that stateside strategy.”
Troubleshooting
Despite Efforts, Lien Release and Title Issuance Problems Persist By Peter Brennan, Esq.
Staff Attorney, MSADA A particular matter we continue to try to solve is the persistent issue of dealer payoffs and delayed lien releases/title issuances. For as long as liens have been attached to vehicles by lenders who have financed deals for consumers, complications have arisen that delay an otherwise simple process. Too frequently, dealers have had a difficult time having lenders promptly accept a payment in satisfaction of the lien, execute a release of that security interest, and mail or deliver to the dealer the certificate of title for the vehicle upon which the lien was attached and the dealer made the loan payoff. This problem can affect consumers directly as well. Many times, consumers that have made a final payment on a vehicle wait weeks, perhaps months, to have the title mailed to them. This delays the consumer from seeking a new vehicle, as they cannot sell or trade the vehicle until they gain possession of the title. Several years ago, spurred by numerous complaints from our member dealers and a lack of enforcement capabilities by the RMV, MSADA led a successful legislative effort to clarify the payoff process and create an enforcement tool for the RMV to use against lienholders who do not timely release titles to dealers after a payoff is made. Chapter 243 of the Acts
of 2004, which amended the RMV’s titling law (MGL Chapter 90D) and took effect on November 1, 2004, contained these three main provisions: a. The new law specified a list of instruments that are deemed to “clear” immediately, including cash, certified checks, cashier’s checks, or electronic transfer of funds; b. Dealers and consumers have the ability to file complaints with the RMV against lenders who fail to comply with the legal requirements to release titles within 3 days after demand, as contemplated in the law; and c. The RMV can issue written notices of noncompliance to lenders, conduct hearings, and issue fines of up to $5,000 for repeat offenders. Despite this law, dealers still experience problems with lienholders that choose to not release the lien in a timely manner as required by statute. Many of our members still relay stories to us of instances where the lender ignores Massachusetts law, does not recognize the form of payment under the law as an immediate “clear”, and delays sending the title for up to a month. Or, the lender takes the payment but still waits an inordinate amount of time to send the title. There is room for improvement within the law. The RMV has been very helpful in working with your Association, our members, and these wayward lenders, but problems continue. Sometimes the problem is not with the lender, but as a result of dealer error. For instance, if you call a lender and receive a payoff amount but do not make the actual payoff within the grace period allowed by the lender, the lender will reject the payoff. Similarly, if the amount of the payoff remitted to the lender is grossly incorrect (that is, not within the de minimis amount allowed by the lender), the lender will not accept the dealer payoff. Please avoid www.msada.org
these types of problems when handling payoffs and perhaps some conflict can be eliminated. To combat some of the problems associated with the lien release process, the RMV has implemented an Electronic Lien and Title Program (ELT), wherein a paperless electronic record of titles, liens and releases is maintained for certain lienholders. The RMV also maintains a “lienholder hit list” with the name, address and lienholder code of the most commonly used lending institutions for vehicles, as well as whether the lienholder utilizes the ELT program. While the addition of ELT has helped somewhat, we have heard of problems with lenders even with the ELT process utilized. Finally, in yet a further twist, dealers report problems they have with receiving titles from the RMV itself. In the past, we have heard of the RMV bundling titles to mail everything out only once or twice a week, and even running out of envelopes for mailing the titles. The problems can be tough enough for dealers without the RMV adding its own gasoline to the fire. If you are having problems with lien releases and delayed titles, please let us know at MSADA so that we can continue our efforts with the RMV to improve this process. When problems occur without your information, we cannot effectively address the issues with the lenders and the RMV. Your information will drive our potential success on this issue. To inform us of your problems, or should you require additional information, 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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by Don Sudbay MSADA
NADA Update
CFPB Guidance Questioned by Industry and Lawmakers 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). Wednesday, October 2 is a very important day for all new car dealers in Massachusetts. MSADA will be conducting its annual “Dealer Day on Beacon Hill.” If you haven’t done this before, please consider, and put it down in your date book. We need a great showing of members to show our legislators how important the issues that affect all of us are. These issues, including “Right to Repair”, the Tesla franchise issue, body shop reimbursement rates, dealer doc fees, and many more will have a huge impact on all of us in the coming years. Failure to engage your legislators on these issues will hurt the value of your franchise. The day is a great one and you will be glad you attended. MSADA will be providing rooms for those that need to arrive the night before. Please put October 2 down in your date book and I look forward to seeing you in Boston at the “Dealer Day on Beacon Hill.”
NADA Chair on CFPB The following letter is an update from NADA Chairman Dave Westcott about the current Consumer Financial Protection Bureau issue: “Ever since the Consumer Financial Protection Bureau (CFPB) released its fair lending guidance to indirect auto lenders on March 21, dealers and lenders have questioned the basis for the guidance—and now Washington lawmakers are as well. “The foundation for the CFPB’s guidance wholly rests on a disputed theory of liability called ‘disparate impact.’ Under this theory, if the auto finance system results in minorities paying more for credit than non-minorities in the same credit tier, then unintentional discrimination is taking place. In an effort to ensure lenders are complying with the Equal Credit Opportunity Act (ECOA) and Regulation B, the CFPB targeted the compensation arrangements used by indirect auto lenders with dealers. “Late last month, House Republicans, including 27 mem-
bers of the Financial Services Committee, sent a letter to the CFPB questioning the intent and methodology behind its guidance. Just as NADA has asked CFPB officials to provide grounds for its assertion that disparate impact exits in auto lending today, Republican lawmakers also called on the CFPB to provide the rationale behind its new fair lending guidelines. “The House letter, which was dated on June 20, asked the CFPB to explain how it determined two important data points in its study regarding disparate impact in the auto industry: the background of certain borrowers and the pricing discrepancies. A total of 35 House members signed the letter which, in part, read: ‘It is troubling that the agency has initiated this process without a public hearing, without public comment, and without releasing the data, methodology, or analysis it relied upon to support such an important change in policy.’ “The lawmakers have asked the Bureau to respond within 30 days. “This isn’t the first time Congress has stepped in to question the unfounded guidance. A letter dated May 28, was circulated by Congresswoman Terri Sewell to colleagues on the House Financial Services Committee. A total of 12 Democrats signed the letter and it was sent directly to CFPB director Richard Cordray. Their letter also asks for the analysis and methodology behind the guidance. “Despite these requests, the CFPB has not revealed any of this information, including the data it used to run its statistical analysis. This poses a major problem since dealers resoundingly agree that a federal agency has an obligation to provide transparency, reliable data analysis, interagency coordination and public feedback when it attempts to change the financing method of a $783 billion auto loan market. “Although the CFPB is not accusing dealers of intentional discrimination, the series of actions it has taken could drastically change how auto finance sources compensate dealers for arranging auto loans. Dealers across the nation understand that changing the system could stifle competition and end up costing consumers more, ultimately hurting the people the CFPB is trying to protect in the first place. “To date, the CFPB has issued subpoenas to several large auto lenders seeking information on sales practices, pricing and disclosure. The Bureau is seemingly pressuring lenders to change the way they compensate dealers so they ultimately move toward a flat fee model. “Over the past few months, NADA opened a dialogue with
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NADA Update CFPB officials, and met several times, to advocate our position and gain clarity on theirs. We have contested the assertion that there is a potential for disparate impact on protected classes of consumers in today’s auto lending. We will continue to let officials—and the public—know that dealers positively and fairly help secure financing for their customers.”
Hillary Rodham Clinton to Keynote NADA Convention in New Orleans Adding to the list of keynote speakers over the past several years, former Secretary of State Hillary Rodham Clinton will address the National Automobile Dealers Association Convention & Expo in New Orleans next January. Clinton served as the 67th U.S. Secretary of State from 2009-2013 after nearly four decades in public service as an advocate, attorney, First Lady and U.S. Senator. She will deliver keynote remarks on the closing day of the 2014 NADA Convention & Expo on Monday, January 27. “NADA has a long history of inviting high profile speakers who have provided diverse perspectives on a wide range of issues,” said Desmond Roberts, chairman of NADA’s convention committee and a Chevrolet dealer in Hodgkins, Illinois. “We’ve hosted U.S. presidents from both parties as well as prime ministers and other dignitaries who have offered interesting insights and opinions.” Other convention speakers include Steve Forbes, chairman and editor-in-chief of Forbes Media, and NADA Chairman David Westcott, a new-car dealer in Burlington, N.C., who will deliver remarks on Saturday, January 25. Army veteran J.R. Martinez, who was injured by a roadside bomb while deployed in Iraq and later won ABC’s “Dancing with the Stars” (13th season), will provide an inspirational address on Sunday, January 26. Past keynote speakers at the convention have included U.S. Presidents Gerald R. Ford (1988), George H.W. Bush (2000), George H.W. Bush and William J. Clinton (2009) and George W. Bush (2012), as well as U.K. Prime Ministers Margaret Thatcher (1993) and John Major (2002).
NADA Data: Jobs and Payroll Up at New-Car Dealerships As the U.S. economy gains momentum and auto sales increase, employment at franchised new-car dealerships continued to rise, up 3.2 percent last year, says the National Automobile Dealers Association in its latest state-of-the-industry report. In 2012, total employment at new-car dealerships increased to 963,400 employees, up from 933,500, according to NADA Data 2013, a report on dealership sales and financial trends. The average number of employees per dealership rose from 53 to 55 last year. New-car dealerships had an annual average payroll of $2.9 million in 2012, up 12 percent from the previous year. The total payroll for all U.S. newcar dealerships was $51.6 billion, up 12.6 percent. Average JULY 2013
Massachusetts Auto Dealer www.msada.org
weekly earnings of employees at U.S. new-car dealerships last year was $1,030, up 9.1 percent from the previous year.
NADA Moves Dates for 2015–2018 Conventions Beginning in 2015, the NADA Convention and Expo will be held Thursday to Sunday, instead of Friday to Monday. “After surveying the membership and exhibitors, the consensus was to end the convention on Sunday, instead of Monday,” said Desmond Roberts, chairman of NADA’s convention committee and a Chevrolet dealer in Hodgkins, Illinois. “The Thursday to Sunday timeframe will allow convention attendees to be back at work earlier the following week.” The 2014 NADA and American Truck Dealers (ATD) conventions will be held concurrently in New Orleans from January 24-27 as scheduled from Friday to Monday. Here are the revised dates for the NADA and ATD conventions: • 2015 – San Francisco (January 22-25) • 2016 – Las Vegas (March 31-April 3) • 2017 – New Orleans (January 26-29) • 2018 – Las Vegas (March 22-25) For more information on the NADA convention, visit www.nadaconventionandexpo.org. For more information on the ATD convention, visit www.atdconventionandexpo.org.
NADA: Prices of Used Plug-in Electric Vehicles to Drop 30 percent in 2013 Values for used plug-in electric vehicles are expected to decline nearly 30 percent this year—the highest depreciation out of all vehicle segments, according to the NADA Used Car Guide in its latest report, Plug-in Electric Vehicles: Market Analysis and Used Price Forecast. “The steep rate of depreciation for used plug-in electric vehicles can be attributed to limited range, manufacturer incentives and federal tax credits intended to offset the higher prices of new plug-in electric vehicles,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide.
OSHA Targeting Dealerships OSHA is targeting automotive repair and maintenance businesses, including new-car dealerships, through a Region 8 Local Emphasis Program. This focused inspection activity, scheduled for between April 16 and at least September 30, 2013, stems from five complaints OSHA Region 8 received in FY 2010, all of which resulted in citations. NADA urges dealerships nationwide to review the inspection directive and their health and safety compliance. Dealerships with specific questions regarding their compliance should contact Lauren Bailey, NADA Regulatory Affairs, at regulatoryaffairs@nada.org or (703) 821-7040 or contact their state or local dealer association.
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