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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
July 2016 • Vol. 28
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Keeping Clean
Ma s s a c h u s e t t s
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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator mguerra@msada.org 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: mguerra@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
Ad Directory Blum Shapiro 21 Boston Herald 32 ConServ 22 Ethos Group 2 Leader Auto Resources 23 Lynnway Auto Auction 20 Nancy Phillips 21 O’Connor & Drew, P.C. 31 Reynolds & Reynolds 28 Southern Auto Auction 24
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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: Passing the Test THE ROUNDUP: Legislature Coming Down the Home Stretch LEGISLATIVE SCORECARD TROUBLESHOOTNG: Frequently Asked Questions DEALER SERVICES: Character, Competence, and Communication
12 AUTO OUTLOOK 14 SOUND OFF: Elephants: The Unseen Power 16 Cover Story: Keeping VW Clean
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NEWS From Around the Horn Truck Corner: Truck Dealers Converge on Capitol Hill nada Market Beat nada update: Proving our Mettle
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from the President
MSADA
Passing the Test
The VW situation is a perfect example of why the franchise system is needed
By Scott Dube MSADA President
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s I write this, the world is waiting to see the final details of Volkswagen’s plan to make good on years of abusing the trust of the public and its customers. At the moment, we know it looks like there will be some combination of buybacks, cash payouts, and fixes offered to those who purchased VW vehicles with emissions systems engineered against U.S. standards and able to lie about doing so. Sounds like a nightmare, right? Well, it’s never good thing for the product you’re selling to be found out to be fraudulent. But there has been an obvious benefit to VW dealers amidst the headlines, corporate office raids, and lawsuits. VW dealers have had the opportunity to show the public, and their customers, that they aren’t hiding anything and they are not going away. In fact, they’ve shown that they are the ones to turn to for the facts, fixes, and support when a car isn’t doing what it’s supposed to do. That scenario should sound familiar. It’s exactly how MSADA has been trying to explain why our Commonwealth’s franchise dealer laws are so important. When we see a manufacturer like Tesla Massachusetts’ pull the wool over the eyes of town councils, this is the VW dealers situation that should cast a harsh light on the reality have shown that’s been put in play. that they are What is going to happen when Tesla vehicles start having the same recall issues any and every manufacturer the ones to faces from time to time? Who are their customers going turn to for to call when their electric vehicle is making a funny the facts, fixes, noise, or, worse, starts behaving erratically? Especially given the products they’re looking to sell, electric and and support self-driving, the need for knowledgeable and responsible when a car isn’t support will be more important than ever. Yet, bizarrely, doing what it’s our Commonwealth has let the company slide by 100 years of law and best practices. supposed to do.” There’s a lot about Tesla we can’t change at this moment. But we can control how we act as dealers. While we’re all disappointed and angry that a few scheming engineers and executives at VW would do so much to discredit what was the world’s No. 1 manufacturer, we dealers are seizing our moment. It’s been a long road to get to some resolution on this VW scandal. But it does look like we’re going to turn the corner. So I want to now offer a pat on the back to all our VW dealers who have offered their customers the service and presence they deserve. Your hard work will reap rewards not just for your businesses, but the entire MSADA community, as we continue our fight to ensure all of us have the ability to do the same. t JULY 2016
Massachusetts Auto Dealer www.msada.org
Msada Board Barnstable County
Brad Tracy, Tracy Volkswagen
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors 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 Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru
Norfolk County
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
Plymouth County
Christine Alicandro, Marty’s Buick GMC Isuzu
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President James G. Boyle, Tuck’s Trucks
NADA Director
Don Sudbay, Jr., Sudbay Motors
Officers
President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian
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 AutoAlert Don Corinna (505) 304-3040 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 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Sarah Macomber (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen (401)-742-1959 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 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 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
www.msada.org Massachusetts Auto Dealer JULY 2016
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The Roundup
Legislature Coming Down the Home Stretch By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers If it is July of an election year, the mad legislative dash is on. Count on it. Like the not-so-dutiful student who waits until the night before to do the book report, hoping that the book is in fact read by then, our solons take pride in pushing the time limit to complete work on all controversial matters. As we go to press the Massachusetts legislature has turned for home and is poised for the stretch run on the completion of its formal sessions, scheduled by the rules for midnight on July 31. Once we achieve that deadline, legislators will be forced to get their legislative wants passed in the informal sessions, which will continue until Tuesday, January 3, 2017, when only matters receiving unanimous consent can be approved. The urgency to get things completed is compounded by the fact that the legislature is taking off the weeks of July 18 and July 25 so that Republican and Democrat legislators can attend their national conventions in Cleveland and Philadelphia, respectively. As a result, we saw the legislators engage in a rare Saturday session on July 23, and we will see them again for the weekend of July 30-31, a SaturdaySunday combo that will cause considerable angst for legislator and lobbyist alike with anything pending, knowing that they gave up two weeks out of the last month of the legislative calendar to address controversial matters. In the end it all comes down to this – the process is built to make it easier to not get things done rather than to actually accomplish something. You may recall the legislative saga for the current two-year session commenced in January JULY 2016
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2015 with bill filings and committee referrals, plus the traditional setting of joint House-Senate rules, albeit this time contentious and eventually unresolved. Nevertheless, we have several matters of interest to our dealers still kicking around – some of which we are working to get over the finish line, others to keep them snuggly in their stalls. As we prepare for the rollicking end of July, here is a brief overview of what we are looking at for now: The FY2017 Budget. Although the legislature sent the FY17 budget to the governor well after the July 1 start of the fiscal year, the governor still took his constitutionally allowed ten days to sign the bill and turn over his approximately 300 lineitem vetoes, totaling about $400 million of the $39.5 billion budget, giving the legislature time to consider override votes by July 31. In fact, the Saturday, July 23, session saw the House and Senate scurry to take up about half of the 200 or so they want to address by July 31. The Senate even installed an electronic voting system for the first time ever in order to get away from the cumbersome and time consuming verbal roll call process. The last weekend will see them rush to get as many done as possible while also taking up other legislative matters. “Big Six” Bills. The governor and legislative leaders have designated six major bills remaining for final action by July 31, each of which could have some impact on small businesses: diversification of the state’s energy supply; regulation of the Uber/Lyft ride-for-hire industry; restricting the use of non-compete agreements; ensuring pay equity between genders; economic development;
MSADA and municipal finance reform, the last two being governor-filed priorities. Of these, the pay equity bill received final legislative approval on July 23 and sent to the governor for his review and expected signature. The other five are still being hashed out in separate six-member conference committees, consisting of three House members and three Senators. The pay equity bill would bar discrimination on the basis of gender in the payment of wages for comparable work “unless the variation is based upon a mitigating factor,” including seniority, education, training, experience, or a bona fide merit system like one that measures earnings by sales. The bill would also prohibit employers from asking applicants about salary history until after a formal offer of employment and compensation has been made, and it would make sure that employees cannot be punished for discussing salaries with co-workers. Associated Industries of Massachusetts, on behalf of the business community, worked hard to water down the more onerous provisions. Look for an MSADA legal bulletin on this subject once the governor signs it. Your association was active on the economic development bill when it was up for debate in both chambers in early and mid-July. The governor included $75 million in his original bill to fund capital expenditures at technical and vocational schools for all kinds of employment education activities. The Joint Committee on Economic Development, unfortunately, slashed this to $45 million. At the committee’s public hearing, we testified in favor of bolstering specific efforts at our voc-tech high schools and community colleges in recruiting and training auto tech students for ultimate hiring at your dealerships. The number one employee need at dealerships is techs, and there are over 70 high schools and six community colleges with auto tech education in their curriculum. More can be done from identifying students, training them, and re-
cruiting them for full-time employment at excellent pay at your stores. As a result of these efforts, the House approved an amendment filed by Reps Gailanne Cariddi (D-North Adams) and Denise Garlick (D-Needham) to create a statewide auto tech training and recruitment program tied into the schools and potential employers. Upon approval, the House subsequently funded the program at $25 million. In the Senate, Sen Mike Rush (D-West Roxbury), whose district encompasses the Norwood Auto Mile, pushed for the program’s inclusion in the Senate version of the econ dev bill. The Senate ultimately approved the language on a voice vote, although no funding was provided in this particular bond bill. The Senate included the phrase “subject to appropriation”, which would open up the program to the vicissitudes of the annual budget process. A conference committee is now hashing out the differences in the two bills. With the inclusion of the program in both bills, the debate internally will be centered on how to fund it. We have chimed in with conferees. Now we must see what emerges. Another issue addressed in the econ dev bill is that of insurance reimbursed labor rates at auto body repair facilities. Repairers and your association have been lobbying for at least 15 years for some help on increasing the labor rate level the insurance companies pay, to no avail. Bills have passed each chamber separately in the past, but never both the House and Senate in the same session. Massachusetts body shop repairers are now reimbursed at the lowest rates in the country, having been passed by Mississippi last year. It just goes to show you the grip the auto insurance companies and their lobbyists have on the throat of innovation and equity in the Commonwealth. Even though we have worked to get bills favorably reported out of the Joint Committee on Financial Services, the
labor rate bills have been stalled in each chambers’ respective ways and means committee. To bypass this legislative logjam, Sen Jim Welch (D-West Springfield) successfully amended the Senate econ dev bill to include a process for adjusting the labor rate upward based on an average of the amount paid in the states contiguous to Massachusetts. This provision, too, will be decided by the bill’s conference committee. Used Vehicle Record Book (House 3074). The House, after giving initial approval to House 3074 on April 13, finally engrossed the legislation on July 18 with a clarifying amendment and sent it to the Senate. This bill would allow new car dealers to maintain in a dealer’s DMS the information demanded of the used vehicle record book without having to duplicate the recording of the info into a handkept book or the electronic version of the book. Our next step is to get this through the Senate. Doc Fee Cap (Senate 140). This legislation would cap dealer documentary preparation fees at $100. Your association opposes this legislation. The bill, after receiving a favorable report from the Joint Committee on Consumer Protection, was referred to the Senate Ways and Means Committee, where it presently remains. We continue to work to make sure it does not receive any support from the committee. Inspection Station Licensure. We have been working with the Baker Administration and the Registry of Motor Vehicles to address the problem of new dealerships not being able to be licensed as vehicle inspection facilities. As a result of the intransigence of the RMV to recognize that a problem exists and that dealerships need to be able to inspect vehicles they are selling in order to maintain high customer satisfaction scores, your association asked legislators to file legislation to grant franchised dealerships a license upon request. Senate 1820, filed
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The Roundup by Sen Vinny deMacedo (R-Plymouth), and House 3044, filed by Rep Chris Markey (D-Dartmouth), received favorable reports from the Joint Committee on Transportation and referred to each’s respective committee on ways and means. We continue to advocate for the bills as we also work with the RMV on a plan for the licensure of dealerships without inspection capabilities today.
New Transgender Accommodations Law On July 11, 2016, Governor Baker signed Massachusetts’s transgender accommodations bill into law, which will allow transgender individuals to use restrooms, changing rooms, and locker rooms that match their gender identities rather than the biological sex assigned at their birth. It will also protect transgender individuals from discrimination in places of public accommodation and will prohibit advertising that discriminates on the basis of gender identity. The new law will go into effect October 1, except for the prohibition against discriminatory advertising, which is effective immediately. Because Massachusetts’ state discrimination law already protects individuals from employment discrimination based on gender identity, there can be no doubt that you now must permit transgender employees to use the bathroom that corresponds with their gender identity. Additionally, if you qualify as a place of public accommodation (i.e., any business that is used by the public, including in the retail, hospitality, or healthcare sectors), you should ensure that your practices comply with this law by October 1 and train employees and managers accordingly. If an employee begins using a bathroom that does not correspond with their apparent current gender (including the gender identified on their human resources paperwork), nothing prohibits you from raising the issue with the employee. If the employee responds
JULY 2016
that they are transitioning to a different gender, however, you must permit them to use the bathroom of their choice, even if they are not currently dressing as that gender or presenting other indicators of that gender. If an employee comes forward to announce that they are planning to transition to a different gender, the best practice is to engage in a collaborative discussion with the employee to plan for the transition. That conversation should include topics such as when the employee will begin dressing according to their gender identity, when they would like to start using the bathroom that corresponds with their gender identity, when and if they plan to change their name, what pronouns they feel comfortable using, and – perhaps most importantly – when and how they want this to be communicated to their co-workers. You should respect the employee’s privacy and should avoid asking questions about the employee’s medical or surgical history. Employers facing these issues should seek advice from counsel to ensure compliance and to avoid costly discrimination litigation. The Massachusetts Commission Against Discrimination is authorized to adopt regulations to effectuate this law, which should be issued in the next several months.
U.S. House Again Rebukes CFPB’s Flawed Auto Finance Guidance By a bipartisan vote of 260-162, the U.S. House of Representatives on July 7 passed an amendment offered by Rep. Frank Guinta (R-NH) that would nullify the Consumer Financial Protection Bureau’s (CFPB) flawed auto finance guidance by preventing the CFPB from spending any funds to enforce the guidance. The amendment was added to the fiscal year 2017 Financial Services appropriations bill (H.R. 5485) on the House floor. This House action is another rebuke of the CFPB’s auto finance guidance, which
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threatens a consumer’s ability to receive a discounted auto loan from a dealer. This is the first time Congress has used the appropriations process to rein in the CFPB. Nineteen Democrats and 241 Republicans voted for the amendment. Massachusetts Democrat Rep William Keating (D-Bourne) was the lone member of our state’s delegation to vote “yes” on the amendment. Congress uses its “power of the purse” to change policy though spending “riders” that specifically limit the use of appropriated funds. The broader provisions of H.R. 5485 would bring the CFPB under the annual appropriations process, and the Guinta amendment then would deny funds to implement the problematic guidance. Votes on spending riders are generally party-line votes. However, the Guinta amendment garnered more recorded Democratic votes than any of the 33 controversial amendments to the bill. NADA issued a statement of appreciation for Rep. Guinta’s leadership to maintain congressional pressure on the CFPB to change its policy to eliminate dealer-discounted credit that benefits auto buyers. Last November, the House passed Rep. Guinta’s bill, H.R. 1737, by a bipartisan vote of 332-96. This bill would nullify the CFPB’s 2013 auto finance guidance and establish a transparent process with public participation to determine future auto finance guidance. In contrast, the CFPB issued the flawed 2013 guidance without any public comment or transparency, and the agency admitted it has failed to study the impact of its guidance on consumers. Congressional attention on this matter now returns to the Senate. NADA is urging dealers around the country to contact their Democratic senators to support S. 2663, the Senate companion bill to H.R. 1737. Due to the elections this year there is a shortened congressional session, and we need to be ready for a Senate vote at any time. t
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Troubleshooting
MSADA MSADA
Frequently Asked Questions By Peter Brennan, Esq.
MSADA Staff Attorney Here at your Association, we field legal inquiries from dealers and their employees on a daily basis. Many of these questions resurface from time to time, and this column will periodically review some of the frequently asked questions that we answer for our members. Question: May our dealership charge every service customer a set fee or percentage of their bill for the disposal of environmentally hazardous materials, regardless of whether we took in hazardous materials during the repair? Answer: A dealership may charge a fee for the disposal of environmentally hazardous material, but only if hazardous materials are actually removed and disposed of by the dealer during the repair. Charging a fee for any services not performed during a service visit is a clear violation of the Attorney General’s regulations at 940 CMR 5.05. Any disposal fee charged should be reasonable in relation to the services performed. It can be included as a set amount or percentage of the total charge for particular services, presuming the fee is disclosed to the customer at the time that the customer authorizes the repair. The disposal fee should also then be explicitly stated on the customer’s receipt. Posting a conspicuous notice regarding the hourly labor rate, parts costs, shop supplies charge, and other potential fees, such as the disposal fee, in an area where the notices will be visible to the customer is a good way to show actual notice under the regulations and will protect dealers JULY 2016
that face a customer complaint based on “hidden costs”. Any fee charged to the customer for the disposal of hazardous materials is subject to the sales tax. This is the case whether the fee is charged as a percentage of the total repair or as a flat fee. Question: Are a manufacturer’s rebates subject to state and local sales tax? Answer: The answer depends on whether the rebate is applied at the time of the sale or sometime after the sale. Under Massachusetts Department of Revenue rules, if a motor vehicle dealer sells a motor vehicle to a customer who applies a manufacturer’s rebate to reduce the sales price at the time of the sale, such rebate is treated as a cash discount and excluded from the sales price subject to tax. However, in the case of a rebate that the customer applies for after the sale, such as the rebate currently offered on certain zero emission vehicles through the Commonwealth’s MOR-EV program, the sales tax is based on the full purchase price of the property. In the case of the MOREV rebate, the customer must complete the transaction at the dealership and then apply for the rebate through the MOR-EV website. Upon receiving the rebate, the customer is not entitled to a refund of taxes originally paid on the rebate amount. A manufacturer’s or any other rebate that is applied after the transaction is completed would be handled the same way. Question: What questions should I, or should I not, ask on an employment application? Answer: Dealers should solicit relevant job-related information to help determine whether an applicant is qualified for the listed position such as education level, work experience, and skills. Make sure to include an authorization to be signed by the applicant allowing the employer to check all references and conduct a credit and background check, as well as a verification statement that the applicant must sign to verify the information provided in the application.
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Refrain from requesting any information that pertains to the following subjects: age, national origin, gender, sexual orientation, and religion. Information regarding an applicant’s criminal record must not be requested on the initial employment application, but an employer may ask the applicant about his or her criminal history during the interview process. Employment applications should contain an explicit statement detailing the employer’s commitment to nondiscrimination on the following bases: race, color, handicap (disability), religious creed, national origin, age (40 or older), ancestry, sex, and sexual orientation. Employers may not request health or disability-related information, but may ask whether the applicant can perform the functions of the job with or without reasonable accommodation, whether they can meet the attendance requirements of the position, and if the applicant holds any required licenses. Medical inquiries should not be made on the application or in an interview. Additionally, employers are not only prohibited from asking an applicant to take a lie detector test, but the following language must also be included in any employment application: “It is unlawful in Massachusetts to require or administer a lie detector test as a condition of employment or continued employment. An employer who violates this law shall be subject to criminal penalties and civil liability.” We previously have made available to dealers an updated compliant employment application. If you need one, contact us. 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.
Dealer Ser vices
MSADA
Character, Competence, and Communication By Rob Sneed Rob Sneed is a development rep and motivator for Ethos Group Consulting Services and the author of various articles in the automotive industry. franchised an
Ethos Group
automotive
integrated
program
provides
dealerships of
with
results-driven
income-development services, comprehensive training,
robust
recruiting
and
industry-
The most successful salespeople in our industry are true professionals at their craft. They understand that trust, value, and logic are critical agreements in any sale – agreements that allow them to work with the potential buyer through the difficult decisions that will result in a successful ownership experience, not just a successful sale. We have identified three key strengths of exceptional salespeople: they close business with character; they conduct the sale with competence; and they communicate with confidence. The best of the best in the business work diligently to develop these key strengths, which significantly reduces the stress and anxiety that consumers experience when making a purchase and all but eliminates the objections that average salespeople consider ordinary.
Character Salespeople can unknowingly and unwittingly compromise their integrity in pursuit of a sale. Mistakes are a part of life and business, but management condones bad behavior when it allows patterns of poor business to form. It is time for dealers to raise the standard. Our industry leaders can no longer afford
to conduct business at a decades-old status quo. Why? Because if dealerships continue to sell vehicles the way they did decades ago they will not connect with the type of buyer that is shopping for a vehicle today. The best salespeople understand that consumers value professionalism, respect, and transparency, and that value almost always translates to higher profit in the recap or on the repair order. Simply stated - the better the experience, the higher the value. The higher the value, the more consumers are willing to pay. The more they are willing to pay, the more potential the dealership has to make money during the transaction! The takeaway: Treat others better than you want to be treated.
Competence Today’s automotive salespeople deal with well-educated consumers. From the palm of their hand a potential buyer can go online, build a vehicle to exact specifications, and even take an on-line test-drive! But despite having all of this information on-demand, buyers still appreciate the personal touch that can only be provided in a person-to-person transaction. Salespeople have to be educated on their product, knowing more about it than even the most well educated consumer, and they need to know their competition’s products as well as their own. But we cannot stop there. You see, it is not just about product knowledge; it is also about people knowledge. Salespeople cannot take for granted the impact that personal touch and attention to detail have on the experience of buying and servicing an automobile. What does that mean? Beyond product knowledge, our salespeople must be committed to executing proven processes with committed consistency. Cars are being built better today than ever before. Vehicles are more powerful, efficient, and reliable than ever before. They are more attractive, comfortable, and safer than at any other time in history. All www.msada.org
those safety, performance, appearance, comfort, economic, and dependability features come at a cost when buying a vehicle, and that means that buyer’s expectations during their ownership also increase. The takeaway: Product knowledge makes the difference in the presentation.
Communication Effective selling is closer to an art than a science. It requires an individual to understand the wants and needs of a buyer and balance those with the requirements of the seller. Exceptional salespeople are excellent communicators. Salespeople must remember that buyers act on what they see, sense, and feel. That means that perception matters. If a salesperson appears to lack confidence, the buyer will respond with cautiousness. If a buyer perceives a salesperson to be untrustworthy, they will be less forthcoming with information. Talk is cheap, and, unfortunately, that leads many salespeople to believe that they can make up for a lack of quality engagement with a sheer quantity of words. It is simply not true! In fact, it almost always has the opposite effect. Sometimes, less is more. Just because you have the words, does not mean you should use them. Listen at least twice as much as you talk! The takeaway: Say the right things, not everything. For a dealership to operate at the highest level, everyone, regardless of their role within the team, has the responsibility to hold themselves to the highest standard by refusing to allow the routine experience of selling and servicing a vehicle to compromise the extraordinary experience of owning a vehicle from your dealership. Effective selling, whether it happens in the sales, F&I or service department, is grounded in customer service, and the key to customer service is that the focus always remains on servicing the customer. t Massachusetts Auto Dealer JULY 2016
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AUTO OUTLOOK
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Elephants: The Unseen Power
Recognize these issues to clear up communication in your family before a small problem becomes much larger. By Daisy Medici
Managing Director of Governance and Education, GenSpring Family Offices The expression “an elephant in the room” has been around for decades – if not longer. Readily recognized to mean an uncomfortable situation not talked about but clearly known to all, the phrase has made its way into literature, everyday life, and, perhaps most often, the notes of therapists worldwide. When elephants make unwanted appearances – at dinners, parties, meetings -- people get uncomfortable and begin to shut down. Once people shut down, they begin to operate from assumptions and to draw conclusions based on their own perceptions, which may or may not be based in reality. Over time, these actions may cause family relationships to erode. To identify the elephants begins the process of removing them from the room. Putting a name to the problem ignites the power to lead the elephant out the door.
Elephant #1: Wealth To many, the idea that wealth can be an issue may seem laughable. Yet, in fact, wealth can be one of the most powerful elephants in the herd. Issues surrounding wealth range from denial to guilt; fear of losing the money; and a sheer lack of financial literacy, which can have a devastating impact. To explore the family’s relationship with money can be eye opening. Sharing the family story of wealth creation uncovers the work ethic, the sacrifices made, and the underlying family values.
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It is crucial to invest in building financial literacy skills across the family. Seek creative ways to talk about wealth and use trusted advisors or facilitators to talk about wealth concerns. Most importantly, create a safe environment to discuss the emotional impact of wealth. Finally, model responsible money behavior.
Elephant #2: Differing values Often in families, the differences in personalities coupled with different styles, priorities, genders, and generational traits leads to utter confusion. Unaddressed, the confusion may result in unfair judgments and relationship rifts. While values are always additive and never negative, people, even people in the same family, have different values. Understanding that our innate personal values help us identify our priorities and energize us to accomplish our goals, differing values could lead to opposing goals. While family members can and do have different values, they also have shared values. Families benefit enormously from exploring their shared values and crafting values-
MSADA driven vision and mission statements. Shared goals work as guidelines for joint decision-making.
Elephant #3: Strong patriarch/matriarch Generally, a strong leader is sought after in times of stress, uncharted waters, and rough seas. But these same take-charge qualities can become challenging when it’s time for the captain to give up the helm. A strong patriarch/matriarch may refuse to cede control for a variety of reasons. He or she may harbor a difference of opinion on how things should be done, have a fear of change and/or innovation, or think no one else is prepared to fill his or her shoes. Here again, visioning work and goal setting can ease the stress and identify the barriers to success. Getting to the root of why there is such reluctance to hand over or lighten up on the reins may uncover control issues that can be worked through. Conversations regarding succession must start early, not when a change in leadership is critical.
Elephant #4: Sibling rivalries Birth order has been talked about, investigated, maligned, and turned into numerous books -- for good reason. The order in which a family is formed is powerful and cannot be denied. Family dynamics emerge without overt coercion. Competiveness, jealousy, and estrangement occur, and, without understanding and assessment, can be devastating. Education on family systems, sibling dynamics, and birth order goes a long way toward understanding and accepting each member’s qualities. Type and style analyses, such as MBTI, Hall-Tonna Values Assessment, and communication styles assessments, help highlight type differences, identify shared values, and invite open communication.
Elephant #5: Blended families In its most basic sense, a blended family is one where the parents have children from previous relationships but all the members come together as one unit. While blended families seem to be common place, the challenges of bringing two groups together have not changed. What were once familiar surroundings become uncharted waters, which can bring fear of the unknown and a longing for the past. Although a fresh start can be exactly what is needed for some, differences in values, parenting styles, financial planning, and age groups can feel very threatening. The expression “time heals all wounds” may be cliché, but allowing time for everyone to adjust to change is crucial for
MSADA the success of the newly formed family. Welcoming open communication, while exercising great patience, will go a long way to surface concerns and fears. Plan time together through new activities that don’t interfere with treasured established traditions to avoid the conflict that might ensue from such pressures.
Elephant #6: Unprepared heirs No one wants to be caught unprepared – neither in a rainstorm nor a meeting. Being unprepared for wealth is no better. And yet, parents reluctant to talk about wealth with the next generation leads to just that: inadequate preparation. Add to that limited formal education around inheritance and the problem compounds. To begin preparing the next gen, open family communication through regular structured family meetings. Establish a procedure for assessing financial literacy competencies and other areas of learning relevant to living a responsible life with wealth.
Elephant #7: Family secrets Secrets and stress are near synonyms. Those “things” not spoken about put a stress on families. Not talking about “it” becomes the default position, making it easier but without resolution. Fear, despair, remorse, regret – all lead to conflict and distancing. These secrets – addiction, infidelity, scandal, health neglect – require attention in order to be addressed. Exploring the family’s shared values around family member well-being can uncover the core strength the group needs to be proactive. This is a time when families should seek qualified professionals and consider using a guided intervention.
Round up the herd A family whose home is full of unwanted “elephants” can begin to turn things around. Become informed, open communication, know the key players, and embrace the process. t
Daisy Medici joined GenSpring Family Offices in 2006 and is the Managing Director of Governance and Education. In addition to her primary role, Daisy oversees GenSpring’s Women & Wealth Initiative and is a member of GenSpring’s Leadership Team. In 2015, Daisy was named as one of The 50 Most Influential Women in Private Wealth by Private Asset Management magazine.
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Cover Story
Keeping Clean Difficult times for Volkswagen are Massachusetts dealers’ time to shine “Our customers know that, no matter what happens with the manufacturer, we will stand behind what we sold them.” —Carla Cosenzi, Tommy Car Auto Group
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By Tom Nash To engineer a fraud as pervasive as Volkswagen’s line of VW and Audi TDI diesel vehicles, exposed for creating false emissions test results last year, experts say people across the company would have been in on the plan for years. “Someone had to take these vehicles out, test them on the standard test cycle, make sure that the emission controls are supposed to be working when they’re supposed to be working,” John German, a member of the International Council on Clean Transportation that commissioned the testing that exposed the secret, told NPR. Following high profile raids of company offices in Germany and France, executive shakeups, consumer lawsuits, and promises to make good, Volkswagen unveiled plans in late June to address the issue. A consumer settlement could unload the company of as much as $15.3 billion toward buybacks, fixes, and payouts.
MSADA MSADA While the conspiracy found by researchers goes deep, it stops at the doorstep of dealerships across the world and Massachusetts. Not since the GM and Chrysler bankruptcies of 2009 have the role of dealerships been more clearly put into the spotlight, as dealers and customers work together to navigate the mess. That means that dealers across Massachusetts have had an opportunity to take a bad situation and do what they do best -build relationships and trust with their customers.
From Wolfsburg to Main Street “We’re trying to do everything we can to make everybody happy.” Spoken by Village Automotive owner Ray Ciccolo, this is the refrain found in VW and Audi dealerships across Massachusetts, where sales have not fallen off with the rest of the country. From the moment customers first became aware of possible issues, to the June announcement of a possible resolution, Massachusetts dealers have been the ambassadors and fixers VW needs to survive and thrive. “We’ve been able to build and maintain a rapport with our customers, and we’ve been able to walk them through this,” says Tommy Auto Group owner Carla Cosenzi. “Our customers know that, no matter what happens with the manufacturer, we will stand behind what we sold them.” The proof is in the numbers. Despite the scandal, Massachusetts dealers haven’t seen the same drop-off seen elsewhere. And Cosenzi even grabbed national headlines when alt-rock legend J Mascis, a native of Western Massachusetts, walked out of her Northampton store with a new car. “We’re in a great market for VW,” Cosenzi adds. “So I think a lot of our customers were upset and felt deceived, but are still very loyal to the VW brand.” Ciccolo adds that even the most trying customer-manufacturer situation, open communication is usually all that’s needed. “We don’t want to try to offer another car,” Ciccolo says. “We don’t want to sound like we’re trying to make more money off them. And we’ve found a lot of people aren’t even looking for a fix.” Brian Heney, director of operations at Kelly Automotive, helps oversee the largest VW dealership on the East Coast. He says that even amid the fallout, business is up month-to-month. “We haven’t skipped a beat,” Heney says. “And VW has been great to us as dealers. They could do better by their customers. Customers have been patient, but they’re working for their final resolution.”
“If manufacturers don’t have a good relationship with their dealers — and they’re not subject to Massachusetts franchise laws — you can circumvent a lot of these issues. This is why the franchise system absolutely works.” —Ray Ciccolo, Village Automotive
The Road Ahead While dealers work with customers one-on-one, the push to punish those responsible for the conspiracy continues. In late July, Massachusetts Attorney General Maura Healey joined her New York and Maryland counterparts to announce a lawsuit against the company on behalf of consumers in those states. “This was not indeed the work of some one, rogue employee but rather a calculated, concerted effort by dozens of employees officers, senior executives, who worked together to orchestrate this plan to mislead regulators, researchers and the public,” Healey said in a press release. VW hopes that its newly-announced settlement with the Justice Department, Environmental Protection Agency, and Federal Trade Commission will help resolve the matter. In addition to readying a software package that should fix the fraudulent emissions system, the company will:
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KEEPING VW CLEAN
- Set aside $10.033 billion to cover buybacks or fixes for diesel cars found to have been cheating emissions tests; - Provide $2 billion over 10 years to fund programs directed by California and the EPA for electric vehicle charging infrastructure, zero-emission ride-sharing fleets, and other zero-emission initiatives; and - Put up $2.7 billion over three years to enable government agencies to replace old buses or to fund infrastructure to reduce diesel emissions. Additionally, Volkswagen will offer to buy back affected vehicles -- with an estimated 475,000 on the road now. Whether customers get the vehicles fixed or not, the company says cash payments will be forthcoming. A separate cash settlement with 44 U.S. states, the District of Columbia, and Puerto Rico is expected to cost at least $600 million, bringing the total payout from the company to as much as $15.3 billion. “We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Müller, Chief Executive Officer of Volkswagen said in a statement. “We know that we still have a great deal of work to do to earn back the trust of the American people. We are focused on resolving the outstanding issues and building a better company that can shape the future of integrated, sustainable mobility for our customers.”
A Teachable Moment Ciccolo, a former NADA Director and longtime presence on Capitol Hill, sees a clear way to make the VW scandal and dealers’ adept handling into a teachable moment for a public that lacks an understanding of the franchise system. “If manufacturers don’t have a good relationship with their dealers or they’re not subject to Massachusetts franchise laws, JULY 2016
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you can circumvent a lot of these issues,” Ciccolo says. “This is why the franchise system absolutely works.” MSADA Executive Vice President Robert O’Koniewski says the recent controversy caused by Tesla’s rejection of the dealer model, and local governments going along with it, will likely be revisited as consumers begin to understand how much worse off VW owners would have been without a Main Street connection to Germany. “Tesla has managed to squeak by in several states in their quest to do away with franchise laws,” O’Koniewski says. “Issues with Tesla vehicles are a matter of when, not if, and it will be a rude awakening when consumers find that they’re the ones left holding the bag.”
What’s Next VW dealers can’t turn a profit on simply being a good case study for the franchise system. Their excitement over the manufacturer’s soon-to-come product line is palpable. A new Alltrack line is expected to do very well in the Commonwealth. “VW seems extremely committed to research and development,” Cosenzi says. “It’s going to need to maintain that focus. They were known for their TDI, and now they’re going to have to have something new for consumers. It’s going to be a relief to have people funneled back to our dealership.” O’Koniewski adds that with the coming products, Massachusetts VW dealers who have worked so hard for so long to do right by their customers will have a well deserved opportunity to move some metal without the complications of the past year. “MSADA has worked to make sure we have provided everything our member VW dealers need as they navigate these tricky waters,” he says. “It’s exciting to see them turn this corner, and to see what’s ahead.” t
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2017
New Orleans January 26-29
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NEWS from the NEWS from Around Around the Horn Horn from Around
NEWS the Horn
PLYMOUTH
Best Chrysler Dodge Jeep Ram joins Colony Place Best Chrysler Dodge Jeep Ram is now open at 520 Colony Place Road in Plymouth, after moving from its temporary location on Cherry Street where the dealership has been operating since December 2014. Best Automotive, which is well known for its Chevrolet Dealership in Hingham, was approached by Chrysler to expand to the Chrysler Dodge Jeep Ram suite of brands after successfully running the Chevrolet store for 57 years. “The combination of stellar customer service, a great product, and heavy community involvement made for a very successful store in Hingham,” said Scott Shulman, owner of Best Chevrolet and Best Chrysler Dodge Jeep Ram. “When Chrysler suggested we open a second dealership in Plymouth, we were thrilled to bring this same level of customer care to a new community.” Over 100 local dignitaries and business owners as well as enthusiastic Best staff attended a ribbon cutting ceremony with the Plymouth Chamber of Commerce on Wednesday, to celebrate the new location at Colony Place past Wal-Mart. Addie Pugh, the General Manager of Best Chrysler Dodge
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Jeep Ram, Ben Shulman, the General Manager of Best Chevrolet, and Best Automotive owner Scott Shulman were hosting the event.
NEWS from Around the Horn
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Sarat Ford Lincoln Opens New Complex The new Sarat Lincoln dealership building, which opened in October last year at the Sarat complex of dealerships on Springfield Street, includes an immersive, luxury-themed experience. The dealership’s design elements were detailed in a July feature in The Springfield Republican. The Sarats renovated a former equipment rental store at a cost of $2.5 million as the first phase of building upgrades. The second phase, a $2 million redo of the Ford dealership building next door, opened just before the all-important Presidents’ Day car-buying weekend in February. Sarat said this week that his family is planning renovations at the Family Ford of Enfield, Connecticut, location it owns, and work may begin later this year. Their remaining dealership, Ford of Northampton, is
already a top-notch facility and is not slated for renovations, Sarat said. Sarat was recently designated a Black Label dealership. Being a Black Label dealership means Sarat offers interior and exterior colors and other fit-andfinish items other Lincoln garages don’t have, he said. Black Label decorating schemes are organized on themes like “The Muse” or “Indulgence.” Sarat remains the only Lincoln dealer in Massachusetts between Worcester and the Berkshires. www.msada.org
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NEWS from Around the Horn NORWOOD
Herb Chambers Opens Automile Dealership Herb Chambers Lincoln of Norwood and Herb Chambers Volvo Cars Norwood opened for business in late June on Norwood’s Automile. “We’re grateful to bring our dealerships to the prestigious Automile,” Herb Chambers said in a press release. “Lincoln and Volvo are such iconic brands and our teams look forward to providing the very best service to our present and future customers at these beautiful new locations.” The new Lincoln facility includes a café, a plush lounge, and a business center with a “quiet” area and complimentary WiFi, according to the release. The Volvo dealership includes amenities such as a coffee bar with complimentary pastries, a customer lounge, and WiFi connectivity, as well as shuttle service to-and-from the area’s attractions. Both dealerships will offer new and pre-owned vehicles. The Lincoln dealership is located at 1120 Providence Highway with the Volvo dealership next door at 1130 Providence Highway.
Herb Chambers, left, president of the Herb Chambers Cos., is joined by Lex Kerssemakers, president of Volvo Car USA, to celebrate the opening.
BRAINTREE
Quirk Apologizes for Advertising Plagiarism Quirk Ford apologized in June for advertising materials that appropriated art from a popular video game without attribution, following national headlines calling attention to the link. The promotional material used a background image from the game “Firewatch” to promote a Summer sale. After initially not responding to questions about the similarities, Quirk’s Twitter account issued an apology to the game’s publisher, Campo Santo, when the public started criticizing Ford directly. “Ford was not involved in creating the Quirk Ford advertising,” Quirk’s Twitter account said. “We regret the error and would like to issue an apology to Campo Santo.” JULY 2016
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MSADA DANVERS
Automotive News’ “Best Dealerships to Work For” Includes Three Kelly Stores Three of Kelly Automotive Group’s Massachusetts dealerships were named in the fifth annual “Best Dealerships to Work For” list by Automotive News. Kelly Honda in Lynn, Kelly Infiniti in Danvers, and Kelly Volkswagen in Danvers were given the honor. T h e “Best Dealerships To Work For” program is dedicated to finding and recognizing the best employers in the retail automobile industry. In October, the publication will announce the ranking of all the dealerships, from 1 to 100. The dealerships on this year’s list have distinguished themselves as leaders in workplace satisfaction, talent retention, and excellent care of their employees
LITTLETON
Bob Moran Profiled on Automotive News TV Bob Moran of Acton Toyota was profiled on Automotive News TV in July for a piece titled, “Mass. Dealer Dishes Meals to Customers, Leeway to Employees.” The video detailed his history as a dealer, various locations, and consistent success. Moran discussed the decision to keep the name recognition of Acton, and his employees gave interviews about his quality, handson management style, as well as the team’s Internet sales strategy. The full video is available on www.automotivenews.com.
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Quirk Re-Opens Pre-Owned Dealership The Boston Herald reported on the Quirk Auto Group reopening its preowned car dealership in July, featuring a new showroom with an interactive kiosk aimed at making buying experiences easier. “We’ve been selling preowned cars at that location for more than 20 years, but we created this new building to keep up with the times,” owner Dan Quirk told The Herald. “The original building wasn’t designed to be a car dealership ... We wanted to make it a place where we could present our products in an environment that was better for both our customers and our employees.” More than 300 preowned vehicles were delivered to Quirk’s brand new, 17,000-square-foot Quincy Avenue dealership in July as part of the company’s grand reopening celebration. In addition to the new building, which was built where the former, smaller preowned dealership once stood, Quirk said his customers can also look forward to being able to browse his inventory with the swipe of a finger. “It’s for customer convenience because some people
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Quirk Preowned managers, from left, Ben Rodman, Phil Ternullo and Xavier Rivera pose at the just-reopened Braintree dealership.
like to shop without aid from salespeople,” Quirk said of the showroom’s new kiosk. “We’re in 2016; it’s not 1990 anymore.”
MSADA
TRUCK CORNER Truck Dealers Converge on Capitol Hill ATD advocates for clean air policies that don’t hurt consumers and the economy
By Steve Parker
Baltimore Potomac Truck Centers ATD Chairman
Last month, ATD hosted its second annual flyin on Capitol Hill where commercial truck dealers urged members of Congress to protect dealerships from harmful policies and regulations that would hinder the growth of one of America’s most important industries. ATD’s summer meeting turned up the heat with 67 congressional meetings, congressional guest speakers, and critical legislative briefings that were held in conjunction with ATD’s annual June board meeting. This was an ideal opportunity to speak to our elected officials and hear from them. I had the honor of speaking with my own U.S. Senator, Ben Cardin (D-Maryland.). It was reassuring to see that many of our congressmen and senators understood what’s at stake in our industry. Our top legislative priority at the fly-in was opposing an increase in the federal excise tax (FET), which is applied to the sale of most heavy-duty trucks, tractors, and trailers at its current rate of 12 percent. During our board meeting, we had the privilege of hearing from Rep. Tim Walz (D-Minnesota), one of the authors of H. Con. Res. 33, a bipartisan resolution that puts Congress on record in opposition to a FET increase. Rep. Walz co-sponsored the bill along with Rep. Reid Ribble (R-Wisconsin). Walz stated: “When you raise the taxes on new, clean, and efficient trucks, you encourage people to buy old, dirty trucks, and you don’t move the economy ... one of those unintended consequences is people purchase older trucks that actually have higher carbon emissions.” As a result of the Hill visits, three additional congressional co-sponsors have joined and several others are pending, bringing us to 33 bipartisan cosponsors on H. Con. Res. 33. Another ATD legislative priority is informing Congress about dealer concerns with the proposed Environmental Protection Agency (EPA)/National
Highway Traffic Safety Administration (NHTSA) Phase 2 greenhouse gas/fuel economy rule. If unreasonably implemented, this rule will have negative consequences for truck dealerships, employees, and the economy. I recently had the opportunity to meet with White House officials who are reviewing the EPA/NHTSA Phase 2 rule. At the meeting, I highlighted ATD’s concerns with the rule’s technological feasibility and cost effectiveness and questioned its potential impact on the upfront and ownership costs of new equipment. I also raised issues with the rule’s lengthy timeframe (2018-2027), suggesting that there be a mid-term review to reevaluate underlying assumptions, akin to that set out in a comparable rule for light-duty fuel economy mandates. I’d like to sincerely thank all our engaged and hardworking truck dealer members and state association executives who attended the ATD fly-in and contributed to a hugely successful week. Not only did we make our voices heard, but we also created and solidified relationships for the future. Hosting officials at our dealerships during the congressional recesses is a logical next step. I urge truck dealers across the country to host your members of Congress this summer when they are home in their districts. Thanks to the efforts of our dealers, we have six pending visits to dealerships across the nation as a direct result of our flyin. With decisions looming this year, these visits are vital to building long-term relationships with our own legislators, and not just when we’re on Capitol Hill. ATD represents more than 1,800 mediumand heavy-duty truck dealerships, and we stand committed to protecting each one of you now and into the future. t
“Not only did we make our voices heard this month, but we also created and solidified relationships for the future.”
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NADA Update
By Don Sudbay
Proving Our Mettle
There’s nothing better than showing the public we’re good at what we do
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). As you’ve seen throughout this month’s issue, as the headlines continue to roll out about VW attempting to make good with its customers, this is a teachable moment. While VW winds it way toward a resolution, we’ve shown how critical it is for there to be a dealer relationship on Main Street customers can build on instead of relying on a multinational corporation to do right by them. We also need to make sure VW makes dealers whole. We dealers have been with our customers this whole time, ready to do the best we can to take care of them. And NADA is going to make sure that the public knows that. NADA Chairman Jeff Carlson’s column below takes a 10,000-foot view of the situation. Also, please note that registration for the 2017 NADA Convention is now open. This is the big one, celebrating 100 years as an organization. New Orleans is always a fun time, and I urge you to make plans to attend as soon as possible.
Chairman’s Column: YES! State Franchise Laws Lower Prices and Benefit Consumers by Jeff
Carlson
A new economic report from the Phoenix Center for Advanced Legal and Economic Public Policy Studies makes one overriding conclusion: State auto franchise laws lower retail prices of new cars, which benefits consumers. The study, “State Automobile Franchise Laws: Public or Private Interests?”, was released in July after years of debate and speculation about the benefits of the dealer franchise network. Professor T. Randolph Beard and Dr. George S. Ford, authors of the study, found that franchise laws do not limit competition or lead to higher prices. Quite the opposite, they found that “all the evidence suggests there is intense competition leading to very low margins on new car sales.” This, in turn, demonstrably lowers prices for consumers and alters the way they buy cars and service in a very positive way. And how does the dealer network compare to manufacturers? Dr. Ford reports that when selling an automobile-service
bundle, the analysis indicated that “franchised auto dealers have a better incentive with respect to consumer desires than car manufacturers.” Thus, it makes sense that state legislatures choose a market design that best fits their constituents. This latest report reaffirms the messages that the National Automobile Dealers Association and auto dealers nationwide have been espousing: The car-buying public is better served with our services than without. For more than 100 years, car buyers have been relying on a system that delivers the most efficient and cost-effective way of buying a car—through franchised dealers. Automakers contract with dealers because we incur billions of dollars in expenses for equipment and facilities; we deliver in-person customer service you cannot get through a computer screen; and we reduce consumer costs through a competitive model that lowers retail prices and makes purchasing possible through dealer-assisted financing. This latest report also is consistent with what respected auto analyst Maryann Keller reported at a Federal Trade Commission panel earlier this year. She cited empirical evidence showing that intra-brand competition among dealers significantly lowers new-car prices. A direct-sales model would not benefit consumers in the same way. Moreover, the franchise network also promotes public safety and instills confidence in the consumer that there is someone there to help service the vehicle when needed. State governments require dealers to invest in facilities so that help is available to car owners throughout the life of the vehicle, and not just at the point of sale. As regulators such as the Federal Trade Commission continue to probe the benefits of the franchise system, we urge them to remember that the franchise laws in place promote not only competition in the free market but also public safety for all. And yes, that is a win-win for consumers and dealers alike.
NADA 100 Carnival to Kick Off 2017 Convention in New Orleans The National Automobile Dealers Association (19172017) will kick off yearlong events commemorating its 100year anniversary, beginning with the NADA 100 Carnival at the 2017 NADA Convention & Expo in New Orleans. The NADA 100 Carnival will be held at Mardi Gras World from 7 to 10 p.m., on Thursday, January 26. The Carnival will feature cuisine from top New Orleans restaurants, as well as entertainment from the headlining band Foreigner, Cowboy Mouth, and local jazz musicians. Online registration and hotel selection for the NADA convention opened on July 25. NADA members and their www.msada.org
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NADA Update managers who register by September 16 will receive a $100 discount from the onsite rate. The member dealer and manager registration fee includes admission to the NADA 100 Carnival, and convention badges must be presented at entry. A limited number of tickets will be available for purchase by non-member dealers and managers. Allied industry attendees are not eligible to purchase a ticket to the NADA 100 Carnival. Shuttle buses will be provided to and from Mardi Gras World and the official NADA hotels. The four-day NADA Convention, which runs from Thursday, January 26, to Sunday, January 29, will be held at the Ernest N. Morial Convention Center and is considered the auto industry event of the year. The convention includes dealer franchise meetings, workshops, keynote speakers, an exhibitor showcase, and numerous networking events. To register or for more information, visit www.nadaconvention.org.
Judge OKs VW Emissions Settlement A federal judge has given preliminary approval to a settlement that calls for Volkswagen to pay $14.7 billion to settle consumer lawsuits and government allegations that it rigged hundreds of thousands of cars to cheat U.S. emission standards. Volkswagen said that U.S. District Court Judge Charles Breyer has signed off on the deal, which calls for the German automaker to pay more than $10 billion to either buy back or repair about 475,000 2-liter diesel vehicles that were sold between 2009 and 2015 and were built with devices to trick emissions testers. Under the agreement, Volkswagen will also compensate owners who purchased 2-liter diesels before September 2015 with payments of $5,100 to $10,000, depending on the age of their cars. Breyer is expected to grant final approval to the settlement on October 18, according to Volkswagen.
Safety Features Score Big, Boosting New-Vehicle Appeal, J.D. Power Study Finds Popular driver-assist technologies help make vehicles considerably more appealing to their owners, according to the J.D. Power 2016 U.S. Automotive Performance, Execution and Layout (APEAL) Study. The study finds that new vehicles equipped with safety features such as blind spot monitoring and low speed collision avoidance have overall APEAL scores substantially higher than similar vehicles without the technologies. Overall APEAL scores are higher among the 41% of owners whose vehicles have blind spot monitoring than among those whose vehicles do not have this technology (821 vs. 787, respectively). Similarly, APEAL scores are higher among the 30% of owners whose vehicles have collision avoidance technology than among those whose vehicles do not have this technology (828 vs. 790, respectively). JULY 2016
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MSADA “Technology-enabled safety features help drivers feel more comfortable and confident while driving their vehicles,” said Renee Stephens, vice president of U.S. automotive quality at J.D. Power. “These features are also ‘gateway technologies’ to autonomous driving capabilities, so the continued level of consumer interest in them will be a critical metric to watch as the industry evolves toward including more automation in new vehicles.”
Enforcement of “Persuader” Rule Blocked A federal court enjoined the U.S. Department of Labor (DOL) from enforcing its so-called “persuader” rule in late June, noting that it undermines employers’ rights to secure legal advice on union organizing. The “persuader” rule was set to take effect on July 1. Among other things, the court held that the DOL failed to adequately explain changes from its prior position on persuader activity. In doing so, it cited last week’s Supreme Court decision in Encino Motorcars, LLC v. Navarro, which held that the DOL had similarly failed to properly justify a change to its long-standing position that service writers are exempt from overtime. The “persuader” rule attempts to require employers and their outside lawyers and consultants to report on any efforts they make to persuade employees on their right to organize or bargain collectively. A June 16 NADA webinar covered compliance with the rule. Questions on the rule, the injunction, or the webinar can be directed to NADA Regulatory Affairs at regulatoryaffairs@nada.org.
NHTSA Urges Dealers to Share Travel Safety Tips with Consumers To improve road safety and help save lives, the National Highway Traffic Safety Administration (NHTSA) is urging NADA members to share travel safety tips with consumers. NHTSA has provided the summer driving safety tips and a link to interactive summer driving tips for dealership websites and distribution though social media channels to help raise awareness of road safety this summer. - Before you go, perform a basic safety check of your vehicle’s tire pressure, wiper blades, fluid levels, lights, and air conditioning. Be prepared in event of an emergency. - Keep children safe. Be aware of the added risks that arise in warm weather. Heatstroke can occur when a child is left unattended in a parked vehicle. - Share the road. Wherever you go this summer, remember that more motorists than usual will be on the road. - Check for recalls. No matter the season use NHTSA’s VIN Look-up Tool at www.SaferCar.gov to make sure your vehicle is recall free. NHTSA’s interactive summer driving tips can be found at www.safercar.gov/SummerDrivingTips. t
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