MAY 2024 AUTO DEALER

The Expanding Compliance

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

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Robert O’Koniewski, Esq. executive Vice President rokoniewski@msada.org

Jean Fabrizio Director of Administration jfabrizio@msada.org

Auto De A ler MAg A zine

Robert O’Koniewski, Esq. executive editor MSADA o ne McKinley Square Sixth f loor Boston, MA 02109

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

AD Directory complyAuto, 2 Driving Dealer Performance, 31 ethos group, 35 Marcum, 26 Merchant Advocate, 32 ocD tech, 25 PlugStar/Plug in America, 45 reynolds & reynolds, 28 Sprague energy, 41 Withum, 51 ADVertiSing rAteS inquire for multiple-insertion discounts or full Media Kit. e-mail jfabrizio@msada.org

Compliance –The Necessary Evil

By Jeb Balise, MSADA President

So much that goes into operating a successful dealership – vehicle inventory management, hiring the right people and utilizing their skills correctly, efficiently running service and parts activities, keeping an eagle eye on finances, an effective website enhancing business development, etc.

One piece that sometimes does not receive its due attention is compliance, which is a vital component of everything we do, from sales and service, to personnel, F&I, advertising, etc. There is nothing that occurs at a dealership that does not involve oversight and enforcement from the myriad collection of federal and state alphabet agencies – FTC, AGO, EPA, FCC, OSHA, DEP, EEOC, just to name a few.

There is nothing that occurs at a dealership that does not involve oversight and enforcement from the myriad collection of federal and state alphabet agencies

One misstep, however, can be far more costly than just paying a large fine.

And the compliance factor is neither going away nor getting any less expensive. As government becomes more intrusive in the business world, new laws and regulations pop up on a regular basis. After all, the business model for these agencies is based on creating new rules, sometimes in search of a problem where none exists.

In these pages each month as well as in our periodic legal bulletins, your MSADA seeks to provide the most up to date guidance to assist your compliance efforts. Our cover story this month addresses three current, complex issues that can have expensive ramifications – not the most exciting topics but ones that should be on your radar screen as government agencies and plaintiffs’ attorneys seek their gotcha moment in the limelight.

We work with a large number of associate members as well as have compliance programs with MSADA-endorsed partners with the goal of helping you stay out of trouble. If you need assistance on any matter, do not hesitate to reach out to us. After all, the risk of not being compliant is too high to chance.

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, Bill Deluca family of Dealerships

Paul Bertoli, Priority chryslerJeep Dodge ram

Franklin County [open]

Hampden County

Jeb Balise, Balise Auto group

Hampshire County

Bryan Burke, Burke chevrolet

Middlesex County frank Hanenberger, MetroWest Subaru

Norfolk County

Jack Madden, Jr., Jack Madden ford charles tufankjian, toyota Scion of Braintree

Plymouth County

christine Alicandro, Marty’s Buick gMc isuzu

Suffolk County

robert Boch, expressway toyota

Worcester County

Steven Sewell, Westboro chrysler Dodge ram Jeep

Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer

Director-at-Large [open]

Immediate Past President

chris connolly, Jr., Herb connolly chevrolet

NADA Director

Scott Dube, Mcgovern Hyundai rt.93

OFFICERs

President, Jeb Balise

Vice President, Steve Sewell

Treasurer, Jack Madden, Jr. Clerk, c harles tufankjian

MSADA A SS oci Ate M e M ber S D irectory

ACV Auctions

Steve Sirko (856) 381-3914

ADESA

Elizabeth Morich (508) 270-5400

Albin, Randall & Bennett

Barton D. Haag (207) 772-1981

American Fidelity Assurance Co.

Kathleen Weisenbach (402) 523-5945

America’s Auto Auction Boston

Chris Colocousis (774) 218-8930

ArentFox LLP

Paul Marshall Harris (617) 973-6179

Sarah Decatur Judge (617) 973-6184

Armatus Dealer Uplift

Joe Jankowski (410) 391-5701

Auto Auction of New England

Steven DeLuca (603) 437-5700

Bank of America Merrill Lynch

Dan Duda and Nancy Price (781) 534-8543

Bellavia Blatt

Leonard Bellavia (516) 873-3000

Broadway Equipment Company

Fred Bauer (860) 798-5869

Brown & Brown Dealer Services

Jason Bayko (508) 624-4344

CDK Global

Rob Steele (508) 564-1346

Clifton Larson Allen

Rick Parmelee (860) 982-9307

Cooperative Systems

Scott Spatz (860) 250-4965

Cox Automotive

Ernest Lattimer (516) 547-2242

Creative Resources Group

Charlie Rasak (508) 726-7544

CVR

John Alviggi (267) 419-3261

Dave Cantin Group

Woody Woodward (401) 465-7000

Dealer Pay

Shannon Wischmeyer (636) 293-8038

Downey & Company

Paul McGovern (781) 849-3100

DP Sales Distributors

Andrew Prussack {631) 842-7549

Driving Dealer Performance

Kimberly Guerin (978) 760-0322

Eastern Bank

David Sawyer (617) 620-3484

EasyCare New England

Greg Gomer (617) 967-0303

Ethos Group, Inc.

Drew Spring (617) 694-9761

F&I Direct

Sean Wiita (508) 414-0706

Michelle Salas (508) 599-0081

Federated Insurance

Kevin Sundberg (559) 547-9694

Fisher Phillips LLP

Joe Ambash (617) 532-9320

Jeff Fritz (617) 532-9325

Josh Nadreau (617) 532-9323

GW Marketing Services

Gordon Wisbach (857) 404-0226

Hilb Group

James Pietro (508) 791-5566

Huntington National Bank

John Marchand (781) 326-0823

iHeart Media

Paul Kelley (757) 328-1431

ION Bank

Timothy Rourke (203) 439-9400

JM&A Group

Chris “KC” Hwang (954) 415-6961

John W. Furrh Associates Inc.

Pamela Barr (508) 824-4939

Key Bank

Mark Flibotte (617) 385-6232

KPA

Abe Cohen (503) 902-6567

LoJack by Spireon

Ashvir Toor and Robin Dukes (800) 557-1449

M & T Bank

John Federici (401) 642-5622

Management Developers, Inc.

Dale Boch (617) 312-2100

Marcum LLP

Nichole Rene (203) 781-9690

McWalter Volunteer Benefits Group

Shawn Allen (617) 483-0359

Merchant Advocate, LLC

Dan Giordano (973) 897-2778

Mintz Levin

Kurt Steinkrauss (617) 542-6000

Murtha Cullina

Thomas Vangel (617) 457-4000

Nancy Phillips Associates, Inc.

Nancy Phillips (603) 658-0004

NEAD Insurance Trust

Charles Muise (781) 706-6944

Northeast Dealer Services

Johna Cutlip (401) 243-7331

OCD Tech

Michael Hammond (844) 623-8324

Performance Management Group, Inc.

Dale Ducasse (508) 393-1400

Piper Consulting

Jim Piper (207) 754-0789

Plug In America

Joel Levin (237) 925-1364

Portfolio

J. Gregory Hoffman (800) 761-4546

Pullman & Comley LLC

James F. Martin, Esq. (413) 314-6160

Reynolds & Reynolds

Austin Ziske (802) 505-0016

Rockland Trust Co.

Joseph Herzog (508)-830-3241

Samet & Company

John J. Czyzewski (617) 731-1222

Santander Bank

Richard Anderson (401) 432-0749

Chris Peck (508) 314-1283

Schlossberg, LLC

Michael O’Neil, Esq. (781) 848-5028

Shepherd & Goldstein CPA

Ron Masiello (508) 757-3311

Southern Auto Auction

Joe Derohanian (860) 292-7500

Sprague Energy

Rick Pasquatelli (508) 768-7640

The Towne Law Firm P.C.

James T. Towne, Jr. (518) 452-1800

TrueCar

Pat Watson (803) 360-6094

Truist

Andrew Carmer (401) 409-9467

US Bank

Vincent Gaglia (716) 649-0581

Wells Fargo Dealer Services

Josh Tobin (508) 951-8334

Withum

Kevin Carnes (617) 471-1120

Zurich American Insurance Company

Steven Megee (774) 210-0092

State Budget Process Continues

By Robert O’Koniewski, Esq.

MSADA

Executive Vice President

rokoniewski@msada.org

Follow us on X (formerly Twitter) • @MassAutoDealers

The most important job our governor and legislature have is the funding and administering the mechanisms of government. Considering that over the last 40 years our state budget has grown from $6 billion to our current FY24 appropriations of $56.2 billion, it is a massive undertaking.

FY25 begins on July 1, 2024. To kick off the budget process, Gov. Maura Healey unveiled in late January her proposed budget. Subsequently, House and Senate budget writers conducted a series of statewide hearings to receive input from the public on state budget priorities.

As we reported last month, on April 26, the Massachusetts House completed action on its version of the FY25 budget, approving on a 153-4 vote the $58 billion spending plan, which included no tax increases and seeks to push overall state spending up by about 3.3 percent, or $2 billion. House Democrats were united in their support of the bill while there were divisions within the 25-member House Republican caucus, where four members voted against the budget.

The Senate then debated its version during the week leading up to the Memorial Day holiday weekend. It unanimously approved its $57.999 billion spending package in the wee hours of the pre-holiday Friday morning after being delayed several hours by a fire-alarm-initiated building evacuation.

There are considerable spending and policy differences in the two documents. A conference committee, led by Ways and Means chairmen

Sen. Michael Rodrigues and Rep. Aaron Michlewitz, will have about five weeks to iron out the differences between the two documents before FY25 starts July 1. The other committee members are Sens. Cindy Friedman (D-Arlington) and Patrick O’Connor (R-Weymouth), and Reps. Ann-Margaret Ferrante (D-Gloucester) and Todd Smola (R-Warren).

The conference committee will have before it at least one matter of interest to new and usedcar dealers: e-titles. During the House budget debate, we were able to successfully lobby the House to include in the bill three outside sections that would call for the Registrar of Motor Vehicles to establish a process for not only accepting electronic signatures on all vehicle transactional documents, including titles and all odometer statements but also creating an e-title process in lieu of the current paper title requirement.

Although identical language was proposed as an amendment for Senate consideration, the Senate ultimately took no action on e-titles, thinking it best to have it resolved during the conference committee discussions. The Senate also took no action on a proposed amendment regarding auto body labor rates. That amendment, based on legislation that is presently before the House Ways and Means Committee, could potentially be part of an economic development bill the legislature is looking to complete action on before the end of formal sessions on July 31.

As we look to the start of FY25, one thing is

for sure – over the last number of years, the legislature has displayed an inability to deliver a final budget to the governor in plenty of time before the July 1 start of the fiscal year. It looks like that streak might remain unbroken.

Mass. Data Privacy Bills

This month, the Joint Committee on Advanced Information Technology, the Internet and Cybersecurity reported favorably two identical bills – An Act Establishing the Massachusetts Data Privacy Act – that went to the respective ways and means committee for each chamber. On their surface, Senate 2770 and House 4632 would seek to ensure that consumers’ personal information is protected under state law, but it is unclear as to how such protections would differ from current federal protections under which financial institutions such as auto dealers presently operate. We will provide more information on these bills over the coming weeks.

New FTC Safeguards Rule Obligation Started May 12

The Federal Trade Commission’s Safeguards Rule contains a new provision that requires dealers to notify the FTC if certain security events that could affect consumer data occur in dealer systems or third-party systems containing dealer data. This new reporting obligation began on May 12, 2024.

Readers may recall that the FTC, on October 27, 2023, announced a final rule amending its Safeguards Rule that will require non-banking financial institutions, such as dealers, to report certain data breaches and other security events, which they refer to as “notification events.” This means that dealers and others will be required to notify the FTC, which will post the reports on a publicly available website.

The trigger for filing a report is what is called a “notification event,” which is defined as “[t]he acquisition of unencrypted customer information without the authorization of the individual to which the

information pertains.” This likely applies to data breaches or other security events that compromise unencrypted consumer data, but, unfortunately, the exact scope of this definition is somewhat unclear.

If a notification event occurs that affects the unencrypted information of 500 or more consumers, then it must be reported to the FTC as soon as possible and no later than 30 days after discovered. Notice to the FTC must be provided electronically through a forthcoming form located on the FTC’s website. Dealers may need to report notification events that occur in dealer-controlled systems as well as those that occur at a vendor if it affects that dealer’s customer data.

NADA has updated its Driven Guide, “A Dealer Guide to the FTC Safeguards Rule (L43)”, to include details about the new requirements. In our Bulletin #63 (5/7/24), we suggested that dealers should review, before the May 12 compliance deadline, NADA’s previous Safeguards guidance and consult the newly updated Driven Guide. Dealers should work with their IT professionals and counsel to understand and prepare for the new requirements. Dealers also should update their incident response plans and information security programs accordingly.

FTC Responds to NADA’s VSR Lawsuit

On May 14, the Federal Trade Commission filed in federal court its brief in response to litigation filed by NADA and the Texas Auto Dealers Association challenging the FTC’s Vehicle Shopping Rule (VSR), which is called the Combating Auto Retail Scams (CARS) Rule under the FTC’s nomenclature. The litigation is before the 5th U.S. Circuit Court of Appeals. Upon the filing of the NADA/TADA appeal in January, the FTC put on hold the July 30 compliance date pending the outcome of the case.

As reported in numerous media sources including Automotive News, both associations have argued that the FTC failed to follow its own rulemaking

process calling for advance stakeholder notice, created the rule without sufficient evidence of its need, and relied on a poor cost-benefit analysis. According to the FTC, the rule is meant to crack down on bad dealership behavior, including baitand-switch advertising and sneaking F&I products into deals without customer knowledge.

A major bone of contention for the dealers’ groups is the Rule’s requirement that dealership ads and communications on a specific vehicle feature an offering price, which is considered to be the outthe-door price inclusive of all charges except government taxes and fees the retailer will honor for any customer. The rule also will require dealers to receive express, informed consent from the customer on any charges, such as the price of an F&I product.

NADA and TADA have until June 13 to file a reply to the FTC brief. Several amicus briefs have been filed on both sides of the matter, including from Automotive Trade Association Executives, on whose board this author serves, opposing the rule, and jointly by 20 Democrat attorneys general, including our Massachusetts AG, in support of the rule.

IRS Issues Final EV Tax Credits Regs; Loosens Critical Component Rule

On May 3, the Internal Revenue Service issued final regulations for the new and previously owned clean vehicle credits.

The final regulations provide rules regarding the critical mineral and battery components requirements for the new clean vehicle credit. The IRS’s published guidance finalizes rules for taxpayers intending to transfer the new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments as well as provides rules regarding the process for dealers to become eligible entities to receive advance payments of the transferred credits.

The final regulations also provide guidance regarding the IRS compliance

process in the case of the taxpayer’s omission of a correct vehicle identification number.

Lastly, the regulations finalize the rules for qualified manufacturers of new clean vehicles to determine if the battery components and applicable critical minerals contained in a vehicle battery are foreign entity of concern (FEOC) compliant.

The Biden administration’s administrative change will enable consumers to receive up to $7,500 for cars containing Chinese graphite through 2026. That is a two-year extension before some of the most stringent supply-chain requirements kick in. The reprieve gives car manufacturers an easier than expected path to make and sell vehicles eligible for the full tax credit. To qualify for the twoyear extension, automakers must show the government how they are beginning to reorient supply chains and document the origins of their graphite.

Additional information from the IRS can be found at www.irs.gov.

Tailpipe Emissions: Congressional GOP Pushes Resolution to Overturn New Biden Rules

On May 1, Congressional Republicans, led by Sen. Pete Ricketts (R-Nebraska) and Rep. John James (R-Michigan), introduced a Congressional Review Act (CRA) resolution that would undo the Biden administration’s rules regulating tailpipe emissions. The Biden administration announced the proposed rule in March, intended to ensure the majority of cars and light-duty trucks sold in the U.S. are hybrid or fully electric by 2032.

The CRA is a legislative tool Congress can use to overturn recent federal agency rules. If a CRA joint resolution of disapproval is approved by both houses of Congress and signed by the President, or if Congress overrides a presidential veto, the rule at issue could not go into effect and also would prevent the EPA from issuing a subsequent substantially similar rule absent future congressional legislation.

According to NADA, a vote on both CRA joint resolutions is expected any time between later this month and midSeptember. While NADA supports both light- and heavy-duty CRA efforts and the CRAs are expected to pass Congress, the President will veto the measures.

Biden’s DEA to Re-Classify Marijuana as Less Dangerous Drug

From The Associated Press

Earlier this month, the Associated Press reported that the U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, a historic shift to generations of American drug policy that could have wide ripple effects across the country. The proposal, which still must be reviewed by the White House Office of Management and Budget, would recognize the medical uses of cannabis and acknowledge it has less potential for abuse than some of the nation’s most dangerous drugs. However, it would not legalize marijuana outright for recreational use.

The agency’s move, confirmed to the AP by five people familiar with the matter who spoke on the condition of anonymity to discuss the sensitive regulatory review, clears the last significant regulatory hurdle before the agency’s biggest policy change in more than 50 years can take effect.

Once OMB signs off, the DEA will take public comment on the plan to move marijuana from its current classification as a Schedule I drug, alongside heroin and LSD. It moves pot to Schedule III, alongside ketamine and some anabolic steroids, following a recommendation from the federal Health and Human Services Department. After the public comment period and a review by an administrative judge, the agency would eventually publish the final rule. Once published by the Federal Register, it will initiate a formal rulemaking process as prescribed by Congress in the Controlled Substances Act. [Note: The DEA published the proposed rule on the Federal Register on May 21.]

Massachusetts note: Federal drug policy has lagged behind many states in recent years, with 38 having already legalized medical marijuana and 24 legalizing its recreational use. Massachusetts has done both. Although the use of marijuana for medicinal and recreation purposes is legal in Massachusetts, the use of marijuana for any purpose remains illegal under federal law. With this latest federal action, Massachusetts employers need to stay on top of how this may affect their workplace policies, especially in the area of employer drug testing of employees. For instance, dealerships with zerotolerance drug testing policies must be aware of an employer’s obligation to reasonably accommodate the off-site use of medicinal marijuana under state antidisability discrimination law as a result of a 2017 decision by the Massachusetts Supreme Judicial Court.

Although dealerships have no obligation to accommodate on-site use of marijuana, a dealership must engage in an “interactive process” with an employee who uses medicinal marijuana at home. Dealers should always consult competent counsel when addressing such employee matters. This is a continually evolving area of the law, especially in the absence of Congressional action to change the drug’s status within federal law, and MSADA will keep its members updated on any developments.

NADA Requests IRS to Pay Dealers with Issues on EV Tax Credits Portal

On May 30, 2024, NADA submitted a letter to the U.S. Department of the Treasury and the Internal Revenue Service formally requesting relief for dealers that have not been reimbursed for the advanced payment of Section 25E and Section 30D clean vehicle tax credits applied at the point-of-sale for 2024 clean vehicle sales because of problems with registration for the advance payment program and submission of Time of Sale reports in the Energy Credits Online portal.

NADA submitted the letter following

extensive informal discussions with Treasury and the IRS over the last two months to define the types of problems encountered by the affected dealers and the scope of the outstanding reimbursements. The letter stressed that, because the customers involved in each sale received the benefit of a clean vehicle tax credit transfer, dealers should not be forced to incur losses on these sales based merely on technical non-compliance with certain regulatory requirements of the advance payment program, particularly given the technological and administrative difficulties encountered during the portal’s implementation. NADA also expressed appreciation for the extensive collaboration by Treasury and IRS with NADA on portal issues to date and acknowledged that efforts are already underway to develop new portal functionalities that may help provide reimbursement for the affected dealers.

NADA will continue to push for imminent relief for the affected dealers and to stress the importance of this issue in its communications with Treasury and IRS.

Dealers, Take Note: Dealers should refrain from applying clean vehicle tax credits at the point-of-sale if they have not completed registration for the advance payment program or experience problems with the portal when submitting a Time of Sale report. Dealers are also reminded that, for transactions involving a clean vehicle tax credit transfer, they should not deliver a vehicle to a customer until after properly submitting a Time of Sale report. In addition, dealers are cautioned against spot deliveries involving a clean vehicle because a return after delivery could cause the vehicle to lose eligibility for a tax credit on a subsequent sale.

Nissan Issues “Do Not Drive” Warning for Certain Cars with Takata Air Bags

On May 29, the National Highway Traffic Safety Administration (NHTSA) issued the following consumer alert. It can be found on its website at www.nhtsa.gov.

Nissan has issued a “Do Not Drive” warning today for 83,920 model year 2002-2006 vehicles equipped with recalled, unrepaired Takata air bags. If you have one of these vehicles, do not drive it until the repair is completed and the defective air bag is replaced.

The warning covers certain model years 2002-2006 Nissan Sentra, 20022004 Nissan Pathfinder and 2002-2003 Infiniti QX4 vehicles that are subject to open Takata air bag recalls under NHTSA recall campaigns 20V-008 and 20V-747.

NHTSA is urging all vehicle owners to immediately check to see if their vehicle has an open Takata air bag recall. If it does, owners should contact their dealership to schedule a free repair as soon as possible and follow any warnings from the vehicle manufacturer. Nissan and Infiniti are offering free towing, mobile repair, and in select locations, loaner vehicles.

Nissan customers with questions or concerns can reach the automaker at 800647-7261 or visit Nissan’s recall website at www.nissanusa.com/takata-airbagrecall.html. Infiniti customers can reach the automaker at 800-662-6200 or visit its website at www.infinitiusa.com/takataairbag-recall.html.

To date, NHTSA has confirmed 27 people in the United States have been killed by a defective Takata air bag that exploded. In addition, at least 400 people in the United States allegedly have been injured by exploding Takata air bag inflators. Even minor crashes can result in exploding Takata air bags that can kill or produce life-altering, gruesome injuries. Older model year vehicles put their occupants at higher risk, as the age of the air bag is one of the contributing factors.

For more information from NHTSA on the Takata air bag safety recall, please go to www.nhtsa.gov/vehicle-safety/takatarecall-spotlight.

EEOC Sues Employers for Failing to File Required EEO-1

On May 29, the U.S. Equal Employment Opportunity Commission (EEOC) announced it filed suit against

15 employers in 10 states, alleging the companies failed to comply with mandatory federal reporting requirements. The EEOC prevents and remedies unlawful employment discrimination and advances equal opportunity for all.

The EEOC sued the employers for repeatedly failing to submit mandatory EEO-1 Component 1 data reports in prior years, including for reporting years 2021 and 2022. Federal law requires employers with 100 or more employees to submit workforce data to the EEOC. The data collected includes workforce information by job category and sex, race, or ethnicity. This workforce demographic data is used for a variety of purposes including enforcement, analytics and research, and employer self-assessment.

“This data collection is an important tool for ensuring compliance with Title VII’s prohibition on workplace discrimination,” said EEOC General Counsel Karla Gilbride. “Not only did Congress authorize the EEOC to collect this data, Congress also authorized the agency to go to court to obtain compliance when employers ignore their obligation to provide the required information.”

“For nearly six decades, the Commission has required private employers with 100 or more employees to submit workforce demographic data to the EEOC,” said EEOC Chair Charlotte A. Burrows. “The data help the agency focus its resources, identify potential discrimination, and refine its investigations. As we commemorate this year’s 60th anniversary of the Civil Rights Act of 1964, the EEOC remains committed to using all our tools to remedy discrimination and fulfill the promise of equal opportunity in our nation’s civil rights laws.”

The EEO-1 Component 1 report is a mandatory annual data collection that requires all private sector employers with 100 or more employees to submit workforce demographic data, including data by job category and sex and race or ethnicity, to the EEOC. This annual data collection is authorized by Section

the roundu P

709 of Title VII of the Civil Rights Act of 1964, as amended, and its companion regulations.

More information is available at www. eeoc.gov.

Upcoming Holiday Reminder –Juneteenth Day

Massachusetts will celebrate Juneteenth Independence Day on Wednesday, June 19, as a partially restricted holiday, which, under state law, means the following:

• Dealership may be open – no permit required.

• Employees cannot be required to work.

• Employees cannot be punished or penalized for choosing not to work that day.

• Presently, as of January 1, 2023, under state law, there is no holiday premium pay requirement. Non-exempt employees, if working the day, need to be paid at least the state minimum wage of $15 per hour for any hours worked that day.

• Review your holiday policies under your Employee Handbook, including providing paid time off if closed for the holiday.

Massachusetts created the state holiday in 2020. All 50 states and D.C. recognize Juneteenth Independence Day as a state holiday or a day of recognition. On June 17, 2021, President Biden signed the law to create a federal Juneteenth Independence Day to be celebrated annually on June 19.

ATD Fly-In, June 25-26

American Truck Dealers (ATD), a branch of NADA, will hold its annual flyin event on June 25-26, at the St. Regis Hotel in Washington, D.C. The 2024 ATD Fly-In provides truck dealers and Automotive Trade Association Executives (ATAEs) an opportunity to lobby Congress on issues of importance to medium- and heavy-duty truck dealers.

Dealer visits with legislators on Capitol Hill are the key component of the Fly-In. This year’s legislative priorities include:

• The EPA’s aggressive “Phase 3” greenhouse gas rule for heavy-duty vehicles;

• Repeal the federal excise tax on heavy-duty trucks (H.R.1440/S.694);

• Opposition to the vehicle “right to re -

pair” legislation (H.R.906); and

• Support for catalytic converter anti-theft legislation (H.R.621/S.154).

We will provide a full report in our June magazine.

Are You Using Our Endorsed Vendor Services?

Your Association recently has engaged several vendors for agreed upon endorsed services:

• Merchant Advocate works with retailers to analyze the credit card fees those businesses are charged and assessed in processing transactions. The savings can be considerable, as Merchant Advocate uncovers duplicate or unsubstantiated fees from the credit card companies. Over the last several years, they have saved retailers across the country over $380 million.

• Plug In America, through its PlugStar program, works with dealerships to train personnel, including salespersons, to be able to best address your customers’ needs and questions regarding electric vehicles. They presently work with dealerships in over 30 states to assist dealerships in the transition to EV sales and servicing.

• ComplyAuto works with dealers’ compliance efforts on privacy and cybersecurity platforms, FTC Safeguards Rule, advertising, AI-powered sales, workplace safety and OSHA-related rules, and HR policies and employee training.

• Sprague Energy works with businesses to analyze their electric and gas charges in an attempt to provide them with reduced charges for such services. Sprague works with a number of Massachusetts dealerships currently in those efforts.

In addition, we have maintained longstanding relationships with the following vendors:

• Ethos Group, who can improve your F&I products and services.

• Reynolds & Reynolds, who is our partner for forms sales and compliance.

• Withum (formerly O’Connor & Drew), who is our accounting partner.

• American Fidelity, who is instrumental in helping dealerships save adminis-

trative time, manage costs, and support their overall employee benefit programs. Check out their ads in this month’s magazine, and do not hesitate to reach out to us if you require additional information.

Our PACs - NADAPAC & NCDPAC

We greatly appreciate the contributions we receive from our member dealers who answer our calls for donations to our PACs. Each year MSADA expresses itself politically through NADA’s federal PAC, NADAPAC, and through our state PAC, the New Car Dealers Political Action Committee (NCDPAC).

We depend on contributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Contributions to our PACs are an inexpensive insurance policy. Since by law we cannot use our membership dues or other association revenues for political contributions, the PACs help us to remain strong politically as we advocate for our dealers’ interests in the political process.

If you have not yet given to the PACs this year, please contact me at rokoniewski@ msada.org and we can make sure your contributions happen. Thank you.

Complete the 2023 Economic Impact Survey

Over the last two months we have asked our member dealers to please assist us again in creating our annual Economic Impact Report, which we use with legislators and opinion makers to demonstrate the real dollar and cents economic impact that dealers have on our Commonwealth and in their cities and towns.

We still need at least 20 more responses in order to improve the accuracy of our compiled data for the report.

Please take a few minutes to complete the survey today for each of your dealerships. The survey is available in our Bulletin #70, issued on May 16. Your submitted survey is strictly confidential. Thank you for your assistance with this project.

EGISLATIVE S CORECARD

MAY 2024

BILL# SPONSOR SUBJECT

S151

H331

H290

H329

S204

H270

H289

S150

H351

Sen Crighton Rep Hunt

Rep Finn

Rep Howitt

Sen O’Connor

Rep Chan

Rep Finn

Sen Crighton

Rep Lewis

Amendments to Ch. 93B, the auto dealer franchise law.

RTR law amendments to fix Model Year start date and consumer notice.

Creates process to appeal improperly issued Class 1 license.

Modernize on-line vehicle purchase process.

S199 Sen Moore Amends definition of heavy-duty trucks in RTR law.

S220 H400 Sen Velis Rep Walsh Open safety recalls notifications.

H354 Rep Linsky Allows an OEM to open a factoryowned store, without a dealer, if there is no same line-make dealer in the state.

(The so-called “Tesla Exemption.”)

Joint Committee on Consumer Protection held public hearing on July 17, 2023; placed into study.

Joint Committee on Consumer Protection held public hearing on July 17, 2023; placed into extension order.

Joint Committee on Consumer Protection held public hearing on July 17, 2023. H270 reported favorably on Jan. 25, 2024; sent to House Ways and Means.

Joint Committee on Consumer Protection held public hearing on July 17, 2023. H351 reported favorably on Jan. 25, 2024; sent to House Steering & Policy Committee; House ordered to third reading on 2/12/24.

SUPPORT Joint Committee on Consumer Protection held public hearing on July 17, 2023; placed into extension order.

SUPPORT Joint Committee on Consumer Protection held public hearing on July 17, 2023. Redraft H4277 reported favorably on January 25, 2024; sent to House Ways and Means.

OPPOSE Joint Committee on Consumer Protection held public hearing on July 17, 2023; placed into study.

S688

H1095

H1118

S639

H1121

H995

Sen Moore Rep McMurtry

Rep Philips

Sen Feeney

Rep Puppolo

Rep Donahue

Creates process to increase the insurance reimbursed labor rate paid to auto body repairers.

Protects consumer choice in vehicle service contracts.

S2219 H3255 Sen Cronin Rep Arciero Eliminates initial state inspection for new vehicle.

Joint Committee on Financial Services held public hearing on October 3, 2023; reported redraft H4412 favorably and sent to House Ways and Means.

Joint Committee on Financial Services held public hearing on October 3, 2023; H995 reported favorably and sent to House Steering & Policy Committee.

SUPPORT Joint Committee on Transportation held public hearing on Jan. 24, 2024; placed into study.

H3348 Limit doc prep fee amounts. OPPOSE Joint Committee on Transportation held public hearing on Jan. 24, 2024; reported favorably and sent to House Ways and Means Committee. Rep Howitt

S2210

Sen Crighton

Sen Creem Rep Carey

Safety shutoff for keyless ignition technology.

Joint Committee on Transportation held public hearing on October 17, 2023; reported favorably.

S25 H60 Personal data privacy and security. OPPOSE Joint Committee on Advanced Information Technology, the Internet and Cybersecurity held public hearing on October 19, 2023. On 5/13/24, Committee reported redrafts S2770 and H4632 favorably; each sent to respective Ways and Means committee.

S227 Sen Finegold Mass. Info Privacy & Security Act. OPPOSE Joint Committee on Economic Development and Emerging Technologies held public hearing on October 19, 2023. Bill sent to AITIC Committee on November 2, 2023.

S171 H311 Sen Feeney Rep Gonzalez Protect consumers in auto transactions. OPPOSE Joint Committee on Consumer Protection held public hearing on July 17, 2023; reported S171 favorably on 1/25/24 and referred to Senate Ways and Means. SWM reported redraft S2736 favorably on 4/22/24. Senate engrossed on 4/25/24.

The Expanding Compliance Minefield

Auto dealerships arguably are the most regulated businesses in our country, as detailed in NADA’s annual “Regulatory Maze” publication. The ever-growing complexity of technology and its usage at dealerships and in the business world goes hand-in-hand with the demands government regulatory agencies are placing on your need to remain in compliance with existing and newly emerging laws and regulations, especially as these laws have been created to protect consumers from potential harm in the retail marketplace.

The following three pieces from ComplyAuto, our MSADA-endorsed compliance partner, highlight three current technological compliance challenges at dealerships. These challenges reflect the intricacies and intrusiveness of government rules, which, if ignored, could cause you great financial, and reputational, harm.

As a reminder, these writings should be used as a compliance aid and are not a substitute for professional legal advice.

All Cookies Are Not Created Equal: FTC Cracks Down On Targeted Advertising Without User Consent

By Chris Cleveland, Co-Founder and CEO, ComplyAuto

With the proliferation of consumer personal data laws and cookie consent banners, the Federal Trade Commission is ramping up its crusade against businesses in the name of consumer protection by wielding its very broad authority under Section 5 of the FTC Act. Section 5 prohibits “unfair or deceptive acts or practices in or affecting commerce” and has been a driving force of the FTC since its inception in 1914. As you can imagine, Section 5, originally empowering the FTC to prevent unfair methods of competition, has changed significantly with the passage of time and evolving business practices.

The advent of collecting consumer data for the purposes of cross-contex-

tual behavioral advertising proved to be another watershed moment that adds an arrow to the FTC growing quiver. The recent FTC cases against GoodRx and BetterHelp are canaries in the coal mine that we should all listen to because dealerships across the country engage in similar behavior. We will briefly discuss these cases below.

The FTC lawsuit against GoodRx alleges that the company integrated third-party tracking tools from Meta, Google, and other advertisers and shared user health data with them for advertising purposes without the user’s consent (also known as “retargeted advertising” as defined below). Additionally, GoodRx used the personal health information to target users with advertisements itself and failed to limit third-party use of their information. According to the FTC, this violated Section 5.

“Retargeted advertising” allows businesses to display adver-

formation you share with us. Read our Privacy Policy [(linked)] to learn more.”

BetterHelp then went through two significant changes in this banner, but neither one of them informed visitors that it would use and disclose their health information for advertising or that third parties would be able to use the visitors’ information for their own purposes. BetterHelp used and disclosed this information through various means, including “web beacons” (specifically pixels) placed on various pages on its website. Information was shared with third parties such as Facebook, Snapchat, Criteo, and Pintrest to carry out this advertising.

Like GoodRx and BetterHelp, dealerships often use cookies for retargeted advertising with companies such as Google and Meta (Facebook) through one of the many digital advertising vendors. The lesson here: Dealerships should implement comprehensive privacy policy disclosures and a well-designed cookie consent banner to avoid the FTC’s scrutiny.

For dealerships that want to avoid becoming the FTC’s next example, they must begin obtaining proper consent for the use and sharing of cookies that collect and track a prospective finance or lease customer’s online information and browsing history

tisements to users who have previously interacted with their website or have shown interest in their products or services. This is a widely used marketing tool because it increases the touch points with that user and makes the user more likely to convert into a sale.

BetterHelp met the same fate at the hands of the FTC for performing similar acts. Brushing aside the more obvious concerns of making false claims and deceptive marketing (BetterHelp said it was “HIPAA Certified” and had seals implying its purported compliance with HIPAA, but no government agency or third party ever reviewed its practices for compliance), we are going to focus on the retargeted advertising aspect of the complaint. BetterHelp had a banner at the bottom of every page on its website, which stated,

“We use cookies to help the site function properly, analyze usage, and measure the effectiveness of our ads. We never sell or rent any in-

For dealerships that want to avoid becoming the FTC’s next example, they must begin obtaining proper consent for the use and sharing of cookies that collect and track a prospective finance or lease customer’s online information and browsing history (and for those of you wondering, yes, the federal Gramm-Leach Bliley Act defines non-public personal information to include cookies and similar technologies). To state the obvious, this is an action based on federal law, so dealerships in all states (even those without comprehensive privacy laws) must prioritize protecting user data by updating their privacy policies with comprehensive disclosures, a cookie use policy, and a compliant cookie consent banner.

For example, a well-designed cookie banner is a crucial tool for dealerships to obtain users’ informed consent for the use of online tracking in connection with retargeted advertising. However, poorly designed cookie banners can do more harm than good if they are implemented to confuse or trick consumers into consenting to online tracking (often referred to by regulators as “dark patterns”). Unfortunately, many vendors offer cookie banners that do not actually work and may inadvertently allow cookies and other tracking technologies to deploy before the user has a chance to consent.

In short, online privacy disclosures and cookie consent management should be a top priority for any risk-averse dealership. Updating privacy policies with comprehensive disclosures and implementing a compliant cookie consent banner can help defeat claims similar to those brought against GoodRx and BetterHelp and protect the dealership from other novel privacy allegations like we have seen with the recent uptick of state and federal wiretapping lawsuits stemming from online tracking activities.

18 EXPANDING COMPLIANCE

Encrypting NPI in Transit & the Safeguards Rule

By Chris Cleveland, Co-Founder and CEO, ComplyAuto

In the ever-evolving world of digital communication, protecting Non-Public Personal Information (NPI) remains a paramount concern for businesses. The Federal Trade Commission’s revised Safeguards Rule underscores the importance of secure information transit. In this piece, we will discuss the Rule’s actual requirements as well as a solution that answers the question, “How do I deal with sending and receiving sensitive customer information?”

What is Encryption In-Transit?

The Rule requires financial institutions (which includes auto dealerships) to encrypt NPI “in transit” over external networks. Encryption in transit refers to the practice of encrypting data while it is being transmitted over a network. When data is sent from one point to another, such as between a user’s device and a server, encryption in transit ensures that the data is protected from unauthorized access or interception during its journey. This is commonly achieved by using protocols like Transport Layer Security (TLS) or Secure Sockets Layer (SSL) to encrypt the data while it is in transit. The good news is that almost all enterprise email accounts will have this enabled by default, and it is usually free. Indeed, the FTC has noted that it would be “unusual” in today’s environment for a business to not be satisfying this requirement with respect to emails.

It is important to note that the Rule does not require “end-to-end encryption”, which provides a higher level of security by encrypting data at the source (sender) and decrypting it only at the destination (receiver). End-to-end encryption, usually accomplished by special tools that come at a cost, ensures that the data remains encrypted and unreadable to anyone in between, including service providers or intermediaries. However, even though not required by the Rule, we will discuss below why using tools with end-to-end encryption may be a best practice under certain circumstances.

Pitfalls of Regular Email and Text Messages for NPI

Commonly used communication channels like email and text messaging pose significant challenges to the safe transmission of NPI. They lack proper encryption and can be intercepted by unauthorized individuals (i.e., “man-in-the-middle” attacks) mak-

ing them unsuitable tools for the safe and secure transmission of sensitive information. This concern directly affects dealership sales and finance teams (as well as other departments) who often need to send and receive sensitive customer information such as driver’s licenses, social security numbers, insurance information, proof of residence, proof of income, and credit applications.

Secure Communication Alternatives

Fortunately, there are secure alternatives that are widely available to anyone who is looking for them. Microsoft Office 365, for example, offers a built-in end-to-end encryption tool that provides an extra layer of protection for the dealership’s email messages. This encrypted email service ensures that only the intended recipient can read the email content and its attachments, thereby aligning with the requirements of the Safeguards Rule. Moreover, numerous other tools on the market offer similar protection. Regardless of the solution the dealership chooses, it is crucial to remember that an encrypted communication tool is only as good as its usage policy. Meaning, giving your employees access to the “best in breed” solutions will do nothing to reduce the dealership’s risk of data breaches if the employees do not use it.

Electronic Use Policy

To ensure secure communication, it is imperative to implement an Electronic Use Policy that prohibits employees from sending or requesting NPI via unencrypted email and text mes-

Navigating the Legal Minefield of Online Tracking: Wiretapping Claims

and Auto Dealerships

By Mark Sandborn Senior Product and Regulatory Counsel, ComplyAuto

The digital age has brought about unprecedented opportunities for auto dealerships to engage with customers online, leveraging powerful tools like cookies and other tracking technologies. However, with great power comes great responsibility, and the use of these technologies has given rise to a new wave of legal challenges, most recently in the form of wiretapping claims.

Recent litigation trends have seen a surge in cases brought under laws like the California Invasion of Privacy Act (“CIPA”), alleging that online tracking tools constitute illegal “wiretapping” or recording of user activities and communications through websites without consent. This has put auto dealerships and manufacturers in the crosshairs, facing legal claims not only in states where they physically operate but also based on the state law where individuals have accessed their websites.

sages. For example, by using ComplyAuto’s free electronic use policy builder, which is tailored for the Safeguards Rule and other similar regulations in all 50 states, dealerships will reduce the risk of data breaches because the policy the dealership will create sets out clear guidelines for employees on the safe and acceptable use of electronic communication. Dealers will be able to easily create a comprehensive, legally sound policy that can protect the company and its sensitive information. There are also tools dealers can use to better protect NPI as well as sensitive information and documents being transmitted by text messaging.

As our world becomes more digital, the importance of secure data transmission grows exponentially. By understanding the Rule, leveraging available encrypted communication tools, and capitalizing on innovative solutions, dealerships can significantly reduce their risk of a data breach and potential fines from the FTC and other liabilities.

The crux of these wiretapping claims lies in the interpretation and application of CIPA and similar state and federal laws. Plaintiffs argue that the use of cookies, tracking pixels, session replay tools, scripts, chat modules, and the like to monitor and record user interactions and communications on dealership websites violates these laws, because the websites did not obtain the users’ prior express consent.

Many of the recent legal claims alleging wiretapping violations related to online tracking have been initiated by the same law firms previously active in website accessibility cases, often using “tester” plaintiffs who visit dealership websites with the primary intention of identifying potential violations rather than genuinely engaging as prospective customers.

The potential consequences for dealerships are significant, with CIPA allowing for statutory damages of $5,000 per violation or three-times actual damages, whichever is higher. As the number of plaintiffs and alleged instances of tracking increases, the potential damages can quickly skyrocket.

But it is not just California that auto dealerships need to worry about. Fourteen states, including Massachusetts, require all-party consent for recording or monitoring communications, and plaintiffs’ lawyers are starting to adopt similar strategies for these jurisdictions. Even federal law, in the form of the Wiretap Act, sets a baseline of protection against unauthorized interception of electronic communications.

It is also important to recognize that the risk extends beyond just dealers located in the 14 states with all-party consent wiretapping laws. Plaintiffs’ lawyers have successfully pursued claims against dealerships located in states without all-party consent legislation based on the fact that the plaintiff was located in an all-party consent state when they accessed the website. This means that, even if a dealership is not located in

20 EXPANDING COMPLIANCE MINEFIELD

an all-party consent state, they may still face potential liability under other wiretapping-related legal principles. Moreover, it is worth noting that additional legal theories related to wiretapping can be applicable, such as the use of pen registers or trap-andtrace devices. In light of these considerations, dealerships across the country should be mindful of the complexities and far-reaching implications of wiretapping laws, regardless of their specific state’s legislation.

keting cookies, scripts, etc. This aligns with the principle of prior express consent, avoids potential limitations of after-the-fact opt-outs, and is consistent with recommendations made by some courts and regulators. This does not mean that dealerships need to adopt practices similar to those established under the European Union’s general data protection regulation (GDPR), but it does mean that dealerships need to be thinking strategically about the use of cookies and tracking technologies on their websites.

So, what can auto dealerships do to navigate this legal minefield? The key lies in understanding the legal landscape, implementing robust consent mechanisms, and being transparent about data practices.

Dealerships must prioritize obtaining explicit, informed consent from website visitors before deploying any tracking technologies. This means implementing clear and conspicuous cookie consent banners that explain the types of data being collected, the purposes for which it will be used, and the third parties with whom it may be shared. Burying this information in lengthy privacy policies or using manipulative design practices (known as “dark patterns”) is unlikely to pass legal muster.

In addition to consent, dealerships should consider preventing the deployment of certain marketing cookies and tracking technologies until a user provides consent. From a technical perspective, achieving this objective requires strategic placement of the cookie banner script at the top of the header section of the website source code to effectively block the execution of third-party mar-

A cookie banner should also be paired with a privacy policy that meets the requirements of state and federal laws, accurately reflecting the organization’s data collection, use, and sharing practices. Dealerships should also maintain accurate inventories of the cookies and tracking technologies used on their websites, regularly auditing and documenting these tools to ensure compliance with privacy laws and facilitate transparent disclosures to users.

When it comes to vendor management, dealerships must be diligent in vetting third parties that have access to user data collected through their websites. This includes establishing contractual safeguards, regularly monitoring vendor compliance, and promptly updating privacy policies when new vendors or data-sharing practices are introduced.

In the face of potentially costly litigation, dealerships may also consider implementing arbitration agreements and class action waivers in their website terms of use. However, the enforceability of such provisions can vary by state, necessitating close collaboration with legal counsel to craft legally sound and enforceable terms.

Navigating the legal landscape of online tracking is no easy feat for auto dealerships, but with a proactive approach, a commitment to transparency and consent, and a robust compliance strategy, they can harness the power of these technologies while minimizing legal risk. By staying informed and adaptable in the face of evolving legal challenges, dealerships can continue to innovate and thrive in the digital age.

NEWS from Around the h orn MSADA

BOSTON

Three dealers Named to Most Influential List

In May, Boston Magazine published its 2024 list of the “Top 150 Most Influential Bostonians.” Included on the list were three of our very own franchised dealers. Congratulations go out to Herb Chambers, Ernie Boch Jr., and Chris Dagesse for their inclusion on the list.

40. Herb Chambers, Owner and President, Herb Chambers Companies: Not only is Chambers still running, and expanding, his auto empire, he intends to keep doing so for a while—when opening his latest, the octogenarian cited its place in the company’s “long-term strategy.” You can’t argue with his success: annual sales approaching $3 billion and one of the “25 Greatest Superyachts of the Past 100 Years,” according to the Robb Report.

96. Ernie Boch Jr., President and CEO, Subaru of New England: Having sold most of his car dealerships (though not his ever-expanding collection of automobiles), Boch is increasingly known for his philanthropy. Whether personally or through his Music Drives Us foundation, Boch spreads his money around while making his mark on New England life and culture through the Boch Center’s shows, education programs, and Folk Americana Roots Hall of Fame.

130. Christopher Dagesse, President, DCD Automotive Holdings: There’s a strong lineage of high-powered car dealers making their mark on the local scene, and Dagesse appears to be the next in that line. Several years after buying most of the Boch auto dealerships, Dagesse has renamed them Nucar—part of a corporate growth effort that includes online car buying and expansion into New Hampshire and beyond.

Carla Cosenzi Honored Local Nurses on

Nurse Appreciation day

On May 6, Carla Cosenzi, owner of TommyCar Auto, delivered personalized tote bags to local nurses at Cooley Dickinson Hospital and Holyoke Medical Center.

As a business owner, Ms. Cosenzi understands the importance of community and giving back. With the ongoing demands and stresses of the healthcare industry, nurses work tirelessly to keep our communities healthy and safe. Ms. Cosenzi presents these gifts to demonstrate how much the community values and appreciates the hard work of nurses.

“I am deeply honored to have extended my heartfelt appreciation to our local nurses, whose sacrifices and dedication remain unparalleled,” expressed Carla Cosenzi. “They truly are heroes,

and we hope these gifts will show them how much we value their dedication and service.”

Nurse Appreciation Day, observed annually on May 6, serves as a reminder of the indelible impact nurses have on the fabric of our society, embodying the values of compassion, empathy, and excellence in patient care.

The TommyCar Auto Group, helmed by siblings Carla J. and Thomas M. Cosenzi, comprises five franchised dealerships in Western Massachusetts: Country Nissan in Hadley, Country Hyundai, Genesis of Northampton, Northampton Volkswagen, and Volvo Cars Pioneer Valley in Northampton, alongside TommyCar Collision Center and TommyCar Towing.

BOSTON ArentFox Schiff Adds Four Partners in Boston to Automotive Practice

By Trajan Warren, The Boston Business Journal

ArentFox Schiff is adding four partners to strengthen its automotive practice at its Boston office. Paul Marshall Harris, Sara Judge, Gregory Paonessa, and Kelly Kirby Ballentine all join ArentFox Schiff as partners and bring with them “extensive experience” across the automotive industry. All four partners joined from Boston-based Burns & Levinson.

“This team has long been entrenched in New England, and we are excited to have them join us in Boston,” David Barbash, Boston managing partner at ArentFox Schiff, said in a statement. “Paul, Sara, Greg, and Kelly have such deep and unique experience in the region and beyond — and clients and attorneys will greatly benefit from their capabilities.”

The ArentFox Schiff automotive team works on a variety of issues such as privacy, cybersecurity, franchise litigation, class ac-

NEWS from Around the h orn MSADA

tion, and criminal accusations as they relate to cars, among other areas. ArentFox Schiff’s automotive services falls under its transportation and mobility practice. Firm wide, there are 62 attorneys on the automotive team, according to ArentFox Schiff’s website.

“With the auto sector undergoing a major post-Covid comeback, we’ve seen an upsurge in consolidation, franchise litigation, and regulatory compliance and defense matters,” Aaron Jacoby said, managing partner at the firm’s Los Angeles office. “I’m thrilled to have this knowledgeable and well-respected group join our growing automotive team during such an exciting time for the industry.”

MCLEAN, VIRGINIA

NADA Academy Graduates in May 2024

The following Massachusetts dealership employees graduated NADA Academy in May this year:

• Michael Alessi, Herb Chambers Volvo of Norwood

• Joseph Dibiasio, Stateline Subaru

• Robert Haddad, Herb Chambers Chevrolet Cadillac

• Wassim Kafal, Nucar Hyundai of Norwood

• Travis McCarthy, Herb Chambers Chrysler Jeep Dodge Ram of Danvers

Congratulations and good luck with your endeavors in our industry.

HOLYOKE

Gary Rome Hyundai Hosts Pinewood Derby Championship

Channel 22 News

On May 19, Cub Scout packs from all four counties in Western Massachusetts gathered at Gary Rome Hyundai for the annual Pinewood Derby Championship. This was the fourth year the championship was hosted at the dealership. The Pinewood Der-

by gives cub scouts the opportunity to build wooden cars from scratch and race them at events like these.

Greg Williams, the Program Director of BSA Western Mass Council told 22News, “The pinewood derby, as I said to my

BOSTON

Annual OEM Awards

The recognition continues for annual OEM awards for performance. Congratulations to our award winners.

Ford 2023 President’s Award for their dedication and outstanding customer service:

• Gervais Ford

• Herb Chambers Ford of Westborough

• Lamoureux Ford

• Place Motor

Lincoln 2023 President’s Award for their dedication to client satisfaction and the brand’s promises to foster a community built on trust, integrity, and a shared passion for luxury driving experiences:

• Herb Chambers Lincoln

Toyota 2023 Board of Governors Award for exceptional performance in vehicle sales:

• George T. Albrecht, Woburn Toyota

Lexus 2023 Elite Award:

• Herb Chambers Lexus, Sharon

• Herb Chambers Lexus of Hingham

• Ira Lexus, Danvers

• Lexus of Northborough

Honda Financial Services

2023 Council of Excellence Award:

• Hyannis Honda, 17-year winner

• Curry Honda in Chicopee, 8-year winner

• Ocean Honda of Brockton, 3-year winner

Acura Financial Services

2023 Council of Excellence Award:

• Acura of Auburn, 2-year winner

scouts earlier, is a celebration of not who has the fastest car, but of the time they got to spend with their families.”

The top 54 cars from the region competed across six different categories at the event. Pinewood derbies are a decades-old tradition of scouting with the first being held in 1953 in California.

NEWS from Around the h orn MSADA

Law Firms Murtha Cullina, Harris Beach to Combine

By Trajan Warren, The Boston Business Journal

A law firm with an established New England presence has announced its plans to combine with another mid-sized firm with a significant footprint in New York.

Murtha Cullina LLP, a Connecticut-founded firm with an office in Boston, will combine with Rochester, New York-headquartered firm Harris Beach PLLC. The combined firm is expected to be known as Harris Beach Murtha.

The combination is scheduled to be completed on January 1, 2025. The two firms will operate independently for the remainder of 2024. The combination is subject to a partner vote which is expected to take place in the next several months.

Murtha Cullina currently has 27 employees in Boston with 16 attorneys and 11 staff. The firm’s presence in Boston dates back to 2000 when Murtha Cullina combined with Boston-based Roche Carens & DeGiacomo.

Chris Jagel, CEO of Harris Beach, and Andy Corea, managing partner of Murtha Cullina, will co-lead an interim advisory committee as the two firms work to close the transaction. After the January 1, 2025, completion date, Jagel will become CEO of the combined firm and Corea will serve on the management committee. The management committee will have representatives from both legacy firms.

Together, Harris Beach Murtha will have 250 attorneys across 15 offices in several states. Currently, Murtha Cullina has 70 attorneys and five offices — one office in Boston, three in Connecticut and one in New York. Harris Beach has 12 total offices with nine in New York, and one office in Connecticut, New Jersey and Washington, D.C. each. The combined firm will consolidate offices in White Plains, New York, and New Haven, Connecticut, according to officials.

While both firms were looking for growth in capabilities and clients, the combined firm is expected to stay focused on the middle market, Corea said. “The needs of midmarket clients are rapidly evolving, and this combination allows the combined firm to meet those changes and serve our clients’ needs,” Corea said in an emailed statement to the Business Journal.

The two firms share core practices in corporate, real estate and finance, energy and utilities, and health care. But there’s also opportunity for enhancement, Corea said, as Harris Beach complements Murtha’s practice areas by adding rapidly expanding areas such as compliance and investigations and cannabis. Murtha enhances Harris Beach’s range of services with its bankruptcy, construction and intellectual property practices.

“Both firms have a long history of excellence and client-driven growth in our respective markets and are well-aligned culturally and with many of the same practice areas,” Jagel said in a statement. “The combination will enable us to extend our reach to provide even more diverse and innovative services and capabilities over a larger geographic footprint.”

DEARBORN, MICHIGAN

Ford Tells Dealers to Halt EV Investments While It Alters Certification Program

Automotive News

Ford Motor Co. has asked dealers to pause implementation of its electric vehicle certification program as it works to finalize changes that will be communicated next month.

The automaker plans to meet with its dealer council in early June to further tweak the program based on feedback from a series of nationwide series of retail gatherings that wrapped up this month. Dealers enrolled in the program were expected to finish work needed to meet EV charging requirements in the coming weeks, but Ford now is telling them to postpone any financial commitments.

“We don’t want them to make any decisions between now and the middle of June, when you can maybe have a more informed decision-making process based off what we work out with council in the next few weeks,” Andrew Frick, president of Ford Blue, told Automotive News. “There’s a lot that we’ll be reviewing.”

Among the many topics discussed in 11 meetings with roughly 1,000 dealers across six cities was the “rapidly changing EV market,” Frick said. Since Ford first asked dealers to invest heavily to sell EVs, it has delayed spending, postponed products and refocused itself on smaller, more affordable models. Despite rising sales, the company expects to lose up to $5.5 billion on its EV business unit this year.

Frick declined to discuss specific alterations to the program but said executives and the dealer council were on the same page after the meetings. “I think we’re both pretty aligned on the process based on what we heard,” he said. “I expect to see some changes coming out of it.”

Beyond the EV program, Ford expects to finalize immediate, nearterm and long-term changes to other aspects of the business in response to concerns the automaker heard from dealers, Frick said

“Our plans are really aimed at simplifying and reducing complexity,” he said. “We’re going to look at everything from floorplan assistance to our commitment to longer-term remote experiences, our Model e standards and Ford Credit policies.”

CEO Jim Farley attended all 11 meetings with Ford dealers, as did a majority of his executive team. The automaker set up each meeting with a series of small breakout tables devoted to specific topics that dealers could rotate through.

“What was great is that we had candid conversations around every aspect of the business,” Frick said. “Nothing was off limits.”

Ford is working to improve dealer communications amid falling trust levels and concerns over EVs, warranty costs, and other topics. Frick said 93 percent of dealers who attended the meetings left with higher confidence in the brand, according to an internal survey.

“We went into it with the approach that the company that has the closest relationship with the dealers is really going to win through this dynamic environment we’re in,” he said. “I think that played out very nicely. “

Managing An Effective & Efficient Parts Department

By Barton Haag CPA, Albin Randall & Bennett bhaag@arbcpa.com

Auto dealerships are hubs of activity, offering a range of services from vehicle sales and financing to maintenance and repairs. Among these services, managing parts inventories efficiently is critical for ensuring smooth operations, holding parts department team members accountable, managing frozen capital, and ensuring customer satisfaction.

In our most recent Auto Dealer Business Intelligence (ADBI) Report, we saw a consistency among all dealers in our database: frozen capital is a big deal again. In recent years, frozen capital has not been an issue. Dealers could not get inventory, customers and banks had plenty of resources to pay off receivables quickly, and the cost of capital was so cheap that it did not really matter. That has all changed. Ensuring that your parts department personnel are managing this inventory efficiently and effectively will help hold them accountable and will minimize frozen capital.

Parts inventory is an often overlooked area of opportunity in the dealership. Maintaining a well-organized and clean parts department helps to improve customer satisfaction. Making sure your shelves, bins, and storage areas are clearly labeled will make it easier for parts department team members to quickly fill orders for parts, reducing search times, and improving efficiency. A well organized and clean parts department also helps with cross-training other parts de-

partment employees by easily integrating team members into different functions of parts inventory management, including receiving, stocking, picking, and shipping. This ensures operational flexibility and resilience to staff turnover.

Most Dealership Management Systems and OEMs have tools assisting parts managers with effectively and efficiently managing their parts inventories. Setting stocking levels, monitoring missed sales, managing reorder points and lead times, and using other available tools help parts managers to identify fast moving parts and parts that should not be stocked but may be needed. Having proper systems in place and actively managing this inventory will help prevent frozen capital, hold parts team members accountable, and improve customer satisfaction.

It is important to have a strong system of forecasting parts demand needs. Your forecasting model should consider seasonal demand, promotions, and changes in vehicle models. Most OEMs have parts depots near dealers, which allows a dealer to use Just-in-Time ordering for certain parts. It is important, however, to allow for unexpected demand spikes and supplier delays. Maintaining healthy relationships with suppliers is critical so you have more than one supplier to go to in the event of emergencies.

One way to effectively manage parts inventory is to adopt an ABC method, or similar method, of classifying parts inventories. Using this approach, parts managers classify parts according to their importance and sales volume. This helps to allocate more resources to high-value, high-demand parts while adopting more streamlined approaches for low-value, low-demand items.

Customer service is critical to an effectively managed parts department. Focus on providing excellent customer service by being responsive to inquiries, process-

ing orders promptly, and resolving any issues or complaints quickly. A satisfied customer is more likely to return to the dealership for additional services and refer friends to the dealership, resulting in increased sales.

If you have not already, we recommend, at a minimum, that each year dealers complete a parts inventory using an outside third-party inventory company to complete the physical inventory. These companies see lots of different parts departments, both well managed and not so well managed, and have suggestions for improving the management of your parts departments. We have several that we work with around the country. Please contact us if you need a name. Adopting cycle counts throughout the year and reconciling the general ledger inventory to the parts pad each month are best practices. These steps will help you quickly verify inventory accuracy and identify discrepancies. This helps prevent stockouts, reduces shrinkage, and maintains data integrity.

It is important for dealers to continuously improve. They should be monitoring key performance indicators (KPIs) such as inventory turnover, fill rates, and stockout rates. Use data analytics provided through your DMS, OEMs, and other vendors, such as our ADBI reports, to identify areas for improvement and to implement process enhancements accordingly.

Properly managing the parts department will almost certainly ensure the right parts are available when needed, preventing frozen capital, and helping minimize downtime for customer vehicles and provide faster repair turnaround times, enhancing overall customer satisfaction.

Please contact your automotive CPA if you would like more information or assistance with managing this department.

Mass. Reimbursement Law Updates to Consider

By Frank O’Brien

It has been a decade since the Massachusetts State Automobile Dealers Association worked with the Legislature to pass amendments to the state’s Chapter 93B franchise law, including language which provided Massachusetts new-car franchised dealers with a defined methodology to submit for warranty rate reimbursement at retail rates for both parts and labor. During this time, most dealers have exercised their rights to obtain retail rates for warranty parts and labor. However, we have seen wide-spread and ever-changing interpretations by the automotive manufacturers, which have limited the dealers form achieving full retail rates.

While the Massachusetts law was on the forefront of the state warranty reimbursement laws passed in this country, many other states have passed similar laws since. Some of these laws, such as California AB179, have precise language pertaining to the rights of the dealers. The most impactful of these provisions relates to the exclusions in the calculation. The current version of section 9 of Chapter 93B has very limited exclusions as listed below:

• Routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs;

• Items that do not have an individual part number such as some nuts, bolts, fasteners; and similar items;

• Tires; and

• Vehicle reconditioning.

Each of these exclusions are critical and should remain in any revision to Chapter 93B. However, due to the scarcity of the exclusions, certain manufacturers have included repairs to the detriment of the dealers, such as alignments, coolant flush-

es, tire rotations, safety checks, batteries, brakes, employee repairs, repairs caused by outside influence, repairs for governmental agencies, parts sold at wholesale, and repairs covered by service contracts.

As a result, we recommend the following exclusions that should be considered in any future versions of the law:

• Manufacturer, manufacturer branch, distributor, or distributor branch or dealer initiated special events, specials, or promotional discounts for retail customer repairs;

• Parts or repairs sold at wholesale;

• Alignments;

• Repairs for a vehicle owned by the dealership, an affiliate of the dealership, or an employee of the dealership;

• Repairs for which volume discounts are provided to groups such as governmental agencies and insurance companies;

• Extended warranties or service contracts;

• Repairs of conditions caused by collision, road hazard, forces of the elements, vandalism, theft, or owner, operational, or third-party negligence or deliberate act;

• Accessories;

• Batteries; and

• Tires and all tire related repairs (including tire rotations).

Additionally, we have seen the following language in other state laws that can help protect the dealer’s rights and facilitate a swift approval process:

• Allow the dealer to submit a single set of repair orders for parts and labor or separate sets of repair orders for parts or labor;

• Include language that requires the franchisor to modify and not reject the submission so long as the calculation is not materially inaccurate or incomplete;

• Include language that requires the franchisor to apply the approved rates to all warranty work, including recalls, manufacturer goodwill, and warranty extensions;

• Prohibit the manufacturer from adjusting the parts or labor rate by comparing it to other dealers in the market, region, or state. Also, the word “unreasonable” in clauses (2)(1) and (2)(ii) has allowed

certain manufacturers to take a liberal approach to this clause and adjust the rate to the market. This word should be excluded from any revision to the law; and

• Prohibit the manufacturer or distributor from changing part numbers for parts associated with recalls thereby decreasing the dealer’s cost. The dealer cost for any part number involved in recalls should be no less than the part’s highest cost for one year preceding the announcement date of any recall. We have seen manufacturers reduce the dealer cost of parts used in recalls by 80% to 90%, which negates the dealer’s retail warranty reimbursement rate.

Finally, there has been a movement in the automotive industry to address the constant reduction of warranty labor times by manufacturers. Most alarming are the reductions in engine and transmission repairs and recalls. Based on conversations with fixed operations directors, these labor times are not realistic for technicians to complete the repairs. As a result, certified A-level technicians often resist these jobs. States, such as Illinois, Montana, and Minnesota have passed legislation in recent years to allow dealers to use third-party time guides for warranty work. While this is a good start, these laws do not provide a defined methodology to apply the third-party time guide, which could lead to manipulation and delays by the manufacturers. We recommend any potential language relating to this issue contain precisely defined language for the process to request and submit for third-party time guide labor time application to warranty repairs.

These clauses will help dealers achieve true retail rates when submitting for warranty reimbursement increases. MSADA should consider adding these to any new proposed amendments of the Chapter 93B franchise law.

If you have any questions regarding these issues or any other issues pertaining to the warranty reimbursement process, please contact Frank O’Brien, CPA, CIA, CFE at (339) 255-5358 or frank.obrien@ withum.com.

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VIN Etching Lawsuits Provide Reminders About Add-On Pricing

By Tom Vangel, Esq.

James Radke, Esq.

Lindsey McComber, Esq.

Murtha Cullina LLP

Class actions filed recently against auto dealerships across Connecticut serve as an important reminder that dealers in Massachusetts must be careful to ensure that the prices they are charging for VIN etching, as well as other add-ons, are transparent and not in violation of state laws or regulations.

Three proposed class actions were filed in May 2024 in state court in Connecticut alleging that dealerships violated state law by overcharging their customers for etching of the Vehicle Identification Number on their vehicles. The plaintiffs in these cases are seeking damages for violations of Connecticut’s Etching of Vehicle Identification Numbers law, injunctive relief, and punitive damages and attorney’s fees under Connecticut’s consumer protection statute.

In class actions filed against a Maserati dealer, a Ford dealer, and a Nissan dealer in Connecticut, plaintiffs allege that these dealers violated the Connecticut Unfair Trade Practices Act and Connecticut Gen. Stat. §14-99h when charging for VIN etching services. Connecticut Gen. Stat. §1499h requires Connecticut dealerships to offer purchasers of new or used motor vehicles the optional service of etching the VIN on the glass of their vehicles. This law is designed to encourage consumers to get their Vehicle Identification Number etched on their cars because it helps prevent automotive theft and can be effective in preventing the harm caused to the public by motor vehicle collisions involving stolen vehicles.

VIN etching is considered to be a theft deterrent because auto glass with VIN etching is more difficult for thieves to sell, and VIN etching on a vehicle makes a stolen

vehicle more difficult for thieves to dispose of. Subsection 14-99h(c) of the statute works to protect the consumer as it limits the amounts that dealerships can charge for VIN etching because it provides that “Each new car dealer, used car dealer, or lessor shall charge reasonable rates for etching services[.]” Under this statute, dealerships are prevented also from charging rates greater than the amount in their most recent schedule that is filed with the Commissioner of Motor Vehicles.

In these complaints, the plaintiffs allege that the dealers charged excessive costs –in some cases a fee of $299 or more – for etching of the Vehicle Identification Number on their vehicles. The plaintiffs allege that the dealers’ actions were in direct violation of Connecticut law because these fees were excessive in light of the labor and material costs to the dealer for performing these services. They also state that VIN etching kits can be sold online for as low as $20, and that, therefore, makes the prices charged disproportionate in light of the costs that consumers can perform these services themselves, even with accounting for service fees. In addition to charging more than a reasonable rate, one of the dealers is alleged to be charging more for VIN etching than the amount that they had represented in their filing with the Commissioner of Motor Vehicles.

The plaintiffs further argue that they were particularly vulnerable to being charged exorbitant prices for VIN etching, because they were past customers of the dealerships and these dealerships concentrated a significant portion of their marketing efforts towards prior customers. In this action, they are seeking relief on behalf of themselves and as many as 600 other consumers who purchased vehicles from these dealerships within the three years.

Although Massachusetts does not have laws specifically regulating VIN etching, these cases highlight the importance of dealers taking steps to ensure that they are com-

plying with state law and regulations when it comes to transparency and reasonableness of their pricing for add-on products. Massachusetts dealers are bound by regulations promulgated by the Attorney General under 940 CMR 5.00, which prevent dealers from acting deceptively when it comes to pricing of their vehicles and add-on products.

Further, the Massachusetts Consumer Protection Act, MGL Chapter 93A, closely mirrors the Connecticut Unfair Trade Practices Act and applies to dealers in similar ways. Chapter 93A has been applied to Massachusetts dealers for using discriminatory pricing for add-on products and charging consumers higher rates than advertised, among other things.

Massachusetts dealers also will need to comply with the recently finalized FTC CARS Rule, which goes into effect on July 30, 3024, which requires dealers to inform consumers that optional add-ons, such as VIN etching, are not required as part of their purchase. Under this Rule, dealers are required to give additional disclosures about the add-on product’s pricing, and they must get the “express, informed consent” of the customer to purchase the addon products. This rule also prohibits dealers from charging for add-ons that do not provide any benefit to consumers.

These actions serve as an important reminder that dealers in Massachusetts must be cognizant that their pricing practices for add-ons must be transparent and comply with state law and federal rules and regulations. In light of these cases, dealers should closely examine their current practices around VIN etching and other services or products offered at the time of purchase, to ensure that their pricing scheme is reasonable and transparent.

Tom Vangel, Jamie Radke, and Lindsey McComber, with the law firm of Murtha Cullina LLP in Boston, specialize in automotive law and can be reached at (617) 457-4072.

Latest Developments in Employment Law

By Jeff Fritz, Esq., and Joshua Nadreau, Esq., Fisher Phillips LLP

When it comes to employment law, things are never static. The following are several recent and impending developments of which you need to be aware to minimize risk and significant cost in the future.

New OT Rule Takes Effect

July 1, 2024

We reported in April that the U.S. Department of Labor was slated to increase the exempt salary threshold for the socalled “white-collar” exemptions. The USDOL has since made it official and is raising the threshold even higher than anticipated.

Currently, the salary threshold for exempt employees is $684 a week ($35,568 annualized) under the administrative, executive, and professional exemptions. Effective July 1, 2024, the salary threshold will increase to $844 a week ($43,888 annualized). Further, effective January 1, 2025, it will increase to $1,128 a week ($58,656 annualized). Moreover, starting July 1, 2027, the salary threshold will be automatically updated every three years.

The salary threshold for the “highly compensated employee” exemption, currently $107,432, will also increase. Effective July 1, 2024, it will increase to $132,964, and, effective January 1, 2025, it will increase to $151,164. It, too, will be updated every three years. (Keep in mind, however, employees are not exempt simply by virtue of the fact that they earn enough; there is a duties test component as well that must be satisfied to avoid having to pay overtime.)

July 1 is fast upon us. It is imperative that you review your exempt employees to ensure you will be in compliance come July 1 (and January 1), or convert them to hourly plus overtime, as missteps can be very costly (and subject to automatic treble damages). It is equally important to give advance notice of any changes. If you do not meet the salary threshold for your executive, administrative, and/or profes-

sional employees, they will no longer be exempt from overtime pay (regardless of whether they satisfy the duties test) and, accordingly, your dealership could be on the hook for significant unpaid wages, multiplied by three, plus attorneys’ fees (yours and the employee’s).

EEOC Workplace Harassment Guidance for LGBTQ+ and Other Workers

In late April, the U.S. Equal Employment Opportunity Commission issued new guidance to address harassment based on sexual orientation. The guidance makes clear that harassment of LGBTQ+ employees, particularly transgender employees, can be considered a Title VII violation. According to the guidance, examples of harassment could include the denial of access to a bathroom consistent with the individual’s gender identity, the intentional and repeated misgendering of an individual, or the harassment of an individual because they do not present in a manner stereotypically associated with their gender.

The EEOC also broadened the definition of sexual harassment to include pregnancy, childbirth, and other “related medical conditions.” This includes protection against harassment based on lactation, contraceptive choices, and the decision to have, or not have, an abortion.

The EEOC also noted that, while employers are required to accommodate employees’ sincerely held religious beliefs so long as they do not present an undue burden, employers also have a duty to protect workers against religiously-motivated harassment. Employers are not required to accommodate religious expression that creates or “reasonably threatens to create” a hostile work environment.

Finally, the EEOC made clear that unlawful harassment can occur virtually. If conduct occurs in a virtual environment and is communicated by email, instant message, videoconference, or other online technology, it can still violate anti-discrim-

ination laws.

In light of the EEOC’s recent guidance, you should review your policies to ensure they are compliant. You should also train your managers accordingly and ensure all complaints are properly investigated and appropriate action is taken if and when improper conduct is found. This can go a long way in helping to defend against claims.

New Pregnancy Accommodation Rule Issued

As we reported last month, the EEOC recently issued a new rule, slated to take effect June 18, 2024, that will require employers to accommodate applicants and workers who need time off or other workplace modifications for pregnancy-related care. The finalized rule contains a broad definition of “pregnancy, childbirth or related conditions.” It includes current, past, and potential pregnancy; infertility and fertility treatment; the use of contraception; termination of pregnancy, including via miscarriage, stillbirth, or abortion; pregnancy-related sicknesses; lactation and associated issues; and menstruation.

This definition is much broader than under the Americas with Disabilities Act, as it includes terms like “temporary” and “in the near future.” Potential accommodations may include job restructuring; schedule changes, part-time work, and paid or unpaid leave; frequent breaks; acquiring or modifying equipment uniforms, or devices; making existing facilities accessible or modifying the work environment; allowing sitting or standing (and providing means to do so); light duty; telework or remote work; providing a reserved parking space; temporarily suspending one or more essential function; and adjusting or modifying workplace policies.

If and when these issues arise, you need to make sure you engage in an “interactive dialogue” with the employee (and their healthcare providers) to determine whether a reasonable accommodation exists.

Auto Dealerships – A Hacker’s Gold Mine

By Scott Spatz

President, Cooperative Systems

In today’s digital age, the automotive industry faces a dual challenge: embracing technological advances while safeguarding against escalating cyber threats. Auto dealerships, in particular, are increasingly targeted by cybercriminals due to their rich troves of sensitive data and the high volume of financial transactions they process. Understanding the specific vulnerabilities that make dealerships appealing to hackers and implementing comprehensive cybersecurity strategies is crucial for protecting both customer information and business integrity.

Why Are Auto Dealerships Prime Targets for Hackers?

1. Rich Personal Data: Auto dealerships store extensive personal information from customers, including names, addresses, Social Security numbers, and financial details for financing purposes. This data is highly valuable on the dark web, where it can be sold for identity theft or used in fraudulent activities.

2. Financial Transactions: The nature of auto dealing involves large financial transactions, often processed through less-secure, localized systems. These transactions are prime targets for cybercriminals looking to intercept or manipulate financial data for theft.

3. Lack of Robust Cybersecurity Measures: Many dealerships have not historically prioritized cybersecurity, operating with outdated systems and inadequate security protocols. This lack of robust cybersecurity measures makes them vulnerable to cyberattacks.

4. Connected Vehicle Technologies: The integration of connected technologies in vehicles adds complexity to dealership security. These systems, designed to improve customer experience, also create potential entry points for hackers.

5. Third-Party Vendor Risks: Dealerships frequently rely on third-party vendors for various services, from IT support to financial services. Inconsistencies in these vendors’ cybersecurity practices can pose significant risks, providing indirect routes for cyberattacks.

6. Ransomware Opportunities: The critical need for continuous operations makes dealerships ideal targets for ransomware attacks, where hackers lock access to key files or systems and demand ransom to restore access.

7. Insider Threats: The human element cannot be overlooked, as employees can inadvertently or maliciously compromise security. Whether through negligence or intent, insider actions are a significant risk factor. What Can Be Done to Mitigate These Risks?

The cybersecurity landscape for auto dealerships is complex and requires a multi-faceted approach. Recognizing the unique threats faced by dealerships is the first step toward developing effective security measures. Dealerships must then implement a comprehensive cybersecurity strategy that includes technological defenses, procedural policies, and continuous employee education.

1. Implement Strong Data Security Measures: The foundation of dealership cybersecurity is robust data protection. Encrypting sensitive customer data and implementing strict access controls can prevent unauthorized access. Advanced firewalls, anti-malware software, and regular security patches are also crucial.

2. Secure Financial Transactions: Protecting financial transactions requires both technological and procedural measures. Employing secure payment technologies and conducting regular financial audits helps safeguard against fraud. Training staff to recognize phishing attempts and other common cyber threats is equally important.

3. Upgrade Cybersecurity Practices: Regular cybersecurity assessments can identify vulnerabilities, and aligning with industry-standard security measures can bolster defenses. Joining industry cybersecurity forums and collaborating with cybersecurity experts can also provide insights into emerging threats and defense mechanisms.

4. Safeguard Connected Systems: As vehicles become increasingly connected, securing these systems is paramount. Collaboration with manufacturers is essential to ensure that vehicle software is secure and

regularly updated to defend against new vulnerabilities as well as keeping connected technologies on a separate network.

5. Manage Third-Party Vendor Risk: Conducting regular security assessments of third-party vendors and setting strict cybersecurity requirements can mitigate risks. Dealerships should insist on compliance with industry-standard security practices as part of their contracts.

6. Develop a Ransomware Response Plan: A proactive approach to ransomware includes regular backups of critical data, training employees on ransomware recognition and response, and establishing a clear action plan for recovery without succumbing to ransom demands.

7. Address Insider Threats: Regular training on cybersecurity best practices is crucial for all employees. Implementing strict access controls and monitoring unusual access patterns can help prevent insider threats. Dealerships Must be Proactive –

Not Reactive

Dealerships that proactively enhance their cybersecurity posture not only protect their operations but also build trust with their customers. This commitment to security can become a significant competitive advantage in the automotive industry.

For auto dealerships, the path to cybersecurity is ongoing. By understanding the threats, implementing robust defenses, and fostering a culture of security awareness, dealerships can significantly reduce their risk and ensure a secure environment for both their data and their customers. This proactive stance is essential in today’s digital world, where cyber threats continue to evolve and expand.

Dealerships interested in improving their cybersecurity measures can benefit from attending specialized industry specific events, such as the monthly Coffee with Coopsys webinars hosted exclusively for MSADA members. These webinars help dealerships understand the cybersecurity landscape and implement effective protections. To register for upcoming Coffee with Coopsys webinars please visit https://coopsys.com/msada/.

Hiring – It is Not Just About Skills

By Tim Marbut

Ethos Group

Finding great employees is tough. One of the first things we look for when hiring people is whether or not they have the skills to do the job. Although skills are extremely important, they may not be the first thing to look for when filling a specific position in the dealership. There are positions that require some previous experience, but these skills may not lead to the experience we are trying to create for our customers.

In the book Setting the Table, Danny Meyer, the Founder and CEO of Union Square Hospitality Group, suggests that, to create the best experience for customers and employees, you must not only hire based off skill level. He suggests looking beyond just skill; look for some very important and specific personal qualities, too. Meyer defines these qualities as having a high hospitality quotient (HQ). Meyer owns several of the most awarded restaurants in the United State. Meyer states, “We hire 51% based on their HQ, and 49% based on their skills.”

As an employer, we have a clear idea of the skills needed, but it is the specific qualities we are looking for in our candidates that will create a point of separation from the rest. Meyer highlights seven key qualities that we should aim to find in our candidates to ensure we hire the best employees.

1. Kindness: It is not rocket science; people like people who are kind. Kindness transcends all cultural and economic barriers. It is also very good for you physically when you are kind. It is good for your blood pressure, your heart, and your mental well-being and it has been proven to produce large levels of dopamine in your system. This is good for the giver and the receiver of kind acts. However, it only works when duplicated repeatedly. A one-time act of kindness is great, but the fuel burns off quickly. We must refill the tank by being kind time and time again for it to really work. Be kind once and you feel good for a bit. Be kind all the time and you always feel good.

2. Optimism: Too often people are dis-

appointed that we are not “doing as good” as we did before. True, without optimism, you will set yourself up to be right. If we are worried about yesterday, we forget about today’s opportunity. Optimism is not only a requirement for a great employee but also vital to a team’s success.

3. Work Ethic: There is nothing better than a hard-working employee. Leaders love people that they do not have to monitor to make sure they are doing the right thing and not just “keeping busy.” We want people to work with us, not just for us. Employees with a strong work ethic are those types of people. Not only do they work hard alone, but they tend to be team players as well. These people need great coaches! You can have the best people in the world and still not find success. That is where you, the coach, make a difference. When you find someone with a great work ethic, you can teach them anything. They are willing to learn, and they will bust their tail to make the coach proud.

4. Curious Intelligence: When people are inquisitive about things, it is a great indicator of someone who wants to grow. If you are partners with a person who never asks questions, you should be concerned. Curiosity is a sure way to learn, grow, and become a better leader and teammate. We know that 8 out of 10 consumers who purchased something in the last several years stated, “The salesperson never asked me what I wanted or needed before they tried to sell me something.” These consumers are looking for professionals who are curious about them. If we are not asking important questions and remain curious, we are not selling. We are just assuming. There is no need for me to explain what happens when you assume.

5. Empathy: According to studies, empathy is the number one thing people look for in their leaders today. It is important that we hire people who can empathize and not just sympathize. If they can understand how to “see” things through others’ eyes, they have a direct road map on how to communicate with our customers and walk them through the decision-making process. When we

know how people feel, we have the upper hand in delivering an exceptional customer experience, presenting the right products to each customer, and communicating that “we know” how it feels to be a customer.

6. Self-Awareness: You cannot grow until you know. Growth starts with self-awareness. Hire people who can honestly evaluate both their strengths and weaknesses. We need people to be honest with us about their needs for success, rather than just telling us what they think we want to hear. This openness helps us to make specific improvements and lead them more effectively. One size does not fit all; it fits one. Knowing how people see themselves helps us to bring out their best.

7. Integrity: There is nothing more important for our culture and our reputation than to have a building full of people who do what they say and say what they do. At the end of the day, that is what matters. Someday, all of us will walk away from this amazing business that we love. People will not talk about how many cars we sold or how much money we made. They will talk about the kind of people we were and how much they did or did not enjoy working or doing business with us. If we can have people who have a common cause and follow through on promises made, we cannot help but to be successful. Integrity is the only thing we take with us when we are done, so make sure we are adding people with it to our team. These qualities are something to keep in mind if you are looking for these qualities in your candidates.

Be sure that you have these qualities as well. People tend to gravitate towards like-minded people. Raise your own “Hospitality Quotient” and you will notice that the right people will be drawn to you, and you will be excited to welcome them aboard. t

For more information on how Ethos Group can help your dealership develop more leaders in your F&I office, sales management tower, and your sale’s floor in 2024, please contact Drew Spring at dspring@ ethosgroup.com or (617) 694-9761.

Do I Have Customer Information on My Workstation?

By Nick Reed

IT Security Analyst, OCD Tech nreed@ocd-tech. com

Protecting customer information at rest and in transit through encryption has been a notoriously difficult technical challenge for automotive dealerships, especially in accordance with the enhanced FTC Safeguards Rule requirements and its definition of covered information.

Encrypting information is the process of making it unreadable by applying a mathematical algorithm, thus protecting customer information from unauthorized access. Under the rule, any customer information stored locally requires encryption. Despite efforts to implement encryption, the persistent risk of maintaining customer information on employee workstations underscores the importance of understanding exactly what is on the organization’s workstations.

your dealership’s computers. However, this solution can entail substantial costs, including both hardware and Windows license upgrades to ensure smooth operation. Consequently, many dealerships simply deny the presence of customer information on their workstations, often opting against encryption deployment on assets to avoid complexities.

A prevalent objection to encryption implementation is the belief that employees do not store customer information outside of the Dealer Management System and Customer Relationship Management systems. However, this statement is ineffective without adequate supporting measures. To validate the claim, an organization’s initial step should be to map out the flow of customer information and un-

a financial institution, whether in paper, electronic, or other form, that is handled or maintained by or on behalf of you or your affiliates.”

It is important not to use customer information interchangeably with personally identifiable information (PII). While similar terms, PII refers to information that can be used to identify an individual, even including data in aggregate. While the term customer information can yield a different classification. For example, addresses and names are often readily available online for legitimate purposes, therefore, this would be considered public customer information, but it is also PII because it can be used to identify a person. These nuances are important to understand when addressing the requirement.

The most effective approach to comprehending the contents of workstations is through direct observation. Regular inspections of workstations can provide great visibility.

This article aims to review key concerns surrounding the storage of customer information as well as how to discern the status of customer information on users’ workstations.

Implementing encryption on workstations via user management solutions offers an effective means to help meet the FTC Safeguards’ requirement to protect data “at rest” – in other words, encrypting information that sits on the hard drives of

derstand how it moves in and even out of the DMS or CRM. Creating a map of the sales, financing, and insurance processes with dependencies will help provide an accurate picture.

To further support this data flow map, an organization should determine what types of information are being collected by creating a basic data inventory. During this process, it is also essential to understand the FTC’s definition of customer information. According to the FTC Safeguards Rule, “customer information means any record containing nonpublic personal information about a customer of

For auto dealers, the vehicle purchasing process typically commences with a basic needs or information sheet, which some dealerships retain physically and others digitally. Depending on the information collected, this document could represent customer information, necessitating encryption. Subsequently, a credit application may be saved locally for transmission to banks or conversion to alternative file formats. Many organizations think they are adequately protected using specialized applications for customer information storage, yet the data often finds its way back to the local computer’s hard drive.

Even in situations where users perceive their information as securely stored in the cloud, the operation of most cloud-based applications entails a temporary transfer of data onto user devices for access

and viewing purposes. This interim storage, known as cache data, is subject to automatic overwriting as storage space requirements dictate. Nevertheless, it is important to acknowledge that information remains locally stored, albeit for a brief duration.

The most effective approach to comprehending the contents of workstations is through direct observation. Regular inspections of workstations can provide great visibility. While initially perceived as burdensome and potentially intrusive into employees’ workspace, this practice is fundamentally simple and efficient. Compared to the consequences of an unregulated and uncompliant environment, this minor burden has become much more palatable.

To document workstation configurations, OCD Tech routinely conducts comprehensive workstation checks, encompassing a thorough review of systems for customer-related data. These inspections have uncovered unexpected discoveries,

even within organizations previously confident in the restriction of customer information on workstations. Instances include the discovery of license images, bank statements containing detailed transactions, images of credit cards, military discharge papers and more. A breach of a Midwest auto dealer last year included sensitive financial information not only of customers, but of the owner and their family.

A crucial step is to thoroughly check if encryption is actually in place, rather than solely relying on assurances from IT support or your managed service provider. Encryption deployment can sometimes encounter issues. In some instances, an encryption policy object was thought to be consistently applied through a centralized user management system, yet some workstations remained unencrypted. To address this, OCD Tech recommends conducting regular scans to identify any workstations that have not been properly encrypted.

Consider a common scenario where outdated computers from the sales floor are either gifted to family members, donated to local schools, or recycled by the organization’s IT service provider without properly purging data. Despite assumptions of safety, sensitive information could still be recovered by unauthorized parties once these computers leave the premises. Similarly, contemplate the scenario of a stolen workstation: relying on assumed encryption only to later discover a breach of customer information by a malicious actor highlights the importance of this verification process.

Securing assets through encryption offers the most reliable protection. Given the numerous ways customer information can end up on workstations, relying solely on written policy is extremely risky. The implementation of reasonable and effective technical controls helps create a more robust environment through alignment with FTC Safeguards regulation.

Patrick Manzi NADA Senior Economist

New light-vehicle sales in April 2024 totaled a SAAR of 15.7 million units, roughly flat year over year and up 1.2% from March 2024. The SAAR for the first four months of 2024 totaled 15.5 million units, an increase of 2.2% compared with the same period in 2023. According to Wards Intelligence, sales to fleet customers accounted for roughly 17% of April sales.

Affordability played a key role in April’s sales mix, says Wards Intelligence. The small-car and small-CUV segment both posted over 15% sales gains year over year while other, more expensive segments saw sales declines. According to J.D. Power, average incentive spending per unit dropped slightly from March 2024 but was up significantly year over year. Average incentive spending per unit is expected to total $2,633 in April, up 56.7% from April 2023. With the sales mix shifting to more affordable models and

with higher average incentive spending, the average transaction price is falling. The average transaction price for April 2024 should be $45,093, down 2.5% year over year, J.D. Power says. Average monthly payments have also seen a slight decline as well despite the high interest-rate environment. According to J.D. Power, the average monthly payment in April 2024 will likely be $724, down $6 from April 2023. New light-vehicle inventory started April at just under 2.58 million units and increased 3.5% to 2.67 million units by the end of the month. We expect that inventory will but will decline slightly in May, as May is typically a high-volume sales month. For 2024 as a whole, we believe that new light-vehicle sales will total 15.9 million units.

Lawmakers are United on Chinese Tariffs, but Will They Work?

By Cody Lusk President & CEO, American International Auto Dealers Association

Democrat and Republican lawmakers in Washington, D.C., do not agree on much, but they do share one particular interest: China. Members of both parties are more than willing to pass bipartisan legislation addressing Chinese manufacturing, trade with China, and even Chinese social networks. This enthusiasm for limiting Chinese influence on American shores has naturally extended to the auto industry.

In May, the Biden administration announced it would keep in place a number of tariffs on Chinese products, known as Section 301 tariffs, as well as adding additional tariffs on a targeted group of mostly clean energy related goods, including electric vehicles. The White House plans to quadruple the current tariff on Chinese electric vehicles from 27.5 percent to 102.5 percent, which will likely take effect this year following a public comment period. The U.S. currently imports almost no Chinese cars, but that has not dampened concern among lawmakers that China is ramping up its efforts to tackle foreign markets.

In response to China’s growing dominance of the global EV market and fearing the cost-advantage held by these comparatively cheap vehicles, some Members of Congress have even called for an outright ban of Chinese autos. Senator Sherrod Brown (D-Ohio) recently told Politico, “Tariffs are not enough. We need to ban Chinese EVs from the U.S., period.” In the halls of Congress, he is hardly alone in that opinion. Banning Chinese vehicles

may be easier said than done, however. While American tariffs protect the U.S. auto market from being flooded with Chinese built and subsidized vehicles, other markets have welcomed China’s electric vehicles. Nearly 40 percent of China’s electric vehicle exports are currently sold in the EU. Projections suggest that sometime this year, vehicles manufactured in China will constitute one-fourth of ALL car sales in Europe. Why has China been so successful in this predatory approach to EV exports? It all comes down to cost.

When terms of pricing, the EVs available in the U.S. simply cannot compete

It is clear to Americans on both sides of the political aisle that Chinese influence in auto manufacturing, particularly electric and smart vehicle manufacturing, must be countered.

with the advantages that the Chinese government has bestowed upon its automakers.

In China, generous government subsidies, cheap labor, and plentiful access to key minerals have allowed domestic automakers to build EVs that sell at a fraction of the cost of those built in the U.S., Europe, and other parts of Asia. BYD, China’s leading builder of EVs, sells its compact Seagull, with a range of 200 miles, for around $10,000 in China. An American customer would be frustrated looking for something comparable at double, or even triple the price. By all measures, China is currently

overproducing its cheap EVs. If the U.S. were to open its markets fully to Chinese EV imports, it would be akin to dropping a piranha in bowl of goldfish. The massacre that would follow would give China near complete control over the global EV market and access to all of the information those vehicles collect.

Chinese automakers have been strategic in both exporting and building vehicles abroad. They have opened factories in Europe and South America and are reportedly considering one in Mexico. Chinese companies interested in penetrating foreign markets are also thinking beyond cars, to the technology they run on. EV operating systems, batteries, and battery materials are in high demand in the many parts of the world, thanks in part to stiff government mandates. If Congress and the White House want to meet the EV mandates they have established through EPA rulemaking, the U.S. and it’s trading partners will need to figure out how to source the minerals and build the batteries that power EVs.

U.S. Commerce Secretary Gina Raimondo hinted recently that new rules governing Chinese connected cars would likely come in the Fall. The Commerce Department is in the process of reviewing public comments on the issue following a probe launched by the Biden administration in February into whether Chinese smart cars posed a national security risk to the United States through the collection of vast amounts of data on drivers and U.S. infrastructure.

It is clear to Americans on both sides of the political aisle that Chinese influence in auto manufacturing, particularly electric and smart vehicle manufacturing, must be countered. How that can be managed, and how American consumers can be protected without being disadvantaged, remains to be seen.

By Scott Pearson Chairman, American Truck Dealers

ATD ChAirmAn SCoTT

PeArSon iS owner AnD

PreSiDenT of PeTerbilT of ATlAnTA.

ATD Fly-In Soon Upon Us

ATD leadership and staff continue with preparations for our 2024 legislative fly-in, June 25-26, in Washington, D.C. This year’s event will be held at The St. Regis Hotel, one block from the White House.

The 2024 ATD Fly-In provides truck dealers and Automotive Trade Association Executives (ATAEs) an opportunity to lobby Congress on issues of importance to medium- and heavy-duty truck dealers. One can register at www.nada.org/atd-fly-in.

Dealer visits with legislators on Capitol Hill are the key component of the Fly-In. ATD Legislative Affairs will set up your legislative meetings unless

Tuesday, June 25

• 9-10am Legislative Briefing

you prefer to schedule your own. This year’s legislative priorities include:

• The EPA’s aggressive “Phase 3” greenhouse gas rule for heavy-duty vehicles;

• Repeal the federal excise tax on heavy-duty trucks (H.R.1440/S.694);

• Opposition to the vehicle “right to repair” legislation (H.R.906); and

• Support for catalytic converter anti-theft legislation (H.R.621/S.154).

We look forward to welcoming you on board in June.

Our event agenda is set as follows:

• 10-11am ATD NextGen Committee Meeting

• Noon-7:30pm Registration open

• 2-5pm ATD Board of Line Representtives Meeting (by invitation only)

• 5:15-6pm ATD NextGen Reception – Guest Speaker: Rep. Brittany Pettersen (D-Colorado)

• 6-8pm ATD Fly-In Welcome Reception

Wednesday, June 26

• 7-11:30am Registration open

• 7:15-8am Continental Breakfast

• 8-11:30am General Session

• Welcome from ATD Chairman Scott Pearson

• Congressional presentation from Rep. Earl Blumenauer (D-Oregon)

• Regulatory Briefing from ATD staff

• Economic Overview: Emily Clayton, American Trucking Associations

• EPA GHG Phase 3 Panel

- Jacqueline Gelb, American Trucking Associations

- Tim Blubaugh, Truck & Engine Manufacturers Association

- Moderator: Laura Perrotta, ATD President

• Roland Berger Study: Wilfried Aulbur, Senior Partner, Roland Berger

• 11:30am Luncheon

• 1-5pm Capitol Hill visits

• 5pm Closing Reception, NADA Capitol Hill Office

“Magical

Thinking Won’t Take Trucking to Net Zero Emissions”

By Jack RoBeRts, Truck Tech, May 22, 2024

Welcome to Las Vegas.

I’m at the Advanced Clean Transportation Expo. It’s Day Three of the show. And I’m sitting in the media room, looking down at the show floor — which will begin filling up with trucking industry attendees in another hour or so.

A weird mix of optimism and pessimism seems to

be in the air this year.

The show floor is jammed with attendees. And, as usual, there is glittering new technology and futuristic trucks everywhere you look.

There’s a definite sense of accomplishment among suppliers and particular OEMs. They’ve done incredible work over the past decade bringing amaz-

ing, alternative-fuel-and-drivetrain vehicles to life. And they have every reason to be proud.

But there also seems to be a growing sense that this massive shift to a net-zero transportation industry isn’t going to happen — not on the timeline that CARB the EPA are insisting on. That we’re going about this all wrong.

Time for a Reality Check on Zero-Emission Trucking

At the end of a high-watt press conference yesterday, I was chatting with a friend and well-known industry insider when he offhandedly patted the Class 8 truck we were standing next to and said, “You know, this is probably a half-million dollar truck, right here…”

Combined with J.B. Hunt CEO Shelley Simpson’s remarks yesterday about being better able to reduce emissions with renewable natural gas, better scheduling, and shifting some freight to intermodal, I thought my friend’s remark sort of perfectly sums up where things stand at the moment.

Yes, battery-electric and hydrogen fuel cell trucks can perform the jobs fleets need them to do. But they’re still prohibitively expense. Deploying them requires substantially reorganizing fleet operations. And you may very well have to purchase two of the trucks to maintain the efficiency and productivity you get from a single diesel truck — driver shortage and price tags notwithstanding.

This morning, Robert Sanchez, CEO and chairman of the board for Ryder System, was adamant that the business case for zero-emission vehicles, infrastructure and productivity simply isn’t here yet.

Speaking to ACT Expo attendees, Sanchez compared currently available ZEV technology to massive “brick” cell phones in the late 1970s: wildly expensive, difficult to charge and use, and barely capable of performing the tasks it was designed to do.

More reliable, cheaper and more capable ZEVs will come, Sanchez said. But the hard, cold truth is we’re just not there yet.

And then there’s the 800,000-pound gorilla in the room: Charging infrastructure. Despite the large number of charging providers at ACT Expo, the sobering reality is that even if the entire country went all-in on building green electric and hydrogen infrastructure today, we’re still about a decade away from having the grid capacity and brick-and-mortar facilities required to support a zero-emission North American commercial vehicle population.

We Need More Realistic Emissions Transition Plans

And, as I’ve already noted, the expectation seems to be that fleets will fund this massive transition all by themselves. But there’s not nearly enough money flowing in to accelerate real change.

My sense is that we’re fast approaching a point where more pragmatic, realistic transition plans need to be adopted.

By all means, put electric trucks to work as soon as possible in urban and regional fleet applications.

But as I argued in another recent Truck Tech blog, it’s time to revisit proven technologies like clean diesel engines, renewable fu-

els, natural gas and hybrid-drive powertrains for heavy-duty trucks.

We also need to seriously look at new ways of hauling freight: A new emphasis on intermodal transport; heavier, longer combination trailers; and the adoption of autonomous truck technology. Enter Regulators’ Magical Thinking

As is often the case, a big part of the problem is that many of the people dictating the current slate of regulations and rules don’t understand the realities of running a trucking fleet.

This is a governmental manifestation of something I’ve observed many times over the course of my career. An affliction I call “Magical Thinking.” The idea that — for reasons that are never clearly explained — whatever obviously unviable plan we’re all supposed to blindly buy into and enthusiastically support will just somehow miraculously work out the way we want it to.

Increasingly, that’s what I’m seeing with regards to trucking’s great transition to net-zero emissions. Lots of magical thinking. But very little in the way of reasoned, rational, sober plans based in reality.

Trucking needs a new transition plan. Because unless something magical happens soon, the one we have right now isn’t going to work.

“Companies

Are Balking

at the

High Costs of Running Electric Trucks”

A Ryder analysis shows operating expenses of low-emissions rigs are far higher than those for diesel trucks

By Paul BeRgeR, The Wall STreeT Journal

, May 8, 2024

Executives at truck leasing company Ryder System spent years listening to some of their biggest customers say they wanted to switch to battery-electric big rigs.

Now that the heavy-duty trucks are available, the company says, few customers want to pay for them.

“The economics just don’t work for most companies,” said Robert Sanchez, the chief executive of Ryder, which manages 250,000 trucks and vans for tens of thousands of retailers and manufacturers.

Ryder’s experience illustrates the challenges facing state and federal governments as they try to push truckers out of heavily polluting diesel rigs and into zero-emissions vehicles. It suggests that truck makers will need to make significant advances in battery weight, range and charging times if battery-electric trucks are to seriously challenge diesel rigs in a highly competitive freight sector that runs on thin margins.

“Quite frankly, demand has not been as strong as what we would like,” said Rakesh Aneja, head of eMobility at Daimler Truck North America, which released its Freightliner eCascadia battery-electric semi-truck in 2022.

Aneja said Freightliner eCascadia orders this year are about level with 2023’s orders. That is despite an increasing push from governments, regulators and from companies themselves to lower

truck pollution.

Battery-electric trucks cost about three times as much to purchase as a diesel rig. There are federal and state programs to help offset the purchase costs, but operating costs and other issues present big hurdles.

Truckers say battery-electric truck operations are too difficult to set up and too expensive and inefficient to run. It can take years to install on-site charging facilities for trucks that can travel less than half as far as diesel rigs between refueling and that require at least several hours to recharge.

Ryder launched a dedicated service a year ago to help companies set up and run battery-powered fleets, including installation of charging equipment and maintenance of the vehicles.

Ryder says that so far it has sold just 60 vehicles through the program and that most of those are light-duty trucks. It says three companies are running battery-electric heavy-duty trucks, but those five vehicles are only being used in yards to shuttle trailers between parking spots and loading docks.

Sanchez said that unlike passenger-vehicle owners who might buy an electric car on principle, companies will only switch to battery technology when it can compete with diesel on the cost of running the vehicle.

Heavier costs

Ryder, using load and route data from 13,000 vehicles it operates on behalf of customers, recently analyzed the annual operating expenses of battery-electric commercial trucks and found sharply higher costs compared with traditional, diesel-powered rigs.

The analysis assumed the infrastructure to provide fast charging was already in place and focused on expenses such as buying the vehicle, maintenance, labor and fuel.

The company found that light-duty, battery-electric vans raise annual operating costs by several percentage points. As trucks get heavier the cost difference becomes more pronounced, according to Ryder’s analysis, with annual costs of operating battery-electric big rigs about twice as expensive as diesel trucks.

“What surprised us was the magnitude of the gap,” Sanchez said.

The costs differ from state to state because of differences in average wages, fuel and power prices.

The Ryder analysis found that converting a typical mixed fleet of 25 commercial vehicles, including about 10 heavy-duty trucks, from diesel to battery power in California would raise a fleet’s annual operating costs 56%, or $3.4 million a year. The same transition in Georgia would raise annual operating costs 67%, or $3.7 million.

In all, Ryder said, the higher operating costs would add 0.5% to 1% to inflation. “Even if it was in one state, you’re going to be pushing the cost of transportation within that state up,” Sanchez said.

Proponents of battery-electric trucks say they are more cost-efficient than diesel trucks over time because they have fewer moving parts than an internal combustion engine and require less maintenance and repair. Some trucking companies say bat-

tery-electric trucks haven’t been on the road long enough to test those assertions.

Saving on fuel

The battery-electric trucks also save on fuel costs in many parts of the country, with savings varying based on the cost of diesel in a state and on the time of day when the vehicle is charged because of shifting costs for electricity.

Because battery-electric trucks are heavier than diesel trucks and require several hours to recharge, companies need more vehicles and drivers to haul the same volume of freight as a diesel truck. The Ryder analysis estimated that a company would need nearly two battery-electric big rigs and more than two drivers to equal the output of a single heavy-duty diesel truck.

Other operating issues are also cropping up as the big rigs get on the roads.

Penske Truck Leasing, which is running pilot programs with battery-electric trucks, has found that because battery-electric rigs are heavier than diesel trucks their tires wear out faster. The company has also found some maintenance costs are more expensive than diesel trucks because parts are rarer and so more expensive.

Paul Rosa, senior vice president of procurement and fleet planning at Penske Truck Leasing, said there is still great interest in zero-emissions vehicles. But while a few years ago customers were pushing to transition to battery-electric trucks “right away,” now they are looking to slow down.

Trucking executives expect that technological advances, such as smaller, lighter batteries that provide greater range between charges, eventually will bring down costs. In the meantime, some state and federal governments are enacting regulations that push truckers into the vehicles.

The U.S. Environmental Protection Agency recently released a rule effectively mandating that manufacturers sell more battery-electric trucks by the end of the decade. California has introduced several regulations that push truckers and fleets into zero-emissions vehicles.

Local and national trade groups oppose the rules and regulations.

“Considering that 96% of U.S. trucking companies operate 10 or fewer trucks, these mandates are simply cost-prohibitive for most truckers,” the American Trucking Associations said earlier this month.

ADT Webinar, June 4 – “Heavy Truck State of the Industry”

To keep a finger on the pulse of the industry, CDK Heavy Truck surveyed dealership employees, asking managers and staffers about current and past problems. On June 4, at 1:00 p.m. ET, join CDK Heavy Truck’s Peter Kahn, Senior Director of Market Research, as he presents their findings and provides key takeaways to help dealers stay nimble and adaptive to change. Register for this webinar at www.nada.org/atd.

I N C R E A S E E V S A L E S W I

H E V C E R T I F I C A T I O N

PlugStar com connects consumers and certified dealers to drive EV sales Designed to enhance the EV shopping experience, the PlugStar program provides dealers with tools, knowledge, and ongoing support through education, certification and resources. Plug In America, the organization behind PlugStar, represents America's deepest pool of EV drivers and is the national leader in EV consumer education

P R O V E N T R A I N I N G

S p e c i a l i s t w h i l e d e a l e r s c a n b e c o m e a P l u g S t a r

C e r t i f i e d D e a l e r s h i p

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f a c e - t o - f a c e i n t e r a c t i o n s w i t h p o t e n t i a l c u s t o m e r s

Our convenient online training takes about two hours to complete and covers:

E V f u n d a m e n t a l s

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W

Since the launch of the PlugStar program five years ago, Plug In America has trained thousands of dealer and manufacturer sales staff from almost every major automaker. Each PlugStar program has recorded improvements of up to 80% in EV salesperson confidence while discussing utility rates and programs, government incentives, the availability and costs of charging at home and on the go To learn more, visit PlugInAmerica.org/PlugStar. T R A I N E D sales staff sell 4 x as many EVs as U N T R A I N E D

Never a Dull Moment

scott DuBe, PaRtneR at McgoveRn HyunDai Rt. 93, RePResents naDa’s MassacHusetts MeMBeRs on tHe naDa BoaRD of DiRectoRs. He can Be ReacHeD at sDuBe@ McgoveRnauto.coM.

There are a number of issues we at NADA have been working on that would directly impact our dealership operations adversely if they go in the wrong direction. There is never a dull moment for the legislative and regulatory folks at NADA in this age of an overly intrusive federal government, seeking to alter all components of the market economy. Here is an update on our ongoing battles:

EPA Emissions Rule

The Environmental Protection Agency’s final vehicle emissions rule, which solidifies greenhouse gas (GHG) standards for model years 2027 through 2032, remains far too aggressive and far ahead of consumer demand. America’s franchised new-car and truck dealers will continue to:

• Promote electrification with billions of dollars in investments in facilities, training, and inventory;

• Urge the Administration to track actual EV sales versus projections and make necessary adjustments to its de facto EV mandates to reflect actual consumer demand; and

• Support Congressional Review Act resolutions or appropriations riders that would disapprove or prevent funding for the Administration’s final rule. On May 1, CRA resolutions to undo the final rule were introduced by Sen. Pete Rickets (R-Nebraska) and Rep. John James (R-Michigan).

Our experience working with consumers every day makes us highly skeptical that consumers will adopt EVs anywhere near the levels required. The charging infrastructure is not ready, the current incentives are not sufficient, and high EV prices will price out millions of consumers, particularly low-income Americans, from the new-car market.

FTC Vehicle Shopping Rule

The Vehicle Shopping Rule is terrible for consumers and contains draconian penalties for dealers. Complying with it will add massive amounts of time, complexity, paperwork, and cost to car buying and car shopping for tens of millions of Americans every year.

NADA’s aggressive legal and legislative strategy to stop the

FTC’s Vehicle Shopping Rule from taking effect is progressing as planned. In March, NADA and the Texas Automobile Dealers Association (TADA) filed the opening brief in support of our Petition for Review of the Vehicle Shopping Rule in the U.S. Court of Appeals for the 5th Circuit. The brief outlines the numerous reasons why the Vehicle Shopping Rule violates federal law and should be set aside. An additional six outside groups – including ATAE, NIADA, AFSA, and the U.S. Chamber of Commerce – each filed amicus (friend of the court) briefs in support of the NADA/TADA Petition. The FTC’s delay of its own rule pending this judicial review remains in place.

The FTC’ filed its reply brief in mid-May. NADA and TADA’s brief in response to the FTC is due to the court on June 13. After that, the case will be assigned to a three-judge panel. NADA will then request oral arguments, which could take place as early as Summer 2024.

In Congress, NADA continues to rally support for legislation – “FTC REDO Act” – that would nullify the rule and require the FTC to follow basic regulatory safeguards (the essential ones it failed to perform in the first place) before it could redo the rule. Additionally, NADA is seeking an amendment (called a “rider”) to a fiscal year 2025 appropriations bill in order to deny the FTC funding for fiscal year 2025 to enforce the Vehicle Shopping Rule.

So-called “Right to Repair” Legislation

NADA is working diligently to prevent so-called “right to repair” legislation from advancing in Congress and will vigorously defend dealers should such legislation gain momentum.

In November 2023, a so-called “right to repair” bill was reported out of the House Subcommittee on Innovation, Data and Commerce despite numerous bipartisan concerns about the legislation.

NADA, alongside ATAEs and Directors, has been engaged in an effort to educate Members of Congress about the true nature of this legislation, which would require OEMs to provide any third-party remote, bidirectional access to all vehicle-generated data “without restrictions or limitations,” including data unrelated to the servicing of the vehicle.

The information independent repair shops need to repair vehicles, including service information, tool information, and training data, is readily available to independent repair shops. But so-called right-to-repair legislation has little to do with repairing vehicles; instead, it compels OEMs to provide any aftermarket parts manufacturer with the information necessary to produce or offer their own compatible aftermarket parts, including safety-critical parts. Passage of this bill would create significant privacy, cybersecurity, automotive safety, and IP concerns.

Hyundai-Amazon

NADA has been persistently engaged with Hyundai, the Hyundai National Dealer Council, and Amazon since the announcement of the Hyundai-Amazon pilot program for vehicle marketing and shopping. NADA’s immediate engagement prompted Hyundai to quickly clarify to its dealers that, while the pilot program would allow marketing and listing of Hyundai vehicles on the Amazon platform, vehicle sales would continue to take place at Hyundai dealerships.

At the request of the Hyundai Dealer Council and Hyundai, NADA’s focus has been on assisting the Hyundai Dealer Council in its efforts to address all questions and concerns about this pilot program and larger partnership. NADA is aware that these discussions between the Hyundai Dealer Council working group, Amazon, and Hyundai are continuing in good faith.

The poor wording and rollout of the Hyundai-Amazon announcement in November understandably resulted in a wave of inaccurate reporting as well as deep concern across the auto industry (both dealers as well as other automakers) about the program and its potential ramifications for Hyundai dealers as well as dealers of other brands.

Ford

NADA continues to communicate dealer concerns with Ford, especially as relates to Model e and the improvement of their working relationship with their U300 dealers, formerly known as Select Dealers. NADA will continue to request that Ford consider adjusting the Model e program based on current EV market adoption realities.

In January 2024, Elena Ford visited NADA HQ in Tysons, Virginia, for a day-long discussion on dealer concerns, dealer training, and federal policy actions that impact dealer and OEM operations. NADA and Ford were scheduled to meet in May to discuss the dealer attitude survey results.

Readers may recall, Ford announced, in late 2022, the Model e program aimed at setting new standards for dealers to qualify to sell and service Ford’s EV vehicles. This program not only mandated EV-related infrastructure at dealerships, but also obligated dealers to spend money on new software systems, training expenses, and in-store technology. Ford’s own estimates put this cost at well over $1 million for many dealers. Also included in the Model e program were mandates to change a dealer’s sales process, service process, inventory stocking strategy, job requirements, and qualifications. Since the announcement date, Ford has suffered an endless wave of dealer dissatisfaction based on the cost, complexity, and, in some cases, adjudicated illegality of the Model e program.

Sony/Honda and VW/Scout

NADA has met with and continues to communicate with leaders of both Honda and VW to express dealer concerns

that each may be attempting to implement a direct-sales retail model for its new brands. Although neither company has yet to publicly announce its distribution channel for the newly created brands, NADA will continue to proactively discuss this topic with each company and respond accordingly once a public statement is made by either regarding the distribution channel for these brands. Additionally, NADA had a meeting with VW in early April and asked for introductions to the U.S. Cupra team to discuss their planned market entry as reported in Automotive News.

Readers may recall, Volkswagen Group announced, in late 2022, the rebirth of the Scout brand, designed to be an allEV SUV/Truck brand. No distribution method was specified at the time, nor has one been announced or specified since. And in January 2023, at the Consumer Electronics Show, Sony announced a new car brand, built in partnership with Honda. There was no discussion of dealers being allowed to sell these vehicles, but the initial conversation left open the possibility that dealers would be allowed to service them.

Any direct-sales model would, to say the very least, undermine any automaker’s relationship with its franchised dealers, all of whom have made significant investments in their current and any future brands.

I will continue to provide updates as NADA activities progress on each of these critical matters. If you have any questions, I can be reached at sdube@mcgovernauto.com.

“Volkswagen

Walks Back EV-or-Bust Strategy That Rankled Rivals”

Bloomberg News

Volkswagen AG’s all-in on electric vehicles plan is no more.

The namesake VW brand, which pitched its ID family of electric cars as central to its future, admitted last week it will need more plug-in hybrids as EV sales decelerate.

This marks just the latest adjustment VW has made to its electrification strategy after the company botched several model releases and fell behind in China, where local brands now dominate. The manufacturer has also shelved efforts to seek outside investors for its battery unit and scrapped plans for a €2 billion ($2.2 billion) EV factory in Germany.

In fact, the automaker is selling so many cars still running on combustion engines that it’s on track to overshoot its emissions allowance next year, leading Chief Executive Officer Oliver Blume to ask European regulators for leniency. It’s a sharp turnabout from only three years ago, when VW’s aggressive lobbying for EVs in the European Union opened up rifts between the company and some of its peers in the region.

VW had little choice but to lean into its electrification messaging after having bet heavily on “clean” diesel en-

gines. That wager went sideways when the company was caught cheating on emissions tests, which forced a hard pivot to battery-powered vehicles. By 2019, then-CEO Herbert Diess announced to launch as many as 75 all-electric models over the next decade.

His EV-or-bust strategy — Diess argued that automakers needed to change quickly if they wanted to survive — rankled executives from Turin to Tokyo who wanted more time and flexibility to make the transition from combustion cars. The CEO even lauded what he saw as an early-mover advantage.

Electric mobility “has won the race,” Diess said when presenting VW’s battery strategy in 2021. “Many in the industry questioned our approach. Today, they are following suit, while we are reaping the fruit.”

While those spoils haven’t been as plentiful as VW hoped, the company isn’t U-turning from electric cars entirely.

Blume is striking partnerships with companies including Xpeng Inc. and preparing a new EV brand in China, offering models kitted out with gadgets like an in-car avatar to win back young consumers lost to BYD Co. and Tesla Inc. VW also has been in discussions with European peers including Renault SA about developing cheaper EVs to win over mass-market car buyers.

VW isn’t alone in having to recalibrate as a result of the EV slowdown. Countries including Germany and Sweden have ceased or pared back subsidies for electric cars that still tend to be more expensive than combustion counterparts, which has hurt the broader sector. Gaps in public charging networks also continue to turn off potential buyers.

Stellantis NV said Tuesday it will sell cars co-developed with a Chinese partner in Europe from September as it tries to lower the cost of its electric offerings. Mercedes-Benz Group AG has stopped development of underpinnings for new electric luxury sedans to save money and plans to sell cars running on gasoline longer than expected. BMW AG, which has had more success selling EVs than its German rivals, still warned this week that the EU’s plan to effectively ban new combustion-engine vehicle sales by 2035 will hurt the industry. European regulators are set to review the policy in 2026.

The slowdown has dealt a serious blow even to Tesla, which has lost $235 billion in market capitalization this year, more than triple VW’s current valuation. CEO Elon Musk has nevertheless criticized carmakers for backtracking.

“The EV adoption rate globally is under pressure, and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead,” Musk said last month when discussing Tesla’s first-quarter earnings. “We believe this is not the right strategy, and electric vehicles will ultimately dominate the market.”

“A

US-China EV Trade War Threatens Biden’s Clean-Car Agenda”

Reuters

The Biden administration’s plan to slap heavy new tariffs on Chinese electric vehicles and batteries would provide temporary protection for U.S. auto jobs, potentially at the expense of White House efforts to fight climate change by accelerating U.S. EV adoption.

Few Chinese-made EVs are currently sold in the United States, so the immediate impact on consumers of higher EV tariffs would be minimal, analysts said. The White House also plans to more than triple tariffs on Chinese EV batteries and battery parts to 25%. Graphite, permanent magnets used in EV motors and other EV minerals would get new 25% duties added. These tariffs could affect a broader range of vehicles.

U.S. President Joe Biden’s administration issued tailpipe pollution standards in April designed to drive the share of electric vehicles up from 8% last year to as much as 56% by 2032. Automakers have warned that hitting the EV targets will be challenging, in part because different Biden administration rules deny federal subsidies to EVs that get too much content from China.

Without access to lower-cost batteries and battery materials made in China, EVs will be too expensive for mainstream U.S. consumers, automakers have said.

U.S. automakers exported 155,337 vehicles worth $6.3 billon to China in 2021, according to the most recent U.S. government data. China sent just 64,067 vehicles to the United States in the same year, worth $1.45 billion. Most of the vehicles imported from China were sold under U.S. brands, led by General Motors’ Buick division.

At present, four vehicle lines sold in the United States are made in China, according to government data: Ford’s Lincoln Nautilus SUV, the Buick Envision SUV, the Polestar 2 and Volvo’s S90 sedans. Polestar and Volvo are affiliates of Chinese automaker Geely.

Chinese retaliatory tariffs that targeted U.S. vehicles could hurt workers at the BMW factory in Spartanburg, South Carolina, which sends about 25,000 vehicles to China per year, or the Mercedes-Benz SUV plant in Alabama that builds electric SUVs sold in the world’s largest market.

A clean-technology trade war between the United States and China could also drive up the costs of EVs, batteries and other EV hardware, keeping overall EV prices high, industry executives and some analysts said. EVs wearing U.S. brands, such as the Mustang Mach-E or Tesla Model 3, have 30% to 51% Chinese content, according to U.S. Transportation Department data.

“From the battery, from the mining, from all the technology integration, the Chinese supply chain now is the leading supply chain. It’s the best,” Stella Li, head of Chinese

EV and battery maker BYD’s operations in the Americas, said at the Milken Conference last week. “Why don’t you allow a U.S. company to have the freedom to choose the best supplier?”

Even before Biden’s action on Tuesday, electric vehicles had taken a central position in the U.S. presidential race. EVs are now symbolic in partisan debates over climate policy and how the U.S. should respond to China’s efforts to dominate critical technologies in the 21st century.

Democrat Biden and his presumptive Republican opponent Donald Trump agree on very little, except when it comes to using steep tariffs and other trade barriers to keep Chinese EV makers out of the U.S. market. Biden and Trump are betting that anti-China trade policies will appeal to voters in swing states such as Michigan, Wisconsin and Pennsylvania, which depend on manufacturing jobs.

Experts are divided over whether stronger tariff protection will help U.S. automakers in the long run, or work to the benefit of consumers.

“The tariffs buy important time,” said Michael Dunne, a consultant who has watched the Chinese auto industry for years. “The U.S. is five to seven years behind China when it comes to electric vehicles and battery supply chains.” China protected its automakers in the 1990s and 2000s, Dunne said. “U.S. political leaders could rightly say we are just borrowing a page from China’s playbook.”

Advocates of speeding up the pace of EV adoption to cut U.S. carbon dioxide emissions warn that reducing pressure from Chinese EV manufacturers will backfire.

Longer-term, Detroit automakers sheltered from Chinese competition could replay the experience of the 1970s and 1980s, when import restrictions on imported Japanese cars gave the domestic automakers a reprieve from lowpriced rivals.

Those trade barriers encouraged Toyota, Honda and Nissan to transplant their lean production systems to new U.S. factories. The success of North American-made Japanese vehicles forced General Motors, Ford and the former Chrysler, now called Stellantis, to shed thousands of jobs and undergo painful overhauls in the 1990s.

BYD’s recent announcement that it plans to build an electric pickup truck in Mexico transforms a hypothetical threat into a real one for incumbent U.S. automakers. A Mexican-made EV with sufficient North American-sourced parts could qualify for tariff-free entry to the U.S. market.

“If General Motors, Ford and Stellantis don’t have to compete against foreign companies that make EVs, they won’t make them. The market will go to BYD. And the Americans will lose market share like they did in the 1970s,” said Daniel Becker of the Center for Biological Diversity, an environmental group that has pushed the Biden administration for stronger climate policies.

It is not clear how China will respond to the Biden tariff moves. When Europe threatened to hike tariffs on Chinese-made EVs, China responded by threatening steep duties on French cognac.

GM President Mark Reuss last week downplayed the risk that Chinese authorities could make life more difficult for the Detroit automaker’s Chinese operations, which dipped into the red during the first quarter of this year. Two of GM’s biggest brands in China are U.S. names: Chevrolet and Buick.

“For us in China this has been a great advantage for us to be partnered so deeply for so many years with our JV partners,” SAIC and Wuling, Reuss said. In China, Reuss said, Buick is seen as both an American and Chinese brand.

“It’s not as clean or as crisp as you might indicate from a more global, geopolitical standpoint,” he said.

“Hybrids Delivering Cash Chest for Toyota, Honda’s EV Ambitions”

Bloomberg News

When Toyota Motor Corp. introduced the world’s first hybrid gasoline-electric vehicle in 1997, it made a loss on every Prius it sold. Decades later, booming sales in the category are delivering a much welcome cash boost.

The world’s largest auto manufacturer recently reported annual operating profit of ¥5 trillion ($32 billion), the first time any Japanese company reached that threshold, with an industry-topping margin of 11.9%. Hybrid sales jumped 32% to 3.59 million units, accounting for one out of every three cars Toyota sells.

With the shift to battery-electric vehicles clearly taking much longer than anticipated, consumers are voting for hybrids with their wallets. That gives Toyota, Honda Motor Co. and other carmakers with hybrid lineups an opportunity to gather up cash that can then be reinvested in the long transition to fully-electric cars.

The profitability of Toyota’s hybrids versus gasoline-engine cars are “now the same, and in some cases more for some models, which means that the more we sell, the more they will contribute to profitability,” Masahiro Yamamoto, an operating officer in the accounting group, said at Toyota’s post-results briefing on May 8.

The cost to manufacture hybrid vehicles is now a sixth of the level compared with when the Prius debuted. Toyota forecasts 4.48 million hybrid vehicle sales in the current fiscal year through March 2025, giving the company a decent chance of reaching its goal of 5 million units ahead of its goal for next year.

Honda has also improved the profitability of its hybrids, Chief Executive Officer Toshihiro Mibe said at the carmaker’s earnings news conference on March 10. Excluding EVs, Honda’s four-wheeler business should be able to

post an operating profit margin of around 8% this fiscal year, according to the CEO. The low profitability of the unit has been an issue for years; the margin stood at 4.1% last year, following a ¥16.6 billion loss in the prior period. Hybrids are “very competitive, including on the cost front,” he said.

Honda is now targeting hybrid sales of about 1 million units this fiscal year, up from approximately 800,000 in the latest period. Mibe said he’s laying the groundwork and working with suppliers to build capacity to 2 million units annually, in anticipation of greater demand.

Nissan Motor Co. is also seeking to capitalize on the hybrid boom. In its medium-term management plan announced in March, the Japanese carmaker said it’s planning to introduce models employing its proprietary “e-Power” hybrid technology in the US market in fiscal 2026.

It’s not just Japanese automakers leaning more toward hybrids. Ford Motor Co. is planning to double production of hybrid versions of its F-150 pickup and lower prices to match the gasoline model. South Korea’s Hyundai Motor Co. reportedly has plans to enable its EV plant being built in Georgia to also be able to manufacture hybrids.

Even Japan’s smaller automakers are following the trend. Mazda Motor Corp. President Masahiro Moro said last week that carmaker plans to develop hybrids using its SkyActive engines to deliver improved performance for its CX-5 models.

“The media, investors and dealers are all talking about ‘hybrids, hybrids, hybrids,’” Moro said. “The perception has changed dramatically.”

“Americans Still Prefer Gas Vehicles Over Hybrid or EVs, Study Shows”

Reuters

Americans still prefer to buy a standard gas vehicle over a hybrid or an electric vehicle even with the same price and features, concluded a KPMG study released on May 30.

Only one-fifth of people surveyed said they would purchase an EV over a gas-powered vehicle or hybrid vehicle.

The show of preference comes amid a global slowdown in demand for electric vehicles, resulting in global automakers such as Ford, General Motors, and Mercedes rethinking their EV plans.

The study shows a gap in expectations between U.S. consumers and auto industry executives for EV charging times during road trips. Sixty percent of U.S. consumers want charging in 20 minutes or less compared with 41% who are willing to wait longer according to auto executives, the study said.

The study also found fewer consumers are likely to pay for self-driving features and entertainment as compared to safety, Wi-Fi, and charging locator.

KPMG’s American Perspectives Survey includes auto insights as part of a broader KPMG cross-industry survey of

1,100 U.S. adults nationwide on the economy and changing consumer preferences.

“Minnesota

Dealership Gives Local Single Mothers a ‘New Reality’”

By catHeRine yoRk, naDa, ManageR, coMMunications

Richard Herod III grew up in a single-parent household. He knows the time and resources single parents dedicate to their families every day to ensure they are healthy and happy. Now, as the vice president and managing partner of White Bear Mitsubishi in Vadnais Heights, Minnesota, Herod is giving back to families like his.

Since 2019, White Bear Mitsubishi has worked with the Newgate School for their annual 12 Moms of Christmas event, where they give away vehicles stuffed with presents to a dozen single moms in the community.

“For these moms, it’s not just about the gifts. It’s about their new realities of having transportation and being able to get around,” Herod said during the inaugural Philanthropy Pitch Competition at the 2024 NADA Show Live Stage, where the dealership was one of six finalists.

The Newgate School, a non-profit automotive technical school that provides tuition-free training for underserved young adults in Minnesota, has been supplying single mothers with vehicles for 40 years.

White Bear Mitsubishi has brought on a community of supporters in their work with the Newgate School. Local businesses donate gift cards to include with the vehicles. And other dealerships have joined the effort, including Apple Autos with various locations in Minnesota, Friendly Chevrolet in Fridley, Minnesota, Gilleland Chevrolet in St. Cloud, Minnesota, Miller Nissan in St. Cloud, Minnesota, and The Bear Lot in Mounds View, Minnesota.

The success stories Herod shared speak for themselves:

• Yolanda and her kids were walking four miles to and from school every day. With her new vehicle, she got two hours back in her day.

• Before getting her own vehicle, Destiny was spending $1,000 a month on ride shares and had to turn off her cell phone at the end of each month to make ends meet.

In the last five years, the dealership and their community sponsors have given away 60 vehicles. The vehicle recipients also receive a credit for $500 of service at the dealership. In 2023 alone, the value of the cars and gifts totaled over $84,000.

White Bear Mitsubishi is not the only franchised dealership to recognize the independence and opportunities offered by access to a vehicle. This March, four Virginia and Maryland dealers donated vehicles to the nonprofit Vehicles for Change through an NADA initiative supporting personal mobility.