May Auto Dealer Magazine

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

auto M a s s a c h u s e t t s

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

May 2013 • Vol. 26 No. 5

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

Annual Meeting

2013

June 21 Marriott Long Wharf Boston

Ma s s a c h u s e t t s

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St a f f D i r e ct o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Paul Fellows Administrative Assistant/ Membership Coordinator pfellows@msada.org Aut o D e a l e r M Ag a z i n e Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: pfellows@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail tnash@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400

Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600

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

Ta b l e o f C o n t e n t s

4 6 9 10 12

From the President: Standing Together THE ROUNDUP: At a Snail’s Pace financial services: Don’t Freeze Up All of Your Assets AUTO OUTLOOK INSURANCE: Premises Liability

14 Cover Story: Annual Meeting Lineup

13 18 23 25

LEGAL: Are F&I Products in CFPB’s Crosshairs?

NEWS From Around the Horn NADA UPDATE: CFPB Guidance Lacks Transparency Economic Update: Benefits of Affordable Domestic Energy

Ad Directory BlumShapiro, 20 Boston Herald, 28 Lynnway Auto Auction, 18 Nancy Phillips Associates Inc, 2 O’Connor & Drew, P.C., 27 Southern Auto Auction, 21 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Join us on Twitter at @MassAutoDealers

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Massachusetts Auto Dealer MAY 2013

from the President

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by Scott Dube, MSADA President

Standing Together

See you at the Annual Meeting on June 21

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Our Annual Meeting is meant to serve as a part of how we keep t seems like every year franchised Massachusetts dealers face you informed. It is arguably one of the most important parts, as it some new regulatory or legislative challenge. As we’ve been seeserves the dual role of helping us keep our organization transparing these past few months, what’s been going on with Tesla’s ent and informing you of just what the landscape ahead will look attempt to exclude themselves from our Commonwealth’s laws like. We can’t predict the future, but we all should make an effort has been one of the most aggravating and potentially damaging to try to see what threats are in front of us. challenges we’ve seen in some time. Have you thought about This year, in addition to an update from Executive Vice Presiwhat Chinese or Indian manufacturers might do if they can just dent Robert O’Koniewski, we’ll hear from industry experts such sell cars here via an internet site, out of the reach of the laws of as George Magliano and others who will lay out what they see Massachusetts? coming down the pike. Others will provide updates on regulatory But how much have you been able to follow the twist and turns actions that could affect all of our bottom lines – for positive and of this case? Have you been able to go to selectmen meetings negative. We have a very interesting in Natick? Attend the multiple slate of speakers lined up for this court hearings?

As a member dealer, I want you to that you won’t want to miss.

I’m guessing not. We’re busiknow that we are working every day year Of course, it’s also a chance for nessmen and women who wake to combat the multitude of forces us to get together and enjoy being in up every morning with challengone place at one time. The Marriott es of our own busy work lives. working against all of us.

Long Wharf is a great facility right Most of us barely have 10 minon the water, and with a little luck it will be a beautiful first day utes to read the newspaper, much less learn the ins and outs of of summer where we can talk shop and enjoy a drink. We have how Tesla is attempting to justify not following our franchise law. also reserved a block of hotel rooms, so that hopefully you’ll take That’s why MSADA is here. As a member dealer, I want you advantage of a night out in the great city of Boston. to know that we are working every day to combat the multitude Please be sure that you have sent in your registration form as of forces working against all of us. But as we’ve seen time and soon as possible, noting whether or not you would like to spend again, it’s important for all of us to stay as “plugged in” to what’s the night. We are also providing a lunch as well. Please send the going on as possible, so that when the time comes we can leverforms back to jfabrizio@msada.org. age our grassroots strength of 20,000 employees across the state.

I look forward to seeing you there. It will be my first time leadIt’s important to remind ourselves and our friends in Governing the Annual Meeting, and I am beyond excited to see what ment that we have over 20,000 employees and represent about 20 ideas and questions my fellow dealers will bring to the table. percent of the retail economy here. As seen through other numbers While we can’t expect everyone to dedicate a lot of resources presented in the MSADA Economic Impact Study we released fighting for our industry every day, we should celebrate this rare last year, politicians should realize that they will look to make us a punching bag at their peril. We are one of very few industries that opportunity to all be together in the same room. We’re in this together, and there is no better way to show it. have a large impact across every corner of the Commonwealth. t We are always working to make sure they remember that.

MAY 2013

Massachusetts Auto Dealer www.msada.org

MSADA

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A ssociate M ember D irectory Name

Msada Board Barnstable County Gary Beard, Dick Beard Chevrolet

Berkshire County Brian Bedard, Bedard Brothers Auto Sales

Bristol County Richard Mastria, Mastria Auto Group

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

Franklin County Jay Dillon, Dillon Chevrolet

Hampden County Jack Sarat, Jr., Sarat Ford

Hampshire County Bryan Burke, Burke GMC

Middlesex County Chris Connolly Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai

Norfolk County Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree

Plymouth County Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County Robert Boch, Expressway Toyota

Worcester County Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

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

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

NADA Director Don Sudbay Jr., Sudbay Motors

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

Contact Telephone

ADESA Boston Chris Carli (508) 270-5403 ADP Dealer Services Maria Trezza (973) 974-4020 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Tom Trudell (413) 885-5477 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Maryanne Recupero (800) 991-1770 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly (617) 929-8373 The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 Curran EasyCare Inc. Mike Douglas (770) 246-9724 CVR Scott Herbers (800) 668-2332 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company James Downey (781) 849-3100 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Chris Welch (724) 766-6666 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Grant Thornton LLP Alan Oslomowski (508) 926-2200 Huntington National Bank John J. Marchand (781) 326-0823 Jewett Construction Alison Jewett (603) 895-2412 Key Bank James Q. Moretti (781) 558-5132 Leader Auto Resources, Inc. John Ackermann (518) 857-8853 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp LLC Ryan Kim (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 Ray-Jurgen Richard Thibadeau (860) 585-0111 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Resource Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 Sovereign Bank Richard Anderson (401) 432-0749 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 Wells Fargo Dealer Services Christopher Peck (508-314-1283) Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (800) 443-4513

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Massachusetts Auto Dealer MAY 2013

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The Roundup

At a Snail’s Pace

by Robert O’Koniewski, Esq. MSADA Executive Vice President Massachusetts is unique in that we have a full two-year legislative session, with no scheduling benchmarks along the way by which time a bill needs to move out of committee or die. Unlike some states where a 120-day session is not unusual, our Legislature uses the full allotment of time given it to deliberate, contemplate, cogitate, ruminate, and negotiate over the 5,000 plus bills filed currently.

As we go to press, several of the standing committees on Beacon Hill have just begun to draw up their schedules for public hearings to eventually take testimony on the bills within their purview.

Some have even held a hearing or two. For many of the committees, however, June appears to be the month in which they will kick off their hearings.

The committee that has a large number of our issues before it – the Joint Committee on Consumer Protection – is one such committee that will use June to kick off the bulk of its hearings. Other committees of interest to us our Financial Services, Transportation, Revenue, Labor and Workforce Development, and Public Safety.

In reviewing the hundreds of bills that impact dealerships directly to various degrees, we compiled a list of those that will most likely receive immediate attention in the weeks ahead: • 93B Franchise Law: Senate 129, filed by Senator Marc Pacheco and in the Consumer Protection Committee, would amend the dealer franchise law, MGL Chapter 93B, to address a number of issues, including the following: 1. Amends the price discrimination prohibition protection for dealers to identify the type of facility upgrade programs that violate price discrimination protections; MAY 2013

Massachusetts Auto Dealer www.msada.org

2. Prohibits vehicle surcharges by manufacturer to pay for warranty reimbursement at the statutorily required retail rate; 3. Clarifies the current limit on the manufacturer ownership of dealerships and direct sales of vehicles by manufacturers; 4. Protects dealers from investing in costly facility upgrades under the threat of termination when the dealer does not have a reasonable expectation to recoup the investment; 5. Limits how often the manufacturer can request a facility upgrade; 6. Places the burden on a manufacturer to justify the financial benefits of a facility upgrade; 7. Eliminates backdoor facility upgrade demands through untenable incentive programs; 8. Prohibits a manufacturer from requiring a dealer to purchase goods or services from a vendor selected, identified, or designated by a manufacturer or distributor by agreement, program, incentive provision, or otherwise without making available to the dealer the option to obtain the goods or services of substantially similar quality from a vendor chosen by the dealer; and 9. Protects dealers from manufacturers’ using export chargebacks to penalize dealers for cars that get exported without dealer’s knowledge.

• Right to Repair: The gift that keeps on giving, “right to repair” just will not go away. The passage of the RTR deal last July by the Legislature was complicated with the voter’s approval of an initiative petition at the November ballot that created a competing law which conflicts with much of the legislative deal. Rep. Garrett Bradley has filed House 184 to re-enact the legislative deal; behind this “deal” bill are MSADA, the manufac-

MSADA turers, and the Right to Repair Coalition.

Fighting this effort is AAA, which has its own competing bill, House 254, filed by Rep. Paul McMurtry, that would re-enact the initiative petition. Additionally, certain truck and motorcycle repair interests are trying to eliminate any exemption for the manufacturers of those vehicles. These bills are in the Consumer Protection Committee.

• Doc Prep Fee Cap: Sen. Jim Eldridge has filed a bill, Senate 95 in the Consumer Protection Committee, which would statutorily cap the doc prep fee at $75 – an amount that is most likely less than what you’ve calculated yours to be.

• Techs’ Flat Rate Pay: Rep. John Binienda has filed a bill for a constituent, House 1696 in the Labor and Workforce Development Committee, that would eliminate the OT pay exemption for auto techs.

• Auto Body Labor Rate: Rep. KathiAnne Reinstein (House 969), Sen. Jim Welch (Senate 497), and Rep. Carlo Basile (House 844) have each filed bills in the Financial Services Committee that would create a process for increasing the insurance reimbursed labor rate to auto body repairers. It has passed in the Senate a couple times in the past (but not last year) and got through the House for the first time last session, albeit at the very end. Strongly opposed by insurance interests, who are committed to keeping Massachusetts last in the country for a reimbursement rate at $36/hour.

• Tesla Store: As we battle Tesla in court, Rep. David Linsky has filed a bill, House 241 in the Consumer Protection Committee, which would allow Tesla to open a factory-owned store outside the explicit prohibition in 93B against OEM-owned dealerships.

• Service Contracts: Sen. Barry Finegold (Senate 440) and Rep. John Mahoney (House 247) have filed bills in the Financial Services Committee and the Consumer Protection Committee, respectively, that would alter the manner in which dealerships offer for sale and sell service contracts to their customers.

• RMA Change: Rep Jonathan Zlotnik has

a bill in the Consumer Protection Committee, House 309, that would reduce from 14 miles to 10 the relevant market area as set in 93B for dealers in Barnstable, Berkshire, Franklin, Hampshire, and Worcester counties.

These bills are in addition to the scores of proposals in the Revenue Committee dealing with sales tax, trade-in, EVs, luxury tax, tax holidays, etc.

The Commonwealth Fisc The House and Senate have created a conference committee to resolve the differences between their tax bills passed earlier in the year. The bad news for taxpayers and businesses – the gas tax and certain other items are going up; the good news, relatively speaking – the $500 million each is seeking, most in gas tax hikes, is considerably less than the multi-billion dollar tax plan the governor sought.

Finally, as we go to press, the Senate is preparing to take up and pass its own version of the FY2014 budget. It will take up its proposed $34 billion spending plan the week before Memorial Day. Readers may recall, the House passed its own $34 billion budget for FY2014 back on April 24; this was at least $1 billion less than the governor’s proposed plan.

Once the Senate finishes its action in time for members to enjoy the holiday weekend, a House-Senate conference committee will be created to resolve the differences between their spending plans, ideally in time for the July 1 start of the new fiscal year.

CARFAX Lawsuit On April 23, Bellavia Blatt Andron & Crossett, PC, filed a $50 million mass action lawsuit on behalf of 120 automobile dealerships against CARFAX, Inc. The suit, filed in U.S. District Court for the Southern District of New York, alleges that CARFAX abuses its monopoly of the vehicle history report market by excluding competitors. In particular, the suit alleges that CARFAX violates current antitrust laws by paying key industry players to not recognize competitive vehicle history rewww.msada.org

port providers.

Instead of focusing resources on developing accurate vehicle history reports and making them available at fair prices, CARFAX allegedly used revenue obtained from dealers who subscribe to CARFAX’s services to form exclusive deals with key websites and the OEMs. CARFAX also grew its own brand at the expense of the dealers through disparaging advertisements that portray dealers as dishonest.

Dealers from New York, New Jersey, Connecticut, Arizona, Maryland, Washington, Wisconsin, Vermont, Delaware, Florida, Virginia, California, Massachusetts, Illinois, Montana, Texas, and Pennsylvania have joined the suit against CARFAX. Bellavia Blatt has added an additional 100 dealerships to the lawsuit since the complaint was filed, and the number of dealers wishing to join the case grows daily.

The suit against CARFAX seeks, among other relief, damages totaling $50 million incurred by dealers for having to pay more to CARFAX for VHRs than they would have paid in a free and competitive market, and injunctions barring CARFAX from continuing its illegal practices. The antitrust laws entitle prevailing dealers to recover attorneys’ fees and treble damages. According to a statement from Bellavia Blatt, the range of expected damages available to plaintiffs in the suit is $108,000 for lower-volume dealers, up to $325,000 for higher-volume dealers.

Moreover, it should be noted that dealers can continue to do business with CARFAX during and after the lawsuit.

The lawsuit seeks: (a) Recovery of treble damages, which equal over-payments made by dealers multiplied by three; (b) Reduced pricing resulting from new providers allowed to compete; and (c) Higher quality vehicle history reports because of increased competition for CARFAX. Dealers interested in learning more about the case should visit the firm’s website, DealerLaw.com, and click on the continued on next page Massachusetts Auto Dealer MAY 2013

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The Roundup from previous page “Join the Dealer Litigation against CARFAX” box. From there dealers can review key documents to decide if they wish to join the case. These documents include a whitepaper outlining the legal theories of the case, and sample calculations for determining potential treble damages per dealer. Dealers who wish to join the lawsuit should send an email to Leonard Bellavia at LBellavia@DealerLaw.com.

FTC Revises Online Ad Disclosures Guidelines The Federal Trade Commission has released new guidance for mobile and other online advertisers that explains how to make disclosures clear and conspicuous to avoid deception.

The new FTC staff guidance, entitled, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, takes into account the expanding use of smartphones with small screens and the rise of social media marketing. It also contains mock ads that illustrate the updated principles.

Like the original guidance document issued in 2000, the updated guidance emphasizes that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio, or print.

If a disclosure is needed to prevent an online ad claim from being deceptive or unfair, it must be clear and conspicuous.

Under the new guidance, this means advertisers should ensure that the disclosure is clear and conspicuous on all devices and platforms that consumers may use to view the ad. The new guidance also explains that if an advertisement without a disclosure would be deceptive or unfair, or would otherwise violate an FTC rule, and the disclosure cannot be made clearly and conspicuously on a device or platform, then that device or platform should not be used.

Like the original guidance, the updated Dot Com Disclosures calls on advertisers MAY 2013

MSADA to avoid using hyperlinks for disclosures that involve product cost or certain health and safety issues. The new guidelines also call for labeling hyperlinks as specifically as possible, and they caution advertisers to consider how their hyperlinks will function on various programs and devices.

The new guidance points out that advertisers using space-constrained ads, such as on some social media platforms, must still provide disclosures necessary to prevent an ad from being deceptive, and it advises marketers to avoid conveying such disclosures through pop-ups, because they are often blocked.

FTC Eliminates Dealer, OEM Label Burden In yet more FTC news, effective May 31, the FTC will no longer require a special label for new alternative-fueled vehicles (AFVs). NADA Regulatory Affairs had strongly advocated for this change, arguing that alternative-fuel information on the FTC label duplicated that found on EPA’s revised fuel economy label. The FTC also has eliminated its AFV label mandate for used vehicles, agreeing with NADA that such labels were of limited usefulness for consumers yet imposed undue regulatory burdens on dealerships.

DEAC & NCDPAC Each year MSADA expresses itself politically through NADA’s federal PAC, Dealers Election Action Committee (DEAC), and through our state PAC, the New Car Dealers Political Action Committee (NCDPAC). We depend on contributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Every dealer should be contributing to both PACs every year. It is an inexpensive insurance policy. Defeating the original right to repair bill, which would have severely hurt your parts sales, and fighting for the dealer exemption to the federal Wall Street reform law are two great examples why we need to be strong politically. If you have not yet given to the PACs this year, please contact me at rokoniewski@msada.org

Massachusetts Auto Dealer www.msada.org

and we can make sure your contributions happen. Thank you.

Mass. Clean Cities Coalition Recently we met with Steve Russell, director of the Massachusetts Clean Cities Coalition and the coordinator of the state’s alternative transportation fuel and technology program. The Clean Cities Coalition is a program that works to encourage the use of alternative fuel vehicles (AFVs) with the help of local businesses, organizations, and state and federal agencies.

Part of a national program sponsored by the U.S. Department of Energy, the Coalition also helps support the development of the necessary infrastructure to make AFVs a viable transportation option.

One of the resources available to dealers at no cost is alternative fuel training. The Coalition is available to meet with dealers and their staff to provide the latest information and resources about alternative fuels available in Massachusetts and across the nation.

If you are interested in having a session at your dealership, Mr. Russell can be reached by phone at (617) 626-7325, or by e-mail at stephen.russell@state.ma.us.

Regional Dealer Meetings Throughout the year we continue to conduct regional meetings across the state at which we provide an update on various legislative and legal issues your Association is addressing, as well as receive input from our member dealers on issues of interest. We also invite area legislators to attend the events to encourage active dialogue between the elected officials and local dealers.

On Friday, June 7, we will conduct a dealer legislative meeting at the UMassLowell Inn and Conference Center for our members and legislators in the Lowell area. And on Friday, June 14, we will be hosting a meeting for dealers and legislators in the greater Springfield area at the Springfield Marriott. If you are in those regions, be on the lookout for our materials with the details for those meetings.

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MSADA

Financial Services

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Don’t freeze up all of your assets, but don’t have them all liquid too…

By Vincent Saccone, LUTCF and Paul Cuomo of The Boston Business Advisory Group

firewood for when you need it. Under this approach, you have established sources for solely producing income and you also have sources for your liquidity needs.

Having your assets liquid feels good. The thought of being able to access your assets at any time is very appealing. However, when it comes to generating income during retirement, having your assets liquid at all times may actually increase the risk of your assets not lasting for your lifetime. Liquidity is not a one-time event, but a lifetime event.

Create one apple tree or multiple apple trees?

Your Retirement Apple Tree Think of all of your assets as one apple tree with branches (your principal) producing enough apples (income) you need to live comfortably during retirement. In the beginning, you may think there’s no harm chopping off a branch or two (liquidity) for firewood due to the overall size of the tree. But, when doing this, you are “double counting” the asset for being equal to meeting two needs. The amount of apples produced would be lower and if you keep chopping off branches, there may come a point when your tree cannot produce enough apples and cannot grow new branches, ultimately reducing the life of your tree. No more tree, no more apples.

There are many decisions you will need to make in your life as you enter into retirement. One of the many financial decisions is what to do with the assets you had accumulated for retirement. Your paycheck is ending. It’s up to you to make a new one to last for your lifetime with your assets.

Now think of your assets as being multiple apple trees You fence off and give up your access (liquidity) to some trees so that these trees are only there to produce enough apples to cover your necessary expenses. The remaining trees are for producing apples and

Your view about retirement should be long-term because it is unknown as to how long your retirement years will be; therefore, you should explore financial products that can provide income for your lifetime and that of your spouse’s lifetime. One of the main reasons that you save for retirement is to produce income (apples) for your necessary expenditures, like paying your mortgage/rent, food and utilities, so you can live comfortably during these years. In addition, a portion of your income should be independent from and not reliant on market performance. Finishing confident is just as important as beginning confident.

Creating Your Plan Today Here are some action steps you can take today to prepare for retirement:

• Understand how your lifetime sources of income work, like Social Security, and explore possible ways to increase these sources. • Compare your retirement income with the total amount • Purchase financial products that can provide guaranteed payments for life or for the life of the surviving spouse, and that can provide protection for unexpected events.

• Follow a distribution/withdrawal plan by accessing pools of assets at certain points in time during retirement. This can help you lengthen the life of your assets, gain the potential benefit of compounding growth and systematically increase your retirement income when you need it most.

Speak with Your Financial Professional

In addition to other sources of income that you may receive during your retirement years, having a guaranteed source of lifetime income for you and your spouse may give you the confidence and ability to enjoy retirement the way that involves doing the things you love without the worry of outliving your money.

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Retirement at Risk After the market crash of 2008, percentage of American households who are “at risk” at age 65 increased to 51% (2009) from 43% (2004) according to the National Retirement Risk Index.

The National Retirement Risk Index measures the amount of American households who are at risk of not being able to support their preretirement lifestyle during retirement. This index is calculated by The Center for Retirement Research at Boston College and the report can be found at www.CRR .BC.EDU.

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Saccone & Cuomo, Registered Representatives and Saccone, Financial Advisor of Park Avenue Securities LLC (PAS), 160 Gould Street, Needham, MA 02494, 781-449-4402. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Financial Representatives, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Neither Guardian nor its subsidiaries, agents or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation. The Boston Business Advisory Group is not a registered investment advisor. The Bulfinch Group is not an affiliate or subsidiary of PAS or Guardian. Life insurance offered through The Bulfinch Group Insurance Agency Inc., an affiliate of The Bulfinch Group, Inc. The Bulfinch Group is not licensed to sell insurance. Neither Guardian nor any of its subsidiaries, employees or agents provides tax or legal advice. PAS is a member of FINRA, SIPC. 2013-6203

The Boston Business Advisory Group will address your Financial Issues on a monthly basis.

Email specific questions or suggestions for future articles to vsaccone@glic.com.

Massachusetts Auto Dealer MAY 2013

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AUTO OUTLOOK

MAY 2013

Massachusetts Auto Dealer www.msada.org

MSADA

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Massachusetts Auto Dealer MAY 2013

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Insurance

Premises Liability Help reduce these costly claims

By Steven Megee

Steven Megee is regional sales manager a t t h e F r a m i n g h a m R e g i o n a l O ff i c e f o r Z u r i c h N o r t h A m e r i c a C o mm e r c i a l ’ s P r o g r a ms & D i r e c t M a r k e t s ’ b u s i n e ss u n i t .

He can be reached at steve.megee@zurichna.com.

Slips, trips and falls cause thousands of accidents and serious injuries every year. A tragic number of cases end up in permanent injury or death, and the dollar costs associated with these cases can be tremendous. The liability connected with these and other premises issues often falls on the business owner.

These accidents also have an adverse effect on employees. An analysis of workplace losses indicates that falls from elevated areas (ladders, stairways, elevated storage areas, etc.) account for the highest severity of injuries and the most deaths. Falls occurring on level surfaces, although generally less severe, constitute the largest percentage of recordable injury. You can implement controls to help protect the general public and also help to prevent employee accidents.

Falls on Level Surfaces The major cause of these falls involves the customer tripping over objects. Customers trip over such items as telephone or electrical cords, floor-mounted outlets, defective floor surfaces, including broken or cracked tiles, frayed or loose rugs and plastic carpet covers with curled edges.

The type of floor surface often presents a hazard that is directly responsible for accidents. Even if a floor defect did not contribute to the accident, claimants often include such unsatisfactory conditions in their negligence claims.

Unsafe Floor Conditions It is essential that unsafe floor condiMAY 2013

tions such as the following be corrected promptly: • Floors exposed to moisture – In areas where moisture may be blown or tracked in during bad weather, rubber mats provide the best type of protection. Permanently installed mats recessed into the floor are preferable. Next best is a surface mat left in place at all times or at least during inclement weather conditions.

The mat should be sufficiently thick and large enough in area so as not to curl or slide easily. It should have beveled edges.

Any moisture accumulations should be promptly mopped up and dried by maintenance personnel.

• Floor spills – Clean up should be han-

Massachusetts Auto Dealer www.msada.org

dled immediately after maintenance personnel are made aware of the spill. Isolate the spill area by placing cones or barriers around it. Do not allow customers or workers to enter the area until the floor has dried completely.

• Aisle space – Aisles should be cleared and materials should not be stored in walking/working areas. All areas should be adequately lighted. Frequent inspection of aisle ways and lighting should also be included in the facility inspection activities.

• Inherently slippery floors – These include highly polished but unwaxed marble and terrazzo floors. The hazard can be reduced by covering paths of travel with suitable non-slip material such as carpet

MSADA or rubber matting. There are also terrazzos made with non-slip material added to them.

• Improperly finished floors – It is rare for a retail establishment to actually use wax on its floors. Today’s floor surfaces are generally treated with a variety of floor finishes. Most of these products are not designed to be buffed. Buffing, especially high-speed buffing, can turn a floor covering with a safe floor finish into a very dangerous, slippery floor. Application and removal of all floor finishes should be done strictly in accordance with manufacturer’s instructions.

• Tears and folds – When carpets or rugs are torn or folded over, prompt action should be taken to have the tears repaired and folded or wrinkled sections smoothed or stretched out.

• Outdoor walking surfaces – Sidewalks, curbs and parking lots also present many trip and fall hazards. Inspect these areas continually for holes, uneven surfaces and broken pavement. It is recommended that you paint curb facings a bright color to highlight the “step-up.” A comprehensive snow removal program is essential in areas of the country where it is necessary.

Falls From Elevated Surfaces The most severe type of falls occur from one level to another. Falls from chairs, stairs, ladders, elevators or other raised surfaces can cause severe injuries and, in some cases, death. According to information gathered by the Consumer Product Safety Commission and the National Bureau of Standards, there are approximately five million stair fall cases per year.

Here are some major areas of concern regarding stairs, along with corrective action: • Treads and handrails – Treads and handrails should be highlighted so that they are immediately and easily distinguished from the riser and adjacent wall surfaces. Adequate lighting is essential. If one side of a stairwell is open to an adjoin-

ing space, it is a good idea to close off the view to prevent distraction that may result in falls.

• Step or tread – The edge of a step or tread should be easy to see. If possible, use carpeting to contrast between the approach to the step and the stairs. Uncarpeted stairs should be edge marked. Consider posting “Caution – Step Down” signs where appropriate.

• Handrail – A continuous handrail must be provided. The railing should preferably be lighter in color because people seem to be more inclined to use a lightercolored railing than a dark one that looks dirty. The handrail should extend to the top and bottom of the staircase, so that it can be grasped before stepping on the step or leaving the last step.

• Stair tread – The stair tread should have good traction and be stable. Worn or defective treads or other parts should be replaced immediately.

• Obstructions – Stairs should be cleared of all obstructions. Sharp ends of handrails and guard rails should be removed or covered to prevent injury.

Other Concerns • Hot drinks – Move all coffee pots and other hot drinks out of the reach of small children.

• Play areas and toys – Don’t provide dangerous toys for young children. Nothing small enough for a child to swallow or anything inherently dangerous should be placed in customer waiting areas.

• Inspect these areas regularly to ensure that toys, furniture and equipment are in good condition. Chair collapse has resulted in premises liability claims. Look closely at electrical outlets and install “child safety plugs” in empty outlets to reduce the shock hazard and prevent children from sticking anything inside of them. If a playground or similar equipment is provided, ensure that it meets the Consumer Product Safety Commission’s recommended guidelines for playground safety – see the Handbook for Public www.msada.org

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Playground Safety.

• Onsite traffic patterns – Mark pedestrian walkways on the parking lot surface to identify safe walking paths for customers. Traffic flow in and out of your facilities should avoid areas where pedestrians commonly travel. Install speed bumps, “caution” and “stop” signs where appropriate to help control traffic.

• Display stands – Large, heavy items (tires, wheels, auto parts, etc.) are often displayed on tall, free-standing racks or shelves. Unless sufficiently stable or secured to a wall, these stands (and the items on display) can fall over on small children or adults and cause substantial injuries. Wall-mounted TV stands offer a similar exposure. Be sure to follow the manufacturer’s installation instructions closely – these stands should be fastened securely to the wall studs, not drywall.

• Overhead doors – Make sure the area is clear before closing overhead doors.

Someone walking through the area can be struck in the head as the door is closing.

• Golf carts – Thoroughly train employees on the safe and proper operation of golf carts. Customers have been thrown out of golf carts during wild turning maneuvers, sudden takeoffs and stops. Set “governors” on the golf carts to prevent excessive speeds. All occupants should remain seated and hold on to cart while it’s in motion and always set the parking brake when unattended. Customers and their children should never be allowed to operate golf carts.

• Self inspections – Periodic inspection tailored to the needs of the facility can help reduce the number of falls and premises liability incidents. The inspection should be performed by individuals trained in hazard recognition. Identified hazards should be immediately corrected to reduce exposure to customers, visitors and employees. Management follow-up is a necessity; it is important to ensure that discrepancies are corrected in a timely manner.

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Massachusetts Auto Dealer MAY 2013

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MSADA Cover Story

MSADA Annual June 21, Marriott Long Wharf Boston The lineup for the 2013 MSADA Annual Meeting includes a diverse array of industry experts and leaders who offer unique perspectives on the challenges dealers are facing now and in the future.

Rachel Kaprielian Rachel Kaprielian has been the Registrar of the Massachusetts Registry of Motor Vehicles since 2008. Prior to that, she served in the State Legislature as the representative from Watertown and Ward 9 of Cambridge. Kaprielian was elected to the House in 1994 at the age of 26, having served two terms as a councilor-atlarge in her hometown of Watertown.

Her leadership has been recognized in a number of areas, including tobacco cessation and prevention policies, early intervention and care for children, and various human services initiatives, as well as job training and education measures.

She received her B.A. from The College of Holy Cross, her J.D. from Suffolk University Law School, and her Master in Public Administration from the John F. Kennedy School of Government at Harvard University.

Kaprielian serves on the boards of various community and civic organizations, including Mt. Auburn Hospital, the Watertown Boys and Girls Club, Watertown Education Foundation, Tufts Health Plan, and Springwell Elder Services.

MAY 2013

Massachusetts Auto Dealer www.msada.org

George Magliano George Magliano is a senior principal economist at IHS Automotive. In that role he is the North and South American groups’ auto economist, responsible for relating the overall economic and market environment of North and South American light vehicle sales. He has focused on the automotive industry since 1989.

Magliano became director of Automotive Research when ECAP was acquired by WEFA, Inc. several years later. For WEFA, he supervised all global automotive research, primarily specializing in forecasting North American vehicle sales and production, as well as many Asian countries. Magliano also has developed models of international trade flows for vehicles and parts and conducted studies of the U.S. aftermarket. In addition, he has directed studies involving customer segmentation, price elasticity, and the outlook under alternative forecast scenarios.

Prior to joining ECAP and WEFA, Magliano was the senior corporate economist for J.P. Stevens, one of the world’s largest manufacturers of textiles. While there, he was responsible for all economic and industry forecasting and assisted in the development of the annual corporate business plan.

Magliano is a graduate of St. Francis College and has a Master’s degree from Fordham University. He is also a member of the National Association of Business Economists, New York Association of Business Economists, and the Society of Automotive Analysts.

Meeting Gabriel Gomez Political newcomer Gabriel Gomez is the GOP candidate vying in the June 25 special election to fill the Senate seat vacated when John Kerry resigned to become U.S. Secretary of State.

A former Navy pilot and SEAL, Gomez went back to school in 1996, received his MBA from Harvard Business School and entered the private sector.

As a principal with Boston-based investment firm Advent International, Gomez helped pension funds, endowments, and retirement systems invest for their members’ retirement. He also helped grow smaller, regional businesses into national, household names – like apparel company Lululemon.

Settled in Cohasset with his wife Sarah and their four children, Gomez coaches for the Cohasset Youth Baseball and Softball Association.

He has also served as a volunteer on a number of town committees, and is the President of the Navy SEAL Foundation of New England.

MSADA

2013

State Senator Marc Pacheco State Senator Marc Pacheco (D-Taunton) is a strong advocate for franchise dealers on Beacon Hill. He currently serves as the Chairman of the Legislature’s environmental committee as well as the Chairman of the Committee on Global Warming and Climate Change.

He was elected to the Massachusetts House of Representatives in 1988 and to the Massachusetts Senate in 1992 by the citizens of the 1st Plymouth and Bristol District. Senator Pacheco dedicated many years of service to the Taunton School Committee prior to his time in the Massachusetts Legislature. He is currently the highest ranking elected official of Portuguese descent in Massachusetts.

Senator Pacheco has prioritized the key issues of today to build a better tomorrow for the future generations of the Commonwealth. Throughout his career, Senator Pacheco has supported initiatives to spur economic growth, preserve and protect the environment, ensure the protection of rights for veterans and senior citizens, increase civic engagement, create jobs in the new “green” economy, and foster the creation of global economic partnerships.

For his work, Senator Pacheco in 1998 received a gubernatorial appointment to the government affairs committee of the Task Force on Growth and Change in Southeastern Massachusetts. Senator Pacheco was then appointed co-chair of the task force which was later named Vision 2020, a regional growth management project being undertaken by three regional planning agencies. Senator Pacheco is the founder and co-chair of the Southeastern Massachusetts Legislative Caucus, a bi-partisan group of legislators and community leaders that share the common goal of fostering economic development throughout the region.

A life-long resident of Taunton, Senator Pacheco was first elected to public office in 1979 as a member of the Taunton School Committee. He served for ten years as a member of that body, eventually rising to chairman of the committee. From 1982 to 1988, he worked for the mayor of Taunton as his chief assistant and budget director.

The Senator earned his Master’s Degree in Public Administration from Suffolk University. Senator Pacheco has a Bachelor’s Degree in Human Services from New Hampshire College and an Associate’s Degree from the University of MassachusettsStockbridge School. Senator Pacheco and his wife Barbara (Sylvia) Pacheco currently reside in the city of Taunton.

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Massachusetts Auto Dealer MAY 2013

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Annual Meeting

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Mike Colias Mike Colias is a Detroit-based reporter primarily covering General Motors for Automotive News, the industry’s leading trade publication. He began his GM coverage shortly after he joined the publication in September 2010 as a supplier reporter. Colias’ work covers all facets of the automaker, from GM’s sales and earnings results and product launches to the company’s relations with its 4,400 dealerships.

Before joining Automotive News, Colias was an award-winning reporter at Crain’s Chicago Business, where he covered the health care industry, including pharmaceutical companies, hospitals and health insurers. He also worked as a reporter in the Chicago bureau of The Associated Press, where he wrote about the city’s major public companies, including McDonald’s and United Airlines. He also has covered business and general news at newspapers in Providence, R.I., and in the Denver area.

A native of Palatine, Illinois, Colias graduated from Ohio University in Athens, Ohio, in 1996, with bachelor’s degrees in journalism and business administration.

Colias will share observations and anecdotes from his time on the GM beat – including insights into the culture of the New GM, the company’s strategy, strengths and weaknesses and its relations with the dealer network — as well as broad industry trends affecting automotive retailers.

MAY 2013

Massachusetts Auto Dealer www.msada.org

MSADA Sean Bradley Sean Bradley, founder and CEO of consulting firm Dealer Synergy, has more than 13 years of automotive internet sales and business development experience.

Bradley started his career on the frontlines as a sales consultant, and eventually moved up into management. He has held various positions at the dealership level, such as internet sales manager and business development director.

In 2004 Bradley launched Dealer Synergy Inc. Dealer Synergy is an award winning training, consulting and digital marketing company that specializes in internet sales and business development.

Bradley contributes to numerous national publications, including a column in AutoSuccess Magazine, and speaks on the subject of automotive internet sales and business development. A digital marketing expert, specialties are automotive sales, analysis of business and online processes.

Frank O’Brien Frank O’Brien, CPA, CIA, CFE of O’Connor & Drew will speak on the new warranty reimbursement law in 93B. He presented at the Massachusetts State Automobile Dealers Association’s 2013 Legal and Accounting Update in February.

O’Brien’s areas of expertise are automobile dealerships, internal controls and fraud investigation. Since joining the O’Connor & Drew in 1998, he has worked both with closely held businesses and non-profits, specializing in the automotive industry. For the past seven years, O’Brien has managed the internal audit and fraud division at the firm.

Memberships include the Massachusetts Society of Certified Public Accountants, the American Institute of Certified Public Accountants, the Institution of Internal Auditors and the Association of Certified Fraud Examiners.

O’Brien graduated with a Bachelor of Science in accounting from Villanova University, School of Commerce and Finance.

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Legal

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By Len Bellavia and Steve Blatt

Are F&I Products Now In The CFPB’s Crosshairs?

Include sales practices related to F&I in compliance efforts We recently told you about the Consumer Finance Protection Bureau’s (CFPB) intentions to use its regulatory powers over indirect lenders to target what it believes are discriminatory lending practices by dealers. Although the CFPB generally lacks jurisdiction over dealers, it may nevertheless impact dealers’ processes by bringing enforcement actions against indirect lenders. Ultimately, the regulations that the CFPB imposes on lenders will “trickle down” to dealers. Lenders will have no choice but to modify their finance agreements in order to stay compliant with CFPB regulations.

You may recall that the CFPB indicated that it will aggressively target practices that it believes are discriminatory, relying on disparate impact theory to show that, even in the absence of direct proof of discrimination, practices in the automobile retail industry have a disproportionately negative impact on members of protected classes. Now, as part of its rulemaking processes, the CFPB has inquired about lenders’ practices related to financing additional products offered at the time of the sale, such as extended service contracts, to see whether lenders’ in effect facilitate dealers’ allegedly discriminatory practices.

Margin compression has resulted in many dealers relying on profits generated through F&I to maintain profitability in new and used vehicle departments.

Therefore, it is critically important to understand that the CFPB’s actions towards lenders may impact what products and potential products are financed in addition to

the vehicle itself.

While it does not appear that regulations from the CFPB regarding F&I products are imminent, it is important to include sales practices related to F&I products in your compliance efforts. Here are a few items to remember while reviewing your processes: • Consider using “menus,” and present all of your F&I products to all of your customers. Besides generally increasing your F&I personnel’s sales effectiveness, menus help with compliance efforts. With menus, your managers can, at a glance, see what products your F&I staff offered a particular customer and whether the consumer agreed to purchase the products.

Your goal should be to offer 100% of your F&I products to 100% of your customers, 100% of the time. If the lender will not allow your dealership to finance additional products as part of the sale of the vehicle, note the lender’s refusal on your menu and have the customer acknowledge this. The customer may instead wish to purchase the products outside of the deal. www.msada.org

• Fixed pricing for F&I products. You should consider fixing the price of F&I products and should not base the price of any products based on the consumer’s credit score. You should not permit your staff to sell the products at prices above your set price without manager approval and an explicit reason for doing so. Remember, you should not increase the price above the fixed price based on a particular consumer’s credit score or deal structure.

• Check your forms for accuracy. Make sure that your forms, particularly the buyer’s order and retail installment contract/lease agreement, properly disclose additional F&I products.

Proper disclosure includes itemization of the product and a succinct name or description of the product. The registration forms/contracts for each F&I product should be up-to-date and clearly reflect the laws of your particular state.

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Len Bellavia and Steve Blatt are partners in the law firm of B ellavia B latt . F or ad ditional information please contact B el lavia , B latt , A ndron & C rossett , PC at (516) 873-3000.

Massachusetts Auto Dealer MAY 2013

18

NEWS

from Around the Horn

MSADA

NATICK

RAYNHAM

Board Votes 3-2 in Favor of Tesla Plan, But Unclear If Supermajority Needed

VW Dealership is Rolling Back into Raynham

On May 22 the Natick Planning Board voted 3-2 in favor of a request from electric car manufacturer Tesla to sell cars in the Natick Mall, but it was unclear if a positive vote required a supermajority.

The board expected to learn in late May if the 3-2 majority vote is sufficient or if a 4-1 supermajority is necessary.

Tesla Motors MA, a subsidiary of Tesla, has sought an exception from a zoning requirement prohibiting car sales around the Natick Mall. Tesla runs a showroom at the mall, but has been prohibited from selling cars there. It opened a sales office on West Central Street, but company officials have said that situation splits up the car-buying process, resulting in fewer sales.

Tesla uses a sales model that relies on a reservation system.

It is not proposing physical changes or a large parking lot filled with cars, something a Tesla lawyer has noted the restriction was designed to prevent.

Planning Board Chairman Andrew Meyer, who supported the motion, said some board members felt this is a unique situation. The motion limits sales activity to accepting a refundable deposit, which Tesla supported.

Meyer said some felt that the exception “did not rise to the level of being substantially more detrimental to the neighborhood.”

Others worried it would create a slippery slope, making it easier for dealerships with car lots to open near the mall. Meyer said planners could deny those proposals, arguing they would be detrimental.

Last year, Metro Motor Group moved its Volkswagen dealership from Raynham to Middleboro.

Now Metro is constructing a new building and will move the franchise back to Raynham.

The VW dealership will join Metro’s Ford and Kia operations on Route 44 near the Church Street intersection.

According to the planning board, Metro received site plan approval in November to construct the 23,336 square foot structure at 1691 New State Highway (Route 44), the former

site of Slip’s Capeway Marine Inc., a boat dealer that relocated to 747 Hill Street.

This marks the most recent expansion in a series of changes to Metro’s Raynham site.

Two years ago, Metro installed a parking lot for vehicle storage and added a building to house its Kia dealership to the west of Metro’s Mazda dealership, now Metro Ford. Last year, Metro moved its Volkswagen dealership two miles up the road.

MANSFIELD

Old Colony Dodge Closes Old Colony Dodge, a seller of new and used vehicles in Mansfield since the 1940s, closed May 17.

Declining business was the culprit, according to co-owner Manny Braga.

The shutdown leaves two new car dealerships operating in Mansfield: Mansfield Jeep Chrysler and Lance Buick GMC. The buildings on either side of West Street occupied by the dealership are being sold, Braga said.

The local franchise was among those that survived a 2009 restructuring by Chrysler that resulted in the closing of more than 700 dealers nationally.

Purchased six years ago by Braga and Ted Bancroft, the Dodge dealership was owned and operated for more than 60 years by members of the Sarro family.

MAY 2013

Massachusetts Auto Dealer www.msada.org

NEWS from Around the Horn

MSADA

LAWRENCE

Commonwealth Motors Donates to Prospect Hill Little League The Prospect Hill Little League of Lawrence will receive ongoing support through its spring season from Commonwealth Motors, in the form of both baseball gear and monetary contributions. Members of the youth sports program visited the dealership in May to pick up donated equipment.

Commonwealth is sponsoring the Prospect Hill league as part of the Chevrolet Youth Baseball Program.

In addition to monetary contributions, Commonwealth is supporting the league with donated equipment, including balls and ball buckets, batting helmets, catcher’s gear, umpire equipment, bases, bat racks and first aid kits. Plus the sponsorship gives players the opportunity to attend baseball clinics conducted by professional teams.

Prospect Hill Little League members also participate in the Chevrolet Youth Baseball Program Sweepstakes, which features a grand prize of a 2013 Chevy Traverse, plus prizes of high-definition televisions donated by Commonwealth.

Left to right:Stephen Raymond, Aaron Johnson, Jeremiah Rodriguez, Marc Quave, Marlon Rivera Jr., and Marlon Rivera Sr.

www.msada.org

Massachusetts Auto Dealer MAY 2013

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NEWS from Around the Horn BEVERLY

Ford to Unleash Special-Edition F-150 SVT Raptor This Fall The Ford F-150 SVT Raptor new Special Edition package is heading to dealerships this fall. The 2014 Ford F-150 SVT Raptor Special Edition will sport several exclusive styling cues inside and out that match the highperformance model’s aggressive demeanor.

Building on the SVT Raptor’s existing Luxury Package, the special-edition F-150 will offer the choice of a unique Ruby Red Metallic paint job or an optional Tuxedo Black Metallic exterior, along with box-side “Raptor SVT” graphics. Inside, the F-150 SVT Raptor Special Edition will feature seat bolsters in Brick Red with black inserts and cloth honeycomb high-

lights, while a new console top finish panel and appliqué accents on the center stack and door panels will liven up the cabin.

“The F-150 SVT Raptor has the capability to conquer any trail, field or mountain road in New England, and the Special Edition will allow buyers to reflect that confidence with a bolder style throughout the truck,” said Jeff Klein, general manager of Thomas Ford. “Adventurous buyers already love the existing model, and they are sure to be drawn to the SVT Raptor Special Edition, which will let them stand out even more, whether it’s on the job site or among the trees.”

HOLYOKE

Marcotte Ford Sales Wins Ford Credit Contest Ford Credit has awarded Marcotte Ford Sales in Holyoke the 2012 Partners in Quality Award.

The Partners in Quality Award is Ford Credit’s most prestigious honor, awarding dealers who achieve the highest levels of customer satisfaction and loyalty to Ford Credit.

Since 1993 Partners in Quality has become one of the most highly regarded dealer recognition programs.

Marcotte Ford Sales was the only winner representing Massachusetts.

BRAINTREE

Quirk Chrysler Jeep Wins Chrysler Club Contest The Walter P. Chrysler Club has announced Quirk Chrysler Jeep is one of its best-in-class dealers.

The Walter P. Chrysler Club Award is the highest recognition the Chrysler Club offers for overall sales and Mopar parts sales performance. Quirk Chrysler Jeep was the only winner from the Commonwealth.

MAY 2013

Massachusetts Auto Dealer www.msada.org

MSADA RAYNHAM

2013 Nissan Pathfinder Awarded by WardsAuto for Its Inviting Interior The redesigned 2013 Nissan Pathfinder earned a spot on the annual Ward’s 10 Best Interiors list, with editors citing the crossover SUV’s combination of comfort and functionality for driver and passengers alike.

To determine its 10 Best Interiors list, WardsAuto ranked vehicles with new or significantly upgraded interiors in several categories, including materials, fit-and-finish, ergonomics, overall design, comfort, value and safety. Technology was also considered, with each model’s dash interface judged in terms of userfriendliness and connectivity with mobile devices. After evaluating the Pathfinder, editors described the crossover as “warm, inviting, spacious and ready for anything.”

“The new Pathfinder not only has the room to fit seven passengers in comfort, but the interior is designed to make your actions in the vehicle easier, whether it’s the simple access to the third row, or an available DVD entertainment system that will keep the kids occupied,” said Jason Ferreira, general sales manager

of Mastria Nissan. “Not to mention, when it comes time to haul equipment or furniture for home improvement, the Pathfinder opens up to nearly 80 cubic feet of cargo space with the second and third rows folded, so you won’t have to borrow a friend’s pickup truck.”

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Massachusetts Auto Dealer MAY 2013

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NEWS from Around the Horn LEXINGTON

Ciccolos Host State Sen. Clark Fundraiser On May 13, Ray and Grace Ciccolo opened their Lexington home to host a fundraiser event for State Senator Katherine Clark (D-Melrose), who is seeking the Democratic nomination in the

“The X4 might be BMW’s most successful attempt yet at really blurring the lines between a sports coupe and an SUV,” said Marshal Cabot, general manager of BMW of Peabody. “Buyers will get head-turning style and dynamic handling on all kinds of roads, yet they’ll be able to bring the entire family and their things along for the ride.”

NORWOOD

Five Mass. Dealerships Win Customer Care Award Subaru has awarded its 2013 Stellar Care Award to five Massachusetts dealers: Clay Subaru in Norwood; Haddad Subaru in Pittsfield; Metrowest Subaru in Natick; Patrick Subaru in Shrewsbury; and Steve Lewis Subaru in Hadley.

According to Subaru, the Stellar Care Award for customer care and satisfaction is the highest honor a Subaru dealer can achieve.

HAVERHILL

Pictured - Back row (L to R): Michelle Ciccolo, State Sen. Katherine Clark, Ray Ciccolo, and Philip Jackson. Front row (L to R): Foster Jackson (Ray’s grandson), Grace Ciccolo, and Leslie Bartolotti.

7th Congressional District. The seat is presently held by Cong.

Ed Markey (D-Malden), who is running in the June 25 special election to fill the remaining time on John Kerry’s term which became available when he resigned to become U.S. Secretary of State. Republican businessman Gabriel Gomez, a former Navy pilot and SEAL, is Markey’s opponent in the race.

PEABODY

New BMW X4 Makes Sleek Debut in Shanghai Since the launch of the BMW X5 in 1999, BMW’s versatile Sports Activity Vehicle (SAV) lineup has grown to four models, and starting next year, luxury buyers will be able to consider a fifth option. Introduced in near-production concept form at Auto Shanghai 2013 this week, the BMW X4 mimics the styling of a sports coupe, yet it features all the capability of a crossover.

The BMW X4 will be built on the same platform as the compact X3, but it more closely resembles the larger X6 in body design. Outlined by chrome and gloss-black surrounds, BMW’s signature kidney grille still adorns the front fascia, while flared fenders, matte-black cladding and 21-inch bi-color light-alloy wheels accentuate the vehicle’s lower, sportier stance. The BMW X4 will come standard with xDrive all-wheel drive, making the model a legitimate four-season ride, even in the hardest hit areas of the Snow Belt.

MAY 2013

Massachusetts Auto Dealer www.msada.org

Mercedes-Benz Earns Record First Quarter Sales, but It Wants More Mercedes-Benz may have earned its best-ever first quarter of sales in the United States this year, but the automaker will not be satisfied until it is once again the global leader of luxury auto sales. In a push to achieve that goal, the company will be targeting younger buyers with an affordable and sporty new compact car called the 2014 Mercedes-Benz CLA-Class.

Arriving at U.S. dealerships this September, the new CLAClass will sport much of the sculpted, coupe-like styling of the larger CLS-Class while incorporating some edgier design lines.

With a starting price of less than $30,000, the CLA-Class will act as Mercedes-Benz’s new gateway vehicle, costing less than other high-volume offerings like the Audi A4 and BMW’s 1 Series and 3 Series. The luxury brand’s current gateway model, the Mercedes-Benz C-Class, remained the lineup’s best-seller in March, moving 8,396 units for an increase of 32 percent yearover-year. That strong performance helped Mercedes-Benz post a record March overall, with its sales totaling 24,646 units across the lineup.

“The C-Class is and will continue to be extremely popular with new luxury buyers, but Mercedes-Benz has developed the smaller CLA-Class to appeal to even younger buyers that may never have considered the brand before,” said James Buckley, general manager of Smith Motor Sales. “The Mercedes-Benz CLA-Class meets buyers’ growing preferences for smaller, more efficient rides, but it doesn’t sacrifice anything in the way of performance, style or technology to do so.”

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NADA Update

MSADA

CFPB Guidance Lacks Transparency Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your

questions

and

concerns

(donsudbayjr@sudbay.com).

The past three months have been very busy for me on the NADA Board. I am serving on the Dealer Operations Committee, the Convention Committee, and the Industry Relations Committee as the line representative for the Chevrolet brand.

The Dealer Operations Committee met in March and discussed issues pertaining to Dealer 20 groups, the NADA Dealer Academy, and the web-based training that NADA offers. The general consensus was that many of our dealer members are not aware of the many resources available to them through NADA University. Many of the guides and tutorials are free of charge to our members. Expect for NADA to reach out with information to your staff so that you can access this valuable material.

The Convention Committee met in New Orleans in April.

New Orleans has come a long way since Katrina, and the folks from the Convention Bureau and Chamber of Commerce will really be rolling out the red carpet for NADA next February. We made some changes to the convention schedule which will change the General Session to Saturday morning (with a shorter session) and for future conventions we hope to conclude the convention on Sunday instead of Monday.

These changes were the result of surveys returned by convention attendees.

Finally, late in April along with NADA staff, I presented the Winter Chevrolet Dealer Attitude Survey to Chevrolet management. A record 68 percent of all Chevrolet dealers responded to the survey. We reviewed areas of concern and compared the Chevrolet results to those of other manufacturers. The following week I was back out to Detroit to attend the GM Dialogue Meeting where we met with senior GM leadership, including North American President Mark Reuss.

The meeting was cordial but some continuing factory-dealer issues were discussed and debated. Be assured that no matter which manufacturer you represent, the NADA folks on the Industry Relations Committee are looking out for your best interests.

The following words from NADA Chairman Dave Westcott continue to address our concerns with CFPB and how it

will affect all of us: “The guidance bulletin issued by the Consumer Financial Protection Bureau (CFPB) on March 21 lacks industry support, legitimacy and, above all, common sense. Dealers resoundingly agree that when there are attempts to change the financing method of a $783 billion auto market, a federal agency has an obligation to provide transparency, reliable data analysis, interagency coordination and public feedback.

“The foundation for the CFPB’s guidance wholly rests on a theory called ‘disparate impact.’ In theory, if the auto finance system results in minorities paying more for credit than nonminorities in the same credit tier, then unintentional discrimination is taking place.

“In an effort to ensure indirect auto lenders are complying with the Equal Credit Opportunity Act (ECOA) and Regulation B, the bureau is targeting the compensation arrangements used by indirect auto lenders with dealers. Although the CFPB is not accusing dealers of intentional discrimination, its guidance could drastically change how auto finance sources compensate dealers for arranging auto loans.

“The first problem is the CFPB’s study. Disparate impact can only be proven through a statistical analysis of past transactions. We have no idea how the bureau concluded that there may be a disparate impact on protected classes of consumers or whether it even exists in today’s auto lending market. For an agency that claims it adheres to transparency, the bureau has not revealed what data and methodology it has used.

“The second problem is the lack of common sense. Even though most dealers are exempt from CFPB’s oversight, auto lenders are not. It’s critical that the bureau closely examine the effect flat fees would have on today’s intensely competitive market. Eliminating a dealer’s ability to discount the credit rates would undoubtedly increase the cost of credit for millions of consumers.

“Finally, the CFPB has not coordinated its enforcement actions with the federal agencies that directly regulate dealers: the Federal Trade Commission and the Federal Reserve Board. As a response, NADA has opened a dialogue with CFPB officials over the past month in order to advocate our position and gain clarity on theirs.

“U.S. Representative John Campbell, in an opinion piece in The Wall Street Journal, recently described the CFPB’s proposal as a ‘noxious attempt to solve a problem that doesn’t exist.’ Congressman Campbell, a member of the House Financial Services Committee, has called on the CFPB to withdraw this outrageous and abusive guidance immediately.

“We agree.” continued on next page www.msada.org

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MSADA

NADA Update

“Be assured that no matter which manufacturer you represent, the NADA folks on the Industry Relations Committee are looking out for your best interests.”

2013 Dealership Workforce Study Extended to June 30 The deadline to participate in the 2013 Dealership Workforce Study has been extended to June 30 to accommodate many requests from dealer members. It’s the only study that compares a dealership’s compensation and benefits, retention and turnover, work schedules and hours of operation to aggregated peer data. The results will allow dealers to make data-based decisions when recruiting, hiring and motivating employees. Only NADA and ATD members are eligible to participate, and there is no cost. To participate, visit www. nadaworkforcestudy.com and follow the step-by-step directions to complete the survey and upload your payroll data file. There are separate processes for single dealership enrollments and multi-dealer group enrollments. Each participating dealership will receive a complimentary individualized Basic Report comparing its data against data aggregated on a regional and national basis. Participants will also receive a complimentary, comprehensive Dealership Workforce Study Industry Report. Participants may purchase an individualized Enhanced Report, which compares dealership data against data for the franchise and state.

NADA and ATD Convention Workshops Now Available Online at NADA University The workshops from the 2013 NADA and ATD conventions are now available online at www.NADAUniversity.com. Organized and sponsored by NADA University, the education and training arm of NADA, the workshops include 58 recorded sessions encompassing seven tracks for auto dealers and three for truck dealers. The programs are included in the Learning Hub Premium Subscription or available as packages individually in multiple formats. NADA and ATD members can log on to www.NADAUniversity.com and go to the NADA University Store to purchase the Learning Hub Premium Subscription or click 2013 Workshops. To order by phone, contact NADA University Customer Service at (800) 557-6232.

Used Vehicle Prices Decline 1.5%; Spring Softness Setting In Overall market prices for all vehicle segments declined by an average of 1.5% in April compared to March. The wholesale price decline in April was directionally correct with what NADA analysts expected to occur during the first full month of the spring selling season. In terms of declines, the MAY 2013

Massachusetts Auto Dealer www.msada.org

mid-size car segment led the pack with prices declining by an average of 1.9% compared to the prior month. Following closely behind was the compact car and compact utility segments which saw prices fall by 1.8% apiece along with mid-size utilities which dropped by 1.2%. All remaining mainstream segments experienced declines well under the market average, mid-size vans declined by 0.7% and large pickups followed right behind at 0.6%. The only mainstream segment with no noticeable movement was large SUVs, which remained flat compared to March prices. Luxury cars and luxury utilities declined by 1%. On a year-over-year basis, according to NADA’s Used Price Index, prices for used vehicles grew by 0.2% in April compared to the same period last year. The index is a seasonally adjusted measurement of the change in prices for used vehicles up to 8 years in age.

For more information, visit www.nada.com/b2b.

NADA University Seeks Workshop Proposals for 2014 NADA and ATD Conventions in New Orleans NADA University is seeking workshop proposals on car and truck industry topics for the 2014 NADA and ATD conventions, which run concurrently in New Orleans from January 24-27. Thousands of car and truck dealers and their employees, as well as other auto industry professionals, will attend the convention workshops to learn about strategies for growth. The workshop sessions at the past convention in Orlando drew more than 17,000 attendees. “This is by far the top opportunity in our industry to share creative strategies and real solutions for success in front of a large group of auto retail professionals eager to learn how to gain a competitive edge,” said Kenneth C. Vance, chairman of NADA’s Dealership Operations Committee and a new-car dealer in Eau Claire, Wisconsin.

NADAguides.com Survey Ranks Shopping Preferences of New-Car and Truck Buyers New-car and -truck buyers ranked Fuel Economy, Ownership Costs, Brand Perception, Safety and Vehicle Design as the five most important attributes considered when shopping for a vehicle, according to a recent survey by NADAguides. com. Factors were scored on a scale from 0 to 100, with a higher score indicating greater importance.

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Economic Update

By Paul Taylor, NADA Chief Economist

Affordable Domestic Energy Will Make the Nation Safer and More Prosperous Our thoughts and prayers are with the city of Boston after the recent tragedy there, and our hats are off for the hard work of law enforcement and citizens at the local, state and federal level that brought a quick resolution to that threat to Boston and the nation.

As Americans focus on getting to work in order to keep our country growing, we are reminded that thrift is still a virtue in the private sector. Americans at all levels of income remain relatively frugal. That is one reason there are more Rolls Royces on the streets of Hong Kong than on the streets of Manhattan. In order to sell U.S. consumers a lot of copies of alternative energy vehicles, the alternative source of energy must be cheap, and the vehicle to use it in must be priced reasonably. The total cost of owning and operating an “alt” vehicle must compute for the typical consumer. Early adopters of technology and those who wish to ride solo in the car pool lane can only carry you so far in large U.S marketplace.

Consider electric cars, for example.

Hybrid gas electric vehicles currently sell largely to early adopters and a lot of Car Pool lane single commuters. It is this pattern that makes Virginia and Maryland the fifth and sixth largest sources of new hybrid buyers, over many much more populous states. Fisker electric cars, at over $100,000 per copy, did not sell well, hold up well or have much range of travel. Washington Post columnist Charles Lane coined the phrase “Off the Fisker Cliff” to spoof the difficulties of Fisker after the firm dismissed most of it workers and took actions that made bankruptcy seem imminent, even after a reported $529 million Energy Department low-interest loan at the expense of the taxpayer. The “College Illinois Fund” for pre-

paid tuition, a state-run organization, sank $10 million into Fisker at the urging of a Chicago-based fund raising firm for venture deals. That’s $10 million that won’t be helping pay tuition for deserving students in Illinois in future years. And Fisker won’t be a jobs machine. All this led The New York Times to label Fisker “the Solyndra of the electric car industry.”

For consumers to buy hybrids or pure electric cars in large numbers takes relatively low cost vehicles and cheap kilowatts to power the vehicle. While the administration is busy shutting coal-fired electricity plants, many utilities are decommissioning nuclear plants that have operated safely in the United States for many years. The tragedy of the Fukushima nuclear plants in Japan will assure that we will not have cheap kilowatts from any new nuclear plants created during the next ten years in the United States. And the prices of conventional genwww.msada.org

eration of electricity are currently going up as a result of regulation. Cheap kilowatts in the immediate future will not drive sales of hybrids or pure electric vehicles if the costs of purchase, operation and maintenance of those vehicles remain high relative to other vehicles available in the marketplace. For that, the total costs of ownership and operation need to come down for electric cars, light trucks and commercial trucks.

So what is the inexpensive energy source for vehicles, and what is the future expected relative price for that energy source?

Natural gas and other similar gases, such as propane that competes with the enormous natural gas resources discovered in the U.S. and Canada in recent years. And the relative price of natural gas is likely to remain low for at least the next ten years, while the cost of competitive energy resources may not. Natural gas is not that easy to transport across oceans, and so the best market for Massachusetts Auto Dealer MAY 2013

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Economic Update “One thing is clear: Natural gas will likely be a key factor in alternative fuel vehicles prospering the U.S. marketplace as a choice of typical consumers.”

U.S. natural gas is in the United States.

Natural gas and its close competitors, such as propane, as alternative fuels bear paying close attention to because they seem likely to be a factor in the vehicle market place in the next 10 years, and dealerships may be offering natural gas and propane vehicles side by side with gasoline and diesel powered vehicles. Now such vehicles are a specialty fleet in geographic pockets of the country. The fueling infrastructure quandary needs to be solved, and this might be a real public good, and an appropriate area for state or federal government funds.

Compressed gas vehicles won’t be prevalent in the U.S. until you can pull into your local gasoline retailer and find natural gas or substitute gas available. Fisker, by contrast, turned out to be another bad deal for the taxpayer, just as their taxes are being raised at the insistence of the Administration. And electricity won’t come down in price unless the switch to natural gas generation is so successful that kilowatt prices come down across the country. In the meantime, early adopters and car pool lane solo drivers will be most of the market for expensiveelectric vehicles. Can even a rocket scientist survive in that market? Only time and the marketplace will tell.

One thing is clear: Natural gas will likely be a key factor in alternative fuel vehicles prospering the U.S. marketplace as a choice of typical consumers. And the commercial truck marketplace will be changed by inexpensive natural gas as well.

In the very near future, cheap borrowing costs and recovering house prices will fuel the new car market, even as taxes rise under current administration initiatives. Over a 10-year horizon, natural gas is likely to become an increasing influence on the composition of new vehicle sales. Alterna-

MAY 2013

tive fuel vehicles can help make America a safer place to live. Those alt fuel vehicles are likely to be powered by natural gas or competing gas products, or by electricity made cheaper by generation by natural gas.

The government has created some roadblocks to cheap domestic energy, and needs to stop standing in the way of energy and wealth creation in the U.S. economy.

Weapons for Wealth Creation: Taking Back Service Work and Parts Sales in the Marketplace Overall parts and service sales were essentially flat last year, as the average age of a light vehicle on the road increased to 12.4 years of age. This increase occurred despite the sale of over one million more new cars and light trucks in 2012 than in 2011. That means that dealers need to capture more of the work on cars more than five years of age. There is simply too much potential business out there in cars and trucks over five years of age, and the trends in sales per warranty repair order have been trending downward along with the average number of recalls. That is bad news for the total contribution of warranty business to the typical dealerships, but for those brands which have seen recalls and subsequent warranty work decline, enhancement of the brand perception by the customer is underway. That should help sales of those

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brands.

Also, good news in the steady rise of the average sales per customer repair order over recent years, from $197 in 2005 to $247 in 2012. Dealerships just need more customers and repair orders in future years.

Going after work on more mature cars and trucks is one way of achieving higher total sales in customer work.

Efforts to lower costs and provide faster service to customers, such as dedicated separate service bays for oil change and tire work, are one way to try and attract a higher number of customers to your Parts and Service operation.

The typical new car dealership had 13 technicians and 18 service bays in 2012, so there is plenty of room for immediate growth.

The chart that follows shows the history of both customer repair orders and warranty repair orders in recent years for the typical new car dealership.

Paul C. Taylor, Ph.D., is Chief Economist of the National Automobile Dealers Association’s Industry Analysis, where he oversees NADA’s industry analysis activities, which include research on a wide range of factors impacting the retail automotive industry and publishing NADA’s annual compilation of facts and figures, titled NADA DATA.

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