MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
October 2015 • Vol. 27 No. 10
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Strength in Numbers
Ma s s a c h u s e t t s
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St a f f D ir e ct o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator mguerra@msada.org Aut o D e a l e r M Ag a z i n e Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator macdonaldcs8@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: mguerra@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Ta b l e o f C o n t e n t s
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From the President: All Politics is Local THE ROUNDUP: The CFPB Battle Heats Up as Dealers Hit Capitol Hill LEGISLATIVE SCORECARD Sound Off: The Massachusetts Workforce Training Fund TROUBLESHOOTNG: Used Car Rule Compliance and the Buyers Guide
12 LEGAL: ‘Be Respectful Of Others and the Company’ 13 Dealer Services: The Attitude Adjustment 14 Cover Story: Strength In Numbers
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NEWS From Around the Horn nada update: A Bright Outlook
Blum Shapiro 19 Boston Herald 28 Ethos Group 2 G&M 20 Leader Auto Resources 23 Lynnway Auto Auction 18 Nancy Phillips 19 O’Connor & Drew, P.C. 27 Reynolds & Reynolds 17 Southern Auto Auction 21 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer OCTOBER 2015
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from the President
MSADA
‘All Politics is Local’ Don’t let a quiet election cycle slip by without making your voice heard.
By Scott Dube MSADA President
W
hile it may be a relatively quiet election year in Massachusetts at the municipal level, this is an important time to remind ourselves and others that the policies being debated on Beacon and Capitol Hill affect us directly. Silence is not an option. But there’s more to the story. The same need to be heard exists on our smallest local commissions and boards. Your aldermen are probably (hopefully) seen around town a lot more than your congressman. And as we saw in Natick, sometimes national news and industry-wide headaches begin in back rooms much smaller than the ones we imagine exist in Congress. There are seemingly unlimited and crucial decisions about zoning and land use that these folks can make that affect us in ways that can present major hurdles. We should always be sure whenever possible to be heard from by those in Town Hall chambers more often than when we need to make an ask. So when is the last time you called up your mayor, your alderman or selectman? It’s important to remember that if we don’t use our ability to advocate for ourselves, someone else will always be ready to step in front us instead. Believe me, every special interest group and manufacturer is represented there! When you head to the voting booth, please remember that now is a great time to remind your representatives in your hometown and in Boston that you are paying attention. Invite them to your dealership. Offer them our most recent economic impact report, if they haven’t seen it already (remember to fill out the new one if you haven’t done so!). Let them know how your business is doing, and how their decisions are impacting you. Hopefully it’s good news to report. If not, there will always be another opportunity down the line for them to get it right. And while this isn’t directly related to municipal government, if you haven’t already given this year, I encourage you to donate to our state Political Action Committee. It’s an important way to keep our needs our needs from being shoved off the table on Beacon Hill. It’s the easiest way to contribute to our grassroots effort to keep our legislators informed and takes only a few minutes. Contact Executive Vice President Robert O’Koniewski at (617) 451-1051 or rokoniewski@msada.org.
Keep an eye out for information about our January 15, 2016 New England International Auto Show Charity Gala. Robert O’Koniewski and the MSADA staff are planning a fantastic event, and I encourage all of our Associate Members to get in touch with Bob for information about sponsorship opportunities. Bob can be reached at (617) 451-1051 or by email at rokoniewski@msada.org. t
Massachusetts Auto Dealer www.msada.org
Barnstable County
Brad Tracy, Tracy Volkswagen
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group
Franklin County
Jay Dillon, Dillon Chevrolet
Hampden County
Jeb Balise, Balise Auto Group
Hampshire County
Bryan Burke, Burke Chevrolet
Middlesex County
Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru
Norfolk County
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
Plymouth County
Christine Alicandro, Marty’s Buick GMC Isuzu
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President
Preparations for Preview Night
OCTOBER 2015
Msada Board
James G. Boyle, Tuck’s Trucks
NADA Director
Don Sudbay, Jr., Sudbay Motors
Officers
President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian
Associate Members
MSADA A ssociate M ember D irectory Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Lennox Cornwall (304) 702-7399 American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly, Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Sarah Macomber (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Inc. David DeCredico (800) 458-7070 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance John Ballard (859) 312-9896 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320
Gulf State Financial Services Cliff Lang (713) 580-3143 GW Marketing Services Gordon Wisbach (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 KEEPS Corporation Darcy Silver (718) 309-6133 Key Bank James Q. Moretti (781) 558-5132, Mark Flibotte (617) 385-6232 KPA Michael Hurd (207) 400-6535 Leader Auto Resources, Inc. Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 Micorp Dealer Services Frank Salkovitz (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 PreOwned Auto Logistics Anthony Parente (877) 542-1955 ProActive Leadership Group Bill Napolitano (774) 254-0383 Quik Video Jack Gardner (617) 221-5502 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Ping Weiner (617) 269-4510
Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Richard Anderson (401) 432-0749 Schlossberg, 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 Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500 Sprague Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 Taino Consulting Group Herby Duverné (617) 797-9316 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092
www.msada.org Massachusetts Auto Dealer OCTOBER 2015
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The Roundup
The CFPB Battle Heats Up as Dealers Hit Capitol Hill By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers
40th Annual Washington Conference At the end of September over 500 franchise car and truck dealers and dealer association executives from across the country hit our nation’s capital to attend policy briefings and meet with Members of Congress to discuss key legislative and regulatory issues during NADA’s 40th annual Washington Conference. This year’s MSADA delegation included MSADA President Scott Dube (Bill Dube Hyundai); MSADA Clerk Charles Tufankjian (Toyota of Braintree); Massachusetts NADA Director Don Sudbay (Sudbay Auto Group); our past NADA Director and current dealer Ray Ciccolo (Village Auto Group); MSADA legislative agent Jim Hurrell; MSADA staff attorney Peter Brennan; and me. Dealers from across the country use the annual Washington Conference to meet with their Senators and Representatives to discuss various legislative and regulatory issues affecting their dealership operations. This is also a chance for dealers to see their legislators in the halls of power where they conduct their business, in contrast to the usual district functions like chamber of commerce rubber-chicken luncheons and ribbon cuttings. NADA, as part of the festivities, schedules politicians and commentators to provide attendees with a flavor of the current situation in Washington and what may be in store for us prospectively. This year’s crop of speakers included Rep. Frank Guinta (R-N.H.), lead sponsor of H.R. 1737, the CFPB reform bill; Rep. David Scott (D-Georgia); Sen. Rand Paul (R-Kentucky); Rep. Tulsi Gabbard (D-Hawaii); FTC Commissioner Maureen Ohlhausen; and political analysts Charlie Cook and Amy Walter. OCTOBER 2015
Massachusetts Auto Dealer www.msada.org
Once on Capitol Hill, we engaged our Congressional members in dealer dialogue on such issues as the Consumer Financial Protection Bureau (CFPB), which is our number one priority; the proposed repeal of LIFO; the treatment of open recalls on rental vehicles; and the tax deduction on advertising costs. During our two days in DC we met with Rep. Stephen Lynch (D-South Boston), Rep. Jim McGovern (D-Worcester), Rep. William Keating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Katherine Clark (D-Melrose), Rep. Seth Moulton (D-Peabody), Rep. Niki Tsongas (D-Lowell), and the chief legal counsel for Democrat Sen. Elizabeth Warren. We are familiar faces for them all, as we make the effort to sit down with them regularly back home in Massachusetts as well. Moving forward, we need to keep in mind that for two days we were only a handful of people going door to door to visit our elected representatives in Washington. We were a group of small businessmen who, on behalf of their fellow dealers back home, gave up time from their dealerships and families to fly to Washington to discuss issues important to their stores and getting the economy going in a positive direction. Back home, however, we are an association of 427 members, whose dealerships employ on average 50 men and women, and who are responsible for almost 20 percent of the Commonwealth’s retail economy. As we ask dealers to get more engaged in contacting their Congressmen and local legislators, we ask that you not be shy and let others carry the load. All dealers - big and small, domestic makes and foreign - are in the same boat. If we give the members of Congress a free ride and do not
MSADA engage them on the issues, they will think we have no problems. The same is true when we are fighting for or against certain laws on Beacon Hill. In the future, please heed the call from your Association to contact your elected officials when such an issue arises. The Obama Administration, supported by its Congressional party members and anonymous bureaucrats squirreled away in a myriad of executive agencies, seems to take great joy in continually rolling out more anti-business proposals that make it increasingly difficult for small businesses, just like your dealerships, to succeed in a challenging economy. Hence, the even greater need to go before our elected officials and inform them of our concerns and desires. Without our input, our esteemed members of Congress, if left to their own devices, could find a way to pour more gasoline on the fire.
Lobbying for H.R. 1737 The main topic of conversation with our Congressional members at the Washington Conference was resolution of the CFPB’s efforts to alter the manner in which dealers assist their customers in obtaining financing for their vehicle purchases. As you may recall, in 2013 the CFPB issued guidance that threatens to eliminate dealers’ flexibility to discount the interest rate offered to consumers to finance vehicle purchases. The CFPB is attempting to change the $905 billion auto loan market and limit market competition without prior public comment and without analyzing the impact of its guidance on consumers. With the CFPB’s actions likely to raise the cost of credit for car buyers, members of Congress are seeking to pass H.R. 1737, legislation initially introduced last year and re-introduced for the current session by Rep. Guinta and Rep. Ed Perlmutter (D-Colorado). The bill would rescind the CFPB’s flawed auto finance guidance and require the CFPB to follow a transparent process, which would include public participation, when issuing any future auto finance guidance.
The bill has bipartisan support with 147 co-sponsors (86 Republicans and 61 Democrats), and it was approved by the House Financial Services Committee on a bipartisan 47-10 vote. Unfortunately, our two Massachusetts members on the committee – Reps. Lynch and Capuano – both voted against the bill. We have heard from NADA that, with the election of Paul Ryan (R-Wisconsin) as Speaker of the House, the flow of legislation will pick up and H.R. 1737 could come to the House floor for a vote within the next two weeks. As we receive more information about a potential vote, we will send out a communication asking you to contact your congressman for his or her support on the bill. The CFPB is not going anywhere in this current political environment. Its back door challenge to dealer’s auto finance activities will significantly limit the market competition that frequently provides customers a lower interest rate than those offered by banks or credit unions. Dealers need to be engaged in this fight or this overzealous regulator, which answers to no one, will continue to run roughshod over our industry.
MSADA Advertising Seminar – November 10, Framingham As we have reported previously, the Federal Trade Commission has not taken a vacation from its duties in regulating dealer advertising. In fact, the FTC continues aggressively to pursue actions against dealerships whose advertising is alleged to violate federal standards. Our own Attorney General also has moved against Massachusetts dealerships who allegedly have violated the AG’s advertising regulations. To assist member dealers in better understanding the federal and state advertising rules, your Association will conduct a seminar dedicated to this subject matter on Tuesday, November 10, at the Framingham Sheraton Hotel, 9:00 a.m.-Noon. Paul Metrey, NADA’s chief regulatory counsel for financial services, privacy, and tax, will cover federal issues. He will www.msada.org
provide a thorough review of the FTC’s recent dealer advertising enforcement actions, such as Operation Ruse Control, and the specific types of advertising that have drawn the attention of the FTC’s lawyers. All attendees will receive a copy of NADA’s “A Dealer Guide to Federal Advertising Requirements”. Massachusetts attorney Scott Silverman will cover our own state rules as articulated in the Attorney General’s regulations, which have been the basis of enforcement actions against franchise dealers over the last several years. Our registration materials have been available for several weeks. Don’t delay – register today. Every dealership or dealership group should have a representative there.
Reminder on Recalls Seemingly each day, word of a new recall sends shudders through dealerships across the land. As we have written previously, the rules are different whether a vehicle subject to a recall is a new or used vehicle. We have written extensively on dealers’ obligations when confronting the overwhelming number of recalls receiving coverage in the media. These responsibilities cannot be taken lightly, especially when state and federal consumer protection laws are at play. Federal law – the National Traffic and Motor Vehicle Safety Act – imposes a “stop sale” on all new, undelivered vehicles and parts subject to a safety recall. Once a dealer receives notice of a safety recall, affected new vehicles or parts may not be delivered until the defect or noncompliance is remedied. Dealers are encouraged to review their internal policies to ensure that new vehicles under recall are not being delivered to customers. Further, the law also requires automakers to buy back the affected inventory, if no immediate fix is available, OR pay dealers an amount equal to at least one percent a month of the price for the vehicle prorated from the date of notice of noncompliance or defect.
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The Roundup As for used vehicle recalls, there is no federal or state law that directly governs the sale of used vehicles that are subject to a recall. Moreover, vehicle manufacturers have no legal authority to impose a stopsale order on used vehicles subject to recall. However, under the Massachusetts Attorney General’s regulations (940 CMR 3.16), a dealer must disclose any material fact that would affect a consumer’s decision to purchase an automobile. Thus, the failure to disclose any information that would influence a buyer not to enter into the transaction is an unfair and deceptive practice under the Chapter 93A Consumer Protection Act. Accordingly, dealers need to disclose any and all facts about a vehicle to a buyer or prospective buyer no matter how trivial the information may appear to be. Moving forward, dealers need to be up to date on the recall status of any vehicle they are offering for sale. Knowing the recall status of your vehicles will enable you to disclose unremedied recalls to purchasers and help avoid any 93A complaints down the road. An easy-to-use tool for checking the recall status of vehicles in inventory or those you are taking in trade or buying is the National Highway Traffic Safety Administration’s online VIN search tool. By allowing Vehicle Identification Numbers (VIN) based searches, the lookup tool will help dealerships determine if particular used vehicles have any unremedied safety recalls. The lookup tool can be used prior to making a purchase or taking in a trade, for used vehicles in inventory, or to help provide consumers with useful safety recall information on their vehicles. Dealers and consumers can access the new NHTSA tool at www.safercar.gov/ vinlookup, where a consumer FAQ and other recall-related information also are available. When using the search tool, one way to confirm consumer disclosure for future use is to print out the search result and have the consumer sign it, and be sure to keep it in the deal jacket. NADA worked with NHTSA to prepare the document, “Dealer Tips for VIN Lookup and Vehicle Recalls.” NADA OCTOBER 2015
has also updated its document, “Safety Recalls Q&A for Franchised Dealers,” which provides guidance on how to handle recalls impacting new and used inventory and service vehicles. Finally, as we have stated previously, a vehicle manufacturer has no authority to issue a stop sale on a used vehicle you may have in inventory. Dealers, however, need to balance the type of recall that may be at issue (safety versus non-safety) to determine whether to move forward with a sale or not. There are tools available for dealers to use that can provide you and your customers adequate legal and vehicle operational protections.
2016 Auto Show, Dealer Summit & Charity Gala Circle the dates now – MSADA’s 59th edition of the New England International Auto Show will run January 14-18, 2016, at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers, their families, and key employees are invited to attend on Friday, January 15, our Nineteenth Annual Auto Show Charity Gala at the BCEC, from 5:00 p.m. to 10:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program. Prior to the Charity Gala we will conduct the Dealer Summit at the BCEC from 2:00 p.m. to 5:00 p.m., at which we will have several speakers discuss ongoing events in our industry.
Economic Impact Report Once again we are asking you to assist us 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. People not involved in our industry, including lawmakers, are consistently surprised by the fact that our dealers’ businesses account for almost 20 percent of the total retail economic activity in Massachusetts. Getting these figures out is crucial to raising awareness of our industry’s im-
Massachusetts Auto Dealer www.msada.org
portance, especially as legislators ponder various new methods of raising revenue. Dealers and our customers’ purchases are consistently made targets of revenue initiatives that hurt the economy and our customers’ pocketbooks. But facts don’t lie, and we need to make it difficult for those who look to businesses to bear the burden during tough budgetary times to justify cutting us off at the knees more than they already have. We recently sent the form to you. Please take a few minutes to complete the survey form for each of your dealerships and fax it to Auto Outlook at (610) 640-2907 as soon as possible. Your submitted survey is strictly confidential. We need returns from at least half our members for our survey to be accurate. We will be collecting the surveys until the end of October. Thank you for your assistance on this project.
Veterans Day (Wednesday, Nov. 11) Pay Rules Reminder • A dealership that operates on Veterans Day is required to pay most employees at time and one-half their regular rate so long as work is actually performed on the holiday. • An employer may not require an employee to work on this holiday nor may it punish or penalize an employee for choosing not to work. • If the dealership is going to be open prior to 1:00 p.m. on the day, a local permit is required.
Congratulations, Steve Sewell Your Association is governed by a twenty-member Board of Directors and a seven-member Executive Committee. The Executive Committee consists of the four officers – president, vice president, treasurer, and clerk – as well as the immediate past president, the NADA director, and an at-large member elected from the full Board. To fill the at-large slot previously held by Bill DeLuca, the Board at its most recent meeting on October 22 elected Worcester County director Steve Sewell of Westboro Mitsubishi. Congratulations and good luck to Steve. .t
MSADA
www.msada.org
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Sound Off
MSADA MSADA
What is the Massachusetts Workforce Training Fund and Why Should You Care? By Bill Napolitano ProActive Leadership Group The Workforce Training Fund was legislated in 1998 to provide funding and resources to Massachusetts businesses as a way to improve workers’ skills, increase productivity, and maintain competitiveness in the marketplace. It is funded by a surcharge on Unemployment Insurance payments made by the employer community. Since its inception, more than $200 million in training grants have been awarded to Massachusetts employers. Very few Massachusetts dealers have tapped into this fund to which they have contributed. There are currently four types of grants available. The two most applicable to the dealer body are the Express Grant and the General Program Training Grant. These grants are reimbursements for training which is planned and executed in ac-
by choosing pre-qualified courses. For example, Leadership, Management, Business Planning, Strategy, Sales, Marketing, Customer Service, Operations, Personal, and Team Mastery Skills are just a few of the training types covered by this grant. State mandated-training courses (such as OSHA) are not covered under this grant. Grant funds are limited to $3,000 per employee per course and $30,000 per company per calendar year. A company whose application has been approved will be reimbursed for up to 50% of the actual cost of training. The online application process is simple and typically takes less than one hour to complete. The General Program Training Grant offers up to $250,000 to employers. It is competitively awarded to qualified businesses that demonstrate a clear need in many businessgrowth areas, some of which are mentioned above. Grant funds must be matched dollar-for-dollar and can include employee wages paid during training. Results and ROI must be measurable. In many cases, applicants seek professional advice in writing this type of grant due to the scope of their project and the competitive nature of this grant. All applicants must pay into the Workforce Training Fund Program (WTFP) via the surcharge on Unemployment Insurance payments and provide a Certificate of Good Standing from the Massachusetts Department of Revenue. For almost a decade, I have been an approved training provider for the Express Grant Program and our clients have reaped the benefits of the fund. We are experts in this program and as such, take full control of the process for our clients including application, award, administration and reimbursement. Additional information is available from The Commonwealth Corporation at www.commcorp.org/wtf.
“Very few Massachusetts dealers have tapped into this fund to which they have contributed.�
t cordance with the Fund Guidelines. Funds cannot be used for past training events. The Express Grant was designed for businesses with less than 100 employees and whose training needs can be met
OCTOBER 2015
Massachusetts Auto Dealer www.msada.org
Bill Napolitano is a partner at the ProActive Leadership Group. He can be reached at (774) 254-0383 or by email at Bill@ResultsImproved.com.
Troubleshooting
MSADA
Used Car Rule Compliance and the Buyers Guide By Peter Brennan, Esq.
MSADA Staff Attorney Do your dealership employees understand the purpose and importance of displaying a Buyers Guide on each used car that is offered for sale at your dealership? In an industry where employee turnover is common and penalties for non-compliance are costly, it is imperative to review dealership policies and procedures from time to time to ensure that employees are familiar with the Used Car Rule (UCR) and how to comply with it. The Buyers Guide is one of the requirements of the Used Car Rule, 16 CFR 455, a federal regulation issued by the Federal Trade Commission intended to protect consumers from misinformation during transactions involving a used vehicle. Violations of the Rule can lead to a civil penalty of $16,000 per violation. The penalties associated with violations of the UCR are not hypothetical. In June, the FTC reached a $90,000 settlement with an Arkansas dealer that had been charged with failing to display Buyers Guides on used vehicles that were offered for sale. Each missing Buyers Guide is considered a separate violation under the UCR, and a lot filled with non-compliant vehicles can bankrupt a careless dealer. The Arkansas dealer in question had received a prior warning, but you may not be so lucky. Under the UCR, the Buyers Guide
must include the following information: (i) whether the vehicle is being sold “asis” or with a warranty, (ii) what percentage of the repair costs a dealer will pay under warranty, (iii) that oral promises are difficult to enforce, (iv) that the consumer should get all promises in writing, (v) to keep the Buyers Guide for reference after the sale, (vi) a description of the major mechanical and electrical systems on the car, as well as some of the major problems that consumers should look out for, and (vii) a statement that the consumer should have the car inspected by an independent mechanic before he or she buys. The Buyers Guide must also list relevant information such as the description of the car and the dealer’s name and address. If a dealer so chooses, they may include a signature line that the consumer must sign to acknowledge receipt of the Buyers Guide. However, if a dealer includes the signature line, they also must include a disclosure near the acknowledgment that states “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale.” The Buyers Guide is sometimes referred to as the “window sticker” due to its normal placement on the vehicle’s window. The Buyers Guide can also be hung from the rear view or either side mirror, or under a windshield wiper, so long as it is conspicuous and visible from both sides of the outside of the vehicle. The UCR also prohibits dealer misrepresentation. It is considered a deceptive act or practice under the UCR to (i) misrepresent the mechanical condition of a used car, (ii) misrepresent the terms of any warranty offered in connection with the sale of a used car, or (iii) represent that a used car is sold with a warranty when, in fact, the vehicle is sold without any warranty. www.msada.org
Additionally, it is an unfair act or practice for the dealer to, prior to the sale of the vehicle, fail to disclose that a vehicle is sold without any warranty or fail to provide the terms of any written warranty that is offered on the vehicle. Certain states, such as Massachusetts, do not allow the sale of “As-Is” vehicles in most cases, so a statement detailing the implied warranties that are included must be expressly stated. If a used vehicle sale is conducted in Spanish, then a Spanish language Buyers Guide must be posted on the vehicle prior to the sale. Accordingly, if a dealer operates in an area with a high concentration of Spanish speakers, the dealer should display both the English language Buyers Guide and a Spanish translation of that form on the automobile before it is offered for sale. Auctions that are closed to consumers are exempt from the UCR. Public auctions, however, are not exempt, and dealers and the auction company must comply. Any vehicle previously driven for purposes other than moving or test driving is considered a used vehicle, including all light-duty trucks and vans, demonstrators and program cars as long as these vehicles have a gross vehicle weight rating of less than 8,500 pounds, a curb weight of less than 6,000 pounds and a frontal area of less than 46 square feet. Motorcycles, scrap vehicles and agricultural equipment are all exempted from the UCR t If you require any additional information regarding prize promotions or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org or by phone at (617) 451-1051.
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MSADA
Legal
By Joseph W. Ambash and Jeffrey A. Fritz
‘Be Respectful Of Others and the Company’ And Other Unlawful Workplace Rules
Section 7 of the National Labor Relations Act (NLRA), among other things, guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Such activity is known as “protected concerted activity,” which generally requires (although does not necessarily require) two or more employees acting together to improve wages or working conditions. Section 8 of the NLRA, among other things, prohibits employers from interfering with or restraining employees in the exercise of the rights guaranteed in Section 7. These provisions apply to all employees and employers, including your dealership, not just employers with unionized workers. The National Labor Relations Board (NLRB) is the federal agency charged with enforcing the NLRA. The NLRB regularly reviews employee handbook provisions and work rules to determine whether, in its view, they reasonably can be read to prohibit or restrain protected concerted criticism of the employer, which would run afoul of the NLRA. The NLRB’s General Counsel issued a report this year designed to assist employers, and provide guidance, in promulgating and maintaining lawful rules. Because employees have a right to criticize or protest their supervisors, their management, and/or their employer in general, the NLRB has found the following workplace rules (if you can believe it) unlawful: • “Be respectful to the company, other employees, customers, partners, and competitors.” • “Do not make fun of, denigrate, or defame your co-workers, customers, franchisees, suppliers, the Company, or our competitors.” • “Be respectful of others and the Company.” • “No defamatory, libelous, slanderous or discriminatory comments about the Company, its customers and/or competitors, its employees, or management.” OCTOBER 2015
The NLRB takes the position that these rules are unlawfully overbroad insofar as they prohibit employees from engaging in disrespectful, negative, inappropriate, or rude conduct towards the employer or management (which the NLRA may protect) without sufficient clarification or context. By contrast, however, if clarification or context is provided in the rule—such as a rule prohibiting “disrespectful conduct or insubordination, including, but not limited to, refusing to follow orders from a supervisor or a designated representative”— such a rule may be lawful. Even rules governing how an employee treats his or her coworkers can, in the NLRB’s view, violate the NLRA. For example, the NLRB takes the position that rules such as these are unlawful: • “Do not make insulting, embarrassing, hurtful, or abusive comments about other company employees.” • “Avoid the use of offensive, derogatory, or prejudicial comments” about coworkers. • “Material that is fraudulent, harassing, embarrassing, sexually explicit, profane, obscene, intimidating, defamatory, otherwise unlawful or inappropriate may not be sent by email.” In the NLRB’s view, such rules could limit an employee’s ability to debate unionization and engage in other protected concerted activity, which is often contentious and controversial, and can involve offensive, derogatory, insulting, or embarrassing language. Still, the NLRB maintains that rules such as “Threatening, intimidating, coercing, or otherwise interfering with the job performance of fellow employees or visitors” and “No harassment of employees, customers, or facility visitors” are lawful. This extends even to your dealership’s name and logo. The NLRB has found that rules such as “Do not use any Company logos, trademarks, graphics, or advertising materials in social media” and “Company logos and trademarks may not be used without written consent” are unlawful. In the
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NLRB’s view, such rules would reasonably be read to prohibit the “fair use” of the employer’s intellectual property in the course of protected concerted activity. Think you can prohibit employees from taking pictures on your premises by maintaining a rule such as “Taking unauthorized pictures or video on company property is prohibited?” If you do, the NLRB disagrees with you, and takes the position that such a rule is unlawful because it might impinge on protected concerted activity, such as documenting health and safety violations. The NLRB even takes the position that prohibiting employees from discussing “customer or employee information” outside of work, including “phone numbers and addresses,” is overbroad (and, therefore, unlawful) because employees have a right to discuss “employee information” including their contact information. These are but a few examples of workplace rules the NLRB finds unlawful. Even if you never actually apply the rules to anyone, the NLRB could still find the mere maintenance of the rules is unlawful, and you might be dragged in front of an Administrative Law Judge for an unfair labor practice hearing. Accordingly, you should consider having your employee workplace rules reviewed with an eye toward lessening the risk of an adverse decision from the NLRB. t
Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at (617) 722-0044.
Dealer Services
MSADA
The Attitude Adjustment Four takeaways to keep your team positive
By Rob Sneed Rob Sneed is a development rep and motivator for Ethos Group Consulting Services and the author of various articles in the automotive industry.
Ethos Group
#3–Mind Your Time
it is part of being human. We cannot allow the challenges to become distractions that have our teams performing below their best. As leaders, we have a responsibility to encourage those around us to rise above what may be happening now and focus on what they are working towards. Here are four quick takeaways that can help you keep your team focused on the positive:
Too often we see salespeople who spend their day waiting for things to happen rather than investing their time into making things happen. Commit to making the most of every day by investing fully in every area of life, from personal to professional. Time is too valuable to allow it to slip away without being put to use.
#1–Gain Perspective
#4–Fight Through With Focus
The greatest successes do not happen overnight. They take time to develop. Step-
Loving what you do does not mean you have to love everything about what you do.
ping back from frustrations, even momentarily, will set the stage for re-engagement with renewed energy, will, and strength. Sometimes the change needed is a change in perspective.
Work through the frustrations and focus on the positive. Leverage your people’s strengths while minimizing their weaknesses and the team’s success will fuel the fire for the next day’s fight. Leaders have the ability to inspire and motivate their teams, even in the face of frustration and adversity. Encourage your leadership to invest in the growth and development of your sales team beyond sales goals and quotas, and they will tap into potential in a way that redefines the business along with the individuals who are part of it. t
provides franchised
automotive dealerships with an integrated program
of
results-driven
income-develop-
ment services, comprehensive training, robust recruiting and industry-leading products.
We have all heard the term “attitude is everything”. When it comes to sales there could be no statement more accurate. It is easy for extraordinary opportunities to get lost in the ordinary routine of business, and we forget what an impact our attitude has on our ability to maximize those opportunities. As a result, focus begins to fade, determination starts to dwindle, and attitude begins to atrophy. The dynamic and ever-changing environment we work in necessitates that leaders, in both sales and management, keep a fresh perspective on business. They do not allow today’s frustrations to poison tomorrow’s potential, but instead seize the moment when it presents itself. They attack opportunity proactively and with a plan, because they are tenacious and maintain a positive mental attitude.
Dealing with Negativity The car business is tough. We hear the word “no” frequently, and turning a “no” into a “yes” is sometimes hard work. While we know that hard work is always worth it, it doesn’t mean that working hard is not sometimes a grind. Everyone deals with negativity at times;
#2–Celebrate Your Progress It is not always easy to slow down and celebrate the successes. Missing these opportunities will wear-down a person’s will to win, and, over time, invalidate their victories. Encourage your people to savor the sweetness of success and be the type of person who celebrates other’s victories with them. www.msada.org
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Cover Story
Strength in MSADA’s Capitol Hill contingent makes the case with national lawmakers. By Catherine MacDonald
“It’s really important for them to hear from dealers exactly how the work they do there in D.C. impacts us here in Massachusetts,” –Scott Dube MSADA President
OCTOBER 2015
W
hile lawmakers on Capitol Hill are often at odds with any number of interest groups, as well as each other, dealerships have a strong advantage when pushing back against onerous policies. Every legislator has a dealership in his or her district, and none of their decisions are made in a vacuum. Every September, the National Auto Dealers Association offers a reminder of the scope of dealerships’ impact by bringing in franchise owners from across the country to visit their representatives. This year, MSADA President Scott Dube, NADA Director Don Sudbay, former NADA Director Ray Ciccolo, and Board Clerk Charles Tufankjian made the trip alongside Executive Vice President Robert O’Koniewski and Staff Attorney Peter Brennan. For Dube, the visit is an opportunity to present the reality of the policies legislators debate every day hundreds of miles from where they’re implemented. “It’s really important for them to hear from dealers exactly how the work they do there in D.C. impacts us here in Massachusetts,” Dube said. Tufankjian made his third trek to Capitol Hill for the event. Over the past few years, he says he’s learned more about the complicated politics of how legislation does, or doesn’t, get through both legislative chambers. “We express our opinion, and we justify it with material from NADA and state our feelings on it,” Tufankjian says. “And the representatives usually give us feedback.” But lobbying and votes are often far apart -- all the more reason Tufankjian says it’s important to take part in the show of force NADA provides. “It’s hard to read them,” Tufankjian says of legislators. “They might tell you one thing, and vote differently. But most of them were fairly favorable toward us. I found that more so this year than other years in the past.” With more than 300 dealer-legislator meetings taking place, NADA singled out three priority issues where congressional action could have an enormous impact on dealer across the country.
Massachusetts Auto Dealer www.msada.org
MSADA
n Numbers “We express our
Unfair CFPB Targeting
opinion, and we
Among the top issues facing dealers nationwide is the Consumer Finance Protection Bureau’s continued aggression against dealer-assisted financing practices. In 2013, for example, the CFPB issued guidance which threatens to eliminate a dealer’s flexibility to discount auto loans in the showroom. In July 2015, the U.S. House Financial Services Committee passed NADA-backed H.R. 1737 by a bipartisan vote of 47-10 to rescind the CFPB guidance. The bill, which was introduced by Reps. Frank Guinta (R-New Hampshire) and Ed Perlmutter (D-Colorado), would bring openness, transparency, and an informed decision-making process to regulating the auto finance market. The bill also requires the CFPB to study the true impact on consumers before issuing new guidance; places provisions for a public comment period; and requires the CFPB to consult with the agencies that currently share jurisdiction over the indirect auto finance market. The bill currently has 147 cosponsors (86 Republicans and 61 Democrats).
justify it with material from NADA.” –Charles Tufankjian MSADA Board Officer
Issue: Overbroad Recall Bills
Another issue that Congress is struggling with is how to address consumer concerns about vehicle recalls. The Senate passed its transportation bill in July, which included a provision offered by Sen. Claire McCaskill (D-Missouri) that would prohibit “rental car companies” (which is defined to include most www.msada.org
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Strength In Numbers dealerships) from renting vehicles (and dealer loaners) under open recall. Sen. Sidney Blumenthal (D-Connecticut) offered a related amendment that would ground all used vehicles under recall sold at a dealership (but not private sales). The Senate Commerce Committee rejected the Blumenthal amendment by a vote of 13-11, and the amendment was not considered on the Senate floor. “We were trying to explain to them how impractical the whole thing is,” Ciccolo says. “If we’re waiting for replacement parts, that would mean more than 500,000 VW Beetles would have to come off the road.” Legislation that would ground all vehicles under open recall at a dealership are flawed because they fail to differentiate between recalls that involve a defect that should be immediately addressed and those with a negligible impact on safety, such as an incorrect phone number in the owner’s manual, or an airbag warning sticker that might peel off the sun visor. It’s NADA’s position that measures to ground all rental and used-cars under recall, such as H.R. 2198 and H.R. 1181, should be rejected. The House Energy and Commerce Committee has started work on its transportation bill. NADA supports measures to boost recall completion rates, and NHTSA should improve the recall database to handle multiple VIN requests as a single inquiry. On Capitol Hill, dealers urged Congress to focus on recall provisions that measurably benefit safety, and oppose overbroad legislation that raises costs for consumers and small businesses without a commensurate safety benefit.
Issue: Tax, Accounting Changes
The third issue dicussed with our Members of Congress were proposed changes to certain tax and accounting rules – matters that reside in the area of the arcane. Sexy they are not. LIFO (“last in, first out”) is a longstanding inventory accounting method used by businesses to help mitigate rising inventory costs. Similarly, advertising has been considered an ordinary and necessary business expense for more than 100 years.Tax reform proposals released during the last Congress would have repealed LIFO and significantly restricted the amount of advertising a dealership could deduct each year. It’s NADA’s position that eliminating LIFO and limiting ad-
OCTOBER 2015
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vertising deductibility would take working capital away from dealerships that could otherwise be used to create jobs. Dealers spoke to their congressional representatives to ensure that any changes to LIFO and advertising deductibility do not negatively impact small business.
Making the Call
Coming away from the conference, O’Koniewksi says it’s imperative for all dealers to do whatever they can to foster a relationship with their legislators in Washington.
“MSADA sends a contingent of dealers to DC to advocate on everyone’s behalf, but we do need all the help we can get,” O’Koniewski says. “Legislators need to remember how important dealers are in their communities, and that message needs to come from their constituents.” Ciccolo, who has spent years working Capitol Hill, says that nothing replaces the value of a Congressman’s full attention in a dealer’s showroom. “We have to put more energy into having Congressmen come out to dealerships, where you can go one and one and have his attention,” Ciccolo says. “In Washington, they are overwhelmed with meetings and they’ve got people running in and out of the office. It’s better to see them in our own envrionment.” But whether in a Washington office or a dealer’s, for Tufankjian developing a relationship with representatives means getting more than rehearsed answers or blank stares when he does make contact. The important thing is making the effort. “We should all know our representatives,” Tufankjian adds. “I feel like if I needed something, I can pick up the phone and call and they know who we are. That personal contact means a lot.” For more information about what you can do to keep in contact with your representative, contact rokoniewski@msada.org. t
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NEWS from Around the Horn from Around
NEWS the Horn
AUBURN
VW Dealers Give Customers Straight Answers Amid the fallout from the Volkswagen emissions scandal, local dealers are working overtime to keep the trust of their customers. More than 200 lawsuits have been filed in federal and state courts. Volkswagen’s new chief executive, Matthias Müller, has already said that setting aside $7.3 billion to resolve the emissions cheating scandal won’t be enough to cover the recall costs. The company’s previous CEO, Martin Winterkorn, resigned as a result of the scandal. But locally, dealers are working to make good on their own. The Worcester Telegram & Gazette profiled Colonial and Patrick Volkswagen’s efforts in October as they worked with customers. Despite the current wave of negative press for Volkswagen, owner Matthew Patrick told the paper he is confident the company will remain strong. “They made a colossal mistake by trying to take a shortcut,” he told The T&G. “Like everything else, you need to do the right thing, the right way, and be honest about it.”
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Both dealers indicated that Volkswagen is offering owner loyalty incentives on top of all other incentives as a way to encourage its customers to stay with the brand. “Volkswagen customers are forgiving,” Patrick said. “Initially, there was an onslaught of anger, and a lot of questions. At the end of last month, business had really dropped off, but things have picked up again.” NORWOOD
Ernie Boch Jr. Sells Five Dealerships Ernie Boch Jr. has sold a large portion of his Route 1 dealerships to a group led by his chief executive Dan Dagesse. Boch will remain the public face for the company and his names will stay on the dealerships. Dagesse, who owns dealerships in New Hampshire, said discussions began several years ago when Ernie Boch Jr. tapped Dagesse’s management group to run the Boch stores. Dagesse told The Union Leader that he and his son, Christopher, will take over the Boch Toyota and Honda stores in Norwood, North Attleborough, and Westford, which will continue to carry the Boch name. Boch keeps the family’s Ferrari and Mase-
MSADA rati dealerships and will continue working with the Dagesses and doing the popular ads the dealership is known for throughout New England. “It was a great deal for both Ernie and I,” Dagesse told The Union Leader. “We’d been talking and just decided if he were going to sell, that we would be the perfect candidates to make it a seamless transition.” Boch also will keep his Subaru distributorship. The Subaru operation is the distributor for every Subaru sold at the 64 dealerships in New England. Andrew Boch started the company nearly 70 years ago. His son, Ernie Boch, earned fame with his “Come on down!” pitch. Boch Jr. took over when his father died in 2003. “With this, we put a deal together to keep his name and have him be the face of the company and continue doing his pricing model that he’s done. So it’s almost the same as what we’ve done for the last five years,” Dagesse said of Boch Jr. “He loves to do the advertising. He loves to do the pricing of the automobiles, so that’s what we’re going to continue doing.” Dagesse would not reveal purchase details. PORTSMOUTH
Past MSADA President Hosts Carly Fiorina MSADA Past President Jim Boyle made use of his Portsmouth Toyota dealership in October when California Republican presidential candidate Carly Fiorina needed a sudden change in venue for a planned rally.
“The Seacoast Republican Women were looking for a venue,” Boyle explained, “and I offered them the use of the showroom.” The event made ABC’s World News Tonight, with the dealership’s name right in the frame as Fiorina spoke. “Her husband’s a car nut,” Boyle added. “And she loved the building.” www.msada.org
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NEWS from Around the Horn SPRINGFIELD
GARDNER
Salvadore Auto Group Makes Strides Against Breast Cancer Salvadore Auto Group played host to a monthlong effort to battle breast cancer in October, featuring a pink Camaro and thousands dedicated to the cause. Salvadore Chevrolet hosted its second annual “Paint it Pink” event October 2, featuring 30 friends, employees, and family coming together to raise money and paint signs for Making Strides Against Breast Cancer. “The generosity of this group not only enabled us to raise money and awareness for MSABC,” said Amy Salvadore Fantoni, “but brought us all together to express our creativity leaving that eve-
Balise Hosts Grand Opening For Hyundai Store Balise Motor Sales hosted a grand opening in September for its new 26,794-square-foot Hyundai dealership in Springfield’s South End. The dealership, already open for business since the summer, is part of a $7.5 million development project on the site. Other aspects of that project include a 2,898-square-foot building for Ready Credit Used Car Sales dealership and a 7,463-squarefoot mechanical car wash and detailing operation still under construction. Balise plans to increase employment at the site from 30 from to 80. The Balise dealerships have a long history in Springfield’s South End. Its founder, Paul E. Balise, moved his Chevrolet dealership to Main Street in the neighborhood in the early 1930s. A few years later Balise Chevrolet moved into a former Dodge dealership on what is now East Columbus Avenue, the company said. Balise operates 12 dealerships in the state, including eight in Western Massachusetts, with a total of 746 employees statewide.
ning with our own painting to remind us of the importance of this cause.” The group also participated in the MSABC Walk in Boston on October 4, where 40,000 walkers raised more than $1 million. Chevrolet Regional District Manager joined Fantoni on stage to present $50,000 from Chevrolet toward research efforts.
OCTOBER 2015
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MSADA HADLEY
Tom Cosenzi Golf Tournament Raises $103,000 for Dana Farber Cancer Institute The Tom Cosenzi Driving for the Cure Charity Golf Tournament announced in October that it had raised $103,000 to support Dr. Patrick Wen and his team of researchers in the Neuro-Oncology Department at Dana Farber Cancer Institute. In the last seven years, the tournament has raised more than half a million dollars. Due to the tremendous support that this year’s tournament brought, the tournament was expanded to Crestview Country Club and Oak Ridge Golf Club. This year the four-player scramble attracted 220 golfers and 250 banquet guests. It included a full day of golf, dinner, and a silent and live-auction in the evening. Autotrader was the event’s Platinum Sponsor. “This tournament was created in memory of our father, who passed away from a Glioblastoma Brain Tumor,” stated Carla Cosenzi. “Whether you were a sponsor, a golfer, a donor, or a volunteer, we would like to thank everyone for their participation in
Left to Right: Patrick Wen, MD, Director, Center for Neuro-Oncology Dana-Farber Cancer Institute; Carla Cosenzi and Tommy Cosenzi, Founders of the Tom Cosenzi Driving for the Cure Charity Golf Tournament.
the 7th Annual Tom Cosenzi Driving for the Cure Charity Golf Tournament especially our presenting sponsor, Autotrader. We are extremely proud to support Dana-Farber’s world-class researcher’s work to reduce and ultimately eliminate the burden of cancer.”
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NEWS from Around the Horn
MSADA
WATERTOWN
Lexus of Watertown Partners with Komen Lexus of Watertown partnered with Susan G. Komen Massachusetts in October to present the Massachusetts Pink Tie Guys fundraising campaign. The campaign invited local men to join in the fight against breast cancer, with each man raising a minimum of $1,008 for Komen Massachusetts. The amount represents the 1 in 8 women who will be diagnosed with breast cancer in their lifetime. Susan G. Komen Massachusetts and Lexus of Watertown sought volunteers to each raise the $1,008 minimum for a campaign goal of $100,800. Volunteers were recognized at a reception on November 5 at The Algonquin Club of Boston. Lexus of Watertown also pledged to make a donation to Susan G. Komen Massachusetts for every test drive in the month of October. SOMERVILLE
Herb Chambers Joins Billionaire List Forbes’ 400 Richest Americans list now includes Herb Chambers, who joined six other Massachusetts moguls for the first time. The new inclusion is credited to a jump in value after a similar dealership group was sold in California. Chambers opened his newest Lexus dealership in Hingham on October 14. The other Massachusetts names have been included before: Fidelity’s Edward and Abigail Johnson, New Balance head Jim Davis, Patriots owner Robert Kraft, and former cable magnate Amos Hostetter. HOLYOKE
Gary Rome Breaks Ground on New Dealership Gary Rome Hyundai broke ground on a new dealership in Holyoke on October 23. In attendance were local government officials including: Alex Morse, Mayor of Holyoke; Marcos Marrero, Director of Planning & Economic Development; and Kathy Anderson, President of the Greater Holyoke Chamber of Commerce. “This is a great milestone for our company’s presence in the Holyoke community,” says Gary Rome, President of the Gary Rome Auto Group. “We are dedicated to the continuous growth and development of the city’s economy and look forward to serving community members for another 100 years.” This ground breaking comes after unanimous approvals from the Holyoke City Council, Ordinance Committee, Planning Board and Licensing Board for a zone change on May 19 earlier this year and two special permits on June 24. OCTOBER 2015
Massachusetts Auto Dealer www.msada.org
The new Gary Rome Hyundai dealership will provide 50 new full-time jobs, 20 part-time jobs, thousands of dollars annually in property tax revenue, and an increase in employee payroll to more than $7 million from the current $4.6 million. HINGHAM
New Herb Chambers Lexus Opens The Herb Chambers Companies has announced the opening of their Hingham Lexus dealership. Located across from the Derby Street Shoppes, the Lexus dealership was temporarily operating out of Norwell while finalizing the construction of the dealership. The dealership is outfitted with a café and cappuccino bar, a luxurious lounge with a fireplace, a business center with complimentary Wi-Fi and a children’s play area. Herb Chambers Lexus of Hingham also is the first dealership in New England to boast state-of-the-art, environmentally-friendly “Express Lube Bays.” With the Herb Chambers’ mission of providing excellence in customer service, there is a convenient three-lane service drive with valet attendants. The service department is equipped to provide “Express Service” for maintenance such as oil and filter changes, tire rotation, brake pad and battery replacements, as well as refills on essential fluids. The service technicians are factory-trained and A.S.E. certified in all automotive lines. Herb Chambers Lexus of Hingham also offers loaner cars and concierge pick-up and drop-off for any service need in addition to daily shuttle service to and from the Derby Street Shoppes. Herb Chambers Lexus of Hingham offers the full line of new Lexus models and a wide array of Lexus Certified Pre-Owned Vehicles complete with a 161-point inspection performed by a Lexus-trained technician, a three-year 100,000-mile limited warranty and 24-hour Roadside Assistance. “We’re thrilled to add Lexus of Hingham to our family of dealerships,” Chambers said. “We tirelessly strive to offer our clients the highest quality service and brands and we’re looking forward to expanding our presence on the South Shore.” With the new Herb Chambers Lexus of Hingham dealership, The Herb Chambers Companies now own and operate 55 dealerships throughout the region.
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NADA Update
By Don Sudbay
A Bright Outlook While we work for progress on Capitol Hill, growth remains robust
Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your
questions
and
concerns
(donsudbayjr@sudbay.com). As NADA Chairman Bill Fox outlines in this month’s column, the demographics of our customers are changing. As baby boomers retire and millenials increasingly dominate the workforce, we’ll be looking to them as the primary purchasers of new vehicles. As dealers, our Internet presence and customer focus will need to sharpen more than ever. We also need to keep a close eye on our own millenial workforce – are they jelling well with the culture in place in our showrooms? Change is a two-way street. As much as we need our employees to meet and exceed our standards, we need to make sure we’re communicating them effectively.
Commentary: 17 Million Reasons Why Auto Sales Will Remain Healthy By Bill Fox “If you want to gauge the economic health of the country, look no further than the retail-auto industry as an economic indicator. The seasonally adjusted annual rate (SAAR) for August soared to 17.8 million, which is the highest pace since July 2005 and the strongest month in the industry’s six-year recovery since the recession. “NADA predicts sales of nearly 17.2 million new cars and light trucks this year. And the used-vehicle market is improving as well. New-car dealerships will retail a combined 31 million new and used vehicles this year, an increase of 3.3 percent from 2014. “Particular factors have lined up to make it possible for consumers to make purchases, including steady employment growth, low gasoline prices, and favorable financing rates on auto loans that will continue. “Despite the robust growth, the industry should be aware of the generational shift in car-buying demographics. Generation Y (the cohort born after 1980) will soon become the majority of consumers, and this could present challenges to the long-term growth in auto retailing.
“NADA’s chief economist, Steven Szakaly, believes it will take up to four millennials to replace the spending power of just one baby boomer in the retail marketplace. He also cites the problematic wage gap between baby boomers and millennials. Generation Y may encounter stagnating wages, along with increasing vehicle sales prices, that can pose challenges for new-car purchases. Millennials are also far more likely to keep their cars for a longer period of time compared to previous generations. “No matter the changing conditions, the dealer business is part of the backbone of our nation’s economy. Franchised dealerships are vital American businesses that support individual communities and the nation as a whole. Dealers employ more than one million people, providing well-paying jobs that cannot be outsourced. “And we expect the sales momentum to continue into 2016, which could be a record year for new-vehicle sales.”
NADA Asks CFPB to Release Documents Admitting Goal of Regulation Through Enforcement The National Automobile Dealers Association has asked the Consumer Financial Protection Bureau (CFPB) to release internal documents acknowledging that the agency intended to regulate the auto finance market through enforcement action, and eschewed evidence that its methods for estimating disparate impact were deeply flawed. The request was made under the Freedom of Information Act (FOIA) and signed by NADA Vice President of Regulatory Affairs Paul Metrey. It is the second time in less than three months that NADA has requested access to agency documents that were leaked to American Banker, and that show a CFPB intent on eliminating the dealer discretion to offer discounted financing rates to consumers. NADA’s first request, filed on July 13, 2015, was denied by the CFPB three days later. On September 17 and 24, American Banker published articles that made numerous references to internal CFPB documents revealing that the CFPB: • Based its understanding of the vehicle financing marketplace and dealer compensation on a discredited advocacy report as opposed to a dispassionate and informed review of the market, data analysis, or an accurate assessment of consumer impact; • Made a conscious decision to attempt to regulate the auto finance market through “market-tipping” enforcement ac-
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NADA Update tions as opposed to a transparent and informed rulemaking process; and • Recognized that, despite knowledge that its disparate impact methodology could produce significant inaccuracies, persisted in using that flawed methodology to extract settlements from finance companies over which it has extraordinary leverage. “These documents demonstrate a lack of transparency and accountability that should be deeply troubling to anyone concerned about how significantly a regulator can influence a market that affects millions of consumers,” said NADA President Peter Welch. “Consumers benefit tremendously from the discounts they get from dealers, and they have every right to demand that their voices be included in - not willfully excluded from - the debate about how to regulate the auto finance market.”
Colorado’s Jeff Carlson Elected NADA Chairman for 2016 The National Automobile Dealers Association’s board of directors has elected Jeff Carlson as chairman for 2016. “This is a great honor, and I’m eager to lead NADA as we continue the important job of protecting the interests of America’s 16,500 franchised new-car dealerships, and the more than one million people they employ nationwide,” said Carlson, who represents Colorado’s new-car dealers on NADA’s board. Carlson, who is currently serving as NADA vice chairman, is president of Glenwood Springs Ford and Glenwood Springs Subaru in Glenwood Springs, Colorado, and co-owner of Summit Ford in Silverthorne, Colorado. His term as chairman officially begins in January 2016. The ceremonial event of “passing the gavel” will occur at the 2016 NADA Convention and Expo in Las Vegas. Mark Scarpelli, who represents Metropolitan Chicago’s new-car dealers on NADA’s board, was elected vice chairman. He is president of Raymond Chevrolet and Kia in Antioch, Illinois, and is co-owner of Ray Chevrolet in Fox Lake, Illinois. Bill Willis, president of Willis Automotive Group (Chevrolet, Buick, and Ford) in Smyrna, Delaware, was elected secretary. Neale Kuperman, president of Rockland Toyota in Blauvelt, New York, was elected treasurer.
Dealer Groups: Fifth Third Settlement Costs Consumers and Ignores Solution Leaders of the three major franchised auto dealership industry groups sharply criticized a settlement reached between the government and Fifth Third Bank over allegations of disparate-impact discrimination resulting from Fifth Third’s policy of allowing dealers to offer consumers discounts on auto loans. OCTOBER 2015
MSADA Under the terms of the consent order, dealers who work with Fifth Third Bank to help consumers obtain financing on new vehicles will now be significantly limited in their ability to get discounted rates at the dealership. As a result, consumers will lose as much as 1.25 percent of available savings on their loans. “By cutting the discount zone so dramatically, the government has significantly reduced the amount of money consumers can save on auto financing at the dealership,” said Bill Fox, NADA Chairman. “Between 70-80 percent of new-car buyers rely on dealerships to help them find competitive financing, and the fact is that most consumers get a better rate at the dealership because of the rate discounts that are only available at the dealership.” “Consumers have every right to continue benefiting from a system that saves them money every day, but bank-bybank, percent-by-percent, the CFPB is taking those rights away, and without giving consumers any say in the matter,” Fox added. The enforcement action is particularly egregious given the publication of private documents in which top officials at the CFPB admitted that the methodology they use to bring these enforcement actions systematically overestimates potential disparities in interest rates paid by minority and non-minority borrowers.
NADA Foundation Presents Grants to Wesley College The National Automobile Dealers Charitable Foundation presented Wesley College in Dover, Delaware, with two grants totaling $14,000. The donations were made through the Joseph J. Sanchez Memorial Fund, which supports the emergency needs of students, and the John P. Winston, Sr., Memorial Fund, which is dedicated to the study of ethics. Sanchez was former vice president and general manager of General Motors’ Oldsmobile division and the first president of Saturn Corporation. Since 1985, Sanchez Fund grants totaling $586,000 have been presented by the NADA Foundation to private and independent colleges across the country. Winston served as an NADA secretary and was an attorney who was committed to ethical practices. Since 1990, the Winston fund has contributed $546,000 in grants to the study of ethics. “Sanchez and Winston were committed to education and the study of ethics,” said Bob Mallon, chairman of the NADA Foundation. “It is our pleasure to present Wesley College with this gift to honor their memory.” The grants were presented NADA director and foundation trustee Bill Willis, his wife Mary Jane Willis, and Mallon.
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TRUCK CORNER American Truck Dealers Move the Industry Forward
By Eric K. Jorgensen
www.msada.org
Massachusetts Auto Dealer JUNE 2015
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